Bitdeer Technologies Group (BTDR) Q3 2024 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call shows a significant decline in revenue, gross profit, and margins, alongside increased operating expenses and net loss. Despite some positive aspects like self-mining revenue and CapEx plans, the overall financial performance is weak. The Q&A reveals uncertainty in partnerships and market share, and management's avoidance of direct answers raises concerns. Considering the market cap of $1.36 billion, the stock is likely to see a negative reaction, with a predicted movement between -2% to -8% over the next two weeks.
Key Financial Performance
Total Revenue $62 million, down 29% year-over-year from $87.3 million, primarily due to the impact of the 2024 halving, higher global network hash rate, and lower hosting and cloud mining revenue.
Self-Mining Revenue $31.5 million, up 4.7% year-over-year, primarily due to an increase in average self-mining hashrate from 6.1 exahash to 7.8 exahash and higher Bitcoin prices.
Cloud Hash Rate Revenue $7.1 million, down from $15.6 million year-over-year, primarily due to long-term cloud hash rate contracts rolling off.
General Hosting Revenue $9.6 million, down from $22.2 million year-over-year, mainly due to the conversion of hosting capacity to hydro-cooling and customers removing less efficient miners after the halving.
Membership Hosting Revenue $9.9 million, down from $16 million year-over-year, reflecting similar reasons as general hosting revenue.
Total Gross Profit $2.8 million, down from $21.1 million year-over-year, primarily driven by lower hosting and cloud hash rate revenues and higher average power prices.
Gross Margin 4.5%, down from 24.2% year-over-year, due to lower revenues and higher power prices.
Total Operating Expenses $42.9 million, up from $27.3 million year-over-year, primarily due to higher R&D costs including a one-off $13.4 million expense related to the SEAL02 chip.
Net Loss $50.1 million, compared to a net loss of $1.8 million year-over-year, driven by a $14 million non-cash derivative gain offset by a $29 million non-cash derivative loss.
Adjusted Profit Negative $26.2 million, down from positive $10.5 million year-over-year, primarily due to revenue declines in cloud hash rate and hosting businesses.
Adjusted EBITDA Negative $8.5 million, down from positive $28 million year-over-year, due to revenue declines and higher R&D costs.
Net Cash Used for Operating Activities $90.7 million.
Net Cash Generated from Investing Activities $10.2 million, including $30.1 million of capital expenditure and $39.9 million from cryptocurrency disposal.
Net Cash Generated from Financing Activities $168.1 million, primarily from $166.3 million raised from convertible notes.
Cash and Cash Equivalents $291.3 million at the end of the quarter.
Cryptocurrencies $39.7 million at the end of the quarter.
Borrowing $92.7 million, excluding derivatives.
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Operating Highlights
SEALMINER A2: Mass production commenced in October, with an expected output of 18 exahash per second for self-mining and external sales.
SEALMINER A1: First batch energized, performing as expected, with mass production starting in October.
SEAL02 chip: Incorporated into SEALMINER A2 rigs, achieving 226 terahash per second for air-cooled and 446 terahash per second for hydro-cooled models.
SEAL03 chip: Taped out with a target efficiency of 10 joules per terahash, initial samples expected in Q2 2025.
AI Cloud Services Expansion: Expanded GPU cloud capacity into Canada, achieving 98% utilization in Singapore, targeting LLM training and inference markets.
Energy Infrastructure: Exploring opportunities to leverage 2.5 gigawatts of global power capacity for HPC and AI data centers.
New Sites: Engaged TLM Group for feasibility assessments of US sites for HPC and AI data centers.
Infrastructure Expansion: Construction progressing on multiple sites, including Tydal, Norway and Rockdale, Texas, with over 1.1 gigawatts of new power capacity expected online in the next year.
CapEx Plans: Anticipated infrastructure CapEx between $250 million to $275 million for 2024-2025.
Vertical Integration Strategy: Focusing on developing industry-leading hardware and software solutions across ASICs and AI cloud business lines.
Market Positioning: Positioning to enter a $4 billion to $5 billion ASIC market, emphasizing technology and supply chain diversification.
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Risk or Challenges
Financial Performance Risks: Bitdeer's Q3 2024 total revenue decreased to $62 million from $87.3 million, with a gross profit of $2.8 million, indicating financial instability. The adjusted EBITDA was negative $8.5 million, primarily due to the impact of the 2024 halving, higher global network hash rate, and increased R&D costs.
Regulatory Risks: The company is navigating a complex regulatory environment across different jurisdictions, particularly in the US, which could impact operational timelines and site development.
Supply Chain Challenges: The construction of the Rockdale, Texas facility faced delays due to supply chain impacts from a US dock workers’ strike, pushing back the expected energization timeline.
Competitive Pressures: Bitdeer faces significant competition in the ASIC market from established players like Bitmain and MicroBT, which may affect market share and pricing strategies.
Economic Factors: The volatility in Bitcoin prices and the overall economic environment can impact the profitability of mining operations and the demand for hosting services.
Operational Risks: The transition from hosting to self-mining may lead to underutilization of existing infrastructure if not managed properly, especially as hosting contracts roll off.
Investment Risks: The anticipated capital expenditure of $250 million to $275 million for infrastructure build-out poses a risk if the expected returns do not materialize.
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Guidance & Outlook
Self-Mining Strategy: Bitdeer is focusing on developing its own ASIC technology rather than pursuing a self-mining hash rate growth strategy, which differentiates its business model.
Energy Infrastructure Expansion: The company is expanding its energy infrastructure pipeline to support the rapid increase of its self-mining hash rate.
ASIC Technology Development: Bitdeer is committed to building a vertically integrated business by developing industry-leading hardware and software solutions across its ASICs and AI cloud business lines.
SEALMINER ASICs Commercialization: The company plans to commercialize its SEALMINER ASICs, targeting a $4 billion to $5 billion market over the next five years.
R&D Roadmap: Bitdeer has a technology roadmap for its SEALMINER products, with mass production of SEALMINER A2 expected to deliver 18 exahash per second.
AI Cloud Business Expansion: The company is expanding its GPU cloud capacity and exploring opportunities to leverage its global power capacity for HPC and AI data centers.
Infrastructure Build-Out: Bitdeer is on track to bring over 1.1 gigawatts of new power capacity online over the next year.
Q4 2024 to 2025 CapEx: Bitdeer anticipates infrastructure CapEx to be in the range of approximately $250 million to $275 million.
Financial Position: The company ended the quarter with $291.3 million in cash and cash equivalents, indicating a strong financial position.
Future ASIC Production: The company expects to ramp up production of SEALMINER A2 and A3 mining machines to increase its self-hash rate.
Revenue Diversification: Bitdeer aims to diversify its revenue streams through the commercialization of its ASICs and expansion into AI cloud services.
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Shareholder Return Plan
Net Cash Generated from Financing Activities: $168.1 million, primarily from $166.3 million raised from convertible notes issued in August.
CapEx Spend: Expected to accelerate between Q4 2024 and 2025, in the range of approximately $250 million to $275 million for infrastructure build-out.
Cash Position: Ended the quarter with $291.3 million in cash and cash equivalents.
Cryptocurrency Holdings: $39.7 million in cryptocurrencies.
Borrowing Excluding Derivatives: $92.7 million.
Interest in SEALMINER A2: Received interest for 253,000 units, with 30,000 units satisfied.
Capacity Lock-in Fees: Customers paid around $12,000 for capacity locking fees at $199 per unit.
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Key Q&A
Q:Can you talk a little bit more about the TLM process and how it positions you to secure HPC partners?
A:The TLM engagement has concluded with positive reports about our US sites. We have ongoing discussions with potential partners but are not ready to announce anything yet.
Q:Can you provide insight into the rollout of the SEALMINER and its impact on your hash rate?
A:We have visibility on self-mining and are positioned to deploy 18 exahash of hash power for self-mining and market sales.
Q:Has the surge in Bitcoin prices changed your ability to reclaim hosting infrastructure for self-mining?
A:The surge in Bitcoin prices has increased the value of power supply, making it beneficial to reclaim hosting capacity, but we will not push too hard to maintain customer trust.
Q:Can you outline the CapEx of $250 million to $275 million over the next year?
A:This CapEx is primarily for existing sites under construction, including Tydal, Texas hydro conversion, and Jigmeling, Bhutan, focusing on Bitcoin mining.
Q:What are the working capital dynamics needed for mass production of the SEALMINER chips?
A:We need about six months of working capital for the cost of mining rigs, with upfront payments required for wafer fabrication.
Q:What is the expected timeline for the hydro cooling conversion at Rockdale?
A:The conversion has been delayed by one month due to supply chain impacts, with base energization now expected between January and March 2025.
Q:What is the difference between Tier 1, Tier 2, and Tier 3 data centers?
A:Tier 3 data centers have more stringent requirements than Bitcoin mining sites, focusing on protecting large investments in AI or HPC.
Q:What is your goal for market share in the ASIC market?
A:We aim to secure market share through technology and stability of mining rigs, but market share predictions are uncertain due to semiconductor capacity.
Q:How many people are working on the HPC initiative?
A:We have three people focused on business development for HPC, with consultants assisting us.
Q:What are the financing terms for potential partners?
A:We are exploring various financing structures, including project-level equity or debt, but cannot disclose specific terms yet.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding the specific details of ongoing discussions with potential HPC partners, stating they are not ready to announce anything yet. Additionally, there was a lack of clarity on the exact terms of financing partnerships, as management mentioned they are still exploring options.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI
ASIC
HPC
Norway
RD
SEALMINER
TLM
Texas
Tier
capacity
capital
center
chip
cloud
decision
demand
development
efficiency
end
exahash
facility
hash rate
industry
infrastructure
kind
line
lot
machine
market
mining rig
model
number
opportunity
partner
power
price
production
project
self mining
side
site
technology
term
today
year
BTDR Transcript
Bitdeer Technologies Group (BTDR) Q1 2025 Earnings Call Transcript
Unknown5-15
The earnings call revealed a significant decline in revenue and gross profit due to the April 2024 halving and increased global network hashrate. Despite optimistic guidance and strategic initiatives, the financial metrics were weak, with negative gross margins and adjusted EBITDA. The Q&A highlighted uncertainties in achieving the 40 exahash target and vague responses from management. While there is increased interest in ASICs, the financial health and expenses raise concerns. Given the market cap of $1.35 billion, the stock is likely to see a moderate negative reaction in the short term.
Bitdeer Technologies Group (BTDR) Q4 2024 Earnings Call Transcript
Unknown2-25
The earnings call reveals significant revenue declines across various segments, a substantial net loss, and increased operating expenses. Despite a strong cash position, the Q&A section highlights management's reluctance to provide clear guidance on CapEx and production timelines, which may increase investor uncertainty. The market is likely to react negatively due to these factors, especially considering the company's small-cap status.
Bitdeer Technologies Group (BTDR) Q3 2024 Earnings Call Transcript
Unknown11-18
The earnings call shows a significant decline in revenue, gross profit, and margins, alongside increased operating expenses and net loss. Despite some positive aspects like self-mining revenue and CapEx plans, the overall financial performance is weak. The Q&A reveals uncertainty in partnerships and market share, and management's avoidance of direct answers raises concerns. Considering the market cap of $1.36 billion, the stock is likely to see a negative reaction, with a predicted movement between -2% to -8% over the next two weeks.
BTDR Report
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