BitFuFu (FUFU) Q1 2026 Earnings Transcript

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DATE

Friday, May 29, 2026 at 8 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Leo Lu
• Chief Financial Officer — Calla Zhao

TAKEAWAYS

• Cloud Mining Revenue -- $57.5 million, representing 7.1% growth year over year and accounting for 79.1% of total revenue.
• Self-Mining Revenue -- $11.4 million, down 35.2% year over year due to strategic capacity reduction and market headwinds.
• Hosting and Other Services -- $3.8 million, rising sharply from $0.7 million in the previous year, primarily attributed to the 2025 mining facility acquisition.
• Cloud Mining Net Dollar Retention Rate -- 85.7%, indicating steady customer engagement and platform reliability during market volatility.
• Average Fleet Efficiency -- Improved to 17.7 joules per terahash from 23.2 joules per terahash, enhancing cost competitiveness.
• Power Capacity -- Ended at 457 megawatts, slightly down from 478 megawatts at the start of the year, driven by higher machine efficiency rather than reduced scale.
• Cost of Revenue -- $72.3 million, an increase of 1.0% year over year, despite a 6.8% decline in overall revenue.
• Net Loss -- $35.0 million compared to $16.9 million loss in the previous year, chiefly stemming from $35.6 million in fair value losses related to Bitcoin holdings and digital asset positions.
• Adjusted EBITDA -- Approximately $1.1 million, positive when excluding fair value loss impacts.
• Total Cash and Digital Assets -- $141.5 million as of March 31, 2026, down from $177.1 million at year-end, primarily affected by lower Bitcoin market prices.
• Total Bitcoin Holdings -- 1,794 Bitcoin, including 357 Bitcoin pledged as collateral.
• Revolving Credit Facility Usage -- $50 million drawn at quarter-end, reduced to $5 million subsequent to quarter close.
• Operational Strategy -- Management reiterated, "We are building for consistency across cycles with the discipline to manage through volatility," emphasizing continued focus on asset-light, capital-light, and scalable operations.
• Procurement Road Map -- Planned selective increase in 360-day hashrate contracts to enhance operational stability and mitigate rollover risk in upcoming quarters.
• Cost Controls -- Actions included reduced nonessential maintenance, streamlined staffing, consolidated logistics, and dynamic fleet management via BitFuFu OS and AI-enabled dashboards.
• Liquidity Management -- Strategic Bitcoin sales were used to balance operational needs and match power expenses.

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RISKS

• Gross margin on self-mining operations declined due to increased network difficulty, lower Bitcoin prices, and higher costs from previously procured hashrate, as management acknowledged direct headwinds.
• Net loss widened to $35.0 million from $16.9 million, heavily impacted by $35.6 million in fair value losses on digital assets and receivables.
• Cost of revenue increased 1.0% even as company-wide revenue dropped 6.8%, compressing underlying profitability.
• Management stated, "first quarter was not without its challenges," referencing margin pressures and the need to rebalance towards predictable cloud mining revenue.

SUMMARY

BitFuFu (NASDAQ:FUFU) prioritized capital discipline and operational efficiency, shifting focus toward cloud mining and away from self-mining to counter volatile Bitcoin prices and increased network difficulty. Management deployed greater automation and cost optimization measures, notably advancing average fleet efficiency and reducing reliance on high-cost hashrate procured last quarter. A key liquidity move included sharply lowering revolver usage from $50 million to $5 million after quarter-close, reinforcing balance sheet flexibility. The company announced plans to strategically increase longer-term hashrate contracts, positioning the portfolio to potentially benefit if network growth slows as competitors divert capacity toward AI and HPC segments. As part of its stated strategy, leadership committed to funding growth through operating cash flow, selective Bitcoin sales, and disciplined credit drawdowns, while reiterating its intent to avoid speculative equity actions.

• CEO Leo Lu said, "We are not chasing trends. We are building a business designed to perform through cycles," highlighting a long-term focus over short-term market swings.
• Management does not expect total hashrate managed to significantly expand by year-end but anticipates portfolio composition to become more resilient and cost-effective.
• BitFuFu will continue to evaluate real-world asset and energy investment opportunities strictly within its established risk and capital efficiency framework.
• CFO Calla Zhao underscored a "ongoing commitment to strengthen our balance sheet and preserve financial optionality," referencing post-quarter balance sheet actions and Bitcoin treasury management.

INDUSTRY GLOSSARY

• Hashrate: The measure of computational power used in cryptocurrency mining, typically expressed in hashes per second.
• Cloud Mining: Providing remote mining services where customers purchase or rent a share of mining capacity managed by the service provider.
• Self-Mining: The company's direct operation and ownership of mining hardware, as opposed to offering mining capacity to others through a platform.
• Net Dollar Retention Rate: A metric reflecting the change in recurring revenue from existing customers, adjusted for upsells, downgrades, and churn, over a specified period.
• BitFuFu OS: BitFuFu's proprietary mining management operating system that controls and optimizes fleet performance.

Full Conference Call Transcript

Leo Lu: Thanks, Charlie, and thank you all for joining us today. As we begin, let's take a moment to step back and look at the broader landscape, not just for BitFuFu, but for the entire Bitcoin mining and infrastructure space. The first quarter of 2026 has been defined by a return to volatility. Bitcoin's price rebounded from $87,000 at the end of December 2025 to $96,000 in early January then fell sharply to $63,000 by mid-February. This wasn't an anomaly. It reflects a maturing cycle. Bull markets build hype and bear markets build resilience. Across the industry, we've seen peers react in different ways, to dampen down on expansion, locking in debt or selling Bitcoin to fund their growth.

Others chose to pause operations to avoid losses. We observed these patterns closely. They taught us something critical. The companies that survive and eventually thrive are not those that chase the highest growth rate during bull markets, but those that design their business to withstand inevitable downturns. At BitFuFu, our strategy from day 1 has been clear. We are building for consistency across cycles with the discipline to manage through volatility that means focusing on structural advantages such as asset-light agility, capital-light scalability, operational discipline and technological leverage. This quarter, we leaned even harder into that philosophy. Our dual engine model remains central. In the first quarter, we focused on proof through execution.

The quarter was not simply about reallocating hashrate. It was about using our dual engine model, combining cloud mining stability with self-mining's upside as the operating framework that guided our decisions in a low price environment. Here's what that looked like in practice. First, we deliberately reduced self-mining exposure to preserve liquidity and mitigate risk during significant price volatility. Second, we leaned further into cloud mining to prioritize more durable recurring performance. Cloud mining revenue grew to $57.5 million, up 7.1% year-over-year, and net dollar retention rate was 85.7%. Results were driven by disciplined client management, platform reliability and consistent service execution. Third, we invested in efficiency across both engines by purchasing S21 units and optimizing their deployment.

Average fleet efficiency improved to 17.7 joules per terahash from 23.2 joules per terahash a year ago. This improvement is structural and strengthens our cost position through cycles by lowering our cost of production. These were deliberate choices, but the differentiator was how we executed them. The key was operational discipline, not just in finance, but in the field. We implemented multiple layers of cost control. First, we reduced site operating expense by cutting nonessential maintenance, optimizing staffing and consolidating logistics. This delivered meaningful savings. Second, we leveraged BitFuFu OS to dynamically manage mining operating modes. We overclock to maximize output during favorable price windows and underclock to reduce power consumption and protect margins during prolonged downturns.

Through an AI-enabled dashboard, we coordinate a large fleet and make real-time decisions based on market, power and hardware metrics. Third, we managed operating costs through disciplined Bitcoin sales, strategically timing Bitcoin disposals to better match power expenses and operational needs. In essence, we treated Bitcoin not just as an asset, but also as a source of strategic liquidity to maintain financial balance and operational resilience. We also delivered meaningful operational improvements. Power capacity at the end of the first quarter was 457 megawatts, slightly lower than 478 megawatts at the start of the year, primarily due to higher machine efficiency rather than capacity reduction.

We're producing more hashrate per unit of power, which strengthens our cost position and supports better margins going forward. To be clear, first quarter was not without its challenges. Gross margin, particularly when self-mining declined year-over-year due to increased network difficulty, lower Bitcoin prices and the carrying cost of higher-priced hashrate procured in the prior quarter. In response, we strategically reduced our self-mining exposure to prioritize capital preservation and risk management, and we reallocated capacity toward cloud mining, which supports a more durable and predictable margin profile. So yes, we felt the pressure, but we responded proactively. We didn't wait for the market to recover to improve the model. We made adjustments to ourselves through scale, flexibility and operational execution.

Looking ahead, we're moving from defense to offense with discipline. We plan to scale deliberately, invest selectively and expand within a clear risk framework. Here's our road map for second quarter and third quarter. First, we plan to optimize our procurement mix by selectively increasing the portion of longer-term 360-day hashrate contracts. Short-term agreements will continue to comprise the majority of our portfolio, but increasing the mix of long-term commitments is intended to improve operational stability and help mitigate rollover risk. As a result, total managed hashrate by year-end may remain relatively stable, while the portfolio becomes better positioned should network difficulty growth slow down as other major miners transition to AI and HPC.

We see this as a strategic window and an opportunity to lock in cost-effective long-term hashrate while Bitcoin prices remain in a lower range, which can improve upside participation while managing downside risk. Second, we will continue to evaluate opportunities in real-world assets and energy, but only where they align with our core economics and risk profile. Finally, we will maintain our focus on capital efficiency. We intend to remain disciplined on equity issuance and avoid speculative bets. We expect to fund growth through a combination of operating cash flow, selective Bitcoin sales and our $100 million revolving credit facility, which supports financial flexibility while limiting dilution. This is not a pivot.

It's a progression in how we manage the business through cycles. These strategic priorities guided our execution in first quarter and despite market headwinds, they improved the durability of our model. I will now turn the call over to Calla to provide more details on our financial results.

Calla Zhao: Good morning, everyone, and thanks, Leo. Let's take a closer look at our first quarter results, starting with revenue and more importantly, what drove it. Cloud Mining Solutions remained our largest revenue source at $57.5 million. This represents 7.1% year-over-year growth and accounted for 79.1% of our total revenue, reinforcing the resilience of our core platform and why we continue to lean into cloud mining. Self-mining operations contributed $11.4 million in first quarter, down 35.2% from the same period last year. The decline reflects a combination of market conditions and our deliberate decision to reduce self-mining exposure to preserve liquidity and reallocate hashrate towards cloud mining solutions, which supports a higher and more predictable margin profile.

We saw significant growth in hosting and other services in the first quarter, increasing to $3.8 million compared with $0.7 million in first quarter 2025. This growth was driven primarily by our 2025 mining facility acquisition, which enabled us to offer a buy-and-host one-stop solution that meets client demand for both asset ownership and operational simplicity. Finally, I want to highlight customer retention. Our cloud mining net dollar retention rate was 85.7% in first quarter, reflecting continued customer engagement and platform reliability in a volatile market. Now turning to costs. Cost of revenue was $72.3 million, up a modest 1.0% year-over-year despite a 6.8% decline in revenue.

In addition to the year-over-year increase in network difficulty, the primary driver was higher cost hedge rate procured during fourth quarter 2025. Those contracts were entered into when Bitcoin prices were higher, and they pressure gross margin as prices moved lower in first quarter. We view this as a timing effect rather than a change in underlying operational efficiency. We are already taking action to realign our cost structure with current market conditions by renegotiating contracts, improving procurement timing and locking in more cost-efficient hashrate at current market rates. Net loss for first quarter was $35.0 million compared to a loss of $16.9 million in the same period last year.

Importantly, fair value losses on our Bitcoin holdings and digital asset receivables and payables contributed $35.6 million to our net loss. Excluding the fair value loss impacts, adjusted EBITDA would have been approximately positive $1.1 million. As of March 31, 2026, our balance sheet remains strong. Total cash and digital assets stood at $141.5 million compared to $177.1 million at year-end, primarily reflecting mark-to-market impact from a lower Bitcoin price. Total Bitcoin holdings were 1794 Bitcoin, including 357 Bitcoin pledged as collateral for loans and payables. We continue to manage our Bitcoin treasury strategically to support operations and maintain financial flexibility. And importantly, we continue to maintain a strong liquidity position supported by our $100 million revolving credit facility.

We ended the quarter with $50 million outstanding under the revolver and subsequent to quarter end, we reduced that balance to $5 million. This reflects our ongoing commitment to strengthen our balance sheet and preserve financial optionality, and it gives us flexibility to fund growth, invest selectively or preserve capital as market conditions evolve. In summary, first quarter was a quarter of disciplined execution. We managed costs, preserve liquidity and maintained a strong balance sheet even in a challenging market. While our GAAP results were impacted by market-driven fair value changes, the underlying operating performance of the business was solid, and we believe we are well positioned for the next phase of growth.

I'll now turn it back to Leo to close out the call.

Leo Lu: Okay. Thank you, Calla. First quarter was not about headline numbers. It was about execution, preserving capital, refining our cost structure and strengthening the business. We achieved this by reducing self-mining exposure, improving fleet efficiency, managing our Bitcoin treasury with discipline and maintaining strong customer execution in cloud mining. As a result, we entered second quarter with a stronger foundation, clearer priorities, and greater flexibility. We are not chasing trends. We are building a business designed to perform through cycles. We are not merely reacting to short-term volatility. We are actively preparing for the next cycle.

We are confident the discipline we showed in first quarter will translate into results in the quarters ahead as efficiency gains and procurement improvements strengthen our cost structure. To our shareholders, thank you for your trust. We remain committed to delivering long-term sustainable value through execution, transparency and a focus on building a business that lasts. This concludes our prepared remarks. Thank you for your time, and we look forward to updating you again next quarter.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.

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