Earnings Call Transcript - BTBT Q4 FY2025

Cameron Schnier, Head of Investor Relations

Thank you, and welcome to BitDigital's fourth quarter and full year 2025 earnings call. Joining me today are Sam Tabar, our Chief Executive Officer, and Eric Wong, our Chief Financial Officer. Before we begin, I'd like to remind everyone that certain statements made during today's call may be considered forward-looking. These statements are subject to risks and uncertainties that could cause actual results to differ materially. For a discussion of these risks, please refer to our SEC file earnings, including our form 10-K filed March 27-2026. We will 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. Following our prepared remarks, we'll open the line for questions. With that, I'll turn the call over to Sam.

Sam Tabar, CEO

Thank you, Cam, and thank you for everyone for joining. I'll start with our progress in 2025 and how we are positioning the business. We repositioned the company as a Strategic Asset Company, or SAC, centered on Ethereum and AI infrastructure. We began exiting Bitcoin mining, built a scaled ETH position, and established white fiber as a core asset. Let me start with our Ethereum strategy. We view ETH as core infrastructure, a productive asset, not a passive holding. It allows us to participate directly in network activity through staking within a disciplined risk framework. For investors, Fit Digital provides a yield generating way to gain productive exposure to the broader Ethereum network. We combine treasury ownership and staking income and disciplined capital allocation. Our focus is on increasing ETH per share, not just growing the balance. We are not optimizing for a short-term scale. We are optimizing for long-term compounding. We approach this through a risk-adjusted lens, prioritizing security, liquidity, and counterparty quality while identifying opportunities to enhance returns. The recipe includes capital efficiency, yield generation, and long-term compounding. Our EAST position has grown more deliberately than some others in the market. That is intentional. We believe this approach allows us to scale over time without compromising the balance We've also been deliberate in how we deploy capital across market conditions. We are not accumulating ETH at any price. We are disciplined with how we use equity with a focus on long-term value per share. We are seeing more opportunities to deploy capital, but we will only do so if it's a creative per share. We continue to believe Ethereum is foundational infrastructure for digital assets and on-chain financial activity and that its role will expand over time we expect staking income to become a meaningful and recurring contributor to cash flow staking revenue grew nearly 300 percent in 2025 nearly half of our nearly half of our full year staking revenue was generated in the fourth quarter reflecting the scaling of our east position over the course of the year turning Starting briefly to Bitcoin mining, we continue to wind down the business in a deliberate As of year-end, our active hash rate was approximately 1.5x a hash. We are not allocating growth or replacement capital to this segment. Exposure will continue to decline and mining is no longer a strategic focus, but it does continue to generate cash flow as we complete the transition. Hash rate will continue to decline gradually while efficiency improves as old miners retire first. Turning now to white fiber. Our ownership and white fiber provides key exposure to AI infrastructure where demand for compute continues to outpace supply. We viewed this as a long-term position aligned with structural growth in the market. Our focus is on supporting the platform asset scales. We have also been clear on our intentions with respect to our ownership. We do not intend to monetize our white fiber position in 2026. We view it as a core long-term strategic asset and a key part of our exposure to AI infrastructure. This ownership stake is a key differentiator for BitDigital. It is a high-quality, liquid asset on our balance sheet that provides differentiated flexibility as we scale the business. Over time, this flexibility can support capital allocation across the platform while reducing reliance on diluted sources of capital. As we look ahead, our priorities are evolving. The next phase of the SAC model is building durable cash flow. This is critical to supporting continued investments and compounding across the platform. We expect to expand our operating footprint through disciplined investments. Our focus is on acquiring or building assets that fit our framework and generate consistent returns. Across Ethereum and AI infrastructure, our approach is consistent. Capital efficiency, discipline, long-term compounding. We have operated through multiple market cycles as a public company. Volatility is not new to us. Our focus remains on execution and long-term value creation. I'll now hand the line to Eric to discuss our financials.

Eric Wong, CFO

Thank you, Sam. I walked through our fourth quarter and full year 2025 results. Our 2025 results include YFiber, which we continue to consolidate following its IPO. A portion of the results is attributable to non-controlling interests. First quarter revenue was $32.3 million, up from $25.8 million in the same period last Full year revenue was $113.6 million, a 5% increase compared to 2024. Results reflect growth in cloud co-location and staking alongside the wind down of Bitcoin First quarter results were also impacted by digital asset revaluation similar to the full I will now break down revenue by segment. Revenue for digital asset mining was $27.3 million for the year down 53% compared to 2024 reflecting the continued wind down of the business. Cloud services revenue was $68.8 million up 50% year over year. Co-location services revenue was $8.9 million, up from $1.4 million in the prior year. Ethereum staking revenue was $7 million, up from $1.8 million in 2024. As of year end, the majority of our eighth holdings were actively staked, supporting ongoing yield generation. Overall, our revenue mix continues to shift away from mining and towards staking and infrastructure related revenue. Now turning to profitability. Gross profit for the fourth quarter was approximately $18 million representing a gross margin of approximately 56% compared to approximately 40% in the same period last year. Net loss attributable to big digital shareholders was $84.9 million for 2025 compared to a net income of $28.3 million in 2024. This change was largely driven by a less favorable year-over-year impact from digital asset revaluation. Adjusted EBITDA for the year was negative $24.9 million compared to a positive $73 million in 2024. A change reflects the same dynamic where non-cash digital asset revaluation offset improvements in our operating businesses. Now turning to a balance sheet. We ended the year with $118.4 million in cash and cash equivalents compared to $95.2 million at the end of 2024. This balance primarily reflects cash held at White Fiber, which is consolidated in our financial statements. Total digital assets were $415.7 million at year end, up from $161.4 million in a prior year. This reflects ETH's accumulation partially offset by lower year-end ETH prices. During the year, we issued $150 million of convertible notes, which are reflected on our year-end balance sheet. Proceeds were used to increase our ETH holdings. Overall, 2025 reflects a transition in our business and financial profile. We reduced the exposure to Bitcoin mining, scaled newer revenue streams, and we positioned a balance sheet around Ethereum and our ownership in White Fiber. Looking ahead, we expect our results to increasingly reflect the recurring revenue and cash flow. with less contribution from legacy mining and reduced exposure to volatility over time. With that, I'll turn it back to Sam for closing remarks.

Sam Tabar, CEO

Thank you, Eric. I'd like to close with a few thoughts on where we're heading. We've made significant progress repositioning BitDigital as a strategic asset company. Today, we are a business built around two core pillars, an Ethereum treasury and staking platform, and a majority ownership stake in white fiber, which gives us exposure to AI infrastructure. We believe that combination is differentiated. We believe it is difficult to replicate at scale. And we do not think it is fully reflective on how the company is valued today. We are not standing still. We are not trying to be a vehicle that simply raises capital to buy ETH. We do not believe that creates long-term value. Our objective is to build a business that can generate cash, deploy that capital efficiency, and compound value over time. That is the next phase of the SAC model. We believe adding a durable cash flow engine is critical to that evolution. It allows us to grow our ETH position in a more sustainable way and reduces reliance on external capital. M&A is part of that strategy. We are actively evaluating opportunities to acquire or build operating businesses that align with our framework and can generate consistent returns. We're focused on assets we understand. We will prioritize long-term value creation over speed. Importantly, we also have flexibility that many others do not. Our ownership in White Fiber is a high-quality liquid asset that provides flexibility as we scale the business. It supports growth without relying on dilutive capital and gives us exposure to AI infrastructure alongside our Ethereum strategy. At the same time, we remain fully aligned with White Fiber's long-term success. as we've said, we do not intend to monetize that position in 2026. The goal is simple. Build a business that generates cash. Deploy that capital into high conviction assets like Ethereum and continue compounding value per share over time. We have evolved the business significantly over the past year, and we expect that evolution to continue. We have operated through multiple market cycles, and our focus remains always on discipline, execution, and long-term value creation. With that operator, we can open the line for questions.

Operator

Thank you. If you would like to signal with questions, please press star 1 on your touch home telephone. If you're joining us today using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star one if you would like to signal with questions. The first question comes from Nick Giles with B. Riley

Nick Giles, Analyst — B. Riley

Securities. Hi, Nick. Yeah. Yes. Thanks, operator. Good morning, guys. Appreciate the update. Sam, I'm intrigued to hear that M&A may be of increased focus. Can you just give us a sense for what that could entail? You know, would potential targets be other DACOs that may have a lower MNAV than yours? Or kind of what would be the rough framework we should be thinking about?

Sam Tabar, CEO

No, it would not be other DATs. It would be a business that is generating cash or is on its way to generating cash so we can deploy that capital and invest it into Ethereum. We think that's the better way. In some ways, we have that already, but we're sunsetting a business, which is Bitcoin mining. So that is generating cash. That's another differentiator that other ZATs don't have. But that is not a business of the future, Bitcoin mining. And we've known that for a long time. In fact, we're the first ones or one of the first ones to announce that publicly. So we are looking, we are actively in the market right now, quite active, looking at M&A opportunities. They could be crypto-adjacent businesses aligned with Ethereum, aligned even potentially with agentic AI that has an intersection with Ethereum. There is an intersection between agentic AI and Ethereum. And so if we can find a business that has a very clear path towards cash flow related related to those work streams, those two sectors, we are very, very much interested. And so we've been actively in the market. We've already spoken to many candidates, actually. You've got to kiss a lot of toads before you find that prince or princess. And so in our case, it's a matter of time when we find it. We have been very successful in M&A in the past, and that being for white fiber when we acquired NFM, but that's for White Fiber. Today is about BitDigital. And we intend to make a successful acquisition, as we've done for White Fiber, but this time for BitDigital.

Nick Giles, Analyst — B. Riley

Sam, that's super helpful. That's exactly what I was looking for. My second question was just, you know, can you speak to some of the trends you're seeing across the Ethereum network? I think in the past, you've spoken about stable coins being built on top and, you know, a number of developers that are using the Ethereum network, just anything you're seeing out there that's kind of away from the price pressures that we see on our screen?

Sam Tabar, CEO

Yeah, I mean, with respect to the price pressures, it's difficult to avoid talking about that. I think there's been a lot of macro movements. I think two things happened with respect to price pressure. I know you're not asking about that, but I do want to make a comment about it. I think there was a rotation into gold. we're now seeing that rotation out of gold and coming back into crypto. I also think that there is obviously macro pressures such as the war that's happening that's caused a darker mood, but that is coming to an end. So I think those price pressures were not helpful, the movement towards gold and the war, but we're surfacing out of those two trends and now coming back into crypto. So I'm glad to see that happen. But with respect to Ethereum, the blockchain itself, I think it was Jamie Dimon that said the era of experimentation is now over. Let's start using these technologies. And I fully agree with that comment. The era of sandboxing this technology, the era of experimenting is over. And it's just the old world is now just changing, especially with AI, people are seeing that you just can't hold things together in the old way. And so all these intermediaries and all these, you know, it can be all streamlined through blockchain and agentic AI. And I think we're really living in an era where that old world is breaking down quite rapidly now the two battering rams being blockchain and then AI and so it's bound to happen it's not if it's when and I agree with the sentiment that the area the era of experimentation is over let's get out of the sandbox the regulations are becoming more clear and we should we should be seeing a more of a golden age in ethereum and I think it's going to be ethereum in particular because it It doesn't have any downtime, and I don't think institutions can deal with a protocol that has uptime issues.

Nick Giles, Analyst — B. Riley

Thank you, Sam. I really appreciate it.

Operator

And our next question will come from George Sutton with Craig Hallam.

George Sutton, Analyst — Craig-Hallum

Hi, George. Hi, Sam. So could you just walk a little in more detail around your recipe that you mentioned and, you know, the things that you are contemplating relative to building that ETH per share?

Sam Tabar, CEO

Yeah, I mean, we have a pretty unique recipe. A lot of people classify us as a DAT. That's a sub-strategy that we have. You know, we're very different. If you look at our peers, we have, believe it or not, a profitable Bitcoin mining business that, of course, we are sunsetting. We have a 70% majority stake in white fiber, you know, and white fiber isn't the topic of the conversation today. But, I mean, just there's obviously a lot of mis- I can't comment the price of particular stocks, but I can comment certain facts that, for example, white fiber has an $865 million contract and has a hyperscaler that is attached to the end of that contract with respect to North Carolina site. Again, this is about BitDigital, but my point is there aren't many companies that are positioned to have an infrastructure investment in the digital space, that being Ethereum, that we have an investment of a real business with incredible contracts attached to it with respect to white fiber. We have, oh, by the way, an ongoing business with Bitcoin mining that we are sunsiding, but there are revenues. It's still profitable. And now we are in the market very actively in M&A. And what we want to do with that business is take the cash flow from that business and create a flywheel that we take the money from that business, and it has to be a high-growth business, and pour that into Ethereum. By the way, we also have a non-dilutive source of capital through white fiber in the future. So if you have a source of capital, all these levers that other dads don't have, the white fiber lever, the business that we intend to acquire in the future with its cash flow. These are real businesses, and we take that and we pour that into buying Ethereum. We think that is the way forward instead of just being a shell company that you just shoved a bunch of Ethereum on, and you're just basically doing that, which we don't think is really the best way forward. And I think it's also highly dilutive. You need different levers.

George Sutton, Analyst — Craig-Hallum

I understand. So that's the recipe. Just on the agentic AI that you mentioned this morning relative to Ethereum, I believe the last number was something like 11,000 agents operating through 402 protocols. Can you just give us a picture of how well positioned ETH is versus other blockchains relative to the agentic AI token side?

Sam Tabar, CEO

Can you rephrase that question? Are you asking basically what's the intersection between agentic AI and – well, it has a lot to do with identification, but I'm not sure that's your question. Are you asking about the activity?

George Sutton, Analyst — Craig-Hallum

Well, you mentioned for the first time today that you're contemplating an agentic AI-related acquisition.

Sam Tabar, CEO

It's definitely one of the – just to be clear, it's a possibility. It's something we're looking into. We've always called out the trends before they happen in the mainstream, and we were the first that, basically. We got out of Bitcoin mining. We're the first ones. We did the AI infrastructure company. We believe that agentic AI is a huge future. And what we're interested in are businesses, blockchain businesses that have an intersection with agentic AI. We think the agentic AI economy is going to blow up in a major way, and we want to participate in the agentic economy. That's our thesis.

George Sutton, Analyst — Craig-Hallum

I understand. Just one other quick question with respect to the Clarity Act. I'm just curious your thoughts on that, your thoughts on likelihood of that getting through, and as it's currently constructed, how do you think it would influence the ETH assets that you own?

Sam Tabar, CEO

This is almost more of a political question. I'm happy to go there. So I think that there are going to be, I think the November elections are very much in play and whoever controls Congress is going to have obviously some influence on whether certain legislation gets passed. I think the Democrats have a choice to make. If they're going to try to weaponize technology like they did in the last election, that's going to be very problematic. I hope that they've learned their lesson, and I hope that they do not go the way of Elizabeth Warren, and they're more enlightened in their posture towards new technologies like blockchain. And if they do that, if the Democrats have learned their lesson from the last election cycle, then I do believe that the Clarity Act will have a chance to pass. It all depends on political parties not weaponizing and politicizing technologies.

George Sutton, Analyst — Craig-Hallum

Thanks for your thoughts.

Operator

And the next question will come from Kevin Deedee with H.C. Wayright.

Nick Giles, Analyst — B. Riley

Hi, Kevin. Hi, Eric.

Kevin Dede, Analyst — H.C. Wainwright

Yeah, hi, Sam. Would you mind digging in a little bit on the Ethereum yield strategy you're considering? I know at one point you had Rappies or Liquidee. I'm wondering if you're considering lending or borrowing on Aave. What sort of DeFi applications or initiatives might you consider in building your Ethereum returns?

Sam Tabar, CEO

I'd love to pass that question over to our CFO, Eric.

Eric Wong, CFO

Hi, Kevin. And so, so, so far, majority of our ETH as states native, and in the past, we have explored URI staking, liquid staking, and all those strategies, but, you know, to, to make a very simple majority as, you know, native, and we are exploring some strategies around enhancing the return, but so far, we think in native staking, you know, provides the, you know, the most, I would say, research-jentified returns, but if we see other opportunities we might pursue, that's the strategy right now.

Kevin Dede, Analyst — H.C. Wainwright

The press release, Eric, the press release talked to 89% of your balance state. Are you running all of that staking on your own validator nodes? And what would it take for you to go to a full 100% staking?

Eric Wong, CFO

Yeah, we worked with our fake demand for native staking. That's through the partnerships and they run the nods for us. And respect to the 10% that's with our third party. fund managers we deploy with them that's generating about three to four percent so which is higher than a three percent native speaking rewards working with a number of external fund managers to get their enhanced yield and our target is to increase that you know, let's say from 10% to 20%, but really it depends on, you know, what the strategies are and what the size of the strategy that would allow to generate such returns from the market, especially from the risks associated with deploying those strategies. So we're super careful about working and selective working with different other parties.

Kevin Dede, Analyst — H.C. Wainwright

Thanks, Eric, you nipped my last question in the bud on counterparty risk. So I'll flip over to Sam. A lot of discussion on M&A activity, can you offer a timeline? Is this something you hope to close before the end of the year? I know you want to keep it, you want to keep yourselves open and want to hold yourself to any obligation, but you just kind of give us something to look forward to, appreciate

Sam Tabar, CEO

Sure. I mean, the last time I spoke about timeline, I got into some hot water, so I want to make sure I don't discuss timelines too aggressively, and I don't want to be optimistic. I prefer to be much more conservative when it comes to timelines. But I could tell you what is happening. We've been on calls with M&A candidates for the past couple of months since early this In fact, we started that process, yeah, I think early January. And it's a long process because, frankly, there's a lot of trash out there. So we want to make sure that we buy a business we really love and is aligned with our philosophy in the future. And we don't want to buy some sort of impaired business or some business where it's just not for us. So in terms of when that will happen, I can't give you a timeline, although I do hope for it to happen. I believe, don't hold me to it, that'll happen this year. But I want to make sure, I want to make it clear that it's more important that we do the right acquisition and we don't rush anything and buy the wrong business because that will end in tears for everybody. So we have to be really careful on who we acquire. And we have a very, we have a fantastic track record in M&A, and we intend to use that talent in spotting the right acquisition candidate to provide and at least some value for BTVT.

Kevin Dede, Analyst — H.C. Wainwright

Yeah. So, Sam, on that topic of being careful and in the due diligence process, do you think Do you think you need to supplement your headcount in analyzing where you think agentic AI software development is and how legitimate the targets you're looking at are?

Sam Tabar, CEO

Yeah, I mean, again, it could be agentic AI. It could be more of an ETH-adjacent play. We're still looking at the various candidates, but as if your question is, just to be clear, if we're to acquire that company, they will have headcount. So that headcount will automatically increase when we acquire X.

Kevin Dede, Analyst — H.C. Wainwright

Yeah, no, no, I understand that. Yeah, I understand that, Sam. I was just wondering if you think you need new people now to help you in the review process.

Sam Tabar, CEO

Yeah, I mean, we are going through, we are, there is actually an active process going on in hiring a headcount that is going to be looking at this, although we have a number of executives looking at this very closely as well. All the candidates, all the M&A candidates that we have been speaking with, we're all, you know, there's a bunch of us on the call, and we are screening people out. And there have been some interesting candidates, by the way, and those conversations continue. But to answer your question directly, Kevin, we are hiring another person to help with the due diligence process of all this. And, of course, once we figure out our top, you know, three candidates, we'll have to go through, you know, a more even deeper dive process, and then we'll be hiring, you know, the bankers, the lawyers, and so on.

Kevin Dede, Analyst — H.C. Wainwright

Perfect. Perfect. Thank you so much, Sam. Appreciate all the color.

Eric Wong, CFO

Thank you.

Operator

And the next question will come from Mike Grondel with Northland Securities.

Sam Tabar, CEO

Hey, Mike.

Mike Grondahl, Analyst — Northland Securities

Hey, guys. Another question on the acquisitions you're looking at for BTPT. It sounds like you're looking to buy an acquisition that generates cash. Can you talk a little bit about the size of acquisition and how you would finance it? And then secondly, if we could get kind of an update on the financing for Wi-Fi, that would be great.

Sam Tabar, CEO

So the financing for Wi-Fi, that was – we did do the White Fiber earnings call the other day, and I believe that script and the audio recording of that is posted on our website. We'll have that sent to you. um so it's it's it's a much longer conversation um although it's it's an exciting one on the on for white fiber with respect to financing and going back to your first question with respect to the sizing it depends on the candidate it depends on you know of course we do still have a balance sheet and um perhaps there are ways to finance it off the balance sheet but i think you know we do have a healthy balance sheet still and we'll be using that to acquire the the candidate we will have in mind as part of our overall strategy for bit digital and again I want to remind everybody on this call that no one is doing these things not I just see that's just pressing the button having one lever and I don't think that's the way to go even strategy this week stops doing that. It's kind of a dumb strategy to just buy the digital asset and that's it. I mean, what kind of headcount do you need for that strategy? Not many people. So we're trying to put some intellectual heft and differentiate ourselves. And we've done that so far with our exposure to AI infrastructure. We've done that. We already have a Bitcoin mining business that continues to throw cash. And we're buying ETH not at any price. And so now, with respect to acquiring a business that's throwing off cash or has a promising path towards throwing off lucrative cash, that's going to be an additional lever for us to buy Ethereum in a non-dilutive manner, which I think is the way forward.

Operator

And, sir, do you have any further questions?

Mike Grondahl, Analyst — Northland Securities

Nope.

Sam Tabar, CEO

Thank you. And at this time, there are no further questions. Thank you, everybody. Thank you very much for attending this call and listening to us. We really look forward to the future and how we'll continue to differentiate ourselves. And we're really excited by it. So we look forward to the next quarterly call. And thank you very much for today.

Operator

Thank you. That does conclude today's conference.

Kevin Dede, Analyst — H.C. Wainwright

We do thank you for your participation. Have an excellent day.