Bit Digital, Inc.

Bitcoin Mining: The company is engaged in Bitcoin mining operations, supporting the generation of Bitcoin through the design, development, and operation of high-performance computing (HPC) data centers. This is one of its traditional and primary sources of revenue. High-Performance Computing (HPC) Data Center Services: Provide hosting and colocation services, offering infrastructure support for other businesses or individuals in need of high-performance computing capabilities. Provides cloud-based HPC graphics processing unit (GPU) services, primarily aimed at artificial intelligence (AI) and machine learning (ML) developers. This indicates that the company is expanding its computing capabilities beyond cryptocurrency mining to capture the demand in the AI/ML field. Digital Asset Staking and Treasury Management: The company participates in digital asset staking business, especially in Ethereum (Ethereum) staking activities. Staking supports the operation of blockchain networks by locking up cryptocurrencies and earning rewards from it, which is an important profit model. Engage in capital and investment management activities, including the management of funds for digital assets, which may involve strategic buying, selling, and management of held cryptocurrencies.

Bitcoin mining income: By operating high-performance ASIC mining machines, complex cryptographic problems are solved to obtain newly minted bitcoins as rewards. The price fluctuations of bitcoin directly affect this portion of income. Characteristics: Capital-intensive (requires significant investment to purchase mining machines and build data centers), high energy consumption, affected by Bitcoin prices and mining difficulty. Ethereum Staking Revenue: The company will lock the Ethereum it holds in the Ethereum 2.0 (now known as the consensus layer) network, participating in network consensus as a validator and earning staking rewards. This portion of income is usually paid in ETH. Features: Compared to mining, staking is usually considered a more energy-efficient and stable source of income, as it does not rely on computational power competition but is based on the amount of ETH held and the network's staking rate. The company is shifting its focus to Ethereum staking to achieve "Ethereum-native finance and staking strategies." High-Performance Computing (HPC) and Cloud Service Revenue: As the company transitions to an AI infrastructure provider, its HPC data centers and cloud services (especially GPU cloud services) will become new revenue growth points. The company will lease computing power to AI and machine learning developers, thereby generating service fees. Features: Diversified sources of income, reducing dependence on a single cryptocurrency market, seizing the rapidly growing opportunities in the AI/ML field. Capital management activities: The company aims to achieve asset appreciation through strategic management of its held digital assets (such as buying, selling, and holding). This portion of income is significantly affected by market fluctuations.

We are transitioning from a profit model that primarily relies on Bitcoin mining to a more diversified model that focuses more on Ethereum staking and AI/HPC services. The significance of this shift is: Reduce risk: Decrease reliance on the price fluctuations of a single cryptocurrency (Bitcoin) by diversifying income sources through Ethereum staking and HPC services, thereby lowering overall business risk. Enhancing Stability: Ethereum staking typically offers relatively stable returns, helping to smooth out fluctuations in company revenue. Seize Emerging Opportunities: Actively layout in the AI/ML field, utilize its HPC infrastructure, and capture the huge market opportunities brought by the development of artificial intelligence technology. Optimize capital efficiency: Compared to Bitcoin mining, Ethereum staking may have higher capital efficiency because it does not require continuous investment of large amounts of money to purchase and maintain mining machines. Overall, Bit Digital's profit model is evolving towards a more resilient and growth-oriented direction to adapt to the market demands of the digital economy and the era of artificial intelligence.

Mainly affects Bitcoin (BTC) and Ethereum (ETH), with the impact evolving as the company's strategic focus shifts.

1. Impact on Bitcoin (BTC)

Impact Method: In the past, Bit Digital, as a Bitcoin mining company, directly increased the supply of Bitcoin through mining activities. Mining requires a large amount of electricity and computing power, and its output directly enters the market circulation, thereby affecting the supply and demand relationship of Bitcoin. Impact Level: As Bit Digital gradually divests its Bitcoin mining business, its influence on the BTC supply side is diminishing. The company's sale of mining machines or reduction in mining activities means that its contribution to new Bitcoin output will decrease. This may lead to a reduced direct impact on the BTC market price, but its exit from the mining market could also create space for other miners.

2. Impact on Ethereum ( ETH )

Impact Method: Bit Digital has shifted its strategic focus to Ethereum staking, which has had multiple effects on it: Increase demand and reduce circulating supply: The company has directly increased market demand for ETH by purchasing Ethereum as a reserve asset and staking it. The staking action locks ETH in the blockchain network, reducing the amount of ETH available in the market, which in turn affects its supply to some extent and may provide support for the ETH price. Enhancing Network Security and Decentralization: As an Ethereum validator, Bit Digital's staking activities contribute to improving the security, stability, and decentralization of the Ethereum network. The more ETH that is staked, the stronger the network's ability to resist attacks, which is crucial for the long-term value and ecological health of ETH. Promoting the development of the Ethereum ecosystem: The company views Ethereum staking as part of its "Ethereum native finance and staking strategy," indicating that it is not merely a speculative holding, but an active participation in the Ethereum ecosystem. This participation may include future development or support for Ethereum-based applications and services, thereby increasing the use cases and value of ETH. Provide stable returns: The ETH rewards obtained through staking bring a relatively stable stream of income to the company, which helps enhance investors' confidence in ETH as an income-generating asset. Impact Level: Bit Digital has significantly increased its holdings of Ethereum and actively participates in staking, such as recently purchasing nearly 20,000 ETH for staking, which is a positive signal for the Ethereum market. Although the staking volume of a single company may not be enough to dominate the market, its active participation in staking as a publicly listed company helps attract more institutional and individual investors' attention and involvement in Ethereum staking, thereby positively impacting the long-term value and market performance of ETH.