My name is Stephan Gill. I am pleased to have with me Charley Brady, VP of Investor Relations, Calla Zhao, CFO, and Leo Lu, CEO of BitFuFu. We will have a total of thirty minutes, including Q&A at the end of the presentation so if you do have a question, please submit your questions at the bottom of the screen. With that, I'll turn it over to you.
Good afternoon, everyone. I'm Charley Brady. As Stephan said, BitFuFu's VP of Investor Relations, and again, with us here today is Leo Lu, BitFuFu's Chairman and CEO, and Calla Zhao, our Chief Financial Officer. It's a pleasure to be here today to tell you, the BitFuFu story and why we believe BitFuFu is an attractive investment opportunity. So here's our disclaimer, a safe harbor statement, of which I'm sure you're all quite familiar with, so we'll skip over that. So this is BitFuFu's mission statement, which we believe differentiates us from traditional mining companies.
Our mission at BitFuFu is to make Bitcoin mining accessible to everyone, and the way we do this is through cloud mining operations, which we sell hash rate to customers and thereby eliminate the high upfront costs and the technical complexity that's associated with traditional Bitcoin mining. And I'll get into more detail on the mechanics of cloud mining in just a few minutes.
So just a quick timeline. BitFuFu began trading on NASDAQ on March first of this year, and while BitFuFu is relatively new as a public company, we're not new to Bitcoin mining or cloud mining. In fact, our Chairman and CEO, Leo Lu, again, with us here today, pioneered cloud mining during his time at Bitmain, which is the largest manufacturer of ASIC mining machines and a strategic partner to BitFuFu.
Last month, we announced our second quarter and first half 2024 financial results, with adjusted EBITDA increasing by over 150%, compared to the first half of 2023. First half revenues were up over 100%, compared to the first half of the prior year. There are several reasons why we believe BitFuFu is an attractive investment opportunity.
First, we're one of the leading Bitcoin mining companies, with 522 megawatts of hosting capacity and 24.7 exahash mining capacity as of June thirtieth. We're a leading global provider of cloud mining services. We've got a distributed network of 25 mining sites on three continents, the majority of which are located in the US, and our total fleet efficiency rate is 21.1 joules per terahash, one of the lowest in the industry.
All of these sites are currently leased capacity, and a key strategic initiative of the company is to build or acquire our own sites. I mentioned the strong results we had in the first half of 2024 . These results were a continuation of the growth that we've experienced over the past three years. So we have a proven track record of growth. Our strategic partnerships with Bitmain and AntPool are a key strategic advantage to support our further growth.
And finally, BitFuFu has a strong balance sheet with a net cash position of over $52 million, as of June 30th, and that includes cash and cash equivalents of approximately $48 million and about $106 million of digital assets as of June 30th. So with that, I'll provide some more details on BitFuFu's business.
We're a technically driven company, and we believe we have three primary business lines: cloud mining, which is about 55%-65% of revenue, self-mining of Bitcoin, which is around 35% to just over 40%, and hosting and other services, which is roughly about 2% of revenues. Our self-mining business is similar to what you'd see from a typical mining company.
We have a network of machines and mining sites. We utilize third-party mining pools to mine Bitcoin. Our strategy is to sell enough Bitcoin to cover our hosting costs, expenses, and to HODL the remainder of the Bitcoin that we mine. Although this strategy does sometimes adjust dynamically according to the market and the pricing of Bitcoin.
Our cloud mining business, however, is a bit different than you typically see from a mining company, and we believe it is a key differentiator for BitFuFu compared to other mining companies. And what we're doing here is providing a one-stop solution for customers to purchase hash rate and acquire Bitcoin without having to deal with the expenses and the complexities of owning mining machines.
And I'll get into a bit more detail on that and cloud mining in just a few slides. And finally, our hosting and other services business is really primarily involved in providing hosting services for owners of mining machines that want to use some of our capacity, as well as facilitating the sale and lease of machines for customers.
But again, that part of the revenue stream is, you know, 1.5%-2% of the revenues, but it is an important part of the business for customer relations. So this slide gives you a view of our hash rate network. Again, we're currently at 25 mining sites globally. 23 of those are in the U.S. Our fleet efficiency is 21.1 joules per terahash. Again, that's one of the best in the industry. And as I mentioned, we plan to expand our network by acquiring or building additional mining sites, which we also expect will lower our costs and increase our gross margins. We're looking at sites both in the U.S. and outside the U.S.
This slide gives you a view of our scale compared to some of our peers in the industry, other public mining companies. Over the past several years, BitFuFu has grown to be one of the leading players in Bitcoin mining and cloud mining, with 24.7 exahash under management and 522 megawatts hosting capacity in use as of June 30th.
As a result, we've established a strong track record of performance, a three-year revenue CAGR of 66%, and even stronger growth in EBITDA. This growth has continued into 2024, as we generated nearly as much revenue in the first half of this year as we did for the full year in 2023. EBITDA growth is an even better story, with first half 2024 EBITDA exceeding full year 2023 EBITDA by over 40%.
We've achieved this growth by continuing to grow our hosting capacity and increasing our mining Exahash over the past 10 quarters, while also steadily improving our fleet efficiency by over 36% over that time period. I mentioned earlier our strategic alliances with Bitmain, the largest manufacturer of ASIC mining machines, and AntP ool, the second largest mining pool. We believe these alliances provide us with several competitive advantages in both supply chain and network accessibility, and further differentiate BitFuFu from other Bitcoin mining companies.
From a supply chain perspective, as a top-tier S-level client, Bitmain, we're able to secure preferential payment terms and delivery schedules for mining machines supplied by Bitmain, as well as access to mining facilities in better locations with greater uptime. We also benefit from having a large distributed network that includes a ten-year, 300 megawatt hosting agreement with Bitmain. Operating a distributed network of mining sites mitigates the risk of unexpected interruptions to our customers, as well as for our self-mining operations.
A final point to note is that from a miner CapEx perspective, we employ an asset-light strategy, whereby we lease a majority of our miners, which, given the rapid advancement in mining machines, allows us to greatly reduce the risk of machine obsolescence and have increased flexibility to upgrade our fleet to the newest and most efficient machines, which is one of the reasons you've seen our efficiency rate continue to improve over the past 10 quarters.
Now, let me turn to cloud mining, and what it is, how it works, its value, and why it is a key differentiator for BitFuFu. As I mentioned earlier, our cloud mining business is about 55%-65% of BitFuFu's revenue, and it's really designed to be convenient and user-friendly for our customers, allowing them to begin mining Bitcoin in a matter of minutes, regardless of having any prior experience with Bitcoin mining.
The process to begin cloud mining is fairly straightforward, takes a little time to begin mining, and this slide gives you an idea of how cloud mining works and the way in which it benefits both BitFuFu and our customers. I mentioned earlier that we're really a one-stop shop, one-stop solution for our customers to acquire Bitcoin. In cloud mining, what we're doing is using our patented proprietary software, which we call Aladdin, to slice up the available hash rate into size customer wishes to purchase.
BitFuFu handles all the logistics and operations to mine Bitcoin, including acquiring mining machines, connecting those machines to a mining pool, and managing and maintaining the machines while also ensuring reliability and miner uptime. In fact, we guarantee our customers 95% plus uptime.
In a typical transaction, a customer would visit the BitFuFu website, where they would register and complete a Know Your Customer or KYC, and once completed and approved, the customer then would purchase a desired amount of hash rate for a specific period of time, whether that's thirty, sixty, ninety, hundred and eighty days, three hundred and sixty days. We have some customers that go beyond that as well.
And then after they select the time period, how much hash rate they would like to buy, they'll then choose a mining pool and provide a wallet address that will receive the Bitcoin that they mine. That purchase price for the customer includes both the price of the hash rate as well as a service fee, and the cost of the hash rate is always paid in full at the start of the contract.
However, the customer has the option to pay a portion of the service fee, upfront and then the rest of that fee over the contract period from the mined Bitcoin that they're generating during that contract period. This delayed service fee payment allows the customer to effectively leverage their investment in Bitcoin mining relative to what they could just acquire buying it strai ght off an exchange directly.
For BitFuFu, because we're receiving that hash rate cost and a down payment of the cloud mining service fee upfront, it improves our working capital. It also importantly hedges against Bitcoin price volatility as we're locking in that future revenue, regardless of where the price of Bitcoin is going to move over that contract period. From a customer perspective, again, several advantages cloud mining has.
It really offers the potential for customers to acquire greater Bitcoin than buying directly off the exchange, and as I just mentioned, leverage their investment by using the Bitcoin they generate to be applied to the remaining service fee they own. It's also less complex than direct mining, with greater flexibility to start or stop mining, and it provides increased stability for Bitcoin output.
Again, as we're guaranteed that 95% or greater uptime, one of the best in the industry. As a result, cloud mining allows anyone, regardless of their mining experience, to participate in Bitcoin mining. And this is a key reason why we've seen a significant increase in the registered users over the past year.
You can see that we've gone from about 211,000 registered users at the end of the second quarter of last year to about 395, almost 400,000 registered users at the end of the second quarter in 2024. So significant growth. And I should mention, importantly, we don't currently sell cloud mining services into the U.S. market.
So this growth has been achieved without even tapping that U.S. market, and we think that it's an opportunity for us, where we're currently reviewing regulatory requirements to be able to do that. So stay tuned. But again, all this growth without even tapping the U.S. market.
Just quickly to illustrate how cloud mining is economically attractive in practice, this is a real-world example of an actual BitFuFu cloud mining customer's experience over a 30-day period, where that customer obtained almost 2% greater Bitcoin than if they had purchased Bitcoin directly from exchange. And again, that's, that's 2% greater Bitcoin over a 30-day period. I won't spend too much time on the self mining business. It's similar to what you'd find from typical mining companies, with one key difference.
Because we have the ability to manage our available hash rate, and we can change the allocation of our hash rate between cloud mining and self mining, we're able to optimize our profit profile to be profitable in both a bull market and a bear market. And to do this, we're utilizing our proprietary patented Aladdin technology. So Aladdin is BitFuFu's self-developed, scalable technology that really comprises three systems. We have a dispatcher engine, a proxy system, and we have BitFuFu Sentry.
And these three systems work together to facilitate hash rate slicing and dispatching, as well as miner fleet management and optimization of the fleet network in real time. Again, it provides us with the ability to guarantee that 95% uptime to cloud mining customers by monitoring that fleet in real time and ensuring a rapid response should a miner have an issue. We can immediately shift the hash rate around to make sure that uptime remains in effect for that customer. To summarize, we're a technically driven company with both self mining and cloud mining operations.
The self mining business enables us to capture the upside when the price of Bitcoin increases, while the cloud mining business enables us to reduce that revenue volatility that you'd typically find in a Bitcoin miner because of the price volatility of the price of Bitcoin, and it allows us to rapidly scale our operations and profitability, as well as improve our working capital, because, again, we're getting that cloud mining hash rate payment right at the start of that contract upfront and locking in that hash rate and that revenue stream. So that's BitFuFu in a nutshell, and I think for now, we'd be happy to take any questions that we have.
Thank you, Charley, for the presentation. Again, as a reminder, if you do have a question, please submit it, and I'll be more than happy to ask on your behalf. I guess I can kick it off with a question of mine. I think earlier you talked about your partnership with Bitmain and AntPool. Like, could you explain further how your partnership, like, fits into your business model, and are you looking for more partnerships?
Yeah. So Bitmain has been a strategic partner of BitFuFu for some time. They were a pre-IPO investor in the company. They were involved in a PIPE transaction along with AntPool as part of the de-SPAC process in March, and they're currently just over a 7% shareholder in the company.
So our Leo, our chairman and CEO, his prior career worked for Bitmain, actually built Bitmain's cloud mining business before that business separated from Bitmain itself and became a different company. And we have other employees that have previous experience working with Bitmain. So there's a very strong tie and relationship to that company, and they are a key strategic partner.
And again, AntPool, which is a mining pool, also a strategic partner. They own just under 2% of total shares outstanding at BitFuFu, and certainly one of the mining pools that we're using in that cloud mining business. So, you know, in terms of looking for other partnerships, I'm not sure we're looking for the same type of strategic partnership we have with Bitmain and AntPool. That's kind of a unique relationship we have, but clearly, we're looking at building those relationships with hosting providers, with owners of sites.
You know, key strategic initiative of the company is to now move away from a purely asset-light model, where we're leasing all this hosting capacity, and move into acquiring our own sites, whether that's acquiring an existing site, building a site, JV, co-location. We're open to a number of different opportunities globally. We believe doing that will give us more control operationally and will also lower our overall cost structure and improve the margins as well.
Thank you. Thank you. I guess, could you provide your outlook on how Bitcoin mining economics might evolve in the coming months?
Yeah, it's hard to predict where the price of Bitcoin mining is gonna go, and the cost of the price of Bitcoin itself. But we've got some pretty smart folks in the company who analyze that, do some internal projections on price, where they think the price of Bitcoin is gonna be, the difficulty rate. Which that really feeds into an algorithm, which goes into how we're really pricing that cloud mining business that we're offering.
So I'm not gonna make a prediction on Bitcoin itself, but I would say that, you know, we're obviously long-term bullish on Bitcoin. We think there's a lot more upside to it, and we think there's certainly opportunity to further reduce our cost structure from Bitcoin mining.
Thank you. And I don't know if you can, like, tell us, like, where hash rate currently stands across all facilities?
Yeah. So it's 24.7 EH across all of our facilities. And I just go back to one of the slides that we have. If you look back to 2023, in the second and third quarters, you'll see that hash rate, that the mining capacity, the megawatts declined a little bit. We did see a similar decline in the second quarter of this year from first quarter of this year. And what drives that really is moving mining machines to more efficient sites, taking some of those machines offline, upgrading those machines.
And so when you do that, there's little, you know, usually a little bit of a lag time, but once those machines come back online and we add additional machines, you'll see that hash rate and then the hash rate increase again, as it did in the fourth quarter of 2023. So just to point that out, when you look at that graph, that's the reason for that. We're just really optimizing the efficiency of the machines and improving the cost structure.
Thank you. And do you have any, like, strategy, whatever, to, like, that you can implement to lower your direct and all-in costs for Bitcoin mining, maybe to mitigate your losses?
Yeah, I think, you know, again, we currently lease all of our capacity, and we lease the majority of the mining machines. And so electricity costs and powering those machines, and the efficiency of the machines is a key, probably the number one cost input to mining Bitcoin.
And one of the advantages we have with leasing this capacity, and again, our relationship with Bitmain, which is the largest manufacturer of ASIC mining machines, is our ability to procure and really keep that fleet fresh, and up to date with essentially the latest technology that's out there. Because we don't have a significant number of machines that we actually own. We do own some, but we lease the majority of those, and those are, you know, short-term leases.
Maybe up to a couple of years, and so we don't have a huge pile of obsolete inventory that we've got to unload, or that we need to spend a significant amount of CapEx to recapitalize an entire mining fleet, as you'd find from some of the other public mining companies out there. I think, you know, as we continue to improve that fleet, the fleet efficiency on the new miners is obviously better than the previous generation, and again, as we go out and acquire and take ownership of some of the actual sites we're gonna be at, that should also lower our overall cost structure.
Thank you. We do have a question from the audience. Can you touch on your user base, almost at four hundred K? Are those, like, just sign-ups on the website?
So there's three hundred and ninety-five thousand plus registered users have registered on the website. They have gone through a KYC, Know Your Customer, verification. So it's not. It's a little more involved than just going on and putting a name and an email into the website. So those are, you know, a little bit more than just sign-ups. They are registered KYC customers.
I would say, you know, not every single one of those three hundred and ninety-five thousand users may have an active contract at the moment. We have customers that will start and stop depending on what their view of Bitcoin is going to be going forward. But I would tell you that our retention rate is extremely high for repeat business. It's a significant amount of recurring revenue that we get from existing customers, in addition to growing the overall registered user base.
Thank you. Do you think, like, high performance computing and AI could become a competitive threat to Bitcoin mining?
I don't know if it's a direct kind of threat to Bitcoin mining. I think the threat really comes from the scarcity of electricity and power and sites that can do either Bitcoin mining or it could do HPC AI. Now, obviously, you know, an HPC AI site requires a significant amount more capital to be put into it to build out an AI site, probably by at least a factor, maybe up to ten times. There's a lot more redundancy you have to have on an AI site with the fiber and with the power lines itself, so a lot more infrastructure has to go into it, and that reliability of that power, obviously, you can't have curtailment, right?
In a Bitcoin mining facility, you'll often see that there is a curtailment, where the mining facility will turn off some machines, and that power goes back into the grid, that Bitcoin mining company gets paid for that curtailment, and these are for sites that would be owned by the mining company. In an AI, you can't have curtailment, right?
You have to have that uptime all the time, and so, you know, it's a little bit of apples and oranges as to the, you know, competing with Bitcoin. I think the real question again is, you know, the amount of power available, where those sites are gonna be, that's probably the biggest competition, that you know, scarcity of power generation going forward.
I'm assuming you don't have any plans to kind of, like, branch into AI data centers?
Well, I'd say never say never.
Okay.
I think first step for us is to acquire our own sites, r ight? Again, you can't really move into an HPC AI site if you don't actually own the site. So I think that's the first step that we're taking to doing that, and I think, you know, we're going to certainly evaluate the cost structure, evaluate the revenue stream that we get from it, the profitability.
Because, you know, putting that much capital to work, you know, you've got to have a customer lined up and a recurring customer, particularly on a, probably a long-term contract. We've seen it. You know, we've only seen really one instance in the industry where the AI customer is paying for the infrastructure build-out. That's a unique opportunity.
It's probably not likely to be repeated, again. And so, you know, the amount of work that goes into capital intensity of building out AI HPC, making sure you've got a long-term customer to fill that capacity, you know, those are key metrics. So, we don't have any specific plans right now, but I think it's certainly something that's... It's obviously top of mind for investors in the industry, and it's certainly something we pay a lot of attention to.
Thank you. And we do have another question from the audience. You've mentioned expansion into more locations, inside and outside the U.S. Like, they noticed, like, your current international locations include Africa and South America. Do you plan to expand into Europe and Asia?
I think, again, if there are sites that have attractive characteristics, and primarily that's gonna be electricity costs. And so, you know, we're really looking at sites that have low-cost electricity, that's the greatest input to it. And whether that's in the U.S., whether it's Africa, Middle East, whether it's Europe, that's really gonna be the determining factor.
I would say that, you know, it's probably less likely that Europe becomes, you know, a meaningful site, because the structure of the power grid is over there, and the cost of electricity probably is not gonna be competitive enough to make us want to put a site there. But there are certainly other sites in Africa where you've got very low-cost power, and you've got an existing infrastructure that would support a build-out of a mining facility.
Thank you. We're almost out of time, but I think I can squeeze in one more question. What can you say about the growth opportunities that you guys are seeking out for the company? Any details on the size, type, or timing?
Yeah, we haven't disclosed, we haven't, and we haven't put targets out for, you know, how many megawatts, how many exahash we, we wanna get to. I would say that, I would answer that question by, by saying that, you know, the target range, you know, I think is what you've seen from typical mining companies that have done M&A in the space, and that's been somewhere in the range from a 20-megawatt facility all the way up to a 100-plus megawatt facility.
And so certainly anything in that range we're looking at, but it can often very times be very site-specific, as to, you know, electricity costs and, and location. Does the site have fiber? If you're going to consider HPC AI, you've got to make sure you have fiber capability.
So, you know, that's certainly something we take into consideration as well. So I think that's kind of where we're going. But I would say, just in general, we have a very, you know, internally, a very targeted strategy to increase the amount of megawatts, increase the amount of exahash we have under management with, you know, hopefully more of that being from sites we directly own ourselves.
Thank you. Well, that's all the questions I have. Do you have any closing remarks before we end this presentation?
Yeah, I just want to thank everyone for tuning in and listening to the story here. We think it's a compelling story. We think it's a unique story. We think the company is significantly undervalued. Quite frankly, I think, you know, the name BitFuFu is not as well known by investors as we'd like it to be, and so that's the reason we're doing events like this.
If anyone has any further questions or clarification, please, you can reach out to me at my main email, my corporate email address is charley, C-H-A-R-L-E-Y, dot B, as in boy, @bitfufu, charley.b@bitfufu, or the IR website, ir@bitfufu. We're happy to answer any questions or to have a continuing conversation, folks.
Well, thank you, Charley, for being here presenting today, and thank you, our audience, for all your questions.
Thank you.
Guys, have a great day.
Thank you.
Take care.