By Joy Lou
BitDeer (stock code BTDR in the US) updated its operating figures for November. The market-focused A2 mining machine (Sealminer A2) began mass production, with the first batch of 30,000 units sold to the outside world.
The first growth curve: self-developed chips, sales of mining machines, and self-operated mining farms
The ability to develop chips on its own has always been the core competitiveness of mining machine manufacturers. Xiaolu successfully completed the production of A2 mining machine chips and A3 mining machine chips in the past six months.
Figure 1: BitDeer Technology Roadmap
Source: BitDeer official website
Figure 2: BitDeer main mining machine parameter prediction
Source: Model forecasts, company guidance
According to public information, the current operating parameters of the A2 mining machine are at the historical leading position among all the mining machines currently on sale and in operation on the market. Although the A3 has not yet been officially released, judging from the known parameters, it will become the world's largest single hash computing power mining machine with the leading energy efficiency ratio. The possibility of this product being sold to the outside world in the short term is extremely low, and it will be used first to deploy self-operated computing power.
Figure 3: The latest mining machine companies and mining machine parameters in the world
Source: Bitmain, BitDeer, Shenma Miner, Canaan Technology official website
In terms of power plants, as of the end of November, the company has completed the deployment of 895MW of power plants in the United States, Norway and Bhutan. There are also 1645MW projects under construction, of which 1415MW will be completed in mid-to-late 2025. According to the minutes of Guosheng's conference call, the company has set up a special department to acquire more power plant projects, and it is expected to add more than 1GW of power plants in 2026; the average electricity price of all self-operated power plants is less than US$0.04/kWh, which is absolutely leading compared with its peers.
Figure 4: BitDeer’s built and under-construction electric fields
Given the above operating figures, the BitRoad 1EH/s model is as follows:
Figure 5: BitDeer single EH/s model
The key assumptions of the model include that the mining machine depreciation period is 4 years (5 years under North American financial standards), the electric field depreciation period is 15 years (20 years under North American financial standards), and other costs (including manual operation and maintenance, etc.) account for 5% of revenue (the company's historical operating figures are only 1-1.5%). According to the model, the shutdown price of BitDeer's self-operated mining farm is 35,000 US dollars in Bitcoin.
Figure 6: Relationship between pre-tax profit margin of BitDeer’s self-operated mining farm and Bitcoin price
When the price of Bitcoin exceeds $150,000, the pre-tax profit slope of BitDeer's self-operated mine will exceed the rate of increase of Bitcoin. If the price of Bitcoin reaches $200,000, the pre-tax profit margin of BitDeer's self-operated mine will be close to 80%.
The market still has two major concerns about BitDeer's first growth curve.
- Regarding the ratio of mining machine sales and self-use. As mentioned earlier, Xiaolu is expected to reach a 2.3GW power field reserve by mid-2025. If all the above mines are equipped with A3 mining machines, the self-operated computing power will be close to 220EH/s. According to the linear growth of the computing power of the whole network, it will account for about 20% of the computing power of the whole network by the end of 2025. According to the company's 2024 third quarter report, the company has cash and general equivalents of US$291 million, and completed US$360 million convertible bonds at the end of November, plus US$40 million options. The company currently has about US$690 million in cash on hand. According to the company's power field investment and self-operation needs, due to the time difference between the laying of self-operated computing power and output, it may need to raise funds again, but Xiaolu's current stock price is undervalued, and the company is not willing to issue additional shares. Therefore, based on cash flow demand, 10,000 4nm wafers can generate an annualized net cash flow of US$480 million (calculated based on 4 months of mining machine turnover). If this cash flow is reinvested into self-operated computing power (all equipped with A3 mining machines), the computing power will increase by 60eh/s. After 2025, Xiaolu's overall cash flow will no longer be a problem, and the sales of mining machines plus the mining business can ensure that the bitcoins produced by Xiaolu are no longer sold, but are self-sustaining.
Figure 7: Operating cash flow derivation model
2. About the competitive relationship between Bitmain and Deer. The core of commercial competition is still the performance of mining machines and the cost of self-operated computing power. According to public data and laboratory data, Deer has sufficient competitive advantages in both the mining machines it has produced and the cost of self-operated computing power. With the development of high-end process chips, mining machines, as the downstream of the industry, will also be affected by the upstream competition pattern.
The second growth curve is AI computing power
In addition to mining machine sales and self-operated mining farms, the company's November operating figures showed that it has begun deploying Nvidia H200 chips in the TIER3 data center of intelligent cloud services for AI computing power construction.
Mr. Wu Jihan wrote an article entitled "The Beauty of Computing Power" in 2018: Computing power may be an effective means for mankind to reach a higher civilization, and it is also the most effective way to fight against entropy increase .
The original intention remains.
According to Tianfeng Research, the power deployment plans of major Bitcoin mining companies in North America currently exceed 1GW, 3,471MW has been powered on, and 5,969MW is expected to be completed by 2028. The above power deployment will meet 56% of the power demand of North American data centers. BitDeer said in a Tianfeng conference call on December 6 that it will deploy Nvidia's high-end chips with at least 200MW of power in the short term, and start serving customers such as MEGA 7 for cloud calls, emulating the COREWEAVE model.
Investment advice and valuation
The right time, the right place and the right people are the best description of investing in BitDeer at the current point in time. The company has accumulated strength and is ready to make a breakthrough. The first growth curve and the second growth curve are expected to rise simultaneously, forming a synergy. It is the most cost-effective target among the current US mining stocks.
However, how to value a company and how to define the company's value in a profit model are challenging. Neither the profit valuation generated by the sale of mining machines alone nor the valuation of self-operated mines is sufficient to cover Xiaolu's actual operating conditions. Therefore, two types of business models are fitted as follows:
Figure 8: Calculation of BitDeer Miner Sales Model
Figure 9: BitDeer self-operated mining farm prediction model
The current average valuation of mainstream mining companies in North America of $170 million/EHs is the closest to the market consensus. It is reasonable to believe that in the next two years, Xiaolu's actual self-operated mines will reach between 120-220EH/s, with a market value of approximately $20.4 billion to $37.4 billion, which is 4.8-9.7 times the current share price.
Figure 10: Valuations of major North American mining companies
Investment risks :
1. Bitcoin price fluctuation risk;
2. TSMC wafer risks caused by sanctions.
