Why Bit Digital is up 17% today

Bit Digital (BTBT 20.74%) is among the top cryptocurrency-related stocks that have surged in today’s session. Shares of the stock are up more than 17% at the time of writing after the company announced earnings.

Bit Digital’s report was a mixed bag, with the company reporting a bigger-than-expected second-quarter loss and a stronger-than-market-anticipated revenue forecast. Like a top Bitcoin mining company, such volatility is to be expected, and today’s results certainly brought the kind of price movement that many investors had already anticipated.

The thing is, this move seems to have little to do with the numbers eventually reported by Bit Digital. The company’s high-performance computing (HPC) division appears to be the focus of investors, with the company announcing that its second customer (Boosteroid) will buy GPU servers over a five-year period in a deal that should be worth of about $13. million in revenue.

Let’s take a closer look at what this may mean for investors.

Bit Digital is growing in key customer acquisition growth

Bit Digital is best known as a Bitcoin mining company and is typically valued based on its current Bitcoin holdings and future cash flows from mining activities. This business is inherently risky and usually leads to a lot of volatility around earnings reports. Thus, today’s action in Bit Digital’s stock price is not necessarily out of the ordinary.

That said, it’s clear that many investors in this space are looking for more consistency from companies like Bit Digital. In the past, Bit Digital’s earnings numbers have fluctuated so much that the current multiple of around 12 times trailing earnings isn’t really useful.

However, this announced acquisition by customers in the company’s high-performance computing division could change computing for investors. Bit Digital estimates that the total market opportunity could reach $700 million. So for a company valued at around $500 million with a price-earnings multiple where it is, this potential sustainable and sustainable revenue stream could lead to significant multiple expansion over time.

Is the price right?

Even after today’s rally, Bit Digital’s valuation appears to be depressed, with the market clearly offering a large margin of safety with this stock at current levels. As we’ve seen in the past, Bitcoin prices can go all over the place. And in the very long term, it’s largely true that Bitcoin miners will continue to consolidate or be pushed out of business as energy costs rise and Bitcoin’s block rewards continue to halve.

But generating new revenue streams could completely change the narrative around this company. Maybe that’s what happened today. We will have to see if this rally can continue from here, but for now, this is a crypto mining stock that I think deserves a deeper look.