Bitcoin Miner Bit Digital Hits Back at ‘False Accusations’ of Fraud

The company shed $130 million in value after J Capital’s report.

AccessTimeIconJan 20, 2021 at 6:42 p.m. UTC
Updated Dec 12, 2022 at 12:46 p.m. UTC
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Nasdaq-listed bitcoin mining company Bit Digitalhttps://hashrateindex.com/stocks/btbt (BTBT) dismissed allegations of fraud against the company made in a recently published report by J Capital Research.

Without specifically naming the report, a press release from the mining company responded to “false accusations” about its business. It repeated financial disclosures from Q3 2020 on the size and scale of its operations, noting that “an overview of our bitcoin mining operations” is all publicly available on the U.S. Securities and Exchange Commission’s (SEC) website. 

Among other allegations, the report from J Capital called Bit Digital’s filings, which showed it operates nearly 23,000 bitcoin mining machines in China, “simply a lie.” 

In December, Bit Digital announced a $13.9 million agreement to buy nearly 18,000 Whatsminer and Antminer ASICs. Whatsminer manufacturer MicroBT did not respond to a request for comment from CoinDesk. 

J Capital also called Bit Digital a “sham bitcoin business,” claiming to have verified with local Chinese government officials that Bit Digital has “no bitcoin miners” there, casting doubt over the legitimacy of its Asia-based mining operations in China. 

Bit Digital said all of its mainland China mining operations are managed by XMAX Hong Kong, and all “utility bills and other expenses” are paid to Hong Kong suppliers.

The company's stock soared over 400% between Dec. 28, 2020, to Jan. 4, 2021, peaking above $32 and pushing the company above a $1 billion market value. J Capital published its report one week later on Jan. 11. Since then, Bit Digital shares have dropped over 35% to around $16. 

Bit Digital responded to none of CoinDesk’s emails seeking comment. CoinDesk was also unable to contact facility managers of Bit Digital’s Asia-based mining operations. 

The company also mines in the U.S., however. In Texas and Nebraska, Bit Digital owns a total of 2,100 machines in facilities managed by Minnesota-based mining infrastructure company Compute North. 

Compute North CEO Dave Perrill told CoinDesk his company has always had a “very healthy partnership” with Bit Digital, confirming the 2,000 machines in Nebraska and 100 in Texas that his company manages.  

On a phone call, Perrill said his team is also “in talks about significantly scaling up operations” with Bit Digital. He said he could not speak to his client’s Asian mining facilities. 

Bit Digital started mining bitcoin in February 2020.

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