This Nasdaq-Traded Bitcoin Miner Has Been Profitable Since 2021

The provider of digital asset mining services is growing its portfolio of self-operated mining machines and data centers as high crypto prices fuel strong revenue and earnings gains

Key Takeaways:

• BitFuFu's revenue grew 63% in 2024, as its annual net profit surged more than fivefold
• The provider of digital asset services is benefitting from the latest cryptocurrency boom, and is now looking to boost its own mining operation to improve profitability

The good times are rolling for BitFuFu Inc. (FUFU.US), which isn't showing any signs of settling for the status quo.

Amid the latest resurgence for cryptocurrencies, including a rise of more than 30% in the price of bitcoin over the last six months, the provider of digital asset mining services is enjoying a big jump in its own profits. But Bitfufu isn't stopping there. It's rapidly building up its own crypto mining business, which can pay off nicely if the current boom continues — though how long that will happen is anyone's guess.

BitFuFu's revenue grew 63% to $463.3 million last year from 2023, as its net profit surged more than fivefold to $54 million, according to its latest annual results released last week. The company benefitted as cryptocurrencies went on a bull run after a long slump, fueled by events including a halving in the supply of new bitcoins and Donald Trump's U.S. presidential election win that is already showing signs of producing favorable policies for digital assets. The euphoria around cryptocurrencies reached a crescendo at the end of last year when bitcoin prices hit $100,000 for the first time.

BitFuFu's profit surge against this backdrop isn't so surprising, since the fortunes of crypto-related service providers are closely tied to movements in the virtual asset market. The company also has its own bitcoin mining business, meaning an increase in bitcoin prices directly translates into its own revenue gains. Reflecting that, BitFuFu's revenue from its bitcoin mining operations increased 57% to $157.5 million last year, slightly faster than the 52% rise for its cloud mining services, even though its actual bitcoin output decreased after the halving event last April.

Despite cryptocurrency ups-and-downs over the last few years, Bitfufu is quite noteworthy for the fact that it hasn't recorded a net loss since its founding in 2020, including during the last crypto crash of 2021 that claimed many of its peers as victims. At its lowest point in 2022, the company nearly failed to break even, but still managed to defend profitability, even if its earnings per share (EPS) that year were tiny.

"We are one of the few publicly traded bitcoin mining companies who have generated positive EPS every year since 2021," BitFuFu founder and CEO Lu Leo said on the company's conference call to discuss the latest results. "This underscores the profitability and resilience of our business model, irrespective of bitcoin price cycles."

BitFuFu's key operational strength lies in its flexible business model that enables it to allocate mining capacity between its own mining operations and cloud-based mining services for its customers, as well as between leased and self-owned equipment, depending on market conditions.

Now, the company is looking to gradually grow its portfolio of self-owned mining machines and data centers, a strategic shift indicating it believes the bull market for virtual assets is likely to endure over the long haul. Most recently, BitFuFu in February announced completion of an acquisition of a majority stake in a data center for bitcoin mining in the U.S. state of Oklahoma, following the entering into a definitive agreement last October to acquire a facility in Ethiopia. And in January, BitFuFu announced that it inked a contract with Bitmain, which was one of the company's early investors and remains its largest supplier, to purchase up to 80,000 crypto mining computers over two years.

Cost savings

Physical assets like mining machines and data centers like the ones Bitfufu is buying inevitably bring higher depreciation costs for the company. But such direct ownership can also lead to cost savings for BitFuFu by eliminating the need to pay for third-party machines and hosting services. BitFuFu reduced its average hosting cost by a quarter in 2024 compared with the prior year by moving some mining machines from U.S. sites to Ethiopia data center, Lu said on the conference call. That's a substantial savings.

BitFuFu's core cloud mining business also continued to flourish last year. That operation is built on a cloud-based platform that allows users to mine digital assets remotely, saving them money by eliminating the need to purchase their own expensive mining equipment. Such services may have become even more attractive for crypto miners after the bitcoin halving event since controlling costs has become even more important, now that the rewards for their mining efforts have been curtailed by half in terms of output.

The number of registered users of BitFuFu's cloud-mining service nearly doubled to about 592,000 at the end of 2024 from a year earlier. And its existing customers appear to be sticking around. They accounted for almost 77% of the company's cloud-mining services revenue in 2024, helping its recurring revenue for the year to exceed the level from 2023. That ability to retain customers is key for any good business, showing your product is well received and making it easier to build up your customer base.

BitFuFu's shares have gained about 4% in the past year and now trade at a price-to-sales (P/S) ratio of 1.58, trailing the 6.03 for larger rival Riot Platforms (RIOT.US) and 5.46 of leading global miner Mara (MARA.US), which is more than five times larger than Bitfufu. That gap seems to indicate many investors have yet to discover the company, suggesting potential upside for its shares.

BitFuFu's ability to use its flexible business model to find consistent profits in a notoriously volatile industry is certainly laudable. Its current focus on amassing its own mining assets looks smart in the current environment compared with some of its peers. The cloud mining solutions could help to mitigate the risk if cryptocurrencies pull back again – which seems inevitable.

But then again, those same cryptocurrencies have shown an uncanny ability to bounce back time and time again, meaning the company should be able to absorb such downturns if it can build a sufficient buffer to weather the bad times. It's already shown once it has that ability, which is one of the most important assets for any company in such an emerging sector with high volatility.