AI Infrastructure Delays And Leverage Risks Will Challenge Expansion Yet Support Long-Term Potential

Catalysts

About Bitdeer Technologies Group

Bitdeer Technologies Group operates a vertically integrated bitcoin mining, ASIC design and high performance compute and AI infrastructure platform anchored by a large global power and data center portfolio.

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

• Although the widening shortage of AI compute capacity and sustained demand from enterprises position Bitdeer to ramp its AI cloud services rapidly, execution risk in converting power sites into AI ready data centers by 2026 to 2027 could delay customer onboarding and push out the targeted multibillion dollar revenue run rate. This could temper near term growth in consolidated revenue and EBITDA.
• While Bitdeer’s global access to low cost, HPC suitable power in regions such as Norway, North America and Asia could structurally support higher profitability versus peers, cost inflation and supply chain bottlenecks for transformers and electrical gear may lift build costs and pressure future net margins if contract pricing does not fully offset these increases.
• Although the company’s transition from pure bitcoin mining toward a diversified AI and HPC platform reduces reliance on bitcoin price cycles, heavy upfront CapEx for data centers and GPUs combined with already elevated borrowings creates a risk that interest expense and leverage remain high. This may constrain earnings growth and limit flexibility to fund incremental expansion.
• While in house SEALMINER development and the planned SEAL04 chip could sustain Bitdeer’s energy efficiency edge in bitcoin mining and support longer term cash generation, ongoing delays and complex R&D requirements increase the likelihood of schedule slippage. This could slow hash rate upgrades and margin expansion in the mining segment and dampen future operating income.
• Although initial traction in bitdeer.ai and expansion plans into Malaysia, the U.S. and Europe tap into growing AI adoption across sectors such as biomedical, robotics and gaming, a customer base that mixes many small and mid sized users with only a handful of large tenants could expose the company to utilization volatility and pricing pressure. This creates uncertainty around the durability of revenue growth and operating leverage.

Assumptions

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

• The bearish analysts are assuming Bitdeer Technologies Group's revenue will grow by 80.7% annually over the next 3 years.
• The bearish analysts are not forecasting that Bitdeer Technologies Group will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Bitdeer Technologies Group's profit margin will increase from -115.6% to the average US Software industry of 12.7% in 3 years.
• If Bitdeer Technologies Group's profit margin were to converge on the industry average, you could expect earnings to reach $349.6 million (and earnings per share of $1.41) by about December 2028, up from $-536.9 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $1.4 billion in earnings, and the most bearish expecting $-519.5 million.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 23.0x on those 2028 earnings, up from -5.1x today. This future PE is lower than the current PE for the US Software industry at 31.9x.
• The bearish 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?

• The long-term transition from a bitcoin mining centric model to an AI and HPC platform requires large, multi year build outs in Ohio, Norway, Asia and the U.S., and any delays in energizing sites or converting power into AI ready data centers could mean Bitdeer misses the current AI compute shortage window, reducing the likelihood of achieving the targeted multibillion dollar AI run rate and slowing consolidated revenue growth.
• Bitdeer is funding aggressive infrastructure expansion and SEALMINER development with substantial borrowings, convertible notes and ATM equity issuance, and if capital markets tighten or bitcoin prices weaken over time, the company may face higher financing costs or dilution that compresses future earnings, keeps IFRS net losses elevated and limits flexibility to pursue all planned projects.
• The SEAL04 next generation ASIC program has already experienced significant delays due to design complexity, and if the chip fails to reach industry leading efficiency or slips further in timing, Bitdeer could lose its cost advantage in mining during future bitcoin difficulty cycles, pressuring self mining gross margins and reducing the cash generation needed to fund AI and data center investments.
• AI and HPC infrastructure demand is currently driven by a supply demand imbalance for GPUs and power that management expects to persist into 2027, but if over time hyperscalers, alternative chip vendors or competing AI data center operators add capacity faster than expected, pricing for both AI cloud services and co location could fall below Bitdeer’s assumptions, lowering utilization, compressing net margins and capping earnings growth.
• The company’s AI customer base strategy mixes many small and mid sized enterprises in sectors such as biomedical, robotics and gaming with a limited number of large tenants, and in a long term downturn or normalization in AI spending, smaller customers could churn or scale back commitments more rapidly than anticipated, creating volatility in recurring cloud revenue, increasing the risk of overbuilt capacity and weakening operating leverage and EBITDA.

Valuation

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

• The assumed bearish price target for Bitdeer Technologies Group is $25.0, which represents up to two standard deviations below the consensus price target of $33.0. 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 more bearish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $43.5, and the most bearish reporting a price target of just $25.0.
  
• In order for you to agree with the more bearish analyst cohort, you'd need to believe that by 2028, revenues will be $2.7 billion, earnings will come to $349.6 million, and it would be trading on a PE ratio of 23.0x, assuming you use a discount rate of 8.9%.
  
• Given the current share price of $11.49, the analyst price target of $25.0 is 54.0% 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.