Executive Summary / Key Takeaways

• Strategic Metamorphosis: BTC Digital Ltd. (NASDAQ:BTCT) has undergone a profound transformation, pivoting from its roots in English Language Training (ELT) to become a dedicated crypto asset technology company focused on Bitcoin mining, machine resale, and rental services in North America.
• Technological Edge in Mining: The company is actively deploying next-generation mining rigs, including Antminer S21 Pro and L9 units, to significantly enhance its hashrate and energy efficiency, aiming to reduce operational costs and maintain a competitive advantage.
• Diversified Revenue Streams: Unlike many pure-play miners, BTCT's business model incorporates mining machine resale and rental services, offering a more diversified approach that could provide greater revenue stability and market accessibility.
• Financial Reorientation: While historical financials reflect the challenges of its prior education business and the costs of transition, recent operational investments signal a clear strategic direction towards capitalizing on the burgeoning digital asset economy.
• Outlook and Risks: Management is committed to becoming a leading metaverse technology company, with new initiatives expected to generate additional revenues. However, the company faces inherent risks from cryptocurrency market volatility, energy costs, and intense competition.

From Classrooms to Crypto: BTC Digital's Strategic Evolution

BTC Digital Ltd. (NASDAQ:BTCT) stands today as a testament to strategic agility, having executed a remarkable pivot from its origins as Meten Holding Group Ltd., a prominent English Language Training (ELT) provider founded in 2006. The company's journey through the early 2020s was marked by significant headwinds, including the profound impact of the COVID-19 pandemic and China's "double reduction policy" on its traditional education business. These challenges necessitated a radical re-evaluation of its core operations, leading to a strategic decision to consolidate offline learning centers and increasingly shift towards online educational offerings.

This period of introspection and adjustment ultimately catalyzed a far more ambitious transformation. Recognizing the burgeoning potential of the digital economy, Meten Holding Group began actively exploring opportunities in the metaverse, blockchain, and cryptocurrency sectors in 2021. This strategic reorientation included plans for metaverse-related career training, the establishment of experience centers, and a concerted push into overseas blockchain and cryptocurrency ventures, encompassing mine construction, mining machine sales, and even participation in crypto-related funds. This pivotal shift culminated in August 2023, when the company formally rebranded as BTC Digital Ltd., signaling its definitive commitment to becoming a crypto asset technology company with a primary focus on Bitcoin mining and related services in the United States.

Technological Prowess and Operational Differentiation

At the heart of BTC Digital's current investment thesis lies its commitment to technological leadership in the highly competitive cryptocurrency mining landscape. The company's strategy emphasizes the continuous upgrade of its mining infrastructure to maximize efficiency and output. A significant step in this direction was the partial deployment of next-generation mining rigs in September 2025, including 434 Antminer S21 Pro units and 140 L9 miners. This deployment is specifically designed to "significantly raise the Company's overall computing power (hashrate) while further optimizing energy utilization to reduce operating energy consumption". This focus on advanced hardware directly translates into tangible benefits for investors: higher hashrate means more potential for Bitcoin rewards, and improved energy efficiency directly lowers operational costs, thereby enhancing profitability margins. This proactive equipment refresh program is crucial for BTCT to maintain a technological edge and lay a solid foundation for long-term sustainable development, as articulated by CEO Siguang Peng.

Beyond direct mining, BTCT differentiates itself through a diversified business model that includes mining machine resale and rental services. This approach provides a more flexible and accessible entry point for clients into the mining ecosystem, contrasting with the more singular focus on direct mining operations seen in many of its peers. For instance, in May 2025, BTCT signed a Litecoin (LTC) miner hosting agreement to provide comprehensive services for 154 LTC miners, offering a total computing power of approximately 1,690 GH/s. These hosting services cover the entire operational spectrum, from miner transportation and power supply to on-site security and daily maintenance, allowing clients to optimize asset returns without the burden of operational complexities. This diversified offering not only broadens BTCT's revenue streams but also potentially enhances customer loyalty and provides a more resilient business model against the inherent volatility of cryptocurrency prices.

Competitive Landscape and Strategic Positioning

The cryptocurrency mining industry is characterized by intense competition, high capital requirements, and significant exposure to energy costs and market fluctuations. BTC Digital operates alongside prominent players such as Marathon Digital Holdings (MARA), Riot Platforms (RIOT), Hut 8 Corp (HUT), and Bitfarms Ltd. (BITF). While these competitors often boast larger operational scales and aggressive expansion strategies, BTCT carves out a distinct niche through its diversified service offerings.

Compared to Marathon Digital Holdings, which primarily focuses on scaling direct mining capacity, BTCT's inclusion of mining machine resale and rental services provides greater flexibility in revenue generation. This model allows BTCT to engage a broader customer base, potentially leading to more stable cash flows even during periods of fluctuating mining profitability. Similarly, against Riot Platforms, known for its focus on advanced mining hardware and infrastructure development, BTCT's multifaceted approach offers a more comprehensive solution for clients, potentially appealing to those seeking managed services rather than solely raw hashrate.

Hut 8 Corp integrates mining with data center services, leveraging energy advantages, while Bitfarms Ltd. emphasizes cost-effective and sustainable mining. BTCT's strategy of providing accessible rental options and comprehensive hosting services could offer a lower barrier to entry for smaller operators or those looking to scale without significant upfront capital investment. This service-oriented diversification is a key competitive advantage, potentially leading to stronger customer loyalty and more robust growth through recurring rental income. However, BTCT may lag behind some larger competitors in terms of sheer mining output growth and the speed of pure mining-specific innovation, given its broader focus.

Financial Performance and Liquidity

BTC Digital's financial trajectory reflects its significant business transformation. The company's earlier performance as Meten Holding Group in 2021 was heavily impacted by external factors. In the third quarter of 2021, revenue decreased by 36.9% year-over-year to $29.2 million, primarily due to the resurgence of COVID-19 and the reduction in offline learning centers. This led to a gross profit decrease of 49.1% year-on-year to $9.9 million and a net loss of $27.2 million for the quarter. However, even during this challenging period, management's strategic adjustments, such as reducing fixed costs and optimizing online resources, were aimed at improving future profitability.

As the company transitioned to its crypto asset focus, the financial profile began to shift. For the fiscal year ending December 31, 2024, BTCT reported total revenue of $11.68 million and a net loss of $1.99 million. While still reporting losses, the scale of operations and the nature of expenses have fundamentally changed. The company's operating cash flow for the trailing twelve months (TTM) as of September 29, 2025, was $1.56 million, indicating some cash generation from core operations, although free cash flow was negative at -$1.19 million, reflecting ongoing investments in its new business.

Liquidity appears to be managed carefully. As of December 31, 2024, BTCT held $14.90 million in cash and cash equivalents, with total debt at a manageable $853,000. The company's working capital stood at $23.66 million, suggesting a healthy short-term financial position to support its operational needs and strategic initiatives. This financial reorientation, while still in its early stages of showing consistent profitability, underscores the company's commitment to building a sustainable business in the digital asset space.

Outlook, Guidance, and Risks

BTC Digital's outlook is firmly anchored in its vision to evolve into a leading metaverse technology company. Management, as early as 2021, articulated an expectation to become a "metaverse technology company in the next one to two years". This forward-looking perspective underpins its current strategic initiatives, including the continuous deployment of advanced mining rigs to enhance hashrate and energy efficiency. The company anticipates that these technological upgrades will lay a solid foundation for long-term sustainable development and ensure it remains at the forefront of industry evolution. The Litecoin miner hosting agreement further illustrates the company's commitment to expanding its service offerings and generating additional revenue streams from its operational network.

However, investing in BTCT comes with inherent risks. The primary risk factor is the extreme volatility of cryptocurrency markets, particularly Bitcoin and Litecoin, which directly impact mining profitability and asset values. Fluctuations in energy prices, a significant operational cost for mining, also pose a considerable threat to margins. Regulatory uncertainty in the rapidly evolving digital asset space, both in North America and globally, could introduce unforeseen challenges. Furthermore, the competitive intensity of the mining industry, with larger players continuously expanding capacity, demands constant technological innovation and operational efficiency from BTCT to maintain its market position. The company's ability to successfully integrate and scale its diversified offerings, including mining machine resale and rental, will be critical to mitigating some of these risks and achieving its long-term growth objectives.

Conclusion

BTC Digital Ltd. represents a compelling narrative of corporate transformation, having successfully pivoted from a traditional education provider to an emerging player in the dynamic digital asset sector. The company's strategic shift, driven by a commitment to technological advancement and a diversified business model encompassing Bitcoin mining, machine resale, and rental services, positions it uniquely within the competitive landscape. While its financial performance reflects the costs of this significant transition, recent operational investments in next-generation mining rigs and hosting agreements underscore a clear path toward capitalizing on the growing demand for digital assets.

For discerning investors, BTCT offers exposure to the high-growth potential of the cryptocurrency industry, underpinned by a management team focused on operational efficiency and a long-term vision to become a metaverse technology leader. The company's ability to leverage its technological edge in mining and its diversified service model will be paramount in navigating market volatility and intense competition. Monitoring the execution of its strategic initiatives, particularly the continued deployment of advanced hardware and the expansion of its hosting services, will be key indicators of its future success and its potential to unearth significant value in the evolving digital economy.