Bit Digital, Inc Q1 FY2025 earnings call

Mining Operations

• Affected by 2024 halving event and fleet redeployment program, leading to revenue decline and production drop. However, mining margins expanded sequentially to 21% due to fleet efficiency improvements. Shipments of previously ordered S21 miners resumed, expected to boost hash rate in Q2.

Cloud Services Developments

• Revenue growth driven by new contracts and DNA fund deployments. Gross margins improved as revenue scales. Facing hardware reliability issues with Shadeform partnership, but working to resolve. Anchor customer adjustment of deployment start date managed by using existing cluster if needed.

Data Center Progress

• Montreal II financing nearing completion, validating data center development model. Montreal III on track, Cerebras deployment upcoming. Acquisition of North Carolina property for data center development, with over 500 megawatts of potential capacity in pipeline.

Financial Results

• Total revenue $25.1 million, down 17% y-o-y. Mining revenue $7.8 million, down 64% y-o-y. Cloud services revenue $14.8 million, up 84% y-o-y. Gross profit $12.3 million, gross margin 49%. Adjusted EBITDA negative $44.5 million. Debt-free, CapEx $65 million spent on GPUs, data center infrastructure, etc.

Mining Business

• First quarter 2025 revenue decreased 64% year-over-year and 26% sequentially. Production declined 80% year-over-year to 83 Bitcoins for the quarter. Despite lower production, mining operations remained gross margin positive with margins expanding ~500 basis points sequentially to 21%. Mining represented 31% of total revenue for the quarter, down from 72% in the same period last year. Active hash rate stood at approx. 1.5 exahash by end of March 2025, expected to rebound to ~2.5 exahash in June with fleet efficiency in low 20s.

Cloud Services Business

• Revenue increased 84% year-over-year and 14% sequentially to $14.8 million. Gross margins rebounded ~700 bps sequentially to 59%. Revenue growth supported by new cloud contracts. Initial deployment for DNA fund began generating revenue in April, and expansion with DNA Fund in May added ~$10.8 million in annualized revenue. Marketing B200 cluster to customers for multiyear contract. Anchor customer adjusted start date on 464 B200 deployment, contract represents ~$50 million in annualized revenue for 18 months. Engaged in large contract discussions with potential annualized revenue above $100 million and 3-5 year terms.

Colocation Services with Data Centers

• Segment represents small portion of Q1 revenue but is a major growth engine. Montreal II development timeline shifted, now expects initial capacity online around early to mid third quarter. Secured Montreal III in April, Cerebras deployment to commence in ~two months. Acquired 95-acre property in North Carolina for data center development. Over 500 megawatts of potential capacity under evaluation or negotiation. Nearing finalization of mortgage financing for Montreal II facility.

Cloud Services

• Expect stronger sequential revenue growth in Q2 and continued growth in Q3 2025.

Mining

• Hash rate expected to rebound to ~2.5 exahash in June.

Data Center

• Nearing finalization of mortgage financing for Montreal II facility, expected to announce terms shortly.

Risks

• Mining market share natural decline without heavy reinvestment.
• Hardware reliability issues with Shadeform partnership.
• Uncertainty related to securing acceptable customer contracts for B200 cluster.

Q: On the WhiteFiber rebranding, can you just give us an update of how that's been received in the market? And then I know you're working on a lot of platform initiatives that are somewhat new to the market. Can you just give us any update there?

A: The rebrand has been really well received. Recently launched a new version of the website with fantastic reviews. Have news coming in next couple of weeks about first-to-market technology, waiting on independent third parties to publish benchmarks, and other developments later this year on cross data center workloads.

Q: Do you think that we could take maybe a step back and you could provide a 30,000-foot view on how you see demand from hyperscalers and enterprise users evolving over the next six months or so?

A: Seeing very strong and positive demand from hyperscalers and medium-sized neo clouds for capacity, with some news expected in next couple of months.

Q: You were describing a delay for [customer one] (ph) from June 30 to August 20. One, can you talk a little bit about why -- and then I think you were saying how you were going to use maybe those GPUs for your own book. Just kind of walk us through the options you have there?

A: Maximum allowable date is exercised. If don't score multiyear contracts for current inventory, can use the cluster. Reasons for shifting include internal product development schedule change. Equipment already installed, Ben working on negotiating multiyear contracts and putting B200 compute on-demand with Shadeform.

Q: How should we think about your desire to continue that expansion in the US versus Canada? And secondly, can you just outline when those megawatts could be available, what the ramp will ultimately look like and CapEx expectations?

A: Disclosed acquisition of 95-acre property in North Carolina, subject to closing conditions. Too early for details. Evaluating and negotiating over 500 megawatts of potential capacity across Canada and US, targeting retrofit sites, with team experienced in retrofit from Enovum acquisition.

Q: Just wanted to kind of get your thoughts, if I look through the 10-Q this morning and you've got $33 million on the balance sheet of investments and at the same time you're raising equity. And just trying to get your thought on how do you weigh that?

A: Recent ATM registration is mechanical renewal for flexibility. Balance raising equity with selling digital assets to fund growth responsibly. Sold some Bitcoin, not ETH. Excited about mortgage financing for data center growth, which will help fund growth with cheap capital.