Sphere 3D Corp. Annual Report - How They Did This Year

I’m putting together this guide to help you make sense of Sphere 3D Corp.’s latest annual report. I’ve broken down the complex details so you can see how the company is actually performing.

1. What does this company do?

Sphere 3D is a Bitcoin mining company. They use high-powered computer servers, called ASICs, to solve complex puzzles. By running roughly 10,000 to 12,000 active miners, they secure the Bitcoin network and earn Bitcoin as a reward. Their profit depends heavily on the price of Bitcoin and the cost of electricity.

2. Major changes and strategy

The company is in a "transition phase." They intentionally slowed production in 2025 to focus on three goals:

• Upgrading their gear: They are swapping old machines for high-performance models like the Antminer S21. Their efficiency improved from 27.1 joules per terahash (J/TH) in 2024 to 22.0 J/TH in 2025. They aim to reach 19.0 J/TH by the end of 2026 to stay competitive.
• Owning their power: They opened an 8-megawatt facility in Iowa. By moving away from third-party hosting, they cut their average power costs by 15%. This helps them stay profitable even when Bitcoin prices drop.
• Big merger news: In March 2026, they announced a merger with Cathedra Bitcoin. This all-stock deal aims to create a larger company with a total capacity of over 5 exahashes per second (EH/s), giving them more bargaining power with hardware makers.

3. Financial health and your ownership

In late 2025, the company performed a "1-for-10 reverse stock split." They combined every 10 shares into one to boost the price per share and meet Nasdaq’s listing rules.

How did they perform? Production dropped significantly. They mined 111.6 Bitcoin in 2025, down 61% from 286.3 in 2024. This happened because the "halving" event cut rewards in half, and they took machines offline to move to the Iowa facility. By the end of 2025, they held 37.3 Bitcoin, worth about $3.3 million.

Because the company is currently losing money, they use an "At-the-Market" (ATM) program. They sell up to $8 million in new stock to pay for operations. This keeps the company running, but it means more shares are issued, which reduces your ownership percentage.

4. Key risks

• The "Mining Race": As more miners join the network, it gets harder to earn rewards. Sphere 3D must grow faster than the industry average to keep its share.
• Execution Risk: Merging with Cathedra is complex. If the deal is delayed or they fail to save the expected costs, the company could be left with too much debt.
• Dilution: Selling new shares to pay for electricity and equipment reduces the value of your existing shares, which may limit stock gains even if Bitcoin prices rise.
• Regulatory and Energy Risk: Changes in local power laws or new environmental taxes in Iowa could hurt their bottom line.

5. The Bottom Line

Sphere 3D is betting that owning their power and using better hardware will lower their costs and help them survive market swings. They are currently rebuilding, choosing long-term efficiency over short-term production. The merger with Cathedra is the most important factor to watch. Success depends on whether the new, larger company can scale quickly while managing the constant issuance of new shares.

Investor Checklist:

• Watch the merger: Keep an eye on the Cathedra deal—it is the primary driver for their future scale.
• Monitor the ATM: Check future filings to see how much more stock they are selling to fund operations, as this directly impacts your share value.
• Track efficiency: Look for updates on their J/TH numbers in future quarterly reports to see if they are hitting their 19.0 target.