Bit Digital, Inc. Announces Bitcoin Production and Mining Operations Update for the Second Quarter of 2021

Bit Digital, Inc., a bitcoin mining company headquartered in New York, announced its unaudited bitcoin production and mining operations update for the second quarter ended June 30, 2021.

• 70.8% of our miner fleet by hash rate was already deployed, in transit to or awaiting installation in North America at June 30, 2021. Following regulatory changes in China, the Company suspended mining operations there effective June 21, 2021, accelerated its migration program to North America, and anticipates completing migration of its remaining China-based fleet during the third quarter of 2021.
• The Company owned 32,500 miners as of June 30, 2021, with a maximum total hash rate of 1.92 EH/s. The 0.34 EH/s reduction from the first quarter was due to fleet repositioning, in which the Company sold or disposed of certain models, in anticipation of purchase opportunities for newer, more efficient machines. The Company recognized a small gain on miner sales, and expects to reinvest sale proceeds of $5.4 million into purchases of newer vintage miners.
• The Company purchased 3,515 miners on the spot market during the second quarter, and expects to make additional miner purchases subsequent to quarter end, potentially in significant volumes, subject to market conditions and capital availability.
• The Company earned 562.9 bitcoins in the second quarter of 2021. The reduction from the first quarter was due to the accelerated migration program, in which more miners were offline while in transit to or awaiting installation in North America, as well as miner sales and disposals.
• Treasury holdings of bitcoin increased to 588.4, with a fair market value of approximately $20.6 million as of June 30, 2021.

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Miner Migration Update

Following the recent announcement of the Chinese government’s decision to ban bitcoin mining, the Company immediately suspended its remaining mining operations in mainland China, effective June 21, 2021. Accordingly, we further accelerated our migration strategy to North America, that had been ongoing since October 2020. As a result, a greater proportion of the Company’s fleet was offline than in the prior quarter, due to more miners being in transit to or awaiting installation in North America.

During the quarter, the Company shipped 14,500 miners to the United States. The Company expects to complete the migration of its remaining China-based miners to North America early in the third quarter of 2021.

The following table represents our miners’ geographic locations as of June 30, 2021:

Miner Geographic Distribution as of June 30, 2021

During the quarter, the Company signed two new hosting agreements in North America, representing 60 megawatts of additional hosting power capacity. As of June 30, 2021, the Company believes it had secured the majority of hosting capacity required to complete redeployment of its remaining China-based fleet in North America. The Company continues to evaluate additional hosting arrangements with existing and new partners in North America, to secure additional capacity and in anticipation of an expected increase in our spot market miner purchase activity and growth of our miner fleet in the coming months.

Bitcoin Production Update

In the second quarter of 2021, Bit Digital earned 562.9 newly minted bitcoins, a reduction from 1013.4 earned in the first quarter. The reduction was due to the aforementioned acceleration of the Company’s miner migration strategy, as well as fleet repositioning in which the Company sold or disposed of certain miners. Bitcoin production is expected to increase following completion of the migration, which is expected during the third quarter of 2021, and upon completion of anticipated miner purchase activity.

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The Company’s quarterly bitcoin production since commencement of our mining operations was as follows:

Miner Fleet Update

As of June 30, 2021, the Company owned 32,500 miners, with a total maximum hash rate of 1.92 EH/S, a decrease from 40,965 miners and 2.26 EH/s as of March 31, 2021. The reduction was due to sales and disposals of certain older miners, partially offset by miner purchases, as further discussed below. The Company’s fleet of owned miners comprised the following models:

Miner Purchases, Sales and Disposals

During the second quarter, we purchased 3,515 miners on the Chinese spot market, including 1,259 Bitmain S17Pro, 954 MicroBT M20S, 930 Bitmain S17+, 261 MicroBT M30S, 101 Bitmain S17 and 10 Bitmain S17E models. As of July 11, 2021, 1,678 of the newly purchased miners had already been deployed in North America and 878 were in transit to North America.

The Company anticipates a significant opportunity to purchase additional miners on the Chinese spot market at attractive prices, potentially in substantial volumes, in the coming months, and continues to closely monitor market conditions for such purchase opportunities. Due to spot market disruption following the Chinese government’s ban of bitcoin mining in June 2021, the Company believes there have been significant spot market pricing reductions, and anticipates an opportunity to make further purchases of newer-vintage miners in the coming months, subject to market conditions and capital availability.

During the quarter, we began to reposition our fleet by selling 11,608 miners that were deemed to have a lower expected return on invested capital than miners we anticipate purchasing in the near future, and/or were deemed unsuitable for long-distance migration to North America. The sold miners included 8,410 Bitmain T17, 1,525 MicroBT M21S, 1,346 MicroBT M20S, 195 Bitmain S17E, 100 MicroBT M31S and 32 Bitmain S17 Pro models. The Company recorded a small gain on these sales, in aggregate. We intend to reinvest the net sales proceeds of $5.4 million into purchases of newer, more efficient models in the coming months.

During the quarter, we abandoned 372 miners in mainland China that were deemed to have reached the end of their useful lives, were no longer operational and/or would have been uneconomical or impossible to repair. The disposed miners included 320 MicroBT M21S, 42 MicroBT M20S and 10 MicroBT M10 models.

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