BTCS Reports Q1 2023 Results
Silver Spring, MD, May 15, 2023 (GLOBE NEWSWIRE) — BTCS Inc. (Nasdaq: BTCS) (“BTCS” or the “Company”), a blockchain technology-focused company, announced its results for the three months ended March 31, 2023.
First Quarter 2023 Financial Highlights
Q1 2023 revenue improved 15% over Q4 2022 to $0.3 million but remained lower than Q1 2022 by 45% as a result of the sharp decline in crypto asset prices during Q2 2022.
74% gross margins for the three months ended March 31, 2023 compared to 75% and 59% for Q1 2021 and Q4 2021 respectively.
Our net loss for the three months ended March 31, 2023 decreased to $1.3 million ($0.10 per share) compared to $5.7 million ($0.47 per share) net loss for Q1 2022 and $1.4 million ($0.11 per share) net loss for Q4 2022.
As of March 31, 2023, the Company had $1.4 million in cash.
The fair value of our crypto assets increased 53% during Q1 2023 to $19.2 million.
The fair value of our crypto assets together with our cash equates to approximately $1.50 per share as of March 31, 2023.
Management Commentary
Business Update
BTCS has continued to make strides in the first quarter of 2023 by building on the momentum of its StakeSeeker platform’s successful beta launch in January. The Company’s innovative StakeSeeker platform, a comprehensive crypto dashboard and education center for crypto asset holders, allows users to learn how to earn crypto rewards by staking through its non-custodial Stake Hub and evaluate their crypto portfolios across exchanges and wallets in a single analytics platform. BTCS has continued to expand the platform’s features and functionality, with a particular focus on integrating new blockchain networks and improving user experience. We remain committed to growing StakeSeeker users and building a strong delegator base on our validator nodes, providing an attractive non-custodial staking option for crypto asset holders.
Impact of Shanghai Upgrade
The recent successful Shanghai upgrade to the Ethereum blockchain in April has unlocked over 840 ETH rewards earned on our Ethereum validator nodes and will cause all our staked ETH to be reclassified as a current asset going forward. This newly unlocked ETH, worth approximately $1.5m as of March 31, 2023, provides additional liquidity, flexibility to manage our assets, and opportunities for growth as we move forward in 2023.
The Shanghai upgrade also introduced significant improvements to the Ethereum blockchain, such as reducing gas fees and improving network performance. As a result, the upgrade has made it easier for BTCS to operate validator nodes on Ethereum’s blockchain, increasing the efficiency and profitability of its staking operations.
Industry Commentary
As we reflect on the first quarter of 2023, there are many indicators that support a positive outlook on the crypto market and our business model. The crypto industry has witnessed remarkable price increases since the lows experienced in 2022, with Ethereum standing out as one of the most notable success stories, having increased as much as 132% during April 2023 from its June 2022 low. This surge in value demonstrates the resilience and potential of cryptocurrencies, and we are optimistic about the continued growth of the market.
BTCS acknowledges the recent challenges faced by some financial institutions catering to the crypto space, such as the failures of Silicon Valley Bank, Silvergate, and Signature Bank. These events have triggered a shift in capital flows, as individuals seek alternative avenues to preserve and grow their wealth. We believe that ETH has emerged as a bright spot in this evolving market environment, providing further signs of optimism in the sector for investors and enthusiasts alike.
Furthermore, recent incidents such as the collapse of FTX and regulatory actions against Kraken by the SEC underscore the importance of regulatory clarity and transparency in the crypto market. BTCS firmly supports the need for a robust regulatory framework that fosters innovation while protecting investors. Our business model, focused on non-custodial staking, is uniquely positioned with high-margin operations, and we adhere to industry best practices to ensure compliance and transparency.
Our flagship StakeSeeker platform sets us apart from others in the staking market. Unlike custodial staking models employed by crypto exchanges, our non-custodial staking-as-a-service solution enables users to maintain control over their crypto assets while directly participating in the network’s consensus mechanism. This approach ensures greater security and eliminates the need to entrust third parties with valuable crypto assets. We believe that non-custodial staking is the future of the industry, and we are proud to offer this innovative solution to the crypto community.
BTCS understands that blockchain technologies are still in the early stages of their evolution, and we are committed to being at the forefront of this ongoing transformation. We invest significant time and resources in educating the public about emerging blockchain technologies, the benefits of self-custody of crypto assets, and the importance of secure staking practices. Our goal is to drive awareness and adoption of blockchains across various sectors, both public and private.
As we look ahead, BTCS remains optimistic about the future of the crypto industry. We are excited to continue driving new innovations that strengthen long-term shareholder value while contributing to the broader adoption and acceptance of blockchain technologies. We firmly believe in the transformative potential of cryptocurrencies and are dedicated to positioning ourselves as leaders in this dynamic landscape.
About BTCS:
BTCS Inc. is a Nasdaq listed company operating in the blockchain technology space since 2014 and is one of the first U.S. publicly traded companies with a primary focus on blockchain infrastructure and staking. BTCS secures and operates validator nodes on disruptive next-generation blockchain networks that power Web 3, earning native token rewards by staking our proof-of-stake crypto assets. “StakeSeeker” is BTCS’ newly introduced proprietary Cryptocurrency Dashboard and Staking-as-a-Service platform, developed to empower users to better understand and grow their crypto holdings with innovative portfolio analytics and a non-custodial process to earn staking rewards on crypto asset holdings. Users can easily link and monitor their cryptocurrency portfolios across exchanges, wallets, validator nodes, and other sources; and have access to a suite of data analytic tools such as performance and reward tracking. StakeSeeker’s Staking Hub allows users to earn rewards by directly participating in network consensus mechanisms by staking and delegating their cryptocurrencies to company-operated validator nodes for a growing number of supported blockchains. As a non-custodial validator operator, BTCS receives a percentage of token holders staking rewards generated as a validator node fee, creating the potential opportunity for a highly scalable business with limited additional costs. For more information visit: www.btcs.com.
Forward-Looking Statements:
Certain statements in this press release, constitute “forward-looking statements” within the meaning of the federal securities laws including statements regarding the growth of our StakeSeeker use base, our beliefs regarding the transformational potential of blockchain technologies and the optimism regarding delivering shareholder value. Words such as “may,” “might,” “will,” “should,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “predict,” “forecast,” “project,” “plan,” “intend” or similar expressions, or statements regarding intent, belief, or current expectations, are forward-looking statements. While the Company believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based on information available to us on the date of this release. These forward-looking statements are based upon current estimates and assumptions and are subject to various risks and uncertainties, including without limitation regulatory issues unexpected issues with our proprietary Digital Asset Analytic and Staking-as-a-Service Platform: StakeSeeker, regulatory issues, and the reluctance of users to try or accept our product, as well as risks set forth in the Company’s filings with the Securities and Exchange Commission including its Form 10-K for the year ended December 31, 2022 which was filed on March 31, 2023. Thus, actual results could be materially different. The Company expressly disclaims any obligation to update or alter statements, whether as a result of new information, future events or otherwise, except as required by law.
Investor Relations:
ir@btcs.com
Financials
The tables below are derived from the Company’s financial statements included in its Form 10-Q filed on May 12, 2023 with the Securities and Exchange Commission. Please refer to the Form 10-Q for complete financial statements and further information regarding the Company’s results of operations and financial condition relating to the fiscal quarter ended March 31, 2023 and 2022. Please also refer to the Company’s Form 10-K for a discussion of risk factors applicable to the Company and its business.
BTCS Inc.
Balance Sheets
| March 31, | December 31, | ||||||
| 2023 | 2022 | ||||||
| (Unaudited) | |||||||
| Assets: | |||||||
| Current assets: | |||||||
| Cash | 1,443,058 | $ | 2,146,783 | ||||
| Crypto assets/currencies | 1,066 | 982 | |||||
| Investments, at value (Cost $100,000) | 100,000 | 100,000 | |||||
| Staked crypto assets/currencies | 7,854,755 | 1,826,307 | |||||
| Prepaid expense | 93,449 | 123,727 | |||||
| Total current assets | 9,492,328 | 4,197,799 | |||||
| Other assets: | |||||||
| Property and equipment, net | 9,999 | 11,152 | |||||
| Staked crypto assets/currencies – long term | – | 5,708,624 | |||||
| Total other assets | 9,999 | 5,719,776 | |||||
| Total Assets | $ | 9,502,327 | $ | 9,917,575 | |||
| Liabilities and Stockholders’ Equity: | |||||||
| Accounts payable and accrued expense | $ | 41,954 | $ | 76,727 | |||
| Accrued compensation | 3,429 | 295,935 | |||||
| Warrant liabilities | 498,750 | 213,750 | |||||
| Total current liabilities | 544,133 | 586,412 | |||||
| Stockholders’ equity: | |||||||
| Common stock, 97,500,000 shares authorized at $0.001 par value, 13,799,745 and 13,107,149 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively | 13,800 | 13,108 | |||||
| Additional paid in capital | 161,839,971 | 160,800,263 | |||||
| Accumulated deficit | (152,895,577 | ) | (151,482,208 | ) | |||
| Total stockholders’ equity | 8,958,194 | 9,331,163 | |||||
| Total Liabilities and Stockholders’ Equity | $ | 9,502,327 | $ | 9,917,575 | |||
BTCS Inc.
Statements of Operations
(Unaudited)
| For the Three Months Ended | |||||||
| March 31, | |||||||
| 2023 | 2022 | ||||||
| Revenues | |||||||
| Validator revenue (net of fees) | $ | 311,508 | $ | 563,015 | |||
| Total revenues | 311,508 | 563,015 | |||||
| Cost of revenues | |||||||
| Validator expense | 82,014 | 137,869 | |||||
| Gross profit | 229,494 | 425,146 | |||||
| Operating expenses: | |||||||
| General and administrative | $ | 609,829 | $ | 650,289 | |||
| Research and development | 201,625 | 136,718 | |||||
| Compensation and related expenses | 462,090 | 1,423,896 | |||||
| Marketing | 6,243 | 41,793 | |||||
| Impairment loss on crypto assets/currencies | 94,907 | 3,307,428 | |||||
| Realized gains on crypto asset/currency transactions | (16,831 | ) | (71,110 | ) | |||
| Total operating expenses | 1,357,863 | 5,489,014 | |||||
| Other income (expenses): | |||||||
| Change in fair value of warrant liabilities | (285,000 | ) | (641,250 | ) | |||
| Distributions to warrant holders | – | (35,625 | ) | ||||
| Total other income (expenses) | (285,000 | ) | (676,875 | ) | |||
| Net loss | $ | (1,413,369 | ) | $ | (5,740,743 | ) | |
| Net loss per share attributable to common stockholders, basic and diluted | $ | (0.10 | ) | $ | (0.47 | ) | |
| Weighted average number of common shares outstanding, basic and diluted | 13,673,126 | 12,245,278 | |||||
BTCS Inc.
Statements of Cash Flows
(Unaudited)
| For the Three Months Ended | |||||||
| March 31, | |||||||
| 2023 | 2022 | ||||||
| Net Cash flows used from operating activities: | |||||||
| Net loss | $ | (1,413,369 | ) | $ | (5,740,743 | ) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
| Depreciation expense | 1,153 | 797 | |||||
| Stock-based compensation | 531,617 | 1,289,274 | |||||
| Validator revenue | (311,508 | ) | (563,015 | ) | |||
| Blockchain network fees (non-cash) | – | 1,321 | |||||
| Change in fair value of warrant liabilities | 285,000 | 641,250 | |||||
| Realized gain on crypto assets/currencies transactions | (16,831 | ) | (71,110 | ) | |||
| Impairment loss on crypto assets/currencies | 94,907 | 3,307,428 | |||||
| Changes in operating assets and liabilities: | – | ||||||
| Prepaid expenses and other current assets | 30,278 | 9,382 | |||||
| Accounts payable and accrued expenses | (34,773 | ) | (36,329 | ) | |||
| Accrued compensation | (292,506 | ) | (4,125 | ) | |||
| Capital shares payable | – | 75,002 | |||||
| Dividends payable – distributions to warrant holders | – | 35,625 | |||||
| Net cash used in operating activities | (1,126,032 | ) | (1,055,243 | ) | |||
| Net cash used in investing activities: | |||||||
| Purchase of productive crypto assets/currencies for validating | (134,019 | ) | (8,521,726 | ) | |||
| Sale of productive crypto assets/currencies | 47,543 | 310,149 | |||||
| Purchase of investments | – | – | |||||
| Purchase of property and equipment | – | (2,558 | ) | ||||
| Net cash used in investing activities | (86,476 | ) | (8,214,135 | ) | |||
| Net cash provided by financing activities: | |||||||
| Dividend distributions | – | (400,194 | ) | ||||
| Net proceeds from issuance common stock/ At-the-market offering | 508,783 | 10,513,767 | |||||
| Net cash provided by financing activities | 508,783 | 10,113,573 | |||||
| Net increase in cash | (703,725 | ) | 844,195 | ||||
| Cash, beginning of period | 2,146,783 | 1,400,867 | |||||
| Cash, end of period | $ | 1,443,058 | $ | 2,245,062 | |||
| Supplemental disclosure of non-cash financing and investing activities: | |||||||
| Dividends payable | $ | – | $ | 230,606 | |||
