Company: FUFU
Filing Date: 2025-04-21
Form Type: 20-F
Source: 0001213900-25-033733
Chunk: 43

Company: Bitfufu Inc.
Filing Date: 2025-04-21
Form: 20-F
Item: Item 3
Chunk 43
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 growth and development of our business.

Many digital asset networks
face significant scaling challenges. For example, digital assets are limited with respect to how many transactions can occur per second.
In this respect, Bitcoin may be particularly affected as it relies on the “proof of work” validation, which due to its inherent
characteristics may be particularly hard to scale to allow simultaneous processing of multiple daily transactions by users. Participants
in the digital asset ecosystem debate potential approaches to increasing the average number of transactions per second that the network
can handle and have implemented mechanisms or are researching ways to increase scale, such as “sharding,” which is a term
for a horizontal partition of data in a database or search engine, which would not require every single transaction to be included in
every single miner’s or validator’s block.

The mechanisms in place or
being explored for increasing the scale of settlement of digital asset transactions may not be effective, and it is uncertain how long
they will take to become effective or whether such mechanisms will be effective for all digital assets. There is also a risk that any
mechanisms of increasing the scale of digital asset settlements, may significantly alter the competitive dynamics in the digital asset
market and may adversely affect the value of Bitcoin stock, any of which could have a material adverse effect on our business, financial
condition and results of operations.

If the reward of new digital assets and/or
transaction fees for solving blocks are not sufficiently high to incentivize transaction processors, such processors may reduce or cease
expending processing power on a particular network, which could negatively impact the utility of the network, reduce the value of our
digital assets and have a material adverse effect on our business, financial condition and results of operations.

As the number of digital assets
rewarded to transaction processors for validating blocks in a network decreases, the incentive for transaction processors to continue
contributing processing power to the network may shift toward transaction fees. Such a shift may increase the transaction fees on a network.
Higher transaction fees may reduce the utility of a network for an end user, which may cause end users to reduce or stop their use of
that network. In such case, the price of the relevant digital asset may decline substantially and could go to zero. Such reduced price
and demand for, and use of, the relevant digital asset and network may reduce the customers’ demand for our cloud-mining services
and hosting services, and reduce the return for our self-mining operations, all of which may have a material adverse effect on our