Company: FUFU
Filing Date: 2025-04-21
Form Type: 20-F
Source: 0001213900-25-033733
Chunk: 141

Company: Bitfufu Inc.
Filing Date: 2025-04-21
Form: 20-F
Item: Item 5
Chunk 141
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3, primarily due to the decrease in the gross profit margin of cloud-mining solutions and the suspension of high margin business, including
sourcing services for mining equipment sales.

The gross profit margin of
cloud-mining solutions decreased from 20.5% in 2022 to 7.6% in 2023, primarily due to our competitive pricing strategies to increase the
revenue and market shares of our cloud mining business. The gross profit margin of our cloud-mining solutions primarily depends on our
sales price, the degree of market competition, lease cost of mining equipment, price of electricity fee, and the agreed service period
of orders and timing of orders.

Sales and marketing expenses

Our sales and marketing expenses
decreased from US$2.0 million in 2022 to US$1.9 million in 2023. The decrease was primarily driven by an increase in market
demand which partially reduced the need for advertising and promotional campaigns.

General and administrative expenses

Our general and administrative
expenses increased from US$2.7 million in 2022 to US$3.7 million in 2023, representing an increase of 37.0%, primarily due to
a US$0.5 million increase in payroll costs associated with the recruiting of additional talent and a US$0.3 million increase in consulting
expenses associated with our business development.

Research and development expenses

Our research and development
expenses increased from US$1.6 million in 2022 to US$1.7 million in 2023, primarily due to an increase in payroll costs of technical
and development employees.

Impairment loss on assets held by FTX

There was no impairment loss
on assets held by FTX in 2023. As of the time of FTX’s bankruptcy filing in November 2022, we deposited US$2.1 million and
480 units of Bitcoin in our account maintained at FTX. Since the uncertain result of the bankruptcy proceeding of FTX, we reclassified
those fund and Bitcoin balances from cash or digital assets to custodian assets held by FTX and made full impairment on those balances,
and recognized impairment loss on assets held by FTX of US$9.8 million in 2022.

Impairment loss on digital assets

Impairment loss on digital
assets in 2023 was US$7.0 million, representing a decrease of 45.7% from US$12.9 million in 2022, primarily