BTDR Valuation Analysis, Top ABTC & HIVE News Now!

Bitcoin stays choppy under 60,000 while mining and AI infrastructure stocks swing even harder, so we slow down and focus on what the numbers actually say. We walk through Hive’s latest financing, ABTC’s Nasdaq compliance move, and an updated Bitdeer valuation tied to the Tydal Norway co-location narrative. 

• Bitcoin price action and what it signals for sentiment 
• Why miner volatility is normal and why we take profits 
• Lessons from the 2021 cycle on leverage, debt and survival 
• Heat map read on one month vs one year performance 
• Hive’s zero coupon senior secured notes and AI HPC capex plans 
• Why Scandinavia can improve data centre economics and PUE 
• ABTC’s 15 to 1 reverse split to maintain Nasdaq listing compliance 
• Bitdeer’s power scale, HPC revenue, SEAL miner efficiency and growth pace 
• Tydal Norway assumptions and sensitivity analysis for implied share value 

Let us know in the comment section below what you think of Bitdeer's numbers and if you're currently holding shares!

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Transcript

Welcome And What’s Coming

SPEAKER_01 0:00

Hey guys, welcome or welcome back to the channel McNally Money, the official home of power analysis. A big episode in store for you today. We've got an updated valuation analysis for BitDeer. We're going to be walking through the latest news from ABTC and Hive and discussing current market sentiment. A lot to talk about before we get into it. Take a second, smash the like button, guys. Big help to myself and the channel. Anthony absolutely loves it. If you're not already subscribed, McNally Money, feel free to join. And let us know in the comment section below what you think of BitDeer's numbers and if you're currently holding shares. With that being said, let's get into today's podcast. All right, guys, away we go. Wednesday afternoon, July 1st. A big day, Anthony. Start of a new month, start of a new quarter. Canada Day up in my neck of the woods and happens to be my 37th birthday. So a big day across the board. We wanted to jump on, give you guys an update, some top headlines in the space, and an updated valuation analysis for BitDear based on that recent title announcement.

Bitcoin Under 60K Sentiment Check

SPEAKER_01 1:09

So a good episode in store. Bitcoin, Anthony, still giving us trouble, still below 60,000. We've taken out the one-year chart again. Hopefully we're close to bottom, but I don't even know what else to say at this point.

SPEAKER_00 1:22

Yeah, um Bitcoin's not been doing too too badly today. It was it was actually further down in in earlier uh trading, um heading towards 57,000. It's actually recovered a little bit. But uh yeah, it's just doing it's just doing its thing at the moment there. Um the last couple of months of that sort of 12-year screen there, you can see it sort of consolidating around that 65 um and just sort of you know the 58,000 mark there. So maybe maybe we continue to consolidate before we start to see a rise up. But um Bitcoin will do what it does. Um it was interesting that um the the announced uh yesterday that the the the president had a significant amount of Bitcoin um he was helding personally. I think something like about uh $50 million worth. Um so um he's obviously been building up his little stack um over the past few years, and um uh good to see that he's sharing the fact that he holds a few Satoshis too.

SPEAKER_01 2:20

I saw that same article, and it did give me a bit of confidence knowing the president himself has some skin in the game. We're gonna talk about ABTC in a second here. Obviously, the president's sons also heavily involved in Bitcoin. Now, as we move over to the miners, Anthony, or the AI players here.

Volatility Lessons From The Last Cycle

SPEAKER_01 2:37

I've said this, I think the last five, maybe six days, pretty red out there. This is exactly why you guys take profits. We talk about that a lot in our members channel and on our individual Patreons, but Anthony, we're bullish on the sector. We also know it's a very volatile place to hold your money.

SPEAKER_00 2:55

Yeah, um we've been in the sector for, you know, I've been sector for you know over six years now, so I've been through um, you know, a couple of these uh periods where you know you you uh buy stocks on the belief that you know you're gonna see some accretive value. Um and sometimes it doesn't really happen. I mean, learned so many lessons in the in the in the previous cycle there, some some really harsh lessons, and I wasn't the only one some really people in the space didn't really understand too much about mining. And we saw that um, you know, people talk about will I ever get a 10x and you know that was nothing in 2021. People were getting 10, 20x, 30x in a space of a few months. Uh, we saw those uh those stocks that we talk about on a daily basis really uh ramp up and fly in the very, very early part of 2021, only to see them come crashing down over the next sort of 18 months to two years, and that took the sting out of them. But during that period, these companies were able to sort of like look at themselves, uh start to uh realize some of the mistakes they'd made. It didn't just happen out of um out of you know nothing. You know, some of these companies were leveraging themselves thinking that um they wouldn't they would be impregnable, they would that the Bitcoin price would continue to rise, and so they were going out, you know, borrowing um at very, very high interest rates to buy more machines to get more hash rates, try and mine more bitcoin, and when the bitcoin price tumbled, these these companies then had to realize, and some of the really good names we talk about today had significant debt on the balance sheet. Two that I remember distinctly, uh Terra Wolf had a lot of debt on the balance sheet, and and Keel, formerly known as Bitfarms, had a lot of debt on the balance sheet. I remember um you know um keel basically the the previous CEO there, you know, one of the challenges he he came out with was he wanted to get rid of that debt and wanted to get rid of it quickly, and I think within an 18-month period, they managed to get rid of 160 million dollars of debt. They were selling the kitchen sink and everything just to change that focus. And you can see how these companies have learned lessons over that period. Terrible for very, very similar story. We have Patrick on the on the channel, we had Paul Prager on the channel talking about what they were going to do over the period when they had that enormous amount of debt, and their debt was in certainly in the in the 100 million plus bracket there. I think it was about 140 million, and they did exactly the same. They had a you know a really really strong strategy to get rid of the debt there. Slowly but surely, they got it down to the very, very manageable part, enabling both to sort of really uh take stock of what the future would hold for both companies, and as you can see, um the difference now in terms of where we are now compared to where we were three years ago, um, is absolutely you know um amazing. So these companies have changed. I think the retailers have learned lessons. If you've been in that period over that same period that I've talked about, you'll have learned a lot of lessons. And days like this today, you know, whether it's profit taking, whether it's um money moving across from different sectors, whether some uncertainty, you'll see these uh percentage losses today, you know, 10, 11, 12, 13 percent down today. Uh, we also see the green days where you see these percentages uh the other way around as well, but it's understanding what the fundamentals are about these companies. I don't really um do too much on the technical side, I'm really more about you know what these companies are from a fundamental analysis. So I'm a chartered accountant, I can certainly look through a balance sheet or an income statement and a few of the of the of the ancillary statements there, the cash flow, and you know, give it give a view as to how I think that company is operating, whether they are operating from a cash position or operating from a leverage position there with them to borrow to keep the the lights on. Um, and a lot of these companies that we talk about now have learned many lessons from the past.

SPEAKER_01 7:00

They have, as have many of the investors watching this channel. So make sure you hold on to those lessons. Again, take profits when you can in the sector. You and I were talking, there's not really any negative news, there's not any big delays. We know Q2 earnings might be a bit soft, but it seems this is just part of the volatility in the sector and a great opportunity to average down on positions if you've got the cash on the

Reading The Miner Heat Map

SPEAKER_01 7:23

sideline. Now, moving over to the heat map, this really uh further proves that point. You can see the first three columns pretty much pure red right now. If you've been waiting to get into some of these names, probably getting into some okay buying levels.

SPEAKER_00 7:37

Yeah, and um, you know, you you're quite right. The first the first three periods out up to the last month there, it's it's pretty dire across the board. Bitcoin's down 22%, stocks on average above them are down um about 15%. So um, but then you look at some of the individual stocks there, you can see some of the big names. Um, you know, HUT uh down 24%, Iron down 36%, ABTC down 40% over that same period that Bitcoin's down 22%. It tells you a different tale from the year today and from the one-year change. The one-year change um is still significantly um positive territory for the majority, um, with the exceptions of a couple of the companies that are what we say are pure play. In fact, they've not necessarily moved across to HPC, so when you know, or haven't signed a contract yet. So Mara, they're in the process of doing it, but they're still 16% down on the year change there. ABTC down 86%, and we'll cover ABTC in a little more detail um later in the podcast. Uh Bit Digital, we know Bit Digital split out their HPC, so now they are an Ethereum staking company with a large um number of shares held in Wi-Fi, and so you know, but their uh their share price hasn't um hasn't uh done particularly well over that period or any of the periods at the moment. And uh BitFoo Foo, who are the sort of like probably one of the last pure play miners out there, they have this phenomenal cloud hash rate, but of um the fact that they haven't mentioned a date or or thought about transitioning any of their power towards HPC is really effectively um you know their company's well there right across the board there. Now Bitcoin is down 44% over that one-year change, but you can see the average of the stocks above there, 121%. Keel still showing over 500% increase, even though it's down 12% today, still leading the way from the one-year chart there. But Iran now down only down or only uh showing 176% increase. Um, so you know that stock price having a little bit of a pullback uh this last month or so. That 36% um definitely putting a bit of a dent there on the $76 all all-time high, which was achieved um uh later last year.

SPEAKER_01 10:02

Pretty crazy to see Iron dropping this far. And again, if you've got that long-term conviction, the fundamental uh investment in these companies could be an opportunity

Hive’s Zero Coupon Note Strategy

SPEAKER_01 10:11

here. Now, Hive's another one we saw rally considerably over the last few weeks. It's pulled back a bit as part of the sector has here, but they've came out with another big announcement. We've been following this senior secured note development, 100 upsize to 115. Now they come out with 130, and this is just a portion of the money they've actually raised in uh the second quarter here.

SPEAKER_00 10:34

Yeah, they've had two effectively zero coupon notes raised um in the quarter, totaling 245 million dollars. Uh, this second one you've you've quite rightly mentioned, 130 million now closed at zero coupon, that's due in 2031, that's five years away. And um, that includes the full 15 million option to exercise. They're going to get approximately 124 and a half million of net proceeds, and that money will be used for GPUs and day center growth, uh, capital contributions to subsidiaries and for general corporate purposes. Um, so you know, um there's there's also a little bit in there about the cat call as well. Um, you can talk maybe a little bit on that side there, Brass if you could.

SPEAKER_01 11:18

Yeah, we've seen this pretty standard with a lot of these raises, essentially avoiding dilution up to a certain point. Now you can see in this case 852, Anthony. So avoiding dilution for existing shareholders up into that point. Now, you and I have talked about the date or timeline here, I think 2031. So we would expect Hive hopefully to be trading above that $8, $10 mark if we look out five uh years from now, but time will tell. The other thing I wanted to mention, they cite using the proceeds for AI HPC development. You've been fortunate to actually go up to the Bowden facility. We've got an image here. So this is one of the buildings they've now purchased, and again, we're seeing that community involvement in the local area.

SPEAKER_00 12:03

Yeah, and if you can look at the uh the the surrounding area there, you can still see snow. This is northern uh Sweden. This is going to be snow majority of the year around there, so you're gonna have that cool temperatures. I was up there and uh and there was snow. Um, I think it was October uh 2024, and um I actually managed to get onto top of that building there um and walk along it there with the with the rest of the group that came for the visit to uh to Bowden that date there. But it was um amazing sight there. There's another a number of other buildings, I think it's three adjacent buildings, this one um that held that held at the time GPUs um and um ASIC machines there, some S21s remember seeing during the visit. And um the the so close to the town of Bowden, and you can see from the from the next photograph there, we've got the Hive Arena. Hive sponsors uh the name of the arena there. So on the building itself, it's a phenomenal um ice ice hockey uh rink there. Uh they have, I don't know, maybe 15-20 different teams in that uh in that area there, and they sponsor the teams there. The Hive uh logo is also on the ice as well, which is um which is interesting to see. And we got to see a number of teams practicing while we're there. I was told there was uh I'm not a big you know follower of ice hockey, but apparently there was uh three uh former Stanley uh Cup players who were on the coaching staff there. That tells you, probably to to even to the untrained eye, that uh they take the ice hockey quite seriously in that neck of the woods, Bryce.

SPEAKER_01 13:39

They do, and also in my neck of the woods, and we've talked a lot about this NIMBY philosophy, not in my backyard. We've seen a lot of pushback from communities in terms of data center development, and it's interesting to see Hive so ingrained in this community, really since day one, partnering with them and getting that support. So kudos to the team uh and on the senior secured 0% note there.

ABTC Reverse Split And Nasdaq Rules

SPEAKER_01 14:03

Now we move over to ABTC. We've talked about this concept a few times. I remember with Saluna as well. NASDAQ requires a $1 minimum listing threshold. If your stock goes below that, you have a period of time to regain. In the case of ABTC, they've been below a dollar for quite some time. Now coming out with a solution, doing a 15 to 1, what's known as a reverse split.

SPEAKER_00 14:28

Yeah, we've seen other companies. Hive did one a few years ago as well. They did, I think it was a uh one for five split. And so basically, uh, you know, for every 15 shares, that would create one new share. And the stock price today, I think it was around about 66 cents. You're going to be looking at maybe a $9 share when this goes through there. Um, and this is all to meet the the Nasdaq requirements. Um, it was voted through on the June the 22nd at the annual meeting, and the board had requested this one for 15, and there's no action required for most of the holders. Now the share count has been cut to 73 million from just over 1.09 billion shares, and of those uh shares, they have 360 million class A shares and 732 million class B shares. They are now down to 24 million class A and 49 million class B, subject to some fractional adjustments there. This is not unusual for companies that want to maintain their holding on the Nasdaq. I mean, you've got far more uh liquidity. Uh, you know, if you're on the Nasdaq there, you know, there's a lot more people buying uh shares as part of ETS. We've talked about this on the various other uh exchanges like the Russell 2000, 3000, Iron joined the Russell 1000 uh this week as well. So these uh exchanges mean there's you know bigger um um a bigger audience to buy shares from and they want to maintain that. Uh once you start leaving the likes of the Nasdaq or the FTSE, uh that's where your capital problems start to fade away. And also when you want to go and raise uh raise funds as well, uh being on these big exchanges there will give you uh you know that as part of your as part of your company CV process when you start knocking on the door asking for funding. And we know that ABTC, as well as mining Bitcoin, they're also there to buy Bitcoin when they believe it's beneficial to buy it as well. So they you know they have been selling shares to buy Bitcoin, but they also want to mine Bitcoin when it's appropriate to do so at a lower cost, and that's their sort of like their the residetra. Um, and so this is just one of those things that you've got to do. And Salouna, in fairness to them, they managed to put out a number of good updates that showed the market that they were very, very serious in driving their AI business model, and the share price rallied significantly to take them away from this issue of maintaining that Nasdaq compliance. I think the challenge with um ABTC is nobody knows what the price of Bitcoin is going to be tomorrow, next month, or next year, and that's the uncertainty. What they're doing now is they're basically you know letting the you know the their shareholders know that with this reverse split, you'll still have that same value of the company, but just a small number of shares, and your price of your shares will be a bit higher. That will enable them to continue the strategy they've maintained over the previous periods.

SPEAKER_01 17:38

Yeah, difficult for ABTC, Bitfufu as well. They're 100% tied to Bitcoin price. We know that it's volatile, but to your earlier point, Anthony, President Trump, big crypto fan himself. We know Eric and Donald Trump Jr. involved in the company, uh, ABTC it is. So hopefully they've got some insight. Maybe we don't.

BitDeer Power Scale And Tidal Setup

SPEAKER_01 17:59

Now we wanted to finish off here with BitDeer. We covered a story earlier in the week related to Tidal Norway. We had Matt Siegel on the program a few weeks back. He had said Terror Wolf and BitDeer in advance negotiations. Lo and behold, we got an announcement out for Tidal. You took it upon yourself to put together an updated valuation analysis, Anthony. So I wanted you to walk us through a couple of the slides here talking about a few of the co-location assumptions. Uh we've seen from BitDeer, we've got the title slide as well for a nice reminder. Then we can get into some of the calculations.

SPEAKER_00 18:33

Yeah, what one thing I want to highlight first is you know, we've mentioned this a few times here. When you're looking at companies that have got power and existing megawatts, they don't come bigger than BitDeer. They've got 1.74 gigawatts of power already in operation. And their pipeline is actual sites that they own and uh approved energy for those sites and a further nearly 1.3 gigawatts of power that will be coming online very, very soon. That's giving them a total of three gigawatts. This isn't about any in the future negotiations, this is real power. So, um, you know, there's not many companies that have got that level there and you know have that level of power um going forward over this next sort of 12 months. Now, one thing they have been doing in their presentation slides is talking about the tidal site. It was obvious for them it was going to be maybe one of the earlier uh co-location deal opportunities, and they did mention in their May update that they were in advanced negotiations with a potential co-location tenant, and they'd recently engaged on an ENC development partner ahead of potential lease agreement as well. Now they've also on that presentation slide, because on the update this week they've really given no information about the deal itself. That will come out within the next month, so they've been very quiet about that, which is unusual because a lot of their peers, as soon as there was a whiff of a deal, they were putting out all the data effectively, so transparent and all there for everyone to see, bit differently slightly differently. However, in their previous presentation slide, they have talked about potential contract duration 10 to 20 years. Well, most of the deals we've seen at the moment are a minimum of 15 years, and with further extensions that can be taken to a total of 25 to 30 years. Capex per megawatt, they've suggested in the region of between 8 and 12 million. Well, I've looked at 10 million as a sort of like a ballpark, and I think I'm I'm probably in the middle there, so that's that works quite well. And the outlook for them is the reason they're going into the co-location deal, is the fact that it's long-term contracts with steady cash flow and the opportunity to have high credit quality tenants. Now, as well as that tidal Norway uh uh facility there, which is two phases, total of 225 megawatts. They do have two significant sites in the US. They have Rockdale at Texas, 563 megawatts. We were fortunate to visit that site last year, Brighton, November. They've also got the Clarington, Ohio site, 570 megawatts there, and they do have at the moment running in Malaysia and Singapore two um um CSP contract sites there delivering 63 million dollars of um HPC uh revenues, uh, which puts them sort of like quite high up in the table in terms of company delivering HPC at the moment because a lot of people are talking about going into HBC, no contracts announced. BitDear have sort of like been doing this behind the scenes. Uh, you know, they are a Bitcoin min, they are the largest Bitcoin mining company um in North America. They're bigger than Mara, they're bigger than Clean Spark in terms of the hash rate that they have for self mining. It's well over 70x hash. Also, host a load of machines in other areas as well. So, I think you can say that their total hash rate exceeds 80x a hash. They go along and they've been building their own machines as well. So, I don't know if you've got the time for all this, these different strategies, but they've built the SEAL miner from the SEAL miner one to the SILMer A4. The SEAL miner A4 is one of the first machines that's under 10 joules a terahash, which is the most efficient machine on the market there. And if you've got the low power rate and that uh efficient machine there, you'll maybe able to still make a margin at the current Bitcoin price we've already talked about today. So while that's all been going on, they're also getting ready to move to HPC as well. So they don't do things in small quantities, they do things in really, really big quantities. And uh I'm sure that Ji Hanwu and the team there uh in Singapore are monitoring what's going on around the world and just getting on with their own business and not putting out massive statements on a day-to-day basis, they're just doing business as it happens there, but they've been growing extremely quickly. We talked about Clean Spark, the growth to 50x hash, we talked about iron, the growth to 50x hash. We didn't really talk too much about BitDear, the growth to 70 or 80x hash in probably like half the time. Um, so you can see that when a company really puts its mind to it, it can uh achieve a lot there, and they've been certainly uh hitting the the strategy uh very, very well. Now they're focused on this tidal Norway, and because of the fact that they've put this announcement out there, which was delivered in the same time frame as Matt Siegel suggested in his update paper by the end of quarter two. Well, within a couple of days of quarter two, they came out with that announcement. But we're hoping in the next month we get more detail.

SPEAKER_01 23:50

We are, yeah. And you talked about a few of the base level assumptions. We also talked about the PUE benefits in Scandinavia here. You've taken those assumptions, Anthony, you put them into an updated valuation analysis here for this title site, assuming 200 megawatts. What could we expect as an approximate impact to share

Valuation Model And Share Upside

SPEAKER_01 24:10

value?

SPEAKER_00 24:10

Yeah, so using this similar assumption that I've used in other models there, I've used a 200 megawatts estimated compute power. Now that allows for sort of like, you know, towards the higher end of the industry uh achievement there. But bear in mind, you're talking about Norway here. We're not talking about Texas. You know, these machines, I've been to Scandinavia, it's proper cold out there, you know, similar to you know the cold weather that you see in Canada, Bryce. Um, you're not going to require too many months of the year where you're going to have to keep machines cool because of the cold weather. Plus, the fact that you also might be saving on heating bills if you can utilize the heat energy coming off these GPUs to heat the buildings that they're in. So, again, there's some real benefits there. So I've suggested a PUE, probably about 1.1. Now we know that's uh terrible for achieving probably about 1.25 keel are probably achieving around about the same, and that's in sort of Pennsylvania and New York State. Uh those companies in Texas where it's proper, you know, hot majority of the year round, there's is probably closer to 1.4 to 1.5. So these are assumptions, and you can change assumptions. But I've suggested I've suggested 1.1. Now the revenue per megawatt, again, this is an unknown, we'll get more information about this, but we've seen some contracts now um delivering, especially with the um enterprise uh businesses or the neo clouds paying slightly more than the hyperscalers, and a couple of the latest deals have been over uh two million dollars per megawatt. So I've used two million as again as a benchmark. EBITDA margins, we know that a lot of the companies are quoting very, very high ebic dollar margins. Some have seen us high in the 90%, million percent range. I've been more pessimistic here, 80% capex at 10 million because we already highlighted they're thinking between eight and twelve, the contract term 15 years as a minimum, and the um eBig DAR multiple to enterprise value of about 15 as well. So, again, a bit more towards the lower end of the scale. We've seen some higher than that, we've seen some maybe 25 to 30. So again, not overselling this uh type of uh deal. Once you plug those figures in, um you know, you're you're you're getting an implied share price increase based on a 200 megawatt deal of about $12.5. So that's potentially how much is you know uh is potentially there once the once the uh the the deal uh metrics have been announced. If you look at that from a hundred megawatts, it's it's effectively half that six dollars and two cents there. And you can see from the sensitivity analysis there, you can pick out different revenues or different percentages of e-bit DAR, and it will give you a potential um you know expectation of the growth of share price. So if you were to get maybe $2.15 and 100% of the of the e-bit DAR that could be as high as $19 there, and at the lower end at uh 1.75 million per megawatt and 60%, it's still close to $5 per for that 200 200 megawatts there. So you've got plenty of opportunity here. Remember, this 200 megawatts is a very, very small amount of the power, they've got over three gigawatts of power, and that will be growing as they start to add into a what we would then class as a pipeline of power. The three gigawatts is a given, they've got all contracts for that power, so there's none having to wait around there. Mostly it comes online in the next 12 months, so they'll have three gigawatts in total by then, and those two big sites at Clarington and uh Rockdale uh also in prime position, maybe not as low as PUE at those two sites, but still the opportunity to get closer to 360, 370 megawatts, maybe 400 megawatts at the Rockdale facility, um, in terms of delivering uh some really big compute uh deals there. But uh this one here just shows you uh you know uh a good a good percentage. And if you if you ask me how much of that $12 is factored into the share price, I would say very little. The share price today, you know, under $15. Um, when you think about the the hash rate that they've got, the machines they've got, the fact they've producing SEAL miner A4s now, the fact they're delivering $63 million in annualized um uh HBC revenue, and they're producing more Bitcoin per day than any other North American public listed miner out there, close to 30 Bitcoin every day. I would say very little is valued into that share price as we see at the moment.

SPEAKER_01 28:59

Yeah, and shows you how quickly these share prices can move. We saw BitDeer in the mid-20s last year, and to your point, they've pulled back considerably despite making significant progress on all of these

Wrap Up Newsletter And Viewer Questions

SPEAKER_01 29:11

strategies. So let us know your thoughts there on BitDeer, specifically if you're holding shares. We also wanted to highlight the articles portion of the website here. Uh, we know we're putting out a lot of videos. If you guys want a condensed uh form, you can just get the quick bullet point updates. A great way to do that. Also, the newsletter coming out this Friday, uh, featuring a number of the AI players and newslines we've talked about throughout the week. So, with that being said, you guys, a difficult day in the markets, but some optimism in terms of the share price and then deals we're seeing. Thanks so much for watching. Happy Canada Day. We'll see you back here tomorrow.