Bitdeer Technologies Group is currently undervalued, as the market is failing to recognize the substantial value embedded in its extensive power pipeline – not to mention the transformative potential of its ASIC manufacturing business. Bitdeer is poised to become a formidable competitor in the Bitcoin mining industry, leveraging its strategic investments in next-generation ASICs and large-scale infrastructure projects.
This is a guest post by Brandon Bailey, co-founder of Second Gate Advisory, and it is drawn from his recent Bitdeer Research Note report.
Key takeaways:
- Undervaluation by the Market: The market is currently undervaluing Bitdeer, because investors are focusing almost exclusively on its current self-mining hashrate. This narrow view overlooks the significant potential in Bitdeer’s other business segments, including its cloud hashrate business, hosting businesses, and incipient ASIC manufacturing business.
- Significant Power Pipeline: Bitdeer has the largest operational power capacity among public Bitcoin miners, with 895 MW currently online and a planned expansion of 1,200 MW by year end 2025. This expansive power pipeline provides a substantial runway for future growth, positioning Bitdeer ahead of its peers.
- Competitive ASIC Manufacturing: Bitdeer’s entry into ASIC manufacturing could allow it to increase its self-mining hashrate at a significant discount compared to peers. With chip allocations secured fromTSMC, Bitdeer is well-positioned to compete directly with industry leader Bitmain, which also uses TSMC for chip production.
- Significant Upside Potential: A sum-of-all-parts valuation of Bitdeer’s diverse business segments (self-mining, cloud hashrate, hosting, and ASIC manufacturing) suggests a total value of $2.1 billion, implying a 206% upside from its current market cap of approximately $900 million.
Bitdeer has the largest power pipeline of public bitcoin miners
Bitdeer boasts the largest power pipeline among public Bitcoin miners, with 895 MW of operational capacity, and it plans to energize an additional 1,200 MW by 2025. Bitdeer has mostly funded significant expansions at its Tydal, Norway site and sites in Ohio and Bhutan, with an estimated $300 million to $320 million in capex remaining to fully develop the 1,200 MW expansion.
Based on recent sales comparisons in the Bitcoin mining space, Bitdeer’s power capacity could have an estimated liquidation value of $350 million to $525 million, representing 39% to 58% of the company’s total market cap. With increasing demand from HPC/AI companies, power capacity is becoming scarcer, uniquely positioning Bitdeer relative to its peers.
Bitdeer is a sleeping giant in ASIC manufacturing
Bitdeer’s entry into ASIC manufacturing, led by its SEALMINER machines, could position it as a formidable challenger to industry giants Bitmain and MicroBT. The SEAL02 chip, Bitdeer’s first commercial ASIC, is expected to achieve a 14 J/TH efficiency at the chip level and 15-16.5 J/TH efficiency at the machine level. Bitdeer has already paid for tapeout at TSMC for the SEAL02 and is aiming for mass-production of the ASICs by Q4 2024.
Vertical integration in ASIC production could give Bitdeer a significant competitive advantage. If the company can produce ASICs at a cost between $11-$13 per TH, it would enable Bitdeer to acquire hashrate at a meaningful discount relative to peers, while also reducing risks related to supply shortages and price increases. If successful, the enterprise value of Bitdeer’s ASIC manufacturing business alone could exceed the company’s current market cap.
Bitdeer’s business segments give it impressive flexibility
Bitdeer’s target of a 60 EH/s self-mining hashrate by year-end 2025 represents a 408% increase from its 2024 year-end target of 11.8 EH. Its hosting business, with 13.8 EH under management, generated $42.7 million in revenue in Q2 2024, with 28.3% gross margins, accounting for 43% of total revenue. The cloud hashrate business, with 1.2 EH under management, offers 83% gross margins and provides the potential for forward selling hashrate at favorable prices during bull market cycles. Additionally, Bitdeer is actively exploring opportunities to expand into the AI and HPC space. The company’s pilot project in Singapore currently operates 250 H100 GPUs, which are currently at full utilization.
Bitdeer has the liquidity to execute its plans
Bitdeer has $204 million in cash, recently announced a $150 million convertible note offering, and has approximately $645 million of remaining borrowing capacity through its at-the-market equity offering. These sources of capital provide Bitdeer with the financial flexibility needed to fund much of its ambitious growth plans across its power pipeline and ASIC manufacturing business.
This is a guest post by Brandon Bailey and does not reflect the opinions and views of Blockspace Media. Nothing in this post should be misconstrued as financial advice.
