Bit Digital raising $500M for cloud service pivot as BTC mining profit margins tighten

Bit Digital, a global platform for high-performance computing (HPC) infrastructure and digital asset mining company, has announced plans to raise up to $500 million through an at-the-market (ATM) equity offering.

The fundraising move by the firm is an attempt to boost its expansion into HPC and cloud services, as traditional Bitcoin mining becomes less profitable due to tightening margins.

The proposed ATM offering would allow Bit Digital to issue and sell shares of its common stock over time through investment bank H.C. Wainwright & Co., which will act as the sales agent and receive a commission of up to 3% on any shares sold.

The offering’s size is more than Bit Digital’s current market capitalization of approximately $429 million, and may potentially require existing shareholders to dilute their holdings.

According to Bit Digital, the proceeds from the offering will be used for general corporate purposes, including capital expenditures on new mining and cloud servicing equipment, working capital, and potential acquisitions.

This fundraising initiative comes amid challenging economics for Bitcoin miners with challenges such as the 2024 Bitcoin halving event, network issues, and increasing operational costs.

Mining companies diversify to adjacent sectors

In response, many mining companies have pursued equity offerings, debt financing, or convertible notes to support operations and pivot into adjacent sectors like AI and HPC. In the fourth quarter of 2024 alone, public mining companies raised over $1.6 billion via equity financing and more than $4.6 billion via debt financing.

Bit Digital’s pivot involves investments in HPC and cloud services. In October 2024, the company acquired Enovum Data Centers, a Tier 3 HPC data center operator, for approximately CAD $62.8 million (USD $46 million).

Additionally, Bit Digital entered into a master service agreement (MSA) with Boosteroid Inc., one of the largest cloud gaming providers, in August 2024. The agreement initiated an initial deployment of 300 GPUs expected to generate approximately $4.6 million in revenue over five years.

Cloud and HPC services to the rescue as mining falters

For its 2024 fiscal year report, Bit Digital reported a total revenue of $108.1 million, a 141% increase from the prior year’s results. Bit Digital attributed the increase to the commencement of its HPC services business. The company’s liquidity stood at approximately $260.7 million, with shareholders’ equity of $463.5 million.

It also made $58.6 million from Bitcoin mining, which was a 32% increase from 2023. Cloud services accounted for $45.7 million in 2024. Thanks to its acquisition of Enovum Data Corp, it made $1.4 million from colocation services. Its ETH staking revenue increased by 169% after it brought in $1.8 million in revenue.

Digital Asset mining accounted for 54% of Bit Digital’s revenue source in 2024, which is a major contrast from 2023, where it was responsible for 98% of the company’s revenue.

Bit Digital’s HPC business lines, along with its cloud services, generated 42% of its revenue for 2024, with a major portion of the haul coming during the fourth quarter of the year.