Digi Power X Inc.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report, including the cautionary statement under the caption Cautionary Note Regarding Forward-Looking Statements, Managements Discussion and Analysis of Financial Condition and Results of Operations, the condensed consolidated financial statements and related notes, and the following additional risk factors, you should carefully consider the risks discussed in Part I, Item 1A - Risk Factors in the 2025 Annual Report, as updated and supplemented in Part II, Item 1A Risk Factors in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 (the Q1 Quarterly Report). There have been no material changes with respect to the risk factors disclosed in our 2025 Annual Report and our Q1 Quarterly Report. However, we note that the risks described in this report and , in our 2025 Annual Report are , and in our Q1 Quarterly Report are not the only risks facing the Corporation, and such additional risks and uncertainties that we currently deem to be immaterial or are unknown to us could negatively impact our business, operations and/or financial results.

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Our future contracts with HPC data center customers could subWe expect to require additional financing, including project us to significant liability.

In-level debt financing, to complete the ordinary coursebuildout of business, we have our AI data centered into campus, and aim to continue to enter into, agreements with customers pursuasuch financing may not be available on acceptable terms or at all.

The full deployment to which we provide of Phase 2 (40 MW) of our purpose-built AI data center space, power, environmental controls, physical scampus is conditioned on our security, and connectivityng adequate financing, and we are pursuing products to ject-level debt financing to fund our HPC hostidata center buildout while seeking and colocatito limit dilution customto our shareholders. Thesre contracts typicallyan be no assurance that we will contain indemnification and liability provisions, in addition to service level commitmentmplete any such financing on the terms we currently contemplate, or at all. If we are unable to obtain sufficient financing on acceptable terms, which could potentially imposee may be required to delay, curtail or abandon all or a significant cost on us in the eveportion of our development of losses arisplans, including out of certain breaches of suchr ability to satisfy our obligations under our AI colocation agreements, services to be provided by us or, which could have a material adverse effect on our subcontractors, or from third-party claims. HPC data centbusiness, financial condition and results of operations.

We depend on a limited number customof suppliers, increasludingly are looking to pass through their regulatory obligations NVIDIA, for critical computing equipment and components, and other liabilities to theirany disruption in supply could materially harm outsourced r business.

Our AI data center providers, and we may not be able to GPU-as-a-Service operations depend on a limit our liability ed number of suppliers, particularly NVIDIA, for damages in an evGPUs and related computing equipment of loss suffered by such customers whether as a result of our breach . On June 3, 2026, we committed to purchase approximately $35 million of an agreement or otherwise. If such an event of loss occurred, we could be liable for material monetary damaNVIDIAs next-generation Vera Rubin systems. This reliance on a single supplier for critical computing hardware exposes us to risks including supply shortages, price increases, delayed product releases, changes and could incur signiin product specificant legtions, and potential feechanges in defending against such an action, which could adversely affect our financialthe supplier relationship. NVIDIAs products are in high demand globally, and we may face condmpetition and results of operations.

We may also develop space specifically for HPC data center customers pursuant to agreefrom other purchasers for limited supply. If we are unable to obtain the necessary equipments signed pri on acceptable terms or to beginning or early in the developmentwithin required timeframes, or if NVIDIA experiences process. In those casduction delays or quality issues, if we failour ability to meetexpand our development oNeoCloudz platform, fulfill our obligations under those ae Cerebras Agreements, these customers may be able to terminate their agreements, and we will , and execute our business strategy could be materially and adversely affected.

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Our data center projects may be requiredsubject to find a new customer for this space. In addition, in certain circumstances, we may lease HPC new or rapidly evolving regulatory frameworks, and we may face increased public scrutiny or negative publicity as a result of our data center facilities prior to their completion. If we fail to complete the facilistrategy.

Data centers are increasingly scrutinized by federal, state, and local authorities in a timely manner, the customer may be entitled to terminand have been subject to environmental activists and negative public perception, due to concerns regarding energy consumption, land use, carbon emissions, wate its agreer usage, environment, seekal impacts, damages or penaltieta-sovereignty considerations against us or pursue other remedies and we nd national-security-related issues. Regulators may be rimpose new permitting required to find a new customer for the space. If we are not able to complete an HPC ments, energy-efficiency standards, carbon-reduction mandates, sustainability reporting rules, or operational restrictions specific to data center in a timely manner, if develops, AI infrastructure, or high-density compute environment costs are higher than we currently estimate, our financial condition, resultss. For example, on July 14, 2026, New York State Governor Kathy Hochul signed an executive order barring the construction of onew hyperations and cash flow could be materially adversely affected.

scale data centers using 50 megawatts or more of power for up to one year in the state of New York. Additionally, a customers decision to lease space and power at our facin Texas, Governor Greg Abbott published a letter to the Electric Reliabilities typically involves a significant cy Council of Texas and the Public Utility Commission of Texas, directing the Commitment of resourcesssion to conduct a comprehensive verification and due diligence oaudit of all data centers advancing through the interconnection process within the part of our customers regarding the adequacy of our facilities. As astate before they are approved to move forward. Such governmental actions and result, we may expend significant timgulations, at the federal level or by state and resources in pursuing a particular transactiolocal governments in that may not result in revenue. Economic conditione States of Alabama, New York, and North Carolina, where we are building, or plan to build, our properties, including market downturns and the implecould increase our capital expenditures, delay developmentation of new tariffs and more restrictive trade regul timelines, limit expansion opportunities, limit projects from moving forward through commercializations, may impact customers ability, or require costly modifications to plan fuexisting infrastructure business activ. Any restrictions or new policy inities, which could causatives targeting large-scale customers to slow spendompute operations, including those supporting or delay decision making. OAI/HPC workloads, could limit our opportunities to acquire additional properties and restrict our inability to adequately manage the risks associated with these developments build out our data center operations on any of our existing or future properties, which may adversely affect our data center business, financial  or limit the econdition and resultsomic viability of operur strategic diversifications.

Certain of our agreements with HPC d initiatives. Given the evolving nature of digital asset and data -center customers may include restrregulation, and the difficulty of predictionng the outcomes on providif ongoing HPC data center services to certain third parties, which couldor future governmental actions, we cannot assure you that future regulatory or legislative developments will not have a material adverse effect on our business, prospects, financial condition, and/or results of ooperations.

Certain of the customer agreements Even in that we may enter into may prohibit us from providing HPC data center services to certain third parties, including competitore absence of new regulations of existing HPC data center customers. The existence of such restrictions could hinder our abilir legislation, increased public scrutiny or negative publicity to enter into agreeregarding the developments with addition and environmental impact of HPC data center customers, which cs could have a material, arm our reputation, which may adverse ely affect on our business, financial condition and/or results of operations.