Bit Digital, Inc. (BTBT) Q2 2025 Earnings Call Transcript

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Overview

The earnings call highlights strong growth in cloud services and strategic shifts towards Ethereum staking, both positively viewed by the market. The Q&A section reveals optimism about regulatory environments and plans to reduce G&A expenses significantly, further enhancing financial health. Although management was vague on some strategic details, the overall sentiment is positive, especially with the focus on non-dilutive financing and improved margins. The absence of a market cap suggests a neutral impact, leading to a prediction of a positive stock price movement.

Key Financial Performance

Total Revenue $25.7 million, a decrease from $29 million in the same quarter last year. The decline is attributed to lower digital asset mining revenue.

Digital Asset Mining Revenue $6.6 million, down 59% year-over-year. The decrease is due to the April 2024 halving, higher network difficulty, and a lower active hash rate.

Cloud Services Revenue $16.6 million, up 33% compared to the prior year quarter. The increase was driven by the commencement of new customer contracts.

Colocation Services Revenue $1.7 million, compared to none in the same period last year, as the business was launched in late 2024.

Ethereum Staking Revenue $0.4 million, down about 2% year-over-year. Higher staking rewards were offset by a lower realized Ethereum price during the quarter.

Cost of Revenue (excluding depreciation) $13.2 million, compared to $15.2 million a year ago and $12.8 million in Q1. The decrease reflects cost management efforts.

Gross Profit $12.5 million, with a gross margin of about 49%, up 80 basis points from the prior year quarter.

General and Administrative Expenses (G&A) $19.7 million, compared to $5.5 million during the same quarter last year. The increase includes $5.5 million in stock-based awards tied to milestone achievements and certain consulting and legal-related expenses, which are expected to be nonrecurring.

Net Income $14.9 million or $0.07 per diluted share, compared to a net loss of $12 million in the same year quarter. The improvement includes a $27.2 million gain on digital assets.

Adjusted EBITDA $27.8 million, compared to negative $3.8 million a year ago. This includes a $27.2 million gain on digital assets.

Cash and Cash Equivalents $181.2 million as of June 30.

Total Digital Assets $91.2 million, consisting of Ethereum and approximately 280 Bitcoin. Subsequent to quarter end, the Bitcoin position was sold to acquire Ethereum.

Total Liquidity $273 million as of June 30, including USDC. The company remains debt-free.

CapEx $82 million, primarily related to legacy HPC commitments for the WhiteFiber business, including the purchase of the North Carolina 1 data center site infrastructure development and GPU procurements.

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Operating Highlights

Transition to Ethereum treasury and staking platform: Bit Digital has shifted its focus to becoming a dedicated Ethereum treasury and staking platform, holding approximately 121,000 ETH as of August 11, 2025.

WhiteFiber IPO: Bit Digital completed the IPO of WhiteFiber, transforming it into a stand-alone AI infrastructure company. Bit Digital retains a 74.3% ownership stake, which may drop to 71.5% if the green shoe is exercised.

Ethereum staking growth: Bit Digital increased its staked ETH to approximately 105,000 ETH as of August 11, 2025, earning 166.8 ETH in staking rewards during Q2 2025.

Bitcoin mining business exploration: The company is exploring strategic alternatives for its Bitcoin mining business, including potential sale or winding down.

Revenue performance: Total revenue for Q2 2025 was $25.7 million, with digital asset mining revenue at $6.6 million and cloud services revenue at $16.6 million.

Cost management: Cost of revenue (excluding depreciation) was $13.2 million, down from $15.2 million a year ago. Gross profit was $12.5 million with a gross margin of 49%.

Focus on Ethereum: Bit Digital aims to build the largest institutional ETH balance sheet in public markets, transitioning from Bitcoin mining to Ethereum staking.

Capital allocation strategy: The company plans to scale its ETH position through operational cash flow, market access, and strategic capital market alternatives.

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Risk or Challenges

Transition to Ethereum Treasury and Staking Platform: The company is undergoing a significant transformation, which includes transitioning to an Ethereum treasury and staking platform. This shift involves risks such as execution challenges, market volatility in Ethereum prices, and potential regulatory uncertainties surrounding digital assets.

Bitcoin Mining Business Wind-Down: The company is exploring strategic alternatives for its Bitcoin mining business, including selling or winding it down. This decision could lead to operational disruptions, loss of revenue from Bitcoin mining, and challenges in managing hosting contracts and fleet efficiency during the transition.

Dependence on Ethereum Market: The company's strategy heavily relies on the Ethereum market, which is subject to price volatility, regulatory changes, and competition. Any adverse developments in the Ethereum ecosystem could significantly impact the company's financial performance.

Regulatory Risks: While regulatory clarity has improved, the company remains exposed to potential changes in laws and regulations affecting digital assets, which could impact its operations and strategic plans.

Capital Allocation and Financing Risks: The company plans to scale its Ethereum position through operational cash flow, market access, and other capital sources. This strategy involves risks related to capital market conditions, shareholder approval for increasing authorized share count, and potential dilution of shares.

WhiteFiber Ownership and Monetization: The company retains a significant ownership stake in WhiteFiber, which it plans to monetize over time. This strategy carries risks related to market conditions, timing of sales, and potential impact on shareholder value.

Operational and Strategic Execution Risks: The company faces challenges in executing its new strategy, including maintaining a strong liquid balance sheet, achieving scalable staking yields, and managing the transition from Bitcoin mining to Ethereum staking.

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Guidance & Outlook

Transition to Ethereum Treasury and Staking Platform: Bit Digital has transitioned to an Ethereum treasury and staking platform, aiming to build one of the largest institutional ETH balance sheets in the public markets and generate scalable staking yield for shareholders.

WhiteFiber IPO and Ownership: Bit Digital completed the IPO of WhiteFiber, now a stand-alone AI infrastructure company. Bit Digital retains approximately 74.3% ownership, which may drop to 71.5% if the green shoe is exercised. The company plans to unwind its position in WhiteFiber over time to maximize shareholder value.

Bitcoin Mining Business Strategy: Bit Digital is exploring strategic alternatives for its Bitcoin mining business, including selling or winding it down. The company will not invest in additional mining units and plans to focus on Ethereum for better long-term returns.

Scaling Ethereum Position: Bit Digital plans to scale its Ethereum position through operational cash flow, opportunistic market access, and other shareholder-aligned capital sources. The company aims to grow its ETH holdings and staking yield while maintaining a strong liquid balance sheet.

Capital Market Alternatives: The company is exploring capital market alternatives to raise further capital for purchasing additional ETH in a non-dilutive manner. This includes a proposal to increase authorized share count to support its ETH treasury strategy.

Regulatory Developments and Institutional Adoption: Bit Digital expects broader institutional adoption of Ethereum due to regulatory clarity, including the GENIUS Act and the CLARITY Act, which strengthen Ethereum's role in digital payments and affirm its status as a digital commodity.

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Shareholder Return Plan

Dividend Program: No specific dividend program was mentioned in the transcript.

Share Buyback Program: The company does not currently have a share buyback program in place. However, they are open to considering one in the future if their shares trade at a meaningful discount, even if it requires reallocating ETH holdings.

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Key Q&A

Q:Can you speak to the growing acceptance of Ethereum staking among institutional investors and how you see this business model developing over time?

A:Samir Tabar explained that Ethereum staking is a smart move for accumulating ETH and generating yield. He emphasized that broader adoption validates the asset and benefits participants. The company has been actively staking ETH for years and aims to compound value with a productive treasury. They also own a large stake in WhiteFiber, which provides a potential source of non-dilutive capital to grow ETH holdings. He highlighted the advantages of ETH treasury plays, including staking economics, which ETFs cannot capture.

Q:Will G&A expenses return to a normalized level, or will they remain higher going forward?

A:Erke Huang stated that G&A expenses will drop substantially as many costs were related to the acquisition of Enovum and IPO expenses for WhiteFiber. Samir Tabar added that the stand-alone digital cost structure will be leaner, with fewer business lines, people, and infrastructure spend. He noted that second-quarter G&A included one-time and nonrecurring items, and corporate expenses are expected to trend down.

Q:Why is there limited discussion about WhiteFiber despite its significance?

A:Samir Tabar explained that WhiteFiber is a separate operating company post-IPO, with its own team, call, and website. Bit Digital owns approximately 71.5% to 74.3% of WhiteFiber, and the shares are subject to a 6-month lockup. The company views the stake as a strategic and financial asset and plans to unwind it opportunistically over time. He emphasized the need to keep the companies separate due to their different narratives and operations.

Q:Beyond ETH purchases, how can you support the Ethereum ecosystem, and how do you plan to market the platform amidst competition?

A:Samir Tabar mentioned that the company was limited in marketing due to the WhiteFiber IPO quiet period, but they plan to reboot their ETH treasury play and increase visibility. They aim to capture mind share and compete on narrative while continuing to buy ETH. He acknowledged the need to catch up on marketing efforts due to the IPO.

Q:What are your thoughts on the regulatory framework for crypto and Ethereum?

A:Samir Tabar expressed optimism about the regulatory environment, noting a friendlier SEC and positive developments like the GENIUS Act and CLARITY Act. He highlighted Ethereum's technological advantages, including smart contracts and its potential to rewrite the financial system. He also noted the growing adoption of stablecoins, many of which are built on Ethereum.

Q:What is your strategy for winding down the Bitcoin mining business?

A:Samir Tabar stated that the company is winding down its Bitcoin mining business to focus on Ethereum. They are not investing in new machines and expect active hash rate and revenue to decline as hosting contracts expire and older machines become unprofitable. They recently deployed efficient S21 units to maintain positive margins during the wind-down. The strategy is to maximize cash flow and minimize disruption while reallocating resources to the ETH treasury play.

Q:Can you provide details on headcount and SG&A reductions?

A:Samir Tabar and Erke Huang explained that most G&A expenses and personnel were related to WhiteFiber, which now operates separately. Approximately 70% of personnel transitioned to WhiteFiber. Bit Digital will operate with a leaner structure, and SG&A expenses are expected to decrease significantly.

Q:Who is managing the executive offices for Bit Digital and WhiteFiber?

A:Samir Tabar clarified that the operational teams for Bit Digital and WhiteFiber are separate. WhiteFiber's data center and cloud teams operate independently, with leadership from Billy and Ben Lamson, respectively. The overlap is limited to strategic, IR, and financial allocation roles involving Samir, Cam, and Erke.

Q:Who manages Ethereum staking, and what are the costs?

A:Erke Huang stated that Ethereum staking is managed through partners like Fireblocks and Figment for native staking, and Lido for liquid staking. Native staking yields about 3%, and liquid staking offers slightly higher returns. Costs are less than 10% in terms of EBIT margin. The company is currently not planning to bring validator node operations in-house.

Q:Review of Unclear Management Responses

A:Management avoided providing specific timelines or detailed plans for unwinding the WhiteFiber stake and monetizing shares. They also did not offer clear guidance on the long-term strategy for Ethereum staking operations or the exact cost structure post-WhiteFiber separation.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

BTBT Transcript

Bit Digital, Inc. (BTBT) Q3 2025 Earnings Call Transcript

Positive11-14

The earnings call presents a positive outlook with strong financial performance, including a significant net income turnaround and improved EBITDA. The strategic focus on Ethereum staking, with clear advantages over competitors, adds to the positive sentiment. Liquidity is robust, supporting growth strategies. The Q&A session reinforces confidence in Ethereum's security and regulatory clarity, and management's focus on non-dilutive capital raising is positive. While there are some uncertainties in WhiteFiber's contract timelines and staking yield specifics, overall sentiment is positive, anticipating a stock price increase in the short term.

Bit Digital, Inc. (BTBT) Q2 2025 Earnings Call Transcript

Positive8-19

Bit Digital, Inc. (NASDAQ:BTBT) Q1 2025 Earnings Call Transcript

Unknown5-20

Despite strong revenue growth in HPC and cloud services, the overall financial performance was weak with a 17% revenue decline and significant losses. Additionally, risks such as supply chain challenges, decreased Bitcoin mining revenue, and financing delays overshadow positive developments like partnerships and cloud service expansion. The Q&A revealed uncertainties and management's lack of clarity on key issues, further contributing to a negative sentiment. The stock is likely to experience a negative reaction due to these factors, particularly the financial losses and market risks.

Earnings call transcript: Bit Digital Q1 2025 shows stock rise despite EPS miss

Unknown5-16

The earnings call reveals mixed signals: strong revenue growth in HPC and cloud services, but significant declines in Bitcoin mining revenue and a high net loss. The Q&A shows positive market reception to rebranding and demand growth, but also highlights delays and unclear management responses. The overall sentiment is neutral, as positive aspects are offset by financial challenges and uncertainties.

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