Golden Bull Ltd. Stock

Hello, and welcome to the Bit Digital Second Quarter 2026 Earnings Conference Call. We'll begin shortly. During the call, all participant lines will be in listen-only mode. Following management's remarks, we will open the line for questions. [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 good morning. Joining me today are Sam Tabar, Chief Executive Officer; and Erke Huang, Chief Financial Officer. Before we begin, I'd like to remind everyone that today's discussion contains forward-looking statements. These statements reflect management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially. For a discussion of these risks, please refer to our annual report on Form 10-K and our quarterly reports. We assume no obligation to update these statements. Certain matters discussed today, including potential capital allocation initiatives remain subject to Board and shareholder approval in accordance with Cayman Island Law, where applicable.

Throughout the call, we may 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. Unless otherwise indicated, figures discussed during these remarks are rounded for readability. With that, I'll turn the call over to Sam.

Thank you, Daniel, and good morning. This quarter was about capital allocation. Every decision started with the same question, how do we create the most long-term value from the assets already on our balance sheet. Bit Digital is positioned to secure the infrastructure for what we believe are the 2 most important sectors in economic history, digital assets, which will settle on Ethereum, and artificial intelligence, which is powered by data centers. Ethereum is our position in the first and white fiber is our position in the second. Two distinct assets connected by 1 capital allocation model. Few companies offer a meaningful exposure to both sides of that build-out, and fewer even still actively allocate capital between them.

Our conviction on Ethereum has not changed. The price did. Ethereum spent most of the quarter below $2,000, and I'm not going to pretend that was comfortable. Bit Digital is 1 of the largest public corporate holders of Ethereum that does not make us a digital asset treasury, and it is not what we are trying to be. The goal has never been to hold the most Ethe. It is to get the most out of Ethe that we hold. Neither purely AI infrastructure nor a digital asset treasury neither and yet both. What we are building towards is the convergence of the 2. Assets positioned for where the economy is going rather than where it is today.

Our theory and treasury has managed the way a company manages cash like reserves. It earns while we hold it and it becomes capital that can be put to work when the right opportunity appears. Unlike a traditional reserve, it generates a protocol native return and also serves as a source of liquidity. That is exactly what happened early in the quarter. White Fiber sought additional capital to bridge its investment in its flagship facility in North Carolina to permanent project financing and to support broader growth initiatives. Together, the company has evaluated a range of financing alternatives. They ultimately pursued a related party bridge facility. This provided white fiber with efficient access to capital while preserving strategic flexibility and avoiding near-term dilution.

Against a portion of our Ethereum, we raised $50 million of liquidity and then use our own balance sheet to originate a delayed draw term facility for White fiber commitments of up to $150 million guaranteed by the White fiber parent. The transaction preserved our Ethereum position, avoided issuing equity at either company and allowed us to maintain our ownership interest in White Fiber. Independent committees at both companies reviewed it and Needham and Seaport delivered fairness opinions to their respective boards. We chose to provide the facility because it offered an efficient way to support our investments in White Fiber while generating an attractive return above the stake in yield available on Ethereum. The principal risk and a structure like this is, of course, margin calls. That was considered as well, so an additional buffer of Ethereum is held against it, size to withstand market moves well beyond what we consider reasonable.

The facility was designed as a temporary bridge to permanent financing for the initial 40-megawatt build-out in our flagship facility in North Carolina. That facility is anchored by end scale and its investment-grade off-taker. Upon permanent financing, our collateral is released and the guarantee terminates. The facility is repaid with interest, more than the staking income that we gave up and without giving up any upside. One decision in one quarter, but it contains the essence of the strategy. We approach our assets differently than a buy-and-hold treasury because every dollar, every [indiscernible] and every share should be maximally productive. And that is what we mean by a strategic asset company. The assets themselves are not the differentiator. It is how we deploy them. Eric will now take you through the details of the quarter.

Thank you, Dan. Good morning, everyone. Our results consolidate White Fiber in full with a portion attributable to noncontrolling interest. Second quarter revenue was $32.1 million, up 15% from $27.9 million in the first quarter. For the 6 months, revenue was $60 million, up 18% year-over-year. Gross profit for the second quarter was $18.6 million, a gross margin of 57.9%. Operating cash flow for 6 months was $46.8 million, up 33% from $35.1 million in the same period last year. Net loss attributable to Bit Digital shareholders was $107.2 million or $0.31 per share. Taken together, the digital asset items, the derivative revaluation and interest expense account for approximately $86 million of the loss. I'll take each in -- turning to our operating segments. Cloud Services revenue was $23.8 million, up 42% sequentially, driven by new contracts entering service and expansion of existing agreements.

For the 6 months, sales revenue increased 29% year-over-year and a gross margin of 58%. Colocation services revenue for the second quarter was $1.7 million, essentially flat sequentially with a 63% gross margin. For the first half, colocation revenue increased 182% year-over-year. and C1 has not yet reflected in those results and expected to begin contributing in the third quarter. Etherum taken revenue was $0.9 million compared to $2.3 million in the first quarter. Though for the 6-month state revenue increased 246% year-over-year. We earned 440 in state rewards during the quarter against 949 in the first. The sequential decline reflects our decision to offtake a portion of Etherum to characterize the facility Tim described as well as the decline Etherum price during this quarter.

Digital assets Mining revenue was $2.4 million on a 32.3-Bitcoin mined, compared to 48.1 Bitcoin in the first quarter. For the 6 months, mining revenue declined 58% year-over-year as expected as we continue to wind down that business. remains solid gross margin positive and 26% for the second quarter. Turning to the items that do not reflect the operating performance. We recorded $28.8 million of loss on digital assets carried at fair value, reflecting market-to-market movement on our ECM and Bitcoin Holdings. We also recorded a $46 million noncash impairment on liquid states used in the White Fiber financing transaction that reflects the accounting treatment of the position and does not represent a realized loss.

Separately, there was a $14 million loss from the change in fair value of the derivative liability associated with our convertible notes, and $8.1 million in interest expense, neither reflects operating performance. Turning to the balance sheet and treasury. On May 11, we purchased 8,568 for $20 million at an average cost of $2,334 per [indiscernible] and so now during the quarter. never break down the positions as of June 30. We held 75,757 Ethe directly carry a fair value of $118.9 million. That includes Etherum late service stakes through our validated banner. In April, we netted 73,235 ETM and received 66,192 LSCTH tokens in exchange. We also saw the exposure through [indiscernible] exposure through an externally managed bond carried at $47.9 million within investment securities. Liquid [indiscernible] as a separate asset from tenor content purposes, which is why it is online under a different measurement basis.

Our underlying economic exposure remains unchanged. Cash and cash equivalents were approximately $83.6 million on a consolidated basis, of which approximately $27.5 billion was held at Bit Digital and 56.1 million in White Fiber. Contract liabilities nearly doubled to $143.1 million from $79.6 million at year-end that represents revenue already contracted and cash already collected for services we have yet to deliver. Finally, remaining performance obligations were approximately $1 billion at quarter end. We expect to recognize approximately $57.7 million across the balance of 2026 million. $136.7 million in 2027 and $105.1 million in 2028 with the remainder thereafter.

To put that in context, the 2027 figure alone is more than we earned in all of 2025. None of it appeared in the revenue line today. With that, I'll turn the call back to Sam.

Thank you, Erke. We own a Etherum because we believe it will appreciate over time and generate attractive long-term returns for our shareholders. That has always been a part of our investment thesis. The second quarter was the third consecutive quarter at Etherum cost lower, but volatility is not new to us. We operated through multiple market cycles, and our approach has remained consistent throughout all of them. We also share the belief that the market price of Ethe has yet to reflect the value of the network. In our view, it is undervalued relative to what it is becoming. The fundamentals moved in 1 direction this quarter, the price moved in the other. That disconnect has not gone unnoticed.

Across the Ethereum ecosystem, there is growing recognition that the success of the network and the performance of the asset are closely linked. Price does matter. The bold case for Ethe is not standing still. Robin Hood launched its own Layer 2 on Ethereum, supporting a platform with roughly 28 million customers and $370 billion in assets with fees paid in Ethe. BlackRock launched 2 tokenized money market products this month and JPMorgan continues to expand its own tokenization footprint. Tokenized real-world assets on public blockchains now surpass $31 billion with roughly 2/3 settling on Ethereum.

And the institutional layer around the network keeps building, Etherum institutional, which launched with more than 500 existing institutional relationships alongside Ethe Labs, E-Systems and etherialize. These are not isolated announcements. Financial activity is migrating on to programmable settlement rails and as that activity grows so does the demand for Ethereum's block space, its security and its native asset. We remain confident the value of the asset will ultimately converge with its growing utility and adoption. That conviction shaped 1 of our most important decisions this quarter. Rather than selling Ethereum or issuing equity, we used our balance sheet to finance white fiber while preserving our long-term exposure to the Ethe asset. The next phase is execution. We expect the third quarter to begin reflecting what we have been building. Turning briefly to White Fiber, our other major strategic asset. Our conviction and its long-term potential remains very strong. And as previously stated, we do not intend to sell White Fabre shares this year. But the same standard applies here as everywhere else.

We look for ways to make a position productive without reducing it. One approach on evaluation is writing out of the money covered calls against a limited portion of our holdings to generate premium income. That would require registering those shares. Registration creates flexibility. It is not a step towards exiting. Any such program will be modest in scope and subject to board approval, and we would retain substantial long-term exposure. We have no interest in a transaction that impairs an asset that we own the majority of. We had White Fiber's quarterly call yesterday, and I strongly recommend that you listen to it. It is posted on x, but I'll mention a few words here. White Fiber is entering an important growth phase across both colocation and cloud services. At White Fiber's flagship facility, initial capacity has been delivered customer deployment and testing is underway and billing has commenced.

White fiber expects to reach the full contracted run rate building later this month under its 10-year agreement with scale representing approximately $865 million of contracted revenue. White Fiber is also expanding a substantial development pipeline and focusing its resources on the opportunities best for it to move excuse me -- best position to move forward. As NCN, our flagship facility reaches full contracted operations, White Fiber is pursuing permanent project financing that, if completed, would allow us to recycle the capital that we invested in North Carolina into the next data center. That is how the flywheel begins to turn, develop infrastructure, secure long-term customers, finance stabilized assets and redeploy capital into the next opportunity. Momentum in cloud services has also accelerated since our last earnings call White Fiber has signed new contracts representing more than $500 million of aggregate contract value, including the next-generation GP deployments and a capital-efficient managed services agreement.

So for Bit Digital, for Bit Digital shareholders, that means an increasingly valuable operating asset with greater revenue visibility, stronger cash flow potential and the ability to fund its own growth. That is the model at both levels. Our strategy has never been to passively accumulate Ethe. It is to build a productive balance sheet assets that earn while they appreciate, assets that finance operating businesses, businesses that generate recurring cash flow and cash flow that gets reinvested into productive assets. That is our strategic asset flywheel and we believe we are early, early to running a company where the treasury itself is productive capital rather than a static position.

We expect that to become a more common model we intend to be further along when it does. The transition in our business is already visible. Infrastructure and staking now represent 89% of our revenue against 70% a year ago. Capital is moving out of our mining business with limited terminal value and into assets that produce. Our operating results improved through the quarter. Our valuation did not. Today, the market is to value Bit Digital primarily as a digital asset treasury. A treasury strategy is fundamentally passive. You buy the asset, you hold it, you wait for the next cycle. That's not what happened here. We allocated capital. We financed an asset we already own. We preserved our Etherum position, and we avoided dilution at both companies. Those are growth company decisions. yet our valuation continues to reflect a passive treasury. That is a fundamental disconnect.

Using observable market values for the assets that we own, we believe Bit Digital continues to trade at a significant discount to its intrinsic value. We monitor that discount closely daily. It has been persistent. And at times, it has exceeded 40% by our calculations. At this discount, buying our own equity is 1 of the highest return uses of capital available and the wider the gap the more accretive it becomes. We intend to take an active role in closing that gap. The Board is evaluating those opportunities in real time alongside our liquidity needs and other priorities. Addressing the discount also expands what we can do next. We continue to look for opportunities to deploy capital in revenue-generating businesses.

And based on our current analysis, one conclusion stands out the best investment available to Bit Digital may be ultimately Bit Digital itself. To our long-term shareholders, the reason to own Bit Digital is to gain exposure to the settlement layer of digital finance combined with the HPC infrastructure that will run on top of it. This is all supported by a productive balance sheet that allocates the capital generates into additional strategic assets. That is the strategic asset company model. Markets can take time to recognize a differentiated model. But when the underlying assets begin producing visible cash flow, and management demonstrates that we'll actively defend value per share, that recognition can happen quickly.

We believe Bit Digital is soon approaching that point. And if the market will not close the gap between what we own and how it's valued, we are considering closing it ourselves. We'll now open the line for questions.

[Operator Instructions] We'll go first to Nick Giles with B. Riley Securities.

I appreciate the update. Sam, it was really interesting to hear you just speak to the prospect of a buyback there. I was just hoping for more details on potential timing, when the Board would ultimately make a decision on something like that? And then should we assume that it would be using the wind down of the WiFi stake? I heard you kind of recommit to maintaining that ownership position in 2026. So should we think about this as more of a 2027 type of event?

Nick, I can't give details on the exact timing of that. The Board is still considering how and when to do that. But I can tell you that it is a very vigorous discussion that we're having. We think the 40% or sometimes even 43% discount to NAV is unacceptable and makes no sense. So the way to close that obviously is considering a buyback. You're right. We did today recommit to not selling our shares in White Fiber. And the reason for that is, frankly, greed. We believe that White Fiber is going to do extraordinarily well. And we just don't want to sell down that position prematurely, that would be shooting ourselves in the foot. So we're very excited by White Fiber's progress. We believe that the market capital continue to be favorable in terms of size and growth, and we're very excited by White Fiber's future.

And of course, as White Fiber becomes larger, when we start selling down that position, it will be even more proceeds that come to Bit Digital, which is a very positive thing for the Digital shareholders. So time is our friend there. And I can't give you the exact time, but we are we are talking about it quite often, and we look forward to future announcements once we get some clear visibility on how and when.

Well, that's very good to hear. I appreciate that perspective, Sam. I think just next question was you spoke to the different ways you're using the balance sheet kind of getting creative there. And I heard you mention the covered calls, just was curious on potential timing around that opportunity and how you kind of would frame up returns on doing that.

Yes. Erke, do you want to take that question?

Sure. In terms of timing, I think we're coordinating with White Fiber for registration statement potentially later this quarter. And we're working with a few banks for their execution. So currently we do not have an exact like pricing yet, but we should be able to talk about it, and we will have the registration done and more proposals in the execution of our desk.

We'll take our next question from George Sutton with Craig-Hallum.

So I am confident that you will soon have a facility on NC1. And can you just walk through the scenario of that happening, let's hypothetically assume that has happened? You will then get an inflow of cash. I assume that would be part of the fuel for a significant buyback. Am I thinking about that the right way?

I'll let Eric talk about it. But just high level, the buyback can come, there are multiple sources of liquidity for a potential buyback. Of course, there's app, but there's also selling down our our White Fiber shares in the future. So there are different sources of liquidity, not just this facility being paid back. But I'll hand it over to Eric, so he can double-click on that.

Yes. For the bridge facility we had with White Fiber is relatively short term, is 90 days to like half the year towards the end of this year. So once the NC1 coming on financing down the White Fiber will obviously pay back a bridge and will use the proceeds we received to unwind our [indiscernible] borrowing with tax in this scenario. So not necessarily using to do a buyback, but this is generating additional yield or revenue for the Bit Digital in a meaningful way compared to native staking?

We're still trying to figure out what source of liquidity will do to consider a buyback. It hasn't been decided yet. But I do want to highlight that the return that we got on the bridge facility is higher than what we would have received on staking.

Understand. And sorry to get geeky on Ethereum, but a couple of things. I'm just curious your thoughts on EIP-8363, which would reduce the issuance relative to staking. Just curious your thoughts on that. And then also on the Glamsterdam hard floor coming up later this year, what do you think that does for Ethan your stake?

I've been looking at the Athyrium ecosystem and what's happening on the moves that are being taken to promote the price of Ethereum. So as mentioned, there's been some companies that have launched recently like Ethe Institutional Atheriaize and to other companies such as EtheLabs and Ethe Systems. And those companies are focused on not the geeky part of Ethereum, but rather getting institutional adoption accelerated and protecting and promoting the price out there. So that's where my focus has been, and I haven't been really focused on the engineering aspect of Ethereum block space. I'm not informed enough to give you a good answer on those questions.

We'll take our next question from Brian Dobson with Clear Street LLC.

So in the press release, you mentioned, of course, that White Fiber is a core holding, would you consider selling just a portion of it in order to finance a repo and take advantage of the valuation discrepancy between the 2 stocks. And I guess on that subject, is there anything in your, call it, portfolio potential investments that, in your view, might generate a greater return than repurchasing the digital shares?

Well, we think that repurchasing Bit Digital shares could be a pretty good investment. But again, that's a discussion happening at the Board. And going back to your question about whether we would use the proceeds from selling down White Fiber and buying back our shares. That is definitely something we're considering. But in terms of the timing, I don't think we'll be doing that. We won't be using proceeds from white fiber to do that only because we've already committed to the markets that we will not be selling down our White Fiber shares this year. If we were to do a buyback program this year, it will not be with the proceeds of White fiber. But we have no idea what the timing of the -- we're just considering it. We're just talking about it. It's on our menu, and it's a very attractive dish on our menu for obvious reasons. But in terms of whether we do it and the timing is still up in the air.

Yes, very good. And then yesterday's White Fiber call was very positive. [indiscernible] business is very encouraging. I suppose is that part of the business as that company continues to gain traction? Do you think that, that will help to erode the NAV discount that the Bit Digital is experiencing

Well, I think so. I mean look, if you compare -- I don't want to -- this is kind of a tough thing to say, but if you compare Bit Digital to its peers. Now we're not a digital asset treasury company, so it's a bit apples-to-apples. But we're performing -- we're outperforming on a relative basis. And I think a lot of that has to do with the White Fiber holding. So I think the white fiber holding very much helps the share price. I can't talk too much about the share price, but I think it's -- it's a positive thing towards the share price, but it does sometimes create a larger disconnect on the NAV. And it's -- and that's why we think there's a capital markets disconnect on BTBT, and we're thinking about correcting it but considering a buyback program because of that disconnection.

Our next question from Raymond Edings with Missouri Trust.

Thanks for the call today. If we can talk for a second about I guess, the opposite of a buyback. It looks like share count went up about 25 million shares in the last quarter. And I know you said you didn't issue shares for the White Fiber allocation or to fund Ethereum purchases. Wondering if you can just talk a little bit about what were shares issued for this quarter.

Yes. I mean, look, we would strongly hesitate to issue equity at these levels today. There would be some pretty strong hesitation. Our capital priorities changed as the discount widened through the quarter. And that change is exactly why the Board is now evaluating a buyback program. The Ethereum purchase and equity issuance were separate decisions. We bought Ethereum to lower our average cost while the ATM provided cash for construction spending, each decision made sense based on the circumstances at the time. I think what changed is the gap between our market value and the value of our assets. That is the allocation test working and at that point, somewhere different than it did in spring.

Okay. What was the approximate at the money sales pricing.

I'll leave that with Eric. I don't have that exact data point, and I'm unsure if we're...

Could you repeat your question again? I'm sorry.

Yes. And I guess, really, my question is relative to the discount. So I know you've said 40% or more is way out of line. I was wondering if we can expect you may issue shares for corporate purposes at a 10% or 20% discount but buy them back in at a 30% or 40% discount.

I see. It's not -- I understand your question now. It's not a -- there's no certain number in mind it will depend on what those purposes are and if the purpose is for a better return than what the discount is, then obviously, we think about it. But there's no specific number in mind that we have. There's no like, oh, it's minus -- it's like 20% disconnect now. we can use the ETM, but we don't think of it that way. It's not a quantifiable number.

And just want to add probably for technical reasons and legal reasons we do not want to ingesting position like we're sort of trading our own stock. So like in a sense that all the decisions are made based on certain circumstances based on your working capital as capital allocation, et cetra. And we try to make decisions as long term as possible -- should not by the short-term rates.

Okay. So the dilution this quarter -- all right. Sorry. Thanks, guys, for your time today.

Thank you. With no additional questions in queue. At this time, I'd like to turn the call back over to Sam for any additional or closing remarks.

Thank you for joining us today. We appreciate your continued interest and support. We look forward to speaking with you again next quarter. This officially concludes our call, and have a great day.

Thank you. That will conclude today's call. We appreciate your participation.

Good morning. It is now 9:00 a.m. Eastern Time. I'm Daniel Kennedy, Head of Investor Relations, and welcome to Bit Digital's 2026 Annual Meeting of Shareholders.

Today's virtual meeting is being held in person at Bit Digital's principal offices at 31 Hudson Yards, Floor 11 in New York. This meeting is being held pursuant to a written notice of the annual meeting mailed to all shareholders of record as of the close of business on April 30, 2026. Each written notice was accompanied by the proxy statement in form of proxy.

We have received a copy of the affidavit of mailing prepared by Andrew Collins, which confirms that the written notice was mailed to our shareholders as of June 11, 2026. Andrew Collins has been appointed Inspector of Elections and has taken his oath of office. Will the Inspector of Elections please take a poll of the shareholders present at the meeting in person or by proxy?

All who wish to vote in person should e-mail their names to Andrew Collins at [email protected], and he, in turn, will distribute ballots to you. We will wait a moment for the shareholders present to be counted.

I have received a written report from the Inspector of Elections, which reports that 55.75% Bit Digital's issued shares entitled to vote are represented at this meeting, either in person or by proxy. In accordance with Bit Digital's amended and restated Articles of Association, this does constitute a quorum. We thank you all for participating.

Good morning. I'm Sam Tabar, Bit Digital's Chief Executive Officer, and welcome to the company's 2026 Annual Meeting of Shareholders. I'm joined by Erke Huang, our Chief Financial Officer; Hughes Ching, our Managing Director of Bit Digital Strategies; and Elliot Lutzker, the company's Counsel. I will chair the meeting and hereby appoint Mr. Erke Huang to act as the Secretary of the meeting.

Will the Secretary produce the following documents for the purpose of filing with the meeting minutes. Copies of the printed notice of annual meeting dated June 11, 2026, which states the time, place and purpose of the meeting, the affidavit certifying the delivery of the notice of meeting to each of the company's ordinary shareholders of record as of close of business on April 30, 2026, as recorded on the shareholder list of the company.

I direct that such notice affidavit, shareholder list and accompanying documents be filed with the minutes of this meeting. Andrew Collins, the duly appointed Inspector of Elections, has subscribed to his oath of office. I direct that oath also be filed with the meeting minutes. Will the secretary please take a poll of the shareholders represented at the meeting in person or by proxy?

Yes.

All persons wishing to vote in person should e-mail their names to Andrew Collins at [email protected], and he will distribute the ballots to you.

Will the Secretary please report as to whether there -- a quorum is present?

Mr. Chairman, I have a written report of the Inspector, which indicates that we have a quorum present at the meeting. I direct that the foregoing report of the Inspector be annexed to the meeting minutes.

Based on such report, I declare that a quorum is present and the meeting is regularly and lawfully convened and ready to transact business.

The next order of business before the meeting is the election of 5 directors to serve until the next Annual Meeting of Shareholders, unless any such director shall resign, become disqualified, disabled or otherwise removed from office. Nominees receiving the highest number of affirmative votes will be elected. No other nominations have been submitted to the company's Nominating and Corporate Governance Committee.

May I have the nominations?

Yes. I nominate Zhaohui Deng, Erke Huang, Ichi Shih, Brock Pierce and Amanda Cassatt, each to serve as a member of the Board of Directors until the Annual Meeting of Shareholders in 2027.

Do I hear a second for the nominations and move that the nominations be closed?

I second the motion.

Are there any other nominations?

I declare the director nominations are now closed. I will entertain a motion that the nominees be elected as directors.

Mr. Chairman, I so move.

I second the motion.

I direct that a vote of the shareholders be taken on the nominations made. Any shareholder who has previously submitted a proxy need not vote on the foregoing nominations unless such shareholder desires to revoke the proxy. Any shareholder who requested a ballot earlier today should mark your ballot and retain it to vote on the following matters as well. Has everyone had an opportunity to vote?

If so, I declare the polls closed for the election of directors.

The next order of business before the meeting is to vote on a proposal to pass a special resolution to amend the company's Article of Association to change the quorum threshold for shareholder meetings.

On behalf of the Board of Directors, I hereby make the motion that proposals being approved.

I second the motion.

I direct the vote of the shareholders be taken for or against the proposal to amend the company's Article of Association to change the quorum threshold for shareholder meetings.

The next order of business before the meeting is to vote upon a proposal to approve an ordinary resolution with immediate effect that the company adopt the 2026 Omnibus Equity Incentive Plan.

On behalf of the Board of Directors, I hereby make the motion that the proposed adoption of the company's 2026 Omnibus Equity Incentive Plan be approved.

I second the motion.

I direct the vote of the shareholders be taken for or against the adoption of the company's 2026 Omnibus Equity Plan. The vote will be taken on the motion. Has everyone had an opportunity to vote on the motion?

If so, I declare the polls closed on the motion.

The next order of business before the meeting is to vote upon the ratification of appointment of Audit Alliance, LLP as the Independent Registered Public Accounting Firm of the company's financial statements for the fiscal year of 2026.

On behalf of the Board of Directors, I hereby make the motion that the appointment be ratified.

I second the motion.

I direct that a vote of the shareholders be taken for or against the appointment of Audit Alliance, LLP to serve as independent auditors for the company's financial statements for fiscal year 2026. The vote will be taken on the motion. Has everyone had an opportunity to vote?

If so, I declare the polls closed on the motion.

Is there any other business to be brought before at this meeting or any questions or comments concerning the proposals submitted for action at this meeting?

I see that the Inspector has completed his tabulations. Mr. Secretary, please report your results.

Yes. Elections of Zhaohui Deng, 119,735,775 votes for, 1,013,593 votes withheld; election of Erke Huang, 136,036,363 votes for, 890,347 votes withheld; election of Ichi Shih, 101,296,348 votes for, 938,941 votes withheld; election of Amanda Cassatt, 136,053,967 votes for, 911,527 votes withheld; election of Brock Pierce, 136,716,166 votes for, 606,823 votes withheld.

I declare that Zhaohui Deng, Erke Huang, Ichi Shih, Amanda Cassatt and Brock Pierce have each been elected as a director of the company.

Mr. Chairman, I report that 123,329,860 votes were cast for the proposal of the charter amendment to change the quorum threshold for shareholder meetings. 26,529,008 shares were voted against the proposal and 756,402 votes abstained.

I declare the adoption of the proposal of the charter amendment to change the quorum threshold is approved.

And Mr. Chairman, I report that 145,923,807 votes were cast for the proposal of -- the approval of the adoption of the company's 2026 Omnibus Equity Incentive Plan. 4,279,906 shares were voted against and 411,552 votes abstained.

I declare the adoption of the company's 2026 Omnibus Equity Incentive Plan is approved.

Mr. Chairman, I report that 236,635,000 -- sorry, let's do again, 236,435,611 votes were cast for the ratification of the appointment of Audit Alliance LLP as independent auditors for the 2026 fiscal year. 4,345,791 votes were cast against and 3,308,655 votes abstained.

I declare that the appointment of Audit Alliance LLP as independent auditors for the 2026 fiscal year has been ratified.

You have heard the results of the meeting. I will now entertain a motion to adjourn the formal portion of the meeting that Erke Huang can report on the company's affairs.

I hereby move that the formal portion of the meeting be adjourned.

I second the motion to adjourn.

Those in favor, signify by saying, aye.

Aye.

Aye.

Those opposed, nay.

The motion is therefore approved, and I hereby declare the 2026 Annual Meeting of the Shareholders of Bit Digital to be adjourned. Thank you all for coming.

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.