📰 Key Takeaways

American Bitcoin posted a net profit of $126M this quarter, but the profit comes mostly from paper gains, and pressure on its core mining business is rising. The Eric Trump-backed miner’s net income includes $197.3M in unrealized (non-cash) gains on its bitcoin holdings. Without that, it had an operating loss of about $5.5M, and it also booked a $64.3M derivatives loss. Mining revenue fell 5.5% quarter over quarter to $63.4M, missing analyst expectations of $74.35M by nearly 15%. The cost to mine each bitcoin rose about 15% to $42,100, which the company blamed mainly on higher electricity prices. It mined 891 bitcoin this quarter versus 932 last quarter. Gross profit dropped from $33M to $25.8M, and mining gross margin slid from 49% to 41%. Earnings per share came in at $1.73, well above the market expectation of $0.26. CEO Mike Ho said that despite seasonal power cost pressure, the company’s mining cost is still below the spot price of bitcoin. But David Gamble, founder of asset manager Enigma Holdings, argued that costs sitting below market price doesn’t by itself create value for shareholders. Hoarding coins isn’t necessarily wrong as a strategy, he said, but with mining difficulty rising and the need to keep investing in newer, more efficient hardware, it’s questionable whether this is sustainable over the long run. After the announcement, ABTC shares closed down about 15% on Thursday at $5.31, while bitcoin traded at $76,119, down 5% over 24 hours. It also highlights a split among mining stocks: American Bitcoin keeps mining and holding bitcoin, while peers like Riot Platforms, MARA Holdings and Core Scientific are pivoting to AI to find new revenue.

💬 JudyAI Lab Take

American Bitcoin’s net income looks great at $126M this quarter, but $197.3M of that is unrealized paper gains on its bitcoin holdings. Strip that out and it’s an operating loss of about $5.5M. This story matters because it shows how far apart the headline number and the health of the core business can be.

Mining revenue fell 5.5% quarter over quarter to $63.4M, missing analyst expectations by nearly 15%. The cost to mine each bitcoin climbed to $42,100, mostly because of higher electricity prices, and gross margin dropped from 49% to 41%. The CEO stresses that cost is still below spot price, but analysts say that doesn’t mean value is being created for shareholders, since the equipment has to be constantly refreshed and long-term sustainability is still an open question. Meanwhile, peers like Riot Platforms, MARA Holdings and Core Scientific have already pivoted to AI for new revenue. For AI builders, that contrast is interesting: compute and power are becoming shared resources that different industries are competing for, and when a pretty number rests on one volatile asset, the risk is easy to hide behind the financial statements. The same goes for AI products. A nice-looking growth curve doesn’t mean your unit costs hold up.

My suggestion: run a unit economics check on your own product. Once you remove one-off or paper-only benefits, do the cost and revenue of each model call still break even?

📅 Source Info

🔗 Further Reading