Summary BitFuFu Inc., a global leader in Bitcoin mining, reported a 63.1% sales increase in 2024, with net income surging 414.3% from 2023. The company’s diversified business model includes cloud mining, self-mining, miner hosting, and miner sales, ensuring flexibility and multiple revenue streams. Despite high sales growth and low debt, BitFuFu faces risks due to its low cash reserves and the capital-intensive nature of the cryptocurrency mining industry. BitFuFu’s stock is undervalued with FWD P/E of 14.13, presenting high-growth potential compared to competitors like Marathon Digital. BitFuFu Inc. ( FUFU ), a Singapore-based global leader in Bitcoin mining, has recently released its full-year financial results for 2024. The company was established in 2020 and has been showing substantial sales growth since then. It received early investment from BITMAIN, a global leader in digital asset mining. BitFuFu still remains BITMAIN's strategic partner in the Bitcoin mining and mining services areas. BitFuFu's mission is to enable everyone to mine Bitcoins. Let me go into more details about the company's results, business model, financial indicators, and risks. Cryptocurrency mining growth rate Before I go into details about the company's recent results, its financial position, its strategic partnerships, risks and valuations, let me give you some key facts about the industry BitFuFu operates in. Even though I have often mentioned that innovative industries are risky because they could mean asset bubbles for investors, Bitcoin has been a highly popular yet highly volatile asset for a long time. As you can see from the diagram below, Bitcoin has been around for almost 15 years, and its price has recently touched a peak of $100,000, a historical high. Coin Market Cap It is likely that Bitcoin's popularity will keep rising in the future. After all, geopolitical uncertainty due to poor macroeconomic indicators, trade wars, and deteriorating international relations is only expected to grow stronger in the future. As a result, the demand for fiat currencies, including the USD, the pound sterling, and the EUR, is likely to decrease. Bitcoin and other cryptocurrencies are here to benefit. That is why the cryptocurrency mining market size is forecasted to keep rising at a steady pace between 2023 and 2034. Precedence research Obviously, BitFuFu is here to benefit. BitFuFu's business model BitFuFu has 34 mining facilities across five continents. The company collaborates with selected mining farms in locations such as the United States, Portugal, Laos, and Indonesia, ensuring compliance and stability in its operations. Let me talk to you about the BitFuFu's recent strategic acquisitions . First, the company signed a two-year framework agreement with BITMAIN, its strategic partner, to buy up to 80,000 S-series miners. It also expanded into North America by acquiring a 51 MW facility in Oklahoma. BitFuFu also acquired a majority stake in an 80 MW Ethiopian facility, thus adding 4.6 EH/s through BITMAIN's S21 miners at very competitive electricity rates (less than $0.04/kWh). This suggests BitFuFu has a diversified asset portfolio. The fact it owns facilities means lower electricity costs, lower mining costs, and lower hosting costs for miners and potentially other data centers. The lower the cost per Bitcoin mined, the higher the margins and, consequently, the better the valuation. Companies with the newest, most efficient mining rigs and access to low-cost energy have a competitive advantage. Now, a few words about BitFuFu's core divisions. First, it's cloud mining . BitFuFu provides an easy and low-cost way to acquire Bitcoin through cloud mining services. Users can engage in mining without the complexities of hardware procurement, transportation, hosting, and maintenance. Second, it's self-mining . It deals with purchasing and consolidating hashrates and utilizing these to mine Bitcoin for BitFuFu's own account. Then, it's miner hosting . Users can buy miners on the platform and co-host them at BitFuFu's mining farms. This service enables users to enjoy mining profits during the hosting period and retain ownership of the miner afterward. Hosting services include deployment, monitoring, maintenance, electricity, and other infrastructure services. Finally, it's miner sales . BitFuFu, in strategic partnership with BITMAIN, provides direct access to flagship miners, meeting diverse customer needs. So, BitFuFu is not only focused on one area of mining but also offers a range of alternative services to its clients. BitFuFu's 2024 earnings results Here is a summary of the full year 2024 financial highlights. Sales totaled $463.3 million in 2024, representing a rise of 63.1% from $284.1 million in 2023. Net income was $54.0 million in 2024, a surge of 414.3% from $10.5 million in 2023. Adjusted EBITDA totaled $117.5 million in 2024, a surge of 181.8% from $41.7 million in 2023. Cash, cash equivalents, and digital assets totaled $175.1 million as of December 31, 2024, representing a rise of 130.4% from $76.0 million for the same period a year ago. All that looks like brilliant progress. I will go into more details about the company's financial history and its financial metrics later in this article. Here are the company's CEO, Leo Lu's, comments. In 2024, the company delivered another year of strong earnings thanks to sustainable revenue growth in the cloud-mining solutions and self-mining divisions. Apart from the earnings progress, BitFuFu also managed to get successfully listed on NASDAQ in March 2024. Much of the success can also be attributed to the strategic transition in the second half of the year from an asset-light model to a diversified one that combines asset-light operations with ownership of data center assets. This is in line with adding more mining capacity. The company's cloud mining business showed brilliant performance, finishing 2024 with almost 600,000 registered users-nearly 100% higher compared to the end of 2023. As concerns to the 2025 outlook, BitFuFu is well-positioned for another year of strong sales growth. The mining capacity is likely to reach about 33 EH/s and hosting capacity to total between 650 MW to 800 MW by the end of this year. The cost structure will be further optimized thanks to the acquisition of datacenters with low electricity costs. There will also be fleet upgrades enabled by the framework agreement with BITMAIN, the company's important partner, to buy up to 80,000 S21 series miners. The company's financials Now, let me go into some other financial figures of BitFuFu. As you can see from the table below, the sales growth rate has been brilliant for several years in a row. And so has the net income growth rate, even though the net profit margin (net profit as a proportion of sales) does not seem to be brilliant. It totaled 11.6% as of December 2024. As you can see from the same table, it was equivalent to earnings from continuing operations. Yet, the operating income (Operating Profit = Gross Profit - Operating Expenses) was lower than the net profit figures and did not show very sustainable growth. Income statement data Seeking Alpha Profitability Prepared by the author based on BitFuFu's data Now, let us have a look at the company's margins. They are sound for a high-growth company like BitFuFu. This is particularly true of the adjusted EBITDA and EBITDA. At the same time, we can see from the balance sheet data that BitFuFu does not have too much operating cash on hand, namely $45.11 million. At the same time, they have a lot of Bitcoins, which are liquid assets, and they have a $100 million line of credit for liquidity . Also, the company's total debt-to-equity ratio of 83.87% is below the normal 1-to-1.5 range, suggesting BitFuFu has a low debt load. Moreover, the company's current ratio is above 4, over and above the recommended 2-2.5 range. Balance sheet data Seeking Alpha So, we cannot say the company is heavily indebted. Downside risks The company does not have too much cash on hand, while the industry it operates in requires heavy expenditures. The fact BitFuFu operates in an innovative, high-growth industry makes it attractive but, at the same time, makes forecasting a tricky game to play. I have often written in my previous work about other companies that high sales growth makes companies look very attractive, but is not always sustainable. Upside factors BitFuFu offers plenty of alternatives to its customers. What I personally find particularly attractive is the fact its clients do not need to have expensive equipment to start mining and making money. This, in my view, ensures flexibility and numerous clients, as a result. BitFuFu's business model is highly diversified, the company has impressive mining facilities and can keep the energy costs under control. The company's sales growth rate is high, but its stock valuations do not quite match the growth rate. I will show this below. Valuations When FUFU stock only got listed in March last year, it traded for more than $12 per share in the first days of trading. Right now, it is selling for less than $5 as I am writing this. YCharts We can also see the company's valuation ratios below. Its P/E ratios do not suggest overvaluation, to say the least, especially the FWD P/E, which is now just 14.13, substantially less than the S&P 500's P/E of 28.46. Seeking Alpha Market cap relative to hash rate, a key valuation metric for mining companies, is also low for BitFuFu. With a market cap of less than $800 million and a hash rate of 20.6 EH/s, BitFuFu trades at approximately 40x its hash rate. In comparison, Marathon Digital ( MARA ), BitFuFu's close competitor, trades at around 80x, while TeraWulf ( WULF ) stands at approximately 144x. Low valuations suggest high-growth potential. Conclusion In conclusion, BitFuFu has high-growth potential. It operates in an industry with a brilliant future and popularity among investors. The company's sales growth is high, while the stock is trading below the highs reached in the first days after the IPO. The only major risk I see is the low cash pile the company has.
