BGIN BLOCKCHAIN Ltd (BGIN) Q4 2025 Earnings Call Transcript

Good morning and good evening, ladies and gentlemen. Thank you for standing by. Welcome to Beijing's Earnings Conference Talk. At this time, all participants are in a listen-only mode. We will be hosting a question and answer session after management's preparing remarks. Please note that today's event is being recorded. I will now turn the conference over to Jennifer Jiang, Investor Relations Director of the company. Please go ahead, ma'am.

Thank you. Hello, everyone, and welcome to BGIN's earnings call for the full fiscal year 2025. With us today are CEO Qin Feng Wu, Chairman Xiu Hua Li, Chase Corporate Development Officer Resson Merza, Co-CFO Zhao Xiang, and Finance Director Carrie Wang. Resson will provide a business overview for last year. Then Carrie will discuss the financials in more details. Following their prepared remarks, CEO Qingfeng Wu, Chairman Chiu Huali, and CFO Zhao Xiang will be available for the Q&A session. You can refer to our yearly financial results on our IR website at ir.bejing.com. You can also access a replay of this call on our IR website when it becomes available a few hours after its conclusion. Safe Harbor Statement. Before we begin, I would like to remind everyone that certain statements made during this call are forward-looking in nature, including but not limited to statements regarding the company's future plans and partnerships. These statements involve risks and uncertainties that are based on our current expectations and projections. You can identify these forward-looking statements by words or phrases such as aims, anticipates, believes, estimates, expects, intents, plans, potential, projects, will, would, should, could, may, or similar expressions. Although not all forward-looking statements contain these identifying words the company undertakes no obligation to update or revise publicly any forward-looking statements to reflect events or circumstances that occur after this call or changes in its expectations except as may be required by law although the company believes that the expectations expressed in these forward-looking statements are reasonable it cannot not be assured that such expectations will turn out to be correct. The company cautious investors that action results may differ materially from preliminary or anticipated results, and encourages investors to review other factors that may affect its future results in the company's registration statements and other filings with the U.S. Securities and Exchange Commission. Thank you. I will now turn the call over to the Chief Corporate Development Officer of Beijing, Rezwan Mirza.

Thank you, Jennifer. Good evening, everyone, and welcome to Beijing's inaugural earnings call as a publicly traded company. I'm Rezwan Mirza, Chief Corporate Development Officer of Beijing Blockchain Limited. 2025 was a transformative year for us. In addition to our successful IPO last October, we also proactively refocused our R&D capabilities away from our initial core altcoin chip business and towards the larger cap cryptocurrencies. We primarily focused our R&D efforts on Bitcoin and Dogecoin in 2025 and continue to do so in 2026. These efforts are already yielding results. in march of this year the company successfully developed a four nanometer bitcoin miner prototype based on the bt1 asic chip this represents a major technical milestone and serves as a powerful validation of our execution capabilities today i will walk you through our three core revenue engines starting with the bedrock of our company hardware sales engine one proprietary hardware and innovation. Our journey began in 2019 when our founders seeking to enter into the self-mining business and facing a shortage of available miners chose to design their own mining rigs. This engineer-first mindset allowed us to be self-sustaining from day one, using mining machine sales revenue to fund successive generations of R&D. To date, we have successfully executed seven tape outs and developed 29 distinct mining models, with nine currently in active deployment. In 2024, our focus on ore coins such as Caspa and Alio generated $192 million in sales of mining machines. in 2025 mining machine sales declined to 15 million dollars driven by market volatility and our strategic decision to prioritize our bitcoin and dogecoin transition looking ahead our roadmap is clear we are accelerating the next generation advanced architecture to optimize the combination of energy efficiency and costs to deliver superior operating performance in bitcoin Coin and Dogecoin mining. Engine two, high efficiency mining operations. Our management team has prioritized operational excellence over raw scale. To maximize margins, we optimized our fleet in early 2025, phasing out older Caspa units in favor of next generation efficiencies. We swapped out our older KS-5 miners with our more efficient KS-7 machines. Our focus on operating efficiencies allowed us to deliver $42.9 million in mining revenue in 2025, holding remarkably steady against the $45 million recorded in 2024. 4. We continue seeking additional sites to grow our mining farm power capacity under the same disciplined operating efficiency parameters. Engine 3, Scalable Hosting Services. Our third engine, Hosting, generated $3.3 million in 2025. While smaller in scale, this remains a low-capital investment high gross margin business we provide small to mid-sized miners with turnkey solutions through two flexible models fixed rate hosting for predictability and a revenue share partnership for performance alignment this model allows us to monetize our operational expertise without the heavy capex typically required for capacity expansion the synergy of these three engines creates a natural hedge against market volatility in the cryptocurrency industry. In bull markets, we capitalize on surging hardware demand and peak sales margins. In bear markets, we pivot to efficiency-first self-mining and cost controls. While across all cycles, hosting provides a resilient, high-margin foundation of recurring cash flow. We continue to enhance our hosting capabilities. For example, to further refine our software infrastructure to support Bitcoin and Dogecoin hosting in the future, we have targeted our cloud mining hosting product towards ALEO miners. Initial feedback from customers utilizing our cloud mining platform has been positive, and we plan to build on that momentum. In 2026, we will continue along our transformational journey from an altcoin chip designer into a fully integrated digital asset infrastructure platform. While Bitcoin is our primary focus, we maintain the flexibility to capture opportunities in promising altcoins when market conditions align. In addition to commercial miners, we are also exploring opportunities to expand our machine sales into the B2C segment. Next week, at the Bitcoin 2026 conference in Las Vegas, we will debut a prototype of our portable BTC. It is a commemorative prototype model created to mark our entry into the Bitcoin mining hardware journey. As BGEN continues to explore value-added consumer-driven miners in line with our focus on democratizing crypto mining, this prototype is an early state sample of a rewards-based approach to crypto mining. Although the prototype to be shown at the Bitcoin 2026 conference is limited and not for sale, future commercial non-limited products will follow. Our retail miner offering should enable consumers to bring Bitcoin mining into their homes. This aligns with our mission, crypto for all. I would like to discuss our four key priorities for 2026. First, we will continue enhancing our research and development capabilities to deliver competitive mining solutions. Second, our mining operations remain anchored in cost effective energy strategies and power sources that provide structural advantages. Third, we are exploring cloud mining and new consumer-focused product lines to democratize access to cryptocurrency mining. Fourth, while large-cap cryptocurrencies such as Bitcoin and Dogecoin are our primary focus, we will maintain the flexibility to opportunistically capture opportunities in promising smaller-cap altcoins. We made difficult choices in 2025, choices that positioned us for success in 2026 and beyond. We are confident in building the world's most cost-effective digital currency mining infrastructure string true to our vision of crypto for all and executing on our B2C strategy to deliver sustainable long-term value for our shareholders. Thank you for your trust and support. I will now ask my colleague Carrie Wong to go over the 2025 financial results in detail. Carrie?

Thank you. Thank you, Riz. Good day, everyone. This is Carrie Wang, Finance Director of Beijing. I am very pleased to walk you through our full year of 2025 financial performance. Before diving into numbers, let me provide you an overview of our results. 2025 was our pivotal transformation year, a year where we made strategic decisions to reposition Beijing from a diversified altcoin chip supplier to a large-cap coin-focused infrastructure company. The financial results reflect this strategic pivot, and I will help you understand the story behind the numbers. We recorded a net loss of $177 million in 2025 compared to net income of $66.1 million in 2024. The majority of the loss are non-cash items. It includes inventory provision and write-offs, of obsolete altcoin mining machines, and also impairment of property and equipment, as well as others. These write-offs, provisions, and impairments resulted from our access of certain product lines and reflected proper accounting treatment of assets that are no longer aligned with our business direction. As we move forward, our balance sheet is now better position to support our Bitcoin and Dogecoin strategy. Meanwhile, we redirected substantial capital into R&D to fund our proprietary ASEC chip development with the primary focus on Bitcoin and Dogecoin mining technologies. One result we see from our R&D investments is our successful 4nm Bitcoin ASAP PayPal in March 2026. Now let's dive into the financial details. Start with our top line. Total revenue of 2025 was $67.4 million, down from $302.3 million in 2024. This decline accompanied a strategy shift from altcoin machine sales to building Bitcoin coin infrastructure business. Let me break down our revenue by segment. Mining revenue came in at $42.9 million, essentially flat comparing to $45 million in 2024. Despite our transformation, our mining operations remained resilient. The slight decline was mainly driven by lower average price for ALPH and our strategic decision to seize iron mining during the year. Sales of mining machines were $15.3 million compared to $192.2 million in 2024. The change resulted from the decline in average selling price of our cash mining machines and also the decreased sales volume driven by increased market competition and decreased customer demand. As we have transitioned our focus to Bitcoin and Dogecoin infrastructure, Cash mining machine sales have worn down accordingly. Hosting revenue was $3.3 million, down to $6.2 million in 2024. The change was mainly due to the reduced customer demand caused by cash price volatility. Mining pool revenue contributed $5.9 million, compared to $58.8 million in 2024. The change resulted from three factors, lower average cash prices, reduced the mining of other cryptocurrencies during our strategic refocusing, and a stricter poor entry requirement that reduced the participating miners in 2025. Now let's look at our cost structure. Total costs of revenues were $143 million, down from $174.6 million in 2024. The decrease was primarily driven by lower machine sales volume, although this is partially set off by increasing mining costs as we deploy additional capacity into mining. costs of mining revenue increased to $63.3 million from $29.7 million in 2024. The increase is a result of combined impact from an increase of $11.5 million in depreciation costs attributable to the deployment of additional mining machines in 2025, an increase of $1.7 million in other costs, primarily comprising logistics, duties, rental costs, and labor driven by higher operating costs associated with the increased number of mining machines deployed, and an increase of $20.4 million in utility expenses, which was consistent with the higher average number of mining machines we deployed in 2025. Costs of sales of mining machines were $71.2 million, down from $81.7 million in 2024. We sold fewer units, less than 10,000 units in 2025 compared to more than 100,000 units in 2024, resulting in a $32 million decrease in cost of sales. We also wrote off $3 million in obsolete mining machines and components in 2025, comparing to $24.1 million write-offs in 2024. The decrease was offset by a significant increase in inventory provision of $46.7 million, recognized based on net realizable value assessment following the decline in cash prices. Costs of hosting revenue decreased to $2.6 million from $4.9 million, corresponding with the decrease in hosting revenue. The absence of significant change in gross margin in 2025 actually reflects the continued maturation of the business. Cost of mining pool revenue dropped to $5.8 million to $58.3 million, also corresponding with the mining pool revenue decline. Moving to operating expenses. GNA expenses increased $13.9 million from $7.2 million in 2024. Let me explain the key drivers. We invested $2.8 million more in employee salaries and benefits to support our business expansion, particularly our growing U.S. operations. We saw a $2.7 million increase in professional fees, primarily related to our successful IPO in October 2025. We also recorded a $1.6 million increase in credit loss provisions for 2024. These increases were partially offset by a $2.4 million decrease in merchant service charges due to the reduced machine sales volume. R&D expenses increased 23% to $20.2 million in 2025 from $16.4 million in 2024. This was a strategic investment. founding our proprietary ASAC chip development for Dogecoin and Bitcoin mining machines. This R&D investment directly enabled our successful 4nm Bitcoin ASAC tape-out in March 2026. Our net loss was $177 million compared to the net income of $66.1 million in 2024. A significant part of this loss, among other non-cash costs and expenses, approximately $126 million represented depreciation, inventory provision, and write-offs, and impairment of property and equipment that came from the machine and parts of our outgoing product Provision, write-off, and impairment were prudently assessed by the company with the support from independent third-party appraisers to reflect the fair value of these assets. This prudent assessment was a necessary step to fairly present our balance sheet and was a validating result aligned to our strategic pivot into large cap points. Basic and diluted net loss per share was $1.62 compared to the net income per share of $0.61 in 2024. Now let's talk about our financial position. As of December 31, 2025, we held $26.3 million in cash and $22.5 million in cryptocurrencies. They give us a total liquidity of $48.7 million. Let me be clear about our runway. Our financial culture is rooted in capital efficiency. Until our IPO in 2025, which is our first ever external financing, we relied entirely on operating on internally generated cash flow. This created a DNA, where every dollar is focused on return on investment, and this discipline remains central to how we operate today. With our current liquidity position, we are able to allocate our capital to maintain our product pipeline to support our intended expansion of mining sites, to further enhance our energy efficiency, and to continue investing in R&D to maintain our technology leadership. Our IPO has provided us with strategic flexibility we never had before. As we look ahead, future capital raises will directly determine our capacity ramp speed and technology iteration cycles. We will continue evaluating financing opportunities based on clear return on investment metrics. Unit capital leverage per megawatt deployed, per terahash produced, and per dollar of revenue generated. The difficult decisions we made in 2025, the strategic pivot from altcoins and the increased R&D investment into large cap points has positioned us to deliver growth across all three revenue engines like Red described. We have financial discipline, the technical execution capability, and the strategic vision to build the world's most cost-effective mining infrastructure while delivering sustainable long-term value to our shareholders. Thank you. And that concludes our prepared remarks. Back to you, operator. We are now ready to take questions.

Thank you. We will now begin the question and answer session. To ask a question, please press star 1-1 and wait for our name to be announced. To cancel your request, you can press star 1-1 again. Our first question comes from the line of Anqi Wang of China Renaissance. Your line is now open. Please go ahead, ma'am.

Hi, thanks for your presentation. So I have two questions here. The first one is, I know some like other industry players are pivoting to AI so why isn't BGen is doing that and the second question would be what differentiates BGen from other industry players who also have chip design and mining capabilities thank you thank you auntie I'll leave this question for the chairman to answer.

Oisheng Chihwali please go ahead.

Oh okay hello I'm Chihwali chairman of Beijing. Actually thanks for the question and look it's a really fair question. We have seen a number of players in this space pivot to AI and I understand why inventors are curious. But the honest answer is we are really good at what we do we have complete seven successful chip step ups we know how to design artists we know how to build and run the high efficiency mining operation and we know how to manage power infrastructure that's our age everything is a meaningful one That said, we are not wearing brighter. If we see an opportunity where our capability is, Chiefs decide power management facility operation can create real value in adjacent areas. We absolutely evaluate it. And before careful assessment and evaluation on real opportunity, we choose to state disciplines and deliver results in the area where we have proven expertise. and for the for the for for the question two um yeah and it's really great questions but the biggest difference is that we all our entire stack we decide our old chips we all our mining facility we run the operation ourselves that's quite unique in this industry and it gave us a level of cost control and flexibility that hard to replicate. A good example of why that matters. In 2025, when Casper price dropped sharply, we were able to move quickly. We phase out older units, and we placed them with our high efficiency case seven models on our old timeline without having to wait for someone else to make a decision and then that's a business model is we have three when when new engines hardware sales self-mining and hosting they naturally balance each other across market cycles When crypto prices are strong, hardware demand is robust. When price softens, we shift towards self-mining where we benefit from lower network hash rates. And hosting provides steady recurring revenue regardless of where the market is. And that is how we managed to see stable mining revenue in 2025, even through a Chinese transition year. And thank you.

Thank you for the questions. One moment for the next question. Our next question comes from the line of Vincent. Your line is now open. Please go ahead.

Hi, thanks so much for taking my questions. My name is Vincent. I'm an individual investor. So I have three questions today. I'll go through those one by one. So the first question is, can you walk us through the key drivers behind the significant impairment charges recorded in 2025?

Okay, this is a finance question. I will leave this for CFO Zhao Xiang to answer. Zhao Xiang, Mark, go ahead.

Okay, thank you for your question, Vincent. My name is Zhao Xiang, Mark, NJCF, co-CFO of Beijing. Let me answer your question. We recorded a 42.6 million impairment of PPE, primarily as a result of the recoverability test performance of our asset group. The key assumptions of the analysis include simulated future cash price, the estimated useful lives of this asset, and relevant OPEX, CAPEX, and tax rates based on historic performance and expected adjustments. Among these factors, the decreasing cash price trend in 2025 played a significant role in the analysis. Average cash price fell about 43% year-over-year, where our average deployed fleet set nearly doubled to about 25,000 units in 2025. We executed or structured phase-out of agency models in response to the market change, replacing some of them with high efficiency CAS 7 unit by year-end. As a result, activity machines utilization drops from over 18% at year-end 2024 to about 6% by the end of 2025, with the The remaining active plates consisting primarily of cash savings. Furthermore, we recognized a 16.2% 3 million inventory provision and white-off based on a less reliable video licensee. The evaluation factored in the recent sales price inventory turnover, market traders, and expected future demand, all of which is a high correlation with cash price trends. To ensure the objective and prudence of this valuation, we engage on independent sole party operator, defending related over-stranded pivot, latency, altcoin models no longer align with our balance sheet objectives as we transaction into the large cap coin segment. The non-cash-charge the risk of our financial position, clearly historical burdens, and positioning us for the next chapter of growth. That's all.

Thank you. I appreciate the reply. So for my second question, you mentioned crypto for all as your mission. beyond the portable BPC product I guess what are your specific BPC investment and product plans for this year?

Thank you I will leave this question for CEO Alan of Tsingfeng Wu to answer. Alan go ahead.

Okay thank you Wenzhen. Hello everyone I am Alan Wu CEO. Are you taking this one? Crypto for all isn't some new marketing night for us it has been in our dna since 2019 when we as founders started at to get around the equipment shortage everyone was facing better than so let me walk you through what we are doing on the b2 first beyond our commercial miners we are actively pushing into the consumer segment. Last week at Bitcoin 2020, we will be showing a prototype of something with portable BTC. Think of it as a commemorative piece. It marks our entry into the business, and it is an early look at where we are consumer-oriented mining. To be clear, But commercial non-negative version will follow. The idea is simple. We want people to be able to bring Bitcoin. And second, and this is often looked over. Our hosting business is itself a B2C bridge. We give small and mid-sized miners 20q solution with flexible models either fixed rate hosting they want certainty or revenue share alignment our cloud mining product is targeted at annual miners has been encouraging we are building on that and the main includes infrastructure to support our bitcoin and So Portable BTC isn't a pivot, it is a natural next step in scaling the mission. Integrated infrastructure to make credit more accessible peer-reviewed.

Thanks for the reply. So my third question is on the Bitcoin chip timeline and commercialization. So you achieved first-pass silicon success on the 4-nanometer BT-1 chip back in March. Can you provide more specific timelines on the mass production, expected pricing, and maybe how the energy efficiency compares to other industry players?

Yes, that's a great question. Our Bitcoin chip program is the cornerstone of Beijing's transformation. So let me give you the context first. We tap out in October 2025. And on March 17 this year, we achieved first-pass silicon success. We are the very first attempt. It is a real validation of our engineering team steps. Right now, we are in extensive testing, profiling performance across different operating conditions, corner case, the full picture. This is the phase where you turn a working chip into a commercial product, and we are taking the time to get it right. Now, we are not ready to disclose GoToMarket specific yet. We are progressing through our standard development playbook, testing, validation, final production, and then commercial launch. And we won't bring this to market until we are confident. It means the performance and efficiency, but our customers will provide more detailed guidance on timing, pricing, and space as we get closer to lunch. Please stay tuned. Thank you.

Awesome. Thank you so much.

Thank you for the questions. As there are no further questions, I would like to hand the conference back to the management for closing remarks.

Thank you again for joining our call today. If you have any further questions, please feel free to contact us or submit a request through our IR website. We're looking forward to speaking with everyone in our next call. Have a good day and a good night.

That does conclude today's conference call. Thank you for your participation. You may now disconnect your lines.