Q4 2024 Bitfufu Inc Earnings Call
Speaker Change: Good day and thank you for standing by. Welcome to Bitfufu's full year 2024 earnings conference call. All participants are in a listen-only mode. Please be advised today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Charlie Brady, Vice President of Investor Relations. Please go ahead.
Speaker Change: <unk> achieved strong year over year revenue growth across both cloud mining in south mining operations.
Speaker Change: 2024, we achieved $463 $3 million total revenue.
Speaker Change: $54 million net income.
Speaker Change: Our adjusted EBITDA in 2024 was $117 $5 million.
Speaker Change: All three of these key metrics hit historical highs.
Speaker Change: Compound annual growth rate of revenue and adjusted EBITDA from 2021% to 2024 was 65% and 177% respectively.
Speaker Change: What I want to emphasize here is 2024 marks the fourth consecutive year since our founding in 2020 that Big Fufu 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.
Speaker Change: <unk> generated positive EPS every year since 2021.
Speaker Change: This underscores the profitability and resilience of our business model irrespective of bitcoin price cycles.
Speaker Change: As of December 31, 2024, our total mining capacity under management stood at 23, five exit hash with hosting capacity at 551 megawatts up from.
Speaker Change: <unk> 22, 9% of hash and 515 megawatts, respectively at the end of 2023.
Speaker Change: In 2024 based on market conditions, we dynamically adjusted the structure and quantity of the hash rate, we procured considering the impact of the having event. We took a more focused view in expanding our scale our mining capacity under management reached 28 extra harsh.
Speaker Change: In the first quarter of 2024, however, we strategically reduced the procurement of hash rate in the following quarters, focusing instead on optimizing our cost structure and enhancing profitability.
Speaker Change: We believe this approach is key to maintaining our competitiveness in the post having era.
Speaker Change: In fact since the beginning of 2024, we have gradually shifted our focus towards vertical integration aiming to reduce mining hosting costs by acquiring or building our own data centers for potential mining sites, we have a strict selection criteria and economic requirements regarding the payback period.
As a result of our business development efforts, we achieved several milestones.
Speaker Change: In the third quarter of 2024, we relocated some leased and self owned mining machines from higher cost U S facilities to lower cost operations in Ethiopia in October we signed an agreement to acquire a majority stake in our first mining site on.
Speaker Change: 80 megawatt facility in Ethiopia, with and electricity cost of $3 six.
Speaker Change: Per kilowatt hour in the fourth quarter of 2024, we also signed long term lease agreements with purchase options for two U S facilities totaling 33 megawatts at $4 <unk> per kilowatt hour.
Speaker Change: As a result of these initiatives by the end of 2024, our average hosting cost has been reduced by 25% compared to the end of 2023.
Speaker Change: Subsequent to the end of 2024 in February 2025, we acquired a majority stake in our 51 megawatt facility in Oklahoma with an electricity cost of three per kilowatt hour. We've set a one gigawatt secured power capacity expand.
Speaker Change: <unk> 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 out.
Speaker Change: Outside North America that have low cost power and stable mining environment.
Speaker Change: As a result of acquisition initiatives, we have made in long term leases, we have signed bit fufu has now secured 164 megawatts of power capacity.
Speaker Change: And our MA pipeline.
Speaker Change: Includes over 500 megawatts of potential projects and we are now still searching for other potential projects.
Speaker Change: Within the one gigawatt target, we aimed to have 400 megawatts of projects online.
Speaker Change: And another 400 megawatts of projects either contracted or under construction by the end of 2025.
Speaker Change: 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.
Speaker Change: Into HBC, our AI data centers, if we choose.
Speaker Change: 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.
Speaker Change: By the end of February 2025 on a global basis, our registered users surpassed 600000.
Speaker Change: This growth reflects not only the accelerating adoption of bitcoin, but also our commitment to innovation through ongoing R&D, we're developing and delivering advanced mining tools and applications that our customers rely on positioning bit fufu as the industry, leading one stop shop platform for comprehensive.
Speaker Change: Ziv Bitcoin mining services and solutions.
Speaker Change: We built a well developed membership system that offers tiered incentives such as coupons and rewards points that are based on user levels. These operational enhancements have played a key role in strengthening user engagement and loyalty with our application.
Speaker Change: Looking ahead.
Speaker Change: We plan to expand our suite of Bitcoin mining services seamlessly integrated into our App to help miners around the world reduced their startup costs and enhance their overall mining experience.
As of today, both bid fufu pool and be true for us are available to the broader mining market bit fufu pool as a private label mining pool service with commission rates as low as 0.4%, which is highly competitive in the industry bit fufu as our sulfur.
Speaker Change: Our solution designed for experienced miners seeking to optimize output.
Speaker Change: Which can increase mining overall earnings by up to 20% bit Fufu OS features a range of over clocking and under clocking modes empowering miners to optimize operations on the fly based on temperature conditions power availability and market conditions. We are also actively developing additional.
Speaker Change: <unk> mining service innovations that build on our proprietary hash rate allocation technology.
Speaker Change: These are expected to rollout later this year and will further strengthen our position as a technology.
Speaker Change: <unk> leader in the global cloud mining space.
Speaker Change: Additionally, in the fourth quarter of 2024, we generated $35 million revenue from selling of mining equipment. If you notice. The last time, we had minor sales revenue was in early 2022, which also coincided with a relatively high bitcoin prices the growth in prices has led.
Speaker Change: To an active market for minor transactions and we expect this trend to continue bringing Pete fufu minor sales revenue in 2025.
Speaker Change: Although I've touched on some of our 2025 initiatives earlier.
Speaker Change: I'd like to take a moment to summarize our broader strategic vision for the year.
Speaker Change: Our primary objective for 2025 is to drive by directional expansion across the bitcoin mining value chain.
Speaker Change: Both horizontally and vertically.
Speaker Change: First on the horizontal side, we plan to continue growing our cloud mining business, while expanding into adjacent services, including.
Speaker Change: Binding machine sales monitoring software and mining software solutions.
Speaker Change: These offerings will diversify our revenue streams and create meaningful synergies with both our cloud mining in south mining operations.
Speaker Change: Through this approach we aim to further strengthen our ecosystem by acquiring more customer relationships deepening supplier networks and enhancing overall brand recognition.
Speaker Change: Second on the vertical side, we will continue to focus on reducing costs, improving efficiency and shortening payback periods for ourself mining operations. 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.
Speaker Change: And strategic asset management.
Speaker Change: 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 exon.
Speaker Change: And hosting capacity to be in the range of 650.
Speaker Change: To 800 megawatts by the end of 2025.
Speaker Change: 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.
Speaker Change: And with that I'll turn the call over to Carla to discuss our financial results in detail.
Speaker Change: Sure.
Carla: Thank you Peter Good morning, everyone I'm pleased to provide a deeper dive into our financial performance for the year of 2024.
Carla: As mentioned by Neil we continue to see strong growth across our key metrics, reflecting the successful execution of our strategy.
Carla: With our top line total revenue of 2024 with $463 $3 million, representing a 63, 1% increase from $284 $1 million in 2023.
Carla: Strong performance was driven by growth in both our cloud mining business self mining operations as well as revenue derived from the sale of mining machine, which we did not have in 2023.
Carla: As a percentage of total revenue during 2024 cloud managed solutions accounted for approximately 59% bitcoin self mining operations accounted for 34% selling of mining machines and hosting services accounted for around 7%.
Carla: I will now provide additional details on our business segments.
Carla: Cloud mining revenue of $271 million 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 are active.
Carla: In 2023 accounted for $208 $4 million.
Carla: Proximately, 77% of our cloud mining revenue.
Carla: The addition of new customers in 2024 contributed $62.6 million or 23% to our cloud mining revenue underscoring the effectiveness of our marketing and customer acquisition efforts.
Carla: Turning to self mining operations revenue for the year was $51 1 million.
Carla: Representing a 57, 2% increase compared to 2023. This growth was largely driven by a 77, 2% year over year increase in the average cash rate used for self mining operations. In addition, there was a 120 <unk>.
Carla: Eight 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 2537 big clients. The decrease in production was primarily due to the increase.
Carla: Blockchain difficulty and to have an event in April 2024.
Carla: You mentioned in the fourth quarter of 2024, we resumed our mining machine sales business, which had been posed in 2023. This line of business generated $35 million in revenue for the year and is expected to continue contributing to revenue in 2025.
Carla: Our goal with this business is not simply to sell mining machine.
Carla: <unk> is designed to provide value added end to end solutions to our customers mining machine sales complement our cloud mining self mining and hosting businesses by allowing us to offer a more comprehensive service package is integrated approach helps to strengthen customer relationships.
Carla: Creates cross selling opportunities and reinforces our position as a full service provider in the bitcoin mining ecosystem.
Carla: <unk> business is supported by a two year framework agreement with big name under which be truthful can purchase up to 80000 mining machines. The agreement includes flexible payment terms, including the ability to defer part of the cash payment interest free following delivery and the.
Carla: Option to pay a portion of the purchase price in shares of <unk>.
Carla: Financial flexibility allows us to manage capital efficiently, while supporting the company's broader growth strategy and enhancing long term shareholder value.
Carla: Now, let's take a closer look at our costs.
Carla: The cost of revenue for 2024 was $433 $6 million, representing an increase of approximately 60% from $271 $4 million. In 2023. This increase was in line with the expansion of our cloud mining and self mining operations.
Carla: As we scaled up our activities to meet growing demand.
Carla: Increase in costs was also driven by higher electricity and hosting fees, which are directly correlated with the scale of our operations.
Carla: Following the bitcoin, having an increased blockchain difficulty sales.
Carla: Sales mining cost of mine bitcoin rose to $47496 per bitcoin.
Carla: $28200 per bit coin in 2023, as a reminder, our cost to mine a bitcoin includes electricity and hosting costs.
Carla: Cost of hash rate purchase from suppliers and the leasing cost of miners, 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 miners in their calculations, while depreciation to some extent.
Carla: It's embedded in our cost of acquiring cash rate and leasing miners.
Carla: Our gross profit margin was six 6% an increase from four 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 having event gross margin was negatively.
Carla: Packaged by the temporary downtime of mining machines, as we strategically relocated minus from high cost to low cost hosting facilities in the second half of 2024.
Carla: During the migration cellphone machines did not contribute enough revenue to cover their depreciation however, the relocation ultimately position the company for greater long term efficiency and profitability.
Carla: Sales and marketing expenses general and administrative expenses and R&D expenses were $38 3 million in total up $31 million compared to 2023.
Carla: This increase was largely due to the share based compensation expense of $26 1 million in 2024 compared to no such expense in 2023.
Carla: In addition, there was at $2 $3 million increase in legal and consulting costs related to M&A and business development activities. We also incurred additional operating expenses attributable to being a public company following bit fufufu lifting in March 2020 for.
Carla: During the year, we also recognized a $44 $3 million noncash fair value gain on bitcoin under fair value accounting rules. This gain reflects the favorable mark to market adjustment of bitcoin prices in the year. We also recognized a gain of over $31 million on.
Carla: The sale of digital assets compared to $18 $2 million in 2023. This increase was driven by the higher price of bitcoin sold during the year.
Carla: Our general Treasury policy is to sell a portion of mind bitcoins on daily basis to cover our electricity feeds and hosting costs.
Carla: However, during 2024, we took a more slightly more proactive approach and our internal sophisticated quantitative trading team strategically chose to sell additional bitcoin.
Carla: Knowing 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.
Carla: <unk> or sales of bitcoin in support ongoing capex needs. However, we maintained our long term bullish view on bitcoin and our desire is to harder the majority of our bitcoin full.
Carla: Full year 2024, adjusted EBITDA of $117 $5 million more than tripled compared with $41 7 million in 2023. This significant growth was driven by the scaling of our cloud mining and self mining operations.
Carla: Disciplined approach to cost control and the gain from the favorable market prices bitcoin.
Carla: As of the end of 2024 bit fufu continue to remain in a strong net cash liquidity position of $77 million to $8 million cash.
Carla: Cash cash equivalents digital assets.
Carla: Digital assets collateral receivables totaled $235 $5 million compared to $76 million at the end of 2023.
Carla: We owned 1720 bitcoins as of year end 2024, including 633, big clients, which have been pledged for loan to asset acquisitions, and excluding 225 bitcoins held by bit fufu as collateral related to a customer.
Carla: Phil.
Carla: This increase in liquidity was supported by proceeds from our NASDAQ listing and.
Carla: An increase in digital assets from our self mining operations and the appreciation of the value of Bitcoin is held by the company.
Carla: In November 2024, we entered into a two year master loan agreement with and pool granting the company access up to $100 million in capital with an annual fixed interest rate of six 5%.
Carla: As of December $35 million was withdrawn under the master loan agreement our debt to assets ratio was 57% as of December 31 2024.
Carla: We continuously monitor market conditions liquidity requirements and risk management strategies to optimize our holdings.
Carla: Protect the interests of our shareholders.
Carla: 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.
Carla: Our strong financial performance in 2024 highlights the meaningful progress we have made and expect to continue making towards building a resilient growth oriented business model by.
Carla: By maintaining disciplined cost controls, making strategic investments in low cost electricity datacenters and driving solid revenue across our business segments. We are laying the foundation for long term success.
Carla: Operational efficiency and sustained profitability.
Carla: Thank you all for your continued interest and support I will now turn the call back over to Neal for his closing remarks.
Neal: Thank you Kayla.
Neal: In closing I want to thank our employees partners and shareholders for their continued support 2024 was a transformational year for bid for and we are entering 2025 with strong momentum a clear strategy and the operational and financial strength to execute we remain.
Neal: 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.
Neal: Thank you.
Neal: Thank you.
Neal: This concludes today's conference call. Thank you for participating and you may now disconnect.
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Neal: Yes.
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