BitFuFu, a publicly-listed Bitcoin miner on Wall Street, recently announced its plans to acquire a majority stake in an 80-megawatt crypto mining facility in Ethiopia. The move comes as the company seeks access to cheaper energy in East Africa amid rising costs and shrinking profit margins in the BTC mining industry.
The acquisition will increase BitFuFu’s total hosting capacity to over 600 MW, with approximately 13% now owned and operated directly by the Nasdaq-listed company. This shift represents a departure from BitFuFu’s previous asset-light approach, where third parties hosted all of its 522 MW capacity as of June 30, 2024.
By equipping the Ethiopian facility with the latest Bitmain S21-series miners, BitFuFu expects to add potential mining capacity of 4.6 EH/s. The site’s power costs average below $0.04 per kilowatt-hour, which the company anticipates will lower its overall Bitcoin production expenses.
“This acquisition is a critical milestone as we work to vertically integrate and transition towards a more diversified and resilient portfolio of Bitcoin mining sites,” said Leo Lu, CEO and Chairman of BitFuFu. “As we integrate this facility into our global infrastructure, we can capitalize on lower energy costs to reduce Bitcoin production expenses, expand our operational capacity, and enhance profitability.”
BitFuFu’s decision to acquire the Ethiopian facility is part of a broader strategy to strengthen its competitive position in the mining market. With most of its current mining infrastructure based in the United States, this acquisition could help boost mining profitability.
The company plans to implement technological upgrades at the new plant to enhance energy efficiency and mining capacity. In Q2 2024, BitFuFu earned $129 million, a 70% increase year-over-year. However, net profit dropped almost fourfold, from $5.1 million to $1.3 million, due to significantly higher mining costs.
“We have already begun planning for technological upgrades to improve energy efficiency and mining capacity at this site,” Lu added. “Moving forward, we aim to strengthen our global position by acquiring or building additional facilities and drive further innovation in the digital asset mining sector while delivering long-term value to our shareholders.”
To combat the challenges in the mining sector, including all-time high mining difficulty, BTC mining companies are diversifying into AI and high-performance computing to boost revenues. VanEck’s head of digital assets research, Matthew Sigel, estimates that this strategic pivot could unlock $38 billion in value for mining companies by 2027.
Overall, BitFuFu’s acquisition of the Ethiopian facility marks a significant step in its growth strategy and efforts to adapt to the evolving landscape of the BTC mining industry. The company’s focus on enhancing efficiency, reducing costs, and driving innovation underscores its commitment to long-term success in the digital asset mining sector.