Bit Digital Pledges 74% of Ethereum Holdings to Galaxy Loan
Bit Digital's financial health is under scrutiny after it revealed that it pledged 74% of its staked Ethereum position to a loan from Galaxy Digital. The loan, worth $50 million, was taken out on May 20 at an interest rate of 5.45%. In exchange for the funding, Bit Digital converted 73,235 ETH into 66,192 LsETH, which it pledged as collateral.
The company also borrowed from WhiteFiber, a separate entity backed by Enovum NC-1 Topco stock and a parent guaranty from White Fiber Operating Partnership. The facility started at $100 million and could rise to $150 million with mutual agreement.
Bit Digital's decision to pledge its Ethereum holdings has raised concerns about the company's capital allocation strategy. CEO Sam Tabar stated that the board is evaluating share repurchases, subject to approval from shareholders and the board.