Bit Digital is a large scale Bitcoin mining company with a strategic focus on sustainability. The majority of its operations run, on average, on carbon-free energy sources, making it a leader in sustainability within the industry. The company looks to continually increase its usage of clean energy, working towards 100% sustainable power.
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00:00 (upbeat music)
00:02 - Sam, good morning.
00:05 - Hi, good morning, how are you?
00:07 - I'm doing well.
00:08 There's so much for us to get to,
00:10 kind of give a little bit of sneak peek
00:11 of the things I wanted to talk about.
00:13 And of course, we'll talk about your company
00:14 specifically as well.
00:15 But for the folks at home who aren't familiar,
00:18 if you could explain it to me like I'm five,
00:19 what is it that your company does?
00:21 - BitDigital is a generator of digital assets.
00:26 We do that sustainably.
00:27 Our fleet is 99% carbon free.
00:30 And I say carbon free, not carbon neutral.
00:32 There's a big difference.
00:33 We're listed on NASDAQ.
00:34 Our ticker is BTBT, and we run a great business.
00:39 - Now, since you brought it up,
00:40 what is the quick difference there?
00:41 'Cause I can kind of take a guess,
00:43 'cause one's neutral, but one's that you're completely free.
00:45 So what's the difference there for you?
00:47 - Yeah, I would strongly recommend
00:50 when the audience hears carbon neutral,
00:53 that that's a huge difference from carbon free.
00:55 When you're carbon neutral,
00:57 all you're doing really is you're creating the damage,
00:59 but you're buying certificates
01:01 to neutralize the damage you've done.
01:05 We don't believe in that approach.
01:06 We believe in being carbon free.
01:08 In other words, just using renewable sources of power,
01:12 no need to buy certificates to neutralize the crap
01:15 that you've created and just become carbon free.
01:18 That's the real way to do it.
01:19 We don't think carbon neutrality is really the way forward
01:24 to power an industry of the future.
01:27 - Yeah, well, that I kind of see, maybe it's a bad example.
01:29 It's kind of like how you have an income coming in,
01:31 but then you have liabilities
01:32 and it kind of just offsets each other
01:33 versus just having income with no liabilities.
01:36 I'd rather have that option.
01:37 But here's the thing, Sam.
01:38 I talked to my friends about investing in Bitcoin.
01:40 They get a little skeptical.
01:42 Then they talk about the Bitcoin miners.
01:44 Obviously, you're one of them.
01:45 What would you say to people in terms of,
01:47 hey, it might be a better option to invest in BTBT
01:51 rather than investing in Bitcoin itself?
01:54 - Sure, I mean, there are some technical reasons
01:56 why people would rather buy security related to Bitcoin
01:59 as opposed to Bitcoin itself.
02:01 But on the other hand, if you look at our business,
02:03 it costs about $16,000 to make a Bitcoin.
02:06 Look at how much it costs to buy Bitcoin in the market.
02:09 So when you're buying a Bitcoin miner
02:12 that's listed on NASDAQ,
02:14 what you're doing is you're buying Bitcoin on steroids.
02:18 That's the thesis.
02:18 And it has worked for a lot of people.
02:20 If you look at, for example, our year to date,
02:22 we're up over 300%.
02:24 You can't say the same thing about Bitcoin.
02:26 - No, you cannot.
02:27 And my portfolio shows that.
02:29 Let's go back to the carbon free for a second.
02:31 How do you kind of source your power then?
02:33 How are you able to achieve that
02:35 while also staying competitive as well?
02:37 - Yes, I like that question.
02:40 It's pretty easy, although it's complicated in execution.
02:44 We have diversified ourselves
02:46 in three first class jurisdictions,
02:48 the United States, Canada, and Iceland.
02:51 Very stable jurisdictions, very stable politics.
02:54 Well, there's a question about the US of course sometimes.
02:57 But the point is,
02:59 these jurisdictions have very stable rule of law
03:03 where a contract is a contract.
03:05 So we're not dealing with any funding issues
03:08 when it comes to contract interpretation in other countries.
03:11 But with respect to the three countries that we're in,
03:14 we use renewable source of power.
03:16 So in New York, we use, for example, hydro,
03:20 and we're drawing power from the Niagara River.
03:23 In Canada, we're using hydro.
03:25 And in Iceland, we're using geothermal and hydro.
03:29 Geothermal is volcanic power.
03:31 - Now let's stick to, you kind of brought up politics.
03:34 I'm gonna touch base on that.
03:35 I know when you had Democrats
03:37 that went and took over as the administration,
03:39 you had wheat stocks that kind of went through the roof
03:42 and they started gaining momentum.
03:44 Are you ever in favor of one party over other?
03:48 Or if you don't wanna answer that,
03:49 like are you ever kind of concentrating
03:51 on the political climate in terms of Bitcoin,
03:53 in terms of regulation or any of that?
03:55 Since you've been working
03:56 a little over a year from the election.
03:58 - Yeah, there's this perception
04:01 that Democrats are against Bitcoin
04:04 and Republicans are more friendly.
04:06 That's actually not true.
04:07 If you look at the Democratic Party, for example,
04:10 Kennedy is very pro-Bitcoin.
04:14 And then if you look at, for example, Senator Warren,
04:16 she's very anti-Bitcoin.
04:17 Both of them are in the Democratic Party.
04:19 So there are many examples within parties
04:23 in which people have different points of views.
04:25 And I applaud and celebrate that.
04:27 Diversity of views and diversity of thought
04:30 is very important within parties
04:32 and that should be celebrated and protected.
04:35 So I don't think it's a blue versus red issue.
04:38 - Now, you just had your quarter two earnings
04:42 that were just reported recently.
04:44 What would you kind of describe
04:45 your financial health of BitDigital?
04:47 And if you wanna go over any surface level numbers
04:50 that you're proud of or what we can look ahead to,
04:51 please feel free to enlighten us on that.
04:53 - Sure, I mean, we had a transitional quarter.
04:55 What I mean by transitional
04:56 is that we reshuffled some of our portfolio.
04:59 We have different operators in various jurisdictions
05:01 and we have been reshuffling that.
05:03 When you reshuffle that, you have to unplug the machine.
05:06 When you unplug the machine,
05:06 that machine is not making money.
05:08 So transitional quarters are a little bit more challenging,
05:11 but despite that, we're up 9% from quarter to quarter.
05:17 We've made about 9 million and adjusted to be 1.9 million.
05:21 So everything is so positive.
05:23 We grew our hash rate by 40% from the end of Q1 to Q2.
05:27 We even announced that we are now going to get to 3.5
05:32 exa hash by the end of the year,
05:34 which makes us a pretty formidable fleet
05:38 by the end of the year.
05:40 We are now 99% carbon free as mentioned
05:43 and our liquidity position is extremely good.
05:47 Our balance sheet is pristine.
05:49 We have about, I think over 65 million of liquidity
05:53 on our balance sheet.
05:54 We have absolutely no debt, no debt whatsoever.
05:57 We did not drink the Kool-Aid during frothy days last year.
06:01 We're buying machines on the cheap
06:03 as opposed to buying them at the top of the market.
06:05 So we've been running a very counter cyclical strategy
06:08 when it comes to our growth
06:10 and it's paid off very handsomely.
06:13 - Let's take a look into the future
06:14 as we talked about the past and the reports of earnings.
06:18 When you have Bitcoin that kind of halves, right?
06:20 Does that impact your business in any way?
06:22 And then how do you kind of position yourself
06:24 to make sure that you're still getting enough of a reward,
06:26 enough of a cut to be profitable?
06:30 - Well, that's one of the reasons
06:31 why we keep a sharp eye on our balance sheet.
06:33 It's very important that we can go get through
06:35 any bear market that is thrown our way.
06:39 We have an incredible burn rate.
06:41 We could go through a burn rate of a number of years
06:45 and still be in business.
06:46 So there is no issue there.
06:48 But with respect to the economics of a halving,
06:51 it's split in half.
06:52 And theoretic, if you look historically,
06:54 Bitcoin has doubled in value during halvings.
06:58 So there is that history that gives us comfort.
07:02 But even if that doesn't happen,
07:03 and we believe it will happen,
07:05 but even if it doesn't,
07:07 we know that machines will be on the cheap
07:10 if Bitcoin remains running at historical lows.
07:14 And what we've done during the counter-cyclical strategy
07:17 is that we buy machines when there's a bear market.
07:21 And that's really important.
07:22 So we'll be taking great advantage of that.
07:24 Why?
07:25 Because we have a great balance sheet
07:26 and we could use our balance sheet to buy these machines
07:29 when they're on the cheap.
07:31 - Yeah, 'cause the biggest concern for me,
07:32 whether you're buying Bitcoin or Bitcoin miners,
07:34 is the fact that, hey, if the price slashes at half, right?
07:37 We saw the huge dip when SpaceX sold,
07:39 but it rebounded quite nicely.
07:41 Then you've got other individuals that are saying,
07:43 hey, Bitcoin by the end of 2025, by the end of the decade,
07:46 could be in six figures, a million, this, that,
07:48 and the other.
07:49 But what if it goes into like,
07:51 let's say we decline 50%,
07:52 like, are you still able to stay profitable
07:54 and make sure that, hey, 'cause you own,
07:56 you have quite a bit of Bitcoin from what I understand.
07:59 But it looks like from your balance sheet perspective,
08:01 you're not really concerned
08:02 and you're positioning yourself well
08:03 to deal with any catastrophic events like that.
08:06 - That's correct.
08:07 That's correct.
08:08 - Now, your floor is kind of yours.
08:10 We've talked about your past, your present, the future,
08:12 what folks can look into, but the floor is all yours.
08:15 If there's anything you wanna talk to our viewers about
08:17 before we wrap this up.
08:18 - No, I think I've answered all the questions.
08:23 There's one thing that I would probably mention
08:24 that BitDigital does that's also a little bit differently
08:28 besides run a very responsible business
08:31 that's environmentally friendly,
08:33 is that we do have diversified revenue streams.
08:36 So what we've done is we've invented a business model
08:40 called the BitDigital Flywheel.
08:42 And what we do there is we take Bitcoin profits
08:44 and we pour a lot of that, about half of that in Ethereum.
08:47 We stake that Ethereum, we take the yield from that Ethereum
08:49 and pour that back into Bitcoin operations.
08:52 So no one else is doing that.
08:53 And if you wanna participate in what we believe
08:57 the smart contract economy,
08:58 which will happen in the future,
09:00 BTBT is doing a lot of staking for itself,
09:04 which is not a regulatory issue.
09:07 Staking for others is an issue,
09:08 but staking for yourself isn't.
09:10 So BitDigital, I have been understanding
09:13 a lot of people are looking at the ticker as a proxy
09:17 for staking as a service,
09:19 given that's what we're doing for ourselves.
09:21 So that's another differentiator
09:22 that our peers have compared to ourselves.
09:26 - I'm glad you brought up, sorry, one last one for me.
09:28 I'm glad you brought up the smart contracts
09:30 'cause the first thing that I think of,
09:31 whether it's appropriate or not, is NFTs.
09:34 I'm thinking of like NBA Top Shot
09:35 and a variety of those programs
09:37 and gimmicks that were out there, if you will.
09:40 Are you concerned that, hey,
09:42 it will always kind of be like,
09:44 phases that come in with smart contracts,
09:47 or do you firmly believe that,
09:48 hey, that is gonna be the future
09:49 in terms of whether we're buying a house,
09:50 whether we're doing this or anything else of the norm?
09:53 - Look, if you recall, I remember in the dot-com era,
09:59 people laughed at having websites
10:01 and it was just not considered,
10:04 it was considered a fad.
10:07 Even Thomas Friedman in the New York Times
10:09 called the internet a fad.
10:11 And many people who are wrong eventually,
10:15 they realized that the internet
10:17 ended up inventing new business models.
10:19 We would never have imagined Uber,
10:21 for example, in the year 2001.
10:24 And so you have to give these new technologies some time.
10:28 And of course, an older generation
10:30 is not going to look at it friendly
10:32 because they don't like change.
10:34 They just want things to stay as it is.
10:35 But the newer generation,
10:37 I know a lot of young people in their 20s,
10:38 they don't even have a broker-dealer account.
10:40 They trade crypto.
10:42 And crypto will eventually become normalized.
10:45 And this newer generation will end up
10:47 being in the positions of power
10:49 when it comes to portfolio construction.
10:50 They'll look at Bitcoin as a proxy to gold.
10:53 Gold right now is, I think, maybe 15, 20 times more
10:56 than the market cap of Bitcoin.
10:59 There's no reason.
11:00 Bitcoin can completely replace gold
11:03 as a proxy for inflation.
11:06 And once that younger generation
11:07 comes into seats of power,
11:08 you'll see Bitcoin and other crypto classes,
11:10 other blue-chip crypto classes, particularly Ethereum,
11:13 because it has the ability of doing smart contracts,
11:15 which Bitcoin can't.
11:16 It will be, and it will end up being normalized
11:19 and institutionalized.
11:20 It's just a question of time.
11:22 So there's structural upside,
11:23 but there will be a lot of cyclical ups and downs.
11:26 - Well, you know, people say it would never reach 20,000
11:28 in terms of Bitcoin.
11:29 Then it did, then after it fell,
11:30 it said never gonna reach all-time highs,
11:32 then it went to like 70-something.
11:34 So we'll see what the future holds for sure.
11:36 But thank you so much.
11:37 I really appreciate you for hanging out with us, Sam.
11:39 - Thank you so much.
11:40 Thanks for having me.
11:41 (upbeat music)
11:43 (upbeat music)