Bitdeer Upsizes Convertible Notes Offering, Exacerbating Dilution and Financial Risk

What happened

Bitdeer has priced $325 million in 5.00% convertible senior notes due 2032, upsized from $300 million, with an option for an additional $50 million, signaling aggressive fundraising despite previous capital raises. This move follows a pattern highlighted in the DeepValue report, where similar offerings have triggered stock declines of 7-20% due to dilution concerns and complex balance sheet impacts. Although the company has shown operational growth in self-mining hash rate and margins, its free cash flow remains deeply negative at approximately -$460 million, forcing reliance on external financing. The new notes add to existing convertible debt and derivative liabilities, increasing interest burden and potential equity dilution if converted. This offering underscores management's willingness to prioritize growth over shareholder value, aligning with the report's warning about recurring dilution risks.

Implication

The upsized convertible notes offering confirms Bitdeer's chronic dependence on capital markets, highlighting its failure to generate sustainable internal cash flow despite operational scaling. With a 5.00% coupon, the new debt adds interest expenses that could worsen already negative earnings, particularly if Bitcoin prices falter or AI revenue growth disappoints. Historical reactions, such as double-digit stock drops on similar announcements, suggest near-term market skepticism and potential share price pressure due to dilution fears. This aligns with the DeepValue report's thesis that another dilutive raise could trigger a downgrade if AI/HPC ARR remains below $25 million within 12 months, emphasizing the need for close monitoring of execution milestones. Consequently, investors should consider reducing exposure or awaiting clearer signs of AI monetization and cash flow improvement before committing new capital.

Thesis delta

The new offering directly meets the report's 'decreases if' condition for another >10% dilutive raise, shifting the thesis towards a more negative outlook unless AI/HPC ARR accelerates rapidly. Specifically, if AI revenue fails to exceed $25 million within 12 months, the POTENTIAL SELL rating is reinforced, highlighting increased dilution without operational progress to justify it.