<br><div data-test-id="content-container"><p><figure class="getty-figure" data-type="getty-image"><picture><img src="https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1165801078/image_1165801078.jpg?io=getty-c-w750" alt="Abstract mining concept" data-id="1165801078" data-type="getty-image" width="4500px" height="3000px" srcset="https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1165801078/image_1165801078.jpg?io=getty-c-w1536 1536w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1165801078/image_1165801078.jpg?io=getty-c-w1280 1280w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1165801078/image_1165801078.jpg?io=getty-c-w1080 1080w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1165801078/image_1165801078.jpg?io=getty-c-w750 750w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1165801078/image_1165801078.jpg?io=getty-c-w640 640w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1165801078/image_1165801078.jpg?io=getty-c-w480 480w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1165801078/image_1165801078.jpg?io=getty-c-w320 320w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1165801078/image_1165801078.jpg?io=getty-c-w240 240w" sizes="(max-width: 768px) calc(100vw - 36px), (max-width: 1024px) calc(100vw - 132px), (max-width: 1200px) calc(66.6vw - 72px), 600px" loading="lazy"/></picture><figcaption><p class="item-credits">Just_Super</p></figcaption></figure></p> <p>Bit Digital (<span class="ticker-hover-wrapper">NASDAQ:<a target="_blank" href="https://seekingalpha.com/symbol/BTBT" title="Bit Digital, Inc." rel="noopener">BTBT</a></span>) is primarily a Bitcoin (<a target="_blank" href="https://seekingalpha.com/symbol/BTC-USD" title="Bitcoin USD" rel="noopener">BTC-USD</a>) mining enterprise primarily based in the US. I've <a target="_blank" href="https://seekingalpha.com/article/4546403-bit-digital-another-casualty-of-hosted-mining" rel="noopener">previously covered</a> Bit Digital for In search of Alpha a number of months in the past. On the time, the mining house was simply beginning to deal<span class="paywall-full-content invisible"> with points from low BTC costs and counter celebration bankruptcies. In my opinion, this was a headwind for Bit Digital particularly due to its use of mining hosts. Whereas the article most likely learn fairly harsh when you're a BTBT bull, the one constructive factor that I did point out was how good the corporate's steadiness sheet was. With one other quarter of efficiency and initiatives, we will see if issues are getting higher or worse for Bit Digital basically.</span></p> <h2 class="paywall-full-content invisible">Steadiness Sheet &amp; Manufacturing</h2> <p class="paywall-full-content invisible">Bit Digital reported Q3 earnings on <a target="_blank" href="https://bit-digital.com/press-releases/bit-digital-inc-announces-third-quarter-of-fiscal-year-2022-financial-results/" rel="nofollow noopener">December 7th</a> and disclosed $9.1 million in income, $2.6 million in gross revenue, and a $12.9 million working loss after administrative bills and amortization. The excellent news is the corporate nonetheless has a robust portfolio of property and just about no debt:</p> <span class="table-responsive paywall-full-content invisible"><span class="table-scroll-wrapper"><span data-intersection-boundary="start"/><table> <tr> <td> </td> <th>Q2-22</th> <th>Q3-22</th> </tr> <tr> <td>Money and Equivalents</td> <td>$44.3</td> <td>$32.3</td> </tr> <tr> <td>Digital Belongings</td> <td>$30.6</td> <td>$33.0</td> </tr> <tr> <td>Internet Property and Plant</td> <td>$90.0</td> <td>$80.7</td> </tr> <tr> <td>Whole Liabilities</td> <td>$7.0</td> <td>$6.4</td> </tr> </table> <span data-intersection-boundary="end"/></span><button class="table-enlarge-button"><svg xmlns="http://www.w3.org/2000/svg" viewbox="0 0 16 16" class="table-enlarge-icon"><path fill-rule="evenodd" clip-rule="evenodd" d="M16 11a5 5 0 0 1-5 5H5a5 5 0 0 1-5-5V5a5 5 0 0 1 5-5h6a5 5 0 0 1 5 5v6zm-4.5-2.5h2v-6h-6v2h4v4zm-9-1h2v4h4v2h-6v-6z"/></svg>Click on to enlarge</button></span> <p class="paywall-full-content invisible">Supply: In search of Alpha</p> <p class="paywall-full-content invisible">Bit Digital's digital property are made up of Bitcoin, Ethereum (<a target="_blank" href="https://seekingalpha.com/symbol/ETH-USD" title="Ethereum USD" rel="noopener">ETH-USD</a>), USDC, and ETH derivatives. In Bit Digital's final <a target="_blank" href="https://bit-digital.com/press-releases/bit-digital-inc-announces-monthly-production-update-for-december-2022/" rel="nofollow noopener">production update</a>, it shared a modest month-to-month mined determine of 130 BTC. For the quarter, the corporate mined roughly 427 BTC, down barely from Q3's 429. Regardless of having publicity to 3rd events by means of the corporate's hosted mining strategy, Bit Digital has been capable of get by means of the miner margin squeeze with out promoting off a big portion of Bitcoin. This has not been the case broadly within the public miner house as different corporations have needed to hearth promote Bitcoin stacks.</p> <span class="table-responsive paywall-full-content invisible"><span class="table-scroll-wrapper"><span data-intersection-boundary="start"/> <span data-intersection-boundary="end"/></span><button class="table-enlarge-button"><svg xmlns="http://www.w3.org/2000/svg" viewbox="0 0 16 16" class="table-enlarge-icon"><path fill-rule="evenodd" clip-rule="evenodd" d="M16 11a5 5 0 0 1-5 5H5a5 5 0 0 1-5-5V5a5 5 0 0 1 5-5h6a5 5 0 0 1 5 5v6zm-4.5-2.5h2v-6h-6v2h4v4zm-9-1h2v4h4v2h-6v-6z"/></svg>Click on to enlarge</button></span> <p class="paywall-full-content invisible">Supply: firm press releases, sorted by BTC Treasury</p> <p class="paywall-full-content invisible">Bit Digital's avoidance of danger has enabled it to say the fifth largest public Bitcoin miner BTC treasury just by not blowing itself up with leverage. Regardless of exhibiting a capability to competently keep a BTC place, Bit Digital may now be simply as interesting for its ETH place and the way the corporate plans to monetize it.</p> <h2 class="paywall-full-content invisible">Ethereum Staking</h2> <p class="paywall-full-content invisible">Final month Bit Digital <a target="_blank" href="https://seekingalpha.com/pr/19065177-bit-digital-inc-announces-commencement-of-ethereum-staking-operations-partnership-blockdaemon" rel="noopener">announced</a> it had begun Ethereum staking by means of Blockdaemon's <a target="_blank" href="https://blockdaemon.com/products/liquid-staking/" rel="nofollow noopener">liquid staking solution</a> Portara. Liquid staking is completely different from typical direct staking as a result of it permits the staker to mint a liquid spinoff token of the ETH that has been staked for additional use in DeFi.</p> <p class="paywall-full-content invisible"><figure class="regular-img-figure" contenteditable="false"><picture><span><a target="_blank" href="https://static.seekingalpha.com/uploads/2023/1/13/50832021-16736428870350418_origin.jpg" rel="lightbox noopener" data-width="1284" data-height="557" data-og-image-twitter_small_card="true" data-og-image-twitter_large_card="true" data-og-image-twitter_image_post="true" data-og-image-msn="true" data-og-image-facebook="true" data-og-image-google_news="true" data-og-image-google_plus="true" data-og-image-linkdin="true"><img src="https://static.seekingalpha.com/uploads/2023/1/13/50832021-16736428870350418.jpg" alt="ETH Liquid Staking" width="640" height="278" contenteditable="true" data-width="640" data-height="278" loading="lazy"/></a></span></picture><figcaption><p class="item-caption">ETH Liquid Staking (Dune Analytics/eliasimos)</p></figcaption></figure></p> <p class="paywall-full-content invisible">Liquid staking is a very talked-about strategy to stake on Ethereum as a result of ETH stake withdrawals will not be enabled till the <a target="_blank" href="https://seekingalpha.com/article/4569097-ethereum-staking-with-lido-finance-shanghai-catalyst" rel="noopener">Shanghai upgrade</a> which is probably going coming in March. As a result of there may be danger in staking an asset and not using a clear time expectation for withdrawal, roughly 43% of the ETH staked has been by means of liquid staking protocols.</p> <p class="paywall-full-content invisible">In my October article protecting BTBT, I famous that the corporate must scale up its ETH place if it desires to generate significant rewards from staking:</p> <blockquote class="paywall-full-content invisible"><p>But when Bit Digital is to shift to a mannequin the place a big proportion of its income comes from Ethereum staking, it's going to seemingly must ramp up the ETH in its treasury to generate a significant return as a brand new income section.</p></blockquote> <p class="paywall-full-content invisible">Bit Digital has definitely been in a position to do this as the corporate's ETH steadiness is now 8,799.9, up from 3,684 ETH on the finish of August. Up to now, we all know that 2,164 ETH have been staked from the corporate's complete ETH stash as of December twentieth. Although it's anticipated that many of the firm's ETH will find yourself in stake whether or not immediately or by means of a liquid staking software like Portara:</p> <blockquote class="paywall-full-content invisible"><p>The Firm intends to proceed accumulating Ethereum and stake considerably all of its ETH place over time</p></blockquote> <p class="paywall-full-content invisible">Past what Bit Digital returns from an ETH reward standpoint, the corporate might think about placing the liquid derivatives to work as nicely by means of DeFi lending protocols. For instance, Lido Finance's (<a target="_blank" href="https://seekingalpha.com/symbol/LDO-USD" title="Lido DAO" rel="noopener">LDO-USD</a>) stETH spinoff token has usually returned someplace between 4-5% APY for the reason that completion of the merge in September:</p> <p class="paywall-full-content invisible"><figure class="regular-img-figure" contenteditable="false"><picture><img src="https://static.seekingalpha.com/uploads/2023/1/13/50832021-16736464452007027.jpg" alt="stETH APY Trend" width="559" height="287" contenteditable="true" data-width="559" data-height="287" loading="lazy"/></picture><figcaption><p class="item-caption">stETH APY Pattern (DeFi Llama)</p></figcaption></figure></p> <p class="paywall-full-content invisible">The corporate might definitely attempt to do one thing comparable with its personal liquid staked tokens ought to it determine to take part in on-chain lending.</p> <h2 class="paywall-full-content invisible">Dangers</h2> <p class="paywall-full-content invisible">Liquid staking depends on asset pegs and belief within the skill to redeem. We have seen staked ETH spinoff tokens commerce at a reduction earlier than. As of article submission, Coinbase's (<a target="_blank" href="https://seekingalpha.com/symbol/COIN" title="Coinbase Global, Inc." rel="noopener">COIN</a>) cbETH token trades a 1.1% low cost to ETH. Bit Digital would not have a big debt place on the company steadiness sheet, however as the corporate ramps up its ETH staking footprint, it will likely be introducing counter celebration danger on the steadiness sheet by means of spinoff tokens.</p> <h2 class="paywall-full-content invisible">Abstract</h2> <p class="paywall-full-content invisible">I like that the corporate is diversifying its enterprise from only a Bitcoin miner to an Ethereum staker. In my opinion, the liquid staking strategy might be an excellent one for a publicly traded firm as a result of it permits BTBT to dump the ETH derivatives ought to it must in a pinch. I additionally suppose going with an institutional grade staking answer that gives slashing insurance coverage and KYC-compliance like Blockdaemon is a accountable strategy to do liquid staking on Ethereum. I do not at the moment have any place in BTBT inventory. That stated, I do suppose the identify is getting extra attention-grabbing and there are most likely worse methods to play a crypto fairness reduction rally.</p> <p class="paywall-full-content invisible">Editor's Observe: This text covers a number of microcap shares. Please concentrate on the dangers related to these shares.</p></div>