10-K: LMFA Reports Wider Losses Amid Bitcoin Volatility, Nasdaq Delisting Risk

LM Funding America, Inc. reported a significantly increased net loss for 2025, driven by decreased Bitcoin mining revenue and impairment losses, while facing a Nasdaq delisting notice.

Summary

• LM Funding America, Inc. operates three distinct businesses: Bitcoin treasury operations, Bitcoin mining, and specialty finance.
• The company's net loss attributable to common shareholders widened significantly to $28.5 million in 2025, from $14.1 million in 2024.
• Total revenues decreased by approximately $2.2 million to $8.8 million in 2025, from $11.0 million in 2024.
• Bitcoin mining revenues decreased to $8.3 million in 2025, from $10.4 million in 2024, primarily due to the April 2024 halving event and approximately 4,000 mining machines being offline for repositioning, partially offset by higher Bitcoin prices.
• The average revenue of each Bitcoin mined was $100,649 in 2025, compared to $61,152 in 2024.
• Operating costs and expenses increased by $14.2 million, or 81.1%, to $31.7 million in 2025, from $17.5 million in 2024.
• This increase was mainly due to a $1.8 million fair market value loss on digital assets (compared to a $7.4 million gain in 2024), a $5.4 million impairment loss on mining equipment, and increased staff costs and payroll.
• As of December 31, 2025, the company controlled 211.4 Bitcoins, with 145 Bitcoins pledged as collateral for an $11 million loan.
• The company acquired 164 Bitcoins in August 2025 and an additional 47 Bitcoins in December 2025 using proceeds from capital raises.
• Total hashing capacity increased to approximately 0.75 EH/s with 7,200 machines as of December 31, 2025, up from 0.63 EH/s with 5,840 machines in 2024.
• The company acquired an 11 MW hosting site in Columbus, Mississippi, for approximately $3.9 million, including 2,380 installed Antminer machines with a total projected hashrate of 238 PH.
• The direct cost to mine one Bitcoin (including miner related depreciation) increased to $156,522 in 2025, from $86,290 in 2024.
• The company received a Nasdaq notification on January 7, 2026, for non-compliance with the minimum $1 bid price rule, with a deadline of July 6, 2026, to regain compliance.
• Net cash used in operating activities was $14.0 million in 2025, compared to $11.9 million in 2024.
• The company raised $27.3 million in net proceeds from equity financing and $13.0 million in net borrowings in 2025, partially offset by an $8.0 million stock repurchase.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing with a highly negative sentiment due to the substantial increase in net losses, significant impairment charges, and the critical Nasdaq delisting notice, which collectively overshadow the company's efforts in Bitcoin acquisition and mining expansion.

Positives

• Increased Bitcoin holdings from 150.2 to 211.4 Bitcoins by year-end 2025, demonstrating continued execution of the treasury strategy.
• Expansion of mining infrastructure through the acquisition of an 11 MW hosting site in Columbus, Mississippi, and an increase in total hashing capacity to 0.75 EH/s.
• Improved direct mining cost to revenue metric (energy/hosting fees only) to 62% in 2025, down from 67% in 2024, indicating better operational efficiency at owned sites.
• Successful participation in demand response programs at the Oklahoma site generated approximately $0.7 million in energy sales in 2025.
• Remediation of a previously identified material weakness in internal control over financial reporting as of December 31, 2023.

Negatives

• Net loss attributable to common shareholders significantly widened to $28.5 million in 2025, from $14.1 million in 2024.
• Total revenues decreased by approximately $2.2 million, primarily due to a $2.1 million decrease in Bitcoin mining revenues.
• Bitcoin mining revenues decreased by $2.1 million despite an increase in the average Bitcoin price, largely due to the halving event and offline machines.
• Operating costs and expenses increased substantially by $14.2 million, or 81.1%, in 2025.
• A $1.8 million loss on the fair value of Bitcoin was recognized in 2025, a significant reversal from a $7.4 million gain in 2024.
• Incurred a $5.4 million impairment loss on mining equipment in 2025, up from $1.4 million in 2024.
• The direct cost to mine one Bitcoin (including depreciation) increased to $156,522 in 2025, from $86,290 in 2024, exceeding the average revenue per Bitcoin mined ($100,649).
• Received a Nasdaq delisting notification for failing to meet the minimum $1 bid price requirement.
• Cash and cash equivalents decreased to $1.4 million as of December 31, 2025, from $3.4 million in 2024.
• Net cash used in operating activities increased to $14.0 million in 2025, from $11.9 million in 2024.

Risks

• Quarterly operating results may fluctuate due to Bitcoin price volatility, timing and amount of collections on Accounts, inability to acquire additional Accounts, decline in Account portfolio recoveries, and increases in operating expenses.
• Future acquisitions may prove unsuccessful, strain resources, or divert management's attention.
• Volatile or recessionary economic conditions could adversely affect business or access to capital markets.
• Adverse effects of inflation on liquidity, cost structure, and interest rates.
• Heavy reliance on the management team, whose continued service and performance are critical, with some members lacking prior Bitcoin mining experience.
• Need for future financing to sustain and expand operations, which may not be available on acceptable terms or at all, potentially leading to dilution.
• Cash held at financial institutions may exceed federally insured limits, risking loss in case of bank failure.
• Operating results are highly dependent on the price of Bitcoin; significant price declines could lead to substantial investment losses.
• Custodially-held crypto assets may be treated as part of the custodian's insolvency estate in bankruptcy, leading to delays or total loss.
• Bitcoin holdings are subject to cyberattacks, hacking, and unauthorized access, potentially resulting in total loss.
• The company is not registered as an investment company or investment adviser, meaning investors lack protections afforded to clients of registered funds/advisers.
• If Bitcoin or other crypto assets are determined to be securities, the company could face extensive registration, reporting, and compliance obligations, and enforcement actions.
• The Bitcoin treasury strategy may attract heightened regulatory scrutiny, leading to compliance costs and required business strategy changes.
• Limited operating history in Bitcoin mining and a history of operating losses and negative cash flow make business evaluation difficult.
• The uncertain impact of geopolitical and economic events on Bitcoin demand may adversely affect the business.
• Selling Bitcoins to cover expenses at low prices could adversely affect investment returns.
• Risks related to disruptions or failures in the supply chain for Bitcoin hardware and difficulties in obtaining new hardware, including ASIC chip shortages.
• Inability to maintain power and hosting arrangements or secure data center sites could disrupt operations.
• Miners are designed specifically for Bitcoin, making them less adaptable if Bitcoin's value declines or another cryptocurrency becomes dominant.
• The Bitcoin halving events reduce mining rewards, and if Bitcoin's price does not increase proportionally, mining revenue will decrease.
• Transaction fees may decrease demand for Bitcoin and prevent expansion.
• Reliance on third-party mining pool service providers for revenue payouts poses risks of downtime or inaccurate record-keeping.
• The open-source structure of the Bitcoin network protocol means contributors are not directly compensated, potentially leading to inadequate monitoring and upgrades.
• Bitcoins held are not subject to FDIC or SIPC protections.
• Incorrect or fraudulent Bitcoin transactions are irreversible.
• Potential for another cryptocurrency to become more desirable than Bitcoin.
• Bitcoin mining activities are energy-intensive, restricting geographic locations and raising environmental concerns, potentially leading to regulatory restrictions or bans.
• Vulnerability to severe weather conditions and natural disasters, power outages, and industrial incidents.
• Adoption of a different method of validating Bitcoin transactions (e.g., proof of stake) could make mining obsolete.
• Government regulations may limit the ability to recover and enforce collection of specialty finance Accounts.
• Potential regulation under the Consumer Financial Protection Bureau (CFPB) without developed compliance standards.
• Class action suits and other litigation could divert management's attention and increase expenses.
• Insolvency of BLGAL (primary Account servicer) could materially affect financial condition, results of operations, and cash flows.
• Associations do not guarantee the validity, enforceability, or collectability of acquired Accounts.
• All specialty finance Accounts are located in Florida, making the business vulnerable to adverse conditions in the state.
• Foreclosure on an Association's lien may not recoup the full investment in a related Account.
• The company may choose not to pursue foreclosure actions due to prohibitive costs, delaying collection.
• The indeterminate holding period for Accounts reduces liquidity.
• Business model and accounting treatment may result in accelerated expense recognition before corresponding revenues.
• Common shares could be delisted from the Nasdaq Capital Market.
• Future sales of common stock by affiliates or other stockholders may depress the stock price.
• Market price and trading volume of shares may be volatile.
• Securities analysts may not initiate coverage or may issue negative reports.
• The company has the right to designate and issue additional shares of preferred stock, potentially diluting common stockholders.
• Failure to establish and maintain adequate internal controls or recruit necessary accounting personnel could adversely affect financial reporting.

Future Outlook

The company's Bitcoin treasury strategy for the next twelve months includes acquiring and holding Bitcoin, utilizing cash flows from operations exceeding working capital requirements, and periodically issuing equity or debt securities or engaging in other capital raising transactions to purchase Bitcoin. Management will continue to monitor market conditions for additional Bitcoin purchases and may periodically sell Bitcoin for general corporate purposes or tax benefits. The company also plans to consider strategies to create income streams or generate funds using its Bitcoin holdings. No specific target for Bitcoin holdings has been set. The company does not currently plan to engage in regular Bitcoin trading (beyond conversion to USD) or hedging activities, though future hedging would be discretionary. The company expects to enter into additional agreements to purchase more miners in the coming years and plans to grow its hashrate by acquiring newer, more effective, and energy-efficient miners. The company anticipates increased regulation in cryptocurrency mining in the nearand long-term.

Management Comments

• Management evaluates all cybersecurity matters semi-annually, providing recommendations for information technology use and protection, including data governance, privacy, compliance, and cybersecurity.
• Decisions to purchase or sell Bitcoin are made on a case-by-case basis at management's discretion, considering liquidity, general market conditions, and anticipated cash requirements.
• Management monitors the Bitcoin market in real-time to determine decisions to hold or sell Bitcoins.
• Management makes real-time determinations on the need and timing to curtail mining operations when power prices exceed the value received for Bitcoin rewards.

Industry Context

StockSavvy.ai notes that LM Funding America's performance is heavily influenced by the volatile cryptocurrency market, particularly Bitcoin prices and mining economics. The significant increase in the cost to mine one Bitcoin (including depreciation) to $156,522 in 2025, exceeding the average revenue of $100,649 per Bitcoin mined, highlights a critical challenge in the current mining environment. This suggests that LMFA's mining operations were unprofitable on a fully-loaded cost basis in 2025, a trend seen across some less efficient miners in periods of lower Bitcoin prices or increased network difficulty. The company's strategy of acquiring and holding Bitcoin, funded by capital raises, aligns with a long-term bullish view on Bitcoin, a common approach among publicly traded miners. However, the reliance on equity and debt financing for Bitcoin purchases and acquisitions, coupled with widening losses, indicates a high capital intensity business model. The Nasdaq delisting notice reflects broader market pressures on smaller-cap crypto-related companies, which often struggle with liquidity and valuation metrics during market downturns or increased regulatory scrutiny. The shift of Bitcoin mining to North America after China's ban in 2021 continues to shape the competitive landscape, with LMFA competing against larger, more established players like CleanSpark and Bitfarms. The upcoming Bitcoin halving in April 2028 is a critical industry event that will further reduce mining rewards, necessitating continuous investment in more efficient hardware and strategic energy management to maintain profitability.

Comparison to Industry Standards

• LMFA's total hashing capacity of 0.75 EH/s as of December 31, 2025, is significantly smaller compared to major publicly traded competitors like CleanSpark, Inc. (which reported 17.0 EH/s as of December 2025 in its filings) or Bitfarms Ltd (which reported 6.5 EH/s as of December 2025). This indicates LMFA operates at a much smaller scale, potentially impacting its ability to achieve economies of scale in energy procurement and miner acquisition.
• The direct cost to mine one Bitcoin (including depreciation) of $156,522 in 2025, compared to an average revenue of $100,649 per Bitcoin mined, suggests LMFA's mining operations were not profitable on a fully-loaded basis. This contrasts with some industry leaders who aim for significantly lower all-in costs per Bitcoin to maintain profitability even during market downturns. For example, some larger miners have reported all-in costs per Bitcoin in the range of $30,000-$50,000 in recent periods, though direct comparisons are complex due to varying accounting methods and operational structures.
• LMFA's reliance on capital raises for Bitcoin purchases and acquisitions, alongside widening net losses, indicates a high capital burn rate relative to its operational scale. Larger competitors often have more diversified revenue streams, stronger balance sheets, or more established access to lower-cost capital, allowing them to weather market volatility more effectively.
• The Nasdaq delisting notice for LMFA's common stock due to bid price non-compliance is a significant concern not typically faced by the larger, more stable industry players mentioned (e.g., CleanSpark, Bitfarms, Iris Energy), which generally maintain higher stock prices and market capitalizations.

Corporate Governance

Legal Proceedings

• US Digital Mining and Hosting Co. LLC v. Uptime Armory, LLC and Bit5ive, LLC: LMFA filed an action in Florida circuit court alleging breach of contract and violation of the Florida Deceptive and Unfair Trade Practices Act, seeking $3.15 million for non-delivery of 18 POD5ive containers. The action is stayed, and parties are in confidential arbitration. The arbitrator ruled in favor of US Digital's dispositive motions. Uptime, Uptime Hosting, LLC, and Bit5ive, LLC have filed for Assignment for the Benefit of Creditors, with US Digital's Proof of Claim for $3.2 million filed.
• US Digital Mining and Hosting Co, LLC v. Uptime Hosting, LLC: LMFA filed a legal action in Florida circuit court for the return of an $0.8 million deposit and other damages, alleging breach of contract and violation of the Florida Deceptive and Unfair Trade Practices Act. The complaint was amended to include additional allegations against multiple defendants for fraudulent transfer and asset conversion.
• Commodity Futures Trading Commission v. Traders Domain FX LTD d/b/a The Traders Domain, et al.: The CFTC filed an enforcement action in U.S. District Court, naming Algo Capital LLC and its insiders/affiliates. Claims against Robert D Collazo, Uptime, Uptime Hosting LLC, Bit5ive LLC, Block Consulting Services, LLC, 6301 Southwest Ranches LLC are now part of this CFTC Action, with a receiver appointed to identify and recover assets. The likelihood and amount of recovery for the company's outstanding claims cannot be estimated.

Related Party Transactions

• BLG Association Law, PLLC (BLGAL), a law firm 50% owned by the company's CEO and Chairman, Bruce M. Rodgers, serves as the primary law firm for servicing and collecting the company's specialty finance Accounts.
• The company pays BLGAL approximately $516 thousand annually for legal services.
• The company shares office space, personnel, and related common expenses with BLGAL, charging BLGAL approximately $30 thousand annually for the office sub-lease.
• Amounts payable to BLGAL were approximately $48 thousand as of December 31, 2025.

Stakeholder Impact

• Shareholders: Face significant dilution risk from ongoing equity financings and potential loss of investment due to widening losses and the Nasdaq delisting threat. The stock repurchase in October 2025 aimed to return value but was followed by further dilution from December offerings.
• Employees: The company had 16 full-time employees as of March 31, 2026, with increased staff costs and payroll due to non-cash stock compensation and adding staff at mining sites. Equity incentive plans are in place to attract and retain talent.
• Customers (Associations in specialty finance): Continue to benefit from the company's financial products and collection services for delinquent assessments, including the New Neighbor Guaranty program.
• Creditors: The company has significant debt, including secured loans from Brown Family Enterprises LLC, SE & AJ Liebel Limited Partnership, and Galaxy Digital LLC, with Bitcoin pledged as collateral. Extensions of maturity dates indicate ongoing liquidity management.
• Suppliers (Bitcoin miner manufacturers, energy providers): The company relies on a few manufacturers like Bitmain for mining machines and faces volatile energy prices, impacting operational costs and supply chain risks.

Next Steps

• Regain compliance with Nasdaq's minimum bid price requirement by July 6, 2026.
• Hold the 2026 Annual Meeting of Shareholders on June 16, 2026.
• Continue to acquire and hold Bitcoin, using cash flows from operations and potentially issuing equity or debt securities.
• Monitor market conditions for additional Bitcoin purchases and consider strategies to generate income from Bitcoin holdings.
• Enter into additional agreements to purchase more energy-efficient miners to grow hashrate.
• Address ongoing legal proceedings related to the Uptime Purchase Agreement and Uptime Hosting Agreement matters, and the CFTC Enforcement Action.

Key Dates

Recommendation

LM Funding America, Inc. presents a highly concerning investment profile. The company reported a substantial increase in net losses, with the direct cost to mine one Bitcoin significantly exceeding the average revenue generated, indicating fundamental unprofitability in its core Bitcoin mining operations on a fully-loaded basis. The Nasdaq delisting notification poses an immediate and severe threat to liquidity and investor confidence. While the company has raised capital and expanded its mining capacity, these efforts are overshadowed by widening losses, significant impairment charges, and ongoing reliance on external financing. The high volatility of Bitcoin, coupled with the company's limited hedging, exposes it to extreme market risks. The specialty finance segment, while stable, is too small to offset the losses from mining. Given the severe financial deterioration, operational challenges, and regulatory risks, a seasoned investor would likely recommend a strong sell.

Keywords

Bitcoin mining, Cryptocurrency, Digital assets, SEC filing, 10-K, Financial results, Nasdaq compliance, Specialty finance, LM Funding America, LMFA, Bitcoin treasury, Hashrate, Mining equipment, Capital raise, Debt financing, Risk factors, Corporate governance, Financial reporting