Bitdeer Technologies Group (BTDR) Earnings Call Transcript & Summary

Good day. Thank you for standing by. Welcome to Bitdeer's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the conference over to your first speaker today, Pretesh Dahya, Head of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. Welcome to Bitdeer Technology Group's Second Quarter 2026 Earnings Conference Call. Joining me today are Jihan Wu, Founder, Chairman and Chief Executive Officer; Haris Basit, Chief Strategy Officer; and Michael Potter, Chief Financial Officer. Today's call will begin with Haris providing a review of our recently announced Tydal Norway colocation lease agreement, followed by Michael, a review of our business segments and second quarter financial results. Before management begins their formal remarks, I would like to remind everyone that during today's call, we may make certain forward-looking statements. These statements are based on management's current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially. For a more complete discussion of forward-looking statements and the risks and uncertainties related to Bitdeer's business and industry, please refer to the company's filings with the U.S. Securities and Exchange Commission. I also want to note that we will be discussing certain non-GAAP financial measures and operating metrics today. A reconciliation of these measures to those directly comparable GAAP measures is included in our earnings release issued earlier today. These non-GAAP measures should not be considered in isolation from or as a substitute for the most directly comparable measures paired in accordance with GAAP. As a reminder, changes to the fair value of our digital assets are reflected in GAAP net income and may introduce noncash volatility into our reported results. With that, I will now turn the call over to Haris.

Thank you, Tesh, and good morning, everyone. This is our first earnings call since we announced the execution of our $4.7 billion colocation lease at Tydal, Norway, and I would like to begin by putting that agreement in context. Over the past several years, we have worked to build a power infrastructure portfolio that we believe is well positioned to support both our Bitcoin mining operations and our expansion into AI infrastructure. Tydal represents an important step in converting that portfolio into long duration contracted revenue, and it establishes AI infrastructure colocation as an additional pillar of our business alongside our AI cloud, Bitdeer Mining and ASIC development and manufacturing operations. We are pleased with the terms of this agreement and with the caliber of Volta as our counterparty. We view Tydal as an important proof point for this strategy, and we intend to pursue additional opportunities of this kind as they arise. Agreements of this scale and complexity reflect the work of our team over the past several years, and I want to thank everyone involved for their efforts in reaching this milestone. With that, let me walk through the terms of the Tydal transaction in more detail. On August 4, we announced that our subsidiary, Tydal Data Center AS has executed a 16-year colocation lease and services agreement with Volta at our Tydal campus in Norway. Under the agreement, we are delivering 121 IT megawatts, supported by approximately 133 gross megawatts. This will be spread across 4 existing data halls and will be configured to run NVIDIA GPUs. The lease is expected to generate approximately $4.7 billion in contracted base term revenue over the initial 16-year term. An renewal option, if exercised, would increase the potential contract value to approximately $8 billion over 24 years with the tenant termination right at the end of year 10. The leases structured has a modified growth arrangement. Volta pays a combined base rent and service fee with a 3% annual escalator and electricity costs are fully reimbursed on a pass-through basis, which protects our margin from energy price volatility and provides a highly predictable cash flow. Over the 16-year based term, we expect this agreement to generate average annual revenue of approximately $2.4 million per IT megawatts. Importantly, Volta's obligations are anticipated to be backed by an institutional grade credit structure. This anticipated credit enhancement meaningfully reduces our counterparty risk and improves the financeable quality of these contracted cash flows, which supports our plan to access attractive debt financing terms to fund the remaining development as Tydal. Our remaining capital expenditure is approximately $500 million, which we believe is significantly more capital efficient than a typical greenfield data center build. We expect to raise project level financing to fully fund our remaining Tydal capital needs and to provide significant additional capital. Delivery is structured across 2 equal-sized phases targeting December 31, 2026, for the first phase and March 31, 2027, for the second. A word on our tenant. Volta is a compute infrastructure developer focused on large-scale AI and data center deployments in power advantage markets. Volta has announced a $10 billion strategic partnership with an AI lab and a broader development pipeline exceeding 1 gigawatt. In selecting Volta as our partner at Tydal, we evaluated their technical ability to execute a large-scale GPU deployment, the quality and enforceability of their anticipated credit support and their ability to move rapidly to match the anticipated Tydal construction time line. It is important to note that Tydal will incorporate leading-edge NVIDIA GPUs has one of the highest reliability grid connections in Europe, is 100% powered by renewable energy and has an extremely high energy efficiency with a PUE of approximately 1.1. Our broader power and infrastructure portfolio stands at approximately 3 gigawatts of total global electrical capacity at the end of the second quarter, up approximately 12% year-over-year. Furthermore, we continue to evaluate opportunities for additional grid connected and behind-the-meter expansion sites globally across both new and existing sites. Our objective is straightforward. Continue acquiring, building and converting powered infrastructure. We will share updates on our progress here when appropriate. I will now turn the call over to Michael to walk through our business segment updates and second quarter financial results.

Thank you, Haris, and good morning. I'm happy to join everyone for the first time as Bitdeer CFO. Execution remains our top priority. While the Titolease that Harris described has now been executed, there is significant work ahead to prepare for the first RFS date. We will update as appropriate as those milestones are achieved. The focus in our view is on the quality of altered demand, robustness of the financing structure and contractual protections. We believe this transaction compares very favorably on these dimensions, and we look forward to demonstrating that through continued execution. Looking ahead, we see plenty of interest in various sites within our portfolio that could potentially be used as AI/HPC data centers. A key advantage of our model is the ability to utilize capacity for crypto mining and to an AI data center is ready, ensuring our power assets remain productive and secured. Turning to our Bitcoin mining business. Self-mining hash rate reached approximately 73 exahash per second at the end of the second quarter, up approximately 342% year-over-year, supported by approximately 243,000 active self-mining rigs. This is an increase of approximately 113% year-over-year. We mined 783 Bitcoin in April, 921 Bitcoin in May and 990 Bitcoin in June. Total second quarter production was approximately 2,694 Bitcoin, an increase of approximately 377% year-over-year. Our co-mining hash rate also continued to accelerate meaningfully during the quarter. This reflects our continued deployment of seal miners into third-party facilities. It grew over 260% sequentially. We believe our; combination of self-mining, co-mining and hosting gives us multiple channels to monetize our growing seal minor production. We have the flexibility to allocate hard work for the channel that offers the best returns as market conditions evolve. Our Sealminer platform continues to reinforce our structural cost advantage. The commercial launch of our A4 Ultra hydro unit operating at 9.45 jewels per terahash at the chip level continues to lower our internal cost per exahash. During the quarter, we also launched the Sealminer Hydral our first machine designed for script algorithm mining. This broadens our product line beyond Bitcoin focused hardware. Our internal manufacturing capability means that we're not subject to third-party markups when deploying Sealminer rig into our own fleet. This remains a structural cost advantage relative to other mining operators. In July, we broke ground on our first U.S.-based manufacturing site a 187,000 square foot seal minor manufacturing facility in Sparks, Nevada. This is expected to be completed by the end of 2026 and we'll be capable of producing 10,000 units. It is expected to create approximately 70 high-quality local jobs. At the Massillon, Ohio site, we have 174 megawatts of capacity currently online for mining. With reconstruction of 2 previously fire damage buildings underway, a significant portion of that cost has been recovered through supplier insurance coverage. We believe the associated capacity to be energized in phases during the third quarter. In June, we broke ground on our Fox Creek, Alberta site, a $155 million investment includes a fully permitted 101-megawatt on-site natural gas power plant with grid interconnection. The site uses a closed-loop dry cooling system. Alberta's bring-your-own generation framework gives us the flexibility to curtail compute workloads and sell power back to the grid. Our AI business continued to scale during the quarter. AI cloud annual recurring revenue reached approximately $76 million at the end of June, an increase of approximately 77% quarter-over-quarter, utilization was approximately 95% across 4,248 deployed GPUs. We also signed a new 10-year lease for 21.7 IT megawatts of capacity in Malaysia with expected in the first quarter of 2027. It is designed to support 128 NVIDIA GB300-NVL72 systems. On the product side, we deployed NVIDIA's Nemotron-III model onto our bitter AI model studio on the first day of its launch. Turning to our financial results. Second quarter revenue was approximately $228.8 million, an increase of approximately 47% year-over-year and approximately 21% sequentially. The year-over-year growth was driven primarily by the continued expansion of our self-mining hash rate and the associated increase in bitcoin production, along with accelerating contribution from our AI cloud business which contributed $14 million, an increase of approximately 284% sequentially. Total gross profit was negative 8.5 million with a gross margin of approximately negative 3.7%. Importantly, this represents a $30.5 million sequential improvement that demonstrates the operating leverage of our vertically integrated model. This recovery was driven by 2 key factors: normalized seasonal power costs, which dropped approximately 15% sequentially and an improvement in our blended fleet efficiency to 15.8 jewels per terahash. On a year-over-year basis, our gross margins reflect continued but moderating pressure from the additional depreciation expense from our expanding mining fleet and the still challenging hash price environment. Adjusted EBITDA was approximately $31.1 million, an increase of approximately 575% over the year and approximately 116% sequentially. This sequential improvement illustrates the operating leverage of our vertically integrated model as both hash price and power cost dynamics continue to stabilize. Operating loss in the quarter was $101.7 million and net loss per share was $0.37. Turning to the balance sheet and cash flow. Net cash used in operating activities was approximately $158.5 million, an improvement of approximately $188 million sequentially. This was driven by the capitalization of Sealminer related inventory to PP&E as we're allocating those rigs for internal use. We ended the quarter with approximately $496 million in cash, cash equivalents and restricted cash compared to approximately $298 million at the end of the first quarter. Total long-term debt was approximately $1.8 billion, a reduction of approximately $78 million sequentially. The increase in cash primarily reflects $457 million in proceeds from our at-the-market equity program during the quarter. We view this as a prudent capital raise, establishing the liquidity reserve necessary to execute on our AI/HPC pipeline, power land acquisition priorities and to help ensure that our Tydal site progresses on schedule. Today, we filed a new shelf registration statement since our previous shelf, which was about 1.5 years old, had largely used up its capacity. We now qualify as a well-known seasoned issuer, which makes us eligible for automatic shelf registration. Considering the increased size and scale of our business, we also filed a prospective supplement to move our existing ATM program to the new shelf and take down $1 billion for offering under that program. Looking ahead, we expect to broaden our sources of capital with much of our remaining 2026 financing needs to be met through project level debt financing anchored by our previously discussed goals of accessing the debt markets for Tydal. We expect this debt financing will also unlock significant incremental liquidity to support our broader AI/HPC pipeline. Our preference is to prioritize non-dilutive project level financing over equity issuance, wherever the underlying contracted cash flow support it. Consistent with this, in Q2, our Bitcoin wave per spend was funded entirely through cash generated by our mining operations and debt collateralized by our wafer bank, not equity issuance. In terms of guidance, we are revising our full year crypto mining infrastructure capital expenditures to $200 million to $280 million driven by additional infrastructure development opportunities we see in North America. As a reminder, this guidance excludes CapEx for Sealminer hardware GPU, AI cloud or colocation development. On expenses, we continue to actively manage our overhead as we scale the organization to support our expanding co-location and AI cloud businesses alongside our core mining and ASIC manufacturing operations, and we expect our general and administrative expense run rate in the second half to reflect the incremental head count and infrastructure needed to support that growth. To summarize, the second quarter was a solid quarter for Bitdeer. In the past few months, we have clearly demonstrated our ability to deliver against our HPC/AI objectives. We executed our first major AI infrastructure colocation lease agreement at Tydal, officially launching our colocation data center business as a core pillar of our company. We reached this milestone on compelling terms and with the partner, Volta, we are excited to work with. Our underlying power portfolio continues to scale. Our AI cloud business is demonstrating strong momentum, and our Bitcoin mining and Seal miner platforms illustrates the benefits of vertical integration. Thank you for joining us this morning. Operator, please open the call for questions.

[Operator Instructions] Our first question coming from the line of Nick with B. Riley Securities.

Guys, congrats on getting the first deal done here. You spoke to the pipeline and looking at new opportunities globally. I was just hoping you could frame up kind of some of the opportunities you're seeing outside of the U.S., how near term of these opportunities could be?

I want to make sure I understand your question. You want to know what our opportunities are outside the U.S.?

Exactly. Yes. Just hoping to get a better sense for the pipeline ex U.S.? How many megawatts are you assessing today? And what's the earliest that some of these megawatts could be brought online?

So I'm sure Jihan could give some additional color on this. But we do have a lot of large Asia-based potential customers that are slowly starting to turn online. Our existing GPUs in Asia are quite used up, and we're expecting to add more capacity as customers come online. I don't know if Jihan has anything additional you want to talk about.

On the [indiscernible] deployment, I think the near future, mostly in Malaysia. We have data center already signed up. And we also have other opportunities in active discussion. And the demand side is also very strong. And the ,it is multiyear and highly profitable contract. And now is our execution. So we are quite busy on executing those AI contract ends in Malaysia. And then Norway will be in the next. We reserved like 15 megawatts a little than 50 megawatts in out in Norway ourselves, that will be a little bit later than in Malaysia. And it is expected within next year. And then we will have some of our U.S. data center activated like in Tennessee and Washington.

That's helpful. Would you consider any new sites outside of the U.S. for co-location purposes? Or are you seeing any opportunities for expansion in your European footprint on the colocation side?

We are actively looking for other part asset opportunities in Europe. But since we haven't done any deal yet. So I think it's too early to really talk about Europe. And right now, our focus should be on execute the deal in Tydal. I think that's very important for us. If we can execute that, we will generate revenue and cash flows. I think that's -- and this will also generate kind of credibility of our data and execution. So I think that's super important for us right now.

Understood. And then maybe one more, if I could. I saw, if I read correctly, just at the Knoxville site, there was a full redesign of the project, and I believe ready-for-service time was slightly pushed out. Can you just talk about -- maybe provide some additional background on what drove that? Was that potential customer driven? Was that just kind of better fit in video architectures? What was the reason for that?

I don't know if you want to talk about that, Haris or you want me to jump in on it.

I think probably best for you, Michael. .

So when we have been going to market and looking at the requirements around our Tydal Norway side, originally, we had expect to Tennessee to be 2 different projects. but the market demand is more for a single, more monolithic amount of megawatts offered in one place. So we redesigned it instead of having 2 separate smaller sites inside our bigger site to dispute be one data hall complex. So that was the redesign we did, and it's reflected on -- from the discussions we've had with potential customers and what their requirements are.

And the expectation actually aligns with the second test. So that will be low Phase I, Phase II, it's only 1 phase, and they were all the online and at the same time. So if we look at the expected Phase II, I think that's actually not pushed down a lot, but there will be low Phase I early activation.

Our next question in queue coming from the line of Mike Condal with Broadman Capital.

Could you spend a minute on how you decided on Volta and kind of what maybe their ultimate demand is? And then secondly, Rockdale and kind of Clarington, what are next steps at both of those sites?

Maybe I'll start with the Volta side and then have Michael or Jihan speak to the other sites. So why we chose Volta was really they have done a great job actually in finding innovative ways of addressing this business in both the capital markets, the customer that they have obtained and their contracts for the customer. They also were able to move rapidly, which is something that we wanted to see at the Tydal site since that site is coming online in just a few months. And in general, the commercial terms were also very favorable. So we thought that they were the right choice for us at the Tydal side. Their ultimate demand can be much larger, but of course, they're just getting started. And -- so we -- the initial leases for 121 IT megawatts.

Got it. Then just an update on next steps at Rockdale and Clarington.

I don't know if Jihan wants to add some further color. But we're continuing to build out the power infrastructure as per our previously discussed time line in Rockdale, that was something that was predating the or the allocation of the power in the site. And we're preparing in the background what we believe we need to do if we want to do an AI data center at that site. Clarington, we're developing it for crypto mining right now. The power is available coming up soon, and we'd like to be able to make sure we use it fully. There's no big update on the lawsuit in Clarington now. The motion to dismiss that we had filed was turned down by the judge, which is pretty common in these pretrial things, and it's gone into a discovery now. We continue to believe that the lawsuit doesn't have any merit, and we continue to work on that.

Our next question coming from the line of Kevin Cassidy with Rosenblatt Securities.

Congratulations on landing Volta. Two things on that. Well, maybe with the Texas government putting a pause on the new data center grid, maybe Harris, you might have touched on that, but how does that affect your colocation opportunities in Texas?

Michael, do you want to answer that one?

It's still a little bit early to make strong comments on that because the actual criteria haven't come out yet. The one big site we have in Texas, which is Rockdale, that side -- all the activity there is pre-batch zero and not related to that, that we're working on. As the actual news gets out and the criteria come out, I think we'll be in a better position to be more specific in our comments.

Okay. Great. And with Volta is large cloud and worldwide, is there a chance to just expand your relationship with them to other sites? I mean there is that potential, of course, with Volta, but we haven't released any information on that yet.

Okay. Maybe I'll ask one other. How should we be model Sealminer rigs going forward? And for external sales?

So right now, the existing wafer inventory that we have, we've designated for internal use with the very challenging hash rate and our desire to expand our ability to do self mining and coal mining. We made the decision to use it internally. We have the capability and the capacity to deploy it, and that's the best way to get that working and earning us some cash. It is an example of our model being extremely flexible in that we do have a fair amount of powered land that's in earlier stages of development for other uses that we can quickly deploy cryptocurrency mining into it and make sure we generate cash off the power. Also, if you keep using the power it's less likely that the utility will try and move it away from the land. So it's important that we can quickly react when we do get land into our portfolio and use it in the crypto mining that we do is a big advantage there.

Our next question in queue coming from the line of John Todaro with Needham.

Congrats on the lease. First question, just as it relates to the lease it was 133 gross megawatts signed. I think we had that site going for 225. Just trying to understand why Volta didn't go for the full amount, I mean are you keeping some for cloud? And if so, I guess, why and the strategy there? And then I have a follow-up.

So the full amount of power there is actually 180 gross megawatts. And so of that 180 gross megawatts, so we're leasing 133 gross, which would be 121 IT megawatts to Volta and then retaining 47 megawatts growth for our own AI cloud use there. So as you know, this market is dynamic. There's a lot of activity in the -- both the colocation and AI cloud space. We think there's still a lot of opportunities for us in Norway with the 47 megawatts that we've retained. And we haven't made final decisions on exactly how that would be deployed in for whose benefit in terms of the ultimate tenants there. So we think that's significant potential upside for us, and we felt it would be beneficial for us to retain that power for ourselves.