Bit Digital's Q3 2025: Contradictions Emerge on Mining Strategy, Ethereum Staking, G&A Costs, White Fiber Expansion, and Megawatt Availability

Date of Call: None provided

Financials Results

• Revenue: $30.5M in 3Q25, up from $25.7M in prior quarter and $22.8M in 3Q24
• EPS: $0.47 per diluted share (net income $146.7M) in 3Q25, compared to a net loss of $38.8M in the year-ago period
• Gross Margin: 60%, compared to 32% in 3Q24

Guidance:

• Expect the full effect of increased ETH holdings and staking to be reflected in Q4 results
• Active mining hash rate expected to trend toward ~1.2 EH/s by mid-2026 with efficiency improving to ~19 J/TH
• Plan to keep total leverage below 20% of ETH holdings; will not increase leverage until ETH price is at a comfortable level
• Will not sell White Fiber shares during 2026 (lockup ends Feb 2026)
• Continue disciplined ETH accumulation using unsecured converts/ATM selectively; closed $150M convert post-quarter

Business Commentary:

• Ethereum Accumulation and Staking:
• Bit Digital's Ethereum holdings increased significantly, with the company holding over 153,000 ETH by October, up from 122,000 ETH at the end of September.
• The company completed a $150 million convertible notes offering to purchase 31,000 ETH. The strategy was to accumulate ETH at a perceived long-term entry point.

• The increase in Ethereum holdings is part of a planned strategy to grow Bit Digital's Ethereum position responsibly and leverage staking activity for long-term value creation.

• Staking Revenue Growth:

• Bit Digital's staking revenue in Q3 rose to $2.9 million, up from $400,000 in the previous quarter, marking a significant increase of 542% year-on-year.

• The growth in staking revenue was driven by an expanded Ethereum stake balance and higher realized ETH prices, indicating the success of the company's strategic positioning in Ethereum.

• Financial Performance and Shareholder Value:

• The company reported net income of $146.7 million, or $0.47 per diluted share, compared to a net loss of $38.8 million in the year-ago period.

• The improvement in financial performance was due to higher revenue, improved mining margins, and a gain on digital assets secondary to Ethereum price appreciation.

• Operational Transition and Strategic Focus:

• Bit Digital has transitioned into a focused Ethereum treasury and staking company, completing its transition with the White Fiber IPO in August.
• The company aims to create long-term value by disciplined capital allocation and risk management, focusing on consistent yield generation through staking operations.

Sentiment Analysis:

Overall Tone: Positive

• Staking revenue grew to ~$2.9M (from $0.4M prior quarter); net income was $146.7M ($0.47/sh) and adjusted EBITDA was $166.8M. Management emphasized disciplined capital allocation, growing ETH treasury (122k at quarter-end to 153.5k by Oct 31), and that staking will become the main recurring cash engine.

Q&A:

• Question from George Sutton (Gray Callum): Can you talk about your ultimate belief in Ethereum relative to other blockchains? Also, do you have a limit on the percentage that you will ultimately stake, and are you using multiple custodians?
  Response: Management: Ethereum is the preferred, enterprise-grade chain due to uptime, security, developer ecosystem and regulatory clarity; Bit Digital can stake up to 100% (currently ~82–85% staked, with some allocated to external managers) and uses two custodians (Fireblocks and Cactus/Metaco).

• Question from Brian Dobson (ClearStreet): What sets Bit Digital apart over the next two years versus peers, and as demand for converts/prefs is strong, do you have a preferred way of raising capital?
  Response: Management: Differentiation is operating history, ownership of White Fiber, deep Ethereum experience and the ability to execute unsecured convertible financings to accretively buy ETH; they favor unsecured converts but monitor leverage closely and will use ATM selectively.

• Question from Kevin Dede (H.C. Wainwright): Given current hash price and fleet pruning, where do you expect hash and efficiency by year-end/next year? Are you considering running your own validator nodes to increase yield, how is staking revenue recognized, and could treasury companies change ETH inflation?
  Response: Management: Mining will be methodically wound down with active hash rate targeted near ~1.2 EH/s by mid‑2026 and efficiency improving toward ~19 J/TH; they currently use Figment for native staking (revenue recognized daily), may consider running validators only when scale warrants, and do not expect treasuries materially to change protocol issuance dynamics.

• Question from Henry Hurl (B. Riley Securities): What are your expectations for consolidation in the digital asset treasury space and opportunistic M&A? Also, any guidance on staking yields beyond the ~3% native rate?
  Response: Management: Not actively pursuing M&A—focus is on disciplined ETH accumulation and leveraging White Fiber; native staking is ~3% medium‑term, targeting managers to reach >=4% and aiming for a 10–20% uplift above native staking via external strategies where justified by risk/return.

• Question from Mike Grandal (Northland Securities): What have been the two biggest challenges in ramping White Fiber revenue? Any operational challenges?
  Response: Management: The primary challenge is lengthy, complex contract/lease negotiations for large, long‑term customers; operationally ramp is strong—Enivum retrofit expertise enables faster, on‑budget conversions of facilities into tier‑3 data centers.

• Question from Pat McCann (Noble Capital Markets) for Joe Gomes: With a goal to become the largest public ETH treasury, where do you rank today? Also, can you comment on the elevated G&A this quarter and where it heads?
  Response: Management: Priority is disciplined, responsible accumulation (how you buy ETH matters more than size); G&A was elevated by one‑offs and White Fiber consolidation/IPO‑related costs and should normalize materially lower going forward.

Contradiction Point 1

Bit Digital's Mining Business Strategy

It involves changes in the company's strategic approach towards mining operations, impacting the financial outlook and resource allocation.

Has the 1.2x hash target reset your calculus? - Kevin Dede (H.C. Wainwright)

2025Q3: The mining business is sunsetting, with older machines being retired. Efficiency should improve as less efficient units are phased out. The mining business will continue to offset corporate overhead, but it is not the focus. - Sam Tabar(CEO)

How has the fleet aged, how do you plan to phase out legacy machines, and what are your near-term recommendations for Bit Digital's Bitcoin hash rate? - Kevin Dede (H.C. Wainwright)

2025Q2: We are winding down the Bitcoin mining business, no longer investing in new machines. Heading towards a future of only running S21s and S19 K-Pros for positive margins. The S21 deployments will improve fleet efficiency, and we expect a decline in total hash rate over time. - Samir Tabar(CEO)

Contradiction Point 2

Ethereum Staking Strategy and Yield Expectations

It involves changes in the company's strategy regarding Ethereum staking and yield expectations, which are critical for understanding the company's financial performance and future growth plans.

Can you provide guidance on future staking yields? - Nick Giles (B. Riley Securities)

2025Q3: Native staking yield is around 3%. We target external managers to achieve at least 4% yield, aiming for a combined yield increase of 10%-20% compared to the native staking benchmark. - Eric Huang(CFO)

What strategies will you use to increase cloud and colo margins, and what is your GPU procurement strategy? - Kevin Dede (H.C. Wainwright)

2025Q1: We are maintaining a fully diluted Ethereum share count of 1.54 million. Staking in Q1 earned $2.5 million of daily staking revenue, and that's without any yield. - Samir Tabar(CEO)

Contradiction Point 3

G&A Expenses and Future Cost Structure

It involves changes in financial forecasts and expectations regarding operating expenses, which are critical for investors assessing efficiency and cost management.

What were the G&A expenses for the quarter? - Pat McCann (Noble Capital Markets)

2025Q3: There were one-off G&A expenses due to White Fiber consolidation and marketing. On a forward basis, G&A should be significantly lower as non-recurring items normalize. - Eric Huang(CFO)

Will consulting and share comp expenses return to normalized levels, resulting in G&A expenses returning to $8 million to $10 million or remaining at a higher level? - Joseph Gomes (NOBLE Capital)

2025Q2: Yes, the rise in G&A is largely due to milestone achievements related to the 2024 acquisition and IPO expenses. These were one-time and nonrecurring costs. The stand-alone digital cost structure will be significantly leaner and will trend down, with ETH staking margins playing a larger role. - Erke Huang(CFO)

Contradiction Point 4

White Fiber Expansion and Market Reception

It involves the company's expansion plans and market reception for White Fiber, which are key aspects of the company's growth strategy.

What are the two biggest challenges in increasing revenue at White Fiber? - Mike Grandal (Northland Securities)

2025Q3: The biggest challenge is the complexity and time needed to negotiate large, long-term contracts. - Sam Tabar(CEO)

What's the update on the market reception of the WhiteFiber rebranding? - George Sutton (Craig-Hallum)

2025Q1: The rebrand has been really well received with several iterations on the website. The latest version, launched about 1.5 weeks ago, has been positively received. - Benjamin Lamson(Head of Revenue, Cloud business)

Contradiction Point 5

Megawatt Availability and Expansion Plans

It involves the company's expansion plans and the availability of megawatts, which are critical for the company's growth and infrastructure development.

What contributed to the G&A expenses for the quarter? - Pat McCann (Noble Capital Markets)

2025Q3: We expect additional megawatts to become available in the coming months. - Sam Tabar(CEO)

What are the key considerations for U.S. vs. Canada expansion, and when will megawatts be available and what are CapEx expectations? - Nick Giles (B. Riley Securities)

2025Q1: We are actively evaluating and negotiating over 500 megawatts of potential capacity across Canada and the U.S. with a focus on retrofits and adjacent to market cities. - Samir Tabar(CEO)