Summary BitFuFu's Q2 results confirmed my rebound thesis, with strong sequential growth and improved operational efficiency despite the Bitcoin halving impact. Strategic investments in energy independence and asset tokenization position BitFuFu for long-term growth and reduced earnings volatility. The market is underappreciating BitFuFu's potential, with my updated valuation model indicating a 340% upside from current levels. Despite execution and regulatory risks, I see BitFuFu as a compelling, undervalued play for long-term investors in the crypto mining sector. In my previous BitFuFu Inc. ( FUFU ) analysis in late June, I forecasted a strong rebound in key financial metrics in Q2 based on preliminary performance data for April and May. Last week, the company reported strong Q2 numbers, confirming my rebound thesis for FUFU. Since my June article, FUFU stock is up ~13% but is still down from my first article published in May in which I projected strong operating profit growth for BitFuFu in 2026. I still believe the market has not fully priced in the expected recovery of BitFuFu and the expected growth in profitability next year. In addition, after analyzing the Q2 performance, my conviction that BitFuFu is laying the groundwork for the next phase of its growth through strategic investments in energy and asset tokenization has grown stronger. Because of this, I believe the valuation disconnect that I highlighted in my previous analysis is even stronger today, offering long-term investors an opportunity to double down on FUFU. BitFuFu's Q2 Results Validate The Rebound Thesis BitFuFu delivered a powerful comeback in Q2, validating my rebound expectations. It is important to keep in mind that the Bitcoin halving event in April 2024 has impacted the self-mining revenue of crypto miners across the board, not just BitFuFu. For context, the Bitcoin halving event reduced the block reward for miners from 6.25 BTC to just 3.125 BTC, meaning that miners are now receiving 50% fewer Bitcoin rewards for the same amount of work. Given the massive impact of the Bitcoin halving event, I believe long-term investors should look at financial metrics such as energy infrastructure investments and hashrate growth to gauge a measure of a crypto miner’s expected growth. In Q2, BitFuFu reported revenue of $115 million , a YoY decline of ~11% led by the lackluster performance of self-mining operations which saw a 71% YoY reduction in revenue. The management attributed this decline directly to the Bitcoin halving event and the company’s strategic decision to allocate more mining power to cloud operations. On the plus side, cloud-mining solutions revenue grew 22.3% YoY to $94.3 million as the company benefited from an increase in demand for cloud mining solutions. The increased hash rate also helped this segment’s performance. The rebound becomes evident when you compare BitFuFu’s Q2 performance with the previous quarter which offers a more reasonable comparison. Sequentially, revenue increased by ~48%. BitFuFu ended the quarter with BTC holdings of 1,792, a YoY increase of a modest 4.1%. Aided by the sharp increase in BTC prices, BitFuFu swung to a net profit of $47.1 million in Q2, a sharp turnaround from the Q1 loss and also a notable improvement from the prior year quarter. For context, the company recognized a $39.6 million unrealized fair value gain from BTC price increases in Q2 compared to an unrealized fair value loss of $16.4 million in the corresponding quarter previous year. What was more encouraging was the evidence of improved operational efficiency that we saw from BitFuFu in the previous quarter. While total revenue declined by 10.8% YoY, cost of revenue fell at a faster clip of 13.4% YoY, resulting in a higher gross profit ($12.9 million vs $11 million) despite the decline in revenue. The company has been actively trying to improve its cost efficiency through procurement optimization, but the biggest contributor was a reduction in per tera-hash electricity cost, which bodes well with BitFuFu’s long-term strategy. Exhibit 1: BitFuFu quarterly revenue and gross profit margin Fiscal AI As I highlighted in my previous articles on BitFuFu, as a diversified crypto miner with both self-mining and cloud mining operations, its prospects largely depend on hash rate growth. In Q2, the company’s total mining capacity under management reached 36.2 EH/s, a YoY increase of ~47%. Validating my rebound thesis, hash rate growth was even more stellar when you look at the sequential improvement as Q1 marked a low for the company. Compared to a depressed hash rate of just 20.6 EH/s in the first quarter, the Q2 hash rate marks a 76% increase. One of the main drivers of this hash rate growth was the strong demand for cloud mining operations which forced the company to secure additional computing capacity. In addition to this, BitFuFu’s ongoing investments in upgrading its fleet to more efficient hardware also contributed to hash rate growth. So far in 2025, the company has purchased approximately 20,000 new mining equipment. As of July 31, managed hash rate had grown to 38.6 EH/s, marking a record high for the company. The Market May Be Missing Two Catalysts After digesting BitFuFu’s Q2 earnings and its recent investment activity, I believe there are two catalysts that could significantly boost the company’s operating earnings in the long run. First, BitFuFu has made solid progress in its plan to be energy independent by sourcing its own natural gas in key regions such as North America and Africa. Compared to many crypto miners that are vulnerable to market price fluctuations but are not actively trying to mitigate this, BitFuFu is trying to get a hold of its supply chain to manage energy costs efficiently. After focusing on the likes of the U.S. and Ethiopia in recent times, the company is now looking at sourcing low-cost energy in Canada as well. Explaining the rationale behind this move during the Q2 earnings call, CEO Leo Lu said: We aim to secure stable low-cost electricity, thereby better controlling costs and ensuring supply security. This strategy is a significant step towards becoming a more vertically integrated power generation and mining company, enabling us to control key links in the value chain. In Canada, for example, we are evaluating opportunities to leverage low-cost natural gas for power generation. The current AECO natural gas price, Canada's benchmark for natural gas traded in Alberta is approximately CAD 0.80 per giga joule, a standard unit of energy equal to about 278-kilowatt hours, at a 33% efficiency rate, meaning 1/3 of the energy in the natural gas is converted to electricity and current exchange rates. Exhibit 2: BitFuFu’s datacenter growth Investor presentation As a result of these strategic investments in securing low-cost energy, I believe BitFuFu is well-positioned to emerge as a best-of-breed crypto miner with a low cost base. This would result in low earnings volatility in the long run, paving the way to attract premium valuation multiples in the market. For now, given its smaller scale compared to the likes of Riot Platforms, Inc. ( RIOT ) and Mara Holdings ( MARA ), the market does not seem to be paying a lot of attention, which keeps BitFuFu’s potential underappreciated. Second, BitFuFu is leading the charge in recognizing hashrate as a real-world asset, which presents new monetization opportunities for the company. As explained by CEO Lu: RWA or real-world assets refers to the digitization and tokenization of existing real-world assets with value and cash flow including government bonds, corporate loans, gold, real estate and even intellectual property on the blockchain. Technically, this involves using on chain smart contracts to record asset rights, distribute returns and execute transfers. The long-term plan would be to structure income rights from hashrate output or even future mining cash flows as an RWA and allow investors to gain exposure to BTC cash flows without having to own or manage mining equipment. I believe such contracts would help BitFuFu attract more institutional customers as well. Given the existing cloud mining business, which saw users grow 58% YoY in Q2 to 623,114, the RWA expansion seems a logical next move that could expand BitFuFu’s business from the mining industry to the secondary RWA trading market. Given the novelty of this business model, I believe Mr. Market is oblivious to the long-term growth opportunity that stems from this business expansion. The Valuation Gap Has Widened After digesting Q2 earnings, I wanted to visit my valuation model for FUFU to determine if the valuation gap between FUFU and its peers has shrunk in the past couple of months. As a reminder, in my previous analysis, I introduced a market cap/hashrate based valuation model where I found a peer average of $84.21 million/EH, to which I applied a 30% discount to estimate a fair market value of $58.95/EH for BitFuFu. Based on BitFuFu’s reported hashrate of 34.1 EH/s in May and 163.2 million shares outstanding, I estimated FUFU’s intrinsic value at $12.32 per share. Let’s revisit the numbers. Below is the updated comparison table. Metric FUFU RIOT MARA CLSK Peer average Market cap $556 million $4.63 billion $5.72 billion $2.67 billion Hashrate (EH/s) 38.6 35.4 57.4 50 Market cap/hashrate $14.4 million/EH $130.8 million/EH $99.7 million/EH $53.4 million/EH $94.6 million/EH Source: Seeking Alpha, company filings, and author’s calculations Based on the new peer average of $94.6 million/EH and a 30% discount to account for FUFU’s smaller scale, I arrived at a target multiple of $66.2 million/EH for FUFU. Based on FUFU’s updated hashrate of 38.6 EH/s, this results in an implied market cap of $2.56 billion for the company. Based on 168.6 million diluted shares outstanding as of Q2, the implied per share value is $15.18. Compared to the current stock price of just $3.45, this updated intrinsic value estimate implies an upside potential of 340%. Risks As I highlighted in my previous articles, investors should keep a close eye on the execution of key strategic initiatives, including BitFuFu’s ambitious energy independence goal. Given the plans to expand into RWA, it makes sense to keep a close eye on the regulatory environment for this new business line as well. In addition, I am keeping a close eye on BitFuFu’s relationship with third-party hashrate providers as it is key to the success of its cloud mining operations. Takeaway BitFuFu, as I expected, made a strong comeback in Q2 compared to a somewhat disappointing first quarter. Despite this comeback, the valuation gap between BitFuFu and its closest peers seems to have widened in the past couple of months, creating an opportunity for long-term FUFU investors to add to their stake. I believe FUFU remains an underappreciated and largely ignored play on the crypto economy, but in the long run, FUFU stock should follow its earnings, handsomely rewarding investors.
