Bit Digital Relocates Bitcoin Miners to Soluna, KaboomRacks as Coinmint Phases Out 46 MW
Bitcoin mining and HPC service provider Bit Digital (NASDAQ: BTBT) has signed new colocation agreements with Soluna and KaboomRacks to relocate its mining rigs from Coinmint’s facilities.
In its annual report last week, Bit Digital detailed multiple colocation arrangements for its mining fleet, which offered color on the challenges of the asset-light mining strategy amid power constraints, intensifying industry competition, and growing demand from the AI sector.
Previously, Bit Digital hosted 46 megawatts (MW) of Bitcoin miners at Coinmint’s Massena and Plattsburgh, New York, facilities, making up a significant portion of its fleet. The company also worked with Bitdeer, Soluna, GreenBlocks, and Digihost under various profit-sharing agreements.
However, Coinmint has been terminating hosting contracts to allocate more capacity for its own mining operations following a strategic investment from NYDIG last year. As a result, Bit Digital faced contract expirations, with 27 MW ending on Dec. 7, 9 MW on Jan. 28, and the remaining 10 MW set to expire on Apr. 5.
To mitigate the impact, Bit Digital has expanded agreements with other hosting providers. In December, the company increased its hosting agreement with Soluna to a total of 17.6 MW, with Soluna entitled to 35% of net mining profit.
In February, Bit Digital signed two new agreements with KaboomRacks for 19 MW, under which KaboomRacks will receive between 19.75% and 40% of net mining profit. Deployment under these agreements is expected to begin in the first quarter of 2025.
The relocation process has caused downtime, with Bit Digital’s realized hashrate dropping from 2.44 EH/s in September to 1.59 EH/s in January. The company has not yet reported production figures for February.
Once Coinmint’s contracts expire, Bit Digital plans to sell inefficient mining units and replace them with newer-generation machines.
“By doing so, we can replace the lost hash rate with around 50% less MW. We have already signed contracts for more than enough hosting capacity to replace that hash rate,” the company stated.
Bit Digital isn’t the only mining firm facing hashrate growth constraints due to reliance on colocation. Argo Blockchain (NASDAQ: ARBK) has also been sourcing hosting partners after Galaxy Digital reclaimed its hosting capacity for proprietary mining and HPC services.
Meanwhile, Bit Digital has been expanding its HPC business through recent data center acquisitions. The company’s Q3 revenue from HPC services already surpassed earnings from Bitcoin mining and Ethereum staking – a trend that continued last quarter, with HPC services generating $14.3 million compared to Bitcoin mining’s $10 million.
