Earnings Call Transcript - BTDR Q1 2025

Operator, Operator

Good day, and welcome to the Bitdeer First Quarter 2025 Earnings Call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Instructions will be given at that time. As a reminder, this call may be recorded. I would like to turn the call over to Yujia Zhai, Investor Relations Advisor. Please go ahead.

Yujia Zhai, Investor Relations Advisor

Thank you, operator, and good morning. Welcome to Bitdeer's first quarter 2025 earnings conference call. Joining me today are Jihan Wu, Chairman and CEO; Matt Kong, Chief Business Officer; Haris Basit, Chief Strategy Officer; and Jeff LaBerge, Head of Capital Markets and Strategic Initiatives. Haris will begin today by providing a high-level overview of Bitdeer’s first quarter 2025 results and then cover the company's strategy and a detailed business update. After that, Jeff will cover Bitdeer's first quarter financial results in more detail, and then we will open the call for questions. To accompany today's earnings call, we have provided a supplemental investor presentation. This presentation can be found on Bitdeer's Investor Relations website under Webcasts and Presentations. Before management begins their formal remarks, we would like to remind everyone that during today's call, we may make certain forward-looking statements. These statements are based on management's current expectations and are subject to risk and uncertainties, which may cause actual results to differ materially. For a more complete discussion on forward-looking statements and the risks and uncertainties related to Bitdeer's business, please refer to its filings with the SEC. Further, in addition to discussing results that are calculated in accordance with International Financial Reporting Standards or IFRS, we will also make references to certain non-IFRS financial measures such as adjusted EBITDA and adjusted profit or loss. For more detailed information on our non-IFRS financial measures, please refer to our earnings release that was published earlier today, which can be found on Bitdeer's Investor Relations website. Thank you. I will now turn the call over to Haris.

Haris Basit, Chief Strategy Officer

Thank you, Yujia, and good day, everyone. Thanks for joining our first quarter 2025 earnings call. I'm excited to share the many developments happening at Bitdeer and walk you through the progress we've made since last quarter. Before diving in, I'd like to briefly highlight our Q1 financial results for which Jeff will provide more details in a few minutes. Starting on Slide 3, for Q1, total revenue was $70.1 million, gross profit was negative $3.2 million, and adjusted EBITDA was negative $56.1 million. The lower performance compared to Q1 last year was primarily driven by the impact of the 2024 halving, higher global network hashrate, lower hosting and cloud mining revenue, and higher R&D costs related to the one-off development and tape-out costs of our SEAL03 chip. These negative impacts were partially offset by higher average self-mining hashrate, which increased to 11.5 exahash per second at the end of the quarter, as well as higher bitcoin prices. Over the past year, we have made the strategic decision to prioritize the development of our own ASIC technology. While this temporarily slowed our hashrate growth, it positioned us with long-term advantages that fundamentally differentiate our business. Producing our own machines enables us to scale at a significant cost advantage and maintain greater control over our growth trajectory. Now that our SEALMINERs are quickly coming off the production line, we expect a rapid acceleration in self-mining hashrate in the quarters ahead. In tandem, we are bringing online nearly 500 megawatts of new self-mining power capacity by mid-year, increasing our total global capacity to nearly 1.6 gigawatts. More than half of this power is located in Norway and Bhutan; our early focus on geographic diversification is now yielding results. Accordingly, in the near term, we are prioritizing deployments of our A2 mining machines to Bhutan and Norway, which we expect will drive our self-mining hashrate to 40 exahash per second by October 2025. On the commercialization front, we are encouraged by the recent trade negotiations, which have led to a de-escalation in tariffs. Looking ahead, we expect U.S. tariff policies to encourage more Bitcoin mining-related manufacturing in the U.S. and anticipate a continued shift towards more balanced trade measures. We plan to migrate a portion of our manufacturing to the U.S. in the second half of 2025 and we'll share more details about this in future calls. Over the long term, we expect demand for Bitcoin mining rigs to continue rising. Having the most efficient chip will be essential to capture this multi-billion dollar total addressable market. Moving now to our ASIC roadmap, which is highlighted on Slide 5 of our supplemental presentation. Starting with SEALMINER A1, at the end of Q1, we completed the mass production of 3.7 exahash per second of our SEALMINER A1 mining rigs and finished installation and energization as of the end of April 2025. For SEALMINER A2, mass production of the previously announced 35 exahash per second remains on track to be completed in October 2025. As of the end of April, we completed manufacturing of 3.3 exahash per second of SEALMINER A2 mining rigs, and 1.2 exahash per second were being assembled. Of the 3.3 exahash per second of completed miners, 1.3 exahash per second have been sold and shipped to external customers, and 0.5 exahash per second have been deployed and energized at Bitdeer's data centers in Texas and Tydal, Norway, with the remaining in transit or being prepared for shipment. Additionally, at the end of Q1, we launched a pro series of our SEALMINER A2 mining rigs, including both an air-cooled and hydrocooled model, both with impressive power efficiency of 14.9 Joules per Terahash. For SEALMINER A3, we completed rigorous testing of several dozen of our prototype models in April, and energy efficiency continues to meet our expectations. We have begun machine-level testing and results are expected to be finalized by late Q2. We anticipate mass production for our SEALMINER A3 to commence in Q3 of this year. Looking ahead to the second half of this year, our R&D efforts are now focused on our SEALMINER A4 project, for which we are targeting an unprecedented efficiency of approximately 5 Joules per Terahash at the chip level. This chip has been completely redesigned from the ground up, leveraging a new digital architecture and technology that significantly improves energy efficiency. We believe this new chip design will revolutionize the way Bitcoin mining ASICs are made in the future. We have begun the process of filing patents on this technology and tape-out is on track for Q4 2025. We believe SEALMINER A4, along with our third generation chip, will position Bitdeer as the leading supplier of the world's most energy-efficient mining rigs, significantly strengthening our market position and unlocking substantial value for our customers and shareholders. On Slide 6 of our supplemental investor presentation, we reiterate our prior guidance for our self-mining hashrate to reach approximately 40 exahash per second by Q4 of this year. Given the significant amount of power capacity we have coming online, our near-term plan is to prioritize our current ASIC production towards self-mining and utilize the bulk of our new power capacity in Tydal, Norway, and Jigmeling, Bhutan. Please note that this forecast does not include anticipated additional wafer allocations for SEAL02 or for SEAL03. Depending on the exact manufacturing schedule and actual wafer allocations, our self-mining hashrate could be well above 40 exahash per second guidance by Q4 2025. Next, I'd like to provide a quick update of our energy infrastructure and pipeline that's highlighted on Slides 7 and 8 of our supplemental investor presentation. In early April, Bitdeer signed a SPA and a turnkey agreement for the acquisition and construction of a 50-megawatt mining data center in Ethiopia. The transaction includes a local company with a mining permit, a 33 kV substation interconnection, and a four-year power purchase agreement with Ethiopian Electric Power Company. We are working closely with an EPC contractor that specializes in Bitcoin mining and are targeting energization by Q4 2025. This project reflects our continued commitment to identifying cost-efficient sites that allow us to keep older generation machines online to maximize the ROI of our existing fleet. Additionally, in April, we energized 202 megawatts of data center capacity for self-mining, of which 70 megawatts was at our Tydal, Norway site and 132 megawatts in Jigmeling, Bhutan. We expect the remaining 105 megawatts in Tydal and 368 megawatts in Jigmeling to be energized by the end of June, bringing our total available power capacity to nearly 1.6 gigawatts. By the end of 2025, we are also on track to energize an additional 221 megawatts in Massillon, Ohio, and including our Ethiopia site, our total available power capacity will reach over 1.8 gigawatts. Finally, in April, due to advancing discussions with development partners and end users for HPC/AI, we made the strategic decision to pause Bitcoin mining-related construction at our 570-megawatt site in Clarington, Ohio. However, we maintain full optionality to reassess and resume the buildout for Bitcoin mining at a later date. In terms of our HPC/AI initiative, in March, we formalized an engagement with Northland Capital Markets to act as financial advisor for our HPC/AI data center development strategy. Northland has been assisting us in our negotiations with potential development partners and providing guidance regarding capital providers. As of May, we have advanced discussions with development partners and potential end users of selected large-scale sites in the U.S., including our Clarington, Ohio site for HPC and AI. In summary, we have many exciting milestones on the horizon. We expect 2025 to be a pivotal year as our efforts start to bear fruit, and we look forward to sharing updates on our progress. I'll now turn it over to Jeff LaBerge, our Head of Capital Markets and Strategic Initiatives, to go over our financial results for the quarter.

Jeff LaBerge, Head of Capital Markets and Strategic Initiatives

Thank you, Haris. Before I go over Bitdeer's first quarter financial results, I'd like to remind everyone that all figures I refer to today are in U.S. dollars and that all comparisons are to Q1 of last year. Q1 consolidated revenue was $70.1 million versus $119.5 million. Self-mining revenue was $37.2 million, down 23.1% primarily due to the April 24 halving event and an increase in global network hashrate, partially offset by higher self-mining hashrate and higher bitcoin prices. Cloud hashrate revenue was $0.1 million versus $18.1 million. This decline was due to the expiration of long-term cloud hashrate contracts and the subsequent reallocation of the hashrate to our self-mining operations. General Hosting revenue was $9.6 million versus $29 million. Membership Hosting revenue was $16.3 million versus $19.5 million. SEALMINER sales revenue in Q1 was $4.1 million. The decrease in Hosting revenue was mainly caused by two factors. First, we converted 100 megawatts of Hosting capacity at our Texas facility to hydro cooling capacity, which is expected to be renovated and equipped with SEALMINER hydrocooled mining rigs that begin phasing in during the first quarter of 2025. Second, some Hosting customers removed less efficient miners after the halving in April 2024. Some of this extra capacity is currently being replenished by new hosted mining rigs. Total gross profit for the quarter was negative $3.2 million versus positive $34.1 million, and gross margin was negative 4.6% versus 28.6%. The decrease in our gross margin was primarily driven by the April 2024 halving, the impact on our self-mining, and lower hosting and cloud hashrate revenues. Total operating expenses for the quarter were $75.8 million and $37.8 million. The increase was primarily driven by higher R&D costs related to the one-off tape-out costs for SEALMINER 03, higher engineering costs related to the company's ASIC development roadmap, and non-cash amortization expenses of intangible assets related to the acquisition of FreeChain in Q4 2024. Other operating expenses were $7.8 million due primarily to the non-cash impairment of Bitcoin. As a reminder, under IFRS, Bitcoin is classified as an intangible asset and is measured at cost less any accumulated impairment losses with no subsequent revaluation permitted. Other net gain for the quarter was $503.1 million versus $2.4 million. The net gain was due to the non-cash derivative gains on the convertible bonds issued in August 2024 and November 2024, and the Tether warrants, which I will discuss in more detail in the liability section. IFRS net profit was $409.5 million versus $0.6 million. Adjusted profit was negative $89.8 million versus positive $9.7 million. Adjusted EBITDA was negative $56.1 million versus positive $27.3 million. This quarter's low performance compared to Q1 last year was primarily driven by the impact of the 2024 halving, higher global network hashrate, lower hosting and cloud mining revenue, and higher R&D costs as described previously. These negative impacts were partially offset by higher average self-mining hashrate and higher Bitcoin prices for the quarter. Net cash used for operating activities was $284 million, predominantly driven by SEALMINERs, supply chain, and manufacturing. Net cash used for investing activities was $73.6 million, including $45.7 million of capital expenditures for infrastructure construction and mining rigs, $18.2 million for the purchase of cryptocurrencies, $21.9 million to acquire the site and gas-fired power project in Alberta, and $12.3 million of proceeds from the disposal of cryptocurrencies from the principal business. Net cash generated from financing activities for the quarter was $94.9 million, which resulted primarily from the $118.4 million of net proceeds from the issuance of shares under our ATM facility in January and February, offset by $21 million used for share repurchases. Moving on to our 2025 Bitcoin mining infrastructure spending, we expect CapEx for the continued buildup of our global power and data center infrastructure to now be in the range of approximately $260 million to $290 million for calendar year 2025. This update includes reported infrastructure CapEx in Q1. The reduction from our prior guidance is due to approximately $80 million in savings for the pause of Bitcoin mining infrastructure construction at our Clarington, Ohio site that Haris spoke about earlier. Please note that this guidance only factors in power and data center spend for Bitcoin mining and does not include CapEx for SEALMINERs used for self-mining. In terms of our balance sheet, we ended the quarter in a strong financial position with $215.6 million in cash and cash equivalents, $131.1 million in cryptocurrencies, and $215.4 million in borrowing excluding derivative liabilities. Derivative liabilities were $256.8 million, which related to the Tether warrants and August 2024 and November 2024 convertible notes, representing a $507.2 million decline compared to our last quarter. Again, this is a non-cash fair value adjustment driven by the decline in our stock price and does not impact our liquidity or operations. Under IFRS, certain derivative instruments, such as warrants and convertible debt, are required to be revalued at fair market value each reported period. As our stock price increases, the fair value of these instruments rise, resulting in a higher reported liability and vice versa. The recorded liability will ultimately be netted at settlements either upon conversion to equity or expiration and does not represent an actual cash outflow. In April 2025, we entered into a loan agreement with Matrix Finance and Technology Holding Company for a financing facility of up to $200 million. The loans drawn under the facility bear a variable interest rate of 90% plus a market-based reference rate. Each drawdown is repayable in fixed monthly installments over 24 months and is secured by the pledge of SEALMINERs. As of today, we have drawn approximately $90 million under this facility. Finally, regarding our outstanding ATM facility, since the middle of February 2025, we have not sold any additional shares given the broader market correction.

Operator, Operator

Thank you, everyone. That concludes the prepared remarks section of our earnings call. Operator, please open the call for questions.

Darren Aftahi, Analyst

Hey guys, good morning. Thanks for taking my questions and nice to see all the progress. A couple of things. First, I know in the past you talked about third-party interest in A2, and I think it was maybe in the 7 exahash range. And then you talked earlier this year about taking that in-house for your own self-mining. I'm just curious how interest in your chips has changed in the last few weeks. Is there as much third-party interest? Has that demand changed since you mentioned bringing that in-house? And then my second question is on your 40 exahash target by the end of the year. Haris talked about there could be upside to that. What is under consideration in terms of that target? Is it simply machines and available power, or is there something more nuanced there? Thank you.

Haris Basit, Chief Strategy Officer

I will take this question. Generally, we feel that the desire for purchasing mining ASICs from us has increased significantly after the Bitcoin price increased. That's very natural. So you can see that we moved some sales of the Bitcoin mining rate, but anyway our priorities are still self-mining. We want to fulfill our Bitcoin mining farm that is going to be built up within this year. Regarding the second question about the upside of our target, well, due to the current trading situation, there is a lot of uncertainty over the availability of the capacity because everyone may want to have more capacity from TSMC and to have inventory. We don't know what their decisions will be, but we have strong confidence in TSMC as our capacity and technology partner and we are communicating with them.

Darren Aftahi, Analyst

Great. Thank you.

Operator, Operator

Thank you. Our next question comes from Ben Summers with BTIG. Your line is open.

Ben Summers, Analyst

Hey, good morning, guys, and thanks for taking my question. First around the decision to pause Bitcoin mining development at Clarington. Any color on the type of customers we're hearing from here and where are we seeing the strong demand for the site?

Haris Basit, Chief Strategy Officer

Okay. I can answer that question. At this point in time, we are getting some inbound requests from potential end users or tenants. However, our primary work here is to get a development partner that we can collaborate with to develop this site. They have very strong connections, the people we're talking to all have ties to hyperscalers. We are not yet in the stage where we're actively pursuing the hyperscalers. So we are receiving some natural inbound requests at this time. The main focus remains on closing a deal with the development partner.

Ben Summers, Analyst

Got it. Super helpful. And then kind of on the recent loan agreement that we entered. Why now? How are we thinking about the capital structure moving forward here, and how are we managing the Bitcoin balance on the balance sheet as we continue to expand the business?

Jeff LaBerge, Head of Capital Markets and Strategic Initiatives

Jihan, do you want to take that or would you like me to? I can touch on that. We feel right now, again, with a broader correction in the market, we stopped using the ATM in February when the price dropped significantly. We've always been very conscious of dilution in our capital raising process. We feel that the business can handle a certain amount of debt to finance, especially on the mining rig side where we have a payback potential opportunity for the use of proceeds. So we felt like a reasonable amount of debt could be utilized to finance the chip purchases.

Ben Summers, Analyst

Awesome. Thank you guys for taking my questions.

Operator, Operator

Thank you. Our next question comes from Kevin Cassidy with Rosenblatt Securities. Your line is open.

Kevin Cassidy, Analyst

Hi, thanks for taking my question and congratulations on the great progress. Regarding the SEAL A4 ASIC that you're going for the fourth quarter, what would be the strategy for that? Given that it's expected to be high demand equipment for other miners, are you going to mostly stay with internal sales, or will there be enough capacity to sell externally and use it internally?

Haris Basit, Chief Strategy Officer

As we fill up our existing capacity with A2s and then some A3s, we will naturally transition to more external sales. A4, if we tape out as we expect in Q4, the machines won't be ready for at least a couple of quarters after that or maybe even longer in mass production. So by that time, I expect we will largely sell externally because our internal capacity should be close to full. If we get as much capacity from TSMC as we hope, we should be able to have significant external sales.

Kevin Cassidy, Analyst

Okay. Great. And how does the transition work from A2 to A3? Do you expect that A3 will continue production for another year after A4 is out?

Haris Basit, Chief Strategy Officer

A4 is still not taped out yet. If A4 tapes out and we get the chip by the end of the year and get it to the status of mass production, A3 and A4 will coexist for quite a long time because A3 will be more cost-effective in terms of dollars per Terahash. It will depend on different situations, which mining rigs users and us want to choose from. It will also depend on other factors. If we have a generous capacity, I think A4 can be preferred. But if the total capacity from TSMC is limited, A3 might actually be better because it can yield much more hashrate from the wafers.

Kevin Cassidy, Analyst

Okay. Great. It's good to have those options. Thanks.

Operator, Operator

Thank you. Our next question comes from Nick Giles with B. Riley Securities. Your line is open.

Nick Giles, Analyst

Thanks, operator. Good morning, everyone. Apologies if I missed this, but it looks like electricity costs were slightly higher in Q1. I assume this was due to some of the extreme weather earlier in the year, but can you just touch on how power costs could trend from here?

Jeff LaBerge, Head of Capital Markets and Strategic Initiatives

Yes. So Q1 historically has been our highest power price for the year. It's due to a couple of factors. In Bhutan, we have a nine-month PPA at around $0.04 to $0.0425 per kilowatt hour that runs between Q2 and Q4. Q1 is a dry season in Bhutan, so during that quarter, we typically procure power from the Indian market. We are looking into options, power purchase agreements, and other forward power pricing opportunities for our future needs. We were not able to get this in place in time for Q1, which is why prices in Bhutan were elevated. Additionally, Rockdale had slightly elevated prices historically. Moving forward, Q2 and Q3 are typically lower-cost quarters for us. We are implementing a more aggressive power supply strategy and expect some of these changes to start bearing fruit in Q2 or Q3.

Nick Giles, Analyst

Thanks for that. That's very helpful. My second question is regarding your ASIC machines and their performance and utilization. What would you consider the first opportunity for the market to judge the overall efficiency of your fleet, specifically on some of the later generations?

Haris Basit, Chief Strategy Officer

Even though we are hungry for the machines in our own mining farm, we are still allocating some of our capacity to customers for testing. So far, we've seen positive results, and we are confident in the performance of A2 and A4. A3 is expected to be ready for shipments to customers by October.

Nick Giles, Analyst

Got it, guys. Appreciate all the information. Best of luck.

Operator, Operator

Thank you. Our next question comes from John Todaro with Needham. Your line is open.

John Todaro, Analyst

Hey guys, thanks for taking my question. Congrats on the progress. First question, I guess, just trying to understand where we should be targeting average fleet efficiency. Obviously, some of these rollouts are going to lower that efficiency quite a bit. Just wondering for the second half of 2025, what that average roughly would be? And then, I have a follow-up question on the HPC.

Jeff LaBerge, Head of Capital Markets and Strategic Initiatives

Yes. So, John, I'll take that. With our latest average moving down from last quarter likely in the high 20s at this point, down from the historical average of around 31, as we approach the 40 exahash range, we expect to see efficiency in the lower 20s, in the 22 to 24 Joules per Terahash range, assuming we keep all our existing hashrate online, which is our plan for now. Eventually, we will start to phase out some of the older rigs, which may be moved to lower-cost power regions like Ethiopia or Canada in the future. As those are phased out or replaced by newer rigs, we expect that efficiency to improve further.

John Todaro, Analyst

That's helpful. And then on HPC, it sounds like with a development partner you would look to do a powered shell or maybe even full stack. I noticed Massillon wasn't paused, Clarington was. Do you still think both sites could be for HPC or are we going to focus on Massillon for Bitcoin mining and Clarington for HPC?

Haris Basit, Chief Strategy Officer

The focus is on Clarington right now. It's not just the first 266 megawatts; it's the entire 570 megawatts that are there in Clarington. Meanwhile, Massillon is moving ahead with Bitcoin mining at that location.

John Todaro, Analyst

Got it. Okay. Great. Thank you. Appreciate it.

Operator, Operator

Thank you. Our next question comes from Brett Knoblauch with Cantor Fitzgerald. Your line is open.

Brett Knoblauch, Analyst

Hey guys, thanks for taking my question. On the ASIC side, I know before you mentioned allocating somewhere around 7 exahash to external sales. Should we expect that 7 exahash of sales for this year? Was the $4.1 million in ASIC sales revenue this quarter related to the 1.3 exahash that was shipped?

Haris Basit, Chief Strategy Officer

I'm going to ask Jihan to answer that regarding our planned sales for this year.

Jihan Wu, Chairman and CEO

This is quite a dynamic decision. The real process is that I approve the applications from the sales email by email. Generally, I want to deploy to our mining farm for self-mining, and it highly depends on the customers and their genuine interest in real tests for the mining rigs. So I cannot provide a precise prediction about our decisions.

Brett Knoblauch, Analyst

And regarding the ASIC revenue from this quarter, is that from the 1.3 exahash that was shipped?

Haris Basit, Chief Strategy Officer

Correct. Yes. That was a portion that was recognized in the quarter. Some additional may be recognized in Q2.

Brett Knoblauch, Analyst

Should we still expect an average selling price around $15 per terahash?

Haris Basit, Chief Strategy Officer

There will be no change in pricing. However, given market competition, we will need to provide a competitive price to our customers. The most recent pricing tag is $12.8 per exahash, if I remember correctly. For A2 and A2 Pro, we will follow market dynamics. If competitors lower their prices, we will follow suit. Anyway, our quantity of sales is limited, so we won't engage in any price competition at this point.

Brett Knoblauch, Analyst

Perfectly understood. On the self-mining growth, I thought I heard that you were expecting 40 exahash by October. Is that correct?

Haris Basit, Chief Strategy Officer

It's by October.

Brett Knoblauch, Analyst

Okay. Awesome. Really appreciate it, guys. Thanks.

Haris Basit, Chief Strategy Officer

Thank you.

Operator, Operator

Thank you. Our next question comes from Mike Grondahl with Northland. Your line is open.

Mike Grondahl, Analyst

Hey guys, thank you. Two questions. One, your lowered CapEx guidance of $260 million to $290 million, could you highlight where that's going this year? Secondly, if you could provide a bit more detail on the SEALMINER loan facility. Is that for chips, inventory, financing, finished goods? Help us understand how that will work mechanically.

Jeff LaBerge, Head of Capital Markets and Strategic Initiatives

Sure, Mike. I can take that first part. The CapEx is primarily related to finishing the Tydal, Norway site, the Jigmeling site, and our Massillon, Ohio site. Between those three, it's about $120 million. We also have budgeted for finishing up Texas and some for Canada, along with a small amount for the Ethiopia project. The $260 million is for the entire year. So the remaining amount for the rest of the year is approximately $190 million. Regarding the second question about the SEALMINER loan facility, it is meant to finance the purchase of chips, and the loan will be secured by the chips all the way through the end SEALMINER.

Mike Grondahl, Analyst

Got it. So those miners are acting as collateral. Thank you.

Operator, Operator

Thank you. Our next question comes from Brian Kinstlinger from Alliance Global Partners. Your line is open.

Brian Kinstlinger, Analyst

Great. Thanks so much. At what level of tariffs would Bitdeer's decision to sell externally alter the current strategy? Is 30% something you're comfortable with? Especially if semiconductors don't get a reprieve. Curious how that might impact your decision if 30% is the number.

Jihan Wu, Chairman and CEO

We believe that the ultimate tariff policy will be reasonable. I don't think the skills of negotiation will dictate the final outcome. It's important that the chips produced in Taiwan will likely not face high tariffs. We can still make our business viable within the U.S. For example, we can ship the chips into the U.S. and do assembly there. That's a possible solution we're evaluating. Secondly, we have capacity overseas in Norway, Bhutan, and Ethiopia, which have low tariffs. Therefore, we can engage in self-mining there. Generally, I think tariffs will encourage more economic activity on U.S. soil, but it's primarily for self-sufficiency and national security, promoting job creation. I think everyone, including us, has to compromise somewhat, but generally, it should be feasible.

Brian Kinstlinger, Analyst

Great. A follow-up in terms of demand: what percentage of your demand for ASICs comes from outside the U.S.?

Jihan Wu, Chairman and CEO

Most of our demand currently comes from the United States.

Operator, Operator

Thank you. Our next question comes from Bill Papanastasiou with KBW. Your line is open.

Bill Papanastasiou, Analyst

Good morning, gentlemen, and congrats on all the progress. Following up on that prior tariff question, can you speak to how customer interest has trended recently for the upcoming SEALMINERs? We've seen several Bitcoin mining companies pull back on capital expenditures for Bitcoin mining. Have you noticed any shift in the composition of interest from North America to the rest of the world due to the recent tariff landscape? Could you see a larger portion of customer sales in the future emerging from the rest of the world?

Jihan Wu, Chairman and CEO

On one side, U.S.-based Bitcoin miners have the best capital market in the world and the capability to raise capital for expansion. I don't think this will change soon. However, dilution could be unwelcome in the market. I perceive from reviews and remarks that U.S.-based Bitcoin miners will start to expand operations without diluting their shareholder base. This means leveraging their business while maintaining confidence in future revenues with proper management effects involving various problems. Therefore, there will be a greater demand for transparency from mining rig suppliers, which we, at Bitdeer, need to work out. Overall, we have confidence given the U.S.'s abundant energy, strong capital market, and culture of entrepreneurship, but the growth of market share in the U.S. will be gradual.

Bill Papanastasiou, Analyst

No. That's great color. And as a follow-up, we've seen several miners enter ASIC option payment structures to acquire additional capacity. Are you considering implementing a similar structure for A4s or A3s?

Jihan Wu, Chairman and CEO

We don't have a plan to provide credit to our clients at the moment. Many clients may need access to market capital with favorable financing. We believe that working with partners will more effectively address these financial challenges than providing credit for capital goods ourselves, as there have been negative experiences associated with that.

Bill Papanastasiou, Analyst

Appreciate the color. Thank you.

Operator, Operator

Thank you. I'm showing no further questions at this time. This concludes the question-and-answer session, and you may now disconnect. Everyone, have a great day.

Haris Basit, Chief Strategy Officer

Thank you.