Bit Digital funded the majority-owned AI infrastructure firm WhiteFiber with out promoting Ethereum or issuing new shares, however the route added a brand new dependency to its crypto treasury.
Galaxy Digital lent Bit Digital $50 million in a borrowing related to 49,000 pledged LsETH, and Bit Digital individually grew to become a lender to WhiteFiber.
The corporate stated in its second-quarter outcomes that it transformed 73,235 ETH into 66,192 LsETH, the liquid-staking token it acquired within the change. It reported the pledged 49,000 LsETH as a $105.6 million digital-asset collateral receivable and retained 17,192 LsETH, value $27.6 million, as a buffer towards margin necessities.
Bit Digital drew the $50 million from Galaxy on Could 20 at a 5.45% rate of interest. The separate WhiteFiber delayed-draw facility began at $100 million and will rise to $150 million solely by mutual written settlement.
LsETH is related to Bit Digital’s company-level Galaxy borrowing. WhiteFiber’s facility is backed by a pledge of Enovum NC-1 Topco inventory and a separate guardian warranty from White Fiber Working Partnership.
Galaxy’s grasp mortgage settlement provides Bit Digital 24 hours after an atypical margin-call discover so as to add collateral. If a required name shouldn’t be met, Galaxy can partially liquidate collateral to revive the contractual stage. A sooner nine-hour process might apply if an pressing threshold is specified.
The general public paperwork set up price-sensitive margin mechanics, however not Bit Digital’s proximity to a name or liquidation.
The impairment was an accounting hit, not a sale
The identical quarterly launch recorded a $46 million non-cash impairment on LsETH, and Bit Digital stated it offered no ETH through the quarter. LsETH is carried at value much less impairment, in contrast to ETH’s fair-value remedy, so the cost was not a realized loss.
ETH staking income fell to $900,000 from $2.3 million within the first quarter, whereas internet loss attributable to Bit Digital shareholders reached $107.2 million. The impairment was just one part of these outcomes and doesn’t point out that the Galaxy mortgage breached a collateral threshold.
The financing preserved the ETH place and prevented quick dilution, however it additionally made a part of the treasury’s worth related to WhiteFiber’s funding chain.
That trade-off is now a part of a broader capital-allocation debate: CEO Sam Tabar stated the board is evaluating share repurchases, topic to board and shareholder approval.

