Bitdeer Technologies Group Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 15, 2025

There are 14 speakers on the call.

Operator

Good day, and welcome to the BidDeer First Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Instructions will be given at that time. As a reminder, this call may be recorded.

Operator

I would now like to turn the call over to Yuji Azai, Investor Relations Advisor. Please go ahead.

Speaker 1

Thank you, operator, and good morning. Welcome to Big Deer's first quarter twenty twenty five earnings conference call. Joining me today are Jihon 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 FitGear's first quarter twenty twenty five results and then cover the company's strategy and a detailed business update. After that, Jeff will cover BidDeer's first quarter financial results in more detail, and then we will open the call for questions.

Speaker 1

To accompany today's earnings call, we have provided a supplemental investor presentation. This presentation can be found on Fifth Year'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 on forward looking statements and the risks and uncertainties related to Bidjer's business, please refer to its filings with the SEC.

Speaker 1

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 or loss. For more detailed information on our non IFRS financial measures, please refer to our earnings release that was published earlier today, which can be found on Bittier's Investor Relations website. Thank you. I will now turn the call over to Harris. Harris?

Speaker 2

Thank you, Yujia, and good day, everyone. Thanks for joining our first quarter twenty twenty five earnings call. I'm excited to share the many developments happening at Fit Deer and walk you through the progress we've made since last quarter. Before diving in, I'd like to briefly highlight our Q1 financial results, for which Jeff will provide more details in a few minutes. Starting on slide three.

Speaker 2

For Q1, total revenue was $70,100,000 gross profit was negative $3,200,000 and adjusted EBITDA was negative $56,100,000 The lower performance compared to Q1 last year was primarily driven by the impact of the 2024 halving, higher global network hash rate, lower hosting, and cloud mining revenue and higher r and d costs related to the one off development and tape out costs of our seal zero three chip. These negative impacts were partially offset by higher average self mining hash rate, which increased to 11.5 hexahash per second at the end of the quarter, as well as higher Bitcoin prices. Over the past year, we have made the strategic decision to prioritize the development of our own ASIC technology. While this temporarily slowed our hash rate growth, it positioned us with long term advantages that fundamentally differentiate our business. Producing our own machines enabled us to scale at a significant cost advantage and maintain greater control over our growth trajectory.

Speaker 2

Now that our seal miners are quickly coming off the production line, we expect a rapid acceleration in self mining hash rates in the quarters ahead. In tandem, we are bringing online nearly 500 megawatts of new self mining power capacity by midyear, increasing our total global capacity to nearly 1.6 gigawatts. More than half of this power is located in Norway and Bhutan. Our early focus on geographic diversification is now yielding results. Accordingly, in the near term, we are prioritizing deployments of our a two minuteing machines to Bhutan and Norway, which we expect will drive our self mining hash rate to 40 exahash per second by October 2025.

Speaker 2

On the commercialization front, we are encouraged by the recent trade negotiations, which have led to a de escalation in tariffs. Looking ahead, we expect U. S. Tariff policies to encourage more Bitcoin mining related manufacturing in The U. S, and anticipate a continued shift towards more balanced trade measures.

Speaker 2

We plan to migrate a portion of our manufacturing to The U. S. In the second half of twenty twenty five, and we'll share more details about this in future calls. Over the longer term, we expect demand for Bitcoin mining rigs to continue rising. Having the most efficient chip will be essential to capture this multibillion dollar TAM.

Speaker 2

Moving now to our ASIC roadmap, which is highlighted on slide five of our supplemental presentation. Starting with Seal Miner A1. At the end of Q1, we completed the mass production of 3.7 hexa per second of our Seal Miner A1 minuteing rigs and finished installation and energization as of the April 2025. For SealMiner A2, mass production of the previously announced 35 exahash per second remains on track to be completed in October 2025. As of the April, we completed manufacturing of 3.3 exahash per second of SealMiner A2 minuteing rigs and 1.2 exahash per second were being assembled.

Speaker 2

Of the 3.3 exahash per second of completed miners, one point three exahash per second have been sold and shipped to external customers, and 0.5 exahash per second have been deployed and energized at Bitdeer's data centers in Texas and Teadle, Norway, with the remaining in transit or being prepared for shipment. Additionally, at the end of Q1, we launched a Pro series of our SealMiner A2 minuteing rigs, including both an air cooled and hydro cooled model, both with an impressive power efficiency of 14.9 joules per terahash. For SealMiner A3, we completed rigorous testing of several dozen of our prototype models in April, and energy efficiency continues to meet our expectations. We have begun machine level testing, and results are expected to be finalized by late Q2. We anticipate mass production for our Seal Miner A3 to commence Q3 of this year.

Speaker 2

Looking ahead to the second half of this year, our R and D efforts are now focused on our Seal Miner A four project, for which we are targeting an unprecedented efficiency of approximately five joules per terahash at the chip level. This chip has been completely redesigned from the ground up, leveraging a new digital architecture and technology that significantly improves energy efficiency. We believe this new chip design will revolutionize the way Bitcoin mining ASICs are made in the future. We have begun the process of filing patents on this technology, and tape out is on track for Q4 twenty twenty five. We believe SealMiner A four, along with our third generation chip, will position Bitdeer as the leading supplier of the world's most energy efficient mining rigs, significantly strengthening our market position and unlocking substantial value for our customers and shareholders.

Speaker 2

On slide six of our supplemental investor presentation, we reiterate our prior guidance for our self mining hash rate to reach approximately 40 exahash per second by Q4 of this year. Given the significant amount of power capacity we have coming online, our near term plan is to prioritize our current ASIC production towards self mining and utilize the bulk of our new power capacity in Tidal, Norway and Zigmaling, Bhutan. Please note that this forecast does not include anticipated additional wafer allocations for C L 02 or for C L 03. Depending on the exact manufacturing schedule and actual wafer allocations, our self mining hash rate could be well above 40 exahash per second guidance by Q4 twenty twenty five. Next, I'd like to provide a quick update of our energy infrastructure and pipeline that's highlighted on slides seven and eight of our supplemental investor presentation.

Speaker 2

In early April, Bidir signed an SPA and a turnkey agreement for the acquisition and construction of a 50 megawatt mining data center in Ethiopia. The transaction includes a local company with a mining permit, a 33 kilovolt substation interconnection, and a four year power purchase agreement with Ethiopian Electric Power Company. We are working closely with an EPC contractor that specializes in Bitcoin mining and are targeting energization by Q4 twenty twenty five. This project reflects our continued commitment to identifying cost efficient sites that allow us to keep older generation machines online to maximize the ROI of our existing fleet. Additionally, in April, we energized 202 megawatts of data center capacity for self mining, of which 70 megawatts was at our Teadle, Norway site and 132 megawatts in Zigmilling, Bhutan.

Speaker 2

We expect the remaining 105 megawatts in Teadle and three sixty eight megawatts in jig milling to be energized by the June, bringing our total available power capacity to nearly 1.6 gigawatts. By the end of twenty twenty five, we are also on track to energize an additional two twenty one megawatts in Massillon, Ohio. And including our Ethiopia site, our total available power capacity will reach over 1.8 gigawatts. Finally, in April, due to advancing discussions with development partners and end users for HPC AI, we made the strategic decision to pause Bitcoin mining related construction at our five seventy megawatt site in Clarington, Ohio. However, we maintain full optionality to reassess and resume the build out for Bitcoin mining at a later date.

Speaker 2

In terms of our HPC AI initiative, in March, we formalized an engagement with Northland Capital Markets to act as financial adviser for our HPC AI data center development strategy. Northland has been assisting us in our negotiations with potential development partners and providing guidance regarding capital providers. As of May, we have advanced discussions with development partners and potential end users for selected large scale sites in The US, including our Clarington, Ohio site for HPC and AI. In summary, we have many exciting milestones on the horizon. 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.

Speaker 2

I'll now turn it over to Jeff Laberge, our Head of Capital Markets and Strategic Initiatives, to go over our financial results for the quarter.

Speaker 3

Thank you, Harris. Before I go over Bidjer's first quarter financial results, I'd like to remind everyone that all figures I refer to today are in U. S. Dollars and that all comparisons are Q1 of last year. Q1 consolidated revenue was $70,100,000 versus $119,500,000 South mining revenue was $37,200,000 down 23.1%, primarily due to the April 24 halving event and an increase in global network hash rate, partially offset by higher self mined hash rate and higher Bitcoin prices.

Speaker 3

Cloud hash rate revenue was $100,000 versus $18,100,000 This decline was due to the expiration of long term cloud hash rate contracts and the subsequent reallocation of this hash rate to our self mining operations. General hosting revenue was $9,600,000 versus $29,000,000 Membership hosting revenue was $16,300,000 versus $19,500,000 Steel Miner sales revenue in Q1 was $4,100,000 The decrease in hosting revenue was mainly caused by two factors. First, we converted 100 megawatts of hosting capacity at our Texas facility to hydrocooling capacity, which is expected to be renovated and equipped with seal miner hydrocooled mining rigs that begins phasing in during the first quarter of twenty twenty five. Second, some hosting customers removed less efficient miners after the halving in April of twenty twenty four. Some of this extra capacity is currently being replenished by new hosted mining rigs.

Speaker 3

Total gross profit for the quarter was negative $3,200,000 versus positive $34,100,000 and gross margin was negative 4.6% versus 28.6%. The decrease in our gross margin was primarily driven by the April 2024 halving events impact on our self mining and lower hosting and cloud hash rate revenues. Total operating expenses for the quarter were $75,800,000 and $37,800,000 The increase was primarily driven by higher R and D costs related to the one off take out costs for Seal Miner three, higher engineering costs related to the company's ASIC development roadmap, and non cash amortization expenses of intangible assets related to the acquisition of Freechain in Q4 twenty twenty four. Other operating expenses were $7,800,000 due primarily to noncash impairment of Bitcoin. As a reminder, under IFRS, Bitcoin is classified as an intangible asset and is measured at cost less any accumulated impairment losses with no subsequent revaluations permitted.

Speaker 3

Other net gain for the quarter was $503,100,000 versus $2,400,000 The net gain was due to the non cash derivative gains on the convertible bonds issued in August 2024 and November 2024 and the Tether warrants, which I will discuss in more detail in the liability section. IFRS net profit was $409,500,000 and $600,000 Adjusted profit was negative $89,800,000 versus positive $9,700,000 Adjusted EBITDA was negative $56,100,000 versus positive $27,300,000 This quarter's lower performance compared to Q1 last year was primarily driven by the impact of the 2024 halving higher global network hash rate, lower hosting and cloud mining revenue, higher R and D costs as described previously. These negative impacts were partially offset by higher average self mining hash rate and higher bitcoin prices for the quarter. Net cash used for operating activities was $284,000,000 predominantly driven by steel miners, supply chain, and manufacturing. Net cash used for investing activities was $73,600,000 including 45,700,000 of capital expenditures for infrastructure construction and mining rigs, $18,200,000 for the purchase of cryptocurrencies, dollars 21,900,000.0 to acquire the site and gas fired power project in Alberta, and $12,300,000 of proceeds from disposal of cryptocurrencies from the principal business.

Speaker 3

Net cash generated from financing activities for the quarter was $94,900,000 which resulted primarily from the $118,400,000 of net proceeds from issuance of shares under our ATM facility in January and February, offset by $21,000,000 used for share repurchases. Moving on to our $20.25 Bitcoin mining infrastructure spend. We expect CapEx for the continued build up of our global power and data center infrastructure to now be in the range of approximately $260,000,000 to $290,000,000 for calendar year 2025. This update includes reported infrastructure CapEx in Q1. The reduction from our prior guidance is due to approximately $80,000,000 in savings for the pause of bitcoin mining infrastructure construction at our Clarendon, Ohio site that Harris spoke about earlier.

Speaker 3

Please note that this guidance only factors in power and data center spend for Bitcoin mining and does not include CapEx for steel miners used for self mining. In terms of our balance sheet, we ended the quarter in a strong financial position with $215,600,000 in cash and cash equivalents, dollars 131,100,000.0 in cryptocurrencies, and $215,400,000 in borrowing, excluding derivative liabilities. Derivative liabilities were $256,800,000 which relate to the Tether warrants, and August 2024 and November 2020 '4 convertible notes, representing a $507,200,000 decline compared to our last quarter. Again, this is a noncash fair value adjustment driven by the decline in our stock price and does not impact our liquidity or operations. Under IFRS, certain derivative instruments, such as warrants and convertible debt, are required to be revalued at fair market value each reporting period.

Speaker 3

As our stock price increases, the fair value of these instruments rise, resulting in a higher reported liability and vice versa. The recorded liability will ultimately be netted at settlement either upon conversion to equity or expiration and does not represent an actual cash outflow. In April 2025, we entered into a loan agreement with Matrix Finance and Technology Holding Company for a financing facility of up to $200,000,000 The loans drawn under the facility bear a variable interest rate of 90% plus a market based reference rate. Each drawdown is repayable in six month installments over twenty four months and is secured by the pledge of steel miners. As of today, 2025, we have drawn approximately $90,000,000 under this facility.

Speaker 3

Finally, regarding our outstanding ATM facility, since the February 2025, we have not sold any additional shares given the broader market correction. Thank you, everyone. That concludes the prepared remarks section of our earnings call. Operator, please open the call for questions.

Operator

Thank you. Our first question comes from Darren Aftahi with Roth. Your line is open.

Speaker 4

Hey guys, good morning. Thanks for taking my questions and nice to see all the progress. A couple of things. First, I know in the past you guys talked about third party interest in A2 and I think it was maybe in the 7 exahash range and you guys kind of talked earlier this year about taking that in house for your own self mining. I'm just kind of curious, obviously the world is moving pretty fast, but how has interest in maybe this not the A2, but your chips in general changed maybe in the last few weeks?

Speaker 4

Is there as much third party interest? Has that demand changed since you kind of said you would bring that in house? And then my second question is on your 40 eggs to hash target by the end of the year, tariffs talked about there could be upside to that. Guess what is under consideration in terms of that target? Is it simply machines and available power or is there something more nuanced there?

Speaker 4

Thank you.

Speaker 5

I will take the next question. Generally, we feel that the desire for purchasing mining ASICs from us has increased significantly after the decompiles increasing. That's very natural. So you can see that we moved some sales of the BCom money rate. But, anyway, we our priority is still self money.

Speaker 5

We want to fulfill our BCom money farm that is going to build up within this year. And then the second question is that the upside of of our target. Well, due to the current situation, there is lots of uncertainty over the availability of the capacity because everyone may want to have a more capacity of the TSMC and to have inventory, and then maybe some of them may give up. We we we don't know what the the the decision and the prediction will be. But we always have a strong confidence over TSMC as our capacity and technology partner, and we are communicating with them.

Speaker 5

So I think we can at least guarantee the previous target we have outside.

Speaker 3

Great. Thank you.

Operator

Thank you. Our next question comes from Ben Summers with BTIG. Your line is open.

Speaker 6

Hey, good morning guys and thanks for taking my question. So first around the decision to pause Bitcoin mining development at Clarington, kind of just any color on the type of customers we're hearing from here and where are we seeing the strong demand for the site?

Speaker 2

Okay, I can maybe answer that question. So at this point in time, we're getting some inbound from potential end users or tenants, but our primary, work here really is to get a development partner that we can work with to develop this site. And so, they have very strong connections, the people we're talking to, to all the hyperscalers, and, we are not, you know, in that stage yet where we're actively pursuing the hyperscalers at the moment, though we are getting some inbound. Just sort of natural inbound requests at this time. The main focus remains on, closing a deal with the development partner.

Speaker 6

Got it. Super helpful. And then, you know, kind of on the recent, loan agreement that we entered, I guess just, why now and then how are we kind of thinking about the capital structure moving forward here and maybe how are we thinking about managing the Bitcoin balance on the balance sheet as we continue to expand the business?

Speaker 5

John, do wanna take

Speaker 3

that or you'd like me to? I can touch on that. So yeah, we feel right now again, with the broader correction in in in the market, you know, we stopped using the ATM in in February when the price dropped, you know, quite significantly. So we've always been very conscious of of dilution in our in our as far as our capital raising process. And, you know, we feel that the business can be can take on a certain amount of debt to finance, especially on the on the mining rig side where, you know, we know we have a a certain payback potential opportunity for for these proceeds.

Speaker 3

So, you know, we felt like responsible or reasonable amount of debt could be utilized to to finance the the the chip purchases.

Speaker 6

Awesome. Thank you guys for taking my questions.

Operator

Thank you. Our next question comes from Kevin Kasim with Rosenblatt Securities. Your line is open.

Speaker 7

Thanks for taking my question and congratulations on the great progress. The Seal A four ASIC that you're going for the fourth quarter and then when you'll have the Seal Miner A four out, what would be the strategy for that? It seems like that's going to be a very high demand device or equipment for other miners. Are you going to stay with mostly internal or will there be enough capacity to sell externally and use it internally?

Speaker 2

So as we fill up our existing capacity with A2s and then some we will naturally transition to more external sales. And so a four, you know, if we tape out as we expect in q four, the machines won't be ready for at least a couple of quarters after that or maybe even a little longer, so in mass production. So, by that time, I expect, but we will know for certain that largely we will be selling externally because our internal capacity should be close to full. And if we get as much capacity from TSMC as we hope, we should be able to have significant external sales.

Speaker 7

Okay, great. And that does ask the question, does the transition work from like, if you go from the CL minor A2 to A3, is A3 expect that to keep that in production for another year or so after A four is out?

Speaker 5

A four still not tipped out yet. If a four taped out and we got it by the chip, I believe that it will be at the end of the year and to get to the status of mass production ready. And after that, I think a three and a four will coexist for quite a long time because a three will be I think the cost in terms of a dollar per terahash will be lower than a four. So it will be it will depend on different situations, which many rigs users and us want to choose from. And it will also depend on other factors.

Speaker 5

If we have a really abundant capacity, I think A four can be a preference, but if the total capacity we can obtain from TSMC is limited, I think A3 maybe actually is better because it can yield much more hash rate out from wafer.

Speaker 7

Okay. Great. It's good to have those options. Thanks.

Operator

Thank you. Our next question comes from Nick Giles with B. Riley Securities. Your line is open.

Speaker 8

Thanks, operator. Good morning, everyone. Guys, apologies if I missed this, but it looks like electricity costs were slightly higher in 1Q. I assume this was on some of the extreme weather early in the year, but can you just touch on how power costs could trend from here?

Speaker 3

Yeah. So Q1 historically has been our highest power price throughout the year. That's primarily due to a couple of things. So number one, in Bhutan, we have a nine month PPA at around 4 and a quarter cents per kilowatt hour. That runs between Q2 and Q4.

Speaker 3

Q1 is a dry season in Bhutan, so during that quarter we typically procure power from the Indian market. We are looking into options, power purchase agreements and other forward power pricing opportunities to fulfill that moving forward. We were not able to get that in place in time for Q1, so prices in Bhutan were elevated. Aside from that, Rockdale had slightly elevated prices just historically. So that led primarily to increase in power price for Q1.

Speaker 3

Moving forward, you know, q two and q three are typically lower cost quarters for us. We are implementing a much more aggressive power supply strategy, and we expect some of those to start very for in this next quarter, possibly q three.

Speaker 8

Thanks for that. That's very that's very helpful. My second question is, clearly your ASIC machines have the opportunity to be the leading edge, but it's been too early for analysts to ultimately track performance and utilization. So what would you consider the first opportunity for the market to see really just the overall efficiency of your fleet, specifically on some of the later generations?

Speaker 5

Even though we are a bit hungry, we're hungry for the machines, you know, our own money farm, we are still squeezing some of our capacity to customers. That's for them to test and to try. And right now, so far so good. I think they are already see that how good our machine are, have a strong confidence over that. And that that's about a two and eight pro.

Speaker 5

A three will be able to ship to our customers on October. So the the earliest day customers can test a three is October.

Speaker 8

Got it. Guys, appreciate all the color. Best of luck.

Operator

Thank you. Our next question comes from John Tadaro with Needham. Your line is open.

Speaker 9

Hey guys, thanks for taking my question. Congrats on the progress. First question, I guess just trying to understand where we should be targeting average fleet efficiency. Obviously, some of these rollouts are going to lower that efficiency quite a bit. Just wondering for kind of like second half of twenty five and then '26, what that average roughly would be?

Speaker 9

And then I have

Speaker 3

a follow-up question on the HPC. Yeah. So, Joel, I'll take that. So with our, you know, obviously our average move down from last quarter, it's probably in the high twenties at this point down from, you know, 31 ish and sort of historically from our legacy fleet. As we get to approach that 40 exahash range, we should be down in in the lower twenties in the, you know, 22 to 24 joule per terahash range.

Speaker 3

That's assuming we keep all of our existing hash rate online, which currently we're we're planning to do. Eventually, obviously, we will start phasing out some of the older rigs. Some of those can be moved to lower cost power regions like Ethiopia, possibly Canada in the future. But, you know, as those start to be phased out or, you know, diluted by newer some of our newer generation rigs, we would expect that efficiency to drop, you know, into those, into the teens.

Speaker 9

That's helpful. And then on HPC, you know, it sounds like with a development partner, you would look to do a powered shell or maybe full stack. But I I noticed, you know, Massillon wasn't paused. Clearington was. Do do you still think both sites could be for HPC, or are we gonna focus on Massillon for Bitcoin mining and then the 266 megawatts at Clarington for HPC?

Speaker 2

So the the focus is on Clarington right now, and it's not just the first two hundred and sixty six megawatts. It's the entire 570 megawatts that are there in Clarington. Massillon, we are moving ahead right now with Bitcoin mining at that location.

Speaker 3

Got it.

Speaker 9

Okay. Great. Thank you. Appreciate it, guys.

Operator

Thank you. Our next question comes from Brett Knoblauch with Cantor Fitzgerald. Your line is open.

Speaker 10

Hey, guys. Thanks for taking my question. Howard, maybe just on ASIC side, I know before I think you guys said you were going be allocating somewhere around 7 exahash to external sales. Should we still be expecting seven exahash of sales for this year? And of the $4,100,000 of ASIC sale revenue this year, was

Speaker 3

that related or this quarter,

Speaker 10

was that related to 1.3 exahash that was shipped?

Speaker 2

I'm gonna ask Jinhon to answer that about the amount of sales that we're going to allocate for this year.

Speaker 5

Wow. This is quite a dynamic decision. Actually, the process the real process is that I approval the application from the sales email by email. Generally, I want to deploy to our own money farm and do self money, And it highly depends on the customers and whether we are generally want them to have interest and a real test for our money rates. So so I I cannot really get you a very precise prediction about our our decisions.

Speaker 5

And

Speaker 10

then just on the the sale or the the basic revenue from this quarter, is that coming from the 1.3 that was shipped?

Speaker 3

Correct. Yes. So that's the portion of that that was recognized in the quarter. Some additional may be recognized in Q2.

Speaker 10

And should we still be expecting a average selling price somewhere around $15 a terash?

Speaker 3

Jen, there's gonna be no change in the pricing. I I don't believe you. Well,

Speaker 5

due to the competition in the market, we will need to provide competitive price to our customers. And the most recent pricing hack is the $12.8 per hash, if I I remember it correctly. And for a two and a two pro, we will just follow the market dynamics. If competitors lower the price, I think we will follow-up. Anyway, our quantity of the sales is limited.

Speaker 5

We we we don't fail to join any price competitions at this point of time.

Speaker 10

Perfect. Understood. And then on the growth, I

Speaker 3

thought I heard that you guys were expecting 40 exahash by October. Is it by October or by end of the year?

Speaker 2

It's by October.

Speaker 3

By October. Okay. Awesome. Really appreciate it, guys. Thank you.

Operator

Thank you. Our next question comes from Mike Grondahl with Northland. Your line is open.

Speaker 11

Hey guys, thank you. Two questions, one, your lowered CapEx guidance two sixty to two ninety, could you kind of highlight where that's going this year? And then secondly, if you could just provide a little bit more detail on that CO minor loan facility, is that for the chips, inventory financing finished goods? Just kind of help us understand mechanically how that'll work.

Speaker 3

Yeah, sure. Mike, I can take that first part. So the CapEx is primarily related to the finishing of the title Norway site and the Jiggleing site as well as our Madison, Ohio site. So between those three is about another $120,000,000 and we also have budgeted in there for finishing up Texas and some for Canada and the small amount for the Ethiopia project. And again, the $2.60 is for really for the entire year.

Speaker 3

So when I just go there was sort of the remaining amount, maybe $190,000,000 left for the rest of the year. What was the second question, Mike?

Speaker 11

The seal minor loan facility you talked about that you recently put in place, just mechanically, how does that work? Is it on chips, inventory, finished goods?

Speaker 3

It's on so yeah. So it's it's it's to be used to to finance the purchase of chips, and then the loan itself is gonna be secured by the by the finish by the chips all the way through to the to the end seal miner.

Speaker 11

Got it. So those miners are kinda acting as collateral kind of presale, if you will?

Speaker 3

Correct. Or for, in this case, self mining use.

Speaker 11

Got it. Okay. Thank you.

Operator

Thank you. Our next question comes from Brian Kislinger from Alliance Global Partners. Your line is open.

Speaker 12

Great. Thanks so much. I'm curious at what level of tariffs would Bit Gear's decision to sell externally alter the strategy right now of timing? Is 30% something you're comfortable with, especially if semiconductors don't get reprieve? Just curious how that might impact your decision if 30% is the number.

Speaker 5

The tariffs, believe in the end it will be quite reasonable. I don't think negotiation skills will be the ultimate tariff policy for the US government. And it's very importantly that the chips produced by Taiwan, I don't think it will be put up with high tariffs. So we we have lots of ways to make our business viable even inside The United States. For example, we we can ship the chips into The United States and doing assembly inside The United States.

Speaker 5

That's a possible solution we're evaluating right now. And secondly, we have capacity overseas in Norway, in Bhutan. It it's Tobias as well. And there are low tariffs for such kind of products as well. So we can do our self money there.

Speaker 5

I think generally tariffs will make more economic activity on The US soil, But of course, it's not for efficiency and prosperity. It's more for self sufficient national security and more for creating jobs inside. So think everyone, including us, has to compromise a little bit. But generally, I think especially in the early years, I think it will be okay.

Speaker 12

Great. A follow-up I have. In terms of demand, and I think you guys have taken deposits, what percentage of that comes outside of The United States in the demand for ASICs roughly, if you could?

Speaker 5

Mostly right now are from The United States.

Speaker 12

Great, thank you.

Operator

Thank you. Our next question comes from Bill Papadimasu with KBW. Your line is open.

Speaker 13

Good morning, and congrats on all the progress. Just a quick question for me here. As a follow-up to that prior tariff question, perhaps you can speak to how customer interest has trended recently for the upcoming sealed miners. We've seen a number of Bitcoin mining companies pull back capital expenditure for Bitcoin mining. Furthermore, have you seen any shift in the composition of customer interest from North America to the rest of the world following the recent tariff landscape?

Speaker 13

Could you see do you think you could see a larger portion of customer sales in the future coming from that rest of world component? Thank you.

Speaker 5

Well, on one side, US based BCom miners has have the best capital market in the world. They have the capability to raise lots of capital to expand their operations. I don't think this will change in the near future. But at the same time, dilutions can be a little bit unwelcome in the market. That's I perceived from those reviews and the remarks.

Speaker 5

So I I think US based will start to find a way to expand their operations without diluted share basis. You know, very, very fastly. I think that means there's a leverage, but they they will need to have confidence about future revenue with certain kinds of money the capacity. So kind of a transparency from the money rack suppliers will be demanded, which are which BDR cannot work out alone. So I I think, generally, we we are confident because The US got a very important energy, very good capital market, and of the culture of entrepreneurship to expand their business.

Speaker 5

The total hash rate market share resides inside The United States, I think will continue to grow from here, roughly 30%, maybe to even higher. But I think it will take very slow time. It will increase as fast as has passed. U. Has increased from nearly zero, or very minimum, hash rate percentage to 30%.

Speaker 5

That's remarkable progress. I think it will the growth of the market share business will continue, but it will at much slower pace. I'm not sure I answered your question or not.

Speaker 13

No. That's great color. And then maybe as a follow-up to that, we've seen a number of miners enter into ASIC option payment structures in order to acquire an incremental amount of capacity. Is there any thought in terms of trying to entertain a similar type of structure at BitDeer for the A4s or A3s down the road?

Speaker 5

You mean, we buy the credit to our clients?

Speaker 13

Yeah. Essentially, yes.

Speaker 5

Generally, we we we don't have the the plan right now. If we want to. Access to, okay, in the market. Really, really good financing expert. So our will be working with a partner to to solve this kind of problem.

Speaker 5

I think it's much more healthier than the idea itself to provide such kind of a credit because because alright. Because a lot lot no. No. Not some bad stories. In the financial or business.

Speaker 5

You you start to provide such kind of credit to a client, such kind of capital goods by yourself. It may it may distort the economic signal a lot.

Speaker 13

Appreciate the color. Thank you so much.

Operator

Thank you. I'm showing no further questions at this time. This does conclude the question and answer session, and you may now disconnect. Everyone, have a great day.

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Earnings Conference Call
Bitdeer Technologies Group Q1 2025
00:00 / 00:00