Bit Digital, Inc (BTBT)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q for the period ended June 30, 2026 as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Form 10-K for the year ended December 31, 2025 (“Form 10-K”). This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. See “Forward Looking Statements and Risk Factor Summary” for a discussion of the uncertainties, risks, and assumptions associated with these statements. Actual results and the timing of events could differ materially from those discussed in our forward-looking statements as a result of many factors, including those set forth under “Risk Factors” and elsewhere in this Quarterly Report.

Overview

Bit Digital, Inc. (“BTBT” or the “Company” or “We”), is a holding company incorporated on February 17, 2017, under the laws of the Cayman Islands. The Company is a strategic asset company focused on active participation in Ethereum (ETH)-native treasury and staking strategies. Through our majority equity stake in WhiteFiber Inc. (Nasdaq: WYFI), the Company also engages in high performance computing (“HPC”) business, including cloud services and HPC data center services.

HPC Business

The Company’s HPC business operates under the WhiteFiber brand. WhiteFiber believes it is a leading provider of artificial intelligence (“AI”) infrastructure solutions. WhiteFiber owns high-performance computing (“HPC”) data centers and provides cloud-based HPC graphics processing units (“GPU”) services, which it terms cloud services, for customers such as AI application and machine learning (“ML”) developers (the “HPC Business”). Its Tier-3 data centers provide hosting and colocation services. WhiteFiber cloud services support generative AI workstreams, especially training and inference.

WhiteFiber’s business model integrates its data center infrastructure and cloud services to provide scalable, high-performance computing solutions for enterprises, research institutions, and AI and ML driven businesses. Its integrated approach aligns specialized data center operations with GPU-focused cloud services, addressing the unique requirements of AI and ML workloads. These workloads demand greater power density, advanced cooling solutions, and robust bandwidth to handle large-scale data transfers. By operating its data centers, it is able to provide the power to support its cloud services and WhiteFiber believes it can better meet the needs of AI and ML workloads and reduce the complexity associated with procuring power and connectivity from external vendors. WhiteFiber can also design its facilities to accommodate the higher heat loads generated by modern GPUs, potentially shortening deployment timelines for customers who require rapid expansion of their computing infrastructure. From a financial standpoint, WhiteFiber’s vertically integrated solution allows it to capture additional margin for both its data center and cloud services businesses, avoiding expenses that would otherwise be due to third-party providers.

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Colocation/Data center services

WhiteFiber designs, develops, and operates data centers, through which it offers its hosting and colocation services. WhiteFiber’s operational data centers meet the requirements of the Tier-3 standard, including N+1 redundancy architecture, concurrent maintainability, uninterruptible power supply, advanced and highly reliable cooling systems, strict monitoring and management systems, 99.982% uptime and no more than 1.6 hours of downtime annually, service organization control, SOC 2 Type 2, differentiated software supporting AI workloads, high density and robust bandwidth, and infrastructure to support AI workloads.

Based on their collective industry experience, WhiteFiber’s data center team is adept at bringing new sites online on an accelerated timeline. WhiteFiber is aggressively pursuing the development pipeline and intends to achieve an estimated 70 MW (gross) of total data center capacity by the end of the fourth quarter of 2026, a target that is underpinned by assets including the MTL-2, MTL-3, and NC-1 facilities. As of June 30, 2026, its pipeline of potential data center projects represents approximately 1,500 MW (gross) under management review. WhiteFiber follows a disciplined process prioritizing projects that are backed by customer lease commitments. In select cases, WhiteFiber may pursue early-stage acquisitions based on strong customer demand signals and defined commercialization pathways. Accordingly, the foregoing timelines and capacities are subject to change based on many factors, many of which are outside of WhiteFiber’s control.

WhiteFiber uses a well-defined set of criteria to select their data center sites. WhiteFiber typically target sites with proximity to metro areas and partial infrastructure in place, where it is retrofitting rather than developing greenfield projects. Metropolitan areas are positioned for low-latency to address long-term, specialized AI computer inference needs, and smaller sites reduce risks. A retrofit entails sourcing and acquiring an existing industrial building with underutilized, in-place power connectivity. The period of time from when a site is purchased until construction can begin varies from location to location depending upon, among other things, obtaining required permits and the availability of construction supplies and contractors. Average build time for retrofits is intended to be approximately six months from commencement of construction, which WhiteFiber believes is approximately one-third to one-half of the industry average development timeline for greenfield projects. This average building time is based upon senior management’s experience at Enovum prior to its acquisition by the Company, as well as their experience prior to Enovum. WhiteFiber also prioritize sites offering opportunities to increase site power over time, enabling its data centers to grow with customer demand. In addition, WhiteFiber selectively targets certain larger opportunities with 50 MW (gross) of power or more, subject to customer demand, to drive AI-driven compute super-clusters. Finally, WhiteFiber prioritize sites powered by sustainable, green energy sources and locked-in power when available. Additionally, to enhance sustainability of certain WhiteFiber data center projects, WhiteFiber is undertaking heat repurposing projects in connection with sustainability and commercial and residential projects.

WhiteFiber acquired Enovum on October 11, 2024. The transaction included the lease of MTL-1, its 4 MW (gross) Tier-3 high-performance computing (“HPC”) data center in Montreal, Canada, which was fully operational and fully leased to customers at the time of acquisition.

On December 27, 2024, WhiteFiber acquired the real estate and building for a build-to-suit 5 MW (gross) Tier-3 data center expansion project near Montreal, Canada which it refers to as MTL-2. MTL-2, a 160,000 square foot site that was previously used as an encapsulation manufacturing facility, is located in Pointe-Claire, Quebec. WhiteFiber initially funded the purchase of CAD 33.5 million (approximately $23.3 million) with cash on hand. WhiteFiber expected to invest approximately $23.6 million to develop the site to Tier-3 standards with an initial load of 5 MW (gross). However, WhiteFiber has prioritized other builds and preserved capital for more time sensitive projects.

On April 11, 2025, WhiteFiber entered into a lease for a new data center site in Saint-Jerome, Quebec, a suburb of Montreal, MTL-3. The MTL-3 facility spans approximately 202,000 square feet on 7.7 acres and is being developed into a 7 MW (gross) Tier-3 data center. It will support current contracted capacity, with Cerebras (5 MW IT Load), with future expansion potential subject to utility approvals. The transaction was executed under a lease-to-own structure, which includes a fixed-price purchase option of CAD 24.2 million (approximately $17.3 million) exercisable by December 2025. The lease term is 20 years, with two 5-year extensions at the Company’s option. In December 2025, WhiteFiber became reasonably certain to exercise the purchase option and notified the lessor of its intent to exercise the purchase option. WhiteFiber had 90 days to complete the purchase, after which the purchase option would expire. The option was exercised on January 14, 2026 and the purchase of MTL-3 closed on May 8, 2026. The facility has been retrofitted to Tier-3 standards and was completed and operational in November 2025. The site has commenced billing Cerebras as of November 1, 2025, in the amount of CAD 1.4 million (approximately 979 thousand USD) monthly for the duration of the five-year contract.

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On May 20, 2025, WhiteFiber completed the purchase of a former industrial/manufacturing building from UMI. Pursuant to the Purchase Agreement WhiteFiber agreed to purchase from UMI, an industrial/manufacturing building together with the underlying land located in Madison, North Carolina, which WhiteFiber refers to as “NC-1”, as well as certain machinery and equipment located thereon for a cash purchase price of $45 million. The purchase price will increase by (i) $8 million, if Duke Energy actually provides, or provides an Electric Services Agreement providing for, at least 99 MW (gross) within two years of May 20, 2025, or (ii) $5 million, if Duke Energy actually provides, or provides an Electric Services Agreement providing for, at least 99 MW (gross) more than two years but less than three years after May 20, 2025. Additionally, the purchase price will increase by an additional $200 thousand per MW over 99 MW (gross) up to a maximum of $5 million if at least 99 MW (gross) are actually delivered, or Duke Energy provides an Electric Services Agreement for the provision of at least 99 MW (gross), within four years of May 20, 2025. Separately, the Company entered into a Capacity Agreement with Duke Energy pursuant to which Duke Energy agreed to use commercially reasonable efforts to achieve 24 MW (gross) of service to NC-1 by September 1, 2025, 40 MW (gross) by April 1, 2026, and 99 MW (gross) within four years of May 16, 2025. Management believes based upon its review of the site and a Duke Energy preliminary transmission study, that NC-1 may receive and support up to 200 MW (gross) of total electrical supply over an extended period of time, subject to infrastructure upgrades, such as developing new substations and other conditions. On August 4, 2025, Enovum NC-1 Bidco LLC, a subsidiary of WhiteFiber, entered into an Assignment and Assumption Agreement with Unifi Manufacturing and Duke Energy Carolinas, LLC, pursuant to which Enovum assumed Unifi’s rights and obligations under certain electric service agreements for facilities located in North Carolina. Duke Energy consented to the assignment. Refer to Note 22. Commitments and contingencies to our condensed consolidated financial statements for further detail.

As the business grows, WhiteFiber’s ability to fund its operating needs will depend on the ongoing ability to generate positive cash flow from our operations and raise capital in the capital markets. Accordingly, WhiteFiber has entered into certain credit facilities to finance these areas of growth, including the RBC Facility Agreement discussed here. Refer to Liquidity and capital resources for further discussion on this Facility and other credit facilities of WhiteFiber.

RBC Credit Facility

On June 18, 2025, WhiteFiber entered into a non-recourse credit agreement with RBC (as subsequently amended on July 4, 2025, t

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Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations

The following discussion and analysis of
our financial condition and results of operations should be read in conjunction with our financial statements and the related notes
included elsewhere in this Annual Report. This discussion contains forward-looking statements reflecting our current expectations
that involve risks and uncertainties. See “Forward Looking Statements and Risk Factor Summary” for a discussion of the
uncertainties, risks, and assumptions associated with these statements. Actual results and the timing of events could differ
materially from those discussed in our forward-looking statements as a result of many factors, including those set forth under
“Risk Factors” and elsewhere in this Annual Report.

Overview

Bit Digital, Inc. (“BTBT” or the
“Company” or “We”), is a holding company incorporated on February 17, 2017, under the laws of the
Cayman Islands. The Company is a strategic asset company focused on active participation in Ethereum (ETH)-native treasury and
staking strategies. Through our majority equity stake in WhiteFiber Inc. (Nasdaq: WYFI), the Company also engages in high
performance computing (“HPC”) business, including cloud services and HPC data center services.

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HPC Business

The Company’s HPC business operates under the WhiteFiber brand. WhiteFiber is a leading provider of AI
infrastructure solutions. WhiteFiber owns HPC data centers and provide cloud-based HPC GPU services, which we term cloud services,
for customers such as AI application and ML developers (the “HPC Business”). The Tier-3 data centers provide hosting and
colocation services. The cloud services support generative AI workstreams, especially training and inference.

On July 30, 2025, WhiteFiber entered into the
Contribution Agreement with us in connection with WhiteFiber’s IPO, pursuant to which, on August 6, 2025, we contributed our HPC
business to WhiteFiber through the transfer of 100% of the capital shares of our cloud services subsidiary, WhiteFiber AI, Inc. and our
wholly-owned subsidiaries WhiteFiber HPC, Inc., WhiteFiber Canada, Inc., WhiteFiber Japan G.K. and WhiteFiber Iceland, ehf, in exchange
for 27,043,749 Ordinary Shares.

Colocation/Data Center Service

WhiteFiber designs, develops, and operates Tier-3
data centers that provide hosting and colocation services with high reliability infrastructure, including N+1 redundancy, advanced cooling,
and strict monitoring systems designed to support AI workloads. Its strategy focuses on rapidly developing retrofit data centers in metro
areas with existing power infrastructure, allowing for significantly faster deployment than greenfield projects. The current portfolio
includes facilities such as MTL-1, MTL-2, MTL-3 in Quebec and NC-1 in North Carolina, with a goal of reaching approximately 76 MW of total
capacity by the end of 2026 and a broader development pipeline of roughly 1,500 MW under review. During 2025, WhiteFiber prioritized projects
with committed customer demand and long-term contracts, including a major services agreement at the NC-1 facility expected to generate
approximately $865 million of contracted revenue over 10 years, with electricity and certain operating costs passed through to the customer.

Cloud Service

WhiteFiber provides specialized GPU-based cloud infrastructure tailored
for generative AI training and inference workloads, offering customized solutions and high service reliability. The business leverages
partnerships with major hardware providers such as NVIDIA, SuperMicro, Dell, Hewlett Packard Enterprise, and QCT, and deploys advanced
GPU architectures including H200, B200, and GB200 systems. Rather than building all infrastructure itself, WhiteFiber uses a global network
of third-party data centers to host GPU clusters. Revenue is generated through a series of service agreements and MSAs with customers
for GPU capacity and AI compute services, ranging from short-term deployments to multi-year contracts. Key agreements include large GPU
deployments for AI workloads and cloud gaming providers such as Boosteroid, with some contracts offering significant expansion potential
and long-term recurring revenue streams.

Digital Asset Business

The digital asset business is comprised primarily of two distinct but
highly complementary operations: (i) ETH staking (the “ETH Staking Operations”); and (ii) digital asset mining (the “Digital
Asset Mining Operations”).

In June 2025, the Company announced that it had
initiated a strategic transition to become a pure play ETH staking and treasury company. In connection with the transition, the Company
has been converting its BTC holdings into ETH over time and has been winding down its bitcoin mining operations, with any
net proceeds to be re-deployed into ETH.

Digital Asset Mining Business

We commenced our bitcoin (“BTC”) mining
business in February 2020. We initiated limited Ethereum mining operations in January 2022, however discontinued the operations by September
2022 due to Ethereum blockchain switching from proof-of-work (“PoW”) consensus mechanism to proof-of-stake (“PoS”)
validation. Our mining operations, hosted by third-party providers, use specialized computers, known as miners, to generate digital assets.
Our miners use application specific integrated circuit (“ASIC”) chips. These chips enable the miners to apply high computational
power, expressed as “hash rate”, to provide transaction verification services (generally known as “solving a block”)
which helps support the blockchain. For every block added, the blockchain provides an award equal to a set number of digital assets per
block. Miners with a greater hash rate generally have a higher chance of solving a block and receiving an award.

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We operate our mining assets with the primary
intent of accumulating digital assets which we may sell for fiat currency from time to time depending on market conditions and management’s
determination of our cash flow needs, and/or exchange into ETH or USD Coin (“USDC”). Our mining strategy has been to mine
bitcoins as quickly and as many as possible given the fixed supply of bitcoins. In view of historically long delivery lead times to purchase
miners from manufacturers like Bitmain Technologies Limited (“Bitmain”) and MicroBT Electronics Technology Co., Ltd (“MicroBT”),
and other considerations, we have chosen to acquire miners on the spot market, which can typically result in delivery within a relatively
short time.

We have signed service agreements with third-party hosting partners
in North America and Iceland. These partners operate specialized mining data centers, where they install and operate the miners and provide
IT consulting, maintenance, and repair work on site for us. Our mining facilities in New York are maintained by Digihost Technologies
Inc. (“Digihost”). Our mining facilities in Texas are maintained by Dory Creek, LLC, a subsidiary of Bitdeer Technologies
Group (“Bitdeer”) and Digital Energy Partner LLC (“DEP”). Soluna Computing, Inc. and DVSL ComputeCo, LLC (collectively,
“Soluna”) previously maintained our mining facilities in Kentucky and Texas, and GreenBlocks ehf, an Icelandic private limited
company (“GreenBlocks”), previously maintained our mining facility in Iceland. The Company’s partnership with Soluna
and GreenBlocks concluded at the end of February 2026.

From time to time, the Company may change partnerships
with hosting facilities to recalibrate its bitcoin mining operations. These terminations are strategic, targeting reduced operational
costs, enhanced energy efficiency for a smaller carbon footprint, increased flexibility in operational control, and minimized geopolitical
risks. While a short-term decrease in mining output might occur, we expect these changes to yield long-term operational improvements.

We are a sustainability-focused digital asset
mining company. On June 24, 2021, we signed the Crypto Climate Accord, a private sector-led initiative that aims to decarbonize the crypto
and blockchain sectors. On December 7, 2021, we became a member of the Bitcoin Mining Council (“BMC”), joining MicroStrategy
and other founding members to promote transparency, share best practices, and educate the public on the benefits of bitcoin and bitcoin
mining.

ETH Staking Business

In the fourth quarter of 2022, we formally commenced
Ethereum staking operations. We delegate or stake our ETH holdings to an Ethereum validator node to help secure and strengthen the blockchain
network. Stakers are compensated for this commitment in the form of a reward of the native network token.

We initiated our native staking operations with
MarsLand Global Limited (“MarsLand”) in August 2023. Subsequently, we have ceased our native staking with MarsLand in the
first quarter of 2024 and initiated our native staking with Figment Inc.

We started participating in liquid staking via
Liquid Collective protocol on the Coinbase platform in the first quarter of 2023. Liquid staking allows participants to achieve greater
capital efficiency by utilizing their staked ETH as collateral and trading their staked ETH tokens on the secondary market. In the first
quarter of 2024, we have reclaimed all the liquid staked ETH from Liquid Collective protocol. In July 2025, we resumed liquid staking
through the Liquid Collective protocol with 5,120 ETH. This approach provided flexibility to engage in both staking and restaking through
a broader range of strategies and platforms. Subsequently, we ceased our liquid staking activities with Liquid Collective protocol in
October 2025.

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Miner Deployments

During the year ended December 31, 2025, we continued
to work with our hosting partners to deploy our miners in North America and Iceland.

During the first quarter of 2025, the Company
deployed an additional 1,441 miners at one of Soluna’s hosting facilities.

During the second quarter of 2025, the Company received an additional
1,720 miners, which were deployed in July 2025.

During the third quarter of 2025, the Company
received an additional 1,855 miners, of which 410 miners were deployed in July 2025 and 1,445 miners were deployed in August 2025.

During the fourth quarter of 2025, the Company
reallocated a portion of its mining fleet across hosting facilities as part of its ongoing efforts to recalibrate its bitcoin mining operations.
This transition, driven by changes in hosting partnerships, including the transfer of 1,443 miners from Soluna’s facilities to Digital
Energy Partners LLC (“DEP”), which was formerly known as A.R.T Digital.

As of December 31, 2025, the Company’s active
hash rate totals approximately 1.5 EH/s, with operations in North America and Iceland.

Power and Hosting Overview

The Company’s subsidiary, Bit Digital Canada,
Inc., entered into a Mining Services Agreement effective September 1, 2022, for Blockbreakers, Inc. to provide five (5) MW of incremental
hosting capacity at its facility in Canada. The facility utilizes an energy source that is primarily hydroelectric.

On May 8, 2023, the Company entered into a Master
Mining Services Agreement with Blockbreakers, pursuant to which Blockbreakers agreed to provide the Company with four (4) MW of additional
mining capacity at its hosting facility in Canada. The agreement is for two (2) years automatically renewable for additional one (1) year
terms unless either party gives at least 60 days’ advance written notice. The performance fee is 15% of the net profit. This new
agreement brought the Company’s total contracted hosting capacity with Blockbreakers to approximately 9 MW. Our service agreement
with Blockbreakers expired in November 2024. A portion of the miners were transferred to other hosting facilities, and the inefficient
units were sold.

On June 7, 2022, we entered into a Master Mining
Services Agreement (the “MMSA”) with Coinmint LLC, pursuant to which Coinmint will provide the

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