Massive AI And HPC Expansion Will Transform Long Term Earnings Power

Catalysts

About Bitdeer Technologies Group

Bitdeer Technologies Group operates a vertically integrated bitcoin mining, ASIC design and AI infrastructure platform powered by a large, global low cost energy portfolio.

What are the underlying business or industry changes driving this perspective?

• Rapid scaling of self mining hash rate with SEALMINER deployments, combined with decommissioning of older rigs, positions Bitdeer to remain among the largest global miners, which may support sustained revenue growth and operating leverage in mining margins.
• Industry leading in house ASIC efficiency with the SEALMINER A3 series and the planned SEAL04 chip is set to lower power consumption per terahash, which may structurally improve gross margin and long term earnings resiliency versus less efficient peers.
• Expanding AI and HPC footprint, with GPUs ramping from Singapore into Malaysia, the U.S. and Europe, allows Bitdeer to monetize the growing compute shortage through higher value cloud services, potentially driving mix shift toward recurring, higher margin revenue.
• Large, low cost and increasingly AI suitable power portfolio, including Clarington, Tydal, Jigmeling and new U.S. sites, creates a durable advantage in time to power and energy pricing, which may support stronger net margins and returns on infrastructure CapEx.
• Conversion of existing mining sites into AI data centers, including Norway, Wenatchee and Knoxville, leverages sunk infrastructure and liquid cooling capabilities to capture high dollar per megawatt AI demand more quickly, which may enhance capital efficiency and return on invested capital.

Assumptions

This narrative explores a more optimistic perspective on Bitdeer Technologies Group compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts. How have these above catalysts been quantified?

• The bullish analysts are assuming Bitdeer Technologies Group's revenue will grow by 115.2% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -115.6% today to 28.7% in 3 years time.
• The bullish analysts expect earnings to reach $1.3 billion (and earnings per share of $4.48) by about December 2028, up from $-536.9 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $-494.9 million.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 11.6x on those 2028 earnings, up from -5.2x today. This future PE is lower than the current PE for the US Software industry at 32.7x.
• The bullish analysts expect the number of shares outstanding to grow by 6.03% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.91%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Bitdeer remains heavily dependent on bitcoin mining economics. A sustained decline in bitcoin prices or a structural increase in global network hash rate and mining difficulty could erode self mining revenue and compress gross margin and EBITDA. This could undermine the growth trajectory implied by the bullish case and delay a path to positive earnings and free cash flow.
• The aggressive buildout of global power and data center infrastructure alongside ASIC R&D, including delayed SEAL04 development, requires very high and sustained capital expenditure at the same time the company is already carrying over $800 million of borrowings and large derivative liabilities. This heightens balance sheet risk and could drive higher interest expense and continued IFRS net losses if returns on invested capital lag expectations.
• The AI and HPC strategy assumes the current supply demand imbalance for GPU compute and attractive co-location and cloud pricing will persist well into 2027. If industry GPU supply normalizes faster than expected or hyperscalers and incumbents saturate the market, pricing and utilization at new AI sites such as Tydal, Wenatchee, Knoxville and Malaysia could disappoint, limiting AI related revenue growth and keeping net margins below bullish forecasts.
• Execution complexity across a 3 gigawatt global power pipeline, multiple new AI data center conversions and simultaneous expansion in Asia, the U.S. and Europe creates material project delivery, procurement and cost overrun risk. Persistent bottlenecks in long lead time electrical equipment or construction inflation could delay energization and ramp, depressing revenue and EBITDA relative to the capital deployed and weighing on long term earnings power.
• The financing model increasingly relies on bitcoin backed loans, at the market share issuance and convertible senior notes that generate large noncash derivative losses under IFRS. If equity markets weaken or bitcoin collateral values fall, Bitdeer may face higher financing costs, further dilution and continued reported net losses that challenge the assumption of a rising valuation multiple and expanding earnings over the long term.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Bitdeer Technologies Group is $47.9, which represents up to two standard deviations above the consensus price target of $34.15. This valuation is based on what can be assumed as the expectations of Bitdeer Technologies Group's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $50.0, and the most bearish reporting a price target of just $25.0.
  
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2028, revenues will be $4.6 billion, earnings will come to $1.3 billion, and it would be trading on a PE ratio of 11.6x, assuming you use a discount rate of 8.9%.
  
• Given the current share price of $11.72, the analyst price target of $47.9 is 75.5% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.