Bit Digital Borrows $50M Against Ethereum to Fund AI Data Center Buildout

Maham Fatima Wed, September 9, 2026 at 8:06 PM PDT | 4 min read

• BTBT -6.02%

Overview

On August 13, Bit Digital (NASDAQ: BTBT) reported second-quarter revenue of $32.1 million, up 15% from the prior quarter, while narrowing its net loss to $107.2 million from $146.7 million. However, the more notable move buried in the release was not a growth number—it was how the company chose to fund WhiteFiber's newest data center: by borrowing against its own Ethereum holdings rather than selling a single coin or issuing new shares.

The Contracts Keep Piling Up

Bit Digital's infrastructure businesses are driving growth:

• Cloud services revenue jumped 42% from the first quarter to $23.8 million.
• Colocation revenue for the first half of the year climbed 182% from a year earlier, even before the company's NC-1 data center campus starts contributing revenue in the third quarter.
• Contract liabilities (cash customers have already committed but the company has not yet recognized as revenue) more than doubled to $143.1 million from $79.6 million at the end of last year. The backlog behind that number runs to roughly $1.0 billion.
• Since its last earnings call, WhiteFiber (NASDAQ: WYFI), the AI infrastructure and HPC subsidiary of Bit Digital, has signed new multi-year cloud services agreements worth more than $540 million in aggregate contract value—a pipeline management says could generate over $200 million in annualized revenue once fully deployed.

The company also found an unusual way to pay for it. Rather than selling Ethereum or issuing new equity at either company, Bit Digital borrowed $50 million against a portion of its ETH treasury and used that liquidity to originate a credit facility of up to $150 million for WhiteFiber, guaranteed by WhiteFiber's parent and reviewed by independent committees at both companies. That structure allowed the company to fund NC-1's buildout while keeping its coins and ownership stake intact. Operating cash flow rose 33% to $46.8 million over the first six months of the year.

Where the Old Business Fades

Bit Digital's older business lines are shrinking:

• Digital asset mining revenue fell 58% year over year over the first half. Sequentially, the drop was just as steep, with bitcoin mined per quarter falling from 48.1 to 32.3. Management stated that no meaningful capital will go toward the segment going forward.
• Ethereum staking revenue fell from $2.3 million to $0.9 million in a single quarter, a decline the company attributed to repositioning coins into liquid staking and to lower average ETH prices—a reminder that this revenue line moves with the crypto market as much as with the business.

The accounting behind the ETH treasury is also becoming harder to parse. The company recorded a $46.0 million non-cash impairment on its liquid staked ETH holdings during the quarter, one of several non-cash items that made up roughly $86 million of the $107.2 million net loss.

Debt is climbing as well:

• Convertible notes rose to $336.2 million.
• The new WhiteFiber facility adds up to $150 million on top, collateralized in part by $105.6 million of the company's own ETH holdings.

CEO Sam Tabar acknowledged the disconnect this creates, noting that operating results improved through the quarter while the stock's valuation did not, and that the board is now evaluating options to close that gap.

Wall Street's Split Verdict

• Hedge fund ownership climbed from 19 funds to 25 in the most recent quarter, a sign institutional conviction is building rather than fading.
• Short interest sits at 18.49% of the float, a level that reflects heavy skepticism and enough crowding that any positive surprise could spark a sharp squeeze.
• The stock trades at a forward price-to-earnings ratio of 23.87 as of September 9, a multiple that assumes real earnings growth from here even as the company's own chief executive flags a valuation gap.

Together, these numbers describe a market that is adding shares but still betting against the stock in size.

A Balance Sheet Still Being Rebuilt

Bit Digital's second quarter...