BitFuFu Inc. (NASDAQ: FUFU), a publicly traded Bitcoin (BTC) miner on Wall Street, has reported a significant increase in crypto mining fees and a sharp decline in net profit for the second quarter of 2024 despite strong revenue growth.

Bitcoin Miner BitFuFu Reports Rising Costs, Lower Profits in Q2

The company’s cost to mine one Bitcoin from self-mining operations rose to $51,887 in Q2 2024, up from $19,344 in the same period last year. This 168% increase in mining costs comes as the cryptocurrency industry grapples with higher energy prices and increased mining difficulty following the Bitcoin halving in April.

Despite a 69.7% year-over-year (YoY) increase in total revenue to $129.4 million, BitFuFu’s net profit fell to $1.3 million in Q2 2024, compared to $5.1 million in the same quarter of 2023. The company attributed this decline in part to a $16.4 million non-cash unrealized fair value loss on its Bitcoin holdings.

However, BitFuFu Chief Financial Officer Calla Zhao claims that the company has maintained a healthy balance sheet with a net cash position of $52.5 million, “which provides a solid foundation to execute our growth strategy.”

The company’s Bitcoin production from self-mining operations fell by 23.1% to 780 BTC in Q2 2024, down from 1,014 BTC in the same period last year. This decline was primarily due to the increase in blockchain difficulty for Bitcoin mining and the impact of the halving.

Recently, two other mining companies also published their financial data for Q2 2024. In their case, however, the fight against the negative effects of the halving seems to be more successful. HIVE Digital increased its revenue by 37% and TeraWulf by 130%.

Net profits also rose as both companies decided to move toward supporting AI and high-performance computing. More companies in the industry are doing so, according to VanEck analysis, eyeing a $38 billion opportunity.

Cloud mining operations on the rise

Despite these challenges, BitFuFu reported strong growth in its cloud mining operations, with an 86.8% year-on-year increase in the number of registered users to 395,056.

“We saw a substantial increase in our registered cloud mining user base, which surpassed 395,000 users as of June 30,” said Leo Lu, Chairman and CEO of BitFuFu. “This represents an 87% increase year-on-year and a 23% increase sequentially from the first quarter of 2024.”

🌟 $FUFUMilestones for Q2 2024! 📊Our hosting capacity grew by 39.6% year-on-year to 522 MW, and #mining capacity increased 62.5% YoY to 24.7 EH/s. With 395,056 users (+86.8% YoY) and revenue growth of 69.7% YoY to $129.4M, we are the leader in #BTC market!Details here! https://t.co/oig3qAY44x photo.twitter.com/xIy0U4SRl1

— BitFuFu (@BitFuFuOfficial) August 20, 2024

And while the number of Bitcoins produced by customers using the cloud mining service also fell, to 1,272 BTC compared to 1,797 BTC in the same period last year, this did not affect the overall revenue structure. Revenue from cloud mining solutions increased by 66.8% to $77.0 million, accounting for 59.5% of total revenue.

“Cloud mining revenue contributed approximately 60% to BitFuFu’s second quarter revenue. Our cloud mining business allows us to effectively lock in the price of Bitcoin, which serves as a hedge against Bitcoin price volatility,” Lu added.

BitFuFu only listed on Wall Street this year and is executing on plans announced back in 2022. While it’s not among the top 5 miners on the Nasdaq with a market cap of $700 million (about $1 billion less than the fifth-largest, Core Scientific), the company’s actions are certainly attracting investor attention.

This article was written by Damian Chmiel on www.financemagnates.com.