LM Funding America (NASDAQ: LMFA) is Positioned for Growth

Operational Performance Driven by Vertically Integrated Mining Strategy, Infrastructure Expansion, and Efficiency Gains

LMFA has made remarkable strides in its vertically integrated mining strategy, focusing on scaling up operations with 5-20 MW mining facilities, thereby reducing reliance on third-party hosting services. This strategy enables better cost management, greater operational flexibility, and the ability to maintain a stable, low-cost energy supply—all of which enhance profitability and ensure long-term sustainability, unlike many competitors burdened with high operating costs.

LMFA’s operational performance reflects the success of this strategy. In fiscal year 2024 (FY24), LMFA mined 170.24 BTC, with its total mining hash rate reaching 630 PH/s, of which 560 PH/s was fully energized as of February 28, 2025. With all mining facilities fully operational, LMFA has optimized its revenue generation capabilities, demonstrating strong operational efficiency.

A pivotal milestone in LMFA’s growth occurred in December 2024, when the company acquired a 15 MW mining facility in Oklahoma for approximately $7.3 million. This acquisition, partially funded by a $5.0 million senior loan backed by Bitcoin collateral, allows LMFA to preserve its Bitcoin holdings rather than liquidating them. The Oklahoma facility enhances LMFA’s mining efficiency, achieving a 600 PH/s operational hash rate, and provides long-term cost savings due to Oklahoma’s low-cost and stable electricity.

Additionally, LMFA is further enhancing its mining capabilities through the implementation of LuxOS, a firmware upgrade that boosts mining efficiency by 10-15% without additional capital expenditures. This improvement will increase the company’s hash rate without the need for additional rigs and reduce energy consumption per Bitcoin mined, thereby improving profit margins and ensuring operational sustainability even during market downturns.

Revenue and Bitcoin Retention Strategy

Revenue in 4Q24 increased to approximately $2.0M from $1.3M in 3Q24, benefiting from improved efficiency and Bitcoin’s year-end rally. However, full-year revenue declined to $11.0M from $13.0M in FY23, primarily due to the April ’24 Bitcoin halving and transitions from third-party hosting.

This decline aligns with LMFA’s strategic decision to accumulate Bitcoin rather than liquidate it for immediate revenue. Digital mining revenue in 2024 was approximately $10.5 million, compared to $12.3 million in 2023. However, LMFA significantly increased its Bitcoin holdings from 95.1 BTC in 2023 to 150.2 BTC by the end of 2024, reflecting a deliberate HODL strategy. If Bitcoin continues its projected upward trajectory, LMFA’s asset value will rise, further enhancing shareholder value.

Cost Optimization and Profitability Turnaround

In 2024, LMFA focused heavily on cost reduction, driving significant improvements in profitability. By cutting staff, payroll, and SG&A expenses to $1.6 million in Q4 2024, a reduction of 18.1% year-over-year, the company was able to achieve a net income of $2.0 million in Q4, reversing the $1.6 million loss from the same period in 2023. Despite lower full-year revenue due to Bitcoin’s halving and the transition from third-party hosting, LMFA’s core EBITDA grew to $3.9 million, demonstrating its ability to improve profitability through strategic cost control measures, such as eliminating hosting fees and reducing energy costs.

Bitcoin Holdings and Implied Valuation

As of February 28, 2025, LM Funding America, Inc. (NASDAQ: LMFA) holds 165.8 BTC. With 5,133,412 shares outstanding (per SEC Form S-3, January 13, 2025) and Bitcoin priced at $87,000, LMFA’s Bitcoin per share stands at $2.81. Given a projected Bitcoin price of $120,000 in 2025-2026, the BTC per share metric would rise to $3.87—significantly higher than LMFA’s stock price of $1.33 as of April 2, 2025. This substantial valuation gap suggests that LMFA’s stock is currently undervalued relative to its Bitcoin holdings.

In addition to its existing holdings, LMFA is expanding its Bitcoin portfolio through its mining operations. In the first two months of 2025, LMFA mined 16.1 BTC, averaging 8.05 BTC per month. If this rate is maintained, the company is on track to mine 96-100 BTC in 2025, excluding any efficiency gains from the LuxOS upgrade. This reinforces LMFA’s position as a growing and efficient player in the Bitcoin mining industry, with strong potential for scaling its operations and further increasing its Bitcoin holdings.

Conclusion

LMFA’s strategic focus on operational efficiency, cost optimization, and Bitcoin retention, combined with its vertically integrated mining model and infrastructure expansion, positions the company for significant long-term growth. With its current Bitcoin holdings, the company is undervalued relative to its stock price, creating an attractive investment opportunity.

As LMFA continues to scale its operations and realize efficiencies from its LuxOS upgrade and strategic infrastructure investments, its Bitcoin holdings should increase, further enhancing shareholder value. Additionally, the company’s ability to lower operating costs and improve profitability through strategic initiatives suggests strong potential for continued growth.

With the projected rise in Bitcoin prices, LMFA is poised for growth, offering investors an attractive opportunity to gain exposure to Bitcoin through equity. The company’s consistent execution of its strategy should result in a substantial increase in value, making LMFA a compelling investment in the growing Bitcoin ecosystem.

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