American Bitcoin banks $126M, but its mining margins tell a less sunny story ⛏️

American Bitcoin, the Nasdaq-listed mining venture majority-owned by Hut 8, reported approximately $126 million in net income for the quarter ended Sept. 30, reversing a $57.2 million net loss in the second quarter. Adjusted EBITDA reached roughly $221 million, compared with a $45 million loss in the prior quarter, while earnings per share of $1.73 exceeded the $0.26 analyst consensus estimate from Yahoo Finance. Shares of American Bitcoin (ABTC) closed Thursday down about 15% at $5.31.

The profit was driven largely by a $197.3 million noncash gain on the company’s $BTC holdings. Excluding the Bitcoin gains, American Bitcoin recorded an operating loss of approximately $5.5 million and a separate $64.3 million loss on derivatives. The company expanded its Bitcoin reserve to about 8,427 $BTC, up roughly 425 coins, or 5%, from the end of June, and increased its “satoshis per share” by about 5%. American Bitcoin did not purchase Bitcoin or issue new shares through its at-the-market program during the quarter, relying on mining output. “These are significant results, particularly in a challenging digital asset market,” said co-founder and chief strategy officer Eric Trump. CEO Mike Ho credited “a disciplined, Bitcoin-denominated operating business,” saying the company continued “mining Bitcoin at a structural discount to spot.”

Mining performance weakened as revenue fell 5.5% to $63.4 million from the previous quarter and nearly 15% below the $74.35 million analyst estimate. Revenue was also nearly unchanged from $64.2 million in the same period last year. American Bitcoin mined 891 $BTC, down from 932 in the prior three months, while the cost to mine increased about 15% to $42,100 from $36,500 because of higher seasonal power costs. Gross mining profit declined to $25.8 million from $33 million, and the reported mining margin slipped to 41% from 49%.

American Bitcoin ended the quarter with about 89,242 miners and 28.1 exahashes per second of capacity. The company had previously said on Monday that its $BTC reserve exceeded 8,000 coins, worth roughly $512 million, after producing a record 932 Bitcoin in the second quarter. It ended June with approximately 8,002 $BTC, up about 14% from roughly 7,021 $BTC at the end of March. The company’s stock has struggled since its public listing through a merger with Gryphon Digital Mining, reaching new lows and prompting a 1-for-15 reverse stock split in July.

David Gamble, founder of Enigma Holdings, said the reported profit does not capture the full mining picture. “Ultimately, mining Bitcoin below its market price doesn’t automatically mean you’re creating shareholder value,” Gamble told Cointelegraph. He added, “I don’t necessarily think their accumulation strategy is flawed, but I do think it raises questions about long-term sustainability,” citing increasing mining difficulty and the need for newer, more efficient technology. American Bitcoin operates in a market where competitors including Riot Platforms, MARA Holdings and Core Scientific are investing in AI infrastructure. As of 8:50 p.m. UTC, $BTC was trading at $76,119, down 5% over the previous 24 hours, according to CoinGecko data.