BitFuFu, a leading cloud-based Bitcoin miner, has taken a significant step in expanding its operations by acquiring its first physical mining facility. The new 80-megawatt (MW) facility in Ethiopia is being hailed as the start of the company’s efforts to diversify its infrastructure. While the financial terms of the deal were not disclosed, this move is expected to boost operational capabilities and strengthen its position in the competitive mining industry.

Boosting Capacity and Efficiency

Previously, company managed its operations through 25 mining facilities, all of which were hosted by third parties. The majority of these sites were located in the United States, with additional facilities in Portugal and Indonesia. With the new acquisition, BitFuFu‘s total mining capacity will rise from 522 MW to over 600 MW. The company plans to upgrade the Ethiopian facility by deploying Bitmain S21 application-specific integrated circuit (ASIC) miners, which could add 4.6 exahashes per second (EH/s) to its mining capacity.

In the second quarter of 2024, BitFuFu’s managed capacity stood at 24.7 EH/s. Leo Lu, the CEO of BitFuFu, described the acquisition as a major milestone, stating, “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.”

Focus on Lower Energy Costs

One of the key advantages of the Ethiopian facility is its low energy costs, which average below $0.04 per kilowatt-hour. This is expected to significantly reduce company’s cost of Bitcoin production, which had risen by 168% year-on-year as of Q2 2024. By lowering operational expenses, the company aims to improve profitability while increasing its mining output.

Lu emphasized that the acquisition will allow BitFuFu to capitalize on lower energy costs, expand its capacity, and boost profits. This move comes at a time when many miners are struggling with rising energy prices and the looming fourth Bitcoin halving, which has slashed miners’ profits.

Resilience in a Challenging Market

The broader Bitcoin mining industry has been facing pressure from surging energy costs and market uncertainties. Some miners have turned to diversification strategies, branching into artificial intelligence and high-performance computing to mitigate the impact. However, those with sufficient cash reserves, like BitFuFu, have taken advantage of the situation to expand their mining operations.

In fact, BitFuFu saw a significant 70% increase in its second-quarter revenue, reaching $129.4 million. This strong performance underscores the company’s ability to navigate a complex and challenging market.

Strategic Partnerships

Founded by executives from Chinese hardware giant Bitmain, BitFuFu has long maintained close ties with its parent company. Bitmain continues to serve as a strategic partner for BitFuFu, providing technological support and hardware. BitFuFu also shares ties with Bitdeer, another spinoff of Bitmain.

As the company continues to expand and diversify its operations, BitFuFu’s recent acquisition marks a key step in its growth strategy, positioning it for long-term success in the evolving Bitcoin mining landscape.

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