Bit Digital Aktie

Hello, and welcome to the Bit Digital First Quarter 2026 Earnings Conference Call. We'll begin shortly. [Operator Instructions] As a reminder, today's call is being recorded.

I'll 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 Bit Digital's First Quarter 2026 Earnings Call. Joining me today are Sam Tabar, our Chief Executive Officer; and Erke Huang, our Chief Financial Officer.

I'd 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 direct 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'll turn the call over to Sam. Sam?

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 Bit Digital story and trajectory to our shareholders.

Bit Digital continued advancing its strategic asset transition during the first quarter. Our business today is centered around 3 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 yields. 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 ETH per share over time while maintaining balance sheet flexibility and capital efficiency.

Turning to our WhiteFiber holding. WhiteFiber remains a core strategic asset for Bit Digital and provides critical exposure to AI infrastructure where demand for compute continues exceeding 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 market value of approximately $322.1 million as of the end 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, the 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 constraints.

Finally, we will continue evaluating opportunities to expand recurring cash flow generation across our strategic asset platform. We remain disciplined in our approach and focus on long-term value creation rather than transaction volume.

I'll now turn the call over to Erke.

Thank you, Sam. 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% Q-over-Q. Colocation services revenue was $4.8 million, up around 23.9% quarter-over-quarter. Staking revenue -- 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 155,444.41 Ethereum. As of April 30, approximately 60,677 Ethereum remained natively staked. Based on closing Ethereum price of around $2,104 per Ethereum. On March 31, the market value of the company's Ethereum holding was $327 million. The company's average Ethereum acquisition price for all holdings was approximately $3,045 as of 31, 2026.

Rev mix -- revenue mix continued shifting away from mining and towards Ethereum-staking cloud business and colocation operations. We believe the transition continued creating a more durable and scalable operation 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 non-cash 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, '25. Digital assets totaled $295 million at quarter end compared to $415.7 million as of December 31 last year, the decline primarily reflected the lower Ethereum price in quarter end rather than reductions in holdings. Ethereum price is roughly $2,300 as of writing and has traded in a range between roughly $1,800 and $2,400 since early February.

Convertible notes increased to $334 million, with the increase driven by the insurance of the notes by WhiteFiber, which are consolidated within our financial statements. As of April 30, approximately 60,677 Ethereum remains natively staked. Total Ethereum holdings were approximately 155,461 Ethereum with a blended acquisition cost basis of around $3,028 per Ethereum.

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 Sam.

Thank you, Erke. Bit Digital 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. Stablecoins, 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 ETH. 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 become eventually 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, Bit Digital 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 Bit Digital. Our focus remains disciplined and long term. We intend to continue building a business at the crossholds of the Ethereum infrastructure, AI and HPC infrastructure and durable cash flow through strategic acquisitions. We believe Ethereum infrastructure and AI compute infrastructure 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 to compounding long-term shareholder value.

With that had, I'd like to open the floor for some questions. If there are any analysts on the call.

[Operator Instructions] We'll now take your first question coming from the line of Nick Giles with B. Riley Securities.

My first question was just along the lines of BTBT is trading at a discounted mNAV. 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, I mean, what would be the rough size of any target? How many of these types of acquisitions would you be comfortable making?

So the crypto industry in general, with respect to the businesses that are built on it are 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 kind of want to avoid buying when it's frothy. So we think it's 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. And we're in a good position with our balance sheet to buy a business that would strategically be aligned with the digital and add revenue.

And it has to be -- I mean, there are a number of ways we can do this. It could be a trading or a market-making firm. It could be an Ethereum-adjacent infrastructure company, but there could even be a company involved in the -- that's participating in the agentic economy because we believe that there is an intersection with Ethereum and AI.

So these are the things we've been looking at. We started that process at the beginning of this year. We've spoken to a number of candidates. We continue being 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. And when we do, we expect it to be -- we tend to be early at things, but they always -- they tend to work out. So we expect to be early in identifying whatever a candidate we decide to acquire, and we'll offer our rationale, and we'll see how it unleashes in terms of valuation in the future.

Sam, I really appreciate that perspective. So just if I could try and clarify those thoughts. You would be using cash on the balance sheet because with BTBT trading at the discount to NAV, it maybe would make less sense to use your currency. But like you said, if there are good businesses trading at cheap discounts, this is kind of the time to take actions. Is that a fair summary?

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

Yes, absolutely.

[Operator Instructions] We'll now take your next question coming from the line of George Sutton with Craig-Hallum.

Logan on for George again today. So Sam, I'm curious to get maybe your thoughts on some of the new privacy-focused blockchains that seem to be getting more activity like Canton, for example. I guess, how do you view those as competitors to Ethereum over time, kind of competing for activity?

I think it comes down to network effects. It's really difficult to get network effects in any private block chain. It kind of reminds me of the Intranet, if you recall. You're not -- I just think you need network effects in order to make something quite valuable. That's just my opinion. I understand that others may disagree. But I don't -- the one that you're referring to, I don't have enough knowledge about it for me to really opine too heavily, to be honest.

Okay. Yes. No, fair enough. Just one other for me, kind of thinking towards maybe an environment where capital raising is a bit more kind of the doors are open. I think in the past, you've talked about trying to keep leverage down to 20% of Ethereum balances. I'm just curious if that's sort of still how you would approach that or if there's any flexibility to that? And would unsecured debt kind of still be your preferred route. I know other companies have been focused on preferreds, but just want to get a better picture of kind of how that might work, again, in a market environment that's kind of more conducive to it.

Yes, Erke, do you want to take that?

Yes. If I may add, yes, leveraging continue to be a key consideration we were doing in fundraising, especially taking on, let's say, convertible or other debt form of financing. So we continue to use 20% as the metrics for us making a decision, whether we like to really put on more leverage on BTBT. And in terms of other forms of financing, our equity as another tool as well. But as we all see the digital is trading at a discount NAV, but with the acquisition targets serving, those were the tools we can use as well.

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

Bit Digital has evolved a lot over the course of the past 3 years, some very exciting opportunities ahead of you as you discuss strategic acquisitions. As you're thinking about the future, what do you think this business looks like in 2 years?

Bit Digital, what it'll look like in 2 years?

Yes, as you're kind of evolving the business model.

Yes. I mean we don't see the intersection of AI and ETH going away anytime soon. We expect to really want -- we just really want to participate in those future trends. And during my earnings call today, I did talk about agentic AI, and I think that there's a natural home for counterparties to interact with each other, and that would be on Ethereum. So we'd like to continue digging in on that theme, and we think that theme will only grow strong over the next 2 years.

And it appears there are no additional questions at this time. I'll 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 in the next quarter. There will be many announcements. Thank you till then.

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

Hello, and welcome to the Bit Digital Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] As a remainder, today's call is being recorded. I'll now turn the call over to your host, Cameron Schnier, Head of Investor Relations at Bit Digital. Cameron, please go ahead.

Thank you and welcome to Bit Digital's Fourth Quarter and Full Year 2025 Earnings Call. Joining me today are Sam Tabar, our Chief Executive Officer; and Erke Huang, 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 involve risks and uncertainties that could cause actual results to differ materially. For a discussion of these risks, please refer to our SEC filings, 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?

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 [indiscernible] Mining, built a scaled ease position and established WhiteFiber as a core asset.

Let me start with our Ethereum strategy. To view ease 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, Bit 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 [indiscernible] per share, not just growing the balance. We are not optimizing for 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 [indiscernible] 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 sheet. We've also been deliberate in how we deploy capital across market conditions. We are not accumulating [indiscernible] 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 accretive 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% in 2025, nearly half of our full year staking revenue was generated in the fourth quarter, reflecting the scaling of our ETH position over the course of the year.

Turning briefly to Bitcoin mining. We continue to wind down the business in a deliberate manner. As of year-end, our active hash rate was approximately 1.5x a hash. We are not allocating growth or replacing 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 WhiteFiber. Our ownership in WhiteFiber provides key exposure to AI infrastructure, where demand for compute continues to outpace supply. We view 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 Bit Digital. 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 dilutive 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 Erke to discuss our financials.

Thank you, Sam. I'll walk through our fourth quarter and full year 2025 results. Our 2025 results will include WhiteFiber which we continue to consolidate following its IPO. A portion of the results is attributable to noncontrolling interests. First quarter revenue was $32.3 million, up from $25.8 million in the same period last year. Full year revenue was $113.6 million, a 5% increase compared to 2024. Results reflect growth in cloud, colocation and staking alongside the wind down of Bitcoin mining. Fourth quarter results were also impacted by digital asset revaluation, similar to the full year.

I will now break down revenue by segment. Revenue for -- sorry, revenue for [indiscernible] 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 58.8 million, up 50% year-over-year. Colocation services revenue was $8.9 million up from $1.4 million in the prior year. [indiscernible] staking revenue was $7 million, up from $1.8 million in 2024. As of year-end, the majority of our ETH holdings were actively stacked support 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 Bit 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 were noncash digital asset revaluation offset improvements in our operating businesses.

Now turning to 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 WhiteFiber, which is consolidated in our financial statements. Total digital assets were $415.7 million at year-end up from $161.4 million in the prior year. This reflects its accumulation partially offset by lower year-end is 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 [indiscernible] mining, skilled newer revenue streams and repositioned the balance sheet around [indiscernible] and our ownership in WhiteFiber. Looking ahead, we expect our results to increasingly reflect recurring revenue and cash flow, with less attribution contribution from legacy mining and reduced exposure to volatility over time.

With that, I'll turn it back to Sam for closing remarks.

Thank you, Erke. I'd like to close with a few thoughts on where we're heading. We've made significant progress repositioning Bit Digital as a strategic asset company. Today, we are a business built around 2 core pillars in [indiscernible] treasury and staking platform and a majority ownership stake in WhiteFiber, 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 WhiteFiber 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 WhiteFiber'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 continued 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 Instructions] The first question comes from Nick Giles with B. Riley Securities.

Appreciate the update. Tim, I'm intrigued to hear that M&A may be of increased focus. Can you give us a sense for what that could entail would potential targets be other [ DAC cos ] that may have a lower NAV than yours? And kind of what would be the rough breakout we should be thinking about?

No. It would not be other [indiscernible] it would be a business that has -- 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 [indiscernible] don't have. But that is not a business of the future of 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 to those work streams, those 2 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 toes 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 therefore, that being for WhiteFiber when we acquired any of them, but that's where WhiteFiber today is about bit digital. And we intend to make a successful acquisition as we've done for WhiteFiber, but this time for a Bit Digital.

And that's super helpful. That's exactly what I was looking for. My second question was just 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 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.

Yes. 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 2 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 bad 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 2 trends, so 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 -- 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 2 battering ramps 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 be seeing more of a golden age. In [indiscernible] and I think it's going to be it's there in particular because it doesn't have any downtime. And I don't think institutions can deal with a protocol that has uptime issues.

Our next question will come from George Sutton with Craig Hallum.

Sam, so could you just walk a little in more detail around your recipe that you mentioned and the things that you are contemplating relative to building that [indiscernible] per share?

Yes. I mean we have a pretty unique recipe. A lot of people classify as [indiscernible]. That's a sub strategy that we have. 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 70% majority stake in WhiteFiber and WhiteFiber isn't the topic of the conversation today. But I mean, just -- there's obviously a lot of -- I can't comment the price of particular stocks, but I can comment certain facts that, for example, WhiteFiber 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 the digital. 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 WhiteFiber. We have, oh, by the way, an ongoing business with Bitcoin mining that we are sunsetting but their revenues is 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 put that into Ethereum.

And by the way, we also have a nondilutive source of capital through [indiscernible] in the future. So if you take -- if you have a source of capital, all these levers that other [indiscernible] 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 a [indiscernible] we think that is the way forward instead of just being a [indiscernible] company that you just subbed 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.

I understand the [indiscernible]. Just on the Agentic AI that you mentioned this morning relative to [indiscernible] I believe the last number was something like 11,000 agents operating through [indiscernible] protocols. Can you just give us a picture of how well positioned [indiscernible] versus other blockchains relative to the Agentic-AI token side?

Can you rephrase that question? Are you asking basically what's the interaction between AgentiAI? 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?

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

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 [indiscernible] Mining were 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 the 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.

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?

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 get 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.

And the next question will come from Kevin Dede with HC Wainright.

Would you mind digging in a little bit on the Ethereum yield strategy you're considering? I know at 1 point, you had [indiscernible] I'm wondering if you're considering lending or borrowing on Ave, what sort of DeFi applications or initiatives might you consider building your Ethereum returns?

I'll look to pass that question over to our CFO, Erke.

Kevin, so far, majority of our ETH [indiscernible] native. And in the past, we had explored [indiscernible] all those strategies. But to make a very simple majority as [indiscernible]. And we are exploring some strategies around enhancing the return. But so far, we think native taking provides the most, I would say, research estified returns, until we see other opportunities we might pursue, that's the strategy right now.

The press release, Erke, the press release talked to 89% and of your balanced 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?

Yes. We worked with [indiscernible] for native staking. That's through the partnerships and they run their node for us, and in respect to the 10% that's with our third-party managers. We deploy with them. That's generating about 3% to 4%, so which is higher than 83% negative taking awards, working with a number of external fund managers together enhanced yield. And it targets to increase, let's say, from 10% to 20%. But really, it depends on what the strategies are and what the size of the strategy that would allow us 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 interparties?

Thanks, Erke. You look 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 time line? 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 can you just kind of give us something to look forward to, would appreciate it.

Sure. Last time I spoke about time line. I got into some hot water. So I want to make sure I don't discuss time lines too aggressively, and I don't want to be optimistic. I prefer to be much more conservative when it comes to time lines. 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 year. In fact, we started that process. Yes, 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 are -- 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 is just -- it's just not for us.

So in terms of when that will happen, I can't give you a time line, although I do hope for it to happen, I believe that don't hold me to it, that will 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 at least some value for BTBT.

Yes. So Sam, on that topic of being careful and the due diligence process, 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?

Yes. I mean, again, it could be agenetic AI. It could be more of an ease adjacent play. We're still looking at the various candidates. But I think your question is -- just to be clear, if we were to acquire that company, they will have headcount. So that headcount will automatically increase when we acquire...

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

Yes. I mean there's -- we are going through -- we are -- there is actually an active process going on in hiring 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 -- there's a bunch of us on the call, and we are screening people out. And so there have been some interest in 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 once we figure out our top 3 candidates, we'll have to go through a more even deeper dive process, and then we'll be hiring the bankers and lawyers and so on.

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

Another question on the acquisitions you're looking at for BTBT. 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 WYFI, that would be great.

So the financing for WiFi, that was -- we did do the WhiteFiber 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. So it's a much longer conversation, although it's an exciting one on WhiteFiber with respect to financing.

And going back to your first question, with respect to the sizing, it depends on the candidate. It depends on of course, we do still have a balance sheet. And perhaps there are ways to finance it off the balance sheet. But I think we do have a healthy balance sheet still, and we'll be using that to acquire 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 [indiscernible] just pressing the button, having 1 lever. And I don't think that's the way to go.

Even strategy this week stops doing that. It's not -- 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 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 thorium in a non-dilutive manner, which I think is the way forward.

And sir, do you have any further questions?

No.

Thank you. And at this time, there are no further questions.

Thank you, everybody. Thank you very much for attending this call [indiscernible] 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.

Thank you. That does conclude today's conference. We do thank you for your participation. Have an excellent day.

Hello, and welcome to the Bit Digital Third Quarter 2025 Earnings Conference Call. Good morning, good afternoon and good evening, depending on where you are joining us from. We'll begin shortly. [Operator Instructions]. As a reminder, today's call is being recorded. I'll now turn the call over to your host, Cameron Schnier, Head of Investor Relations at Bit Digital. Please go ahead.

Thank you, and welcome to the Bit Digital Third Quarter 2025 Earnings Call. Joining me on the call today are Sam Tabar, our Chief Executive Officer; and Erke Huang, 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 involve risks and uncertainties that could cause actual results to differ materially from those projected. For a discussion of those risks, please refer to our filings with the SEC, including our Form 10-Q filed today.

Our remarks today may also include non-GAAP financial measures. Reconciliations of those measures to the most directly comparable GAAP figures can be found in our Form 10-Q, which is available on our website. After our prepared remarks, we'll open the call for Q&A. With that, I'll hand the phone over to Sam to discuss our performance. Sam?

Thank you, Cam, and thank you to everyone for joining us today. The third quarter was our first full period as a focused Ethereum treasury and staking company. Our execution has been consistent with the plan we laid out last year. Since completing the WhiteFiber IPO in August, Bit Digital has become a more streamlined distant.

Our strategy is simple. Grow our Ethereum holdings and state gain activity in a prudent, responsible way that creates long-term value for shareholders. We're not chasing size for its own sake. We're now trying to accumulate as much ETH as possible and at the shortest time. Our goal is to compound value per share through disciplined capital allocation, careful risk management and consistent yield generation.

During the quarter, we continued to expand our ETH position. At quarter end, we held about 122,000 ETH. By the end of October, that number has risen to more than 153,000 ETH with roughly 132,000 actively stated. That is a 5-fold increase since June. That shows that our transition to an ETHcentric platform is well underway.

After quarter end, we completed a $150 million convertible notes offering. We used the proceeds to purchase about 31,000 ETHs. The structure of the offering was designed to be accretive to net asset value per share. The initial conversion price was set at a premium to our estimated NAV at the time. The transaction attracted participation from leading digital asset investors and institutional funds.

This financing reflects our disciplined approach to growth. We are not pursuing rapid expansion for its own sake. Instead, we raised long-term low-cost capital on attractive terms, then we deployed it directly into Ethereum by what we believe is a compelling long-term entry point.

Our staking operations are now beginning to contribute meaningfully to revenue. Staking revenue grew to about $2.9 million in the third quarter, up from $400,000 in the prior quarter. This was driven by a large state balance and a higher realized ETH price.

As our ETH position grows, staking income will become the main engine of our results. We see it developing into a strong recurring source of cash flow. And of course, the real core of this model shows itself when ETH moves meaningfully higher, something we believe is a matter of when, not if.

Turning briefly to mining. We produced 65 Bitcoin in the third quarter down from 83% in the prior quarter as we continue to wind down the business in a measured way. Mining gross margin was about 32%, our highest since the recent halving. This reflects improved fleet efficiency as we phased out older hardware and optimized hosting.

As of the end of September, our active hash rate was about 1.9 exahash with an average efficiency of roughly 22 joules per terahash. We expect fleet efficiencies to improve to around 19 joules per terahash over the next few quarters as less efficient units are retired. We anticipate active cash rate trending towards 1.2 exahash by mid-2026.

Mining remains a small noncore contributor but it continues to help offset corporate overhead while we complete the transition to a fully Ethereum based model. As I like to say, mining can be a pretty good business if you never have to spend money on facing ASICs.

Ethereum fundamentals remain solid. Institutional participation is rising. Validated accounts continue to grow. On-chain activity is strong. We believe the ETH role as the foundation for digital assets, decentralized finance and tokenized real-world assets becomes clearer with time. For investors, Bit Digital offers an actively managed yield-generating way to gain Ethereum exposure. We combine the characteristics of a treasury vehicle, but the benefits of active capital allocation and staking income. Our experience and scale allow us to manage risk and capture opportunities that passive holders cannot.

Finally, discipline is more than a strategy is who we are. This quarter reaffirmed that discipline in our competitive edge. We have operated and evolved through multiple crypto cycles asset of the company. Drawdowns are nothing new to us. That experience helps us stay focused on durability, not momentum. The third quarter was about execution. We streamlined the business. We strengthened our capital base, and we delivered strong results while positioning Bit Digital for the next phase of growth. With that, I will hand it over to Erke to walk through the financials.

Thank you, Sam. As a reminder, our financial results continue to consolidate WhiteFiber under U.S. GAAP due to our majority ownership. Segment breakouts are available in our Form 10-Q. Also note that a portion of our consolidated cash is held at a WhiteFiber level.

Total revenue for the third quarter was $30.5 million compared to $25.7 million in the prior quarter and $22.8 million in the same period last year. Ethereum staking revenue totaled $2.9 million, up over 542% from last year. We earned 644 ETH from native staking and 53 ETH from liquid staking during the quarter. The year-over-year increase in staking revenue reflects both higher sum earned and a higher average immune price.

As of September 30, we held approximately 122,000 ETH of which about 100,000 were fixed, representing roughly 82% of total holdings. That balance has continued to grow meaningfully since quarter end with 153,500 ETHs held and 132,000 ETHs staked as of October 31. While new validators take time to enter the activation queue before generating yield, we expect the full effect of this increase to be reflected in fourth quarter results.

Digital asset mining revenue was $7.4 million compared to $6.6 million in the prior quarter and $10.1 million in the same period last year. We produced 65 Bitcoin during the quarter. Mining margins remained positive despite higher network difficulty and ongoing wind-down of the fleet.

Cost of revenue, excluding depreciation was $2.1 million compared to $13.8 million in the prior quarter and $15.5 million a year ago. Gross profit was $18.3 million, representing a 60% gross margin compared to a 32% in 3Q 2024. General and administrative expenses were $33.1 million compared to $19.7 million in the second quarter and $13.7 million a year earlier. The increase primarily reflects higher share-based compensation and consulting costs related to the WhiteFiber IPO and transition.

Stand-alone Bit Digital G&A expected to be normalized as long nonrecurring costs fall off and once WhiteFiber related costs are fully separated. The several cost structure for Bit Digital has the flexibility to become very lean. Net income for the third quarter was $146.7 million or $0.47 per diluted share compared to a net loss of $38.8 million in the year ago period. Results were driven by higher revenue, improved margins and $168 million gain on digital assets, reflecting appreciation in our Ethereum holdings.

Adjusted EBITDA was $166.8 million compared to $27.8 million in Q2 and negative $19.7 million a year ago. On the balance sheet, we ended the quarter with approximately $179 million in cash and cash equivalents and approximately $24 million in digital assets, consisting almost entirely of this year. Including USDC, total liquidity was approximately $620 million, of which roughly $166 million was held at WhiteFiber level.

We had no debt outstanding as of September 30. After quarter end, we closed a $150 million offering of 4% convertible notes due 2030, providing long-term, low-cost capital to support continued ETH accumulation. Our plan is to keep total leverage below 20% of our ETH holdings. Right now, the figure is above the threshold, meaning we would not increase leverage until the ETH price rises to a comfortable level relative to our notes. That concludes my financial review. I'll now hand the line back to Sam.

The third quarter was an important step in Bit Digital's evolution. We completed our transformation into an Ethereum focused company. At the same time, we continue to deliver strong financial performance. Our balance sheet is solid. Our capital base has expanded, and our ETH position continues to grow.

Looking ahead, our priorities remain the same. We will allocate capital responsibly. We will continue scaling our staking operations, and we will maintain a strong financial position. We believe that disciplined patience and thoughtful execution will create the most long-term value for our shareholders. We are also in a unique position amongst the digital asset companies.

Bit Digital gives investors exposures to 2 powerful secular trends. First, the growth of Ethereum as the backdrop of decentralized finance; and second, the rise of AI infrastructure through our ownership of WhiteFiber. Our competitive edge is clear. We built infrastructure that earns in all conditions anchored by the 2 most powerful story arcs of our time, ETH if and AI.

WhiteFiber is establishing itself as a credible operator in the high-performance computing market. We continue to see substantial value in that business. Our retained stake represents a meaningful asset for Bit Digital shareholders. We review our ownership as both strategic and long term. The lockup on those shares expires in February 2026.

But let me state firmly. We will not sell any of our WhiteFiber shares during 2026. We are confident that the value of this asset will materially appreciate over time. The recent sector-wide drawdown does not affect a conviction. Clarity accelerates adoption. For the first time, we're seeing regulation begin to finally catch up with technology and Ethereum is winning where it matters most.

Every part of modern financial infrastructure now touches ETH in some way. It has become the foundation for stable coins, decentralized finance and the next wave of on-chain financial innovation. We believe Ethereum and AI, we will define the future of digital infrastructure. This is where credibility and capital needs.

Bit Digital positions itself early for where the talk is going, not where it has been. We are building for participation, not extraction. We own the compute the capital and the credibility to help secure the next generation of networks. As we move forward, we will stay focused on what we can control, disciplined capital deployment, prudent risk management and steady growth in our staking operations. We believe this approach will allow us to compound value per share over time and remain one of the most durable platform. Thank you for joining us today, and thank you for your continued support.

[Operator Instructions]. We'll take our first phone question. We'll go to George Sutton with Craig-Hallum.

Thanks, Sam. So one thing I think would be helpful, the market has gotten a little confused of late with a number of different blockchain alternatives. I would call them Solana, Sweet, Jensen, et cetera. Can you just talk about your ultimate belief in Ethereum relative to the rest of the blockchain options?

Sure. I mean to begin this, Ethereum has no downtime. And Wall Street is going to back a blockchain that has 0 downtime. So when it comes to security and downtime, there is no second best. Ethereum is certainly the very best stock chain for that use case. Of course, Bitcoin is not possible because it doesn't have smart contracts and of course, the various smart contract technology with Solana and the others, but they have downtime, there's also centralization issues.

It's pretty clear that Wall Street has already made its decision about which blockchain is going to that given those reasons that I mentioned. It also helps from a regulatory perspective. There's been some clarity and there's emerging priority about stablecoins. You're seeing regulatory acts like the CLARITY Act and the GENIUS Act making their way up. And a lot of these regulations provide a lot of clarity about the rules on stablecoins.

And last I looked, I think a little bit more than half of stablecoins are built on Ethereum. And stablecoins is certainly where the pot will be going. And that is built on Ethereum so for all those reasons and much more not to mention there are tens and tens of thousands of developers in Ethereum that is way more than any other blockchain by orders of magnitude. So I mean that can go on, but those are a few reasons why we believe Ethereum is going to be the winner. And frankly, we think that race has already been largely determined but perhaps some bias.

So I appreciate the increase in the staking revenue. Can you give a limit on the percentage that you ultimately stake?

I mean for us, the more the merrier. I'll let Erke talk about that a little bit.

In terms of the ETH on our balance sheet, we can take the 100% and right now, the reason were about like 85%, it's below 90% is because a portion of that we're working with external managers also being stated and by different like staking strategies that will generate alpha for the company as well. So that's our target to generally just not just native staking but beyond native staking above 3% of the yield. But to answer your question ...

[indiscernible].

I'm sorry. I didn't catch that. Can you repeat that question, please?

Are you using multiple custodians?

Yes, we primarily are using 2 customers. One is Fireblocks and another one is Cactus Custody by Matrixport and we have been using them for the past 4, 5 years, has been working great.

Our next question comes from Brian Dobson with Clear Street.

As you look out into the broader market, thinking about your competition, what do you think could set the digital part over the next 2 years?

I mean we have -- just taking a step back, there's SBET and there's BMNR. These companies. I have a lot of respect for Joe and for Tom. I was just on the panel with them in Singapore at TOKEN2049. We had a very healthy debate with each other. How do you recommend checking out that to debate because that question came up.

And the short version of my answer was that, first of all, we Bit Digital has a successful business. We had Bitcoin Mining, which was profitable. We sold all our Bitcoin. We bought into -- we bought Ethereum with that. We also had a very successful HPC business. So successful that we IPO-ed that business, and we now own 71.5% of a real business.

So this is -- Bit Digital was not -- BTBT was not some sort of failed business that was a shell, that was just picked up and then did a pipe and slapped a bunch of Ethereum on it. That's not what happened. This was a real company. And this company currently still has a very profitable business, including staking Ethereum on the balance sheet.

Also, I mean, except for Joe Lubin, who's the co-founder of Ethereum, I've been involved with Ethereum since 2017. I remember people asking me if I thought Ethereum was basically topping at $300. I kept telling people no. I don't think it's top. And if you ask me today, I will still continue to do the same answer it has not topped even at $3,000.

So I've been involved in this space. So I also built technology on Ethereum. As a co-founder -- the team built something called AirSwap. It was a decentralized exchange. We actually sold that company to Joe Lubin, who is the Co-Founder of Ethereum, who is involved with SBET. So we're intimately involved this Ethereum, not just from a price action perspective, but also from a technological perspective, which is why it reinforces our belief and our conviction why those technology over other technologies.

And lastly, I mean, there are many reasons. But lastly, we're able to do things like unsecured converts. We've been able to financially engineer the purchases of Ethereum unlike any other DAT. There isn't any DAT out there that's done unsecured converts. We are the only one. And we just have that ability and talent and we're structuring a way where we can do that. And that's really important because if it's a secured convert well, when Ethereum goes down, creditors can grab your Ethereum, and that's going to not end well for you.

But in our case, that can't happen because it was an unsecured debt, it's not secured by the underlying assets that we have on our balance sheet. So because of our creative ability with financial engineering, which we were inspired by Michael Saylor's playbook and this was a successful company, continues to be a successful company and owns a controlling ownership stake in WhiteFiber, which is an AI infrastructure company. And because we understand the underlying technology very, very well.

And the only person who knows that better than me is Joe Lubin, we think that we are very differentiated in many different ways. So we don't think frankly being the largest is the marker successive how you do it. And we've done it with unsecured converts. We are structured in a way that positions us to have exposure to digital assets and artificial intelligence in a successful company. And so those -- for those reasons and more, that's how we're differentiated versus as SBET and BMNR.

Great. And then just as -- just as a quick follow-up, the converts and preferred market or rather demand for converts and preferred has been pretty robust over the past few months. As you're looking forward, do you have a preferred way of raising capital?

We love these unsecured converts, but I'll let Erke, our CFO, talk more about that.

Yes. I mean, convertible is always on the table, but we do monitor our leverage very closely, and we don't want to overleverage the company and we had to set up an ATM program for $2.5 billion, but we only use it when we see in the market makes sense or the NAV makes sense. We're very conservative and combined. I think that's our way of adding additional Ethereum accumulation treasury.

We'll next go to Kevin Dede with H.C Wainwright.

Erke, I guess first question is, I know you mentioned 1.2 exahash midyear next year, Sam. But I'm looking at the cash price at $0.04 now, and I'm wondering if that may have reset your calculus a little bit. And maybe you could give us an idea where you think it could be at the end of the year next year?

I'll give that to you, Cam and Erke.

I mean likely in that range, I think it's just a function of sort of a hosting portfolio pruning over time as contracts roll off and then optimizing the newer machines. I mean there might be space to increase it marginally just based on what's available in the venture term, 1-month extension here or there if those machines make sense, but I mean it is a business generally that is sunsetting and like we've never had a lot of conviction historically in being able to model mining economics a year out.

So I think we'll just evaluate that as it comes. But as it stands, it's going to be a business that methodically winds down. And as older machines are retired, efficiency should improve and should enhance the overall margin profile of that business, all else equal with the ad price.

I know that you're working with fire blocks, obviously, another custodian, but I was wondering if you might offer your thinking on running your own validator nodes? And I guess more broadly, how you expect to squeeze more yield out of the Ethereum network?

We work with FitMint for our native staking, and we have been very happy with the service and security as well. We take this very seriously as we grow digital asset base. It's in the $100 million range and not too far from $1 billion of digital assets under management. Another strategy we have is we'll be engaging with external managers for strategies that would generate additional yield beyond native staking but again, we're very cautious about the risks associated with external partners as well. So we take a very measured way. But yes, we're trying to generate additional yield alpha from the market as well on top of the 3% native staking that's bringing us.

Erke, is there -- I mean is there any thinking on internally about perhaps running your own validator nodes and taking FitMint out of the equation?

I think as on now, we're pretty happy with working with FitMint. But I would say when the operation becomes meaningful enough, we might consider but at this point, we're happy with working with the external service provider.

Can you just sort of walk me through your $2.9 million staking revenue number? How do you -- how do you get that? I mean I saw how much Ethereum you generated. Is that just sort of the end of the quarter number multiplied by the Ethereum price? Or is it done on some sort of average basis?

It's based on, I think, daily basis for revenue.

Okay. Sort of a higher-level question. Given on the Ethereum network because I'm still trying to get used to it, the complexion of the business has changed the network has changed a lot, right, with some very large companies acquiring large amounts of Ethereum and you named abitmine and SharpLink and ETHZilla, The Ether Machine.

And I'm wondering how you might think about what happens to inflation of Ethereum tokens itself. I mean I know after the merge, it was sort of -- the network was deflationary. And I think inflation is pretty slight, less than 1% most recently. But I'm wondering if you think these treasury companies change that inflation pattern.

I'm not sure if the treasury companies would change the inflation because the inflation is more driven by the issuance of Ethereum from the blockchain itself and the activity is unchanged. So the treasury companies would -- how it accumulates and stake ETH that would -- I think that would average a lower staking yield. But at this point, the staking yield is pretty stable. So it's not making a very material impact for the overall like inflation discussion of Ethereum.

Okay. Thanks Erke, I appreciate your color on that. I guess I was sort of thinking that huge amounts of there were coming out of the network, and there isn't more available to handle the daily transaction volume.

No, they're all being staked and all the new bets were like running the valuators. So they're feeling the ecosystem, money being taken out in that regard.

We go to Nick Giles with B. Riley Securities.

This is Henry Hearle on for Nick Giles. For my first question, what are your guys' expectations for consolidation in the digital asset treasury space? And how do you guys think about opportunistic M&A?

It's a good question. We've come across some opportunities ourselves, but we're currently focused on our unique position. And we are very uniquely positioned. We're not just some ordinary playing the little of that. We are -- we have Ethereum on our balance sheet, which we stake the vast majority of, and we own 71.5% of WhiteFiber, which is in the hottest sector, and that will continue.

We see absolutely no drop in demand before the building of the data centers regardless of the drawdown in effect today, regardless of what Jim Cramer, has to say. We actually know that there is incredible demand, and we own 71.5% of that, company that's exposed to that particular demand.

So we're uniquely positioned, and there's just no space I'd rather be in the digital assets and artificial intelligence. And I don't know of any other publicly listed company that has direct exposure to that. So very uniquely positioned. If we were to buy another debt, I'm unsure they'd add value really. I think we'll just continue to stay the course and buy Ethereum. As I mentioned today, and it's very important for everybody to note, we will -- even though our lockup ends in about 3 months for WhiteFiber, we are announcing today that we will not sell that stake throughout next year because our conviction in that company is extremely rock-solid high.

Great. That's well noted. And then as a follow-up to a previous question, could you guys provide any more guidance on sticking yields going forward? Like how should we think about opportunities beyond the 3% annually that we're seeing today?

I'll let -- Erke will answer that question, but I hope that one day, people will dig a little deeper on how people are doing. They're taking amongst the DATs. It would be interesting to see if fees that shouldn't be -- you guys should look at the fees that are being charged in the various service providers that other DATs are using just to make sure that it's in line with the interest of shareholders. I can certainly say that with respect to our very much aligned with the interest of shareholders. From there on, I'll just leave it to Erke to answer your question more directly.

Yes. Happy to. The medium sticking right now provides about 3%. I think we'll continue to provide 3% for medium-term period of time and the managers we are working with, we like to see at least 4% of the yield and that's a go. But we're evaluating those strategies and justify the risk return. And -- but combined, we'd like to have this new boost 10% and the 3% of the -- compared to the benchmark for native staking.

Mike Grondahl, Northland Securities.

Sam let me ask you about WhiteFiber. And what would you say have been the 2 biggest challenges in ramping revenue there?

Well, look, we're trying to close this deal this week. I wish it was the as easy as signing a lease for an apartment but it's not. There are a lot of moving parts when it comes to a contract that is generationally long and that has this kind of quantum amount to it. So things take a little longer than anticipated. But time is our friend because as time went on, we were able to upgrade the deal on the white fiber side.

So we look very much forward to announcing a deal when it's finally signed. I will not -- I will not discuss like in a time line, except to say it's very soon, but I cannot -- I don't want to quantify it because I don't want to be crucified afterwards if I get it wrong. So let's -- I'm glad that everybody is patient.

But to answer your question, the challenge with respect to WhiteFiber is basically how long it takes and how complicated things are in negotiating deals sort of a certain size, it takes a while. But for those who are patients, people would be likely rewarded.

Got it. And no operational challenges or anything of that nature? Just basically lease complications and signing, it sounds like.

That's right. That's right. And we have -- we are so blessed with the Amazon acquisition. On the WhiteFiber side, we did -- what I think was a gem of an acquisition of a team called Enovum last year. And one of their strengths is the -- they have a retrofit approach to data centers. So their entire careers they've been doing this for hyperscalers before they did it for us. They would identify facilities and turn them into Tier 3 data centers.

In fact, the latest what they did for WhiteFiber was they identified what was a mattress factory last February. They took control of it. I think early April or late March. And now they turned it into a Tier 3 data center and it's going to start generating revenue now for a very well-known counterparty called [ CRBRUS ]. And they did that on time within budget within 6 months, and they used a retrofit model approach to that, you cannot do that with a greenfield build greenfield builds take about 18 months, sometimes 2 years and a lot of variables that you don't control and build in a greenfield.

But because this team that we acquired has this ability to retrofit existing facilities or turn them into 2 data centers. That's a very special ability that not many people have, and we have that team. And so because now we're looking at North Carolina, which is our flagship facility that used to be one of the largest manufacturing facilities on the Eastern Seaboard and we're turning that into a Tier 3 data center, the construction has already begun.

And now we're just working on finalizing the business development aspect of it. But operationally, we are extremely well seasoned thanks to the talent, the very deep talent and the seasoned experience of our team that we were able to acquire and hire across the past 1.5 years.

And next, we'll go to Pat McCann with NOBLE Capital Markets.

On for Joe Gomes today. First question is, with the goal of becoming the largest public ETH treasury, where do you believe you rank today?

The goal is to be the best. Size is not really the metric. The goal is how you do it. So we were able to financially engineer the purchase of Ethereum in ways that others have not. That's extremely important. Imagine you become the best or rather the biggest to say a secured convert. I'd much rather be #2 purchasing Ethereum with an unsecured convert, then being #1 was in doing that through a secured convert. I'm not saying that's what the #1 guy did, but there are sloppy ways to buy Ethereum and to beat #1 through a sloppy way is not the way to go. And so we've been very, very careful not to do it that way.

And I think that to us is really our north star. How you do it, how you're purchasing Ethereum, how you're positioned being positioned with owning a successful company like WhiteFiber, being positioned by buying Ethereum through unsecured converts, being positioned that way to do it responsibly to us is our goal and not to just buy Ethereum hell or high water and be #1 and then you can get in trouble after a while. So that is not something that is our goal necessarily.

Having said that, we do intend to buy a material amount of Ethereum. We'll do it in a responsible way. We have levers that others do not have. And we look forward to reporting in the medium-term future about these Ethereum purchases that we'll be doing. And as cloud, it's nice to see that Ethereum is down today. People may be selling Ethereum today, but it's those who have diamond hands to get rich and we have a very long-term vision of what Ethereum was.

I've been saying the same thing since 2017, the same thing in 2018, the same thing in 2019 and I'll be saying the same thing in 2025. I'll be saying the same thing next year in 2026. Ethereum will continue to structurally go up. There will be a lot of cyclical gyrations but the way that Bit Digital's going to purchase Ethereum will be responsibly and prudently because we don't want to go up.

Got it. Appreciate that. And then the other question, just if you could comment on the G&A expense this quarter. What went into that? And where do you see that going moving forward?

Yes, there's a lot of one-off G&A expenses because of -- maybe I should be about to Cam and Erke. Go ahead.

I mean, G&A does consolidate WhiteFiber and I mean -- from the perspective of consolidation, I would generally refer to comments made on the WhiteFiber earnings call, which would provide a lot of nuance on that side of the business. For Bit Digital, there was similarly, some nonrecurring items, some elevated marketing spend, some that we would view as discretionary that we could pull back.

I think generally, Bit Digital is pretty flexible from cost structure perspective and it can be very lean, and it will become significantly leaner. So like on a forward basis, G&A should be materially lower.

Yes. Basically, just a lot of one-offs that happened on the G&A level. On a normalized basis, you'll see how the digital cost structure is actually very light and flexible.

And we have no questions over the phone.

No more questions? Okay. Well, thank you for joining us today. We appreciate your continued interest and support. We look forward to speaking with you again next quarter, and remember about my comments on diamond hands. Thank you, everybody.

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

Hello, and welcome to the Bit Digital Second Quarter 2025 Earnings Conference Call. Good morning, good afternoon and good evening, depending on where you're joining us from. Thank you for being here. [Operator Instructions]. Also as a reminder, today's conference is being recorded.

I'll now hand it over to your host, Cameron Schnier, Head of Investor Relations at Bit Digital. Cameron, the floor is yours.

Thank you. Good morning, and welcome to the Bit Digital Second Quarter 2025 Earnings Call. Joining us on the call today are Sam Tabar, Chief Executive Officer; and Erke Huang, Chief Financial Officer. Before we begin, I would like to remind all participants that some of the statements we will be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements.

I, therefore, refer you to yesterday's 10-Q filing and our other SEC filings. Our comments today may also include non-GAAP financial measures. Additional details and reconciliation of the most directly comparable GAAP financial measures can be found in our 10-K filing, which is on our website.

[Operator Instructions]. With that covered, I will turn the call over to Sam to discuss our performance. Sam?

Thank you, Cam. Ladies and gentlemen, thank you for joining us on the call today. The past few months have been busy for our team to say the least. The word transformation is likely overused in earnings calls, that Bit Digital has truly transformed in the end of the first quarter.

In June, we announced our transition to an Ethereum treasury and staking platform. Last week, we completed the IPO of White fiber. Our former wholly owned subsidiary is now a stand-alone AI infrastructure company. These 2 steps reshape our business and [ RG ]. Our focus going simple going forward is simple. We want to build one of the largest institutional as balance sheets in the public markets and generate scalable, staking yield for our shareholders. We aim to do this strategic and prudent capital allocation. Although WhiteFiber is now a stand-alone company, our ownership and retained rights currently require us to consolidate its results in our financials under U.S. GAAP. The portion we do not own will be shown as a noncontrolling interest. That will remain the case. Unless and until ownership or control falls below the threshold required for consolidation. We believe the WhiteFiber IPO is the best way to unlock value for our shareholders.

We have created 2 focused independent platforms. With the WhiteFiber IPO behind us, we are now laser-focused on making Bit Digital, the largest ETH treasury platform and public market. Yes, you could call this a reboot. Bit Digital is now finally in a position to scale as Ethereum treasury and stake in company. WhiteFiber, meanwhile, has the flexibility to pursue its own growth strategy as a stand-alone AI infrastructure company. We believe that this separation gives both companies greater strategic clarity and more disciplined capital allocation.

We currently own about 74.3% of WhiteFiber which would drop to around [ 71% ] if the green shoe is fully exercised. Our shares are subject to a 6-month lockup following the IPO. Over time, we plan to fully unwind our position in a measured and opportunistic way. But we are in no rush. We are extremely excited by the future of White fiber. We believe selling down our ownership prematurely would only hurt shareholder value for BTBT. Our goal is to maximize long-term value for shareholders of both companies. WhiteFiber remains a very valuable asset for our shareholders.

But today's call is focused on Bit Digital's core business. We will not be providing forward-looking comments on WhiteFiber. For additional information on white fiber, I encourage you to visit WhiteFiber's website and SEC filings.

During the second quarter, we launched our plan to become a dedicated Ethereum holding and yield patient platform. As of the end of June, we held approximately 3,653 ETH. After the quarter closed, we increased that to about 121,000 as of August 11. This was ended in part by our recent equity offerings and by the sale of Bitcoin. Converting our Bitcoin into ETH has been a great trade so far. We earned approximately 166.8 ETH in stake in rewards during the quarter. At quarter end, around 21,568 ETH were actively staked. The annualized effective yield was approximately 3.1%. As of August 11, we had approximately 105,000 ETH stake. This transition represents a structural pivot. Our goal is to build the largest institutional ETH balance sheet in the public markets. We want to generate scalable, staking yield for shareholders. This isn't a trend we're chasing.

We've ETH since 2021, and we held it through multiple market cycles earlier than any other treasury company. We started converting our Bitcoin into ETH at a time when miners thought that was sacrilegious. Turns out, it wasn't hearsay. It was foresight.

We had conviction in the long-term of -- ETH. That conviction has only grown. We believe the value of ETH is still in the very early innings from an awareness standpoint.

Now turning to Bitcoin mining. In June, we announced that we are exploring strategic alternatives for our Bitcoin mining business. We are open to either selling the business or winding it down. Basically, if we don't sell, will run the fleet until units become unprobable or hosting contracts expire. We will for mutually beneficial outcomes as we work with our hosting partners. To be very clear, we will not invest in additional mining units.

Simply because we believe ETH will deliver better long-term returns than mining. Yes, you heard that right. ETH produced 68 Bitcoin in the second quarter, down from 83 Bitcoin in Q1. Mining revenue declined to [ $6.6 million ], but gross margin remained positive despite lower production and a weaker half price. As of quarter end, our active hash rate was about 1.2 exahash, reflecting curtailments. Since then, we've deployed 2,130 S21 miners and expect to deploy another 1,445 later this month.

As an important note, those units were purchased earlier this year. These newer machines, combined with the gradual retirement of older models are expected to improve fleet efficiency to below 22 jewels per terahash as the business winds down.

With that overview, I will turn it over to Erke to walk through the financials.

Thank you, Sam. Total revenue in second quarter was $25.7 million. That compares to $29 million in the same quarter last year, and $21 million z-- sorry, $25.1 million in the first quarter. Digital Asset Mining revenue was $6.6 million, down 59% year-over-year. Due to the April 2024 -- higher network city and a lower active hash rate. Cloud services revenue was $16.6 million, up 33% compared to the prior year quarter. The increase was driven by the commencement of new customer contracts. Colocation services contributed $1.7 million compared to none in the same period last year as the business was launched in late 2024. Ethereum stake in revenue was $0.4 million, down about 2% year-over-year as higher sticking rewards were offset by lower realized ACM price during the quarter. Cost of revenue, excluding depreciation, was approximately $13.2 million compared to $15.2 million a year ago and $12.8 million in Q1.

Gross profit was approximately $12.5 million for a total gross margin of about 49%, up 80 basis points from the prior year quarter. G&A for the second quarter was $19.7 million compared to $5.5 million during the same quarter last year. Second quarter G&A included approximately $5.5 million in stock-based awards tied to milestone achievements related to our 2024 acquisition of [ Norton ] as well as certain consulting and legal-related expenses, which we expect to be nonrecurring. The stand-alone bit digital cost structure is expected to be significantly less than our consolidated G&A by WhiteFiber.

Net income for the quarter was $14.9 million or $0.07 per diluted share versus a net loss of $12 million in the same year quarter. Adjusted EBITDA was $27.8 million compared to negative $3.8 million a year ago. This includes a $27.2 million gain on digital assets. On the balance sheet, as of June 30, we held $181.2 million in cash and cash equivalents. Total digital assets were $91.2 million consisting of a firm and approximately 280 bitcoin. Subsequent to quarter end, we sold our Bitcoin position and use proceeds to acquire easy.

Including USDC, total liquidity was approximately $273 million as of June 30. We remain debt-free. During the quarter, the company signed a CAD 60 million credit facility with the Royal Bank of Canada. However, the facility transferred to WhiteFiber following the idle.

FX for the quarter was approximately $82 million primarily related to legacy HPC commitments for the WhiteFiber business. including the purchase of -- most data center site infrastructure, development and GPU procurements.

I will now hand the line back to Sam.

Thank you, Erke. The second quarter marked the start of Bit Digital's next chapter as a focused Ethereum treasury and staking company. We believe Eat is the most compelling long-term digital asset. It empowers a global computer network. It enables the tokenization of assets decentralized finance and real-world applications. It is programmable, productive and deflationary. The ETH ecosystem continues to flourish. It has the most active developer base. Major institutions like coin-based, PayPal and BlackRock are building on it. We believe Ethereum is becoming the financial infrastructure layer of the Internet.

Regulatory clarity has also improved. The GENIUS Act was signed into law last month creating a stable coin framework that strengthens Ethereum's role in digital payments. The CLARITY Act, which affirms ETH as a digital commodity is moving through the Senate. Together, these are meaningful steps toward broader institutional adoption. In plain English, the rules are catching up to the reality.

We see ETH as a scarce productive treasury asset. It earns yield. We believe that it is set to capture more value as activity migrates on chain. Our priorities are to scale our ETH position, or by staking yield and maintain a strong liquid balance sheet. Our goal is just to buy ETH. It is to grow long-term value per share. That means expanding our position at a measured pace, deploying capital when the value proposition is compelling. And issuing shares at prices we view as a premium to our net asset value. While we do not have a buyback program in place, we would be open to considering one in the future, should our shares trade at a meaningful discount, even if that required reallocating ETH Holdings.

We are also differentiated by our substantial ownership stake in White Fiber, a valuable public company in its own over time, that stake provides a unique source of strategic flexibility that could be monetized, if appropriate, to grow our ETH position in a nondilutive way. We intend to follow Michael Sellers playbook with the goal of driving our share price to a meaningful premium to NAV over time.

Accordingly, we are exploring capital market alternatives to raise further capital to purchase additional ETH in a non-dilutive fashion. It's worth noting that our June 2025 issuance price of $2 per share subsequently traded materially higher as -- a substantial premium to that share price.

Looking ahead, we expect to continue scaling our ETH position through operational cash flow, opportunistic market access and when appropriate, other sources of capital that align with shareholder interest. To support that flexibility, we have created a proposal in our upcoming proxy to increase our authorized share count. This isn't tied to any immediate financing plan. It is ensuring that we have the tools to execute our ETH treasury strategy in a disciplined and shareholder-aligned way. We ask that you both and return your proxy card.

Bit Digital is built to be more than an ETH holder. We are a platform for compounding value through yield, strategic capital allocation and the flexibility of our WhiteFiber ownership. We believe these advantages position us uniquely to deliver sustained growth in value per share over the long term.

With that, we'll open the line for questions. And as a reminder, we will not be answering questions related to the WhiteFiber business beyond what has already been disclosed. Operator?

[Operator Instructions]. And the first question will come from Brian Dobson with Clear Street.

So there's certainly been a lot of growth in the treasury business model and Bitcoin treasury models like strategy are getting a lot of the headlines. But steering staking can generate real returns for investors. Do you think you could speak to the growing acceptance of the Ethereum staking among institutional investors and how you see this business model developing over time?

Sure. I mean there are so many ways to answer that question. First of all, we think it's a pretty smart move to accumulate ETH, and we're seeing -- we're glad to see other companies leaning into that strategy. The more companies that lean into that strategy, the more that Ethereum goes up. So we're pretty happy about that. We don't see that as pure competition. It's more of a cooperation competition hybrid. Broader adoption for us helps validate the asset. It benefits everyone who's already participating. We've been staking eat for a long time, and we're not just holding it. We've been actively staking ETH for years now in generating yield.

Our strategy is about compounding value with a productive treasury, as you mentioned, not just building a static ETH position. It's also probably worth reminding that we do own a large stake in WhiteFiber. And that state gives us a unique potential source of non-dilutive capital that we may use to grow our ETH Holdings over time.

So we are very much in a unique position. We've been talking about Ethereum and how that is a predictive treasury asset compared to Bitcoin because it has this field. It's worth noting that ETF, I'm not sure ETFs even have the ability, although they're talking about it to capture yield. That's one of the reasons why these ETH treasury plays are popular because people can get taking economics by buying an e treasury public company. That's something that you really couldn't do in the past. I hope that answers some of your questions.

And the next question will come from Joe Gomes, NOBLE Capital.

Just wanted to clear something up first. Erke, I'm not quite sure I heard, but I just want to make sure on the G&A, I did see that the professional consulting fees were significantly increased and the same with the share comp which drove overall G&A up to the 19.7 from 8.2% in the first quarter. Did you say that those consulting and the share comp are going to go back to more normalized level so that G&A going forward, would it be back to, let's call that $8 million to $10 million or we're going to be at a higher level going forward?

Yes, we do see this as a long time. A big part is related to our acquisition of Enovum as a milestone of the team, that's $5.5 million and some other consulting fees are related to the IPO expenses, those are all going to be related to WhiteFiber. So going forward, you see digital itself, the G&A will drop substantially.

I'd love to add to that. So in terms of the question of go-forward cost structure and what that will look like now that WhiteFiber is separate to Erke's point, the stand-alone digital cost structure will be significantly leaner than what you see in our consolidated results. Most of the CapEx and G&A associated with White Fiber will no longer apply. So we'll be operating with a much simpler -- much simpler footprint, fewer business lines fewer people and much lower infrastructure spend.

The simplicity is part of what makes the ETH treasury strategy scalable. And going forward, we expect corporate expenses to trend down and ETH taking margins to play a larger role in our profitability. Second quarter G&A also featured a material amount of onetime and nonrecurring items to Erke's point, so the cost structure is less than a figure derived from simply allocating part of the G&A to fiber and part to BTBT.

Okay. I will just make the comment. I'm not quite understanding Sam, why you don't want to talk about WhiteFiber. I mean you guys still own 70% of it. The numbers are going to be consolidated. It's a big part of the value equation here in the story and to just say you guys are not going to talk about it. It does make a whole lot of sense to me. So I'm just throwing that out there, but thank you for your answer on the G&A.

Well, let's just -- let me comment on your comment WhiteFiber is its own operating company. And that was the point of the IPO. And so we're going to -- we have to treat it somewhat separately on a separate call and separate website and separate team I can say that we currently own your right, we do own approximately 71.5% to 74.3% of WhiteFiber depending on the underwriter options and those shares are subject to a 6-month lockup. I can say that we view that stake as strategic as a strategic and financial asset for Bit Digital. I could say that over time, we intend to unwind that position and in a very measured and opportunistic way. That would mean monetizing shares when it makes sense, either to reinvest in our strategy or return value to shareholders. We're not committing to a specific time line, but we do see the full separation as the long-term path going forward.

But if there are some questions, we will, in the -- similar format for WhiteFiber. If we made this call about WhiteFiber and not Bit Digital it would be very confusing and it would sort of defeat the purpose, I think, of keeping the company's separate because an eat treasury play and a digital infrastructure player, just very different narratives, different audiences, different stories and different operations. And that was one of the main reasons to have the IPO. So I think WhiteFiber deserves its own format its own call and so on. So I hope you understand.

And the next question will come from Nick Giles with B. Riley Securities

Just to follow up, I mean, beyond ETH purchases, what are some of the other ways that you can support the overall Ethereum ecosystem? Are there any partnerships you could consider? And really, just as we see increased competition in the treasury strategy landscape, how do you plan to market this platform and its overall contribution.

Yes. I think we've been a little bit hamstrung on the marketing of the ETH treasury play because we were under the mandated quiet period when we're going through the process of the WhiteFiber IPO. That is finally slowly receding. And when I mentioned that there's a reboot for our ETH treasury play, I meant it. So now that the IPO is behind us, you'll be seeing us on the circuit more often and catching up on mind share. We were the first ones to do this compared to any other ETH treasury play out there. And so we have the ability and the appetite to catch up on mind share, and we're already doing that. We have plans on that.

But you're right, part of the competition is to own the narrative. And right now, there is -- there's a few companies out there and we're all competing on mind share. And of course, at the same time, you've got to buy a lot of ease. We have plans to buy a lot of ETH and we have plans to capture mind share and it's something that we'll be executing on for sure.

But there is something up to do because of this IPO, frankly, just me, the IPO was a very heavy left not to mention the mandated quiet period that we had to be on. It was frustrated to have metaphoric duct tape in my mouth not being able to talk about Ethereum in our treasury play, but that's finally -- that chapter in that era is finally behind us. I appreciate that color and the background.

My next question would just be -- you touched on the GENIUS Act, which has obviously been transformational for the space. I mean, where do you think the regulatory framework could or should go for here?

Well, I think the regulatory framework will certainly be in favor of all things crypto. As a reminder, there was an era where Gary Gensler was the Chairman of the SEC. That era is finally behind us. We have a very friendly SEC towards crypto Almost every other day. There is a positive statement or rule interpretation that is very friendly towards this new technology. So we're really happy to see that. At the congressional level, we're seeing, like you mentioned, the GENIUS Act and the CLARITY Act that is obviously very, very -- offers a lot of clarity and rules where these rules and clarity just wasn't there in the past.

In the past, during Chairman, Gary Gensler era, there were no rules. And if you did anything, these poor programmers that we're building on the them ecosystem would be -- it was regulatory warfare. And I had friends who just weren't sure if they should build on Ethereum because they didn't want to go to jail because they had no idea what the rules are. That's a very different era today. And we've only started this era just about 7 months ago. So we have a long way to go and people are also beginning to understand the value of Ethereum. Why Ethereum has a lot of technological prowess over the mother coin, which is Bitcoin? It has smart contracts. It can rewrite the entire financial system. We're seeing institutions like JPMorgan even leaning in on the Ethereum ecosystem because it has absolute value. especially if it wants to rebuild in a more or rather less frictionless way for its infrastructure, its back office and middle office. I can't imagine the front office is wanting to embrace the Ethereum because that's a bit existential for them. But they're going to start with the back office and how Ethereum can replace that.

So it's a very great time with respect to the CLARITY Act -- sorry, the GENIUS Act, that provided a lot of rules on -- sorry, a lot of clarity on rules for stable at accept stable coins as a formal payment processor. And so you're going to see a lot of issuers build their own stable coins. PayPal has already done it. You're going to see other issuers and other companies have their own stable coins. And remember, more than 50% of stable coins are built on Ethereum. That is a blue-chip ecosystem and people are getting to realize that and wake up to that.

And I'm very bullish on Bitcoin. I think Bitcoin its main competitor are the gold markets. Bitcoin is a simple store value and Bitcoin is a simple store value. But frankly, if Bitcoin and Ethereum, look, Bitcoin had a first-mover advantage at Bitcoin and Ethereum were invented on the first day. I don't think people would be talking about Bitcoin. It's just not the technology that Ethereum has. So that is why you're seeing a lot of success right now in these ETH treasury plays. There's a yield, there's fundamental value. There's technology, it's programmable and it could rewrite the entire financial system. Bitcoin can. Bitcoin is simply answer to gold.

Sam, I really appreciate your perspective. So continued best of luck.

I mean the markets -- I don't think I needed the luck because the markets are speaking for themselves right now. And selling our bitcoin on our balance sheet and buying Ethereum was a great trade.

We'll take our next question from a participant from H.C. Wainwright in call. Please provide your name as well.

I was hoping you wouldn't mind talking a little bit more, Sam, about your Bitcoin mining thinking. I understand your 1.2 exahash with about 700 petahash coming in, I guess, through jive future 21 deployments. I'm just wondering if you could give us a hint on how the fleet has aged and how you might see tapering what you have, legacy machines off as those come on and what you might recommend we consider in Bit Digital's Bitcoin hash at least in the near term, understanding full well it's not a long-term strategic initiatives?

Yes. I mean, look, that's right. We're in the process of winding down our Bitcoin mining business. It's part of our strategic just towards Ethereum. We're no longer investing in new machines. And over time, we do expect our active hash rate and revenue to decline as hosting contracts expire and older machines become unprofitable.

To your point, we've recently deployed a batch of efficient S21 units that will help gain positive margins while we wind down. Our strategy is to continue operating the fleet as long surveys profitable on a unit-by-unit basis. As mentioned, if there's a chance to sell business, we'd be happy to evaluate that. But absent that, the plan is just to let the business sunset in a way that maximizes cash flow and minimize this disruption.

I think you talked about the current fleet efficiency and how that's trending as of the end of June, our fleet efficiency has been -- was approximately 25.1 jewels per terahash. That's improved since quarter end. We've also deployed as mentioned, 2,130 S21 miners and expect to deploy another 1,445 in the next coming weeks. Once those are online, -- we expect fleet efficiency to improve to around 23.3 tools per terahash, I apologize. And as mentioned, as you can guess over time as older models roll off, we anticipate fleet efficiency to fall in the range of 17.5 to 23.5 jewels per terahash.

And look, we do expect total fleet has rate to decline gradually as we wind down the mining business and retire older units. In the short term, the S21 deployments will add around 317 per terahash as of capacity. So to the 1.6 to 1.8 range. But as older contracts expire and we transition toward only running the most efficient fleets in other words, the S21 and the S19 K-Pros. The total hash rate will decline while margins should improve.

And I'm not sure if you're asking us whether continuing in mining equipment should we continue investing in mining equipment even though our margins are still positive. We just think that the capital allocation is just juicier if we allocate -- if we reallocate everything towards our ETH treasury play.

Yes. No, no. That point resonated clearly, Sam. No question there is just appreciate the help on how you see the hash rate trending. So if you get arms around it in the model. You also mentioned reducing infrastructure personnel. And I was wondering if you wouldn't mind sort of walking through headcount, maybe we could kind of get our arms around where SG&A would sort of bottom out?

Yes, absolutely. I mean the G&A is certainly going to be much less than on a going-forward basis because most of the G&A was focused on white fiber. In terms of headcount, I think Erke has a more granular grasp on that. Recall how many people are going to have went, have migrated to WhiteFiber and how many are staying with the Bit Digital.

I think at this point, WhiteFiber probably takes about 70% of the Ethereum in personnel. And while there are some lapping consolidation and there's a transition period, but Bit Digital should remain -- and we can take out the wide fiber S1 that the much subtract that portion from WhiteFiber, that gets to a Bit Digital.

Right. Good idea, Erke. Sam, the executive offices are a little unclear to me. I understand you're going to run 2 company needs separately. I just maybe walk through who's heading up what and where?

Yes, absolutely. So as you recall, last fall, we acquired Enovum, a data center operator. That team has about 20 years of building greenfield and retrofit Tier 3 data centers -- that was one of the main reasons why we acquired them, they've been in the trenches of refitting old facilities that had not going to do with Tier 3 data centers and converting them into Tier 3 data centers. They've been doing that for the likes of other hyperscalers like Amazon and Microsoft, and they continue that track record under the Enovum umbrella. And then we acquired them for about $46 million last fall. So that particular team is very intact. It's run by Billy, who is still the CEO of Enovum and is now transferred to WhiteFiber.

There is no difference for the data center team. The day-to-day was always operationally very separate and had nothing to do with what the Bit Digital was doing. We also have a cloud team that's run by Ben Lambson, who has been who we were able to hire from another well-known Neo Cloud, in fact, the first Neo Cloud in history, and he was the first business development hire over there. And we have him and members of the team heading the cloud business.

So both the cloud business and the data center business are under WhiteFiber they actually were always under WhiteFiber even before the IPO. So they were operationally very different than the people we had on the Bit Digital side. So there's no overlap except for 2 or 3 folks, the ones on the call today, myself, Cam and Erke. We will, for example, be very much involved in the Investor Relations portion of both companies will be very much involved, of course, in the financial allocation and the strategic discussions and so will I in terms of the capital allocation between our cloud and data center business.

But in terms of the operational day-to-day, that is very separate. I would never be able to tell, for example, Billy's team on the construction crew side how to -- Tier 3 data center. They've been doing this for 2 decades. And so that would not be appropriate for me, Cam or Erke, to get involved with -- but again, the cloud team and the data center team, they've been operationally very separate from Bit Digital since day 1, and they continue to be, especially after this IPO and the only overlap that takes place is are those who are on the call from a strategic perspective, an IR perspective in a financial allocation perspective.

One last one for me, if I may. I was wondering if you could give us a little insight on the handling of Ethereum. Who do you have at stake with what are they charging you to manage that? What are your longer term or what's your longer-term thinking about maybe running nodes yourself? How are you considering that?

Yes, I'll let Erke take that question.

With Fireblocks custodian and stake to Fireblocks with the help of fitment for native staking. And also we had stakes through -- for liquid stating you're working with LSCTH. So those are various partners we had been working with. And the native staking brings out about 3% -- liquid staking bumps up a little bit too. And the cost is less than 10%, I would say, in terms of EBIT margin.

How are you thinking about it going forward, Erke, do you think you might take some of that validator node operation in-house?

We had R&D around that. But at this point, was partnering with those institutional vendors and partners, and they have been doing a great job and giving us a lot of clarity and support and reporting and compliance, et cetera. So I think in the short term or medium term, we'll still be using those partners.

Very good. Thank you, gentlemen. Appreciate it. Congratulations on navigating all that you have lately.

There was an important question about why we can't comment too much about WhiteFiber. It's just worth mentioning that the WhiteFiber quiet period ends on August 31. So it's just another reason why we can't comment too much on White fiber for the time being.

And that does conclude the question-and-answer session. I'll now turn the conference back over to you.

Thank you very much, ladies and gentlemen, for your time today. We look forward to the next call. We are working very hard on executing this vision. Rome wasn't built in a day. So thanks very much for your patience. We are aiming to provide maximum shareholder value. So thank you for supporting us and until the next call. Thank you.

Thank you. That does conclude today's conference. We do thank you for your participation. Have an excellent day.