Analysts at Noble Capital Markets have repeated their ‘Outperform’ rating on Bit Digital Inc (NASDAQ:BTBT) after the Bitcoin miner’s second quarter earnings impressed and it announced a significant contract win for its new High Performance Computing (HPC) business with cloud gaming firm Boosteroid.
“We believe the company's expansion of its [HPC business] provides the company with additional stable cash flow and risk diversification outside of its cryptocurrency mining and staking operations,” the analysts wrote in a note to clients.
They highlighted management’s expectation that the HPC business could achieve a $100 million annualized revenue run rate by the year-end.
“Management is placing greater emphasis on the HPC segment given the near-term potential of the business, its higher margin profile, and growing pipeline of opportunity,” analysts wrote.
The company is adding staff in its HPC segment, including a head of sales, as it realizes more of its growing pipeline.
“It has already come to fruition with the Boosteroid agreement announcement and management noted that other potential clients are not far behind,” analysts wrote, adding that they would not be surprised to see more agreement announcements announced sooner rather than later.
They see the Boosteroid agreement, which will generate an initial $13 million in revenue over five years with total possible revenue of $700 million, as “a positive scalable addition to the company’s HPC business.”
The analysts also maintained their $5.50 price target on Bit Digital, implying upside of more than 50% from the company’s share price at the time of writing.
“We believe the company offers stable cash flow through its HPC services segment with increased risk diversification. All of this is combined with a stabilizing mining environment,” they wrote.
“We believe the mining production of Bitcoin has stabilized since the 'halving' event in April. With an active hash rate goal of 6.0 EH/s at the end of 2024, we believe the company will deploy more miners and increase production as the year progresses.”