Bitdeer Technologies Group

Good day, and thank you for standing by. Welcome to the Big Ear Fourth Quarter 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. As with the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising you how to raise. To withdraw your question, please press star 1-1 again. Please be advised that today's conference will be recorded. I'd like to hand the conference over to your first speaker today, John Ragazzino, External Investor Relations for Bitdeer. Please go ahead.

Thank you, Operator, and good morning, everyone. Welcome to Bitdeer Technologies' fourth quarter 2025 earnings conference call. Joining me today are Jihan Wu, Chief Executive Officer, Matt Kong, Chief Business Officer, and Harris Baffet, Chief Strategy Officer. Harris will provide a high-level overview of Bitdeer's fourth quarter 2025 results, and discuss the company's strategy, provide a detailed business update, and review the financial results for the quarter. Jihan, Matt, and Harris will be available for questions after the formal remarks. To accompany today's call, we have provided a supplemental investor presentation available on Bitgear's investor relations website under webcasts and presentations. Before management begins their formal remarks, I'd 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 more complete discussion on forward-looking statements and the risks and uncertainties related to Bitdeer's business, please refer to the company's filings with the SEC. In addition to discussing results calculated in accordance with International Financial Reporting Standards, or IFRS, we will also reference certain non-IFRS financial measures, such as adjusted EBITDA and adjusted profit and loss. For more detailed information on our non-IFRS financial measures, please refer to our earnings release published earlier today, which can be found on Bitdeer's IR website. With that, I'll now turn the call over to Harris.

Thank you, John, and good day, everyone. It's great to be with you today. The fourth quarter of 2025 marked a defining period of execution and strategic progress for Bitdeer. We achieved critical milestones across our three strategic pillars, and position the company for sustained growth as a vertically integrated Bitcoin and AI infrastructure company. I'll start with a brief overview of our financial performance for the quarter. Fourth quarter total revenue reached $225 million, up 226% year over year and 33% sequentially. Growth profit totaled $10.6 million and adjusted EBITDA was $31.2 million for the quarter. While both metrics declined sequentially, the results primarily reflect a combination of lower average Bitcoin pricing, modestly higher electricity costs, substantially higher depreciation expense due to the rapid expansion of our self-mining capacity, and further investment in new talent to support our growing AI HPC initiatives. I will discuss these factors in greater detail later in the call. Let me begin with a brief review of our power and infrastructure portfolio. We continue to make meaningful progress during the quarter, advancing a global portfolio of sites that we believe are well suited to support both large-scale Bitcoin money and next-generation AI and HPC workloads. Across regions, our focus remains on developing power-rich, capital-efficient infrastructure that provides flexibility, speed to market, and long-term strategic optionality. From an energy infrastructure perspective, execution during the quarter remained on track. At the end of January, we had over 1.66 gigawatts of capacity online and a total global power pipeline of 3 gigawatts. We believe this represents one of the most attractive and AI-suitable power portfolios in the industry. and provides us with a vast opportunity as the demand for such capacity continues to grow. Over the past several months, we've seen a significant shift in market dynamics around AI data center development. Demand for large-scale colocation capacity has increased substantially, and we've responded by refining our approach to better align with this opportunity. Therefore, we are currently prioritizing colocation services for sites in Norway and the U.S. that are suitable for large-scale AI HPC deployments. Let me walk through a few sites and where we stand with our development plans. First, Tito, Norway represents our most near-term co-location opportunity. This 225 megawatt facility was originally constructed to Tier 3 data center specifications, which puts us in a favorable position for conversion to AI workloads. We estimate the retrofit will require much less incremental capital expenditure to add uninterruptible power supply systems, backup batteries and generation, as well as some additional cooling capacity compared to industry benchmarks for Greenfield Tier 3 data center development, which typically run in the $8 million to $12 million per megawatt range. The site benefits from hydropower with attractive economics. Independent 100 megawatt transformers provide redundancy. We are currently in lease discussions with multiple counterparties and expect to be in a position to announce a signed lease agreement for TETL as soon as possible in 2026, although the exact timing is very difficult to predict. This site should be capable of supporting initial test GPU deployments in late 2026 and first production GPUs expected in early 2027. Second, our 570 megawatt site in Clarington represents one of the larger AI data center development opportunities in the United States. We've made progress on two fronts here. First, the local utility has accelerated our interconnection timeline. Second, we are currently in discussion with multiple prospective tenants. These are well recognizable companies in the space and the discussions are progressing. While litigation has recently been filed, that could potentially delay development at this location, we believe that we have meritorious claims and a strong defense and will pursue an expedient solution. Given the scale of this site, even a partial or first-phase lease would represent a significant milestone for Bitdeer and would provide substantial contracted revenue while de-risking our development capital. Third, at Rockdale, We're pursuing a strategy that allows us to maintain our current Bitcoin mining operations while developing new HPC capacity. We are evaluating the acquisition of adjacent land to our existing facility where we could potentially construct a purpose-built HPC data center. This approach would minimize disruption during data center development to our 563 megawatt mining operation, which continues to generate revenue. The Greenfield HPC build would be designed from the ground up for AI workloads. The Rockdale site benefits from its location in the ERCOT market, which provides operational flexibility. We are currently talking with prospective co-location tenants for this site. The dual-track approach, maintaining Bitcoin mining while developing HPC capacity, reflects our commitment to both businesses and our ability to optimize our power portfolio across use cases. While we're prioritizing co-location for our larger sites, we continue to see opportunity in GPU as a service for targeted markets. We're expanding our cloud platform in Malaysia by 10 to 15 megawatts, building on the success we've had in Singapore, serving customers in biomedical, robotics, and gaming sectors who need fully managed, orchestrated infrastructure. In the United States, we're planning to add 10 megawatts of GPU capacity in Washington State and are evaluating a partial conversion of our Knoxville site from Bitcoin mining to GPU cloud. I want to be clear that the scale of our long-term US GPU as a service expansion is predicated on signing customer contracts. We do not anticipate deploying large speculative capacity. We expect all major GPU deployments will be backed by committed revenue from enterprise customers who are seeking meaningful capacity with comprehensive managed services. This disciplined approach ensures we're deploying capital where we have revenue certainty. A key element of our strategy is how we're approaching data center development. We've built an internal development team with experience in very large data center construction, and we're augmenting that team through strategic hires. We're working with experienced EPT contractors and general contractors on a fee basis rather than through joint venture arrangements. This gives us greater control over timelines and specifications. And importantly, it allows us to retain more of the economic value these assets generate. As we look ahead, Bitgear's growth will continue to be anchored by our three strategic pillars, Bitcoin mining, ASIC development, and HPC AI. Together, these represent a vertically integrated highly defensible platform that leverages our deep technology expertise, proprietary chip design capabilities, and extensive global power portfolio. The supply-demand imbalance for AI compute continues to widen, and we expect this shortage to persist well into 2027. Time to power is a critical variable, and we believe BitGear is exceptionally well-positioned to serve customers seeking both near-term and mid-term capacity. On the Bitcoin mining side, the rapid expansion of our self-mining platform continues. We exited the year with more than 55 exahash per second of self-mining hashrate. And in the month of January alone, we brought another 8 exahash per second online, exiting the month of January at over 63 exahash per second. This firmly establishes Bitgear as one of the largest publicly listed Bitcoin miners by total hashrate under Mandarin. supported by the disciplined rollout of our seal miner fleet. Accelerated deployment of seal miner rigs has driven material improvements in fleet-wide efficiency. The seal miner A2 and A3, being actively deployed in our shelf mining business, operate at approximately 15 to 16.5 joules per terahash and 12.5 to 14 joules per terahash, respectively, and represent industry-leading power efficiency. As these next-generation rigs replace legacy third-party equipment, our blended fleet efficiency continues to improve, with our overall fleet-wide efficiency currently standing at 17.5 joules per terahash as of January 31, 2026. As steel miner penetration increases throughout 2026, we expect our overall fleet-wide efficiency to continue to improve, enhancing our mining margins. Looking ahead, Our self-mining operations are not plateauing. Our investments in chip design are delivering tangible results. During the quarter, we commenced mass production of the seal miner A3 series. Initial shipments began in November, and we have deployed a total of 8.7 exahash of our seal miner A3s to date. As we continue to retire older generation third-party rigs, we expect the A3 series to continue to meaningfully contribute to our fleet efficiency improvements and growth throughout 2026. On the R&D front, our CLO4-1 chip was completed back in September. The CLO4-1 represents a meaningful step forward in efficiency and positions Bitdeer to maintain technological leadership as the industry continues its relentless drive towards lower power consumption per unit of hash rate. Mass production of mining rigs based on the SEAL-04-1 chip will begin in Q1, 2026. SEAL-04-2 chip design remains under development at our US-based design center. Additionally, we have successfully taped out a new Litecoin chip, SEAL-DL1, designed for DOGE and Litecoin mining. The initial test results of SEAL-DL1 have exceeded comparable rigs in both energy efficiency and hash rate. Based on the recent market conditions, the SEAL DL1 generates higher fiat-based returns per megawatt than our SEAL Miner A2. Preparations for UFA SEAL Miner manufacturing remain in progress. This initiative is a core component of our vertically integrated strategy and aligns with both operational resilience objectives and evolving trade and supply chain dynamics. Let me walk through our detailed financial results for the quarter. Before I begin, I'd like to remind everyone that all figures I refer to today are in U.S. dollars. Fourth quarter consolidated revenue was $224.8 million, up 225.8% year-over-year and up 32.5% sequentially. Year-over-year growth and sequential growth in revenue was primarily driven by significantly higher self-mining hash rates as a result of continued seal miner deployment, as well as contributions from seal miner sales offset in part by slightly lower Bitcoin prices for the quarter. Self-mining revenue was $168.6 million compared to $41.5 million in Q4 2024 and $130.9 million in Q3 2025. representing year-over-year growth of 306% and a sequential growth of 28.7%. The continued growth from Q3 2025 levels reflects a significant increase in average operating hash rate and associated Bitcoin production during the quarter, offset in part by 13% lower average Bitcoin prices quarter-on-quarter. Kilometer sales revenue was $23.4 million, up 105.4% over the $11.4 million reported in Q3 2025. Total gross profit for the quarter was $10.6 million, reflecting a gross margin of 4.7% versus 7.4% in Q4 2024, and $40.8 million, or 24.1%, in Q3 2025. The significant decline in gross margin reflects the combined impact of several drivers during the quarter. First, obviously, we experienced 13% lower Bitcoin prices during the quarter, along with the gradual increase of the global hash rate. Second, on the cost side, we experienced an approximately 5% increase in average electricity costs per unit during the quarter when compared to Q3 2025, mainly due to the seasonal winter pricing dynamics at Norway sites. Third, the growth in our self-mining hash rate comes with a concurrent non-cash depreciation expense associated with this fleet of new miners. Additionally, during the quarter, we changed our methodology for calculating depreciation expense to reflect a more conservative approach. We now depreciate rigs using a three-year straight line method versus our prior assumption of a five-year depreciable life for hardware. Total operating expenses for the quarter were $66.3 million compared to $42.5 million in Q4 2024 and $60.5 million in Q3 2025. The sequential increase in operating expenses was primarily driven by the following factors compared to Q3. We added more headcount to support both mining site operations and our AI infrastructure expansion, incurred additional holiday season compensation, along with an increase in year-end general corporate activities. These expenditures reflect the operational requirements of our growing infrastructure footprint and the resources necessary to execute on our strategic initiatives. Other operating expenses for the quarter was 43.8 million, compared to 3.7 million in Q4 2024 and other operating income of 26.5 million in Q3 2025. This was largely attributable to the fair value change of Bitcoins pledged for the Bitcoin collateralized loan since Q3 2025. Other net gain for the quarter was 208.9 million. compared to other net loss of $479.8 million in Q4 2024 and $238.5 million in Q3 2025. This is largely attributable to non-cash fair value change of derivative liabilities related to the convertible senior notes issued in November 2024, June 2025, and November 2025. Adjusted net loss was 82.6 million versus 37.4 million in Q4 2024 and 36.3 million in Q3 2025. The increase in loss was primarily due to higher energy and depreciation costs, higher operating and interest expense, partially offset by the year-over-year higher revenue. Adjusted EBITDA was 31.2 million versus negative $4.3 million in Q4 2024, and positive $39.6 million in Q3 2025. The sequential decline was primarily driven by higher energy costs and higher operating expenses attributed to salaries and wages for recent additions to our headcount, as well as a number of elevated costs associated with year-end holiday allowance and year-end general corporate activities. To provide a better sense of our G&A expense on a run-rate basis, our Q4 2025 results reflect approximately $3 million of salary, wage, and benefits expense, which will largely be recurring, as well as another $6 to $7 million in consulting, legal, and travel expenses, which can vary significantly from quarter to quarter. Net cash used for operating activities was $599.5 million, primarily driven by steel miner supply chain and manufacturing costs, electricity costs from the mining business, general corporate overhead, and interest expense. Net cash generated from investing activities was $97.9 million, which includes $50.7 million of capital expenditures relating to data center infrastructure construction, GPU equipment procurement, and tariffs and freight for mining rigs delivered to the data centers, and 150.6 million of proceeds from the disposal of cryptocurrencies. Net cash generated from financing activities for the quarter was 454.5 million, which resulted primarily from 388.5 million of proceeds from the issuance of convertible senior notes, 168 million in borrowings from a related party, and 141.5 million of proceeds from shares sold under our ATM and ELOC program, offset by 171.1 million of repayments of borrowings. For the full calendar year 2025, capital expenditures for the continued build out of our global power and data center infrastructure totaled 176 million. Looking to full year 2026, we anticipate total infrastructure spend in the range of $180 to $200 million for crypto mining data center construction. Please note that this guidance covers power and crypto mining data center infrastructure only and does not include CapEx for steel miners and GPU. AI cloud and co-location capital expenditures are also not included. Turning to our balance sheet and financial positions, We exited the year with $149.4 million in cash and cash equivalents, $83.1 million in cryptocurrencies held at cost, less impairment, $135.6 million in cryptocurrency receivables held at fair market value, and $1.0 billion in borrowings excluding derivative liabilities. Derivative liabilities were $501.1 million, which relate to the November 2024 June 2025 and November 2025 convertible senior notes. This represents 171.4 million reduction compared to the prior quarter, reflecting a non-cash fair value adjustment driven by the change in our stock price and settlement for partial principal of November 2024 convertible senior notes. As I mentioned earlier, this does not impact our liquidity or operations. Regarding our outstanding ATM and ELOC facility, we received approximately 143.6 million in growth proceeds during the quarter, with approximately 6.7 million additional shares issued. We have exercised disciplined capital allocation throughout the year, using the ATM and ELOC opportunistically to support our growth initiative while minimizing dilution. As a final note to our financial update, We wish to note that starting in Q1, 2026, we will begin to use GAAP instead of IFRS as our accounting standard. In summary, we are proud of our team's execution this quarter and throughout 2025. I want to express my deep pride in what our team has accomplished this year. We've established Bitgear as one of the world's largest publicly listed Bitcoin mining operators by total hash rate under management. Our leadership position in self-mining and our proprietary seal miner technology provide multiple paths to value creation that few, if any, competitors can match. Our pipeline of developed and contracted power capacity gives us a meaningful competitive edge in serving a variety of customers. The co-location opportunity ahead of us is immense, and we are pursuing it proactively. We enter 2026 with strong operational momentum, a differentiated asset base, and a team that has proven its ability to execute at scale. We're excited about what lies ahead and remain committed to delivering long-term value for our shareholders. Thank you, operator. Please open the call for questions.