American Bitcoin’s $126M profit masks mining pressure as rivals turn to AI

American Bitcoin reported a quarterly net income of $126 million, primarily due to gains on its Bitcoin holdings, despite increased mining costs and shrinking margins. The Eric Trump-backed company's profit was bolstered by a $197.3 million noncash gain on its Bitcoin holdings, while mining revenue declined 5.5% to $63.4 million from the prior quarter.

Mining costs to acquire one BTC increased by roughly 15% to $42,100. Excluding Bitcoin gains, American Bitcoin would have posted an operating loss of around $5.5 million, as per its financial statements. The company also reported a $64.3 million loss on derivatives. CEO Mike Ho attributed the earnings to Bitcoin mining at a "structural discount to spot."

Bitcoin was trading at $76,119, down 5% over the previous 24 hours. Shares of American Bitcoin (ABTC) fell about 15% to $5.31. Competitors such as Riot Platforms, MARA Holdings, and Core Scientific are pivoting towards artificial intelligence to discover new revenue sources. David Gamble, founder of asset management company Enigma Holdings, cautioned that American Bitcoin's profit may not fully represent its mining business, as mining below market price does not necessarily create shareholder value.

American Bitcoin's mining revenue and gross mining profit both declined in the quarter, and its mining margin fell to 41% from 49%. The company mined 891 BTC in the period, a decrease from 932 BTC in the previous quarter. Higher electricity prices were identified as the primary reason for increased mining costs. Gamble noted that the real competitive advantage in the industry is shifting toward energy infrastructure, as Bitcoin miners and AI companies vie for the same power supply, with AI data centers potentially generating more revenue than Bitcoin mining in certain instances.