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Bit Digital, Inc. Vertically Integrates, Acquiring Tier 3 HPC Datacenter Company; 280+ MW Pipeline in Major Metropolitan Areas
BTBTBit Digital(BTBT) Prnewswire·2024-10-14 20:00

Core Viewpoint - Bit Digital has acquired Enovum Data Centers for approximately CAD 62.8million(USD62.8 million (USD 46 million), enhancing its high-performance computing (HPC) operations and expanding its service offerings in the digital asset and AI infrastructure sectors [1][2][3]. Transaction Overview - The acquisition was completed on a debt-free, cash-free basis, funded by approximately CAD 56millionincashand1.62millionshareequivalentsissuedtokeymanagement[2].−ThetransactionclosedonOctober11,2024[2].StrategicRationale−TheacquisitionverticallyintegratesBitDigital′sHPCbusinessintothecolocationservicessector,allowingforpotentialsynergiesandincreasedmarginsfromHPCcustomers[3].−ItenhancescompetitivepositioningbyenablingtheofferingofanintegratedGPUcloudsolution[3].−GreateroperationalflexibilityisachievedbycolocatingownedGPUinventoryinEnovumdatacenters,whichiscrucialformeetingcustomerdemandpromptly[3].ExpansionPipeline−Enovumhasadevelopmentpipelineof288MW,with93MWcurrentlyunderLetterofIntent(LOI)[4].−Immediateplansincludebringingapproximately8MWonlinebytheendofQ22025,withanexpectedrun−ratecolocationEBITDAofapproximatelyUSD56 million in cash and 1.62 million share equivalents issued to key management [2]. - The transaction closed on October 11, 2024 [2]. Strategic Rationale - The acquisition vertically integrates Bit Digital's HPC business into the colocation services sector, allowing for potential synergies and increased margins from HPC customers [3]. - It enhances competitive positioning by enabling the offering of an integrated GPU cloud solution [3]. - Greater operational flexibility is achieved by colocating owned GPU inventory in Enovum datacenters, which is crucial for meeting customer demand promptly [3]. Expansion Pipeline - Enovum has a development pipeline of 288 MW, with 93 MW currently under Letter of Intent (LOI) [4]. - Immediate plans include bringing approximately 8 MW online by the end of Q2 2025, with an expected run-rate colocation EBITDA of approximately USD 13 million [4]. - Additional 20 MW is tentatively planned to be brought online by the end of 2025, contingent on customer demand and financing [4]. Financing Alternatives - Bit Digital is pursuing debt financing alternatives to fund Enovum's expansion and GPU server procurement [5]. - The acquisition has been structured to optimize tax outcomes and allow for a potential future Real Estate Investment Trust (REIT) election [5]. Enovum Overview - Enovum operates a 4 MW Tier 3 datacenter in Montreal, powered by renewable hydroelectricity, and is expected to generate approximately CAD $10 million in revenue in 2025 [6][10]. - The datacenter is fully leased to over a dozen colocation customers, indicating strong demand for its services [6]. Experienced Team - Bit Digital will retain key employees from Enovum to ensure operational continuity and leverage their extensive experience in managing and developing Tier 3 data centers [7]. Management Commentary - The CEO of Bit Digital expressed enthusiasm about the acquisition, highlighting its strategic importance and the advantages of acquiring an operational facility at an attractive price [8]. - The existing site and near-term expansion sites are located in major metropolitan areas, which is vital for latency-sensitive applications [8]. Advisors - B. Riley Securities is acting as the exclusive financial advisor, while Davies Ward Phillips & Vineberg LLP and White & Case LLP are serving as legal advisors to Bit Digital [8]. Conference Call - A conference call to discuss the acquisition is scheduled for October 15, 2024, at 9 AM ET [9].