Release Date: May 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue increased by 266% compared to the prior year, driven by higher realized bitcoin prices and the start of the HPC services business.
- Adjusted EBITDA grew significantly to $58.5 million for the quarter, compared to $1.5 million in Q1 2023, primarily due to gross margin expansion and the introduction of high-margin HPC business.
- Bit Digital Inc's bitcoin mining fleet was approximately 85% carbon-free as of March 31, 2024, highlighting ongoing efforts towards sustainability.
- The company has a strong balance sheet with over $160 million in cash and digital assets and no debt, providing financial flexibility.
- Bit Digital Inc is actively exploring M&A opportunities to fill strategic gaps and improve margins, demonstrating proactive growth management.
Negative Points
- The decrease in the percentage of carbon-free operations from 93% at the end of 2023 to 85% by March 31, 2024, due to increased consumption from carbon-based energy sources.
- Despite significant revenue growth, there was a one-time $1.3 million credit issued to a customer for reduced utilization during the initial HPC deployment, impacting financials.
- The company faces increased general and administrative costs, primarily due to higher personnel and consulting expenses.
- Bit Digital Inc is still in the process of securing approximately 40 megawatts to reach its 6 exahash goal, indicating potential challenges in scaling operations.
- The company's approach to fleet expansion remains cautious, potentially limiting rapid growth opportunities in the bitcoin mining sector.
Q & A Highlights
Q: You received that letter about the second 2,000 GPUs back in late March. What's kind of taking so long there for final terms or final contract? And then do you think those GPUs will still be sort of installed and live by June 30?
A: Erke Huang, CFO of Bit Digital, explained that the delay was due to preparing other vendors for the deployment and working with the vendor for deployment. They are expecting installation by June 30 or around that time.
Q: Related to the second batch of 2,000 GPUs, you talked about a volume discount and a purchase discount. Are you finding the market competitive for GPUs?
A: Sam Tabar, CEO of Bit Digital, mentioned that they are seeing more competitive pricing for those servers as manufacturing production shapes up, which should lead to better procurement pricing.
Q: In regards to potential customer two, three, and four, you said you're hiring a sales team to help with that process. Has that process slowed down?
A: Sam Tabar explained that the process with potential clients is moving forward, but nobody currently owns that process, which is why they are hiring ahead of revenue. They are in final discussions with experienced people in the relevant space to accelerate and manage the sales process.
Q: On the last call, you guys talked about getting a credit facility put in place to help finance GPU purchases. Where does that stand?
A: Sam Tabar noted that they are open to looking at credit facilities for the AI business due to its predictable cash flow, unlike the bitcoin mining equipment. They are in deep discussions with various counterparties to optimize the best financing terms.
Q: I want to start off on the HPC adjusted gross margin there. I think you said it was about 72.5%. Should we expect that similar type of a margin going forward?
A: Erke Huang indicated that for the first batch, the margin would be the same as before. However, going forward, there might be some pricing compression, which could potentially decrease the margin depending on the finalized contracts and market conditions.
Q: Professional consulting expenses increased to $2.6 million from $1 million. Could you give us more color on what was driving those costs?
A: Erke Huang explained that those costs were related to the sales process for appraising the deal and professional services related to the installation of the equipment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
