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.
The accounting behind the ETH treasury is also getting harder to parse. The company recorded a $46.0 million non-cash impairment on its liquid staked ETH holdings during the quarter, one of several non-cash items that made up roughly $86 million of the $107.2 million net loss. Debt is climbing too. Convertible notes rose to $336.2 million, and the new WhiteFiber facility layers up to $150 million more on top, collateralized in part by $105.6 million of the company’s own ETH holdings. Even CEO Sam Tabar acknowledged the disconnect this creates, noting that operating results improved through the quarter while the stock’s valuation did not, and that the board is now evaluating options to close that gap.
Wall Street’s Split Verdict
Hedge fund ownership climbed from 19 funds to 25 in the most recent quarter, a sign institutional conviction is building rather than fading. Short interest sits at 18.49% of the float, a level that reflects heavy skepticism and enough crowding that any positive surprise could spark a sharp squeeze. The stock trades at a forward price-to-earnings ratio of 23.87 as of September 9, a multiple that assumes real earnings growth from here even as the company’s own chief executive flags a valuation gap. Together, those numbers describe a market that’s adding shares but still betting against the stock in size.
A Balance Sheet Still Being Rebuilt
Bit Digital’s second quarter reads like a company mid-transformation, funding a fast-growing infrastructure business while quietly retiring a mining operation it no longer wants. WhiteFiber’s new contracts still need to convert into the promised $200 million of annualized revenue without straining the debt built to get there. ETH-collateralized borrowing and non-cash swings could keep clouding the picture just as the board tries to convince the market the stock deserves a higher multiple. Rising hedge fund ownership suggests some investors are already positioning for that re-rating.
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