LD Capital: BitDeer Q1 2025 Performance Review and Investment Recommendations

Written by: LD Capital

Event: Bit Deer (Btdr.US) releases Q1 FY2025 report. The company's operating income in the first quarter was $70.1 million, down 41.3% year-on-year and up 1.6% quarter-on-quarter. Among them, self-operated business revenue was US$37.2 million, down 10.4% year-on-year; The consolidated gross profit was negative US$3.2 million and the gross margin was -4.6%, mainly due to the increase in electricity prices due to the dry season in Bhutan and the temporary closure of the Bhutan mine by Xiaolu, but the electricity price has returned to the level of US$0.042/kWh after the wet season entered the second quarter. Seal miner sales of $4.1 million marked the official start of the company's mining machine sales. Adjusted EBITDA was negative $56.1 million, compared to positive $27.3 million for the same period in 2024. Net income was $410 million, primarily due to the fair value reversal of convertible notes accrued in the fourth quarter of 2024 ($448.7 million) and TEDA options ($58.4 million).

Comment:

1 Little Deer has further increased its prepayments to $382 million in Q1 2025 (compared to $310 million in Q4 2024), and the amount required to cover the maximum available wafer volume has been fully met. The Seal02 mining machine has entered the shipping phase, and the subsequent pace of self-operated and sales will depend on the pricing strategies of competitors; if competition intensifies, priority will be given to activating self-operated mining sites. The Seal03 mining machine also completed wafer production in Q1 and is currently still in the testing phase, with expectations to officially enter the layout and sales phase of self-operated mining sites by the end of Q3 and into Q4 of 2025.

2 Regarding the trade war with the United States. Little Deer will complete the construction of its North American assembly plant in the second quarter, after which sales in the North American region will come from localized assembly. Although costs have risen by nearly 10%, this is negligible compared to the current tariffs in Southeast Asia. The Southeast Asian assembly plant will meet the demand for mining sites in non-American regions.

The global power infrastructure construction of 3 Little Deer is maintaining rapid progress, and it is expected that by the end of the second quarter, the global available power capacity will approach 1.6GW and reach 1.8GW by the end of this year.

4 Little Deer’s self-operated mining farm hash rate has reached 12.5 Eh/s as of April, expected to rise to 40 Eh/s in October, and anticipated to exceed 40 Eh/s by the end of 2025. The company’s latest Seal01 and Seal02 mining machines were only launched in March at the self-operated mining farm, but the overall mining costs are still at least 20% lower than peers (including Mara, CLSK, etc.). After fully replacing old mining machines, the cost advantage will further manifest, with monthly output expected to show an exponential growth trend starting in the second quarter.

Investment advice: Bitcoin prices have recently regained momentum and are expected to break through the previous all-time high of $109,000 per coin. Since the U.S. trade war, the U.S. dollar has come under pressure, and Bitcoin, as an alternative asset, has begun to show its gold-like safe-haven properties. The Federal Reserve has also recently begun to adopt an "average inflation" policy, which is expected to cut interest rates earlier than June, and the expected rate cut for the whole year has been raised to three times (previously one), which has positively supported the price of bitcoin. After the business transition period in the fourth quarter of last year and the first quarter of this year, Bit Deer will usher in an important moment, the speed of mining machine research and development and the lighting speed of self-operated mines are important highlights in the next few quarters, and the operating conditions in the first quarter of 2025 should be the worst period in the next two years, and the business inflection point will also begin here, which is still the best choice for North American Bitcoin mining stocks.

Investment Risks: The risk of further adjustment in Bitcoin prices, the risk of TSMC's wafer production falling short of expectations, and the risk of the company's self-operated mining machines coming online slower than expected.