Company: FUFU
Filing Date: 2025-04-21
Form Type: 20-F
Source: 0001213900-25-033733
Chunk: 125

Company: Bitfufu Inc.
Filing Date: 2025-04-21
Form: 20-F
Item: Item 5
Chunk 125
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4, respectively when the price
of Bitcoin dropped significantly against its carrying value. On the other hand, a significant growth in the price of Bitcoin contributed
fair value gain of US$37.6 million in 2024 after early adoption of the FASB’s fair value accounting standard, ASU No. 2023-08, Accounting
for and Disclosure of Crypto Assets. The market for digital assets is relatively new, rapidly evolving and subject to regulatory, tax,
political and market factors beyond our control, which makes it difficult for us to predict the market trend of our digital assets.

Capacity and efficiency of miners

Our financial condition and
profitability are affected by the capacity and efficiency of miners we lease from our suppliers or own to mine digital assets. Increases
in hash rate of blockchain network of digital assets, especially that of Bitcoin, resulting from the growth in the overall quantity and
quality of miners working to solve blocks on the blockchain, will generally lead to increases in mining difficulty, which would reduce
the mining proceeds of the equipment proportionally, and eventually require miners to be upgraded to remain profitable. Further, reward
rates for digital assets are subject to adjustments at predetermined intervals. For example, for Bitcoin, the reward was initially set
at 50 Bitcoin currency rewards per block and this was cut in half to 25 on November 28, 2012 at block 210,000, to 12.5 on July 9,
2016 at block 420,000, to 6.25 on May 11, 2020 at block 630,000 and again to 3.125 on April 20, 2024 at block 840,000. These adjustments
have had and will continue to have material effects on the economic viability of mining digital assets. We expect to invest in system
and miner upgrades and in vertical integration of upstream mining facility resources to maintain our mining efficiency, which is expected
to cause us to incur relevant costs and expenditure in the future.

Cost of revenues

Our ability to operate in
a cost-efficient manner also depends on our access to stable supply of power on commercially reasonable terms. Cost of revenues,
which is in line with the above revenue streams, mainly includes lease expense of mining equipment, depreciation expenses of self-own
mining equipment, outsourcing fee, electricity and hosting fee, platform technology fee, web service fee, salaries, allocated overhead,
purchase cost of mining equipment and sourcing expenses. Mining digital assets requires a significant amount of electricity, and increases