NEW YORK, Nov. 17, 2021 /PRNewswire/ -- Bit Digital, Inc.
(Nasdaq: BTBT) ("Bit Digital" or the "Company"), a bitcoin mining
company headquartered in New York,
announced its unaudited bitcoin production and mining operations
update for the third quarter ended September
30, 2021.
Preliminary Third Quarter 2021 Highlights
- We completed our fleet's exit from China. As of the date of this press release,
100% of our fleet had arrived in North
America. As of September 30,
2021, we had no miners remaining in China: 79.1% of our miner fleet was already
deployed or awaiting installation in North America, and 20.9% was in transit.
- The Company owned 27,744 miners as of September 30, 2021, with an estimated maximum
total hash rate of 1.603 Exahash ("EH/s"). The 0.318 EH/s reduction
in the third quarter was due to fleet repositioning, in which the
Company sold or disposed of certain models (partially offset by
purchases) in anticipation of purchase opportunities. The Company
recognized a $0.375 million gain on
miner sales, and the net sale proceeds had been reinvested into
miner purchases as of the date of this press release.
- The Company purchased 851 miners on the spot market during the
quarter.
- Subsequent to September 30, 2021,
the Company signed an agreement with Bitmain Technologies Limited
("Bitmain") to purchase 10,000 Bitcoin miners. The previously
announced purchases are expected to increase Bit Digital's maximum
hash rate by approximately 1.0 EH/s. Pro forma for the announced
purchases, our maximum total hash rate is expected to be
approximately 2.603 EH/s.
- The Company earned 248.36 bitcoins. The reduction from the
second quarter was due to the migration program, in which a higher
percentage of fleet capacity was offline while in transit to, or
awaiting installation in, North
America, as well as miner sales and disposals.
- Treasury holdings of BTC and WBTC were 526.1 and 101.0,
respectively, for a total of 627.1 BTC equivalent, with a fair
market value of approximately $27.5
million as of September 30,
2021.
- The Company raised $80 million of
gross proceeds in a private placement with institutional
investors.
- The Company announced that Brock
Pierce, Chairman of the Bitcoin Foundation, joined its Board of Directors effective
October 31, 2021.
Miner Migration Completed
As a result of the State Council targeting virtual currency
mining in China, we terminated all
mining operations in China on
June 21, 2021. Accordingly, we
further accelerated our migration strategy to North America, that had been ongoing since
October 2020, and completed our
fleet's exit from China during the
third quarter. As of September 30,
2021, we had no miners in China: 79.1% of our fleet was already deployed
or awaiting installation in North
America, and 20.9% was in transit. As of the date of this
press release, 100% of our fleet had arrived in North America.
Power and Hosting Update
During the third quarter, the Company signed two new hosting
agreements in the United States,
representing 135 megawatts ("MW") of additional power capacity.
Both are expected to be powered by a substantial component of
renewable and/or carbon-free energy, contributing to our ongoing
efforts to decarbonize our mining operations.
On July 22, we signed a 100 MW
agreement with Digihost Technologies ("Digihost") that is expected
to be powered by approximately half renewable and/or carbon free
energy sources, subject to finalizing our energy procurement
strategy with Digihost. This second agreement brings our total
contracted hosting capacity with Digihost to 120 MW. Digihost is
expected to deliver the first 20 MW of contracted power capacity
during Q4 2021. The remaining 100 MW is scheduled for delivery
during the first and second quarters of 2022.
On August 25, we signed a 35 MW
hosting agreement with Blockfusion USA ("Blockfusion") that is expected to be
powered primarily from zero carbon emission energy sources.
As of the date of this press
release, Blockfusion had completed the first (of four)
phases of miner deployments, representing approximately 5 MW of
power consumption. The remaining three phases are scheduled for
delivery in Q4 2021 and Q1 2022. During the term of our agreement
and for twelve (12) months thereafter, Bit Digital has a right of
first refusal to match any bona fide offer from a third party to
finance or acquire securities and/or assets of Blockfusion, and to
receive a credit or refund of certain expenses incurred in the
development of infrastructure.
As a result of these two new agreements, as of September 30, 2021, the Company had secured
hosting capacity sufficient to complete the redeployment of its
fleet in North America, with
additional signed capacity to
facilitate future fleet growth. The Company continues to evaluate
additional hosting arrangements with existing and prospective new hosting partners.
Our hosting partner Compute North LLC ("Compute North") has
advised us that its delivery of 40 MW of hosting capacity that was
contracted for during Q2 and anticipated for delivery in Q3 2021
has been delayed. Compute North has not yet determined updated
delivery timing for this additional capacity. Pending revised
delivery timing, Bit Digital expects to redirect miner deployments
to other hosting partners.
Our hosting partner Link Global Technologies ("Link") has
advised us that Link's facility in Alberta, Canada that had supplied
approximately 3.3 MW for hosting our miners was required to
discontinue operations as a result of a permitting dispute. Link is
currently evaluating alternative sites to accommodate our miners.
In the interim, pending further updates, Bit Digital expects to
redirect miners formerly hosted with Link to other hosting
partners.
The following table summarizes our signed hosting agreements as
of September 30, 2021, and expected
delivery timing based on
communications with our hosting partners:
Hosting
Partner
|
Date
Signed
|
Location
(State)
|
Expected
Power
Capacity
(MW)
|
% of
Total
|
Expected
Delivery
Timing
|
Compute
North
|
9/9/2020
|
Texas
|
0.3
|
0.1%
|
Delivered
|
Link Global
Technologies
|
1/31/2021
|
TBD
(formerly Alberta)
|
3.3
|
1.5%
|
TBD
|
Compute
North
|
12/30/2020
|
Nebraska
|
6.5
|
3.0%
|
Delivered
|
Compute
North
|
1/21/2021
|
Nebraska
|
9.2
|
4.3%
|
Delivered
|
Other
|
2/22/2021
|
Georgia
|
0.3
|
0.2%
|
Delivered
|
Compute
North
|
3/12/2021
|
TBD
|
40.0
|
18.6%
|
TBD
|
Digihost
Technologies
|
6/10/2021
|
New York
|
20.0
|
9.3%
|
Q4 2021
|
Digihost
Technologies
|
7/22/2021
|
New York
|
100.0
|
46.6%
|
Q1 to Q2
2022
|
Blockfusion
USA
|
8/25/2021
|
New York
|
35.0
|
16.3%
|
Q4 2021 to Q1
2022 (1)
|
Total
|
|
|
214.6
|
100.0%
|
|
|
(1)
Approximately 5 MW has already been delivered as of the date of
this press release.
|
The following table summarizes our expected hosting deliveries,
by quarter:
Expected Delivery
Timing
|
Expected Power Capacity
(MW)
|
Delivered as of
September 30, 2021
|
21.3
|
Q4 2021
|
30.0
|
Q1 2022
|
80.0
|
Q2 2022
|
40.0
|
To be
determined
|
43.3
|
Total
|
214.6
|
Pro forma for hosting agreements signed to date, we expect to
enjoy a competitive estimated
base power and hosting rate of approximately 3.6 cents per kilowatt-hour, on an annualized weighted average
basis.The foregoing base power rate
therefore is an estimate and relies on certain assumptions,
including but not limited to
estimated future energy
procurement pricing, and
excludes the effect of profit
sharing arrangements. We achieve what we
believe are attractive hosting rates, in part, by offering
profit shares to many of our hosting partners. We believe that
profit sharing helps align interests with our hosts, and
contributes to strong performance and uptime for our hosted
miners.
Bitcoin Production Update
In the third quarter of 2021, Bit Digital earned 248.4 newly
minted bitcoins, a reduction from 588.4 earned in the second
quarter. The reduction was due to the aforementioned miner
migration, as well as fleet repositioning in which the Company sold
or disposed of certain miners. Bitcoin production is expected to
increase following completion of the redeployment of miners
migrated from China, which is
expected during the first quarter of 2022, and upon completion of
announced miner purchases.
The Company's quarterly bitcoin production since commencement of
our mining operations was as follows:
Miner Fleet Update
As of September 30, 2021, the
Company owned 27,744 miners, with an estimated total maximum hash
rate of 1.603 EH/s, a decrease from 32,500 miners and 1.915 EH/s as
of June 30, 2021. The reduction was
due to sales and disposals of certain miners, partially offset by
miner purchases, as further discussed below. The Company's fleet of
owned miners comprised the following models:
Model
|
Owned as
of
September 30,
2021
|
MicroBT Whatsminer
M21S
|
16,296
|
MicroBT Whatsminer
M20S
|
3,690
|
Bitmain Antminer
S17
|
3,641
|
MicroBT Whatsminer
M10
|
1,938
|
Bitmain Antminer
T3
|
769
|
Bitmain Antminer S19
Pro
|
605
|
Bitmain Antminer
S17+
|
500
|
MicroBT Whatsminer
M30S
|
261
|
Bitmain Antminer
T17+
|
44
|
Total
|
27,744
|
Miner Purchases, Sales and Disposals
During the third quarter, we purchased 851 miners on the spot
market, including 400 Bitmain S19Pro and 451 Bitmain S17 models. As
of September 30, 2021, all of the
newly purchased miners had already been deployed in North America.
Subsequent to September 30, 2021,
we signed an agreement with Bitmain to purchase 10,000 Bitcoin
miners. The total maximum purchase price is estimated at US
$65,000,000 (subject to certain
potential discounts), of which the initial installments have been made, with the final
installment due ten (10) days prior to each shipment through
June 2022. The announced purchases
are expected to increase Bit Digital's miner fleet hash rate by
approximately 1.0 EH/s. Pro forma for announced purchases, our
maximum total hash rate is expected to be approximately 2.603
EH/s.
The Company anticipates an ongoing opportunity to purchase
additional miners, both on the
spot market and from
manufacturers in the coming months, subject to market
conditions and capital availability, and continues to monitor
market conditions for such purchase opportunities.
During the quarter, we continued repositioning our fleet by
selling 4,200 miners that were deemed to have a lower expected
return on invested capital than miners we believe we can purchase,
and/or were deemed unsuitable for long-distance migration to
North America. The sold miners
included 4,000 Bitmain S17 and 200 Bitmain T17 models. The Company
recorded a gain of $0.375 million on
these sales, in aggregate. The net sale proceeds had been
reinvested into miner purchases and/or purchase orders as of the
date of this press release.
During the quarter, we abandoned 1,407 miners that were deemed
to have reached the end of their useful lives, were no longer
operational and/or would have been uneconomical or impossible to
repair or migrate. The disposed miners included 611 Bitmain S17+,
301 MicroBT M21S, 252 MicroBT M10, 212 Bitmain T17+ and 31 Bitmain
T3 models.
Private Placement Transaction with Institutional
Investors
On October 5, 2021, the Company
closed its previously announced private placement with
institutional investors for the sale of 13,490,728 ordinary shares.
The Company also issued to the investors unregistered warrants to
purchase up to an aggregate of 10,118,046 ordinary shares. The
gross proceeds from the private placement were approximately
$80 million before deducting
placement agent fees and other estimated offering expenses.
Appointment of Director
On September 28, 2021, the Company
announced the appointment of Brock
Pierce, Chairman of the Bitcoin Foundation, to its board of
directors. Such appointment became
effective on October 31, 2021.
Management Commentary
"Bit Digital marks a major
milestone for our Company. Our mining assets are now entirely out
of China and 100% in North America," said Bryan Bullett, Bit Digital's CEO. "It's unusual
that a business is faced with migrating the majority of its
operating assets across the globe
on an expedited timeline. Thanks to our talented team, partners, and head start, having begun migrating in
October 2020, we accomplished
a major logistical feat. I'd like to
thank the entire Bit Digital team for exceptional performance in
executing against these unprecedented circumstances."
"It's also unusual that a major economy exits an entire
vertical, as China did earlier
this year, by banning bitcoin mining. Despite the initial
operational complexity – a challenge our team squarely met –
we believe the shift in global hash
distribution will result in a stronger bitcoin network, with the
majority of hash now located here in North America."
"By closing our recent
$80 million equity placement, we
illustrated our access to growth capital, and welcomed new
institutional shareholders. We thank these institutions for
trusting us with their investment."
"We committed the majority of the placement's net proceeds
within approximately one week, securing 10,000 new Bitmain units on
what we believe are attractive terms. And while the accelerated
migration prompted us to modestly cull our legacy fleet, we expect
this to result in improved profitability, as our purchase
activity significantly
exceeded the temporary reduction in fleet size since the start of
Q3. Pro forma for announced purchases, we expect to have approximately 2.6 EH/s of mining power."
"Finally, we welcomed to our Board of Directors Brock Pierce, a legendary crypto pioneer who
needs no introduction. We believe that with his newly elevated
position in the Company, Brock's vast industry knowledge,
relationships, and guidance will be invaluable going forward."
About Bit Digital
Bit Digital, Inc. is a bitcoin mining company headquartered in
New York City. Our mining
operations are located in North
America. For additional information, please contact
Sam Tabar at
sam@bit-digital.com or visit our
www.bit-digital.com.
Investor Notice
Investing in our securities involves a high degree of risk.
Before making an investment decision, you should carefully consider
the risks, uncertainties and forward-looking statements described
under "Risk Factors" in Item 3.D of our most recent Annual Report
on Form 20-F for the fiscal year ended December 31, 2020. If any material risk was to
occur, our business, financial condition or results of operations
would likely suffer. In that event, the value of our securities
could decline and you could lose part or all of your investment.
The risks and uncertainties we describe are not the only ones
facing us. Additional risks not presently known to us or that we
currently deem immaterial may also impair our business operations.
In addition, our past financial performance may not be a reliable
indicator of future performance, and historical trends should not
be used to anticipate results in the future. Future changes in the
network-wide mining difficulty rate or Bitcoin hash rate may also
materially affect the future performance of Bit Digital's
production of bitcoin. Additionally, all discussions of financial
metrics assume mining difficulty rates as of September 2021. See "Safe Harbor Statement"
below.
Safe Harbor Statement
This press release may contain certain "forward-looking
statements" relating to the business of Bit Digital, Inc., and its
subsidiary companies. All statements, other than statements of
historical fact included herein are "forward-looking statements."
These forward-looking statements are often identified by the use of
forward-looking terminology such as "believes," "expects," or
similar expressions, involving known and unknown risks and
uncertainties. Although the company believes that the expectations
reflected in these forward-looking statements are reasonable, they
do involve assumptions, risks and uncertainties, and these
expectations may prove to be incorrect. Investors should not place
undue reliance on these forward-looking statements, which speak
only as of the date of this press release. The company's actual
results could differ materially from those anticipated in these
forward-looking statements as a result of a variety of factors,
including those discussed in the company's periodic reports that
are filed with the Securities and Exchange Commission and available
on its website at http://www.sec.gov. All forward-looking
statements attributable to the company or persons acting on its
behalf are expressly qualified in their entirety by these factors.
Other than as required under the securities laws, the company does
not assume a duty to update these forward-looking statements.
Note: Actual operating hash
rate will vary depending on network difficulty rate, total hash
rate of the network, the operations of our facilities and the
status of our miners.
|
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