BGDE — Q2 2026 Financial Report Analysis

Revenue fell by a third as grid-program income halved; insiders' cash kept the lights on

Big Digital Energy (formerly Mawson Infrastructure Group, renamed on April 24, 2026) runs about 129 MW of data-centre capacity in Pennsylvania. It earns money three ways: hosting other companies' Bitcoin-mining and computing machines ("digital colocation"), getting paid by the regional power grid to switch its machines off at peak times ("energy management"), and mining Bitcoin for itself. In the quarter to June 30, 2026, total revenue fell 35.5% to $6.15 million. Nearly all of the drop came from energy management, where revenue halved. The net loss narrowed slightly to $7.38 million, but that improvement came mostly from a smaller accounting charge on a power contract, not from the business itself. What changed most was the balance sheet. A new board took control in April, and companies owned by the new executives put in money through preferred stock and a credit line. That took shareholders' equity from negative $3.1 million at year-end to positive $12.4 million.

At a glance

• Energy management revenue: $2.61M, down 49.1%. The grid program's rules changed in 2026. The company says its miners did not meet the new equipment life-expectancy requirement, so this income stream is smaller for a structural reason, not a seasonal one.
• Operating cash outflow: $20.5M in the first half, against a $6.8M net loss. The company burned far more cash than its reported loss. Part of that was paying down $7.0M of overdue bills to suppliers.
• Overdue debt: $27.5M of the $30.1M owed is past its repayment date. The filing still states "substantial doubt" about whether the company can continue as a going concern (keep operating for the next 12 months).

The numbers

All figures are in US dollars, as reported in the 10-Q for the quarter ended June 30, 2026.

Operating margin is operating profit (here, a loss) as a share of revenue. At -102.4%, the company lost slightly more than a dollar running the business for every dollar of revenue it brought in. Gross margin here means revenue minus direct costs, mainly electricity, before depreciation.

Where the revenue went

Energy management (-$2.5M). Under PJM grid programs, the company is paid to cut its power use when the grid is under strain. The 10-Q says the decline was "primarily attributable to changes to miner specification requirements for curtailment program participation beginning in 2026, in which the Company's mining fleet did not achieve the target life expectancy." It also cites fewer customers and smaller contracts, partly offset by higher payments for selling spare energy capacity. The machines are too old to qualify, and that stays true until the fleet is replaced.

Colocation (-4.2%). The quarter looks steady, but only because of a new related-party deal. In April the company signed a Joint Mining Agreement with Six Thirty AI, LLC. That company is owned or controlled by the Executive Chairman (Joshua Kilgore), the CEO (Phillip Stanley) and the COO (Cody Smith). Six Thirty AI is to supply about 25,000 S19XP miners for roughly 75 MW at the Midland, PA site, and profits are split 50/50. Big Digital keeps all of the cash. Six Thirty AI's half is paid in common stock (20%) and warrants with a $20 exercise price (80%). The 10-Q says the agreement had "an immaterial impact" on Q2 results. Without it, colocation was shrinking: first-half colocation revenue fell 50% to $7.0M, and one former customer, Consensus Technology Group, accounted for $7.0M of that drop.

Self-mining (-95.5%). The company moved its own mining capacity at Midland and Bellefonte over to the Six Thirty AI fleet, so it now mines almost no Bitcoin for itself.

What the headline numbers hide

• The narrower loss isn't operating improvement. Each quarter the company revalues a fixed-price power contract that expires in December 2026, and records the change as a gain or loss. That charge fell from $2.14M a year ago to $0.11M this quarter. Excluding it, the operating loss widened from $4.44M to $6.19M. The company's own Adjusted EBITDA tells the same story: a loss of $4.42M, against $1.99M a year earlier.
• The first half was flattered by a non-cash gain. The first-half net loss of $6.77M includes a $10.16M "gain on legal settlements" from two settlements: one with Ionic Digital Mining over the old Celsius hosting contract, and one with a separate hosting customer. The cash flow statement subtracts this gain in full, so no cash came in. It mostly reflects liabilities removed from the books. Without it, the first-half pre-tax loss would have been about $16.8M. Operating loss for the half was $14.45M, against $6.00M a year earlier.
• Cash burn was three times the reported loss. Operating cash outflow was $20.46M in the first half, against $2.59M a year earlier. About $7.0M went on paying down trade payables (unpaid bills to suppliers) and $2.5M on prepaid and other current assets. Prepaid expenses rose from $3.68M to $7.04M. Capital spending was only $54K, so this was not money spent on growth.
• Interest is accruing, not being paid. Interest expense was $1.97M for the half, but cash paid for interest was $8,246. The four legacy loans (Marshall $14.1M, Celsius note $11.3M, W Capital $1.9M, convertible notes $0.2M) are all in default and in litigation. The interest just adds to what is owed.
• The per-share figure says little. The loss per share fell 83%, but mainly because the average share count rose 5.5 times. That reflects at-the-market stock sales and other issuance since mid-2025 (figures adjusted for the 1-for-20 reverse split in November 2025). It does not mean the loss got smaller.
• Where the cash came from. First-half financing brought in $23.5M: $7.18M from selling 1.69M shares at about $4.43, $14.03M net from Series D preferred stock sold to Six Thirty AI, and $2.5M from a 12% revolving credit line from Endeavor Blockchain, which the Executive Chairman wholly owns. Cash rose to $16.3M.

Takeaway: Big Digital's core business is shrinking. Revenue is down 53% in the first half, energy-management income has halved for a structural reason, and the operating loss before the derivative revaluation is getting bigger. The company keeps going because its own executives are funding it. They have now financed it through the credit line, the Series D preferred stock and the joint mining deal, so they are lender, preferred investor and largest new colocation partner at the same time.

Dilution is the variable to watch

The Series D preferred has a stated value of $16.7M and pays a 5% dividend. Holders can convert from August 30, 2026 at 95% of the lowest daily volume-weighted average share price in the five days before conversion, with a floor of $1.80. Because the price floats, the lower the stock goes, the more shares conversion creates. At the floor, $16.7M would convert into about 9.3 million shares, against 5.65 million common shares outstanding on June 30. A warrant for another 926,748 shares at $10.81 comes with it. Nasdaq rules cap these issues at 19.99% of shares outstanding unless stockholders approve more. The preliminary proxy for the November 13, 2026 annual meeting asks for exactly that approval (Proposal 2). It also asks to raise authorized common shares from 90 million to 200 million and to add 1 million shares to the equity incentive plan. After the quarter, on September 18, the $2.57M owed on the revolver (principal plus interest) was exchanged for 442,899 new shares at $5.80, which turned that insider debt into equity.

Outlook

Management gives no revenue or earnings guidance. The filing says the company "will need to raise substantial additional capital" to keep operating and service its debt. The items to watch in Q3:

• Nasdaq equity test. Nasdaq's compliance decision requires at least $5M of stockholders' equity at every quarter-end for twelve months from June 30, 2026. On a quarterly net loss of around $7M, equity of $12.4M would fall below that threshold within roughly a quarter or two unless new equity is raised. The revolver-for-shares exchange in September added about $2.6M.
• Does the Six Thirty AI fleet show up in revenue? Q2 had only a partial quarter of the 75 MW deal and it was called immaterial. Q3 is the first quarter where it could offset the lost customers. Six Thirty AI's half of the profit is paid in shares and warrants, which also adds dilution.
• Texas expansion. In July a 50/50 joint venture with 10NetZero paid about $10M for 30 acres in Hood County, Texas, with 17 MW of operating power that could expand to 111 MW. The company also lent 10NetZero $4.9M, due October 13, 2026. If the loan is not repaid, 10NetZero's stake transfers to Big Digital over five months. That is a large cash commitment next to $16.3M of cash at quarter-end.
• Power contract expiry. The fixed-price power supply agreement at Midland ends in December 2026, and the $3.45M derivative asset tied to it will run off with it. Power costs after that date are not disclosed.

Our view: the third quarter will most likely show revenue still well below 2025 levels, with any recovery depending on the related-party mining deal. The balance sheet will likely depend on further share issuance, at a pace set by the floating-price conversion terms.