Bit小鹿 2025 Q1 Performance Review and Investment Recommendations

Written by: Cycle Trading

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

Comment:

1. Xiaolu's prepayments further increased to $382 million in Q1 2025 (compared to $310 million in Q4 2024), and the amount needed to cover the maximum available chip production has been fully covered. The Seal02 mining machine has entered the shipping stage, and the subsequent pace of self-operated and sales will depend on the pricing strategy of competitors. If competition is fierce, priority will be given to lighting up self-operated mining fields; the Seal03 mining machine also completed chip production in Q1 and is currently still in the testing phase. It is expected to officially enter the layout and sales phase of self-operated mining fields by the end of Q3 and in Q4 2025.

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

3. The global power infrastructure construction of Xiaolu is keeping a rapid pace, and it is expected that by the end of the second quarter, the global available power capacity will approach 1.6GW and reach 1.8GW by the end of this year.

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

Investment advice: The price of Bitcoin has recently returned to an upward trend and is expected to break through the previous historical high price of $109,000 per coin. Since the U.S. trade war, the dollar has been under pressure, and Bitcoin, as an alternative asset, is beginning to show its safe-haven properties similar to gold. The Federal Reserve has also recently begun to adopt an "average inflation" policy, with expectations for an interest rate cut potentially advancing to June, and the annual rate cut expectation has increased to three times (up from one previously), all of which provide positive support for the price of Bitcoin. After experiencing a transitional phase in operations in the fourth quarter of last year and the first quarter of this year, Bitdeer is about to welcome an important moment; the speed of mining machine research and development and the speed of lighting up self-operated mining fields will be important highlights in the coming quarters. The operating conditions in the first quarter of 2025 should represent the worst period in the next two years, and the turning point in operations will begin from this point, still making North American Bitcoin mining stocks the best choice.

Investment risks: The risk of further adjustment in Bitcoin prices, the risk of TSMC's chip production falling short of expectations, and the risk of the company's self-operated mining machines being launched slower than expected.