American Bitcoin, the Nasdaq-listed miner co-founded by Eric Trump, reported higher power costs and lower mining margins in the third quarter, even as it returned to a net profit. American Bi
American Bitcoin, the Nasdaq-listed miner co-founded by Eric Trump, reported higher power costs and lower mining margins in the third quarter, even as it returned to a net profit.
American Bitcoin (ABTC) said in its Nov. 4 earnings release that the reported cost to mine one Bitcoin rose to about $42,100, up from $36,500 in the second quarter. Higher seasonal power costs were the main reason.
That increase of about 15% came as Bitcoin production and mining revenue fell. Gross margin narrowed to about 41% from 49%, despite the company reporting nearly $126 million in net income.
A $197.3 million gain on digital assets helped produce that profit. It was not $126 million earned from mining alone.
Bitcoin miners use specialized computers to process transactions and compete for newly issued Bitcoin. Running those computers requires electricity, making power prices a major part of the cost of producing each coin.
The company mined about 891 Bitcoin during the three months ended Sept. 30, compared with 932 in the previous quarter. Mining revenue fell to $63.4 million from $67 million.
Revenue per Bitcoin mined slipped to about $71,100 from $71,900. Meanwhile, the reported cost to produce each coin increased by $5,600.
Gross profit fell to about $25.8 million from $33 million, a decline of roughly 22%. The eight-percentage-point drop in gross margin meant the company retained less of each revenue dollar before other expenses.
The cost-to-mine figure should not be read as the company's complete cost of doing business. Its financial statement lists depreciation and amortization, which spread the cost of equipment and other assets over time, separately from cost of revenue.
Depreciation and amortization totaled $28.6 million in the third quarter. General and administrative expenses added another $2.8 million.
Mike Ho, the company's chief executive, said it continued mining Bitcoin at a "structural discount to spot" despite seasonal power-cost pressure.
American Bitcoin reported $126 million in net income, reversing a $57.2 million loss in the second quarter. Its income statement shows a $197.3 million gain on digital assets, compared with a $71.2 million digital-asset loss in the preceding quarter.
That change helped turn a weaker mining quarter into a profitable one overall.
The company also recorded a $64.3 million loss on derivatives, compared with an $18.3 million gain in the second quarter. Derivatives are contracts whose value depends on an underlying asset or financial measure.
The digital-asset gain and derivative loss are separate from mining revenue. The earnings release does not break the digital-asset gain into realized and unrealized amounts, so the full gain cannot be treated as cash proceeds.
Eric Trump, American Bitcoin's co-founder and chief strategy officer, highlighted the return to profit and growth in Bitcoin holdings in the release.
"This quarter, we delivered approximately $126 million in net income and $221 million in Adjusted EBITDA, while growing our Bitcoin reserve and increasing Bitcoin per share," he said.
Adjusted EBITDA is a company-defined earnings measure that removes certain expenses and other items from net income. American Bitcoin's reconciliation adds back depreciation, the derivative loss and other adjustments, but does not remove the digital-asset gain.
The $221 million figure therefore should not be treated as cash profit from mining or as a number that excludes changes in the value of Bitcoin holdings.
American Bitcoin ended September with about 8,427 Bitcoin, up from roughly 8,002 at the end of June. It said it did not buy Bitcoin or issue shares through its at-the-market program during the quarter.
An at-the-market program allows a company to sell newly issued shares into the stock market. Ho emphasized that American Bitcoin grew its reserve without using that source of funding during the period.
The company did sell some of the Bitcoin it produced to cover operating costs. Its total holdings still rose by about 425 coins.
That reserve includes approximately 3,090 Bitcoin pledged for mining-equipment purchases under agreements with BITMAIN. The headline holdings figure is therefore not the same as an entirely unpledged reserve.
The company said Bitcoin attributable to each outstanding common share increased by about 5%. Its calculations reflect a one-for-15 reverse stock split completed July 2, so per-share comparisons need to use the adjusted share count.
American Bitcoin is majority-owned by Hut 8. Its latest results follow earlier volatility in its earnings, including the fourth-quarter loss TheStreet covered in February.
The third-quarter figures now show two different trends. American Bitcoin accumulated more Bitcoin and returned to net profit, while higher power costs reduced the profitability of producing each new coin.
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Disclaimer: This article is for informational purposes only and does not constitute financial advice.
Cryptocurrency investments are highly volatile and risky. Always conduct your own research before making any investment decisions.
