Original author: Joy Lou

BitDeer (stock code BTDR in the US) updated its operating figures for November. The market-focused A 2 mining machine (Sealminer A 2) 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 A 2 mining machine chips and A 3 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 Prediction, Company Guidance

According to public data, the operational parameters of the A2 miner are currently at a historically leading position among all mining machines on the market, while the A3 has yet to be officially launched but is expected to become the largest single-hash computing power miner in the world based on known parameters and has superior energy consumption. The short-term possibility of this product being sold externally is very low, as it will be prioritized for deploying self-operated computing power.

Figure 3: Latest Global Mining Machine Companies and Mining Machine Parameters

Source: Bitmain, Bit Deer, Shenma Mining Machine, and Canaan Technology Official Websites

Regarding power plants, as of the end of November, the company has completed a total of 895 MW of power plant deployment in the United States, Norway, and Bhutan. Additionally, 1,645 MW projects are under construction, with 1,415 MW expected to be completed by mid-2025. According to the minutes of the Guosheng conference call, the company has established a special department dedicated to acquiring more power plant projects, with the expectation of adding over 1 GW of power plants by 2026; all self-operated power plants have an average electricity price of less than $0.04/kWh, maintaining an absolute leading advantage compared to peers.

Figure 4: Bit Deer Constructed and Under Construction Power Plants

Source: Company Official Website

Given the above operational figures, Bit Deer's 1 EH/s model is as follows:

Figure 5: Bit Deer Single EH/s Model

Source: Model Prediction

The key assumptions of this model include: mining machine depreciation period of 4 years (North American financial standards allow for up to 5 years), power plant depreciation period of 15 years (North American financial standards allow for up to 20 years), and other costs (including labor and operational maintenance, etc.) accounting for 5% of revenue (historically, the company's operating figures have only been 1-1.5%). According to the model, the shutdown price of Bit Deer's self-operated mining site is $35,000 for Bitcoin.

Figure 6: Bit Deer Self-operated Mining Site Pre-tax Profit Margin and Bitcoin Price Relationship

Source: Model Prediction

Once the Bitcoin price exceeds $150,000, the pre-tax profit margin of Bit Deer's self-operated mining site can surpass the speed of Bitcoin's rise. If the Bitcoin price reaches $200,000, Bit Deer's self-operated mining site pre-tax profit margin will approach 80%.

The company released 6-K and 3-F forms on December 11, adjusting the shelf offering from $250 million to $580 million, while announcing the issuance of $1 billion in common stock debt securities warrants.

As mentioned earlier, Bit Deer is expected to reach a power plant reserve of 2.3 GW by mid-2025. If all the above mining sites are equipped with A3 miners, self-operated computing power will approach 220 EH/s (based on A3 miner's 325 Th calculation, corresponding to about 700,000 units). According to the linear growth of 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 third-quarter report, cash and cash equivalents amount to $291 million, $40 million in options, $360 million in convertible bonds to be completed by the end of November, and $410 million in shelf offerings (originally planned $250 million, $170 million has been issued, with an additional $330 million), along with $1 billion in warrants, cash on the company's books will reach $2.1 billion. Based on TSMC's current wafer price and the latest conference call, the cost for 3 NM process per 10,000 wafers is $200 million, corresponding to 90,000 A3 miners. 700,000 miners correspond to 80,000 wafers, equating to $1.6 billion in capital expenditure. TSMC's latest quarterly report shows that current 3 NM capacity is about 80,000 wafers/month, set to increase to 100,000 wafers/month by 2025. After increasing financing efforts, Bit Deer will actively secure future wafer production capacity to prepare for launching its self-operated mining site earlier.

Figure 7: After Bit Deer completes all financing increases, cash on hand will reach $2.1 billion.

Source: Bit Deer Company Announcement

Regarding the competitive relationship between Bitmain and Bit Deer. The core of commercial competition still lies in mining machine performance and self-operated computing power costs. According to public data and laboratory data, Bit Deer holds sufficient competitive advantages in both produced mining machines and self-operated costs. With the development of high-end process chips, mining machines, as an industry downstream, will also be affected by upstream competitive dynamics.

Second Growth Curve AI Computing Power

In addition to mining machine sales and self-operated mining sites, the company's operational data report from November shows that it has begun deploying NVIDIA H200 chips in TIER 3 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 counter entropy increase.

The original intention remains.

NVIDIA's latest disclosed 13 F report shows that as of the end of the third quarter of 2024, the company added 7.72 million shares of Applied Digital (APLD), reaching a shareholding ratio of 3.6%. The latter is dedicated to transforming into high-performance computing and artificial intelligence infrastructure solutions and cloud services; on December 2, NVIDIA as a strategic investor led the additional issuance of approximately 33.33 million new shares of the Dutch artificial intelligence infrastructure service provider Nebius (NBIS) at $21 per share to accelerate the promotion of the artificial intelligence manufacturing industry. JPMorgan's latest research report predicts that global artificial intelligence capital expenditure will reach $48 billion by 2025, and major North American SAAS companies have begun promoting B-end artificial intelligence AI Agent services and will increase investment by 2025, improving overall ROI expectations. As a mining site owner with substantial power resources, transitioning from mining to artificial intelligence cloud services is in line with expectations. Bit Deer is currently beginning to engage with major North American technology companies (MEGA 7) and will allocate more power to artificial intelligence cloud services in the medium term.

Investment Recommendations and Valuations

The timing, location, and favorable conditions best summarize the current investment in Bit Deer. The company is well-prepared for growth, and both the first and second growth curves are expected to rise in sync, creating a synergistic effect, making it one of the most cost-effective targets among current U.S. mining stocks.

However, valuing the company and defining its value in the profit model poses challenges. The profit valuation from standalone mining machine sales or self-operated mining sites is insufficient to cover Bit Deer's actual operating conditions; thus, two types of business models are fitted as follows:

Figure 8: Bit Deer Miner Sales Model Calculation

Source: Model Prediction

Figure 9: Bit Deer Self-operated Mining Site Forecast Model

Source: Model Prediction

The current average valuation method for mainstream North American mining stock companies is $170 million/EH. It is reasonable to believe that in the next two years, Bit Deer's actual self-operated mining sites will reach between 120–220 EH/s, with a market value estimated between $20.4 billion and $37.4 billion, which is 4.8 to 9.7 times the current stock price.

Figure 10: Valuation of Major North American Mining Stock Companies

Investment Risks:

1. Bitcoin price volatility risk;

2. Risks of TSMC wafer production due to sanctions.