Bit Digital Production Slump Continued Into Q1, Strikes Deals With Coinmint, Riot to Increase Hashrate

The bitcoin miner has struggled to recover its hashrate since moving its operations out of China.

AccessTimeIconJun 22, 2022 at 4:08 p.m. UTC
Updated Jun 22, 2022 at 4:28 p.m. UTC

Eliza Gkritsi is CoinDesk's crypto mining reporter based in Asia.

Bit Digital's (BTBT) slowdown in bitcoin production continued well into the first quarter of the year, as the company struggles to return its hashrate to previous levels after being forced to move out of China.

The firm mined 194.48 BTC and 189.26 ETH in the first quarter of 2022, bringing in $8.6 million in revenue, according to its unaudited quarterly earnings report filed with the U.S. Securities and Exchange Commission (SEC) on Wednesday. In the first quarter of 2021, Bit Digital marked $43.95 million in revenues. BTBT also noted a $10.18 million net comprehensive loss for Q1 2022, compared with a $35.79 million profit for the same period last year. The numbers also mark a drop compared to the last two quarters of 2021.

The firm had to move its mining rigs out of China when the government banned crypto mining in May 2021. All of its rigs were in the U.S. as of November 2021, but under 40% was deployed as of March 2022.

BTBT's production in May 2022 suffered from an explosion and a subsequent fire at a facility in Niagara Falls, New York, hosted by Blockfusion. In the same month, a mine in North Tonawanda, also in upstate New York and hosted by Digihost (DGHI), had its power cut off because local authorities said it required additional permitting. Out of 1,580 rigs of Bit Digital's that were offline in North Tonawanda, 470 have been brought back online as per the Wednesday filing.

Bit Digital has moved to recover its hashrate in the second quarter of the year. On June 7, it signed a colocation agreement with Coinmint, leasing hashrate for at least one year. Under the deal, Bit Digital will pay for operating costs, including electricity and a fee of 27.5% of profit to Coinmint. On June 9, it signed a hashrate swap agreement with Riot Blockchain (RIOT), under which Bit Digital’s factory-new miners were swapped for Riot’s operational machines, hosted at a Coinmint facility in Massena, New York. BTBT will receive 0.625 exahash/second (EH/s) of hashrate from Riot, in exchange for 0.500 EH/s, according to the filing.

Recently, bitcoin miners have had to sell off their bitcoin holdings to pay for running costs and debt, giving up on HODLing strategies. To weather the storm, at the end of Q1, Bit Digital had $28.1 million in cash and digital assets holdings of 832.14 BTC and 266.71 ETH, worth about $17.4 million at today's prices. The miner also raised $21 million through a share sale to Ionic Ventures LLC between April and May of this year, the filing said, and has filed with the SEC to raise $500 million through an at-the-market equity offering.

Bit Digital is likely not affected by a moratorium bill on proof-of-work mining in New York State that is awaiting the governor's signature, since the company draws electricity from the grid and doesn't plan to file permit applications.

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Eliza Gkritsi is CoinDesk's crypto mining reporter based in Asia.

CoinDesk - Unknown

Eliza Gkritsi is CoinDesk's crypto mining reporter based in Asia.

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