Intchains Group Limited Q2 FY2025 earnings call

• The company has 3 main business lines: altcoin mining machines (Goldshell brand, primary revenue contributor), ETH accumulation (strategic self-funded dollar cost averaging since Q1 2024), and Web3 application development (e.g., Goldshell Pay and Goldshell Wallet).
• Q2 2025 revenue was RMB 43.2 million, impacted by lower sales of mining machines due to factors like Aleo price decline, short-term tariffs, and export delays. Cost of revenue was RMB 32.9 million, a 20% decrease from Q2 2024. Operating expenses were RMB 26.4 million, 10.2% lower than Q2 2024. Net income for Q2 2025 was RMB 38.3 million due to gains on fair value of cryptocurrencies.
• First half 2025 revenues were RMB 175.6 million, net income was RMB 4.3 million. Balance sheet remains strong with cash position of $71.6 million as of June 30, 2025.
• R&D investments: $5.8 million invested so far in 2025. Launched new products and upgrades, including 6 major Aleo mining series and Goldshell Byte dual-mining machine. Adopted ETH dollar cost averaging strategy, with total ETH units held at 8,816 as of June 30, 2025, a 25.5% increase from Q1 2025.
• Partnership with FalconX to optimize ETH acquisitions and yield generation, targeting up to 10% annualized yield on ETH holdings.

The company has 3 main business lines: altcoin mining machines, ETH accumulation, and Web3 application development. The core business is altcoin mining machines under the Goldshell brand, which is the primary revenue contributor. In Q2 2025, revenue from altcoin mining machines was RMB 43.2 million (or $6 million). For the first half of 2025, total revenues were RMB 175.6 million (or USD 24.5 million), primarily supported by sales of Aleo series mining machines. The altcoin mining machine segment is the largest revenue contributor, with the other segments (ETH accumulation and Web3) being secondary in terms of revenue contribution.

• Expect revenue for the second half of 2025 to be impacted by softer sales driven by altcoin price volatility.
• Continue to invest in R&D to strengthen technology leadership in altcoin mining machines, with plans to launch new altcoin mining products in the second half of 2025 and Dogecoin miners in 2026.
• Expand ETH reserve and enhance yield-generation strategy through initiatives like cooperation with FalconX, aiming for increased annualized yield on ETH holdings up to 10%.

• Volatility in cryptocurrency prices: Affects mining machine sales and fair value of cryptocurrency holdings.
• Regulatory changes: Can impact export of mining machines and overall business operations.
• Seasonal demand shifts and changes in mining difficulty: Influence customers' purchasing behavior and investment cycles for altcoin mining machines.

Q: I wanted to maybe focus on the ETH accumulation strategy. Do you have any concrete objectives on how aggressively you intend to accumulate ETH? Is there any thought to becoming more like the traditional Bitcoin strategies where they issue and use financial instruments to acquire more? Or are you intending to continue to sort of do it organically from cash flows that you could generate off the core business?

A: Currently, the company primarily uses its own funds to conduct a dollar cost averaging strategy for ETH purchases. In the future, may consider moderate financing depending on market conditions, but the dollar cost averaging approach will remain the core of the ETH treasury operation.

Q: And if I could ask one follow-up question. I think you mentioned targeting up to a 10% yield on your Ethereum treasury. Can you talk about how much of your holdings, any if you would consider putting towards a staking or trading strategy? Is it half or more? Just how much do you intend to put towards yield activity?

A: Cooperate with FalconX to lower purchase price cost through trading strategies and optimize returns through lending. Will explore partnerships with decentralized exchanges and expand staking. Over 80% of ETH will be used to generate income but not all in one place.

Q: The company's prepared remarks made reference to a pipeline of multiple altcoin projects that are moving toward commercialization. What can you tell us about what that pipeline of altcoin projects looks like? And what your thinking is with regard to their potential contribution especially in 2026?

A: Aleo mining had strong revenue growth in H1 2025. In H2 2025, will launch new altcoin mining products. New Dogecoin miner expected to complete testing in 2025 and enter mass production in H1 2026. 2026 will see Dogecoin miners and new coin miners.

Q: I'm just curious strategically, how you're thinking about the artificial intelligence market given excellence in semiconductor design. I'm just wondering where that might fall in your strategic thinking.

A: Currently, no plan to expand business in the artificial intelligence area, but will internally discuss further.

Q: I'm curious about if you could give us some thoughts about how to model R&D spending through the rest of 2025. Should we see that pick up in the back half of the year as you try to bring new products to market? Or do you think first quarter was maybe the high point of the year? Just some thoughts around that.

A: R&D expenses were mostly incurred in the first half. Second half will have new products, but R&D expenses in the second half will not be larger than the first half. The base figure of the second half is not big, with maybe one tape-out and a process node not very high.