Wednesday, October 16, 2024
Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
New Service. Bit Digital’s acquisition of Enovum provides a new vertical within the HPC business in AI/HPC colocation services. As noted in our previous report, the new business will vertically integrate Bit Digital’s HPC business and complement the current GPU Cloud service segment.
Colocation Expansion and Synergies. The new service offers longer contract terms (4-12 years versus 2-5) and higher gross margin (70-80% versus 65-75%) than the current GPU Cloud service. With a potential 8MW expansion, annualized EBITDA can climb to $13 million, and the additional 20MW expansion can further climb it to $45 million. The data centers also can be extended to its GPU Cloud service through storing procured GPUs, offering capacity to customers on a just-in-time basis, or to boost margins instead of hosting third party GPUs. We believe the scalability and potential synergies present an exciting vertical now and in the future.
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