On Wednesday, H.C. Wainwright adjusted its outlook on Bit Digital Inc. (NASDAQ:BTBT) shares, raising the price target to $7.00 from the previous $6.00 while maintaining a Buy rating on the stock. This revision follows Bit Digital's recent announcement of acquiring Montreal-based high-performance computing (HPC) data center operator Enovum Data Centers for $46 million, primarily in cash.
The transaction, which was finalized on October 11, is part of Bit Digital's expansion into the infrastructure and energy aspects of bitcoin mining and HPC.
Enovum Data Centers, now a subsidiary of Bit Digital, operates by hosting machines for other entities and has considered purchasing its own GPUs in the past. Bit Digital, recognized as a leader in transitioning from bitcoin (BTC) to HPC, sees this acquisition as filling a crucial infrastructure gap that emerged after relocating its bitcoin mining operations to North America following the mid-2021 crackdown on cryptocurrency activities in China.
The acquisition includes a fully contracted 4MW site in Montreal and a series of smaller sites expected to launch within the next 12 to 14 months. These additions are projected to increase Bit Digital's owned HPC infrastructure to approximately 32MW. Specifically, the Montreal 2 (MTL2) site and a Vancouver site are anticipated to add 3MW each by June, contributing to an estimated 12MW of operational capacity by the end of that month.
In financial terms, Bit Digital forecasts a $23 million boost to its HPC revenue by the second quarter of 2025, which is expected to result in $13 million in EBITDA. By the end of the next year, the company projects a run-rate revenue of $67 million and $48 million in EBITDA.
Despite the new sites not yet being operational, H.C. Wainwright has expressed confidence in Bit Digital's delivery capabilities, while also exercising caution by not fully accounting for the potential revenue contribution until the facilities are fully contracted and operational.
The analyst's statement reinforced this conservative stance but acknowledged the positive impact of Bit Digital's move into infrastructure through the Enovum acquisition. The price target increase reflects this optimism, albeit with a careful approach to the company's future performance projections.
In other recent news, Bit Digital has finalized the acquisition of Enovum Data Centers for a sum of approximately $46 million, aiming to expand its operations and service offerings. This acquisition is expected to diversify Bit Digital's customer base and enhance its competitive edge in the market.
Furthermore, Bit Digital reported 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.
In addition, Bit Digital has 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. The company has also entered into a five-year agreement with Boosteroid, a cloud-based gaming provider, expected to generate $2.6 million annually.
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 metrics and insights from InvestingPro. The company's market cap stands at $525.68 million, reflecting its growing presence in the bitcoin mining and HPC sectors. InvestingPro data shows that Bit Digital's revenue growth has been impressive, with a 153.87% increase in the last twelve months as of Q2 2024, and a remarkable 220.34% quarterly growth in Q2 2024. This robust growth supports H.C. Wainwright's optimistic outlook and increased price target.
InvestingPro Tips highlight that Bit Digital holds more cash than debt on its balance sheet, which likely facilitated the $46 million acquisition of Enovum. Moreover, analysts anticipate sales growth in the current year, aligning with the company's projected revenue boost from the new HPC infrastructure.
It is worth noting that InvestingPro offers 16 additional tips for Bit Digital, providing investors with a comprehensive analysis of the company's financial health and market position. These insights could be particularly valuable as Bit Digital expands its operations and aims to capitalize on its new infrastructure assets.
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