Bit Digital (BTBT) told investors this week that it held approximately 164,310.5 Ether (ETH) at the end of June. Its quarterly filing shows that a substantial part of that position is no longer the company's to hold.
Bit Digital's Ether Treasury Includes $106mn it No Longer Owns
14 August 2026 - 13:46 UTC
By Stu Clelland
On 20 May the company drew $50mn from a credit facility with Galaxy Digital, secured against liquid-staked Ether. Under the terms, Galaxy has the contractual right to "sell, pledge, rehypothecate, assign, invest, use, commingle or otherwise dispose of" the collateral while the loan is outstanding. Because control passed to the lender, Bit Digital removed those tokens from its balance sheet entirely. In their place sits a $106mn digital asset collateral receivable, a contractual claim to receive an equivalent quantity of tokens back when the borrowing settles.
The company disclosed all of this. Almost none of it appeared in the coverage, which reported second-quarter revenue of $32mn, up 25% on the year, and a purchase of 8,568 ETH in May.
What the lender is allowed to do
Two features of the arrangement matter more than the interest rate.
The first is what Galaxy can do with the tokens. This is not a safe deposit box where the collateral sits untouched until the loan is repaid. Galaxy is free to sell it, lend it on to someone else, or mix it with its own holdings. That is why Bit Digital treats the tokens as gone rather than as still owned. What the company has left is a promise that the same quantity will come back, and it accounts for that promise the way a lender accounts for money it is owed, including making allowance for the possibility that it does not arrive.
The second is how long the loan lasts, which is Galaxy's decision rather than Bit Digital's. There is no maturity date. Galaxy can ask for its money back at a week's notice, which is why the company lists the debt among the bills it may have to settle within the year rather than as long-term borrowing. If the pledged tokens fall in value, Bit Digital can also be required to hand over more of them.
Against that risk, it holds 17,192 LsETH, worth $28mn, which management described on its earnings call as a buffer sized to withstand extreme moves. Cash at the parent company, as distinct from the consolidated group, was $27.5mn.
Less than half the treasury still tracks Ether
The arrangement has a second consequence that is easier to miss and harder to reverse.
Three separate items now make up what the company presents as its Ether position, and only one of them behaves like Ether. Digital assets of $120mn are carried at market value and move up and down with the price. The unpledged LsETH, at $28mn, is carried at cost and can be written down but never written up. The $106mn owed by Galaxy is a fixed claim that does not move with Ether at all.
So of roughly $253mn attributed to the treasury, about 47% still tracks the asset. Ether closed the quarter at $1,569 and has risen since. Bit Digital captures that on less than half of what it calls its holdings.
The pledged portion earns nothing in the meantime, either. Bit Digital books rewards on liquid-staked Ether only when the tokens are converted back, and the filing reports nil revenue from liquid staking for the half. Native staking, the part that does generate income, has been cut roughly in half over six months.
What the structure cost the quarter
The single transaction produced a $14mn gain when Ether was converted into LsETH and a $46mn write-down when the LsETH was pledged because the tokens were carried above market. Management called the write-down an accounting treatment rather than a realized loss. That is accurate, and it is also a cost that arose from the financing structure rather than from the market.
The wider picture is heavy. Bit Digital lost $112mn in the quarter against a profit a year earlier, and total liabilities more than doubled to $704mn over six months. The operating businesses are pulling in opposite directions, with cloud services revenue up 43% while mining fell 64%.
Investors apparently read the release before they read the filing. Shares opened about 12% higher on 13 Aug, then gave back nearly all of it to close up 1.4%.
The purpose was to avoid selling
None of this was accidental. Bit Digital used the borrowing to originate a $150mn facility for WhiteFiber, its majority-owned data centre subsidiary, and said explicitly that the structure funded the buildout without selling Ether or issuing equity at either company.
That is a defensible choice, and it is the same choice several treasury companies have reached this month by different routes. MARA moved a sixth of its Bitcoin (BTC) into a yield strategy run by a firm it partly owns, as Sandmark reported. Riot Platforms and Strategy both sold outright. Bit Digital, which completed its move to an Ether-only treasury last year, borrowed against its position instead.
The distinction the filing draws is the one investors should hold on to. Selling converts an asset into cash and ends the exposure. Pledging under an agreement like this one keeps the price risk with the company while moving the asset off its balance sheet and replacing it with a claim on someone else. Bit Digital still rises and falls with Ether. It no longer holds the coins.
