Bitdeer Technologies Group

Good day, and thank you for standing by. Welcome to the TIRS fourth quarter and full year 2024 earnings conference call. At this time, all participants are on a listen-only mode. After this week's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automatic message advising your hand is raised. Please note that today's conference is being recorded. I would now like to turn the conference over to your speaker host. UCI's Office of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. Welcome to BitDeer's fourth quarter and full year 2024 earnings conference call. Joining me today are Jihan Wu, Chairman and CEO, Matt Kong, Chief Business Officer, Harris Bassett, Chief Strategy Officer, and Jeff LaBerge, Head of Capital Markets and Strategic Initiatives. Harris will begin today by providing a high-level overview of Bitgear's fourth quarter and full year 2024 results, and then cover the company's strategy in a detailed business update. After that, Jeff will cover Bitgear's fourth quarter financial results in more detail, and then we will open the call for questions. To accompany today's earnings call, we have provided a supplemental investor presentation. This presentation can be found on Bitgear's investor relations website under webcasts and presentations. Before management begins their formal remarks, we would like to remind everyone that during today's call, we may make certain forward-looking statements. These statements are based on management's current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially. For a more complete discussion of forward-looking statements and the risks and uncertainties related to BitGear's business, please refer to its filings with SEC. Further, in addition to discussing results that are calculated in accordance with International Financial Reporting Standards, or IFRS, we will also make references to certain non-IFRS financial measures, such as adjusted EBITDA and adjusted profit. For more detailed information on non-IFRS financial measures, please refer to our earnings release that was published earlier today. which can be found on Bitdeer's investor relations website. Thank you. I will now turn the call over to Harris. Harris?

Thank you, Yuja, and good day, everyone. Welcome to our Q4 and full year 2024 earnings conference call. I'm excited to share the many developments happening at Bitdeer and walk you through the progress we've made since last quarter. Before diving in, I'd like to briefly highlight our Q4 financial results for which Jeff will provide more details in a few minutes. Starting on slide three, for Q4 2024, total revenue was $69 million. Gross profit was $5.1 million, and adjusted EBITDA was negative $3.8 million. This lower performance compared to Q4 2023 was primarily driven by the impact of the April 2024 halving. increased global network hash rate, lower hosting and cloud mining revenue, and higher R&D costs. These negative impacts were partially offset by higher year-over-year average self-mining hash rate and higher Bitcoin prices. Over the last year, we made a deliberate decision to prioritize resources on the development of our own ASIC technology. This limited our hash rate growth but gives us massive advantages going forward that differentiates our business from the rest of the sector. As our mining machines become available in volume in the coming months, we will be able to rapidly increase our self-mining hash rate at a significant cost advantage, as well as sell our machines to external customers to begin penetrating the $4 to $5 billion annual ASIC market. A core pillar of our strategy is to develop internal technologies and capabilities driven by our belief that this is the best way to maximize long-term shareholder value. To secure long-term success, we are committed to building a fully vertically integrated business. This includes developing our own power generation assets, globally diversified data centers, and leading edge mining hardware. As seen on slide five of our supplemental presentation, and in pursuit of our vertical integration initiative, we successfully acquired a 19-acre site that is fully permitted for construction of a 101-megawatt gas-fired power plant. This project is near Fox Creek, Alberta and was acquired earlier this month for $21.7 million in cash. It also includes approval for a 99-megawatt grid interconnection with Alberta Electric System Operator. We plan to develop and construct the power plant in partnership with a leading engineering, procurement, and construction firm with completion and energization expected by Q4 2026. In parallel to the gas-fired generator, we plan to develop a 99-megawatt data center for Bitcoin mining as the first phase of this site's development. We estimate the total capital expenditure for constructing the gas-fired power plant to be approximately $19 million, with an additional $30 million allocated for electrical and data center infrastructure. Upon completion, we intend to deploy approximately nine exahash of our SealMiner A3 mining machines, which are expected to deliver industry-leading efficiency of 11 to 12 joules per terahash. We estimate energy production costs at this gas-fired power plant to range between $20 to $25 per megawatt hour, based on current gas prices. Additionally, as part of the acquisition, we plan to implement a carbon utilization system that captures CO2, making this project a net zero carbon producer. This initiative is expected to help offset Canadian carbon tax obligations, while also creating potential future revenue opportunities through the sale of carbon credits. Further, as part of our energy optimization strategy, we plan to curtail and sell power back to the Alberta grid during periods of peak demand. This approach is expected to enhance cost efficiency while contributing to grid stability with minimal impact on Bitcoin production. We are extremely excited about this acquisition. This newly acquired site and power generation project represents a big step for Bitdeer, positioning us as the world's first fully vertically integrated Bitcoin miner at scale. With this development, we are on a path to achieve one of the lowest Bitcoin mining costs in the industry. In terms of our ASIC business, which is highlighted on slides six through eight of our supplemental presentation, we continue to execute on our advanced chip roadmap, positioning ourselves for a transformative 2025. Owning and deploying our own mining ASICs is an integral part of our full vertical integration strategy. It will provide us distinct advantages, such as a lower cost structure, enhanced capital efficiency, and a dramatically improved supply chain compared to the broader industry. In addition, commercializing steel miner ASICs allows us to diversify our revenue streams into the rapidly growing ASICs markets. where we see strong demand for alternative suppliers of ASIC solutions. I will now provide a detailed update on our ASIC roadmap. Starting with seal miner A1. To date, we have energized 0.4 exahash of our seal miner A1 miners, and they have demonstrated solid performance. The mass production of the remaining 3.3 exahash remains on schedule and is expected to be completed in March 2025. For SEAL Miner A2, this miner represents a significant advancement in our technology roadmap, leveraging our proprietary SEAL O2 chip. In Q4, we commenced mass production at TSMC to deliver approximately 35 exahash of SEAL Miner A2s by October 2025. This represents a delay of approximately one month compared to our original expectation due to a 6.4 magnitude earthquake that struck Taiwan on January 21, 2025. The Seal Miner A2 is our first commercial miner available for sale to external customers. So far, we have allocated seven exahash of the current 35 exahash for external sale. Initial customer demand has been extremely strong with pre-orders for the seven EXA hash being oversubscribed by a factor of six. We have already received 20% of the total price as down payments on all seven EXA hash. Volume shipments to these customers will commence in March, 2025. The remaining 28 EXA hash of A2 capacity is currently intended to be used for our own self mining. The first batch of air-cooled machines have been delivered to our mining data centers for testing and are running stably. Building on the success of A2, our R&D efforts for SEAL Miner A3 are progressing smoothly. This next generation model will feature the SEAL O3 chip, which is expected to deliver industry-leading energy efficiency of 10 joules per terahash at the chip level. Finished wafers from the initial tape out are expected in March 2025, with production readiness targeted for later this year. Achieving 10 joules per terahash chip efficiency would mark a major milestone for the industry, positioning seal miner A3 as the most advanced and energy-efficient ASIC on the market. As energy efficiency remains the most important single metric influencing buying decisions, we believe having the most efficient ASIC is the key factor to winning market share. Unlike other industries, such as smartphones, where switching costs include significant ecosystem frictions, Bitcoin mining ASICs operate in a highly fluid market where transitioning to alternate machines creates little or no friction. In this space, the most efficient and reliable machines win. With that in mind, we are eagerly awaiting the return of CLO3 sample wafers scheduled for March. Looking ahead to the second half of this year, our CLMiner A4 project is a testament to our commitment to maintaining technological leadership and pushing past perceived limitations of ASIC design. The CLO4 uses a revolutionary new digital chip architecture that significantly enhances energy efficiency and is projected to have a chip-level energy efficiency of 5 joules per terahash. Tape-out is planned for Q3 2025. We believe SealMiner A4, along with our third-generation chip, will position Bitgear as the leading supplier of the world's most energy-efficient mining machines, significantly strengthening our market position and unlocking substantial value for our customers and shareholders. As we look to the remainder of 2025, we are fully committed to executing a successful entry into the multibillion dollar ASIC market while also rapidly ramping our self-mining hash rate. On slide eight of our supplemental investor presentation, we have laid out our expectations for self-mining hash rate into Q4 of this year. Given the significant amount of power capacity we have coming online, our plan is to initially prioritize our current ASIC production towards self-mining. We plan to energize the remaining seal miner A1s and 28 exahash of seal miner A2s on top of our existing 8.7 exahash of self-mining hash rate as of January 31, 2025. Therefore, upon deployment of a combined 31.3 exahash of seal miner A1 and A2 machines, we expect our total self-mining hash rate to be approximately 40 exahash. We expect to be able to deliver this with machines fully racked and energized by Q4 2025. Please note that this forecast does not include anticipated additional wafer allocations for CL02 or for CL03. Depending on the exact manufacturing schedule, these anticipated additional wafer allocations could increase our self-mining hash rate well above the 40X a hash guidance for Q4 2025. In addition, I'd like to address the recently published U.S. Department of Commerce Bureau of Industry and Security ruling regarding advanced computing integrated circuits. Based on our preliminary review, we do not expect that the application of the BIS rules will have any impact on the delivery of sealed chips. As the outsourced semiconductor assembly and test, OSAT, companies for seal chips are approved OSAT companies under BIS regulations. Next, I'd like to talk about our energy infrastructure and pipeline that's highlighted on slides 9 and 10 of our supplemental investor presentation. We have secured one of the largest globally diversified power portfolios in the industry with over 2.6 gigawatts of total power capacity. but one gigawatt is scheduled to be newly energized over the course of 2025. This massive power portfolio allows us to deploy our seal miner machines for self-mining and also capitalize on the significant demand for HPC and AI data center power. Based on a third-party feasibility study, many of our sites are suitable for HPC and AI data centers. In particular, our Clarington, Ohio site is a strong contender given its near-term access to power, scale, and fiber and water resources. We are actively working with leading data center developers on long-term partnerships for selected sites. A shortage of reliable power for AI data centers is a critical challenge for the industry, and we believe Bitdeer can play a significant role. We look forward to providing an update to our shareholders in the near future. In summary, we made significant strides across all of our strategic initiatives to close out 2024, and we couldn't be more proud of the entire VidDeer team. We expect 2025 to be a pivotal year as our efforts start to bear fruit, and we look forward to sharing updates on our progress. I'll now turn it over to Jeff LaBerge, our head of capital markets and strategic initiatives, to go over financial results for the quarter.