Bit Digital strengthens anchor HPC client relationship with new GPU agreement
Published: 11:06 27 Jan 2025 EST
Bit Digital Inc (NASDAQ:BTBT) has returned a repeat ‘Outperform’ rating from Noble Capital Markets analysts after it announced a new agreement with its anchor customer in the GPU cloud part of its HPC business.
The analysts see the new agreement as representing an expanded relationship between Bit Digital and its anchor client.
“With the potential for more contracts in the future, we believe the number of servers may be broadened, aiding future performance,” they wrote.
“Outside of the anchor client, we believe management's active discussions with potential clients may provide additional agreements, such as the MSA executed at the end of December.”
The contract is for 464 Nvidia B200 GPUs, replacing a prior agreement to provide 2,048 H100 GPUs and represents approximately $15 million in annualized revenue.
“While the new agreement reduces annualized revenue from what the company anticipated last year (roughly $50 million), management is exploring additional contracts with the customer, which we are hopeful, when combined, will at least rise to the originally expected contract level,” analysts wrote in a note.
To fulfill the contract, Bit Digital has ordered 58 B200 servers for approximately $21 million to be deployed in its Iceland facility.
Analysts highlighted that, unlike the previous order, the new order will not have a lease-back agreement which represents a higher margin for Bit Digital when the servers are deployed.
“According to management, the newer B200 GPUs are roughly three times better at training machine learning than the H100s. In our view, this presents Bit Digital with newer GPUs that provide more staying power and performance,” they added.
Analysts retained their $5.50 price target on Bit Digital, implying upside of almost 50% from the company’s shares at the time of writing.
“We believe the company offers stable cash flow through its HPC Services segment, now with a colocation service and increased risk diversification. All of this is combined with a focus on more efficient mining,” they concluded.
