Bitcoin miners transform into Ethereum whale: Bit Digital's 100,000 ETH holdings, is its valuation still underestimated?

Bitcoin miner Bit Digital recently announced a major adjustment to its asset allocation strategy, turning to Ethereum, and expanding its holdings to more than 100,000 ETH in a short period of time, which attracted great attention from the market. As soon as the news came out, the stock price soared 29% in a single day, and the market value returned to more than US$1 billion. However, some analysts pointed out that Bit Digital's current valuation is still far below its true value.

Bit Digital bought a large amount of ETH and became the second largest ETH holding company

According to the official announcement , Bit Digital (NASDAQ: BTBT) announced yesterday that it has completed its transition to an Ethereum reserve strategy, raising approximately US$172 million to purchase ETH and investing the 280 BTC that had been sold into the purchase of ETH .

As of the end of the first quarter, Bit Digital held only 24,434 ETH, but now it has surged to 100,603, with a total market value of approximately $257 million. According to CoinGecko's unupdated data, the company's ETH holdings will approach Coinbase by then, making it the second largest listed company in terms of Ethereum holdings.

This strategic shift shows the company’s high confidence in the Ethereum ecosystem. CEO Sam Tabar said: “BTBT has now fully transformed into an Ethereum financial reserve company and is committed to becoming the world’s most representative ETH holding company.”

We believe that Ethereum has the ability to rewrite the entire financial system. Ethereum's programmability, growing adoption rate, and staking yield model represent the future of digital assets.

Enterprises embrace cryptocurrency reserve strategies, and institutions begin to take an interest in ETH?

The trend of companies incorporating crypto assets into their balance sheets continues to heat up . In the past month alone, more than 21 institutions have added new Bitcoin holdings. Among them, the leading MicroStrategy (MSTR) currently holds up to 597,000 BTC.

(Not every company can be MicroStrategy: From Sharplink's 70% plunge, we can see the risks of crypto reserve companies )

However, compared with BTC, institutions are still conservative in their allocation to ETH. But the market atmosphere seems to be changing recently, and the US ETH ETF has recorded net inflows for seven consecutive weeks, indicating that institutions are gradually increasing their interest in ETH.

Matthew Sigel: BTBT is underestimated by the market, and its HPC business has become a golden goose

Matthew Sigel, head of digital assets at VanEck, expressed his opinion that BTBT’s current valuation may be significantly underestimated: “BTBT’s current market value is approximately US$1 billion, of which ETH assets account for approximately US$257 million, but its cloud and high-performance computing (HPC) business WhiteFiber has greater explosive potential.”

Sigel estimates that WhiteFiber's annual recurring revenue (ARR) could reach $150 million by 2026. Even if we consider scale and liquidity, WhiteFiber is still worth $1.01 billion at a 75% discount to its peer NBIS's 9x ARR valuation. In other words, the market has not yet reflected the value of its ETH assets.

Looking at this the other way around, if ETH is valued at 2x NAV (~$514M), then WhiteFiber is trading at just 3.3x ARR compared to NBIS’s 9x:

BTBT has now applied for an IPO to spin off WhiteFiber, which could help unlock this multiple and valuation.

ETH reserve companies are flourishing: Is BTBT a bet or an opportunity?

In the context of the crypto market still being volatile, the "All in ETH" strategy adopted by Bit Digital is undoubtedly a high-risk gamble, but it is also a strong statement on the future status of Ethereum. Previously, BitMine, a Bitcoin miner led by Tom Lee, a well-known Wall Street strategist and co-founder of the financial research institution Fundstrat, also switched from BTC to ETH, trying to create a micro-strategy in the Ethereum world.

(Wall Street analyst Tom Lee took over Bitcoin miner BitMine and invested $250 million to build Ethereum micro-strategy )

With WhiteFiber's successful listing and reasonable pricing, and ETH reserve companies becoming a new trend, BTBT's dual business structure (mining + cloud business) is expected to open up space for market value revaluation and generate imagination for future stock prices.

The US online brokerage Robinhood previously launched a "stock tokenization" service in the EU, allowing European users to invest in unlisted companies such as OpenAI and SpaceX by holding tokens. However, just a few days after the launch, OpenAI subsequently issued a statement to clarify that these OpenAI tokens on Robinhood are not its own stocks. In response, the Central Bank of Lithuania immediately launched an investigation .

Tokenized stocks allow retail investors to participate in the private equity market, but are cut by OpenAI after launch

Robinhood officially launched its stock tokenization product in the European Union on July 1, allowing users to indirectly invest in stocks through on-chain tokens, and even hold equity in unlisted companies such as OpenAI and SpaceX.

Robinhood said the product gives retail investors the opportunity to participate in the private market, and Robinhood will achieve this through holdings in a special purpose vehicle (SPV) , and the token will represent the shares indirectly held by the SPV.

But the day after the product was launched, OpenAI immediately tweeted a clarification :

“These so-called ‘OpenAI tokens’ are not OpenAI shares. We are not working with Robinhood, nor are we involved in this project, nor do we support it.”

OpenAI added that any transfer of OpenAI shares requires company approval, and this operation was unauthorized, calling on users to be vigilant about such products.

Lithuania's central bank to investigate Robinhood

As Robinhood’s main regulator in the EU, the Central Bank of Lithuania responded to CNBC on July 8:

“We have contacted Robinhood and are currently waiting for Robinhood’s detailed explanation of the OpenAI and SpaceX equity token structure, as well as relevant investor documents.”

Giedrius Šniukas, spokesman for the Central Bank of Lithuania, emphasized that only after obtaining this information will they further evaluate whether the product is legal and complies with consumer protection regulations. Robinhood has not yet responded to this.

After the news broke, Robinhood's stock price fell 1% during trading to $93.46 per share, but rose slightly by 0.02% after trading to $93.48 per share, with little price change.