Summary Bitdeer's Q2 revenue was a record $155.6 million, marking a 57% year-over-year and 122% sequential increase, driven by external hardware sales. A key driver of top-line growth was $69.5 million in revenue from the external sale of proprietary SEALMINER A2 rigs, proving the vertical integration thesis is working. The headline net loss of $147.7 million was largely driven by non-cash, fair value changes on derivative liabilities, not a direct drain on core business operations. Bitdeer maintains a strong liquidity position with $299.8 million in cash and cash equivalents and $169.3 million in crypto assets, supported by recent convertible note proceeds. Q2 results are in for Bitdeer (NASDAQ: BTDR ). While net loss deepened compared to a year ago, and was a deviation from last quarter's net profit, the results show a company that is deliberately sacrificing short-term profitability in favor of an aggressive, long-term growth strategy. Breaking into hardware manufacturing isn't easy, and I think the main highlight for BTDR investors should be the significant strides the company has made so far, such that sales revenue from ASIC miners were a key driver for Q2’s top line. Here are some of the Q2 earnings figures precis: revenue came in at $155.6 million, with cost of revenue at $142.8 million. Gross margin was squeezed lower at 8.2%, and adjusted EBITDA was $17.3 million. Q2 revenue was a record for Bitdeer, up 57% YoY and 122% sequentially. The cost of revenue also jumped 91% YoY and 136% sequentially. The jump in cost of revenue could be linked to the higher operating and manufacturing expenses that have come with the production of ASIC hardware. The cloud mining segment saw a complete collapse, contributing almost nothing to the top line in Q2. Bitdeer’s record-breaking revenue was not a fluke but a direct outcome of the successful strategic pivot to a vertically integrated model (which began in earnest last year) with the sale of proprietary ASIC miners and a rapid expansion of self-mining operations as the primary drivers. I believe Q2 could be seen as an inflection point, and a repeat of such performance moving forward would be likely sustainable. I'm not saying Bitdeer will always mirror Q2’s triple-digit revenue jump every quarter moving forward, considering seasonality that comes with ASIC shipments and even Bitcoin ( BTC-USD ) mining price volatility influencing the sales from mining, but I believe the company might have found a sustainable ground for its long-term sales revenue mix. SEAL chips and miners release roadmap (Bitdeer) My previous coverages of BTDR in the past year have anchored mostly on the SEALMINER roadmap, from first initiating coverage on BTDR in January last year with a Buy rating based mainly on the company’s vertical integration strategy, the high allocation to R&D, and the prospects the company’s proprietary SEAL chips and SEALMINERs presented. The stock has seen a healthy rally since then and is still currently up over 100% despite volatility in Bitcoin’s price for most of last year. The latest top-line boost as a direct outcome of the vertical integration strategy, with revenue finally materializing from SEALMINER sales, means the initial Buy thesis which was mainly anchored on that vertical integration was correct, and I believe that there is still room for BTDR as a long-term hold in a crypto-stocks portfolio. My latest coverage back in June highlighted the declining sales across all of the company’s segments in Q1 (which was the negative) and then the initial traction from external SEALMINER sales (which was the positive). Despite the “mixed bag” results in Q1, I went a bit contrarian and maintained a Buy rating. And in this piece I’m reiterating a Buy rating despite the deepened net loss in Q2, and here’s why. Looking Beyond The Headline Net Loss The headline net loss does not tell the full operating story. The reported net loss of $147.7 million was mainly driven by non-cash, fair value changes on derivative liabilities, which included a $75.4 million loss from convertible notes and a $15.8 million loss from Tether warrants. This is not a direct cash drain from core business operations. Bitdeer maintained a strong liquidity position as of quarter-end. It held $299.8 million in cash and cash equivalents and $169.3 million in crypto assets. Bitdeer also issued $330 million in convertible notes in June, with an option for an additional $45 million. I believe the operational results in Q2 still validate the vertical integration thesis I’ve held on to since initiating BTDR coverage. The company's self-mining hashrate surged to an average of 14.2 EH/s in Q2. It continued to grow, reaching 22.3 EH/s by July . This was possible because the company successfully produced and deployed its own SEALMINERs. The company sold and shipped 5.3 EH/s of A2 rigs to external customers in Q2 alone, with an additional 0.6 EH/s recognized in July. This is proving to be not just a theoretical pipeline. It shows growing ASIC market share and customer acceptance that extended into Q3. Bitdeer’s mining hardware sales cadence is starting to form. We are on track to achieve our previous target of 40 EH/s of self-mining hashrate 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. As we continue to scale, our fleetwide energy efficiency will also improve, delivering better mining margins and operating leverage - Haris Basit, Chief Strategy Officer, during the Q2 earnings call . With external sales ramping, Bitdeer’s in-house capacity and fleet efficiency are inflecting at the same time. Bitdeer's fleet efficiency improved from 31.6 J/TH to 25.7 J/TH. That was a noteworthy 18.7% step forward. Fleet efficiency improvement drops unit power costs and expands operating leverage in a way that compounds with scale. With the ongoing efficiency gains and hashrate scaling at the same time, breakeven levels are likely to get more resilient. This makes the self-mining segment less fragile against Bitcoin price cycles (at least until the next Bitcoin halving which is about three years away). Management expects to reach 40 EH/s by late October with possibility of surpassing that target by year-end if wafer allocation improves. They’d be deploying the new mining rigs from their proprietary SEALMINER A3 machines, hence the hashrate sscale progress hinges on their silicon wafer supply. Q2 balance sheet (Bitdeer) Working capital is another piece of the story that looks different once you dig in. Inventory rose to $208.8 million (up from $64.9 million a year ago) and prepayments to $465.2 million. While these numbers look heavy, they are a direct reflection of Bitdeer’s proactive strategy of making advanced payments to suppliers and stocking wafers, chips, and work-in-progress inventory to support mass volume production of the proprietary ASIC miners. The company is stacking wafers, chips, and work-in-progress inventory to support both self mining ramp and the external SEALMINER shipments. This ties up cash in the short term, but also reduces supply chain risk in a tight foundry cycle and secures visibility for both sales and hashrate expansion. I think Bitdeer also benefits from a structural advantage that might be ignored by most of the market. Management can shift ASIC output between external sales and internal self-mining to match cycle conditions. This lets the company maximize gross profit per wafer, not just per unit shipped. Q2 showed both channels working together with self-mining revenue at $59.3 million and external SEALMINER sales at $69.5 million. The company also reallocated machines from its expiring cloud hash rate contracts to its self-mining operations. This is a structural edge over miners who rely on only a single business model, or who have pivoted to high performance computing [HPC] hosting but have not seen an equally significant revenue mix from that segment compared to that from self mining operations. 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. This LoA advances the final stages of the contracting process for the full 570 MW 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. - Haris Basit, Chief Strategy Officer, during the Q2 earnings call. There is also an overlooked benefit in how Bitdeer positioned its U.S. expansion. The Letter of Agreement (mentioned during the Q2 earnings call) for the Clarington site in Ohio was signed before new state data-center billing rules that would have imposed higher collateral and demand charges. The timing protects Bitdeer’s cost structure and leaves the door open for HPC hosting and AI cloud services pivot at the site, which would add another non-Bitcoin mining revenue stream on top of the existing power base. Finally, Bitdeer’s product roadmap adds more optionality for the company. The SEALMINER A3 are in the final stages of mass production and are expected to launch next month. Then tape-out for the SEALMINER A4, when the chip design will be sent to a semiconductor foundry for manufacturing, is planned for Q4 2025. The A4 targets a breakthrough efficiency of approximately 5 J/TH at the chip level. If the SEALMINER A4 lands near this J/Th target, I believe it will widen the efficiency gap between Bitdeer’s self mining efficiency and that of several other miners. It will also potentially expand the pricing umbrella for external sales. And this could potentially lift both hardware margins and self-mining returns. In all, Bitdeer’s aggressive roadmap is supported by clear capex visibility through the power and datacenter infrastructure build-out that management has embarked on so far this year. Q2 Capex spend was around $106 million. But on the output and capacity side of it, Bitdeer has energized 361 MW of datacenter capacity year-to-date, bringing total available electrical capacity to 1.3 GW, with a goal of over 1.6 GW by year-end. And this keeps management’s 40 EH/s target and beyond by year end very feasible. Risks The risks facing Bitdeer at this juncture are familiar to growth investors and are tied to Bitdeer's vertical integration strategy and proprietary hardware manufacture. They include inventory obsolescence from next-generation hardware cycles, supply chain bottlenecks from wafer or chip shortages, and volatility in Bitcoin’s price that directly affects the economics of both self-mining and external hardware sales. Execution risk on the SEALMINER roadmap also remains, as delays or underperformance on the A3 or A4 rigs could hurt market confidence. Takeaway Q2 shows that Bitdeer is moving from concept to execution in its vertical integration strategy. The meaningful sales recorded from SEALMINER A2 units are an early proof point that the model works. On top of that, the company’s self-mining is also scaling, with a feasible 40 EH/s target before year end. Efficiency has also improved from 31.6 J/TH to 25.7 J/TH, and the rollout of the A3 rigs and the planned tape-out of the A4 SEALMINER means further efficiency gains and potential margin expansion are still ahead. The balance sheet, bolstered by cash, crypto, and convertible note proceeds, is structured to fund growth at scale. The risks of inventory exposure and Bitcoin volatility look better defended with the efficiency gains, secured wafer allocation, and a broader revenue base that now includes both hardware sales and expanding self-mining output. On these bases, I believe the Buy rating for BTDR remains warranted, and the vertical integration thesis remains intact.
