Summary Bitdeer's vertical integration and proprietary SEALMINER line set it apart, but Q1 results highlight margin pressure and significant cash burn. The company is aggressively pivoting to HPC/AI and scaling SEALMINER deployment, but execution risk has increased and efficiency lags peers. Liquidity is adequate for now, but continued cash outflows may force further dilution or reserve drawdowns if revenue doesn't ramp up soon. I reiterate a cautious Buy for investors confident in SEALMINER/HPC revenue materializing and Bitdeer achieving its 40 EH/s target by year-end. Bitdeer (NASDAQ: BTDR ) is one of the favorite miners to emerge in the last Bitcoin (BTC-USD) market cycle. I initiated coverage on Bitdeer about a year ago (June 2024), around the release of last year's Q1 earnings. What caught my eye was the degree of vertical integration the “young” miner was showing - proprietary chips and mining rigs via the SEAL chips and SEALMINER line, as well as tailored solutions for fleet efficiency. Such level of in-house capability was too good to ignore, just coming out of the fourth halving two months prior. Mining efficiency was the top priority for every investor and miner at the time. What better way to ensure that than by being vertically integrated? Author's BTDR rating history (Seeking Alpha) BTDR is still up 98% since initial coverage. Then, a follow-up coverage reiterating a Buy rating came in December last year. From the date of the follow-up coverage , BTDR is down 38%. Miners have faced correction along with the broader market so far this year, though things have now started to cool off, and a recovery is taking place among mining stocks. I think BTDR’s decline in particular was steeper because it had already enjoyed an outsized upside in 2024. As the next chart shows, BTDR printed more gains in 2024 than peers. In fact, by the end of last year, if we compare BTDR’s gains to those of other miners throughout the year, BTDR dwarfed them all, with 241% gain in the second half of 2024 alone (post halving). Data by YCharts Q1 2025 earnings are in. Just like peers, the results are a mixed bag. The top line was a beat, and the GAAP bottom line turned positive (though not from operations), operating income and margins were subpar. Revenue came in at $70.1 million, a 41% YoY decline. Gross profit was negative $6.3 million, showing margin pressure, while adjusted EBITDA came in at negative $36.8 million. Adjusted net loss was $89.8 million, despite the GAAP-reported net income of $409.5 million, which was largely driven by the non-cash derivative revaluation gain. The drop in sales was across all segments of the company. Revenue from self-mining declined to $37.2 million from $48.4 million a year ago, attributed to the April 2024 halving and higher network hashrate. Cloud hash rate revenue collapsed to just $0.1 million from $18.1 million as contracts expired and machines were reallocated to self-mining. General hosting revenue fell to $9.6 million from $29.0 million. Membership hosting dropped to $16.3 million from $19.5 million a year ago. Revenue from sales of Bitdeer’s proprietary mining machines SEALMINER came in at $4.1 million. One encouraging takeaway from the sales breakdown is that Bitdeer is recording actual revenue from SEALMINER. The company has allocated an ample amount of R&D resources to develop the SEAL chips and SEALMINERS. Q1 was no exception as the financials show. Q1 2025 balance sheet (Bitdeer) As seen in the $153.7 million inventory level on the balance sheet, Bitdeer’s cash flow from operations was heavily impacted by working capital outflows tied to SEALMINER production, leading to $284 million operating cash outflow for the quarter. The balance sheet remains healthy though, with $215.6 million in cash and cash equivalents, $215.4 million in total borrowings, and $131.1 million in crypto holdings. But vertical integration (mainly manufacture of the SEAL chips and SEALMINERS) and pivot to HPC/AI, all happening at once, is coming at a high cost. Bitdeer ended Q1 in a net cash burn, with total outflows from operations and investing activities reaching $357.6 million, only partially offset by $94.9 million in financing inflows. If this rate of cash burn persists into Q2 without a meaningful offset from revenue growth or at least external capital raises, Bitdeer would be forced to dip into its cash and crypto reserves to maintain liquidity, or at least embark on heavy dilution - $118 million was already raised in Q1 through ATM, $106 million raised in January and $12 million raised in February. Some strategic initiatives undertaken in Q1 include the revision of infrastructure CaPex guidance from $340 to $370 million down to $260 to $290 million, partly due to a pause in Bitcoin mining-related construction at the Clarington Ohio site to focus more on HPC/AI. While this is strategically opportunistic given the growing demand for AI compute, it also indirectly functions as a move that reduces cash outflow in the interim, which as said earlier, has been heavy. Operationally, Bitdeer continues to energize SEALMINER A1 and SEALMINER A2 machines, and as of the end of Q1 self-mining hashrate was 11.5 EH/s. That figure stands at 12.4 EH/s today as more SEALMINER A1 and SEALMINER A2 machines were energized last month. Bitdeer is rapidly scaling deployment of their proprietary rigs in-house. Bitdeer targets 40 EH/s by the end of this year. Current average miner efficiency at Bitdeer is 29 J/TH. At 29 J/TH, scaling with more efficient SEALMINERS better come soon and decisively because efficiency data from other miners as of Q1 end shows Bitdeer lagging in this aspect. Fleet efficiency (J/Th) Bitdeer 29 J/TH CleanSpark ( CLSK ) 16.15 J/TH Hut 8 ( HUT ) 20.0 J/TH Riot Platforms ( RIOT ) 21.0 J/TH I think Bitdeer Q2 efficiency will be better as the company has said they are taking advantage of the temporary 90-day suspension of U.S. tariffs on certain goods. Bitdeer is strategically shipping mining rigs from Southeast Asia to the U.S. On top of the in-house deployment, Bitdeer is taking the SEALMINER business line seriously. They intend to start manufacturing SEAL chips and SEALMINER machines in the U.S . This move is part of a broader strategy to mitigate risks associated with international trade tensions by localizing production. Overall, Q1 shows both ambitions and headwinds (most related to spending). And I think the bull case for Bitdeer is still somewhat intact. Investors should note that execution risk has risen with HPC. Every miner’s HPC bet remains an unproven thesis until non-Bitcoin revenue steadily offsets BTC bear market cycles. I’m inclined to reiterate a Buy here, but this is a very cautious buy, and should be for investors who believe that Bitdeer's SEALMINER or HPC revenue will meaningfully materialize by at most Q4 this year, and the 40 EH/s target will also be reached. Power infrastructure summary (Bitdeer) Bitdeer has ample power capacity currently online - 1098 MW capacity online and 1592 MW in pipeline, with over 700MW to go online between Q2 and Q4 this year - to pursue and quickly scale into HPC. That power capacity also underpins its mining capacity to the 40 EH/s target. Overall, Bitdeer remains one of the operationally attractive miners.
