Bit Digital, Inc Q1 FY2026 Earnings Call

Hello, and welcome to the Bit Digital First Quarter 2026 Earnings Conference Call. We will 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 would like to ask a question at that time, please press *1 on your telephone keypad. As a reminder, today's call is being recorded. I will now turn the call over to your host, Daniel Kennedy, Head of Investor Relations at Bit Digital. Daniel, please go ahead.

Thank you. And welcome everyone to BitDigital's First Quarter 2026 Earnings Call. Joining me today are Samir Tabar, Chief Executive Officer, and Erke Huang, our Chief Financial Officer. I would like to remind everyone that certain statements made during today's call may be forward-looking. These statements are subject to risks and uncertainties that could cause results to differ. For a discussion of these risks, please refer to our SEC filings, including our Form 10-Q filed today. 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. Following our prepared remarks, we will open the call for questions. With that, I will turn the call over to Samir.

Thank you, Daniel, and thank you, everyone, for joining us. Before I begin, I would like to extend a hand of welcome to our new Head of Investor Relations, Daniel Kennedy. He was formerly a board member, adviser and director to publicly listed companies across the digital asset, crypto, fintech, and AI infrastructure sectors. Welcome aboard, Daniel, and we look forward to your abilities to share the BitDigital story and trajectory to our shareholders. Bit Digital continued advancing its strategic asset transition during the first quarter. Our business today is centered around three verticals: Ethereum treasury and staking, AI infrastructure through WhiteFiber, and building durable cash flow through disciplined capital allocation. We believe these businesses complement each other. Ethereum provides long-term treasury exposure and staking yield. WhiteFiber provides exposure to AI infrastructure and compute demand. Over time, we expect additional operating businesses to support recurring revenue generation across the platform. Starting with Ethereum. We continue viewing Ethereum as foundational infrastructure for digital assets and on-chain financial activity. Our approach remains disciplined. We are focused on increasing value per share over time while maintaining balance sheet flexibility and capital efficiency. Turning to our WhiteFiber holdings. WhiteFiber remains a core strategic asset for BitDigital and provides critical exposure to AI infrastructure where demand for compute continues to exceed available supply. We expect these constraints to persist, presenting opportunities which we believe we are uniquely positioned to capitalize on. We continue viewing WhiteFiber as a long-term holding and do not intend to monetize the position in 2026. Our company has a long history of execution in HPC, delivering projects on time and on budget to customers and partners. Importantly, Bit Digital continues to maintain a significant ownership position in WhiteFiber. The company held approximately 27 million WhiteFiber shares with a value of approximately $322 million as of March 2026. Turning briefly to mining. We continued reducing exposure to Bitcoin mining during the quarter. Mining remains cash-flow generative, but it is no longer a strategic growth priority. Capital will continue shifting towards Ethereum and infrastructure-related opportunities. Turning to the convergence and the constraint. We believe AI and Ethereum are converging. We are uniquely positioned through our exposure to AI infrastructure, the Ethereum ecosystem, and strategic acquisitions. At the same time, demand for compute and power continues to exceed available supply. We believe compute itself is becoming sufficiently scarce and valuable to emerge as a new asset class. We are strategically positioned to capitalize on both the convergence and the constraint. Finally, we will continue evaluating opportunities to expand recurring cash flow generation across our strategic asset platform. We remain disciplined in our approach and focused on long-term value creation rather than transaction volume. I will now turn the call over to Erke.

Thank you, Samir. Our first quarter 2026 results reflect the continued repositioning of the business toward infrastructure, staking and treasury operations. Total revenue for Q1 was $27.9 million compared to $32.3 million in Q4 2025. This represents a decrease of 13.7% quarter over quarter. Cloud services revenue was $16.8 million, down 13.1% quarter over quarter. Colocation services revenue was $4.8 million, up around 23.9% quarter over quarter. Ethereum staking revenue was $2.3 million, down roughly 29.4% quarter over quarter. The decline reflected lower average Ethereum prices and lower natively staked balances. Digital asset mining revenue was $3.7 million, down just under 33% quarter over quarter, reflecting lower Bitcoin production and lower average Bitcoin prices during the quarter. As of March 31, the company held approximately 155 thousand ETH. As of April 30, approximately 60.7 thousand Ethereum remained natively staked. Based on a closing Ethereum price of around $2.1 thousand per ETH on March 31, the market value of the company's Ethereum holdings was $327 million. The company's average at-the-market (ATM) acquisition price for all holdings was approximately $3.04 thousand as of March 31, 2026. Revenue mix continued shifting away from mining and towards Ethereum staking, cloud services, and colocation operations. We believe the transition can continue creating a more durable and scalable operating model centered around infrastructure, staking, and treasury management activities with lower dependency on legacy mining operations. Net loss was $146.7 million in Q1 2026 compared to $185.3 million in Q4 2025. Results continue to be impacted by noncash mark-to-market adjustments on digital assets. Turning to the balance sheet. Cash and cash equivalents were $79.5 million as of March 31, compared to $118.4 million as of December 31, 2025. Digital assets totaled $295 million at quarter end, compared to $415.7 million as of December. The decline primarily reflects a lower at-the-market price at quarter end, rather than reductions in holdings. Ethereum price is roughly $2.3 thousand at the time of this call and has traded in the range between $1.8 thousand and $2.4 thousand since early February. Convertible notes increased to $334 million with the increase driven by the issuance of the notes by WhiteFiber, which are consolidated within our financial statements. As of April 30, approximately 60.7 thousand ETH remained natively staked. Total ETH holdings were approximately 155 thousand ETH with a blended acquisition cost basis of around $3.03 thousand per ETH. Overall, our financial profile continues evolving towards infrastructure, staking, and treasury management, with reduced contribution from legacy Bitcoin mining operations. I will now turn the call back to Samir.

Thank you, Erke. BitDigital has become accustomed to being early and making bold calls. When you make calls early, criticism usually comes before consensus. We believe Ethereum will become the core settlement infrastructure for the future digital financial system. We believe we are simply early again. Data points: tokenized assets and on-chain settlement activity are already scaling rapidly on Ethereum-compatible infrastructure. Ethereum hosts the majority of stablecoin supply by market value, and remains the dominant settlement layer for institutional stablecoin activity. BlackRock launched its tokenized money market fund on Ethereum. We believe the broader financial system is increasingly moving toward regulatory and institutional integration with digital asset infrastructure. We share the belief that everything of value will eventually become tokenized. Ethereum is also home to innovation in areas like zero-knowledge payments. We do not believe this is temporary; it is only the beginning. Also, automated agentic workflows will increasingly transact without human intervention. The first iteration is likely to involve highly specialized agents interacting with each other to complete complex tasks automatically within predefined constraints. This will require a medium to exchange value. Ethereum offers programmable pragmatism through smart contracts. We also continue expanding our relationships across the Ethereum ecosystem. During the quarter, BitDigital was approved by the Ethereum Foundation to purchase ETH directly from the Foundation. We view that as an important validation of our long-term commitment to the ecosystem. More on that in the future. We also continue actively executing on our Ethereum treasury strategy and expect to provide a material update in the very near term. At the same time, we remain active evaluating strategic acquisition opportunities aligned with our infrastructure and treasury strategy. We are currently engaged in ongoing diligence around a potential acquisition target that will contribute revenues to BitDigital. Our focus remains disciplined and long-term. We intend to continue building a business at the crossroads of Ethereum infrastructure, AI and HPC infrastructure, and durable cash flow through strategic acquisitions. We believe Ethereum infrastructure and AI compute are not separate strategies but components of a single integrated platform aligned with the future digital financial system. Yesterday, the Clarity Act advanced through the Senate Banking Committee and now moves forward in the Senate approval process. Passage of the Clarity Act would represent a meaningful step forward for Ethereum and the broader digital asset ecosystem. Clearer market structure and regulatory clarity would support increased institutional participation and continued development of Ethereum-compatible financial infrastructure. The goal remains straightforward: maintain balance sheet flexibility, allocate capital efficiently, and continue compounding long-term shareholder value. With that, I would like to open the floor for some questions. Are there any analysts on the call?

Thank you. If you would like to ask a question, please signal by pressing *1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, if you would like to ask a question, please press *1 on your telephone keypad. We will pause for just a moment to allow everyone an opportunity to signal for questions. We will now take your first question. Coming from the line of Nick Giles with B. Riley Securities.

Hi, Nick.

Yes. Hey, sir. Hey, guys. Thanks very much. My first question was just along the lines of BTBT is trading at a discounted NAV, and I wanted to get your take just on where you need to see valuation before you might think about strategic acquisitions? And then as we think about targets, what would be the rough size of any target? How many of these types of acquisitions would you be comfortable making? Thanks a lot.

So the crypto industry in general, with respect to the businesses that are built on it, is trading at compressed valuations right now. So it is a good time to consider buying when there is a bear market or a mixed market in the sector. You generally want to avoid buying when it is frothy. We think it is an interesting time to buy, and there are a lot of great businesses out there. There are also a lot of not so great businesses out there. We are in a good position with our balance sheet to buy a business that would be strategically aligned with BitDigital and add revenue. There are a number of ways we can do this. It could be a trading or market-making firm. It could be an Ethereum-adjacent infrastructure company. It could even be a company participating in the agentic economy, because we believe there is an intersection with Ethereum and AI. These are the types of businesses we have been looking at. We started that process at the beginning of this year. We have spoken to a number of candidates. We continue to be on the hunt, and we look forward to hopefully selecting a candidate in an acquisition, or maybe more than one acquisition. As you mentioned, it could be more than one. We tend to be early on things, and we expect to be early and identify whatever candidate we decide to acquire. We will offer our rationale when we do, and we will see how it unfolds in terms of valuation in the future.

Hey, Samir. I really appreciate that perspective. So just to clarify those thoughts: you would be using cash on the balance sheet because with BTBT trading at a discount to NAV, it might make less sense to use your currency. But like you said, if there are good businesses trading at cheap discounts, this is the time to take action? Is that a fair summary?

That is a fair summary. Erke, do you agree?

Yeah. Absolutely. Leveraging will continue to be a key consideration when doing fundraising, especially taking, let's say, convertible or other debt forms of financing. We continue to use 20% as a metric for us to make a decision on whether we would add more leverage to BTBT. In terms of other forms of financing, equity is another tool as well. But if the digital asset sector is trading at a discount to NAV, then with acquisition targets surfaced, those are the tools we can use as well.

Okay. Very helpful. I'll turn it over, guys. Thanks for the update.

Thank you. Again, if you would like to ask a question, you may press *1 on your telephone keypad. We will now take your next question coming from the line of George Sutton with Craig-Hallum.

Hi, George.

Hey, guys. Logan on for George Sutton today. Thanks for taking the question. So Samir, I am curious to get maybe your thoughts on some of the new privacy-focused blockchains that seem to be getting more activity, like Canto, for example. Do you view those as competitors to Ethereum over time, kind of competing for activity?

I think it comes down to network effects. It is really difficult to get network effects in any private or niche blockchain. It kind of reminds me of the intranet, if you recall. You are not going to get the same broad participation. You need network effects in order to make something quite valuable; that is just my opinion. I understand that others may disagree. I do not have enough detailed knowledge about the specific chain you are referring to for me to opine too heavily.

Okay. Fair enough. Just one other for me, kind of thinking toward maybe an environment where capital raising is a bit more open: in the past, you have talked about trying to keep leverage down to 20% of Ethereum balances. Is that still how you would approach that, or is there any flexibility? Would unsecured debt still be your preferred route? I know other companies have been focused on preferreds, but just want to get a better picture of how that might work in a market environment that is more conducive to it.

If I may add, yes. Leveraging will continue to be a key consideration when doing fundraising, especially taking convertible or other debt forms of financing. We continue to use 20% as the metric for us to decide whether to add more leverage on BTBT. In terms of other forms of financing, equity is another tool as well. But if the digital asset sector is trading at a discount to NAV, then with acquisition targets surfaced, those are the tools we can use as well.

Helpful. Okay. That is all for me. Thanks, guys.

Your next question will come from the line of Brian Dobson with Clear Street.

Hi, Brian.

Hey, how are you doing? Thanks so much for taking my question. BitDigital has evolved a lot over the course of the past three years. Some very exciting opportunities ahead of you with strategic acquisitions. As you are thinking about the future, what do you think this business looks like in two years?

What it will look like in two years? As we evolve the business model, we do not see the intersection of AI and ETH going away anytime soon. We expect to participate meaningfully in those future trends. I talked during my remarks about agentic AI, and I think there is a natural home for counterparties to interact with each other, and that would be on Ethereum. We would like to continue focusing on that theme, and we think that theme will only grow stronger over the next two years.

Yeah, that is fantastic. Thanks a lot.

And it appears there are no additional questions at this time. I will turn it back to you for your closing remarks.

Thank you for joining us today. We do appreciate your continued interest and support, and we look forward to speaking with you again next quarter. There will be many announcements. Thank you. Thank you.

This concludes today's call. Thank you for your participation. You may now disconnect.