Bit Digital Pledges 74% of LsETH as Collateral for $50M Loan

Bit Digital pledged 49,000 LsETH as collateral for a $50 million loan from Galaxy Digital, representing roughly 74% of the company’s liquid-staked Ethereum. The loan was drawn on May 20 at a 5.45% interest rate.

The company converted 73,235 ETH into 66,192 LsETH and recorded the pledged 49,000 LsETH as a $105.6 million digital-asset collateral receivable. Bit Digital retained 17,192 LsETH, valued at about $27.6 million, as a buffer against margin requirements.

Galaxy’s master loan agreement gives Bit Digital 24 hours after an ordinary margin-call notice to add collateral. A shortened nine-hour window can apply if an urgent threshold is specified. If a required call is not met, Galaxy may partially liquidate pledged collateral to restore contractual levels. Public filings disclose those margin mechanics but do not show how close Bit Digital is to a margin call or liquidation.

Bit Digital used the financing in part to fund WhiteFiber, an AI infrastructure business in which it holds a majority stake, without selling ETH or issuing new shares. WhiteFiber has a separate delayed-draw facility that started at $100 million and could increase to $150 million by mutual written agreement. That facility is secured by a pledge of Enovum NC-1 Topco stock and a parent guaranty from White Fiber Operating Partnership. The LsETH pledge is tied to the company-level Galaxy borrowing, not to WhiteFiber’s credit line.

In its second-quarter report, Bit Digital recorded a $46 million non-cash impairment on LsETH and said it sold no ETH during the quarter. The company carries LsETH on the balance sheet at cost less impairment, while ETH is treated at fair value for accounting purposes.

Operational results showed ETH staking revenue fell to $900,000 from $2.3 million in the prior quarter. Net loss attributable to Bit Digital shareholders reached $107.2 million for the period. Filings do not indicate that the Galaxy loan breached a collateral threshold during the quarter.

Chief executive Sam Tabar indicated the board is evaluating share repurchases, subject to board and shareholder approval. The financing preserved the company’s ETH holdings and avoided immediate dilution, and the pledged LsETH is now subject to the loan’s margin mechanics.