Bit Digital Raises $500M to Develop Cloud Service as BTC Mining Profits Decline
Bit Digital, a global high-performance computing (HPC) infrastructure platform and digital asset mining company, announced it intends to raise up to US$500 million through an all-in-one (ATM) offering.
The company's capital-raising efforts are aimed at supporting its expansion into high-performance computing and cloud services as traditional bitcoin mining becomes less profitable due to shrinking margins.
The planned ATM offering will allow Bit Digital to issue and sell its common shares gradually through investment bank HC Wainwright & Co., which will act as the selling agent and receive a commission of up to 3% on any shares sold.
The size of the offering exceeds Bit Digital's current market cap of approximately $429 million and could potentially require existing shareholders to dilute their stakes.
According to Bit Digital, the proceeds from the offering will be used for general corporate purposes, including capital expenditures on new mining equipment and cloud services, working capital, and potential acquisitions.
The fundraising initiative comes amid challenging economic conditions for Bitcoin miners, such as the 2024 Bitcoin halving, network issues, and rising operating costs.
Mining companies diversify their activities
In response to these challenges, many mining companies have begun issuing equity, debt financing, or convertible bonds to support their operations and move into adjacent areas such as AI and HPC. In Q4 2024 alone, publicly traded mining companies raised more than $1.6 billion in equity financing and more than $4.6 billion in debt financing.
Bit Digital’s primary focus includes investments in HPC and cloud services. In October 2024, the company acquired Enovum Data Centers, a Tier 3 HPC data center operator, for approximately C$62.8 million (US$46 million).
Additionally, in August 2024, Bit Digital signed a Master Services Agreement (MSA) with Boosteroid Inc., a leading cloud gaming provider. This agreement marked the beginning of the deployment of 300 GPUs, which is expected to generate approximately $4.6 million in revenue over five years.
Cloud and High Performance Computing Services Come to the Rescue in the Face of Mining Failures
In its fiscal 2024 report, Bit Digital reported total revenue of $108.1 million, up 141% year-on-year. Bit Digital attributed the growth to the launch of its HPC services business. The company had approximately $260.7 million in liquid assets and $463.5 million in shareholders' equity.
The company also earned $58.6 million from Bitcoin mining, up 32% from 2023. Cloud services brought in $45.7 million in 2024. Thanks to the acquisition of Enovum Data Corp, it earned $1.4 million from colocation services. Revenue from ETH staking increased by 169%, reaching $1.8 million.
In 2024, digital asset mining accounted for 54% of Bit Digital's revenue, a significant change from 2023, when it accounted for 98% of the company's revenue.
Bit Digital's high-performance computing and cloud services businesses accounted for 42% of revenue in 2024, with the bulk of revenue coming in the fourth quarter of the year.
Source: cryptonews.net
