After announcing the finalization of a substantial contract, Bit Digital, Inc. (NASDAQ: BTBT) experienced a significant surge in its stock price, climbing 39.714% on the US charts Tuesday and closing the session at $3.39.
Details Of The Agreement
Bit Digital (BTBT) has formalized an agreement to supply an additional 2,048 GPUs to an existing customer over a three-year term, commencing upon deployment. This agreement expands the total supply to 4,096 GPUs for the respective three-year periods, generating approximately $275 million in revenue, or $92 million annually.
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To fulfill the contract, Bit Digital has placed an order for 256 servers from Dell Technologies, an authorized Nvidia OEM. These servers, equipped with 2,048 Nvidia HGX H100 GPUs and related equipment, are expected to be delivered in July 2024.
Deployment And Financial Strategy
The servers will be deployed in Iceland at the datacenter housing BTBT’s current AI servers, with revenue generation anticipated to begin in August 2024. Bit Digital plans to finance the deal using a combination of cash and digital assets. Additionally, the company has entered into a sale-leaseback agreement for 1,024 GPUs with a third-party entity to reduce its capital outlay. BTBT is also exploring debt financing options to retroactively finance its hardware assets.
This agreement significantly advances Bit Digital’s goal of achieving a $100 million annualized revenue run-rate by the end of 2024, bringing the company to over 90% of this target. Bit Digital remains committed to the HPC business, aiming to effectively support its customers’ AI ambitions and continue its robust growth trajectory throughout the year.
Recent Operational Update
Bit Digital revealed in its most recent operational update that as of May 31, 2024, it had 256 servers actively earning revenue from its initial Bit Digital AI contract. The company earned an estimated $4.2 million in unaudited revenue from this contract during the month of May 2024.
Bit Digital produced 63.3 BTC in May 2024, a 47% decrease from the previous month. The primary reason for the decrease was the reduction of bitcoin block rewards after the April halving event. As of May 31, 2024, the company’s active hash rate was roughly 2.54 EH/s.
