NEW YORK – Bit Digital, Inc. (NASDAQ:BTBT), a New York-based digital asset and artificial intelligence infrastructure platform, has completed the acquisition of Enovum Data Centers, an operator of high-performance computing data centers, for approximately USD $46 million. . The deal, which was completed on Monday, aims to expand Bit Digital’s operations and service offerings.
The acquisition combines Bit Digital’s high-performance computing (HPC) operations with Enovum’s Tier 3 data centers, located in major cities and fully leased. It is expected to diversify Bit Digital’s customer base and increase 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 data center 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 around $50 million. This expansion is expected to generate collocated EBITDA of around USD $13 million for Enovum by the end of the same quarter.
Bit Digital financed the acquisition with approximately CAD $56 million in cash and issued approximately 1.62 million shares equivalent to Enovum’s key management, which rolled over a significant portion of its holdings. The transaction was structured to maximize tax returns and potentially prepare for future Real Estate Investment Trust elections.
The company has retained key employees from Enovum to ensure continuity and expertise in managing and developing data centers. Bit Digital’s CEO, Sam Tabar, expressed confidence in the acquisition, highlighting operational facilities, a strong customer base, and a strong pipeline for future sites as key advantages.
Bit Digital is also exploring debt financing options to support the expansion of Enovum’s existing facilities and cloud businesses. B. Riley Securities served as exclusive financial advisor to 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 further details of the acquisition. This article is based on a press release from Bit Digital, Inc.
In other recent news, Bit Digital reported an important development in its operations. The company announced unaudited earnings for September 2024, with revenue of approximately $4.2 million from AI services. However, the company’s cryptocurrency mining efforts fell slightly with 51.5 bitcoins produced, marking a 3.6% decline since August. Bit Digital Treasury holds digital assets valued at approximately $117.6 million, with cash and cash equivalents totaling $104 million.
The company also announced key executive appointments, including Benjamin Lamson as Chief Revenue Officer and Tom Sanfilippo as Chief Technology Officer, to enhance its high-performance computing business. In a new venture, Bit Digital has announced a five-year agreement with Boosteroid, a cloud-based game provider, expected to generate $2.6 million annually. HC Wainwright maintains a Buy rating for Bit Digital in response to these developments.
For the second quarter of 2024, Bit Digital reported an income of $29 million, marking a 220% increase from the same quarter last year, despite a loss per share – $0.09 due to the challenges of the bitcoin halving event and increased network difficulties. This is a recent development in Bit Digital’s operations.
InvestingPro Insights
Bit Digital’s recent acquisition of Enovum Data Center aligns 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 InvestingPro Tip which indicates that analysts expect sales growth in the current year.
The acquisition’s focus on developing high-performance computing capabilities and data center operations is particularly relevant given Bit Digital’s current financial position. With a market capitalization of $487.29 million and a P/E ratio of 12.21, the company appears to be trading at a fairly attractive valuation, especially considering its growth prospects. InvestingPro Tips notes that Bit Digital trades at a low P/E ratio relative to short-term earnings growth, which could make this acquisition timely for potential value creation.
In addition, the company’s strong liquidity position, as shown by another InvestingPro Tip that states that liquid assets exceed short-term liabilities, shows that Bit Digital is well positioned to finance this $46 million acquisition and support future growth initiatives. This financial stability is essential to carry out the expansion and investment that has been planned in the acquisition announcement.
For investors looking for 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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