Bit Digital Pledges 74% of Staked Ethereum to Galaxy Loan with Collateral Call

Bit Digital, an AI-focused company, has pledged 74% of its staked Ethereum position to Galaxy, a loan that comes with a 24-hour collateral call. The $50 million loan is associated with 49,000 LsETH, which is valued at $105.6 million. This financing arrangement allowed Bit Digital to fund WhiteFiber, an AI infrastructure company it majority owns, without selling any Ethereum or issuing new shares.

The company drew the $50 million from Galaxy on May 20 at a 5.45% interest rate. The loan is secured by LsETH, with part of the treasury's value tied to WhiteFiber's funding chain. If Bit Digital fails to meet the margin call within 24 hours, Galaxy can partially liquidate collateral to restore the contractual level.

Bit Digital recorded a $46 million non-cash impairment on LsETH in its second-quarter results. The impairment was an accounting hit and not a realized loss, as LsETH is carried at cost less impairment. ETH staking revenue fell to $900,000 from $2.3 million in the first quarter.