Bitdeer Technologies (BTDR) 6-KIndex to Financial Statements

Unless otherwise stated or unless the context otherwise requires, the terms “we,” “us,” “our,” “our Company,” “Bitdeer” refer to Bitdeer Technologies Group. Capitalized terms not otherwise defined shall have the meanings ascribed to them in our annual report on Form 20-F for the year ended December 31, 2023, filed with the Securities and Exchange Commission on March 28, 2024.

 

On September 13, 2024, we completed the acquisition (the “FreeChain Acquisition”) of all the issued and outstanding shares of FreeChain Inc., an exempted company with limited liability incorporated under the laws of Cayman Islands (“FreeChain”) from certain individuals and the individuals’ holding companies (collectively, the “FreeChain Sellers”). Pursuant to the agreement, we agreed to acquire 100% shares of FreeChain in exchange for 20 million Class A ordinary shares. Bitdeer Shares issued to certain FreeChain Sellers will vest in equal instalments over a period of five or seven years, subject to the terms and conditions therein. Certain FreeChain Sellers also agreed not to transfer 50% of the issued Bitdeer Shares for a period of six months and the remaining 50% of the issued Bitdeer Shares for a period of 12 months, each following the closing.

On September 6, 2024, our board of directors approved a share repurchase program under which we may repurchase up to US$10,000,000 worth of its Class A Ordinary Shares, effective from September 9, 2024 through September 8, 2025. As of September 23, 2024, we have repurchased 145,762 Class A ordinary shares for approximately US$0.9 million under the share repurchase program.

 

On August 20, 2024, we issued US$172,500,000 aggregate principal amount of 8.50% convertible senior notes due 2029 (the “Convertible Notes”), including US$22,500,000 aggregate principal amount of Convertible Notes pursuant to the exercise in full by the underwriters in that offering of their over-allotment option to purchase additional Convertible Notes.

 

On May 30, 2024, we entered into a Subscription Agreement for a private placement (the “Private Placement”) with Tether International Limited, a BVI company (“Tether”), pursuant to which we issued to Tether (i) 18,587,360 Class A Ordinary Shares, and (ii) a warrant to purchase up to 5,000,000 Class A Ordinary Shares (the “Warrant”) at an exercise price equivalent to US$10.00 per Class A Ordinary Share. We received US$100,000,000 in proceeds from the Private Placement, and will receive up to an additional US$50,000,000 if the Warrant is fully exercised. The Warrant is subject to customary anti-dilution provisions reflecting share dividends and splits or other similar transactions, and weighted average anti-dilution protection with respect to the issuance of ordinary shares or ordinary share equivalents for consideration per share less than the initial exercise price of the Warrant. The Warrant will remain exercisable at the election of Tether within 12 months after the closing of the Private Placement on May 30, 2024.

 

On April 15, 2024, we completed the acquisition (the “Norway Acquisition”) of all the shares in TROLL HOUSING AS and TYDAL DATA CENTER AS from BRYHNI.COM AS and RENOL INVEST AS (collectively, the “Norway Sellers”). In connection with the completion of the Norway Acquisition, on April 15, 2024, we entered into: (1) a US$15,000,000 secured and freely tradable consideration loan note (the “Note Purchase Agreement”) with a maturity date of five years from April 15, 2024, and with a coupon rate of 6% per annum, accompanied by collateral in the form of a first priority share pledge over the shares in TROLL HOUSING AS and TYDAL DATA CENTER AS; and (2) a call option agreement which granted the Norway Sellers the option to acquire US$15,000,000 worth of Class A Ordinary Shares at a strike price of US$35.96 per Class A Ordinary Share.

 

As of August 31, 2024, we have made a partial repayment of the outstanding principal balance under the Note Purchase Agreement in the amount of US$5,000,000.

 

On March 18, 2024, we entered into an At Market Issuance Sales Agreement with B. Riley Securities, Inc., Cantor Fitzgerald & Co., Needham & Company, LLC, Roth Capital Partners, LLC, StockBlock Securities LLC and Rosenblatt Securities Inc. (collectively, the “Sales Agents”), pursuant to which we may offer and sell our Class A Ordinary Shares having an aggregate offering price of up to US$250,000,000 from time to time through or to the Sales Agents, as agent or principal. It is not possible to predict the actual number of Class A Ordinary Shares, if any, we will sell under such agreement, or the actual gross proceeds resulting from those sales.

 

As of August 31, 2024, we offered and sold an aggregate of 1,722,240 Class A Ordinary Shares under the At Market Issuance Sales Agreement for a total of approximately US$14.1 million.

 

On August 8, 2023, we entered into the Equity Financing Purchase Agreement with B. Riley Principal Capital II, pursuant to which we have the right to sell to B. Riley Principal Capital II, up to US$150,000,000 of our Class A Ordinary Shares, subject to certain limitations and conditions set forth therein, from time to time during the term thereof. Sales of our Class A Ordinary Shares pursuant to the Equity Financing Purchase Agreement, and the timing of any sales, are solely at our option, and we are under no obligation to sell any securities to B. Riley Principal Capital II under the Equity Financing Purchase Agreement.

 

As of August 31, 2024, we offered and sold an aggregate of 8,089,181 Class A Ordinary Shares under the Equity Financing Purchase Agreement for a total of approximately US$62.0 million.

 

In evaluating our business, we consider and use non-IFRS measures, adjusted EBITDA and adjusted profit/(loss), as supplemental measures to review and assess our operating performance. We define adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, further adjusted to exclude the changes in fair value of derivative liabilities, listing fee and share-based payment expenses under IFRS 2, and define adjusted profit/(loss) as profit/(loss) adjusted to exclude the changes in fair value of derivative liabilities, listing fee and share-based payment expenses under IFRS 2.

 

We present these non-IFRS financial measures because they are used by our management to evaluate our operating performance and formulate business plans. We also believe that the use of these non-IFRS measures facilitate investors’ assessment of our operating performance. These measures are not necessarily comparable to similarly titled measures used by other companies. As a result, investors should not consider these measures in isolation from, or as a substitute analysis for, our loss for the periods, as determined in accordance with IFRS. We compensate for these limitations by reconciling these non-IFRS financial measures to the nearest IFRS performance measure, all of which should be considered when evaluating our performance. We encourage investors to review our financial information in our entirety and not rely on a single financial measure.

The following table presents a reconciliation of loss for the relevant period to adjusted EBITDA and adjusted profit, for the six months ended June 30, 2024 and 2023.

The following tables summarize our results of operations, revenue breakdown, and expenses by nature for the six months ended June 30, 2024 and 2023. This information should be read together with our unaudited interim condensed consolidated financial statements for the six months ended June 30, 2024 and 2023 and related notes. The results of operations in any particular period are not necessarily indicative of our future trends.

 

The following table summarizes our results of operations for the periods indicated.

 

 

 

The following table sets forth a breakdown by nature of our cost of revenue, selling, general and administrative, and research and development expenses for the periods indicated.

 

 

Our revenue increased from US$166.4 million for the six months ended June 30, 2023 to US$218.7 million for the six months ended June 30, 2024, primarily driven by an increase in revenue generated from self-mining.

 

 

 

 

 

 

Our cost of revenue increased from US$136.8 million for the six months ended June 30, 2023 to US$160.2 million for the six months ended June 30, 2024, primarily driven by an increase in electricity expenses incurred for operating mining machines, partially offset by a decrease in depreciation of mining machines and share-based payments expenses incurred by mining datacenter personnel.

 

 

 

 

Our selling expenses decreased by 10.5% from US$4.3 million for the six months ended June 30, 2023 to US$3.9 million for the six months ended June 30, 2024, primarily due to (i) a decrease in staff costs, including salaries, wages and other benefits to sales personnel, and (ii) a decrease in share-based payment expenses recognized according to graded vesting schedules for outstanding share awards for six months ended June 30, 2024, partially offset by an increase in advertising expenses.

 

Our research and development expenses increased by 129.5% from US$12.7 million for the six months ended June 30, 2023 to US$29.2 million for the six months ended June 30, 2024, primarily due to (i) a US$14.9 million one-off incremental development expense related to the SEAL01 chip for the six months ended June 30, 2024 and (ii) an increase in staff costs, including salaries, wages and other benefits to research and development personnel, partially offset by a decrease in share-based payment expenses recognized according to graded vesting schedules for outstanding share awards for six months ended June 30, 2024.

 

 

We incurred other operating expenses of US$0.1 million and generated other operating income of US$3.2 million for the six months ended June 30, 2023 and 2024, respectively. This change was primarily driven by the increase of net gain on disposal of cryptocurrencies.

 

We recorded other net gain of US$1.6 million for the six months ended June 30, 2023, primarily due to the net gains on the changes in fair value of financial assets at fair value through profit or loss. We recorded other net loss of US$13.0 million for the six months ended June 30, 2024, primarily due to a US$14.2 million loss of the fair value change for Tether warrants, partially offset by the net gains on the changes in fair value of financial asset at fair value through profit or loss.

 

As a result of the foregoing, we recorded a loss from operations of US$51.5 million and US$15.2 million for the six months ended June 30, 2023 and 2024, respectively.

 

We recorded income tax benefit of US$2.8 million and income tax expenses of US$2.0 million for the six months ended June 30, 2023 and 2024, respectively.

 

As a result of the foregoing, we incurred a net loss of US$49.8 million and US$17.1 million for the six months ended June 30, 2023 and 2024, respectively.

 

As of June 30, 2024, we had cash and cash equivalents of US$203.9 million and fiat currency investment of US$1.0 million in unlisted debt instruments, redeemable on demand. We have financed our operations primarily with cash flow from disposal of cryptocurrencies earned from principal business operations, as well as through the issuance of securities in registered offerings and private placement transactions. We believe that our cash and cash equivalents and anticipated proceeds from disposal of cryptocurrencies in connection with our principal business will be sufficient to meet our current and anticipated working capital requirements and capital expenditures for at least the next 18 months.

 

Our cash and cash equivalents increased from US$144.7 million as of December 31, 2023 to US$203.9 million as of June 30, 2024, primarily attributable to proceeds from issuance of Class A Ordinary Shares, partially offset by our construction expenditure of mining datacenters in Norway and Bhutan and the prepayment to purchase wafers for the upcoming production of our SEALMINER rigs.

 

Our material cash requirements as of June 30, 2024 primarily include our purchase of plant, property and equipment, lease obligations and borrowings. Other than those discussed below, we did not have any significant capital and other commitments, long-term obligations or guarantees as of June 30, 2024.

 

 

 

 

For additional information regarding (i) the US$172,500,000 aggregate principal amount of 8.5% convertible senior notes due 2029 issued on August 20, 2024, (ii) the Private Placement on May 30, 2024, (iii) At Market Issuance Sales Agreement dated March 18, 2024, and (iv) Equity Financing Purchase Agreement dated August 8, 2023, see “––Recent Developments.”

 

We intend to fund our existing and future material cash requirements primarily with our cash and cash equivalent and anticipated proceeds from disposal of cryptocurrencies in connection with our principal business, which is classified as an investing activity. However, our future capital requirements will depend on many factors, including market acceptance of cryptocurrency, our growth, our ability to scale up our infrastructure and hash rate, our ability to effectively control costs, our ability to attract and retain customers, our ability to continue the research and development of mining rig chips, our ability to manufacture the mining rigs, the continuing market acceptance of our offerings, expansion of sales and marketing activities and overall economic conditions. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in additional dilution to our shareholders. The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. In the event that additional financing is required from outside sources, there is a possibility we may not be able to raise it on term acceptable to us or at all. If we are unable to raise additional capital when desired, our business, operations and financial condition could be adversely affected.

 

We have not entered into any commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.

 

Net cash used in operating activities was US$206.3 million for the six months ended June 30, 2024. The difference between our net loss of US$17.1 million and the net cash used in operating activities was primarily attributable to (i) adjustments for revenues recognized on acceptance of cryptocurrencies of US$201.0 million, (ii) changes in prepayments and other assets of US$38.1 million primarily associated with prepayments made to suppliers, and (iii) changes in other payables and accruals of US$9.1 million associated with operating expenses, partially offset by (i) an adjustment for depreciation and amortization of US$36.5 million primarily relating to the depreciation of mining machines used in our principal business operations and property, plant and equipment used in connection with our mining datacenters during this period, (ii) an adjustment for share-based payment expenses of US$15.9 million for the issuance of options pursuant to our share incentive plans, and (iii) an adjustment for change in the fair value of US$14.2 million for Tether warrants.

 

Net cash used in operating activities was US$157.1 million for the six months ended June 30, 2023. The difference between our net loss of US$49.8 million and the net cash used in operating activities was primarily attributable to (i) adjustments for revenues recognized on acceptance of cryptocurrencies of US$153.5 million, (ii) changes in prepayments and other assets of US$39.6 million primarily associated with deposits and prepayments made to suppliers, and (iii) changes in other payables and accruals of US$4.8 million associated with operating expenses, partially offset by (i) an adjustment for depreciation and amortization of US$36.2 million primarily relating to the depreciation of mining machines used in our principal business operations and property, plant and equipment used in connection with our mining datacenters during this period, (ii) an adjustment for listing fee of US$33.2 million related to the Business Combination, and (iii) an adjustment for share-based payment expenses of US$21.8 million for the issuance of options pursuant to our share incentive plans.

 

 

Net cash generated from investing activities was US$67.8 million for the six months ended June 30, 2023, which was primarily attributable to (i) proceeds from disposal of cryptocurrencies of US$125.2 million and (ii) proceeds from redemption on fiat currency investment of US$31.1 million in unlisted debt instruments, partially offset by (i) purchase of property, plant and equipment, investment properties and intangible assets of US$24.6 million and (ii) purchase of mining machines of US$62.5 million for the newly built Gedu mining datacenter.

 

Net cash generated from financing activities was US$153.4 million for the six months ended June 30, 2024, which was primarily attributable to (i) the US$98.5 million in net proceeds from the Private Placement, after deducting the underwriters’ discounts and commissions and relevant offering expenses, (ii) proceeds from issuance of ordinary shares under the Equity Financing Purchase Agreement, net of transaction costs, of approximately US$51.6 million, and (iii) proceeds from issuance of ordinary shares under the At Market Issuance Sales Agreement, net of transaction costs, of approximately US$5.6 million, offset by the capital element of lease rentals paid of US$2.6 million.

 

Net cash used in financing activities was US$10.3 million for the six months ended June 30, 2023, which was primarily attributable to the cash payment of US$7.7 million mainly related to the transaction cost of the Business Combination and capital element of lease rentals paid of US$2.6 million.