Bit Digital lends $100M to WhiteFiber via Ethereum-backed credit line

Bit Digital extended a $100 million delayed draw term loan to a WhiteFiber subsidiary, funding the facility through an Ethereum-denominated credit line from Galaxy Digital.

"This transaction reflects a disciplined and differentiated capital allocation approach that further supports our existing AI Infrastructure investment thesis," Bit Digital Chief Executive Officer Sam Tabar said.

The Nasdaq-listed company borrowed an initial $50 million from Galaxy Digital at 5.45% on a one-year renewable term dated May 20, using its ETH holdings as collateral. It then lent those funds to WhiteFiber at 9.5%, with a step-down to 8% after the borrower hits certain Phase I milestones at its North Carolina data center. The gross spread lands at roughly 400 basis points before expenses. B. Riley Securities purchased a $20 million slice of the loans on matching terms.

The structure lets Bit Digital keep its Ethereum exposure while earning a financing spread that management expects to exceed traditional staking yields. The risks are layered: ETH price declines could trigger margin calls on the Galaxy facility, and WhiteFiber's data center buildout faces execution risk. Bit Digital holds roughly 70% of WhiteFiber's equity through about 27 million shares, concentrating its exposure on both the debt and equity sides.

The facility, announced May 27, provides WhiteFiber with access to up to $100 million in delayed draw financing, expandable to $150 million upon mutual agreement. The terms include a 3% original issue discount and a 1.1x minimum multiple-on-invested-capital repayment clause.

WhiteFiber, which trades on Nasdaq under WYFI, went public in August 2025 and operates in the AI infrastructure and high-performance computing space. The company previously secured C$60 million from the Royal Bank of Canada in June 2025 for a tier-3 AI data center buildout.

The transaction received board approval from both companies, with independent committees reviewing the economics and structure. Needham & Company and Seaport Global Securities each issued fairness opinions.

For Bit Digital shareholders, the calculus is multi-layered: continued ETH price exposure through the company's holdings, a financing spread on the loan, and indirect exposure to AI infrastructure growth through the WhiteFiber equity stake. The one-year renewable term on the Galaxy borrowing introduces refinancing risk if credit conditions tighten or ETH volatility spikes.

This article is for informational purposes only and does not constitute investment advice.