Cloud Miner BitFuFu Expands with New Mining Facility in Ethiopia
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Nasdaq-listed Bitcoin mining company BitFuFu announced on October 22 plans to acquire a majority stake in Ethiopia’s 80-megawatt (MW) crypto mining facility.
The acquisition is a shift for the Wall Street-based miner, seeking cheaper energy sources in East Africa to address rising operational costs and shrinking profit margins.
Over the past year, BitFuFu’s operational costs surged by 170%, resulting in a 75% decline in net profit. The company’s move into Ethiopia is expected to mitigate these challenges by tapping into lower energy costs, averaging below $0.04 per kilowatt-hour.
BitFuFu Taps into Low-Cost Energy with Ethiopian Facility Acquisition
According to the announcement, when equipped with Bitmain’s latest S21-series miners, the Ethiopian facility is projected to add 4.6 exahashes per second (EH/s) to BitFuFu’s mining capacity. Power costs at the new facility average below $0.04 per kilowatt-hour, promising to reduce BitFuFu’s cost of Bitcoin production.
With this acquisition, BitFuFu’s total hosting capacity will surpass 600 MW from 522 MW, with approximately 13% now directly owned and operated by the company. This marks a departure from its previous asset-light strategy, where third-party facilities hosted its operations.
While the acquisition’s value is undisclosed, it is a major milestone for the company, which has previously operated entirely through third-party hosted facilities in the U.S., Portugal, and Indonesia.
The acquisition is part of the company’s long-term strategy to expand its operational capacity and technological efficiency at the new Ethiopian site and explore further acquisitions to strengthen its global position.
BitFuFu’s CEO Leo Lu highlighted the advantage of Ethiopia’s lower energy costs, which average below $0.04 per kilowatt-hour. This will reduce the company’s overall Bitcoin production expenses.
Bitcoin Mining Faces All-Time Challenges: Will BitFuFu’s New Strategy Pay Off?
BitFuFu’s move comes amid broader industry challenges. In Q2 2024, the company reported $129 million in revenue, a 70% year-over-year increase—but net profits reduced from $5.1 million to $1.3 million due to escalating mining costs.
The cryptocurrency mining sector faces significant headwinds, including all-time-high mining difficulty and declining revenue. Bitcoin miners’ earnings fell to $827.56 million, the lowest since September 2023.
Many BTC mining companies, including BitFuFu, are exploring diversification into artificial intelligence and high-performance computing as alternative revenue streams. Experts suggest that such pivots could unlock up to $38 billion in value by 2027.
Despite the increasing difficulty of Bitcoin mining, firms have not greatly ramped up their Bitcoin sales. On October 20, Bitcoin miners sent 2,916 BTC to centralized exchanges (CEXs), marking the fourth-lowest selling day in the past 30 days, according to CryptoQuant.
Following the Bitcoin halving in May, some consolidation occurred, with the network’s hash rate dipping to a two-month low of 575 exahashes per second (EH/s).
James Butterfill, head of research at CoinShares, attributed this drop to miners shutting down unprofitable rigs due to rising costs and declining rewards. Despite these challenges, miners are holding onto their Bitcoin.
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