Analysis of the Valuation Potential of Bitdeer.
Written by: Joy Lou
Bitdeer (NASDAQ: BTDR) updated its operational numbers for November, with market attention on the A2 mining machine (Sealminer A2) which has begun mass production, with the first batch of 30,000 units for external sale.
First Growth Curve: Self-Developed Chips, Mining Machine Sales, Self-Operated Mining Farms
The ability to develop self-owned chips has always been the core competitiveness of mining machine manufacturers. In the past six months, Bitdeer has successfully completed the first batch of chips for the A2 and A3 mining machines.
Figure 1: Bitdeer Technology Roadmap, Source: Bitdeer Official Website
Figure 2: Bitdeer Main Mining Machine Parameter Forecast, Source: Model Prediction, Company Guidance
According to public information, the operational parameters of the A2 mining machine are currently at a historically leading position among all mining machines available and in operation on the market. Although the A3 has not yet officially launched, based on known parameters, it is expected to become the largest single hash power mining machine globally, with leading energy consumption. The possibility of external sales for this product in the short term is extremely low, as it will be prioritized for deployment in self-operated computing power.
Figure 3: Latest Global Mining Machine Companies and Mining Machine Parameters, Source: Bitmain, Bitdeer, Innosilicon, Canaan Creative Official Website
In terms of power plants, as of the end of November, the company has completed the deployment of a total of 895MW of power plants in the United States, Norway, and Bhutan. There are still 1,645MW of projects under construction, of which 1,415MW will be completed in the second half of 2025. According to the conference call minutes from Guosheng, the company has established a special department dedicated to acquiring more power plant projects, with the expectation of adding over 1GW of power plants by 2026; the average electricity price of all self-operated power plants is less than $0.04 per kWh, which is an absolute leading advantage compared to peers.
Figure 4: Bitdeer Built and Under Construction Power Plants, Source: Company Official Website
Given the above operational numbers, Bitdeer's 1EH/s model is as follows:
Figure 5: Bitdeer Single EH/s Model, Source: Model Prediction
The key assumptions of this model include a mining machine depreciation period of 4 years (North American financial standards allow for 5 years), a power plant depreciation period of 15 years (North American financial standards allow for 20 years), and other costs (including labor and operation) accounting for 5% of revenue (the company's historical operational numbers have only been 1-1.5%). According to the model, Bitdeer's self-operated mining farm shutdown price is $35,000 per Bitcoin.
Figure 6: Bitdeer Self-Operated Mining Farm Pre-Tax Profit Margin and Bitcoin Price Relationship, Source: Model Prediction
When the price of Bitcoin exceeds $150,000, the pre-tax profit slope of Bitdeer's self-operated mining farm can exceed the rate of Bitcoin's increase. If the price of Bitcoin reaches $200,000, Bitdeer's self-operated mining farm pre-tax profit margin will approach 80%.
For Bitdeer's first growth curve, the market still has two major concerns.
- Regarding the ratio of mining machine sales to self-use. As mentioned earlier, Bitdeer is expected to reach a power plant reserve of 2.3GW by mid-2025. If all these power plants are equipped with A3 mining machines, the self-operated computing power will be close to 220EH/s. Assuming linear growth of the total network computing power, it will account for about 20% of the total network computing power by the end of 2025. According to the company's Q3 2024 report, the company has cash and cash equivalents of $291 million, completed $360 million in convertible bonds by the end of November, and has about $690 million in cash on hand, including $40 million in options. Based on the company's power plant investment and self-operated demand, due to the time lag between self-operated computing power deployment and output, further financing may be needed. However, Bitdeer's current stock price is undervalued, and the company's willingness to issue additional shares is low. Therefore, starting from cash flow needs, a batch of 10,000 4nm wafers can generate an annual net cash flow of $480 million (calculated based on a 4-month mining machine turnover). If this cash flow is reinvested into self-operated computing power (fully equipped with A3 mining machines), it will increase computing power by 60EH/s. After 2025, Bitdeer's overall cash flow will no longer be a problem, and the combination of mining machine sales and mining operations will ensure that the Bitcoin produced by Bitdeer will no longer be sold but retained.
Figure 7: Operating Cash Flow Derivation Model, Source: Model Prediction
- Regarding the competitive relationship between Bitmain and Bitdeer. The core of the commercial competition relationship still lies in mining machine performance and self-operated computing power costs. According to public data and laboratory data, Bitdeer has sufficient competitive advantages in both produced mining machines and self-operated costs. With the development of high-end process chips, mining machines, as the downstream of the industry, will also be affected by the competitive landscape upstream.
Second Growth Curve: AI Computing Power
In addition to mining machine sales and self-operated mining farms, the company's operational numbers report for November shows that it has begun deploying Nvidia H200 chips in TIER3 data centers for AI computing power construction.
Mr. Wu Jihan wrote an article titled "The Beauty of Computing Power" in 2018: Computing power may be an effective means for humanity to reach a higher civilization and the most effective way to combat entropy increase.
The original intention remains.
According to a report from Tianfeng Research, the power deployment plans of major Bitcoin mining companies in North America exceed 1GW, with 3,471MW already powered on, and it is expected to complete 5,969MW before 2028. This power deployment will meet 56% of the electricity demand for data centers in North America. Bitdeer stated in the Tianfeng conference call on December 6 that it will deploy at least 200MW of power in the short term to support Nvidia's high-end chips and begin serving clients like MEGA 7 for cloud calls, emulating the COREWEAVE model.
Investment Recommendations and Valuation
Timing, location, and people are the best explanations for investing in Bitdeer at the current moment. The company is well-prepared for growth, with the first and second growth curves expected to rise in tandem, creating a synergistic effect, making it one of the most cost-effective stocks in the U.S. mining sector.
However, valuing the company and defining its value within the profit model presents challenges. The profits generated solely from mining machine sales or self-operated mining farms are insufficient to cover Bitdeer's true operational situation. Therefore, the two business models are fitted as follows:
Figure 8: Bitdeer Mining Machine Sales Model Calculation, Source: Model Prediction
Figure 9: Bitdeer Self-Operated Mining Farm Forecast Model, Source: Model Prediction
The current average valuation method for mainstream mining companies in North America is approximately $170 million per EH/s, which is closest to market consensus. It is reasonable to believe that in the next two years, Bitdeer's actual self-operated mining farms will reach between 120–220EH/s, with a potential market value estimated between $20.4 billion and $37.4 billion, representing a price increase of 4.8–9.7 times from the current stock price.
Figure 10: Valuation of Major North American Mining Companies
Investment Risks:
Bitcoin price volatility risk;
Risks of sanctions leading to TSMC wafer supply issues.
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