Bit Digital’s Strategic Shift: A High-Reward Gamble on AI Infrastructure

Wesley ParkFriday, May 16, 2025 12:36 am ET
27min read

Investors who shy away from volatility miss out on the next big thing.

Bit Digital
(BTBT) just reported a quarter that looks like a stumble on paper—mining revenue cratered 64%—but beneath the surface, this company is pulling off a high-stakes pivot to the AI infrastructure boom. If you can stomach the short-term pain, this could be a once-in-a-decade setup.

Let’s start with the ugly truth: Bit Digital’s Q1 2025 mining revenue dropped to $7.8 million, a fraction of its former glory. The Bitcoin halving and brutal competition in crypto mining have crushed this segment. But here’s the catch: the company is intentionally gutting its reliance on crypto volatility. The decline in mining is part of a calculated strategy to double down on cloud and colocation services—segments that grew 84% year-over-year to $14.8 million. That’s not just growth—it’s a new revenue engine.

The AI Infrastructure Play: Betting on the Future

Bit Digital isn’t just chasing a fad. It’s building the backbone of the AI revolution. Here’s why this pivot could pay off big:

  1. Cloud Services Surge: The company’s cloud revenue is now the majority of its business, fueled by partnerships like DNA Fund and Boosteroid. A recent deal with DNA added 616 GPUs, while Boosteroid’s 701 GPU servers lock in multi-year contracts worth $23 million annually. Even better? The rollout of 64 NVIDIA B200 GPU servers (512 GPUs) is just the start. A pending deal for 464 B200 GPUs by August 2025 could add another $15 million in annualized revenue.

  2. Colocation’s Explosive Potential: The acquisition of Enovum Data Centers isn’t just a diversification move—it’s a land grab. The 5-year, 5MW Cerebras partnership in Québec (opening July 2025) gives Bit Digital a beachhead in AI supercomputing. Meanwhile, a $2.25M earnest deposit on a North Carolina data center signals U.S. expansion. Management calls colocation a “major growth engine”—and I’m inclined to believe them.

  3. Liquidity to Fuel the Fire: With $141.4 million in liquidity ($61.3M cash, $80M in BTC/ETH), Bit Digital isn’t just surviving—it’s positioned to outbid rivals for infrastructure. No debt means no pressure to dilute shareholders or cut corners. This is a company that can afford to be patient.

The Near-Term Risks (And Why They’re Worth It)

The bears have their points. The Zacks Hold rating isn’t random: Q1’s $44.5M adjusted EBITDA loss—driven by crypto mark-to-market swings—hurts. And with shares down 27% YTD, investors are getting nervous. But here’s the rub:

  • Crypto Volatility Is Manageable: The $80M in digital assets on the books are a liability in the short term, but Bitcoin’s long-term trajectory (and Bit Digital’s reduced mining) should stabilize this.
  • Zacks Hold ≠ Death Sentence: The rating reflects inconsistent earnings, not a death knell. The Tech Services sector (Bit Digital’s home) is in the top 20% of Zacks industries—a tailwind if execution improves.
  • The AI Tailwind Is Real: HPC infrastructure demand is exploding. From training models to inference workloads, companies need GPU power—and Bit Digital is already under contract with customers willing to pay for it.

The Bottom Line: A Risky Gamble, But Worth the Bet

This isn’t a “buy and forget” stock. Bit Digital’s Q1 miss is real, and the crypto whiplash could continue. But the strategic shift to AI infrastructure isn’t just a pivot—it’s a reinvention. With cloud/colocation revenue growing 84% YoY and a balance sheet that can fund growth, this company is building a moat in one of the hottest sectors.

For investors willing to endure volatility, BTBT offers a rare chance to own the infrastructure of the AI era. The stock trades at a $634M market cap—cheap for a company with $158M in projected 2025 revenue and a fortress balance sheet.

Action Item: Buy BTBT on dips below $5.86—then sit tight. The AI revolution isn’t waiting, and neither should you.

Final Thought: Bit Digital’s Q1 stumble is just a speed bump. The real race is to corner the AI infrastructure market—and this company is already in the lead.