Bit Digital, a publicly traded company, drew $50 million from Galaxy Digital on May 20, 2025, at a 5.45% interest rate, pledging 49,000 LsETH as collateral. The pledge represents 74% of Bit Digital’s staked Ethereum position, according to the company’s regulatory filings.

The collateral arrangement carries a 24-hour notice period for margin calls, with a faster 9-hour procedure available under urgent thresholds. If Bit Digital fails to meet collateral requirements within the notice window, Galaxy’s master loan agreement permits the lender to partially liquidate the pledged assets.

Treasury Strategy and Staking Conversion

Bit Digital converted 73,235 ETH into 66,192 LsETH during Q2 2025, a move tied to the company’s decision to fund WhiteFiber, its majority-owned AI infrastructure company, without selling ETH or issuing new shares. The conversion generated a $46 million non-cash impairment charge on LsETH in Q2 results, as the company carries LsETH at cost less impairment, unlike ETH’s fair-value accounting treatment.

The pledged 49,000 LsETH was reported as a collateral receivable valued at $105.6 million on the balance sheet. Bit Digital retained 17,192 LsETH, valued at $27.6 million, as a buffer against margin requirements.

Balance Sheet Expansion and WhiteFiber Facility

Management deployed net cash to acquire additional ETH after the loan draw. Bit Digital’s balance sheet held 24,434 ETH on March 31, 2025, and now holds roughly 100,603 ETH. The company generated $900,000 in ETH staking revenue during Q2 and $2.3 million in Q1.

WhiteFiber’s financing is backed by a separate facility with a starting size of $100 million and a maximum size of $150 million by mutual agreement. The facility is secured by a pledge of Enovum NC-1 Topco stock and a parent guaranty from White Fiber Operating Partnership.

Capital Allocation and Shareholder Returns

CEO Sam Tabar said the board is evaluating share repurchases, subject to board and shareholder approval. The company reported a net loss attributable to Bit Digital shareholders of $107.2 million in Q2 2025.

Public filings do not disclose Bit Digital’s proximity to a margin-call threshold or the specific collateral ratio that would trigger liquidation.