Bit Digital holds a first-priority lien on the equity behind WhiteFiber's $865 million Nscale contract

WhiteFiber▼−8.13% — WhiteFiber, down 8.13 percent today, a landlord renting space, power and cooling in data centers plus rented Nvidia▼−3.89% — Nvidia, down 3.89 percent today compute, has an $865 million, ten-year contract with Nscale, an AI cloud company, for 40 megawatts at its NC-1 data center in North Carolina, against a market cap of $469 million ¹². The gap is why eleven analysts average a $38 price target on a $10.36 stock ².

But the newest disclosure cuts the other way: the proxy filed October 21↗ shows the 59.7% parent lending into the project company and holding a lien on the equity the contract runs through ³. That is why this piece exists now, three weeks before the first quarterly print since the August rescue.

The revenue is real, but so was the departure

Second-quarter revenue of $28.84 million came with a $14.98 million loss, and $12.3 million of that revenue was a termination fee from a customer who walked away, later raised to $15.7 million and still unpaid on August 12 ¹.

The machines were re-let, which shows the equipment kept its use ¹. It also shows that contracted capacity only protects cash when the customer pays ¹.

The balance sheet needed a rescue, and got a convertible one

The August rescue we covered on September 29, when we wrote that Baseten had locked three years of GPUs and WhiteFiber's convert holders would carry the bill, followed a weak June: $56.1 million of available cash against $315.3 million of loans due, excluding leases ¹.

WhiteFiber issued $310 million of 5% convertible notes, netting roughly $180 million of new cash after an exchange with old bondholders, leaving $341.85 million of combined principal ¹. The NC-1 construction bridge carries a 9.5% coupon that works out to a 50.6% effective annual rate once fees and the lender's minimum return are counted, and a September presentation still described the longer-term refinancing as expected, not closed ¹.

The parent sits on both sides of the table

The proxy discloses that Enovum NC-1 Venture, the project company behind the Nscale site, has a delayed-draw term loan from Bit Digital▼−9.88% — Bit Digital, down 9.88 percent today Capital, the lending subsidiary of parent Bit Digital, the former bitcoin miner from which WhiteFiber was spun out and which still holds about 59.7%: up to $100 million, 9.5% interest before a step-down to 8%, $30 million outstanding on October 21, funded at a 3% discount and secured by a first-priority lien on the borrower's equity in NC-1 Topco ²³.

The company that can pass every shareholder vote alone holds the claim on the entity the $865 million runs through ²³.

Insiders are selling, and November 10 is the test

Insiders add to the caution: TipRanks counts negative insider sentiment over the past quarter, with director Ichi Shih selling 7,059 shares last month ⁵. Wall Street's target list is split, too, with TipRanks reading the consensus as Strong Buy at $36.50 where MarketBeat↗ shows Moderate Buy at $38.00 ²⁵. For minority shareholders, the November 10 earnings call↗, the first financials since the August financing, must show how much of the contract has been accepted, what cash is actually left, and where that lien sits in any future financing ⁴.