Bit Digital (BTBT) Turns Its Ethereum Stash Into a Lending Machine

• BTBT

On August 13, Bit Digital (NASDAQ:BTBT) reported second-quarter revenue of $32.1 million, up 15% from the prior quarter, while narrowing its net loss to $107.2 million from $146.7 million. But the more interesting move buried in the release wasn’t a growth number. It was how the company chose to fund WhiteFiber’s newest data center: by borrowing against its own Ethereum holdings rather than selling a single coin or issuing new shares.

The Contracts Keep Piling Up

Bit Digital’s infrastructure businesses are doing the heavy lifting. Cloud services revenue jumped 42% from the first quarter to $23.8 million, and colocation revenue for the first half of the year climbed 182% from a year earlier, even before the company’s NC-1 data center campus starts contributing revenue in the third quarter.

Contract liabilities, essentially cash customers have already committed, but the company hasn’t yet recognized as revenue, more than doubled to $143.1 million from $79.6 million at the end of last year, and the backlog behind that number runs to roughly $1.0 billion. Since its last earnings call, WhiteFiber (NASDAQ:WYFI), which is the AI infrastructure and HPC subsidiary of Bit Digital, has signed new multi-year cloud services agreements worth more than $540 million in aggregate contract value, a pipeline management says could generate over $200 million in annualized revenue once fully deployed.

The company also found an unusual way to pay for it. Rather than selling Ethereum or issuing new equity at either company, Bit Digital borrowed $50 million against a portion of its ETH treasury and used that liquidity to originate a credit facility of up to $150 million for WhiteFiber, guaranteed by WhiteFiber’s parent and reviewed by independent committees at both companies. That structure let the company fund NC-1’s buildout while keeping its coins and its ownership stake intact. Operating cash flow backed up the story, rising 33% to $46.8 million over the first six months of the year.

Where the Old Business Fades

Bit Digital’s older business lines are shrinking, not growing. Digital asset mining revenue fell 58% year over year over the first half. Sequentially, the drop was just as steep, with bitcoin mined per quarter falling from 48.1 to 32.3, with management saying no meaningful capital will go toward the segment going forward. Ethereum staking revenue fell from $2.3 million to $0.9 million in a single quarter, a decline the company attributed to repositioning coins into liquid staking and to lower average ETH prices, a reminder that this revenue line moves with the crypto market as much as with the business.

Source: finance.yahoo.com