American Bitcoin posts $126 million profit as mining costs rise

American Bitcoin, the miner backed by Eric Trump, announced quarterly net income of $126 million on Wednesday. A noncash gain of $197.3 million on Bitcoin holdings drove the profit. Financial statements show that American Bitcoin would have recorded an operating loss of approximately $5.5 million without gains on Bitcoin holdings. American Bitcoin recorded another loss of $64.3 million on derivatives. Yahoo Finance data show earnings per share of $1.73, above the analyst consensus of $0.26.

Mining revenue declined 5.5% from the previous quarter to $63.4 million. The cost of mining one BTC increased about 15% to $42,100. Gross mining profit decreased from $33 million in the previous quarter to $25.8 million. The mining margin narrowed from 49% to 41%, reducing the proportion of mining revenue remaining after direct costs. Yahoo Finance data show quarterly revenue missed analyst estimates of $74.35 million by nearly 15%.

American Bitcoin produced 891 BTC during the quarter, compared with 932 BTC in the preceding three months. American Bitcoin identified higher electricity prices as the main cause of increased mining costs. CEO Mike Ho said in Wednesday's earnings announcement that American Bitcoin continued producing Bitcoin at a structural discount to spot prices despite seasonal electricity-cost pressures. Revenue slipped from $64.2 million in the corresponding period last year to $63.4 million. However, net income increased from $3.5 million to $126 million, mainly because of gains on Bitcoin holdings.

CoinGecko data showed Bitcoin at $76,119 as of 8:50 p.m. UTC, a decline of 5% over 24 hours. American Bitcoin shares, traded as ABTC, ended Thursday at $5.31, down about 15%.

American Bitcoin continues producing and retaining Bitcoin while Riot Platforms, MARA Holdings and Core Scientific expand into artificial intelligence to develop additional revenue sources. Riot's latest earnings show Riot is constructing large AI data centers. MARA is expanding into AI while maintaining Bitcoin mining operations. Core Scientific has already redirected much of the business toward AI data centers. American Bitcoin held 8,427 BTC at September's end, compared with 3,418 BTC a year earlier. Rising costs and declining mining profits raise questions about the long-term strategy American Bitcoin is pursuing.

David Gamble, founder of Enigma Holdings, an asset manager focused on Bitcoin mining and AI infrastructure, said the reported profit incompletely reflects mining performance. Gamble said producing Bitcoin for less than the market price does not necessarily create value for shareholders. Gamble said the accumulation strategy was not necessarily flawed, but questioned long-term sustainability because mining difficulty is increasing and competitive operations require continued investment in more efficient technology.

Gamble said energy infrastructure is becoming the industry's central competitive advantage, rather than simply Bitcoin production or deployed hashrate. Gamble said Bitcoin miners compete with AI companies for the same electricity supply. Gamble said AI data centers could generate more money than Bitcoin mining in some locations. However, Gamble cautioned that not every mining facility can readily convert to AI. Gamble said depreciation, equipment replacement, financing expenses and the opportunity cost of investing capital elsewhere must also be considered.