Bitcoin Group released its 2022 financial report, with its stock price continuing to trade below the IPO price since its shell listing.

Recently, the mining company BitDeer, which successfully went public through a reverse merger, debuted on Nasdaq on April 14th but fell below its IPO price. BitDeer released its 2022 financial report yesterday, showing a revenue of $330 million and a net loss of $60.36 million for the year. Following the announcement, the stock price dropped by 4.06% to $6.15, remaining below the IPO price.

For more information on BitDeer's reverse merger listing, please see: BitDeer Successfully Goes Public Through Reverse Merger, Falls Below IPO Price on First Day of Trading

Founder Wu Jihan Holds Great Power

Bitdeer, a cryptocurrency mining company originating from China, was founded by Wu Jihan in 2013, who also co-founded China's largest Bitcoin mining chip manufacturer Bitmain. In 2019, he established the digital asset platform Matrixport. Wu Jihan branched out from Bitmain in 2021 to create Bitdeer, with its headquarters in Singapore. Bitdeer's cryptocurrencies are mostly held by Matrixport, which facilitates the sale of its cryptocurrencies and related investments.

According to Bitdeer's financial report, as of the end of 2022, Bitdeer has issued 62,888,683 Class A common shares and 48,399,922 Class V common shares. Wu Jihan owns all Class V common shares, giving him 87.4% of absolute voting rights.

Bitdeer's Operating Model

Bitdeer has deployed mining data centers in Washington, Texas, Tennessee, and Norway, with a total of five mining farms and plans to open more in Ohio and Bhutan.

Its operating model includes three types:

• Self-Mining: Bitdeer conducts cryptocurrency mining using its own accounts.
• Hashrate Sharing: Divided into cloud hashrate and hashrate market. Cloud hashrate involves selling Bitdeer's proprietary hashrate to customers through fixed-price hashrate subscription plans, sharing mining revenue with customers. The hashrate market connects reliable third-party hashrate suppliers with hashrate users to facilitate hashrate sales and generate income through service fees.
• Hosting: Hosting services provide customers with a one-stop mining machine hosting solution, including deployment, maintenance, and management services for efficient cryptocurrency mining. Customers can subscribe to cloud hosting services through a "group purchase" mode with designated mining machines to obtain hashrate, or send mining machines to their mining data centers for hosting.

Bitdeer's self-developed intelligent software platform, Minerplus, provides customers with software support, reducing the time and manpower costs required for daily maintenance and mining machine upgrades.

Bitdeer's 2022 Financial Report

According to its financial disclosure, Bitdeer is classified as a foreign private issuer under the Exchange Act, exempt from certain provisions of US securities rules and regulations applicable to domestic issuers, such as submitting quarterly 10-Q or 8-K reports to the SEC, only required to file an annual 20-F report within four months after the end of each fiscal year. However, Bitdeer stated that it will announce its performance quarterly through press releases.

The disclosed financial report traces back to its establishment in 2020, providing insight into its business development.

In 2022, total revenue decreased compared to 2021 due to the decline in Bitcoin prices, reduced mining quantities, and macroeconomic factors affecting income. On the cost side, increased electricity and electricity costs, along with a substantial rise in employee stock incentive plans, led to a total loss of $60.36 million in 2022. It is noteworthy that the depreciation of mining machines decreased because Bitdeer extended the lifespan of newer models from 1 year to 1-2 years.

However, a closer look at the revenue details reveals that Bitdeer has shifted a greater proportion from self-mining to hashrate sharing and hosting services, which can mitigate the risks of electricity and Bitcoin price fluctuations, providing more profit security for Bitdeer.

As of December 31, 2022, Bitdeer holds $230 million in cash and cash equivalents and $31.1 million in non-listed bonds denominated in fiat currency. The company's working capital mainly comes from earning cryptocurrencies through mining.

Bitdeer's Outlook on Future Mining Company Operational Risks

Will mining companies' profits have the opportunity to start growing with the stabilization of the cryptocurrency market in the future?

In its financial report, Bitdeer points out various factors that could adversely affect its business, prospects, or operations, such as Bitcoin price fluctuations, increased mining difficulty, rising electricity costs, government interventions in cryptocurrency miners' power supply, environmental concerns related to mining-caused carbon emissions, and regulatory compliance risks where cryptocurrencies may be deemed securities affecting currency prices.

Bitdeer's Relative Excellence Compared to Peers

We also compared the total revenue and net profit of two mining companies listed in the US, Marathon Digital Holdings MARA and Riot Platforms RIOT, in 2022 and found that Bitdeer is actually a relatively profitable entity among them. Its hash rate at the end of January is 16.2 EH per second, second only to the bankrupt Core Scientific CORZ, higher than Riot Platforms RIOT and Marathon Digital Holdings MARA.

Bitdeer CEO Kong Linghui stated:

Despite the volatility in cryptocurrency prices and the temporary misalignment in the crypto industry, we defied the odds and achieved positive adjusted net profit and positive adjusted EBITDA for the full year of 2022, demonstrating the viability and flexibility of our business model. Meanwhile, through prudent cost management, by the end of 2022, we have maintained ample capital reserves, marking the beginning of a new journey as a US-listed company.

Please note that the "adjusted" figures mentioned are expenses the company deems adjustable, including depreciation and amortization and stock-based compensation expenses, which are essential costs to be recognized.