From P2P Blowup to Bitcoin Mining and Ethereum Strategy: Bit Digital's Road to Survival

Author: KarenZ, Foresight News

This week (July 7), Nasdaq-listed mining firm Bit Digital (BTBT) announced the completion of its full strategic transition to an Ethereum treasury model, accumulating over 100,000 ETH in holdings.

This move not only marks a fundamental shift in its business focus from Bitcoin mining to the Ethereum ecosystem—demonstrating strong confidence in Ethereum’s long-term potential—but also reflects the growing institutional appeal of Ethereum.

This article will analyze Bit Digital's evolution, the background behind its transformation, and the core motivations for shifting toward Ethereum.

The Evolution of Bit Digital

Origins: The Troubled "First Chinese Car Loan Stock"

Bit Digital traces its roots back to Golden Bull Limited, founded in Shanghai in November 2015 with a core business in auto-secured loans.

According to International Financial News, Golden Bull once disclosed on its official website that it received RMB 20 million in angel investment (co-funded by Zeng Erxin and Liu Xiaohui) in January 2016 upon launch; completed Series B financing in May 2016 through joint investments from Huishi Equity Investment Fund (Shanghai) Co., Ltd. (Huishi Fund) and Shaanxi Xifeng Investment Co., Ltd. (Xifeng Investment), two state-owned enterprises; and raised another RMB 200 million in Series C funding in December 2016. However, these claims have been met with skepticism, including allegations of "fabricated funding rounds" and "false advertising."

In March 2018, the company went public on Nasdaq under the ticker “DNJR,” branding itself as the “first Chinese car loan stock.”

But its success was short-lived. In July 2019, amid the broader P2P industry collapse and regulatory crackdowns in China, Golden Bull was investigated by Shanghai police for suspected illegal public deposit-taking. Seventeen suspects were criminally detained, and the actual controller was placed on the national red notice list. The company’s stock price plummeted, nearly facing delisting. In October of the same year, the board dismissed Chairman and CEO Zeng Erxin, CFO Leng Jing, and director Liu Xiaohui, subsequently forming a new management team.

Transformation: From Auto Leasing to Bitcoin Mining

After the collapse of its P2P operations, Golden Bull gradually pivoted to auto leasing and Bitcoin mining.

• In Q3 2020, Golden Bull rebranded as Bit Digital, Inc., changed its Nasdaq ticker to “BTBT,” and divested its original P2P lending business. The company headquarters later moved to New York, USA.

• In September 2020, Bit Digital established a wholly-owned subsidiary, Bit Digital USA, Inc., in Delaware, planning to operate its mining rigs in the U.S. and accelerate the relocation of miners from China to North America.

• In June 2021, following China’s nationwide ban on cryptocurrency mining, Bit Digital suspended all remaining mining operations in China and further accelerated its migration strategy to North America.

From 2020 to 2021, Bit Digital expanded its scale through multiple financings for miner procurement and capacity expansion. By Q1 2021, Bit Digital operated 40,965 miners across Xinjiang, Sichuan, and Yunnan provinces in China, and Texas, Nebraska, and Georgia in the U.S. Bitcoin mining became its core revenue source, generating $43.95 million in mining revenue that quarter. However, due to miner migration, production restrictions, and rising network hash rate, revenues gradually declined.

Notably, Yu Hong, founder of the famous “3 AM Blockchain” WeChat group, joined Golden Bull as Chief Strategy Officer and director in April 2020. But in February 2021, during a major executive reshuffle at Bit Digital, Yu Hong resigned from both roles. In April 2021, Golden Bull acquired XMAX Chain Limited, a Hong Kong-based wholly-owned subsidiary responsible for operating all mainland Bitcoin mining activities. Yu Hong had previously invested in and promoted XMAX Chain but later severed ties with the project. Golden Bull later clarified that Yu Hong had no formal connection with XMAX Hong Kong.

Diversification: Ethereum + Cloud Services + High-Performance Computing

Starting in late 2022, Bit Digital began reducing reliance on standalone Bitcoin mining and pursued a diversified strategy.

• December 2022: Launched Ethereum staking operations.

• 2023: Established subsidiary WhiteFiber AI, Inc. (formerly Bit Digital AI, Inc.) to enter cloud services.

• June 2024: Founded WhiteFiber HPC, Inc. (formerly Bit Digital HPC, Inc.), focusing on high-performance computing (HPC). In October 2024, acquired Canadian firm Enovum Data Centers Corp to strengthen HPC data center capabilities.

• March 2025: Established WhiteFiber Canada, Inc., creating a multi-regional HPC and cloud service network.

Full Transition to Ethereum Treasury Management Strategy

In early July 2025, Bit Digital announced the completion of its strategic pivot to an Ethereum treasury management model. It recently raised approximately $172 million in total proceeds, allocating net capital toward Ethereum purchases. Additionally, Bit Digital sold around 280 BTC and reinvested the proceeds into ETH.

Combined with its prior holding of 24,434 ETH (as of March 31, 2025), Bit Digital’s total ETH position reached 100,603.

Concurrently, Bit Digital updated its official description: “Bit Digital is a publicly traded digital asset platform focused on Ethereum-native asset management and staking strategies.”

Regarding HPC operations, in February 2025, Bit Digital officially rebranded its HPC business as WhiteFiber, Inc., encompassing its GPU cloud services and HPC data center platform, Enovum Data Centers.

Why Go All-In on Ethereum?

CEO Sam Tabar stated clearly: “We believe Ethereum has the power to rewrite the entire financial system. Ethereum’s programmability, growing adoption, and staking yield model represent the future of digital assets. Bit Digital is aligning itself with Ethereum’s long-term potential and positioning as a leading Ethereum treasury management platform. We plan to actively increase our holdings and ultimately become one of the world’s largest ETH holders.”

In Bit Digital’s view, Ethereum is emerging as a new strategic corporate asset class—akin to gold or government bonds historically—but more dynamic, driven by the largest global developer ecosystem (far surpassing other blockchains), enabling continuous technological innovation.

Of course, Bit Digital’s shift from a Bitcoin-mining-focused company to the Ethereum ecosystem reflects not only macro trends in the crypto industry but also internal financial and operational considerations.

Bitcoin Mining Profitability Under Pressure

• Intensifying Hashrate Competition + Bitcoin Halving: Rising Bitcoin mining difficulty has steadily reduced marginal returns for miners.

• Bitcoin mining heavily depends on cheap electricity. After being forced to relocate from China to North America in 2021 due to regulatory crackdowns, Bit Digital faced significantly higher operating and compliance costs.

• Weakening profitability in digital asset mining: In Q1 2025, Bit Digital reported $7.77 million in mining revenue, down 64% from $21.89 million in Q1 2024. Meanwhile, cost of revenue dropped from $12.98 million to $6.12 million. Measured by cost-to-income ratio—a proxy for profitability—the figure rose from 59% in Q1 2024 to 78% in Q1 2025, excluding depreciation and amortization expenses ($7.24 million across all businesses). A higher ratio indicates weaker profitability per unit of revenue.

• Unbalanced business structure with declining mining contribution: In Q1 2025, mining revenue accounted for only 31% of total revenue, down sharply from 72% in the same period of 2024, highlighting the urgent need for new growth drivers.

The Appeal of the Ethereum Ecosystem

• Ethereum staking generated $600,000 in revenue in 2024, up 72% year-on-year. As of March 31, 2025, Bit Digital had approximately 21,568 ETH staked via native protocols. Following this latest increase to over 100,603 ETH, the company emphasized that it is not merely buying tokens but strategically allocating reserves into protocols.

• Ethereum’s staking mechanism allows holders to earn relatively stable annualized yields by locking up tokens—offering more predictable returns compared to the high energy consumption and uncertainty of Bitcoin mining. Energy-intensive mining faces increasing scrutiny under global carbon neutrality goals, whereas Ethereum’s proof-of-stake mechanism consumes minimal energy, aligning better with sustainability trends.

• Shift toward diversified institutional allocation: As Ethereum adoption grows, institutional investors are gradually moving from Bitcoin-centric portfolios toward diversification, recognizing Ethereum’s long-term value.

In summary, Bit Digital’s journey represents a story of transformation and resilience—from a troubled Chinese P2P platform to a Nasdaq-listed entity, then pivoting to Bitcoin mining, expanding into HPC and AI, and now fully embracing Ethereum amid disappointing mining performance. Its strategic shifts have consistently followed market trends. Yet this bold bet on Ethereum brings new risks—its future performance will be highly correlated with ETH’s price trajectory.

For the crypto industry, Bit Digital’s transformation reflects both the rising attractiveness of the Ethereum ecosystem and a broader shift in how institutions and mining firms approach digital asset allocation—from “mining for profit” to “long-term asset holding.” As the Ethereum ecosystem matures further, more institutions may follow suit.