NEW YORK, Oct. 14, 2024 /PRNewswire/: Bit Digital, Inc. (Nasdaq: BTBT) (“Bit Digital” or the “Company”), a sustainable platform for digital assets and artificial intelligence (“AI”) infrastructure headquartered in New York, announced today that it has acquired Enovum Data Centers (“Enovum”), an owner, operator, and developer of high-performance computing (“HPC”) datacenters, for a total consideration of approximately CAD $62.8 million (approximately USD $46MM). This transaction vertically integrates Bit Digital’s HPC operations with an existing, fully operational, and fully leased Tier 3 datacenter in a major city; provides a strong diversity of existing and prospective colocation customers; delivers a strong pipeline of expansion site opportunities and an experienced team to lead the development processes; and enables Bit Digital to offer new service offerings such as colocation and on-demand computing to complement its existing GPU offerings.
Transaction Overview: Bit Digital has acquired Enovum for a total consideration of CAD $62.8MM (approximately USD $46MM based on a CAD/USD exchange rate of 0.73). The acquisition was completed on a debt-free, cash-free basis, with a normalized level of working capital acquired, funded by approximately CAD $56 million of cash and approximately 1.62 million share equivalents issued solely to key management, who rolled over a significant portion of their existing ownership in Enovum. The transaction closed on October 11, 2024.
Strategic Rationale: The addition of Enovum vertically integrates Bit Digital’s HPC business into the colocation services sector of the value chain. This creates the potential for significant synergies, as Bit Digital may capture additional margin from HPC customers versus hosting them with third-party datacenters. Additionally, it enhances Bit Digital’s competitive positioning in the marketplace, enabling the company to offer an integrated GPU cloud solution to customers. Finally, Bit Digital will enjoy greater operating flexibility by colocating its owned GPU inventory in Enovum datacenters, offering capacity to customers on a just-in-time basis—an important differentiator in a marketplace where time-to-market is paramount.
Expansion Pipeline: Enovum has a proprietary development pipeline of 288 MW, including 93 MW that are currently under LOI with respective landlords. All sites are in major metropolitan areas and, in general, will be designed to accommodate direct-to-chip liquid cooling. Immediate term plans include bringing approximately 8MW online by the end of 2Q 2025 for approximately USD $50MM of capex. The company expects run-rate, colocation EBITDA for the Enovum business to exit 2Q25 at approximately USD $13MM based on that development schedule. Bit Digital may also place its own GPUs at those sites, which could significantly increase EBITDA per MW. The company is tentatively planning to bring an additional 20MW online by year-end 2025. However, development plans will be contingent on firm customer demand and financing options.
Financing Alternatives: Bit Digital has engaged an investment banking firm to pursue debt financing alternatives to expand Bit Digital’s capital resources to fund both Enovum’s expansion capex as well as the procurement of GPU servers for Bit Digital’s existing cloud business. The Enovum acquisition has been structured to optimize tax outcomes and provide for a potential future REIT (Real Estate Investment Trust) election.
Enovum Overview: Enovum, headquartered in Montreal, Canada, is an owner, operator, and developer of HPC datacenters that commenced operations in 2020. Enovum currently operates a 4MW Tier 3 datacenter in Montreal that is powered by renewable hydroelectricity. The site, which is leased through 2036 with two five-year extension options, features 2N UPS and 2N generators with N+1 redundant cooling design. The site is currently fully leased to more than a dozen colocation customers and is expected to generate approximately CAD $10MM of revenue in 2025. Enovum already has strong demand from both existing and new customers for colocation capacity in the new capacity to be brought online.
Experienced Team: Bit Digital will retain key employees from Enovum as part of its purchase agreement to ensure operational continuity of the existing site and development of the expansion pipeline. These employees possess decades of collective experience in managing and developing Tier 3 data centers and fill a key gap in Bit Digital’s capabilities.
Management Commentary: Sam Tabar, Bit Digital’s CEO, commented: “We are thrilled to announce a transformational acquisition for Bit Digital. This transaction is the culmination of many months of due diligence and negotiation. Vertical integration on the HPC side has been a priority for Bit Digital, and we believe we were able to achieve this goal at an attractive price. For a similar cost to ground-up development, we acquired an operational 4MW facility and a key time value advantage vs. greenfield development; a fully leased site already generating several million dollars of EBITDA; a diverse set of existing customers and firm book for future capacity; and a strong pipeline of future sites with an experienced team to lead the development process.”
Tabar continued: “One of our key criteria for acquiring an HPC site was proximity to a major metropolitan area. The existing site in Montreal and near-term expansion sites are all located in Tier-1 cities. We continue to see major value in having datacenter assets adjacent to highly populous areas, as they present the most value for inference models where latency is a primary concern. Following this acquisition and contemplating our expansion program, we believe Bit Digital will be well positioned to accommodate inference workloads. In tandem with the buildout of our datacenter footprint, we will continue to invest in our GPU-as-a-service business, with the two units coalescing to establish a formidable player in the HPC industry.”
Advisors: B. Riley Securities is acting as exclusive financial advisor to Bit Digital, Inc., and Davies Ward Phillips & Vineberg LLP and White & Case LLP are acting as legal advisors.
Also read: Viksit Workforce for a Viksit Bharat
Do Follow: CIO News LinkedIn Account | CIO News Facebook | CIO News Youtube | CIO News Twitter
About us:
CIO News is the premier platform dedicated to delivering the latest news, updates, and insights from the CIO industry. As a trusted source in the technology and IT sector, we provide a comprehensive resource for executives and professionals seeking to stay informed and ahead of the curve. With a focus on cutting-edge developments and trends, CIO News serves as your go-to destination for staying abreast of the rapidly evolving landscape of technology and IT. Founded in June 2020, CIO News has rapidly evolved with ambitious growth plans to expand globally, targeting markets in the Middle East & Africa, ASEAN, USA, and the UK.
CIO News is a proprietary of Mercadeo Multiventures Pvt Ltd.
