Bitmain’s cloud mining company BitFuFu revealed the state of Bitcoin mining in late 2024. After a record hashrate and difficulty, most miners now have to spend more than double the expenses to mine one BTC.
According to the latest quarterly report by BitFuFu, the breakeven price for mining one BTC is $59,452, leaving a relatively wide margin even at current prices. BitFuFu is one of the rising cloud mining companies, built with an early investment from Bitmain.
BTC invited highly competitive mining even at levels just above $75,000, showing some confidence in a bigger future rally. In late 2023, BitFuFu cloud and self-miners had a cost basis of only $25,618, allowing them to hold some of the coins.
The results of BitFuFu arrive at a time when Bitcoin achieved a new record of mining activity, as well as peak difficulty levels. The mining facility has managed to find electricity costs of $0.04 per KW/h on average, much lower than the usual rate used to compute mining profitability. BitFuFu managed to offer viable rented hashing power even in late 2024, showing there is more space for competitive mining. In general, some operations may work at a loss, as the cost basis may go above $70K in some cases.
The quarterly results reflect the low hashprice index, which is now at a constantly low level after the 2024 halving of the reward. However, the underperformance has not stopped mining farms from building more facilities, tapping the latest mining machines from Bitmain for higher efficiency.
The hashprice index shows Bitcoin miners have lowered their productivity after the Halving in 2024. | Source: Hashrate Index
After the recent hashrate record, BTC even continued its usual pattern of price action following mining expansion. BTC recovered above $70,000 after the news of the mining record. Mining farms have a longer time frame and are sitting on BTC produced during earlier periods.
BitFuFu drew in more cloud-mining contracts
BitFuFu is one of the fastest-growing services, as mining requires more serious technical knowledge. With economies of scale, the service offers lower mining costs for its contract buyers.
In Q3 ended in September, BitFuFu achieved a hashrate of 26.2 EH/s, surpassing most minor mining pools. BitFuFu is also closing in on Binance Poool, which aggregates around 48 EH/s as of November 5. BitFuFu expanded its capacity from 13.9 EH/s in Q3, 2024.
In the past year, BitFuFu saw an inflow of clients for cloud mining services. Despite the demand, buyers of cloud services also saw their BTC production shrink by 40% in competition with other pools. The customers of BitFuFu produced 957 BTC for themselves in Q3, down from 1,614 BTC for the same period in 2023.
Year-on-year, demand rose by more than 75%. The mining facility only produced 340 BTC from self-mining operations, down from 515 BTC in the same period of 2023. The self-mining revenues increased in fiat terms, due to toe 114% increase in BTC market prices for the past year. In Q3, BitFuFu recognized $2.2M in gains from BTC sales, retaining most of its coins for further capital gains.
As a result of more mining demand, BitFuFu abandoned its low-asset strategy. In October, the facility acquired a 51.25% stake in a mining capacity in Ethiopia, with an 80MW power capacity. Even without the latest purchase of a new facility, the cloud mining organization sat on a portfolio of 556 MW of reliable power, up from 339 MW in Q3, 2023.
Cloud mining boosted BitFuFu’s bottom line
Even with fewer BTC produced, BitFuFu expanded its revenues and EBITDA earnings. Total revenues reached $90.3M, up from $61.2M for Q3, 2023.
BitFuFu achieved EBITDA of $5.8M, though a net loss after stock compensation of $5M. The company also increased its reserves to $147.2M, up from $76M as of December 2023.
The positive results arrived in the first full quarter following the 2024 BTC halving. BitFuFu had secured cloud mining clients before the event, relying on recurring revenues. In Q3, recurring revenues contributed to 61.3% of the total, with the remainder coming from new customers acquired from September onward. The revenue mix shows no signs of cloud miner capitulation, mixed with significant new demand.