Bit Digital: An Updated Look At The Fundamentals
If you're buying the AI hype, you may want to take a look at one of the data center companies buying NVIDIA's silicon shovels.
Bitcoin mining stocks are notoriously incredibly volatile and the last three months have been no different. One of the fastest horses on the BTC mining track is arguably Bit Digital BTBT 0.00%↑. After nearly tripling between mid-November through the end of 2023, BTBT shares have collapsed 54% since the start of the year.
This is the second time in the last 12 months that this sort of round trip roller coaster has happened. My position on Bitcoin miners for some time has been that they’re great short term trading instruments and terrible long term investments as currently constructed. There are about two dozen of these companies that trade in the public markets and I think I’ve now covered nearly all of them.
As such, BTBT is a company that I have some familiarity with. I’ve written about it a half dozen times for Seeking Alpha over the last two years and it has generally been one of my top 3 to 5 BTC mining positions at any given time. More than simply Bitcoin mining, which has considerable headwinds without a permanent change to Bitcoin transaction fee market dynamics, Bit Digital also runs an Ethereum-staking business and recently started generating revenue from generative AI solutions.
In my opinion, if you believe all of the NVIDIA NVDA 0.00%↑ hype, then companies like Bit Digital should be on your radar as well since this is one of the companies buying the H100s that NVIDIA is slinging. Bit Digital is finding itself in the increasingly crowded Bitcoin miner-turned-HPC data center realm. Just buying chips is one part of all of this. From there, AI/machine learning solutions need physical infrastructure and that’s where data centers like Bit Digital come in.
If this is all completely Greek to you, I would recommend trying out an image generating service like Stable Diffusion - it’s an incredible tool and shows how powerful AI can actually be. Here’s an example of what it can do. I entered the prompt:
a painting of an artificial intelligence powered robot in the style of Andy Warhol
Less than a minute later, I had this:
An art enthusiast may take issue with the “Warhol-ness” of this output but it’s a lot better than I could do with Gimp or Photoshop and it took a heck of a lot less time to generate.
For Bit Digital, generative AI is interesting. Frankly, I have a lot of questions about how these types of things will ultimately be monetized, but what can I say; when you’re in a gold rush you can charge a lot for shovels. We’ll see if it sticks. So far, Bit Digital has disclosed $1 million in revenue from its first AI contract near the end of January. This is where projections get interesting and when combining AI revenue forecasts with what we can reasonably expect Bit Digital to earn from BTC mining for the remainder of the year, I’d actually argue BTBT may be cheap at Monday’s closing price based purely on what I think are achievable full year revenue expectations.
Keep reading with a 7-day free trial
Subscribe to Heretic Speculator to keep reading this post and get 7 days of free access to the full post archives.