NEW YORK - Bit Digital, Inc. (NASDAQ:BTBT), a New York-based digital assets and artificial intelligence infrastructure platform, has completed the acquisition of Enovum Data Centers, a high-performance computing data center operator, for approximately USD $46 million. The deal, which concluded on Monday, aims to expand Bit Digital's operations and service offerings.
The acquisition integrates Bit Digital's high-performance computing (HPC) operations with Enovum's Tier 3 datacenter, which is situated in a major city and fully leased. It is expected to diversify Bit Digital's customer base and enhance its competitive edge in the market by offering integrated GPU cloud solutions and colocation services.
Enovum, headquartered in Montreal, Canada, operates a 4MW Tier 3 datacenter and has a development pipeline of 288 MW, including 93MW currently under letters of intent. The company's immediate plans include bringing 8MW online by the end of the second quarter of 2025, with an investment of approximately USD $50 million. This expansion is projected to generate a colocation EBITDA of around USD $13 million for Enovum by the end of the same quarter.
Bit Digital funded the acquisition with roughly CAD $56 million in cash and the issuance of approximately 1.62 million share equivalents to key management of Enovum, who rolled over a significant portion of their ownership. The transaction was structured to optimize tax outcomes and potentially prepare for a future Real Estate Investment Trust election.
The company has retained key employees from Enovum to ensure continuity and expertise in managing and developing the data centers. Bit Digital's CEO, Sam Tabar, expressed confidence in the acquisition, highlighting the operational facility, a strong customer base, and a robust pipeline of future sites as key advantages.
Bit Digital is also exploring debt financing options to support the expansion of Enovum's facilities and its existing cloud business. B. Riley Securities served as the exclusive financial advisor for the transaction, with legal advice provided by Davies Ward Phillips & Vineberg LLP and White & Case LLP.
The company will host a conference call on Tuesday to discuss the acquisition details further. This article is based on a press release statement from Bit Digital, Inc.
In other recent news, Bit Digital reported notable developments in its operations. The company disclosed unaudited earnings for September 2024, with a revenue of approximately $4.2 million from its AI services. However, the company's cryptocurrency mining efforts slightly decreased with 51.5 bitcoins produced, marking a 3.6% decrease from August. Bit Digital's treasury held digital assets valued at roughly $117.6 million, with cash and cash equivalents totaling $104 million.
The company also announced key executive appointments, including Benjamin Lamson as Head of Revenue and Tom Sanfilippo as Chief Technology Officer, to bolster its high-performance computing business. In a new venture, Bit Digital has announced a five-year agreement with Boosteroid, a cloud-based gaming provider, expected to generate $2.6 million annually. H.C. Wainwright maintained a Buy rating for Bit Digital in response to these developments.
For the second quarter of 2024, Bit Digital reported a revenue of $29 million, marking a 220% increase from the same quarter last year, despite a loss per share of -$0.09 due to challenges from the bitcoin halving event and increased network difficulty. These are the recent developments in Bit Digital's operations.
InvestingPro Insights
Bit Digital's recent acquisition of Enovum Data Centers aligns well with several key financial metrics and trends highlighted by InvestingPro. The company's strong revenue growth, with a 220.34% increase in the most recent quarter, suggests that strategic moves like this acquisition are part of a broader expansion strategy. This is further supported by an InvestingPro Tip indicating that analysts anticipate sales growth in the current year.
The acquisition's focus on expanding high-performance computing capabilities and data center operations is particularly relevant given Bit Digital's current financial position. With a market cap of $487.29 million and a P/E ratio of 12.21, the company appears to be trading at a relatively attractive valuation, especially considering its growth prospects. An InvestingPro Tip notes that Bit Digital is trading at a low P/E ratio relative to near-term earnings growth, which could make this acquisition timely for potential value creation.
Moreover, the company's strong liquidity position, as indicated by another InvestingPro Tip stating that liquid assets exceed short-term obligations, suggests that Bit Digital is well-positioned to fund this $46 million acquisition and support future growth initiatives. This financial stability is crucial for executing the planned expansions and investments outlined in the acquisition announcement.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Bit Digital, providing a deeper understanding of the company's financial health and market position.
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