BitFuFu Inc. Price & Performance (FUFU)

Thank you, operator. Good morning, ladies and gentlemen, and welcome to BitFuFu's Full Year twenty twenty four Earnings Call. The company's financial results were released earlier today and are available on the BitFu Investor Relations website at ir.bitfufu.com as well as on the globalnewswire.com website. Joining me today on the call are Leo Liu, Chairman and CEO and Kao Isao, Chief Financial Officer. Before we begin, please note that the discussion today will contain forward looking statements made under the Safe Harbor provisions of The U. S. Private Securities and Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the company's beliefs and expectations, are forward looking statements. Forward looking statements involve risks and uncertainties that may cause actual results to differ materially from management's current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in the company's public filings with the SEC. The company does not undertake any obligation to update any forward looking statement except as required under applicable law. We will be discussing non GAAP financial information on this call. The company is providing that information as a supplement to information prepared in accordance with accounting principles generally accepted in The United States or GAAP.

You can find a reconciliation of these metrics to the company's reported GAAP results in the reconciliation tables provided in today's earnings release. One final note, although we will not be conducting a Q and A on this call, questions can be emailed to irbitfufu dot com and we will respond as quickly as possible, generally within twenty four hours. I'll now turn the call over to Leo Lu, the company's chairman and chief executive officer. Good morning, and thank you for joining us.

Today, I'm excited to share BitFuFu's full year 2024 performance and provide updates on strategic growth initiatives. 2024 was a pivotal year for both BitFuFu and the Bitcoin mining sector, We successfully listed on NASDAQ in March, expanded our hosting and Bitcoin mining capacity, began transitioning to owning data center assets in Q4. In terms of mining services, our cloud mining saw tremendous growth in 2024. We have offered more mining services to our customers. Including the development of our proprietary mining site management system. The launch of the BitFuFu OS operating system providing overclocking and underclocking services, and the introduction of BitFuFu pool, a mining pool in collaboration with third party institutions. Despite the Bitcoin halving event, which reduced the Bitcoin block subsidy, from 6.25 to 3.125 Bitcoin BitFuFu achieved strong year over year revenue growth across both cloud mining and self mining operations. In 2024, we achieved $463,300,000.0 total revenue. Dollars 54,000,000 net income, and our adjusted EBITDA in 2024 was $117,500,000 All three of these key metrics hit historical highs The compound annual growth rate of revenue and adjusted EBITDA from 2021 to 2024 was 65177% respectively. What I want to emphasize here is 2024 marks the fourth consecutive year since our founding in 2020, that BitFuFu has delivered both strong revenue growth and positive net income and adjusted EBITDA.

In fact, we are one of the few publicly traded Bitcoin mining companies. Who generate positive EPS every year since 2021. This underscores the profitability and resilience of our business model irrespective of Bitcoin price cycles. As of 12/31/2024, our total mining capacity under management stood at 23.5 exahash with hosting capacity at 551 megawatts up from 22.9sahash and five fifteen megawatts respectively, at the end of twenty twenty three. In 2024, based on market conditions, we dynamically adjusted the structure and quantity of the hash rate we procured. Considering the impact of the halving event, we took a more focused view in expanding our scale. Our mining capacity under management reached 28 Exahash in the first quarter of twenty twenty four. However, we strategically reduced the procurement of Hash rate in the following quarters. Focusing instead on optimizing our cost structure and enhancing profitability. We believe this approach is key to maintaining our competitiveness in the post halving era. In fact, since the beginning of 2024, we have gradually shifted our focus towards vertical integration, aiming to reduce mining hosting costs by a acquiring or building our own data centers. For potential mining sites, we have strict selection criteria and economic requirements regarding the payback period.

As a result of our business development efforts, we achieved several milestones. In the third quarter of twenty twenty four, we relocated some leased and self owned mining machines from higher cost US facilities to lower cost operations in Ethiopia. In October, we signed an agreement to acquire a majority stake in our first mining site an 80 megawatt facility in Ethiopia with an electricity cost of 3.6¢ per kilowatt hour, In the fourth quarter of twenty twenty four, we also signed long term lease agreements with purchase options for two US facilities totaling 33 megawatts at 4.2¢ per kilowatt hour. As a result of these initiatives, by the end of 2024, our average hosting cost had been reduced by 25%, compared to the end of twenty twenty three. Subsequent to the end of 2024, in February 2025, we acquired a majority stake in a 51 megawatt facility in Oklahoma, with an electricity cost of 3¢ per kilowatt hour. We've set a one gigawatt secured power capacity expansion plan for the next two years. Which includes the acquisition of currently operating sites and development of greenfield sites. Geographically, we primarily focus on expansion in North America However, we will also consider sites outside North America that have low cost power and a stable mining environment.

As a result of acquisition initiatives, we have made and long term leases we have signed BitFuFu has now secured 164 megawatts of power capacity. And our MA pipeline includes over 500 megawatts of potential projects. And we are now still searching for other potential projects within the one gigawatt target we aimed to have 400 megawatts of projects online and another 400 megawatts of projects either contracted or under construction by the end of twenty twenty five. As I've noted on previous calls, transitioning from a pure asset light model to a combined model in which we will increasingly secure more cell phone miners and mining sites is one of our long term strategy. Ownership enables cost structure improvements greater network control, and the flexibility to expand into HPC or AI data centers if we choose. Our cloud mining business continued to grow rapidly in 2024, accounting for more than half of our revenue. During the year, we saw an accelerating growth rate in our registered users. Which has continued into 2025. By the February 2025, on a global basis, our registered users surpassed 600,000. This growth reflects not only the accelerating adoption of Bitcoin, but also our commitment to innovation.

Through ongoing R and D, we're developing and delivering advanced mining tools and applications that are customers rely on. Positioning BitFuFu as the industry leading one stop shop platform for comprehensive Bitcoin mining services and We built a well developed membership system that offers tiered incentives such as coupons, and reward points that are based on user levels. These operational enhancements have played a key role in strengthening user engagement and loyalty with our application. Looking ahead, we plan to expand our suite of Bitcoin mining services. Seamlessly integrated into our app to help miners around the world reduce their startup costs and enhance their overall mining experience. As of today, both BitFuFuPu and BitFuFuOS are available to the broader mining market. BitFuFuPool is our private label mining pool service with commission rates as low as 0.4%. Which is highly competitive in the industry. BitFuFuOS is our software solution designed for experienced miners seeking to optimize output. Which can increase mining overall earnings by up to 20%. BitFuFu OS features a range of overclocking and underclocking modes, empowering miners to optimize operations on the fly. Based on temperature conditions power availability and market conditions. We are also actively developing additional mining service innovations that build on our proprietary hash rate allocation technology.

These are expected to roll out later this year and will further strengthen our position as a technology leader in the global cloud mining space. Additionally, in the fourth quarter of twenty twenty four, we generated $30,500,000 revenue from selling of mining equipment. If you notice, the last time we had miner sales revenue was in early twenty twenty two, which also coincided with a relatively high Bitcoin prices. The growth in prices has led to an active market for minor transactions. And we expect this trend to continue. Bringing BitFuFu Minor sales revenue in 2025. Although I've touched on some of our 2025 initiatives earlier, I'd like to take a moment to summarize our broader strategic vision for the year. Our primary objective for 2025 is to drive bi directional expansion across the Bitcoin mining value chain. Both horizontally and vertically. First, on the horizontal side, we plan to continue growing our cloud mining business while expanding into adjacent services. Including mining machine sales, monitoring software, and mining software solutions These offerings will diversify our revenue streams and create meaningful synergies with both our cloud mining and self mining Through this approach, we aim to further strengthen our ecosystem by acquiring more customer relationships deepening supplier networks.

And enhancing overall brand recognition. Second, on the vertical side, we will continue to focus on reducing costs improving efficiency and shortening payback periods for our self mining We plan to do this by acquiring high quality assets and optimizing our deployment strategies. In parallel, we aim to accumulate more Bitcoin through disciplined and strategic asset management. We do not normally provide guidance, however, given what we believe to be a significant valuation gap compared to some of our peers, we recognize that it may be helpful to provide some initial guidance. We expect our mining capacity to reach approximately 33 exahash. And hosting capacity to be in the range of six fifty to 800 megawatts by the end of twenty twenty five. As we approach the end of the first quarter, and look to the remainder of 2025, we remain confident in our ability to drive continued growth and shareholder value And with that, I'll turn the call over to Kala to discuss our financial results in detail. Kala, Thank you, Leo. Good morning, everyone.

I'm pleased to provide a deeper dive into our financial performance for the year of 2024. As mentioned by Leo, we continue to see strong growth across our key metrics. Reflecting the successful execution of our strategy. Starting with our top line, Total revenue of 2024 was $463,300,000 representing a 63.1% increase from $284,100,000 in 2023. This strong performance was driven by growth in both our Cloud Mining business and our Self Mining operations as well as revenue derived from the sale of mining machines. Which we did not have in 2023. As a percentage of total revenue during 2024, Cloud Mining Solutions accounted for approximately 59% Bitcoin self mining operations accounted for 34%, Selling of mining machines and hosting services accounted for around 7%, I will now provide additional details on our business segments. Cloud mining revenue of $271,000,000 in 2024 was up 52.2% year over year. This growth was primarily driven by the strong repeat business from existing customers. In fact, recurring revenue from existing customers who were active in 2023, accounted for $208,400,000 or approximately 77% of our cloud mining revenue. The addition of new customers in 2024 contributed $62,600,000 or 23%. To our Cloud Mining revenue underscoring the effectiveness of our marketing and customer acquisition efforts.

Turning to our self mining operations, revenue for the year was $51,100,000 representing a 57.2% increase compared to 2023. This growth was largely driven by a 77.2% year over year increase in the average hash rate used for self mining operations. In addition, there was a 128.4% year over year increase in the annual average price of Bitcoin. Which was partially offset by a decrease in Bitcoin production, which fell by approximately 29% to 2,537 bitcoins. The decrease in production was primarily due to the increase in blockchain difficulty and the halving event in April 2024. As Leo mentioned, in the fourth quarter of twenty twenty four, we resumed our mining machine sales business, which had been paused in 2023. This line of business generated $30,500,000 in revenue for the year and is expected to continue contributing to revenue in 2025. Our goal with this business is not simply to sell mining machines. It is designed to provide value added end to end solutions to our customers. Mining machine cells complement our cloud mining self mining and hosting businesses by allowing us to offer a more comprehensive service package. This integrated approach helps to strengthen customer relationships creates cross selling opportunities, and reinforces our position as a full service provider in the Bitcoin mining ecosystem.

This business is supported by a two year framework agreement. With Bitmain. Under which BitFuFu can purchase up to 80,000 minuteing machines The agreement includes flexible payment terms, including the ability to defer part of the cash payment following delivery and the option to pay a portion of the purchase price in shares of BitFuFu. This financial flexibility allows us to manage capital efficiently, while supporting the company's broader growth strategy and enhancing long term shareholder value. Now, lets take a closer look at our costs. The cost of revenue for 2024 was $433,600,000 representing an increase of approximately 60% from $271,400,000 in 2023 This increase was in line with the expansion of our cloud mining and self mining operations, as we scaled up our to meet growing demand. The increase in costs was also driven by higher electricity and hosting fees, which are directly correlated with the scale of our operations, Following the Bitcoin having an increased blockchain difficulty, our self mining cost to mine Bitcoin rose to $47,496 per Bitcoin, up from $28,200 per Bitcoin in 2023. As a reminder, our cost to mine a Bitcoin includes electricity and hosting [indiscernible] the cost of hash rate purchased from suppliers and the leasing cost of minors.

Which make up a majority of our mining fleet. As such, our cost is not directly comparable to some of our peers, which may exclude the depreciation cost of minors in their calculations. While depreciation to some extent is embedded in our cost of acquiring hash rate and leasing miners. Our gross profit margin was 6.6% an increase from 4.5% in 2023 which was primarily attributable to the combined effect of the increase in the price of Bitcoin and the decline in Bitcoin production. In addition to the impact of the halving event, gross margin was negatively impacted by the temporary downtime of mining machines, as we strategically relocated miners from high cost to low cost hosting facilities in the second half of twenty twenty four. During the migration, cell phone machines did not contribute enough revenue to cover their depreciation. However, the relocation ultimately positions the company for greater long term efficiency and profitability. Sales and marketing expenses. General and administrative expenses and R and D expenses were $38,300,000 in total, up $31,000,000 compared to 2023. This increase was largely due to the share based compensation expense of $26,100,000 in 2024 compared to no such expense in 2023. In addition, there was a $2,300,000 increase legal and consulting costs related to MA and business development activities.

We also incurred additional operating expenses at attributable to being a public company following BitFuFu's listing in March 2024. During the year, we also recognized a $44,300,000 non cash fair value gain on Bitcoin, under fair value accounting rules. This gain reflects the favorable mark to market of Bitcoin prices in the year. We also recognized a gain of over $31,000,000 on the sale of digital assets compared to $18,200,000 in 2023. This increase was driven by the higher price of Bitcoin sold during the year. Our general treasury policy is to sell a portion of mined on daily basis to cover our electricity fees and hosting costs. However, during 2024, we took a more slightly more proactive approach. And our internal sophisticated quantitative trading teams strategically chose to sell additional Bitcoins following a rapid increase in the price of Bitcoin. And acquire Bitcoin through open market purchases when the price declined. In 2025, we will continue to closely monitor our Bitcoin holdings the price of Bitcoin and market dynamics to potentially make opportunistic purchases or sales of Bitcoin in support ongoing CapEx needs. However, we maintain our long term bullish view on Bitcoin and our desire is to HODL the majority of our Bitcoin Full year 2024 adjusted EBITDA of $117,500,000 more than tripled compared with $41,700,000 in 2023 This significant growth was driven by the scaling of our cloud mining and self mining operations, our disciplined approach to cost control and the gain from the favorable market price of Bitcoin.

As of the end of twenty twenty four, BitFuFu continued to remain in a strong net cash liquidity position of $77,800,000 Cash, cash equivalents, digital assets, and digital assets collateral receivables totaled $235,500,000 compared to $76,000,000 at the end of twenty twenty three. We owned seventeen twenty Bitcoins as of year end 2024, including six thirty three bitcoins, which have been pledged for loans or asset acquisitions and excluding two twenty five Bitcoins held by BitFuFu as collateral related to a customer sale This increase in liquidity was supported by proceeds from our NASDAQ listing. An increase in digital assets from our self mining operations and their appreciation of the value of bitcoins held by the company. In November 2024, we entered into a two year master granting the company access up to $100,000,000 in capital with an annual fixed interest rate of 6.5%. As of December, million was withdrawn under the master loan agreement. Our debt to assets ratio was 57% as of December 31, 2024, We continuously monitor market conditions, liquidity requirements and risk management to optimize our holdings and protect the interests of our shareholders. Our balance sheet strength and liquidity position provide us with the flexibility to pursue growth opportunities and make strategic investments in line with our long term objectives.

Our strong financial performance in 2024 highlights the meaningful progress we have made and expect to continue making toward building a resilient, growth oriented business model. By maintaining disciplined cost controls, making strategic investments in low cost electricity data centers, and driving solid revenue across our business segments, we are laying the foundation for long term success. Operational efficiency and sustained profitability. Thank you all for your continued interest and support. I'll now turn the call back over to Leo for his closing remarks.

Thank you, Kala. In closing, I want to thank our employees partners, shareholders for their continued support. 2024 was a transformational year for BitFuFu. And we are entering 2025 with strong momentum a clear strategy and the operational and financial strength to execute. We remain focused on driving innovation, expanding our capabilities, and delivering sustainable value as we continue to lead in the evolving Bitcoin mining industry. We appreciate your time today and look forward to updating you on our progress in the quarters ahead. Thank you.

Thank you. This concludes today's conference call. Thank for participating and you may now disconnect.