Image Credit: bitdigital.com
Bit Digital is using its Ethereum treasury as collateral to finance a lending strategy tied to its majority-owned AI infrastructure company, WhiteFiber. The company borrowed $50 million against liquid-staked ETH while also funding a WhiteFiber loan facility carrying a higher interest rate.
Bit Digital Borrows Against Its Ethereum
Bit Digital’s latest investor presentation details a structure in which Galaxy Digital provides an ETH-backed credit facility to the company. Bit Digital made an initial $50 million draw in May at an annual interest rate of 5.45%.
The borrowing is backed by liquid-staked Ethereum, or LsETH. As of June 30, Bit Digital had pledged 49,000 LsETH, recorded at $105.6 million, as collateral for the borrowing. The company retained another 17,192 LsETH as a buffer against margin requirements.
WhiteFiber Loan Pays Up to 9.5%
Bit Digital also funded a delayed-draw term loan for Enovum NC-1 Venture, a WhiteFiber subsidiary. The facility provides up to $100 million and can increase to $150 million if both sides agree.
The loan carries annual interest of 9.5% before a milestone-based reduction to 8%. The lower rate applies after WhiteFiber substantially completes a 40-megawatt first phase at its NC-1 data center and leases at least 80% of that capacity at market rates.
Bit Digital says the structure lets it maintain economic exposure to its Ethereum holdings while earning financing income from the WhiteFiber loan, subject to collateral and margin risks.
Company Pitches ETH as a Productive Asset
Bit Digital CEO Sam Tabar has described the financing as part of a broader effort to generate returns from the company’s Ethereum holdings rather than treating them as passive treasury assets. He said:
“We are not trying to hold the most ETH. We are trying to get the most out of the ETH we hold.”
Bit Digital reported approximately 164,842 ETH and LsETH as of July 31, worth about $306.7 million using the ETH reference price cited in its Sept. 9 investor presentation. About 74,174 ETH and LsETH were staked, with the company reporting an annual staking yield of 3.2%.
Strategy Links Ethereum With AI Infrastructure
WhiteFiber is developing AI and high-performance computing infrastructure, including the NC-1 campus in North Carolina. Bit Digital’s loan can support the first phase of that project and other growth initiatives while WhiteFiber pursues longer-term financing.
Bit Digital presented the structure again in its Sept. 9 investor deck as part of what it calls an Ethereum “flywheel.” The approach combines ETH accumulation and staking with borrowing against Ethereum to finance operating assets.
