Bitdeer Technologies Group Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 18, 2025

Key Takeaways

  • Positive Sentiment: Q2 revenue surged to $155.6 million (up 122% sequentially) with adjusted EBITDA of $17.3 million, driven by strong self-mining execution and commercial sales of SealMiner ASICs.
  • Positive Sentiment: Self-mining hash rate rose to 14.2 EH/s in Q2 and reached 22.3 EH/s by July, with a goal of achieving 40 EH/s by October—and potentially exceeding it by year-end.
  • Positive Sentiment: SealMiner A3 ASICs have met performance targets and are slated for mass production in October, positioning BitDeer to contribute to both self-mining and external sales in 2026.
  • Positive Sentiment: Secured a letter of agreement with AEP Ohio to lock in 570 MW at the Clarington site before regulatory billing changes, ensuring lower power costs for planned HPC/AI and mining expansion.
  • Negative Sentiment: IFRS net loss was $147.5 million, primarily due to non-cash fair value adjustments on convertible note derivatives, although these do not affect cash liquidity.
AI Generated. May Contain Errors.
Earnings Conference Call
Bitdeer Technologies Group Q2 2025
00:00 / 00:00

There are 11 speakers on the call.

Speaker 10

Today, and welcome to the Bitdeer Technologies Group second quarter 2025 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Instructions will be given at that time. As a reminder, this call may be recorded. I will now turn the call over to Yujia Zhai, Investor Relations. Please go ahead.

Speaker 8

Thank you, operator, and good morning, everyone. Welcome to Bitdeer Technologies Group's second quarter 2025 earnings conference call. Joining me today are Jihan Wu, Chairman and CEO; Matt Kong, Chief Business Officer; Haris Basit, Chief Strategy Officer; and Jeff LaBerge, VP of Capital Markets and Strategy. Haris will begin today by providing a high-level overview of Bitdeer Technologies Group's second quarter 2025 results and then cover the company's strategy and a detailed business update. After that, Jeff will cover Bitdeer Technologies Group's second 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 Bitdeer Technologies Group'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.

Speaker 8

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 complete discussion on forward-looking statements and the risks and uncertainties related to Bitdeer Technologies Group's business, please refer to its filings with the 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 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 Bitdeer Technologies Group's investor relations website. Thank you. I will now turn the call over to Haris. Haris?

Speaker 9

Thank you, Yujia, and good day, everyone. Thanks for joining our second quarter 2025 earnings call. Since our last call, we've made significant progress across all of our strategic priorities, and I'm excited to walk you through those updates today. I will begin with a brief overview of our Q2 financial results, then highlight what we're focused on for the remainder of the year and share a glimpse of our outlook beyond 2025. Starting on slide three, in Q2, total revenue was $155.6 million, up 122% sequentially from Q1 and up 57% year over year. Gross profit was $12.8 million, and adjusted EBITDA was $17.3 million, up materially from Q1. This significant improvement in our results is from strong execution in our self-mining business and commercial sales of our SEALMINER ASICs.

Speaker 9

Mass production of our SEALMINER ASICs enabled us to increase our average operating hash rate by 46% to 14.2 exahash during the quarter, from the 9.7 exahash in Q1. In addition, we sold and shipped 5.3 exahash of our SEALMINER A2 mining rig to external customers, recognizing $69.5 million in revenue in Q2. As of the end of July, we further grew our self-mining hash rate to 22.3 exahash, representing a 162% increase from the beginning of the year. We also sold and recognized revenue on an additional 0.6 exahash of SEALMINER A2s in July. Looking back on the first half of the year, we believe Q1 marked both the bottom and a key inflection point. We are now turning the corner with strong momentum, powered by our vertically integrated and technology-driven growth strategy.

Speaker 9

Our decision to invest aggressively in chip design, supply chain, and manufacturing built a strong foundation that is now enabling us to rapidly scale our own self-mining operations while positioning us to capture a meaningful share of the Bitcoin mining ASIC market. By combining our proprietary technology, in-house hardware manufacturing, and expansive global power portfolio, we've created a highly advantaged and defensible platform for long-term growth. Looking forward, our SEALMINER ASICs continue to roll off the production line, and we anticipate continued rapid growth in our self-mining hash rate throughout the remainder of the year. We are on track to achieve our previous target of 40 exahash of self-mining hash rate by the end of October. Furthermore, wafer supply allocation at our foundry has improved, and we expect to exceed this target by year-end. This will put us on par with the largest publicly traded Bitcoin miners in the world.

Speaker 9

As we continue to scale, our fleet-wide energy efficiency will also improve, delivering better mining margins and operating leverage. Upon exiting this year, we anticipate record results on a run-rate basis, setting a strong foundation for 2026 and beyond. Last year, when we embarked on our aggressive ASICs roadmap, we understood that building chips alone wasn't sufficient. To win in this market, we have to achieve industry leadership in performance and energy efficiency. Today, we are proud that our dedicated R&D team has executed this plan with precision, delivering three of the four chips on schedule and on spec. With our latest SEALMINER A3, we now possess one of the most competitive mining rigs in the market, built on leading process nodes and optimized for high-efficiency deployment at scale. All machine-level validation metrics have met or exceeded our internal benchmarks, and we are preparing to initiate mass production.

Speaker 9

The first batch of SEALMINER A3 mining machines is expected to be available for shipment in October. We expect SEALMINER A3 to contribute to our revenue through both self-mining and external sales in 2026. Looking ahead, our R&D efforts have now pivoted to the SEAL-04 chip. We are taking a dual-track approach to SEAL-04, with two completely independent designs to ensure success. The first SEAL-04 chip, using a more traditional circuit architecture, has already been taped out, and we expect initial sample wafers to come back in Q3 2025. Our second SEAL-04 chip will be a completely new, next-generation architecture targeting breakthrough efficiency of approximately 5 joules per terahash at the chip level. This chip is a full redesign that uses new digital circuit architectures that enable breakthrough improvements in energy efficiency.

Speaker 9

We believe the digital chip architecture utilized by our SEAL-04 chip will set a new standard for Bitcoin mining and also have application to a broader class of high-performance, energy-intensive compute applications. We have begun the process of filing patents on our technology. Furthermore, in July, we made major progress with the successful development of customized silicon design software necessary to fully exploit this new architecture. We have also expanded the senior engineering and software team in the U.S. to support the SEAL-04 chip development, as well as added senior roles in legal and IP licensing. We are extremely excited about the SEAL-04. Together with our SEALMINER A3 mining rig, we believe these two chips will firmly position Bitdeer Technologies Group as a leading supplier with the most energy-efficient mining rigs in the industry, significantly enhancing our competitive position and unlocking substantial value for both our customers and shareholders.

Speaker 9

Next, I'd like to provide a quick update on our energy infrastructure that's highlighted on slides eight and nine of our supplemental investor presentation. In Q2, we continued our rapid build-out of our global power and data center infrastructure. As of July 2025, we energized 361 megawatts of data center capacity for self-mining, of which 126 megawatts was at our Tydal, Norway site, and 235 megawatts in Jigmaling, Bhutan, bringing our total available electrical capacity to approximately 1.3 gigawatts. We expect the remaining 49 megawatts in Tydal and 265 megawatts in Jigmaling to be energized in Q3, which will bring our total available power capacity to nearly 1.6 gigawatts. In May, we achieved a key milestone by signing the letter of agreement with AEP Ohio for the second phase of power at the Clarington site.

Speaker 9

This LOA advances the final stages of the contracting process for the full 570 megawatts of capacity. Critically, this document was executed before the Public Utilities Commission of Ohio issued a ruling to classify data centers under an industry-specific billing structure. This new structure would have imposed substantially higher collateral requirements and minimum demand charges. Locking in our position ahead of this monumental regulatory shift allows us to proceed with plans for the full build-out of this strategic data center with significantly lower cost structure. With regard to our HPC AI initiative in Clarington, Ohio, we have entered into advanced negotiations with a development partner that has significant expertise and customer relationships. We are optimistic that we will be able to share more details in the coming quarter. Lastly, on slide 10 of our supplemental investor presentation, we would like to reemphasize our guidance for our self-mining hash rate.

Speaker 9

Given the steady rollout of our SEALMINER A2 mining rig, we remain on track to reach 40 exahash by October. Furthermore, as I mentioned earlier, wafer supply has improved for both our SEAL02 and SEAL03 chips, leading us to believe we will surpass this target by year-end. 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. In summary, we are pleased with our team's execution across all our strategic priorities. We have successfully met our initial targets for our aggressive ASIC roadmap, our self-mining infrastructure and deployment plan, and our entry into the massive ASIC market opportunity. We have also made significant strides in our HPC AI strategy.

Speaker 9

As we move into the second half of 2025, we expect these efforts to be reflected in our financial results, and we look forward to sharing updates on our progress. I'll now turn it over to Jeff LaBerge, our Vice President of Capital Markets and Strategy, to go over our detailed financial results for the quarter.

Operator

Thank you, Haris. Before I go over Bitdeer Technologies Group's second quarter financial results, I'd like to remind everyone that all figures I refer to today are in US dollars. Q2 consolidated revenue was $155.6 million, up from $99.2 million in Q2 2024 and $70.1 million in Q1 2025, or up 56.8% year over year and 121.9% sequentially. Self-mining revenue was $59.3 million versus $41.6 million in Q2 2024 and $37.2 million in Q1 2025, or up 42.5% year over year and up 59.4% sequentially. These results were primarily due to a 103.3% year over year and 45.5% sequential increase in self-mining hash rate, as well as higher Bitcoin prices. These increases were partially offset by the April 2024 halving event and higher mining difficulty. SEALMINER sales revenue was $69.5 million compared to $0 in Q2 2024 and $4.1 million in Q1 2025.

Operator

Cloud hash rate revenue was $0 versus $12.2 million in Q2 2024 and $0.1 million in Q1 2025. 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 was $9.3 million versus $20.6 million in Q2 2024 and $9.6 million in Q1 2025. Membership hosting revenue was $14.6 million versus $22.1 million in Q2 2024 and $16.3 million in Q1 2025. This year-over-year decrease in hosting revenue was mainly caused by two factors. First, we converted 100 megawatts of hosting capacity at our Texas facility to self-mining, which has been equipped with SEALMINER hydro-cooled mining rigs. Second, some hosting customers removed less efficient mining rigs after the halving event in April 2024. Some of this extra capacity is currently being replenished by new hosted mining rigs.

Operator

Total gross profit for the quarter was positive $12.8 million versus $24.4 million in Q2 2024 and negative $3.2 million in Q1 2025. Gross margin was 8.2% versus 24.6% in Q2 2024 and negative 4.6% in Q1 2025. This year-over-year decrease in our gross margin was primarily driven by the April 2024 halving event's impact on self-mining, higher mining difficulty, and lower hosting and cloud hash rate revenues. Sequentially, our gross margin improved due to the increase in our self-mining hash rate, improvements in our fleet efficiency, and commercialization of our SEALMINER ASICs. Going forward, we expect gross margin to improve over the coming quarters as our hash rate ramps and our overall fleet efficiency improves. Total operating expenses for the quarter were $42.3 million versus $26.1 million in Q2 2024 and $75.8 million in Q1 2025.

Operator

The year-over-year increase was primarily driven by R&D costs for our SEALMINER roadmap and higher G&A. The sequential decrease was primarily driven by our R&D costs due to the absence of the tape-out costs for SEAL-03 that occurred in Q1 2025. Other operating income was $3.7 million, primarily due to the reversal of non-cash impairments 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 upward revaluation permitted. Other net gain for the quarter was negative $108.5 million versus negative $15.5 million in Q2 2024 and positive $503.1 million in Q1 2025. The net loss was due to the non-cash derivative loss on the convertible senior notes issued in August 2024, November 2024, and June 2025, which I will discuss in more detail in the liability section.

Operator

IFRS net income was negative $147.5 million versus negative $17.7 million in Q2 2024 and positive $409.5 million in Q1 2025. Adjusted profit was negative $24.4 million versus positive $3.2 million in Q2 2024 and negative $89.8 million in Q1 2025. Adjusted EBITDA was positive $17.3 million versus positive $23.5 million in Q2 2024 and negative $56.1 million in Q1 2025. This quarter's higher year-over-year and sequential top-line and non-GAAP bottom-line performance was mainly driven by higher self-mining hash rate, SEALMINER sales, and higher Bitcoin prices. These were primarily offset by higher global network hash rate, lower hosting and cloud mining revenue, higher R&D costs, and G&A expenses as previously described. Net cash used for operating activities was $334.9 million, primarily driven by $230 million of payments for SEALMINER wafers and related production costs, and $27 million for the initial tape-out of SEAL-04.

Operator

The remainder was driven by electricity costs from the mining business and general corporate overhead. Please note, a large portion of the $27 million SEAL-04 tape-out cost is expected to be expensed in Q3. Net cash used for investing activities was $12.6 million, which was driven by $106.5 million of capital expenditure, of which $76 million was related to data center infrastructure and related construction. Proceeds from disposable cryptocurrency from our primary business was $100.1 million. Net cash generated from financing activities for the quarter was $431.5 million, which resulted primarily from $364.3 million of net proceeds from the convertible senior notes issued in June 2025, $180 million of borrowings from a related party, and $50 million of proceeds from the issuance of shares in connection with the exercise of the tether warrants.

Operator

This was partially offset by $129.6 million used for the purchase of a zero-strike call option in connection with the convertible senior notes issued in June 2025 and payment of $33.8 million in connection with the extinguishment of a portion of the convertible senior notes issued in August 2024. There were no shares issued under our ATM during the quarter. Moving on to our 2025 Bitcoin mining infrastructure spend, we continue to expect CapEx for the continued build-out of our global power and data center infrastructure to be in the range of $260 million to $290 million for calendar year 2025. This range includes reported infrastructure CapEx in Q1 and Q2 of approximately $118 million.

Operator

The remaining projected CapEx is expected to fund the completion or near completion of our data centers in Tydal, Norway, Jigmaling, Bhutan, Mazlen, Ohio, and Ethiopia, as well as partial completion of the 101-megawatt gas-fired power plant in Alberta, Canada. Please note that this guidance only factors in power and data center spend for Bitcoin mining and does not include CapEx for SEALMINERs. In terms of our balance sheet, we ended the quarter in a strong financial position with $299.8 million in cash and cash equivalents, $169.3 million in cryptocurrencies, and $533.1 million in borrowings, excluding derivative liabilities. Please note the $169.3 million in cryptocurrencies is accounted for according to IFRS rules and is currently below its market value. Derivative liabilities were $438 million, which relate to the August 2024, November 2024, and June 2025 convertible notes, representing a $181.2 million increase compared to the last quarter.

Operator

This is a non-cash fair value adjustment driven by the increase 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. 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 June, we successfully closed a $375 million convertible senior note through an oversubscribed private placement offering. The note bears interest at 4.875% and is due in 2031. Finally, regarding our outstanding ATM facility, we have not sold any additional shares in Q2 2025. Thank you, everyone. That concludes the prepared remarks section of our earnings call.

Operator

Operator, please open the call for questions.

Speaker 10

Thank you. If you'd like to ask a question, please press star-11. If your question has been answered and you'd like to remove yourself from the queue, please press star-11 again. Our first question comes from Greg Lewis with BTIG. Your line is open.

Speaker 10

Yeah, hi. Thank you. Good morning, good afternoon, good evening, and thanks for taking my questions. I did want to touch on the prepared remarks around the data center opportunity. Realizing I guess it sounds like you're in active negotiations with that, so understanding what you can and cannot say. Kind of curious that as we think about it, one of the things that I think the market's trying to understand as you pursue with a partner is how is Bitdeer Technologies Group thinking about the risk around construction? It sounds like in the past we've talked about financing being done with a partner in terms of sourcing general contractors to do the work. Any kind of color you can provide around that? As this is the Clarington site, are we pursuing something similar at, I know in the past we've talked about potentially Rockdale and even Norway.

Speaker 10

Is this partner, do we think this could be a multi-partner relationship across multiple sites, or is this potentially a one-off?

Speaker 9

Hey, thanks, Greg, for the question. The focus right now is on the Clarington site. However, as we've reported in the past, we have had inbound requests for both the sites in Norway and Rockdale, and we're in discussions there, but they're much less advanced than the Clarington site. Our current thinking around the Clarington site is that our capital requirements would be very minimal, that it would be provided through the partner and then, of course, construction loans on top of that. Does that answer your question?

Speaker 9

Yeah, no, that's super helpful. My other question was, just as we look at, you know, as Bitcoin ASIC production becomes more important to the company, it looked like maybe pricing improved a little bit for your sales. Is that maybe a sign, is there some strength in the market, or is that more of a shift in you selling more efficient rigs? Maybe it's a little bit of both.

Speaker 5

I think pricing was fairly consistent to last quarter. We are seeing increased demand, obviously increasing strength due to rising hash price. Bitcoin price obviously has helped that out as well. The demand has definitely increased, and we think the demand for SEALMINER A3 will obviously be much higher as well.

Speaker 5

Okay, thank you.

Speaker 5

Thanks, Greg.

Speaker 10

Thank you. Our next question comes from Dylan Heslin with Roth Capital Partners. Your line is open.

Speaker 10

Hey, good morning. Thanks for taking my question. To follow up on some of the HPC comments in Clarington, have you sort of solidified with your partner at all the approach you're going to take in terms of what that could look like? Would that be a colocation deal like a lot of the peers have done? Would you try to do a powered shell, or given your experience running the GPU clusters, would you try to do more of a full stack? Just how are you thinking about that opportunity?

Speaker 9

The Clarington site is quite large, you know, 570 megawatts gross power. A full stack is not currently in our thoughts. We're really looking at trying to focus on a build-to-suit. However, the main thing to remember here is that we're flexible and that as we move forward, it will depend to a large part on which tenant we end up with, who's the final customer for the site. It's hard to answer those questions definitively other than our target is to do a build-to-suit.

Speaker 9

Got it. Thank you. Just as a follow-up on the wafer availability, what is the sort of timeline into when you get better clarity as to the chip or the wafers you're going to be allocated?

Speaker 9

We get, we're in sort of constant communication with TSMC, and it's hard to predict exactly when we get allocations of new wafers, but we're also not really publicizing our wafer allocations ahead of time. We report the amount of machines that we produce and use internally and that we sell as the quarter or the month ends, but not in advance.

Speaker 9

Great. Thank you.

Speaker 10

Thank you. Our next question comes from Mike Collins with HC Wainwright. Your line is open.

Speaker 10

Hi, good morning, guys. Thanks for taking my questions today. First one for me, and Jeff, you alluded to a bit of this on the demand side, but if you could provide more color around some of the early demand you're seeing for the SEALMINER A3 and how that matches up against expected manufacturing capacity. Haris, I think you mentioned that the first batch will be ready to ship sometime in October.

Speaker 5

That's correct. We are planning to have the first batch available this year. Again, we've not given any guidance on the total hash rate that will be available. We can say that we likely will be using a large portion of that internally, but we'll plan to sell some of those as well.

Speaker 9

We are not actively marketing the SEALMINER A3 at this point, at least not extensively for our external use.

Speaker 9

Got it. Thanks for the clarity, guys. The follow-ups from me, I'm just curious to get your general outlook for ASIC prices based on current Bitcoin market dynamics and the broader competitive landscape right now. Really how that SEALMINER A3 chip or ASIC will stack up on pricing compared to what some of your peers are charging for their most efficient ASICs out there in the market today.

Speaker 9

I mean, you know, we always have to be competitive on pricing. The A3 is, you know, it's a great product. It has significant efficiency advantages. We haven't determined pricing. As I said, we're not going out there really pushing it as an external sales right now. Our plan is to use the bulk of the initial batches for internal use. I mean, I can't really say what our external pricing will be. It will be better than the A2. Of course, it'll be higher than the A2 because it's a much more efficient machine. We haven't set that price yet, and it's probably premature.

Speaker 9

That's all for me. Thanks.

Speaker 5

Thanks, Mike.

Speaker 10

Thank you. Our next question comes from Mark Palmer with The Benchmark Company. Your line is open.

Speaker 10

Yes, good morning, and thanks for taking my questions. With regard to the use of the production of various SEALMINER units going forward, how are you thinking about the balance between use for self-mining versus external sales? What are the factors that are going to enter into that, including obviously the price of Bitcoin on the one hand, but also demand for those units on the other?

Speaker 9

As we've said, we are prioritizing our internal use. That's driven by the fact that we don't want idle capacity, that the margins for self-mining are actually quite high, and that we think we are still in the early stages of a Bitcoin boom cycle. We're certainly prioritizing that. Our internal capacity will start to fill up in the coming months and quarters, so you'll see naturally a transition from using these mining rigs internally to selling more and more externally. Long term, of course, our goal is to be a major vendor of these to the overall market and not just for internal use.

Speaker 5

Yeah, Mark, I would just add to that, you know, we want to be in a position where we can always be very market-based in our approach, in that we will be able to have a home for every ASIC that we ever manufacture and be able to decide what's really what the highest and best use for it is, whether it's using it internally or selling it to third parties. As of right now, because we have significant capacity coming online, we obviously don't want that sitting idle. We are prioritizing that. Moving forward, we will be able to have that much more, you know, market-based approach.

Speaker 5

Kind of along the same lines in terms of the options on the table, what is your current thinking with regard to the use or non-use of the Bitcoin on the company's balance sheet, in terms of accumulation versus liquidation and funneling the proceeds from that into the development of the company's platform? Thank you.

Speaker 5

Yeah, I think we started, our policy had been to sell most or all the Bitcoin that we mine up until, I would say, toward the end of last year where we did start holding. Obviously, we do see value in holding Bitcoin on the balance sheet. We're very bullish on it long term. I don't think it's something that we're necessarily idealistic about. Jihan, do you have any other comments on that?

Speaker 3

Yeah, basically, we are taking a kind of a balanced approach. We sell some and we hold some. We need to sell some Bitcoin to make sure that our balance sheet in the accounting perspective in U.S. dollars in the long term can be balanced, right? Because we borrow money, we will borrow U.S. dollars, and then we raise the U.S. dollars through equity. Anyway, one day we need to return the capital to our investors in equity or in our debt. To sell some of the Bitcoin I think is necessary, but also hold Bitcoin into the long term. I believe it's a good activity, good deploy of capital because I believe that in 80 years, the Bitcoin can grow up to like $1 million. That's like 10 times from now. That's almost a 30% IRR investment. I think that's also a thing good for investors.

Speaker 3

During this kind of a turbulence of the market, we need to take a kind of a balanced approach. That's our philosophy here.

Speaker 3

Thank you.

Speaker 10

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

Speaker 10

Thanks for taking my question. To me, it was a surprise how much SEALMINERs you sold externally. Can you say where they were sold geographically? Were the tariffs at all involved?

Speaker 5

We did not disclose specifically where they were sold from a geographic location. We can say they were sold really throughout the world, some in the U.S., some obviously ex-U.S. We've not disclosed the buyers or actual geography.

Speaker 5

What was the last part of your question, Kevin? Was what involved?

Speaker 5

Yeah, reference to tariffs in the U.S. if there were high tariffs on equipment sold into the U.S.

Speaker 5

The tariffs over the last 90 days have still been on the pause. Anything, we wouldn't expect to have significant tariff exposure, at least in the last quarter.

Speaker 5

Okay, great. I understand the strategy is to use the equipment more for internal. Would we expect that this is a run rate for equipment sales each quarter?

Speaker 5

Not necessarily. It will come down to allocation we have from TSMC and really just the cadence of our power coming online. We are expecting quite a bit of power this quarter, and we are expecting to ramp to that 40 exahash target that we've set and possibly beyond that by year-end. As we kind of roll into the first half of 2026, we'll expect to have the Mazlen, Ohio site come on. That's another 221 megawatts. There will be quite a bit of additional new capacity that we'll want to fill with SEALMINERs. It really will come down to allocation. I think we'll always want to keep a bit of a balance between internal use and sales. In this kind of short-term period over the next, let's say, two to four quarters, two to three quarters, it will likely see a higher balance or higher allocation to self-mining.

Speaker 9

While the numbers are still relatively small, there'll be more volatility in how much gets sold externally. If you go past the three or four quarters, then you'll see that become a more steady and predictable number.

Speaker 9

Okay, thanks for that clarification.

Speaker 5

Thank you.

Speaker 10

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

Speaker 10

Hey, guys. How would you describe the demand environment and sort of pricing based on your discussions over the summer for Clarington? Did that pick up? Did it moderate? Just kind of curious the cadence.

Speaker 9

We haven't seen any decline at all. It's hard to say if it's, you know, how much it's picked up. It's been hot the whole time, I think. It's fair to say.

Speaker 5

Yeah, I think we've seen a lot of folks back in the market over these last several months, at least the last couple of months. The market's definitely picked up from a demand standpoint. Overall, yeah, we've not seen any slowdown by any means.

Speaker 5

You've mentioned Rockdale and Norway. Do you have a priority as to which you think you'd develop next?

Speaker 5

Not necessarily. I mean, I think we're going to see where the market goes. We think the opportunity in Norway is a very interesting one because the EU is quite a ways behind where we are in the U.S. from an adoption standpoint. We think that opportunity may have a longer tail to it. We think it's just an advantage for us. I think more price discovery that happens. We do think that's going to be a very interesting asset given that it is 100% hydropower. Norway is very well interconnected from a latency standpoint, good fiber that runs right adjacent to our property, and obviously a good climate for cooling. We're very bullish about that opportunity.

Speaker 5

Okay, thank you.

Speaker 10

Thank you. Our next question comes from Brett Noblock with Equity Research Analyst. Your line is open.

Speaker 10

Hi guys, thanks for taking my question. On maybe just the performance of the SEALMINER A2 that you guys have sold and also just used internally, I guess how is that both standing up to your expectations in terms of uptime and overall availability?

Speaker 9

I think the uptime and reliability are quite good, and it's about what we expected based on the early results. Maybe I'll ask Jihan, I think he has more direct interaction with the customers if he wants to add to that.

Speaker 3

It's excellent, I would say.

Speaker 3

All right, well said. Maybe just on the development partner kind of advanced negotiations, I guess what's the next step in that process? Is it formalizing an agreement with the development partner? Is it looking to find maybe a JV partner after that? What should we be thinking the cadence is for Clarington?

Speaker 9

Are you talking about the Clarington, Ohio site?

Speaker 9

Yes.

Speaker 9

Yeah, formalizing the agreement with the development partner is the next step.

Speaker 9

After that?

Speaker 9

The immediate next step is to identify a tenant and to sign a lease with that tenant. There will be some work done while that's going on, but that would be the highest priority.

Speaker 9

Yeah, concurrent to that, we could see horizontal construction on the property as well.

Speaker 9

Awesome.

Speaker 9

Thank you, guys.

Speaker 10

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

Speaker 10

Hey, guys, thanks for taking my question. Not sure if I missed this. On the SEALMINER sales, do we have the units? Is pricing the same as we were kind of guided to before? Did anything kind of change on that? I have a follow-up on the HPC side of the business.

Speaker 5

Yeah, no, pricing remains relatively consistent from last quarter. I think from the, you know, obviously sales increased. The amount of hash rate we sold was quite a bit higher, but pricing was pretty consistent.

Speaker 5

Got it. Understood. Thanks for that, Jeff. On the HPC part of the business, you still need to finalize the agreement with the development partner. The development partner, I wouldn't assume also is financing. You get the tenant, you get some debt financing, but you bring a JV partner in for an equity piece as well. Should we anticipate some equity given up in this process?

Speaker 5

The development partner we're looking to work with, we were looking for a partner that would actually bring the project equity to the table as well. Our goal is to finance the whole or the majority of the project at the project level, both project equity, obviously, as well as project financed debt.

Speaker 5

Got it. Understood. Thank you for that. Appreciate it.

Speaker 5

Yeah, thanks for the question.

Speaker 10

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

Speaker 10

Great, thanks. A little bit of a follow-up on Clarington. After an agreement with a development partner is in place, do you think any other actions need to be completed before a tenant moves forward with their own negotiations?

Speaker 9

Whether they need to be completed or not, we will be doing other actions. There will be sort of engineering work done. We'll order long lead time items. There will be what's called horizontal work, things like that. A lot of that stuff that's sort of agnostic to who the end tenant is and is relatively low cost, we will very likely start on that immediately in parallel with looking for and finding the tenant. Finding, identifying, and finding the tenant doesn't take that long, but actually finalizing a lease with the tenant can take quite a while, just because the leases tend to be quite complicated.

Speaker 5

Yeah, in an ideal scenario, we would have a, you know, we would finalize an agreement and then start that horizontal construction and ideally be ready to go vertical once we had a tenant identified.

Speaker 5

Great. Haris, you mentioned one of your comments was that the results will get stronger sequentially. Was that a comment on total revenue and just the EBITDA, or is that commentary just on self-mining given it doesn't sound like the third quarter will produce as much in external sales?

Speaker 5

I could say just generally speaking, obviously we're looking at a much higher run rate now at 40 exahash going into the fourth quarter versus the nine we were at coming into the beginning of this year. The run rate, I think we have set a new bar on the self-mining side. As Haris Basit said earlier, the sales side might be a little choppier just given the allocation from self-mining versus external sales. That will kind of vary a little bit more over these next two to four quarters. After that, like we said, we would expect it to be more heavily weighted potentially towards sales after that.

Speaker 5

Okay, thank you.

Speaker 5

Absolutely.

Speaker 10

Thank you. As a reminder, to ask a question, please press star-1-1. Our next question comes from Nick Giles with B. Riley Securities. Your line is open.

Speaker 3

Thank you very much, operator, and good morning, everyone. This is Cedar Chabalin on Nick Giles. My first one is regarding Clarington. You mentioned, can you provide a bit more color on what advanced stage of negotiation means and when should we expect an incremental update on the purchase? Thank you.

Speaker 9

Advanced stages means, you know, the final legal documents and final due diligence, things like that. We are hoping that in this quarter, Q3, we will have something to announce.

Speaker 3

you for that. A follow-up question regarding the SEAL-04 chip. What is the likelihood that this chip design could be adopted for applications beyond Bitcoin mining? If such adoptions are feasible, what specific application or use cases would be the most suitable? Thank you.

Speaker 9

The A4 is split now into two A4s. If you're talking about the one using the new technology, we need to do a lot more work to validate this, but the initial indications are that it should work quite well in many digital applications where there's very energy-intensive usage. Chips that have a lot of compute compared to others will benefit. If a chip is very high I/O intensive and most of its power is through I/O, then it will be less beneficial. If it's very compute intensive, that's where this technology helps the most. This is sort of a long-term thing. For using this technology on other non-Bitcoin chips, you're talking a couple of years out at least in order to get this adopted by other applications. I just want to make sure you're aware of that timeline.

Speaker 3

Thank you very much, Haris. Jeff and the team, continue best of luck.

Speaker 3

Thanks.

Speaker 10

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

Speaker 10

Yeah, good morning. Thank you for taking my questions and congrats on the strong equipment sales performance this quarter. Maybe you could just speak to the customer composition as you're selling the different series of SEALMINERs. Are you seeing a lot of customer retention and repurchasing of some of the newer series, or is that kind of distributed towards new customers? Curious to hear how that's performing and kind of your expectations. Thank you.

Speaker 5

Hey, Bill. Yeah, thanks for the question. We've not really disclosed the exact composition or any names of customers. What we can say, though, is that it has been a good mix of both public and private miners, large and small. Our goal really was to get the SEALMINER A2 in the hands of as many end users as we can to get more market feedback. While some of the larger PUBCOs, we believe, will likely be more interested in the SEALMINER A3, we have been able to distribute some of the A2s for testing as well.

Speaker 5

Great. Appreciate that color. My other questions were already answered. Thanks.

Speaker 5

Thanks, Bill.

Speaker 10

Thank you for your participation. There are no further questions at this time. You may now disconnect. Everyone, good day.

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