Bit Digital Turns China’s Bitcoin Mining Ban Into an Opportunity

Bit Digital (NASDAQ:BTBT) is one of the few Bitcoin (CCC:BTC-USD) miners that is successfully transitioning from China to the U.S. The move is in response to the Chinese government’s ban on Bitcoin mining announced in June. Once Bit Digital gets back up to speed, BTBT stock could rebound even further, despite already being up acutely from its lows in June.

Bit Digital (BTBT stock): several rows of processors in a crypto mining farm.

Source: PHOTOCREO Michal Bednarek / Shutterstock

For example, BTBT stock fell to a low of $4.26 on July 20 after peaking briefly at $29.27 on Jan. 4. In other words, the stock has been quite volatile this year. In fact, it closed at $9.97 on Sept. 14, up 134% from its lows.

However, last year BTBT stock closed at $21.91 on Dec. 31. That means that year-to-date, it is still down 54%. That is a lot of ground to have to make up.

Where Things Stand With BTBT Stock

On Sept. 13, CEO Bryan Bullet gave a speech at the HC Wainwright Investor Conference describing the recent events at the company. He described how Bit Digital is handling the transition of a large portion of its mining operations to the U.S.

Keep in mind that the company was very fortunate to not have put all its eggs in one basket, so to speak. It already had operations in the U.S. Because of this diversification, Bit Digital was able to still earn revenue.

In the second quarter of 2021, the company earned 562.9 Bitcoin. At its Sept. 14 price of $47,190, those Bitcoin are worth $26.563 million.

The CEO pointed out that The Wall Street Journal ran a full, front-page article on Aug. 22 on Bit Digital’s move out of China. It shows the lengths to which the company went to sell its existing miners and push through to get out of China.

In fact, in Bullet’s speech on Sept. 13, he indicated that many other miners operating in China were forced to dump their Bitcoin mining equipment. Bit Digital has been able to pick up a number of these miners cheaply.

Bit Digital’s Renewable Power Deals

Bit Digital seems sensitive, as it does not appear to be a typical energy-grubbing Bitcoin miner. Many crypto miners use traditional power sources and methods that use huge amounts of energy. As a result, these companies are often seen as a bane to the environment.

In contrast, Bit Digital signed at least two different power purchase agreements that include considerable amounts of energy coming from renewables. For example, on Sept. 7, it announced a new 35 megawatt (MW) hosting agreement with Blockfusion USA that should be powered largely by renewables.

Additionally, the company signed a 100 MW agreement with the Canadian company Digihost Technology (OTCMKTS:HSSHF). The deal involves sourcing green energy for the mining process.

Where This Leaves BTBT Stock

There are no analyst reports on the stock to compare at this time. However, as of June 30, the company claims it has 32,500 Bitcoin miners and has been able to buy miners “at scale” from those selling the equipment in China.

However, the problem is the company has not yet produced any financial statements for Q2, nor has it released its present cash balance. For all we know, for example, Bit Digital may be planning a large or mid-sized capital raise that could dilute shareholders. The proceeds from that raise might be used to pay for the “at scale” Bitcoin mining equipment.

Recently, BTBT stock has drifted down from a medium-term peak of $17.55 on Aug. 6. It has been fairly volatile, as I mentioned above. But that could present opportunities to buy BTBT stock shares on the cheap.

Right now seems to be one of those opportunities, even with the risk of a potential capital raise. If the cash is used to buy a large amount of discounted mining equipment, it could be a once-in-a-lifetime chance. Therefore, the enterprising investor will consider jumping in at these prices.

On the date of publication, Mark Hake held a long position in Bitcoin but did not have (either directly or indirectly) any positions in any other of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.


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