Bit Digital Posts $27.1 Million Q3 Revenue, Mulls Buyback to Close NAV Gap

Bit Digital (NASDAQ:BTBT) reported third-quarter revenue of $27.1 million, down from $32.1 million in the second quarter, as declining cloud services sales outweighed growth in colocation and Ethereum staking. The drop did not stop Chief Executive Sam Tabar from addressing a sore point: a roughly 39% discount between the share price and disclosed net asset value. He outlined options to close it, including a potential share repurchase program that would first require shareholder approval and a funding plan.

Nine-month revenue told a gentler story. It rose 7% year over year to $87.1 million, CFO Erke Huang said.

What Drove the Sequential Decline?

Cloud services revenue fell to $18.1 million from $23.8 million in the prior quarter. The latest figure included $3.4 million in termination fee revenue from an initial customer. Huang said deployments for new customers partially offset the loss of that recurring revenue.

Colocation moved in the opposite direction. Revenue rose to $5.4 million from $4.7 million sequentially and $1.7 million a year earlier, driven by the MTL-3 facility and an initial contribution from WhiteFiber's NC1 site in North Carolina, which generated roughly $1.1 million in lease income during the quarter. Tabar said NC1 began contributing revenue in August from its first 20-megawatt data hall. Temporary switchgear issues slightly delayed the ramp, but all 40 megawatts of contracted capacity are now operational and billing. That capacity sits under an $865 million, 10-year contract.

The remaining lines split neatly. Native staking revenue rose to $1 million from $903,000, with the company earning 474 ETH against 440 ETH in the second quarter. Bitcoin mining revenue fell to $2 million from $2.4 million as production declined to 28.4 Bitcoin from 32.3.

Cloud, colocation and staking together accounted for about 91% of consolidated revenue, up from roughly 74% a year earlier, Tabar said. The pivot away from Bitcoin mining is, at this point, arithmetic rather than ambition.

Where Did the Profit Come From?

Net income attributable to Bit Digital shareholders was $28.5 million, or $0.08 per diluted share, after $27.9 million in losses were allocated to noncontrolling interests, leaving consolidated net income of $0.6 million, Huang said. The results fully consolidated WhiteFiber (its data-center subsidiary), with a portion attributable to minority holders.

The composition deserves a footnote. The company recorded $84 million in gains on digital assets and a $10.7 million gain from remeasuring a derivative liability tied to its convertible notes. Other income included $17.1 million of unrealized gains on digital assets held through a third-party fund.

Offsetting items were substantial. WhiteFiber's settlement of part of its 2031 convertible notes produced an $80.8 million induced conversion expense. Consolidated interest expense came to $10.4 million.

Huang said nine-month operating cash flow reached $163 million, materially supported by customer advance payments for services not yet delivered. Remaining performance obligations (contracted revenue not yet recognized) totaled $729 million at quarter-end, though he cautioned the figure excludes lease arrangements and certain other items and is not a consolidated revenue forecast.

How Is the Ethereum Treasury Financed?

Bit Digital held approximately 163,726 ETH and ETH equivalents at the end of September, Tabar said. The quarter's 474 ETH in staking rewards came at an average annualized yield of about 3.4%.

The financing architecture around that treasury is inventive. Huang said Bit Digital converted some native-staked ETH into liquid staking ETH and used it as collateral to borrow U.S. dollars from Galaxy, preserving staking-related appreciation while financing a bridge loan to WhiteFiber. The Galaxy borrowing carries a 5.5% annualized rate. The WhiteFiber bridge charges 9.5% annually with a 1.1-times multiple-on-invested-capital feature, and had $100 million outstanding, with repayment targeted in the second quarter of 2027. Tabar said WhiteFiber had closed a $300 million secured credit facility, expected to fund later in the month, to support that repayment. Consolidated cash and equivalents stood at $143.5 million at the end of September.

Will the Company Buy Back Shares?

Not yet, and not easily. Tabar said the company's articles of association require shareholder approval for any repurchase program, including how purchases would be made. Management must also determine how to fund buybacks while preserving liquidity and assessing the effect on value per share.

Selling ETH to fund repurchases would reduce the share count but sacrifice staking rewards and Ethereum price exposure, he noted, adding that no set discount to net asset value would trigger such a sale. During the question-and-answer session, Tabar raised one alternative: Bit Digital might sell a portion of its WhiteFiber stake in 2027 and use proceeds to repurchase its own shares. There is no target stake or fixed plan, and any sale would be measured to avoid pressuring WhiteFiber's share price.

Management also teased an early-stage, revenue-generating business under development. Tabar said decentralized finance was among the possibilities; Huang declined details and said more information should arrive in the first quarter of next year. A company earning 3.4% on its Ethereum considering DeFi is, one supposes, a natural progression.