BitDigital (BTBT) Q1 2025: Cloud Services Jump 84% as Mining Shrinks to 31% of Revenue
BitDigital’s Q1 marked a decisive pivot from legacy Bitcoin mining to high-margin cloud and data center services, with cloud revenue now eclipsing mining and robust expansion underway in North America. Management’s disciplined capital strategy and pipeline of large, multi-year GPU contracts signal a structural transformation in business mix and margin profile. The outlook hinges on execution in data center build-out, contract wins, and navigating hardware and financing headwinds.
Summary
- Business Mix Shift: Cloud and data center services now anchor revenue, overtaking legacy mining.
- Margin Expansion: Cloud gross margin rebounded as scale and contract discipline improved profitability.
- Growth Pipeline: Multi-year GPU and colocation deals under negotiation could reshape scale and capital structure.
Performance Analysis
BitDigital’s Q1 2025 results underscore a major business model transformation, with cloud services revenue surging 84% year-over-year to $14.8 million and now representing the majority of total revenue. Bitcoin mining, once the company’s core, fell sharply to just 31% of revenue (down from 72% a year ago), reflecting both the impact of the 2024 Bitcoin halving, which cut mining rewards, and a deliberate pullback in mining fleet investment. Mining revenue dropped 64% YoY and 26% sequentially, with production volumes down 80% YoY to 83 Bitcoins. Despite this, mining margins improved by 500 basis points sequentially, reaching 21%, as efficiency initiatives offset some of the revenue loss.
Cloud services delivered both volume and profitability growth, with gross margin expanding 700 basis points sequentially to 59%. This improvement was driven by new contracts and better utilization of existing capacity, as well as a disciplined approach to GPU procurement—only acquiring hardware when backed by customer demand. Colocation (data center hosting) contributed a small but growing share, with gross margin at 67% and development activity accelerating across North America. General and administrative expenses rose to $8.2 million, reflecting headcount investment in high-performance computing (HPC) business lines. Adjusted EBITDA was negative, primarily due to non-cash mark-to-market losses on digital asset holdings, not operational shortfalls.
- Revenue Concentration Shift: Mining now just 31% of revenue, highlighting the company’s pivot to infrastructure and cloud.
- Gross Margin Recovery: Overall gross margin rose to 49%, with cloud and colocation leading margin gains.
- CapEx Prioritization: $65 million in Q1 CapEx focused on GPUs and data center infrastructure to support contract-driven growth.
The quarter’s results reflect a disciplined reallocation of capital from volatile mining to scalable, contracted cloud and data center services, setting the stage for margin and revenue stability.
Executive Commentary
"Mining represented just 31% of our total revenue for the quarter, compared to 72% in the same period last year. This shift reflects both the growth of our HPC business and the reality that without heavy reinvestment, mining market share naturally declines. And we are fine with that. While our hash rate stands to rebound in the second quarter, our primary focus remains on investing in our data center build-out and cloud services business."
Sam Tabar, Chief Executive Officer
"Cloud services gross margin expanded to 59% from 52% last quarter, reflecting improved utilization and skills. Collocation services gross margin improved modestly to 67%. General and administrative expenses were $8.2 million up from $6 million in Q1 2024, which reflects an increase in headcount as we invest in our HPC business lines."
Eric Long, Chief Financial Officer
Strategic Positioning
1. Cloud and Data Center as Growth Engines
BitDigital is repositioning itself as a high-performance infrastructure provider, with cloud and colocation services now the primary revenue drivers. The company’s WhiteFiber cloud platform, with proprietary API integration and focus on multi-year, creditworthy contracts, is designed to lock in recurring, high-margin revenue. Recent contract wins with DNA Fund and active negotiations for four additional deals (each with $100 million-plus annualized potential) highlight the scalability of this approach.
2. Disciplined Capital Allocation and Financing
Management is prioritizing non-dilutive financing—favoring mortgage-backed debt over equity issuance—to fund data center expansion. The company raised $10 million via ATM in Q1 and $48 million post-quarter, but stresses this is a tool of last resort. Sale of $32 million in Bitcoin was used to fund growth, with management emphasizing a preference for “cheap sources of financing” and highlighting imminent mortgage deals to underpin further build-out.
3. Hardware Procurement and Risk Management
BitDigital’s procurement strategy is to tie GPU purchases directly to secured customer contracts, minimizing speculative inventory risk. This approach has enabled the company to avoid overextension during supply chain volatility and hardware reliability issues (notably with early B200 GPU server iterations). The company is also leveraging relationships with OEMs and NVIDIA to secure advanced chips on accelerated timelines.
4. North American Expansion and Pipeline Depth
With the acquisition of a 95-acre North Carolina site pending and over 500 megawatts of potential capacity under evaluation across the US and Canada, BitDigital is building a geographically diversified infrastructure footprint. The company’s retrofit-first approach—leveraging acquired expertise from the Inova team—enables faster, lower-cost deployment versus greenfield builds, supporting both speed and capital efficiency.
5. Software Innovation and Platform Differentiation
Proprietary software, including API layers for external provisioning and cross-data center workload management, is being developed to enhance WhiteFiber’s market position. Early customer feedback and upcoming third-party benchmarks are expected to support the platform’s premium positioning and drive further adoption.
Key Considerations
This quarter marks a structural shift for BitDigital, with management executing on a deliberate move away from mining volatility and toward scalable, contract-driven infrastructure. Investors should weigh the following:
- Revenue Mix Sustainability: Cloud and colocation growth must continue to offset mining declines as mining becomes a legacy segment.
- Contractual Visibility: Multi-year GPU and data center contracts are critical to recurring revenue and margin stability.
- Financing Execution: Successful mortgage financing will be key to scaling data center capacity without excessive dilution.
- Hardware Reliability: Ongoing issues with early B200 servers and supply chain constraints remain a risk to deployment timelines.
- Pipeline Conversion: Closing the large, multi-year deals in negotiation will determine the pace of transformation and capital efficiency.
Risks
Key risks include continued Bitcoin price volatility affecting digital asset holdings, hardware reliability issues impacting cloud service uptime, and execution risk in securing and deploying large-scale contracts. Financing delays, especially in mortgage-backed deals, could slow capacity expansion. Management’s ability to maintain discipline in capital allocation and contract quality will be tested as the company scales.
Forward Outlook
For Q2 2025, BitDigital expects:
- Sequential growth in cloud services revenue as full-quarter impact of new deployments is recognized.
- Mining hash rate to recover to approximately 2.5 exahash as new S-21 miners are deployed.
For full-year 2025, management maintained a focus on:
- Securing multi-year, financeable contracts with creditworthy counterparties.
- Announcing terms of mortgage financing for Montreal 2 and progressing North Carolina site development.
Management highlighted that revenue and margin expansion will be driven by contract wins and operationalizing new data center capacity, with several large deals in advanced negotiation stages.
Takeaways
BitDigital’s Q1 2025 is a turning point, with the company’s future increasingly tied to cloud infrastructure and away from legacy mining volatility.
- Business Model Inflection: The shift to cloud and data center services is now visible in the revenue mix and margin profile, with contract discipline underpinning growth.
- Capital Strategy in Focus: Non-dilutive financing and targeted asset sales reflect a preference for capital efficiency as the company scales infrastructure.
- Execution Watchpoints: Investors should monitor contract conversion, data center build-out progress, and the resolution of hardware issues for signs of sustained momentum.
Conclusion
BitDigital has executed a material pivot to cloud and data center infrastructure, with Q1 results validating the new business mix and margin potential. The company’s outlook is increasingly tied to disciplined capital deployment, contract wins, and operational execution—areas where near-term progress will determine the durability of the transformation.
Industry Read-Through
BitDigital’s results reinforce a broader trend in the digital asset and infrastructure sector: operators are pivoting away from pure mining toward higher-margin, contract-based cloud and colocation services. The company’s capital-light, contract-driven approach is setting a template for others seeking margin stability and scalable growth. Hardware supply chain reliability and access to non-dilutive financing are emerging as key differentiators in the AI and HPC infrastructure race. The North American data center build-out and focus on multi-year contracts signal intensifying competition for enterprise and hyperscaler workloads—an industry dynamic likely to accelerate in coming quarters.