CryptoStar : Q2 2022 Management Discussion and Analysis

CRYPTOSTAR CORP.

Management Discussion and Analysis

For the Three and Six Months Ended June 30, 2022

(Expressed in U.S. dollars)

This management discussion and analysis ("MD&A") of the results of the operations and financial position of CryptoStar Corp. and its subsidiaries (the "Company" or "CryptoStar") is dated as of August 26, 2022 and should be read in conjunction with the Company's condensed interim consolidated financial statements (unaudited) and the related notes for the three and six months ended June 30, 2022. All amounts are expressed in United States dollars ($) unless otherwise stated.

Management's Responsibility

The Company's management is responsible for the preparation and presentation of the condensed interim consolidated financial statements (unaudited) and the MD&A. This MD&A has been prepared in accordance with the requirements of securities regulators, including National Instrument 51-102 of the Canadian Securities Administrators. Information provided in this report, including the condensed interim consolidated financial statements (unaudited), is the responsibility of management. In the preparation of these statements, estimates and judgements are sometimes necessary to make a determination of future value for certain assets or liabilities. Management believes such estimates and judgements have been based on careful assessments and have been properly reflected in the accompanying condensed interim consolidated financial statements (unaudited). Management maintains a system of internal controls to provide reasonable assurances that the Company's assets are safeguarded and to facilitate the preparation of relevant and timely information.

Non-IFRS Measures

This MD&A presents certain non-IFRS ("IFRS" refers to International Financial Reporting Standards) financial measures to assist readers in understanding the Company's performance. These non-IFRS measures do not have any standardized meaning and therefore are unlikely to be comparable to similar measures presented by other issuers and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

The following terms are used, which are not found in the Chartered Professional Accountants of Canada Handbook and do not have a standardized meaning under IFRS:

• "Net gain from operations" represents gross profit or loss excluding depreciation and amortization.
• "EBITDA" represents net income or loss excluding net finance income or expense, income tax or recovery, depreciation, and amortization.
• "Adjusted EBITDA" represents EBITDA adjusted to exclude non-cashshare-based compensation, fair value loss or gain on remeasurement of foreign currency and digital assets, and costs associated with one-time or non-recurring transactions.

The Company uses these non-IFRS measures to supplement the analysis and evaluation of operating performance as it provides an indication of the operational results generated by its business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration asset depreciation and amortization and it excludes items that could affect the comparability of our operational results and could potentially alter the trends analysis in business performance. Excluding these items does not necessarily imply they are non-recurring, infrequent or unusual. Net gain from operations, EBITDA and Adjusted EBITDA are also used by some investors and analysts for the purpose of valuing a company. Investors are cautioned that Net gain from operations, EBITDA and Adjusted EBITDA should not be construed as an alternative to operating earnings or net earnings determined in accordance with IFRS as an indicator of the Company's financial performance or as a measure of the Company's liquidity and cash flows. Net gain from operations, EBITDA and Adjusted EBITDA do not take into account the impact of working capital changes, capital expenditures, debt principal reductions and other sources and uses of cash, which are disclosed in the condensed interim consolidated statements of cash flows.

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CRYPTOSTAR CORP.

Management Discussion and Analysis

For the Three and Six Months Ended June 30, 2022

(Expressed in U.S. dollars)

Non-IFRS Measures (continued)

See "Reconciliation of Non-IFRS Measures" section of this MD&A for reconciliations of non-IFRS measures to IFRS measures.

Description of Business

CryptoStar operates in the distributed ledger technology space, utilizing specialized equipment ("miners") to perform computationally intensive cryptographic operations to validate transactions on the Blockchain (a process known as "mining"), receiving digital currencies (primarily Bitcoin and Ethereum). CryptoStar has cryptocurrency mining operations with data centres located in Canada and the USA and is currently dedicated to becoming one of the lowest cost cryptocurrency producers in North America. The Company also provides equipment hosting services to customers worldwide, for which services the Company receives monthly hosting fees, as well as sells miners to customers.

CryptoStar Corp. was incorporated under the Ontario Business Corporations Act on January 6, 2017. The registered and head office of the Company is located at 181 Bay Street, Suite 4400, Toronto, Ontario, Canada M5J 2T3. CryptoStar Corp.'s common shares are listed on the TSX Venture Exchange ("TSXV") under the trading symbol "CSTR" and the OTCQB Venture Market under the trading symbol "CSTXF".

Q2 2022 Highlights

Significant events and operating highlights for the three months ended June 30, 2022 include the following:

• On April 5, 2022, the Company announced the expansion of its self-mining Hashrate and operations in Quebec, Canada. The Company also provided an update on operations.
  Redeployment of Hashrate and Expansion in Quebec:
  In March 2022, the Company secured an aggregate mining capacity of 1.5 megawatts (MW) of green, hydro-based power in Quebec, Canada, effective April 1, 2022. As at April 1, 2022, the Company had successfully redeployed 88% of its ASIC self-mining Hashrate equating to 44.35 PH/s and 52% of its GPU self-mining Hashrate equating to 39.16 MH/s from ASIC and GPU miners that were relocated from Alberta, Canada in its data centres in Quebec, Canada.
  In addition, through a subsidiary, the Company continued to make progress on its expansion of operations in Quebec, Canada, and on its application with Hydro Quebec to secure an additional 5 MW of power at its data centre.

Self-Mining Operations:

1. As at April 5, 2022, the Company had received and deployed at its award-winning data centre facilities in Utah, USA, 300 of the 600 high performance ASIC miners previously announced on September 24, 2021, representing an additional self-mining Hashrate of 26.48 PH/s.

1. As at April 5, 2022, the Company had an aggregate self-mining Hashrate of 78.8 PH/s from ASIC miners and 121,944 MH/s from GPU miners running at its data centres.

1. The 78.8 PH/s and 121,944 MH/s of existing self-mining Hashrate was contributing USD $674,342.98 per month in self-mining revenue for CryptoStar. (Source: https://whattomine.com/ Mining metrics are calculated based on a BTC - USD exchange rate of 1 BTC = $46,609.30 and ETH - USD exchange rate of 1 ETH = $3,515.04 updated at 2022-04-05 11:07:26 UTC).

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CRYPTOSTAR CORP.

Management Discussion and Analysis

For the Three and Six Months Ended June 30, 2022

(Expressed in U.S. dollars)

Q2 2022 Highlights (continued)

1. The previously announced purchase of 600 high performance ASIC miners to be delivered in 6 equal tranches of 100 miners during calendar 2022 commencing in January 2022 and ending in June 2022, continued to be delivered with three deliveries remaining. This would increase the Company's self-mining Hashrate from ASIC miners by a further 8.8 PH/s each delivery month.

1. The Company anticipated that it would redeploy the remaining self-mining Hashrate of 11.6 PH/s from ASIC miners and 54,826 MH/s from GPU miners that were previously running in Alberta, Canada as expeditiously as possible in Q2, 2022.

Hosting Operations:

1. As at April 5, 2022, the Company had Equipment Hosting Agreements for an aggregate mining capacity of 12 MW located at its award-winning data centre facilities in Utah, USA, contributing annual hosting revenues for the Company of USD$1.7 million.

LOI with Kansas Partner:

1. The Company continued to perform diligence on the potential power supply agreement with a Kansas-based energy company as previously announced on February 10, 2022.

Alberta Operations:

1. The natural gas power generation site of 611890 Alberta Inc. DBA Avila Energy (the "Alberta Partner") remained shut down. Litigation against the Alberta Partner et al. was ongoing with respect to the non-compliance with terms of the power supply agreement for up to 30 MW and damages arising therefrom.

Future Growth:

1. The Company planned to continue to further expand its self-mining inventory of mining hardware. Additional ASIC miners had been ordered for delivery in Q2, 2022 and further orders for mining hardware would be placed using astute capital management strategies based upon prevailing market conditions for delivery in Q2, 2022 and beyond.

1. The Company planned to continue to further expand its data centre operations in North America by partnering with large cryptocurrency miners seeking operating locations in North America. The Company continued to consider and perform diligence on several potential transactions and opportunities.

Financial Position:

1. The Company was in a strong financial position and was well capitalized.

1. As at April 5, 2022, the Company held 538.38 ETH, 86.72 BTC and USD$2.7 million (CAD$3.4 million) in cash.

1. Additionally, the Company had made payments and deposits for ASIC miners, buildings and infrastructure equipment of USD$4.9 million (CAD$6.2 million).

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CRYPTOSTAR CORP.

Management Discussion and Analysis

For the Three and Six Months Ended June 30, 2022

(Expressed in U.S. dollars)

Q2 2022 Highlights (continued)

• On June 20, 2022, the Company provided an update on operations and announced stock option grants.
  Self-Mining Operations:

1. As at June 20, 2022, the Company had an aggregate self-mining Hashrate of 93.0 PH/s from ASIC miners and 136,850 MH/s from GPU miners running at its data centres.

1. The 93.0 PH/s and 136,850 MH/s of existing self-mining Hashrate was contributing USD$312,902 per month in self-mining revenue for CryptoStar. (Source: https://whattomine.com/ Mining metrics are calculated based on a BTC - USD exchange rate of 1 BTC = $20,874.86 and ETH - USD exchange rate of 1 ETH = $1,139.14 updated at 2022-06-20 14:54:49 UTC).

1. 100 high performance ASIC miners of the previously announced purchase of 600 high performance ASIC miners remained to be deployed and a further 100 high performance ASIC miners were scheduled to be delivered in June 2022. This would increase the Company's self-mining Hashrate from ASIC miners by a further 17.6 PH/s.

Expansion in Quebec:

1. The Company secured an additional 0.5 megawatts (MW) of green, hydro-based power in Quebec, Canada effective May 10, 2022. This was in addition to the 1.5 MW of green, hydro- based power secured by the Company in Quebec, Canada, previously announced on April 5, 2022.

1. The Company, through a subsidiary, continued to make progress on its expansion of operations in Quebec, Canada, and on its application with Hydro Quebec to secure an additional 5 MW of power at its data centre.

Hosting Operations:

1. As at June 20, 2022, the Company had Equipment Hosting Agreements for an aggregate mining capacity of 12 MW located at its award-winning data centre facilities in Utah, USA, contributing annual hosting revenues for the Company of USD$1.7 million.

LOI with Kansas Partner:

1. The Company continued to perform diligence on the potential power supply agreement with a Kansas-based energy company as previously announced on February 10, 2022.

Alberta Operations:

1. The natural gas power generation site of 611890 Alberta Inc. DBA Avila Energy (the "Alberta Partner") remained shut down. Litigation against the Alberta Partner et al. was ongoing with respect to the non-compliance with terms of the power supply agreement for up to 30 MW and damages arising therefrom.

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CRYPTOSTAR CORP.

Management Discussion and Analysis

For the Three and Six Months Ended June 30, 2022

(Expressed in U.S. dollars)

Q2 2022 Highlights (continued)

Stock Option Grants:

1. The Company granted an aggregate of 5,000,000 options (the "Options") to an officer of the Company to purchase 5,000,000 common shares (the "Shares") in the capital of the Company pursuant to the Company's stock option plan. The Options will vest in accordance with the following schedule: 25% of the Options will vest at each of the three-month, ten- month, seventeen-month and twenty-four-month anniversary of the grant date. The Options will expire on June 17, 2032 with 2,500,000 Options being exercisable at an exercise price of $0.05 per Share and the remaining 2,500,000 Options being exercisable at an exercise price of $0.10 per Share.

Future Growth:

1. The Company planned to continue to further expand its self-mining inventory of mining hardware. Further orders for mining hardware would be placed using astute capital management strategies based upon prevailing market conditions for delivery in Q3, 2022 and beyond.

1. The Company planned to continue to further expand its data centre operations in North America by partnering with large cryptocurrency miners seeking operating locations in North America. The Company continued to consider and perform diligence on several potential transactions and opportunities.

Financial Position:

1. The Company was in a strong financial position and was well capitalized.

1. As at June 20, 2022, the Company held 649.12 ETH, 105.56 BTC and USD$1.9 million (CAD$2.4 million) in cash.

1. Additionally, the Company had made payments and deposits for ASIC miners, buildings and infrastructure equipment of USD$4.6 million (CAD$6.1 million).

Subsequent Events

• During the subsequent period from July 1, 2022 to August 26, 2022, no common shares were issued by the Company upon the exercise of warrants and 2,300,000 warrants expired.
• As at August 26, 2022, the Company's self-mining revenue run rate is USD$366,921/month and its hosting revenue run rate is USD$177,000/month. Further orders for mining hardware may be placed using astute capital management strategies based upon prevailing market conditions. (Source: https://whattomine.com/ Mining metrics are calculated based on a BTC - USD exchange rate of 1 BTC = $21,319.98 and ETH - USD exchange rate of 1 ETH = $1,649.06 updated at 2022- 08-26 14:47:34 UTC).
• As at August 26, 2022, the Company is in a strong financial position, is well capitalized and holds 79.56 BTC, 550.10 ETH and USD$2.8 million (CAD$3.5 million) in cash. Additionally, the Company has made prepayments and deposits for buildings and infrastructure equipment of USD$4.2 million (CAD$5.4 million).

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