On Thursday, Bit Digital (NASDAQ:BTBT) discussed second-quarter financial results during its earnings call. The full transcript is provided below.
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Summary
Bit Digital reported a 15% increase in second-quarter revenue to $32.1 million and a gross margin of 57.9%, but faced a net loss of $107.2 million, largely due to digital asset revaluation and interest expenses.
The company strategically used its Ethereum holdings to secure a $50 million liquidity facility for White Fiber, avoiding equity dilution while maintaining its Ethereum position.
Bit Digital remains focused on leveraging assets between digital finance (Ethereum) and AI infrastructure (White Fiber), with plans to execute buybacks to address perceived undervaluation in its stock price.
Operating cash flow rose by 33% year-over-year to $46.8 million, and the company held substantial cash and Ethereum reserves, totaling $83.6 million and 75,757 ETH, respectively.
Management emphasized the growing institutional adoption of Ethereum and their strategic asset model, aiming to transition from a digital asset treasury perception to a productive asset company model.
Full Transcript
OPERATOR
Hello and welcome to the Bit Digital second quarter 2026 earnings conference call. We'll begin shortly. During the call, all participant lines will be in listen-only mode. Following management's remarks, we will open the line for questions. If you'd like to ask a question at this time, please press star-1 on your telephone keypad. As a reminder, today's call is being recorded. I'll now turn the call over to your host, Daniel Kennedy, Head of Investor Relations at Bit Digital.
Daniel, please go ahead.
Daniel Kennedy, Head of Investor Relations
Thank you and good morning. Joining me today are Sam Tabar, Chief Executive Officer, and Eric Huang, Chief Financial Officer. Before we begin, I'd like to remind everyone that today's discussion contains forward-looking statements. These statements reflect management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially. For a discussion of these risks, please refer to our annual report on Form 10-K and our quarterly reports.
We assume no obligation to update these statements. Certain matters discussed today, including potential capital allocation initiatives, remain subject to board and shareholder approval in accordance with Cayman Islands law. Where applicable throughout the call, we may also refer to non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures can be found in our earnings materials available on our website. Unless otherwise indicated, figures discussed during these remarks are rounded for readability.
With that, I'll turn the call over to Sam.
Sam Tabar, CEO
Thank you, Daniel, and good morning. This quarter was about capital allocation. Every decision started with the same question: How do we create the most long-term value from the assets already on our balance sheet? Bit Digital is positioned to secure the infrastructure for what we believe are the two most important sectors in the economy: digital assets, which will settle on Ethereum, and artificial intelligence, which is powered by data centers.
Ethereum is our position in the first, and White Fiber is our position in the second. Two distinct assets connected by one capital allocation model. Few companies offer meaningful exposure to both sides of that buildout, and fewer even still actively allocate capital between them. Our conviction on Ethereum has not changed. The price did. Ethereum spent most of the quarter below 2,000, and I'm not going to pretend that was comfortable. Bit Digital is one of the largest public corporate holders of Ethereum.
That does not make us a digital asset treasury, and it is not what we are trying to be. The goal has never been to hold the most ETH. It is to get the most out of the ETH that we hold—neither purely AI infrastructure nor a digital asset treasury; neither, and yet both. What we are building towards is the convergence of the two, assets positioned for where the economy is going rather than where it is today. Our Ethereum treasury is managed the way a company manages cash.
Like reserves, it earns while we hold it, and it becomes capital that can be put to work when the right opportunity appears. Unlike a traditional reserve, it generates a protocol-native return and also serves as a source of liquidity. That is exactly what happened. Early in the quarter, White Fiber sought additional capital to bridge its investment in its flagship facility in North Carolina to permanent project financing and to support broader growth initiatives.
Together, the companies evaluated a range of financing alternatives. They ultimately pursued a related-party bridge facility. This provided White Fiber with efficient access to capital while preserving strategic flexibility and avoiding near-term dilution. Against a portion of our Ethereum, we raised $50 million of liquidity and then used our own balance sheet to originate a delayed-draw term facility for White Fiber, commitments of up to $150 million, guaranteed by the White Fiber parent.
The transaction preserved our Ethereum position, avoided issuing equity at either company, and allowed us to maintain our ownership interest in White Fiber. Independent committees at both companies reviewed it, and Needham and Seaport delivered fairness opinions to their respective boards. We chose to provide the facility because it offered an efficient way to support our investments in White Fiber while generating an attractive return above the staking yield available on Ethereum.
The principal risk in a structure like this is, of course, margin call. That was considered as well. So an additional buffer of Ethereum is held against it, sized to withstand market moves well beyond what we consider reasonable. The facility was designed as a temporary bridge to permanent financing for the initial 40-megawatt buildout in our flagship facility in North Carolina. That facility is anchored by NScale and its investment-grade offtaker.
Upon permanent financing, our collateral is released and the guarantee terminates. The facility is repaid with interest—more than the staking income that we gave up and without giving up any upside. One decision in one quarter, but it contains the essence of the strategy. We approach our assets differently than a buy-and-hold treasury because every dollar, every ETH, and every share should be maximally productive. And that is what we mean by a strategic asset company.
The assets themselves are not the differentiator; it is how we deploy them. Eric will now take you through the details.
Eric Huang, CFO
Thank you, Sam. Good morning everyone. Our results consolidate White Fiber in full, with a portion attributable to non-controlling interests. Second quarter revenue was $32.1 million, up 15% from $27.9 million in first quarter. For the six months, revenue was $60 million, up 18% year over year. Gross profit for second quarter was $18.6 million, a gross margin of 57.9%. Operating cash flow for six months was $46.8 million, up 33% from $35.1 million in the same period last year.
Net loss attributable to Bit Digital shareholders was $107.2 million, or $0.31 per share. Taken together, the digital asset items, the derivative revaluation, and interest expense account for approximately $86 million of the loss. I'll take each in turn. Turning to our operating segments, Cloud Services revenue was $23.8 million, up 42% sequentially, driven by new contracts entering service and expansion of existing agreements. For the six months, Cloud revenue increased 29% year over year at a gross margin of 58%.
Colocation Services revenue for the second quarter was $4.7 million, essentially flat sequentially, with a 63% gross margin. For the first half, Colocation revenue increased 182% year over year. NC1 is not yet reflected in those results and is expected to begin contributing in the third quarter. Ethereum staking revenue was $0.9 million, compared to $2.3 million in the first quarter, though for the six months staking revenue increased 246% year over year.
We earned 440 ETH in staking rewards during the quarter against 949 in the first. The sequential decline reflects a decision to unstake a portion of Ethereum to characterize the facility Sam described, as well as the decline in Ethereum price during this quarter. Digital asset mining revenue was $2.4 million on 32.3 Bitcoin mined, compared to 48.1 Bitcoin in the first quarter. Over six months, mining revenue declined 58% year over year as expected, as we continue to wind down that business.
It remains solidly gross-margin positive at 26% for the second quarter. Turning to the items that do not reflect operating performance, we recorded $28.8 million of loss on digital assets carried at fair value, reflecting mark-to-market movement on Ethereum and Bitcoin holdings. We also recorded a $46 million non-cash impairment on liquid staked ETH used in the White Fiber refinancing transaction. That reflects the accounting treatment of the position and does not represent a realized loss.
Separately, there was a $14 million loss from the change in fair value of the derivative liability associated with our convertible notes, and $8.1 million interest expense. Neither reflects operating performance. Turning to the balance sheet and treasury, on May 11th we purchased 8,568 ETH for $20 million at an average cost of $2,334 per ETH, and sold it during the quarter. Now a breakdown of the positions: As of June 30th we held 75,757 ETH directly, carrying a fair value of $118.9 million.
That includes Ethereum natively staked through our validator partner. In April, we liquid staked 73,235 Ethereum and received 66,192 LSETH tokens in exchange. We also hold Ethereum exposure through an externally managed fund carried at $47.9 million. Within investment securities, liquid staked ETH is a separate asset from ETH for accounting purposes, which is why it sits on its own line under a different measurement basis. Our underlying economic exposure remains unchanged.
Cash and cash equivalents were approximately $83.6 million on a consolidated basis, of which approximately $27.5 million was held at Bit Digital and $56.1 million at White Fiber. Contract liabilities nearly doubled to $143.1 million from $79.6 million at year-end. That represents revenue already contracted and cash already collected for services we have yet to deliver. Finally, remaining performance obligations were approximately $1 billion at quarter end.
We expect to recognize approximately $57.7 million across the balance of 2026, $136.7 million in 2027, and $105.1 million in 2028, with the remainder thereafter. To put that in context, the 2027 figure alone is more than we earned in all of 2025. None of it appeared in the revenue line today. With that, I'll turn the call back to Sam.
Sam Tabar, CEO
Thank you, Eric. We own Ethereum because we believe it will appreciate over time and generate attractive long-term returns for our shareholders. That has always been a part of our investment thesis. The second quarter was the third consecutive quarter Ethereum closed lower. But volatility is not new to us. We operated through multiple market cycles, and our approach has remained consistent throughout all of them. We also share the belief that the market price of ETH has yet to reflect the value of the network.
In our view, it is undervalued relative to what it is becoming. The fundamentals moved in one direction this quarter; the price moved in the other. That disconnect has not gone unnoticed across the Ethereum ecosystem. There is growing recognition that the success of the network and the performance of the asset are closely linked. Price does matter. The bull case for ETH is not standing still. Robinhood launched its own Layer 2 on Ethereum, supporting a platform with roughly 28 million customers and $370 billion in assets, with fees paid in ETH.
BlackRock launched two tokenized money market products this month, and JPMorgan continues to expand its own tokenization footprint. Tokenized real-world assets on public blockchains now surpass $31 billion, with roughly two-thirds settling on Ethereum, and the institutional layer around the network keeps building. Ethereum Institutional, which launched with more than 500 existing institutional relationships alongside ETH Labs, ETH Systems, and Etherealise.
These are not isolated announcements. Financial activity is migrating onto programmable settlement rails, and as that activity grows, so does the demand for Ethereum's block space, its security, and its native asset. We remain confident the value of the asset will ultimately converge with its growing utility and adoption. That conviction shaped one of our most important decisions this quarter. Rather than selling Ethereum or issuing equity, we used our balance sheet to finance White Fiber while preserving our long-term exposure to the ETH asset. The next phase is execution. We expect the third quarter to begin reflecting what we have been building, turning briefly to White Fiber, our other major strategic asset. Our conviction in its long-term potential remains very strong and, as previously stated, we do not intend to sell White Fiber shares this year.
But the same standard applies here as everywhere else. We look for ways to make a position productive without reducing it. One approach under evaluation is writing out-of-the-money covered calls against a limited portion of our holdings to generate premium income that would require registering those shares. Registration creates flexibility. It is not a step towards exiting. Any such program would be modest in scope and subject to board approval, and we would retain substantial long-term exposure.
We have no interest in a transaction that impairs an asset that we own the majority of. We had White Fiber's quarterly call yesterday, and I strongly recommend that you listen to it. It is posted on X, but I'll mention a few words. White Fiber is entering an important growth phase across both colocation and cloud services at White Fiber's flagship facility. Initial capacity has been delivered, customer deployment and testing is underway, and billing has commenced.
White Fiber expects to reach the full contracted run-rate billing later this month under its 10-year agreement with Nscale, representing approximately $865 million of contracted revenue. White Fiber is also expanding a substantial development pipeline and focusing its resources on the opportunities best forward to move—excuse me? Best position to move forward at NC1, our flagship facility reaches full contracted operations. White Fiber is pursuing permanent project financing that, if completed, would allow us to recycle the capital that we invested in North Carolina into the next data center.
That is how the flywheel begins to turn: develop infrastructure, secure long-term customers, finance stabilized assets, and redeploy capital into the next opportunity. Momentum in cloud services has also accelerated since our last earnings call. White Fiber has signed new contracts representing more than $500 million of aggregate customer contract value, including the next-generation GPU deployments and a capital-efficient managed services agreement.
So for Bit Digital, for Bit Digital shareholders, that means an increasingly valuable operating asset with greater revenue visibility, stronger cash flow potential, and the ability to fund its own growth. That is the model at both levels. Our strategy has never been to passively accumulate ETH. It is to build a productive balance sheet—assets that earn while they appreciate, assets that finance operating businesses, businesses that generate recurring cash flow, and cash flow that gets reinvested into productive assets.
That is our strategic asset flywheel. And we believe we are early—early to running a company where the treasury itself is productive capital rather than a static position. We expect that to become a more common model. We intend to be further along when it does. The transition in our business is already visible. Infrastructure and staking now represent 89% of our revenue against 70% a year ago. Capital is moving out of our mining business with limited terminal value and into assets that produce.
Our operating results improved through the quarter; our valuation did not. Today the market is to value Bit Digital primarily as a digital asset treasury. A treasury strategy is fundamentally passive: you buy the asset, you hold it, you wait for the next cycle. That's not what happened here. We allocated capital, we financed an asset we already own, we preserved our Ethereum position, and we avoided dilution at both companies. Those are growth company decisions.
Yet our valuation continues to reflect a passive treasury. That is a fundamental disconnect. Using observable market values for the assets that we own, we believe that Bit Digital continues to trade at a significant discount to its intrinsic value. We monitor that discount closely, daily. It has been persistent and, at times, it has exceeded 40% by our calculations. At this discount, buying our own equity is one of the highest-return uses of capital available.
And the wider the gap, the more creative it becomes. We intend to take an active role in closing that gap. The board is evaluating those opportunities in real time alongside our liquidity needs and other priorities. Addressing the discount also expands what we can do next. We continue to look for opportunities to deploy capital in revenue-generating businesses. And based on our current analysis, one conclusion stands out: the best investment available to Bit Digital may be ultimately Bit Digital itself.
To our long-term shareholders, the reason to own Bit Digital is to gain exposure to the settlement layer of digital finance combined with the HPC infrastructure that will run on top of it. This is all supported by a productive balance sheet that allocates the capital it generates into additional strategic assets. That is the strategic asset company model. Markets can take time to recognize a differentiated model, but when the underlying assets begin producing visible cash flow and management demonstrates that we'll actively defend value per share, that recognition can happen quickly.
We believe Bit Digital is soon approaching that point. And if the market will not close the gap between what we own and how it's valued, we are considering closing it ourselves. We'll now open the line for questions.
OPERATOR
Thank you. As a reminder, if you'd like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, star one for questions. We'll go first to Nick Giles with B. Riley Securities.
Nick Giles, Analyst at B. Riley Securities
Thanks, operator. Hi guys. Appreciate the update. Sam, it was really interesting to hear you just speak to the prospect of a buyback there. I was just hoping for more details on potential timing, you know, when the board would ultimately make a decision on something like that. And then should we assume that it would be using the wind down of the White Fiber stake? I heard you kind of recommit to maintaining that ownership position in 2026. So should we think about this as more of a 2027 type of event?
Sam Tabar, CEO
Thanks, Nick. I can't give details on the exact timing of that. The board is still considering how and when to do that. But I can tell you that it is a very vigorous discussion that we're having. We think the 40% or sometimes even 43% discount to NAV is unacceptable and makes no sense. So the way to close that obviously is considering a buyback. You're right. We did today recommit to not selling our shares in White Fiber. And the reason for that is, frankly, greed.
We believe that White Fiber is going to do extraordinarily well, and we just don't want to sell down that position prematurely. That would be shooting ourselves in the foot. So we're very excited by White Fiber's progress. We believe that the market cap will continue to be favorable in terms of size and growth, and we're very excited by White Fiber's future. And, of course, as White Fiber becomes larger, when we start selling down that position, it'll be even more proceeds that come to Bit Digital, which is a very positive thing for the Bit Digital shareholder.
So time is our friend there. And I can't give you the exact time, but we are talking about it quite often, and we look forward to future announcements once we get some clearer visibility on how and when.
Nick Giles, Analyst at B. Riley Securities
Well, that's very good to hear. I appreciate that perspective, Sam. I think just next question was, you spoke to the different ways you're using the balance sheet, kind of getting creative there, and I heard you mention the covered calls. Just was curious on potential timing around that opportunity and how you kind of would frame up returns on doing that. Thanks.
Sam Tabar, CEO
Yeah. Eric, do you want to take that question?
Eric Huang, CFO
Sure. In terms of timing, I think we're coordinating with White Fiber for registration statements potentially later this quarter, and we're working with a few banks for their execution. So currently we do not have exact pricing yet, but we should be able to talk about it when we have the registration done and more proposals from the execution desk.
Nick Giles, Analyst at B. Riley Securities
Understood. Okay. Well guys, thanks again for the update. I'll turn it over.
OPERATOR
Thank you. We'll take our next question from George Sutton with Craig-Hallum.
Sam Tabar, CEO
Hi George.
George Sutton, Analyst at Craig-Hallum
Thank you. Hey Sam. Hey Eric. So I'm confident that you will soon have a facility on NC1. And can you just walk through the scenario of that happening, hypothetically—assume that has happened—you will then get an inflow of cash. I assume that would be part of the fuel for a significant buyback. Am I thinking about that the right way?
Sam Tabar, CEO
I'll let Eric talk about it. But just high level, the buyback can come—you know, there are multiple sources of liquidity for a potential buyback. Of course there's that, but there's also selling down our White Fiber shares in the future. So there are different sources of liquidity, not just this facility being paid back. But I'll hand it over to Eric so he can double click on that.
Eric Huang, CFO
Yeah. For the bridge facility we had with White Fiber, it's relatively short term—it's 90 days to like half a year towards the end of this year. So once the NC1 term financing is done, then White Fiber will obviously pay back our bridge, and we'll use the proceeds we receive to unwind our collateral borrowing with Galaxy in this scenario. So not necessarily using it to do a buyback, but this is generating additional yield or revenue for Bit Digital in a meaningful way compared to native staking.
We're still trying to figure out what source of liquidity we'll use to consider a buyback. It hasn't been decided yet, but I do want to highlight that the return that we got on the bridge facility is higher than what we would have received on staking.
George Sutton, Analyst at Craig-Hallum
Understand, and sorry to get geeky on Ethereum, but a couple things. I'm just curious your thoughts on EIP8363, which would reduce the ETH issuance relative to staking. Just curious your thoughts on that and then also on the Glamsterdam hard fork coming up later this year. What do you think that does for ETH and your stake?
Sam Tabar, CEO
I've been looking at the Ethereum ecosystem and what's happening on the moves that are being taken to promote the price of Ethereum. So, as mentioned, there's been some companies that have launched recently like ETH Institutional, Etheralize, and two other companies such as ETH Labs and ETH Systems. And those companies are focused on not the geeky part of Ethereum, but rather getting institutional adoption accelerated and protecting and promoting the price out there.
So that's where my focus has been, and I haven't been really focused on the engineering aspect of Ethereum block space. So I'm not informed enough to give you a good answer on those questions.
George Sutton, Analyst at Craig-Hallum
Okay, thank you.
OPERATOR
Thank you. We'll take our next question from Brian Dobson with Clear Street LLC.
Brian Dobson, Analyst at Clear Street LLC
Hey, how are you doing? So in the press release you mentioned, of course, that White Fiber is a core holding. Would you consider selling just a portion of it in order to finance a repo and take advantage of the valuation discrepancy between the two stocks? And I guess on that subject, is there anything in your, call it, portfolio of potential investments that in your view might generate a greater return than repurchasing Bit Digital shares?
Sam Tabar, CEO
Well, we think that repurchasing Bit Digital shares could be a pretty good investment, but again, that's a discussion happening at the board, and going back to your question about whether we would use the proceeds from selling down White Fiber and buying back our shares, that is definitely something we're considering. But in terms of the timing, I don't think we're going to be—we'll be doing that. We won't be using proceeds from White Fiber to do that, only because we've already committed to the markets that we will not be selling down our White Fiber shares this year.
If we were to do a buyback program this year, it will not be with the proceeds of White Fiber. But we have no idea about the timing. We're just considering it. We're just talking about it. It's on our menu and it's a very attractive dish on our menu for obvious reasons, but in terms of whether we do it and the timing is still up in the air.
Brian Dobson, Analyst at Clear Street LLC
Yeah, very good. And then yesterday's White Fiber call was very positive. The tone of forward business, very encouraging, I suppose. As that company continues to gain traction, do you think that that will help to erode the NAV discount that Bit Digital is experiencing?
Sam Tabar, CEO
Well, I think so. I mean, look, if you compare—I don't want to—this is kind of a tough thing to say, but if you compare Bit Digital to its peers—now, we're not a digital asset treasury company, so it's a bit apples to oranges—but we're performing. We're outperforming on a relative basis. And I think a lot of that has to do with the White Fiber holding. So I think the White Fiber holding very much helps the share price. I can't talk too much about the share price, but I think it's a positive thing towards the share price.
But it does sometimes create a larger disconnect on the NAV. And that's why we think there's a capital markets disconnect on BTBT, and we're thinking about correcting it by considering a buyback program because of that disconnection.
Brian Dobson, Analyst at Clear Street LLC
Yeah. Very good. Thanks a lot. Thank you.
OPERATOR
Thank you. We'll take our next question from Raymond Eddings with Missouri Trust.
Raymond Eddings, Analyst at Missouri Trust
Hello. Hi, guys. Thanks for the call today. If we can talk for a second about, I guess the opposite of a buyback. It looks like share count went up about 25 million shares in the last quarter. And I know you said you didn't issue shares for the White Fiber allocation or to fund Ethereum purchases. Wondering if you can just talk a little bit about what were shares issued for this quarter?
Sam Tabar, CEO
Yeah, I mean, look, we would strongly hesitate to issue equity at these levels today. There would be some pretty strong hesitation. Our capital priorities changed as the discount widened through the quarter. And that change is exactly why the board is now evaluating a buyback program. The Ethereum purchase and equity issuance were separate decisions. We bought Ethereum to lower our average cost, while the ATM provided cash for construction spending.
Each decision made sense based on the circumstances at the time. I think what changed is the gap between our market value and the value of our assets. That is the allocation test working, and it now points somewhere different than it did in spring.
Raymond Eddings, Analyst at Missouri Trust
Okay. What was the approximate at-the-money sales pricing?
Sam Tabar, CEO
Eric, are we—I'll leave that with Eric. I don't have that exact data point and I'm unsure if we're—
Eric Huang, CFO
Yeah. Could you repeat your question again?
Raymond Eddings, Analyst at Missouri Trust
Yeah. And I guess really my question is relative to the discount. So I know you've said 40% or more is way out of line. I was wondering if we can expect—you may issue shares for corporate purposes at a 10 or 20% discount, but buy them back in at a 30 or 40% discount?
Sam Tabar, CEO
I see. It's not—it's not a quantity question now. It's not a—there's no certain number in mind. It'll depend on what those purposes are. And if the purposes for a better return than where the discount is, then obviously we think about it. But there's no specific number in mind that we have. There's no, like, oh, it's minus 20—it's like it's 20% disconnect, now we can use the ATM. We don't think of it that way. It's not a quantifiable number.
Eric Huang, CFO
And also just want to add, probably for technical reasons and legal reasons, we do not want to put in our position like we're sort of trading our own stock. So like Sam said, all the decisions are based on certain circumstances, based on your working capital needs, capital allocation, et cetera. And we try to make decisions as long term as possible to not be affected by short term.
Sam Tabar, CEO
That's right.
Raymond Eddings, Analyst at Missouri Trust
Okay, so the dilution this quarter. All right. Sorry. Thanks, guys, for your time today.
Sam Tabar, CEO
Thank you.
OPERATOR
Thank you. With no additional questions in queue at this time, I'd like to turn the call back over to Sam for any additional or closing remarks.
Sam Tabar, CEO
Thank you for joining us today. We appreciate your continued interest and support. We look forward to speaking with you again next quarter. This officially concludes our call, and have a great day.
OPERATOR
Thank you. That will conclude today's call. We appreciate your participation.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
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