Bit Digital, Inc Q3 FY2024 earnings call

Management Statement and Operational Highlights

• Acquisition of Enovum: In October 2024, acquired Enovum for ~$46 million, vertically integrating HPC operations with a Tier 3 data center. Expect to add 8 megawatts by 2Q 2025 and reach 32 megawatts by year-end.
• GPU Cloud Business: Executed an MSA with Boosteroid, placed initial order of ~300 GPUs, revenue generation to begin by end of November. Expect deployment with Boosteroid to reach ~10,000 GPUs by 2025.
• HPC Pipeline: Actively vetting and negotiating 5-10 deals, with several deals nearing completion. Signed term sheets with new customers, including a month-to-month contract for 64 GPUs ($1.2 million annualized revenue), a 12-month deal for 576 H200s ($10 million revenue), and a 6-month deal for 512 H200s (~$5 million revenue).
• Mining Fleet: Plan to high-grade mining fleet to lower production costs. Currently using ~46 megawatts from Coinmint sites, but will replace with newer-generation machines.

Segment Performance

• Mining Business: Bitcoin production decreased 59% year-over-year to 165.4 Bitcoins. Bitcoin mining revenue was $10.1 million, down 11% year-over-year. Mining margins were underwhelming due to hash price lows and increased electricity costs. Plan to high-grade the mining fleet.
• HPC Services Business: Recognized $12.2 million in revenue in Q3 2024. This business started generating revenue in early 2024.
• ETH Staking: Earned 161.9 Ethereums from native staking rewards, representing approximately $450,000 in revenue.

Guidance

• HPC Revenue Target: Confident of hitting $100 million run rate revenue target for HPC business by year-end 2024.
• Data Center Expansion: Expect to add 8 megawatts by 2Q 2025 and reach 32 megawatts by year-end. Pipeline includes potential 40 megawatts by mid-2025 and 100 megawatts in ~18 months.
• GPU Deployment: Expect deployment with Boosteroid to reach ~10,000 GPUs by 2025.

Risks

• Bitcoin Mining Challenges: Hash price lows, increased network hash rate, and seasonal electricity cost increases impacted mining margins.
• HPC Market Competition: Competitive GPU as a service market with compressed sales cycles and need to pre-order GPUs to compete.
• Digital Asset Volatility: Unrealized losses on digital asset positions, though current asset prices may reverse this in Q4.

Question and Answer

Q: How is the HPC revenue target of $100 million for year-end 2024 being achieved?

A: Reaffirms confidence, with term sheets and MSAs announced, including Enovum contribution, nearly 90% of the way there, with deployment timelines determining final achievement.

Q: Detail on new HPC deals mentioned?

A: Three term sheets, two converted to MSAs. One is 576 H200s for 12 months ($10M revenue), another is 512 H200s for at least 6 months ($5M annualized), and an MSA for 64 GPUs (~$1.2M annualized).

Q: Potential separation of business lines?

A: Suspect separating HPC and digital assets businesses may unlock better valuation, currently studying internally.