Bit Digital's Q3 2025 Earnings Call: Contradictions in Staking Strategy, G&A Costs, Mining Plans, and Capital Allocation

Date of Call: November 14, 2025

Financials Results

• Revenue: $30.5M, up from $25.7M in prior quarter and $22.8M a year ago
• EPS: $0.47 per diluted share, compared to a net loss of $38.8M in 3Q2024
• Gross Margin: 60%, compared to 32% in 3Q2024

Guidance:

• Expect the full effect of increased validator activations to appear in Q4 results
• Continue scaling staking operations; staking to be main engine of recurring revenue
• Mining to wind down; active hash rate targeted toward ~1.2 EH by mid-2026
• Fleet efficiency expected to improve to ~19 J/TH as older machines retire
• Keep total leverage below 20% of ETH holdings; no leverage increases until ETH price improves
• Will not sell WhiteFiber shares during 2026

Business Commentary:

• Ethereum Staking and Expansion:
• Bit Digital expanded its ETH position to 153,500 ETH by October 31, marking a 5-fold increase since June.

• This growth is driven by the company's strategy to focus on Ethereum as a core treasury and staking activity to increase long-term value.

• Revenue and Financial Performance:

• 
• The company's total revenue for Q3 reached $30.5 million, up from $25.7 million in the prior quarter.

• The increase is attributed to higher Ethereum staking revenue and improved mining margins.

• Staking Revenue Growth:

• Bit Digital's staking revenue grew to $2.9 million in Q3, up over 542% from the prior year.

• This was driven by increased Ethereum holdings and a higher realized ETH price.

• Mining Operations and Efficiency:

• Mining gross margin improved to 32%, the highest since the recent halving, with an active hash rate of 1.9 exahash.
• This was achieved by optimizing fleet efficiency and phasing out older hardware.
  

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted staking revenue growth to ~$2.9M (from $0.4M prior quarter), net income of $146.7M ($0.47/share) and ETH holdings rising to ~153,500 ETH by Oct 31. They described a disciplined, accretive $150M convertible used to buy ~31,000 ETH and emphasized growing staking as the main recurring cash engine.

Q&A:

• Question from George Sutton (Craig-Hallum Capital Group LLC, Research Division): Can you talk about your belief in Ethereum relative to other blockchain alternatives?
  Response: Ethereum is viewed as the best choice due to uptime, security, developer ecosystem and stablecoin prevalence; management is confident Ethereum is the long-term winner.

• Question from George Sutton (Craig-Hallum Capital Group LLC, Research Division): Can you give a limit on the percentage of ETH you ultimately stake?
  Response: Target is effectively to stake as much as practical (up to ~100%); current ~82–85% staked because some assets are with external managers to pursue additional alpha.

• Question from George Sutton (Craig-Hallum Capital Group LLC, Research Division): Are you using multiple custodians?
  Response: Yes — primarily Fireblocks and Cactus Custody by Matrixport; they've been used for 4–5 years.

• Question from Brian Dobson (Clear Street LLC): What could set Bit Digital apart over the next two years versus competitors?
  Response: Differentiators are prior profitable mining and HPC operations, IP/experience in Ethereum, ownership of WhiteFiber, and unique financing (unsecured converts) enabling disciplined, accretive ETH accumulation.

• Question from Brian Dobson (Clear Street LLC): Do you have a preferred way of raising capital going forward?
  Response: Convertibles remain preferred but management monitors leverage closely and will use ATM/equity only when NAV and market conditions make sense.

• Question from Kevin Dede (H.C. Wainwright & Co, LLC, Research Division): Given current cash price dynamics, can you update expected hash rate or where it could be year-end next year?
  Response: Mining is being methodically wound down; active hash rate is expected to trend toward ~1.2 EH by mid-2026 while evaluating hosting renewals opportunistically.

• Question from Kevin Dede (H.C. Wainwright & Co, LLC, Research Division): Thoughts on running your own validator nodes and how to squeeze more yield from Ethereum?
  Response: Currently using FitMint for native staking and working with external managers for alpha; running own validators is possible once operations are sufficiently large, but today they prefer external providers and measured third-party strategies.

• Question from Kevin Dede (H.C. Wainwright & Co, LLC, Research Division): Is there any internal thinking about removing FitMint and running your own validators?
  Response: Not presently — management is content with FitMint but may reconsider when staking operations become materially larger.

• Question from Kevin Dede (H.C. Wainwright & Co, LLC, Research Division): How is the $2.9M staking revenue calculated?
  Response: Staking revenue is recognized on a daily basis (not just end-of-quarter balances).

• Question from Kevin Dede (H.C. Wainwright & Co, LLC, Research Division): Do large treasury companies change Ethereum's inflation pattern?
  Response: No — inflation is driven by blockchain issuance and activity; treasuries staking ETH doesn't materially alter network-level inflation dynamics.

• Question from Henry Hearle (on behalf of Nick Giles) (B. Riley Securities): What are your expectations for consolidation in the digital asset treasury space and M&A appetite?
  Response: Management sees itself as uniquely positioned with ETH holdings and 71.5% of WhiteFiber; opportunistic M&A is secondary to continuing disciplined ETH accumulation and they would only pursue deals that add clear value.

• Question from Henry Hearle (on behalf of Nick Giles) (B. Riley Securities): Any guidance on staking yields beyond the ~3% native rate?
  Response: Native staking yield is expected to remain ~3% medium-term; they target external manager strategies that can deliver >=4% to justify added risk and aim to combine strategies to boost overall yield above the native benchmark.

• Question from Mike Grondahl (Northland Capital Markets, Research Division): What have been the two biggest challenges ramping revenue at WhiteFiber?
  Response: Primary challenges are long, complex commercial contracts and negotiating large, generational leases; time-consuming deal execution, not operational capability, has been the main bottleneck.

• Question from Mike Grondahl (Northland Capital Markets, Research Division): Any operational challenges at WhiteFiber or just leasing/contract timing?
  Response: Operationally they feel well-prepared due to the Enovum retrofit team; main issues have been contracting timelines rather than operations.

• Question from Patrick McCann (NOBLE Capital Markets, Inc., Research Division): With the goal of becoming the largest public ETH treasury, where do you believe you rank today?
  Response: Management emphasizes being the best in execution over being the largest; they intend to accumulate material ETH but prioritize disciplined, non‑secured financing and prudent acquisition methods.

• Question from Patrick McCann (NOBLE Capital Markets, Inc., Research Division): Please comment on the elevated G&A this quarter and outlook for G&A going forward.
  Response: Q3 G&A included nonrecurring WhiteFiber-related costs, elevated share-based comp and consulting; standalone Bit Digital G&A is flexible and expected to normalize materially lower as one-offs fall off.

Contradiction Point 1

Staking Strategy and External Managers

It highlights a shift in Bit Digital's strategy regarding external management for staking, which impacts their overall yield strategy and risk management.

Can you set a cap on the percentage you stake? - [George Sutton](Craig-Hallum Capital Group LLC, Research Division)

2025Q3: The company works with external managers for staking strategies that can generate additional yield. - [Samir Tabar](CEO), [Erke Huang](CFO)

Which entity is managing your Ethereum stake, and what are the associated fees? Do you plan to run nodes in-house long-term? - [Kevin Dede](H.C. Wainwright & Co, LLC, Research Division)

2025Q2: We use Fireblocks custodian and stake with their help, along with LSCTH for liquid staking. The cost is less than 10% of EBIT margin, and we're focusing on institutional partners for the short to medium term. - [Erke Huang](CFO)

Contradiction Point 2

G&A Expense Expectations

It involves differing expectations about the future level of G&A expenses, which are critical for financial planning and investor expectations.

Could you comment on G&A expenses this quarter? - [Patrick McCann](NOBLE Capital Markets, Inc., Research Division)

2025Q3: G&A includes one-off expenses and elevated marketing spends. Bit Digital's cost structure is flexible and can become leaner over time. - [William Schnier](Head of IR), [Samir Tabar](CEO)

Will consulting and share-based compensation return to normalized levels, causing future G&A expenses to return to $8 million to $10 million, or will expenses remain higher? - [Joseph Gomes](NOBLE Capital)

2025Q2: Yes, we do see this as a long-term reduction. A big part of the increased G&A during the quarter was related to our acquisition of Enovum and milestone achievements, as well as consulting fees related to the IPO. Going forward, Bit Digital's G&A will drop substantially. - [Erke Huang](CFO)

Contradiction Point 3

Mining Capacity and Strategy

It involves the company's strategic direction for mining capacity and the use of external providers for staking, which are key operational decisions impacting the company's growth and profitability.

Where do you expect your mining capacity to be by the end of next year? - [Kevin Dede](H.C. Wainwright & Co, LLC, Research Division)

2025Q3: Mining capacity is expected to trend towards 1.2 exahash by mid-2026, as older hardware is phased out and efficiency improves. - [William Schnier](Head of Investor Relations)

Why did Customer 1 delay deployment, and how will you address idle GPU capacity? - [Mike Grondahl](Northland Securities)

2025Q1: will no longer be prioritizing new mining rig purchases as we continue to focus our capital on our AI and cloud infrastructure initiatives. - [Samir Tabar](CEO)

Contradiction Point 4

Capital Allocation and Financing Strategy

It involves the company's approach to capital allocation and financing, which impacts its ability to grow and manage its balance sheet.

What is your preferred method of raising capital? - [Brian Dobson](Clear Street LLC)

2025Q3: Convertible debt is always an option, but the company is cautious about leverage. It has an ATM program for $2.5 billion available when market conditions align. - [Erke Huang](CFO)

Are you considering discontinuing the ATM and confident in alternative financing methods for growth? - [Joseph Gomes](Noble Capital)

2024Q4: We do not plan to use the ATM at current levels. We prefer nondilutive financing methods, especially for data centers and cloud services. - [Samir Tabar](CEO)