As part of the proposed transaction, Hyperscale Data intends to initially transfer all operating assets used in its cryptocurrency mining operations to Patriot BTC, including the Company's Montana data center, Bitcoin miners, mining equipment and related infrastructure.

The proposed transfer is intended to separate the Company's Bitcoin mining operations from its Michigan AI data center strategy. The Company believes the separation would align management attention and capital allocation with the distinct needs of each business, improve transparency into their respective operations and financial performance, and pave the way for the Michigan facility to operate as a standalone, single-purpose AI data center business.

Patriot BTC Mining Assets

Patriot BTC is intended to become a focused Bitcoin mining and infrastructure company that would generate its own Bitcoin through its mining operations. The Company currently anticipates that Patriot BTC will initially hold two principal groups of assets:

  • The Company's Montana data center and related Montana assets and infrastructure; and
  • The Company's Bitcoin miners, mining equipment and associated Bitcoin mining infrastructure.

By placing the mining assets within a dedicated subsidiary, Hyperscale Data believes Patriot BTC can provide greater transparency into the value, operations and financial performance of the Company's Bitcoin mining business.

Strategic Rationale and Alternatives for Patriot BTC

Management may recommend to the Board of Directors that, subject to applicable approvals, legal and regulatory requirements and other appropriate conditions, the Company pursue a transaction intended to position Patriot BTC within a publicly traded entity, whether through a separation or another transaction structure. The Company is evaluating potential structures to accomplish this objective and has not selected or approved a specific transaction structure.

Milton "Todd" Ault III, Executive Chairman of Hyperscale Data, stated, "Patriot BTC reflects our belief that the Company's Bitcoin mining business can create greater long-term value with a distinct identity, focused leadership and a strategy tailored to the digital asset sector. We believe greater focus and transparency will allow stockholders and the market to evaluate the mining business on its own merits."

Mr. Ault continued, "We continue to believe Bitcoin mining can be viable as a focused, single-purpose business. However, Bitcoin mining and AI data center development have different capital requirements, operating priorities and value drivers. Separating the businesses is intended to give each a clearer mandate and allow us to remain focused on positioning the Michigan facility for a potential sale, public-company transaction or internally funded development."

Under the proposed structure, Patriot BTC's management could focus on mining economics, fleet performance, power costs and related infrastructure, while the management of Alliance Cloud Services and Sentinum could focus on financing, developing and strategically positioning the Michigan AI data center.

Proposed Transaction

The formation of Patriot BTC has not yet been completed, and no transaction structure or separation involving Patriot BTC has been approved at this time.

Any proposed transaction involving Patriot BTC would be subject to, among other things:

  • Approval by the Hyperscale Data Board of Directors;
  • Applicable federal and state securities laws;
  • Applicable NYSE American and other trading-market requirements;
  • Tax and accounting considerations;
  • Determination of the appropriate capitalization of Patriot BTC;
  • Selection and implementation of an appropriate transaction structure; and
  • Other legal, regulatory and business conditions deemed appropriate by the Company.

There can be no assurance that Patriot BTC will be formed as currently contemplated, that any proposed transaction involving Patriot BTC will be approved or completed, that Patriot BTC will become publicly traded, or as to the timing or final structure of any such transaction.

Hyperscale Data expects to provide additional information regarding Patriot BTC, including its capitalization, the final mining assets to be contributed, the proposed transaction structure and its anticipated trading and reporting structure, as those matters are determined and approved.