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

American Bitcoin reported a quarterly net income of $126 million on Wednesday, but rising mining costs and falling profits from mining raise questions about its long-term strategy as major rivals pivot towards artificial intelligence.

The Eric Trump-backed company’s profit was driven by a $197.3 million noncash gain on its Bitcoin (BTC) holdings. Meanwhile, mining revenue fell 5.5% to $63.4 million from the previous quarter, while the cost to mine one BTC rose about 15% to $42,100.

Excluding gains from its Bitcoin holdings, American Bitcoin would have reported an operating loss of approximately $5.5 million, according to its financial statements. The company also recorded a separate $64.3 million loss on derivatives.

“Despite seasonal power cost pressures, we continued mining Bitcoin at a structural discount to spot,” American Bitcoin CEO Mike Ho said in Wednesday’s earnings announcement.

Earnings per share stood at $1.73, beating analysts’ consensus estimate of $0.26, according to Yahoo Finance data.

Bitcoin was trading at $76,119, down 5% over the past 24 hours as of 8:50 p.m. UTC, according to CoinGecko data. Shares of American Bitcoin (ABTC), meanwhile, closed Thursday down about 15% at $5.31.

The results highlight an interesting divide among Bitcoin miners: while American Bitcoin continues mining and holding BTC, competitors like Riot Platforms, MARA Holdings and Core Scientific are investing in AI to find new sources of revenue.

Mining margins narrow

David Gamble, founder of asset management company Enigma Holdings, which focuses on Bitcoin mining and AI infrastructure, said American Bitcoin’s reported profit does not tell the full story of its mining business.

“Ultimately, mining Bitcoin below its market price doesn’t automatically mean you’re creating shareholder value,” Gamble told Cointelegraph.

American Bitcoin’s gross mining profit fell to $25.8 million from $33 million in the previous quarter. Its reported mining margin dropped to 41% from 49%, leaving the company with a smaller share of mining revenue after direct costs.

The company’s $63.4 million in quarterly revenue also fell short of analysts’ estimates of $74.35 million, according to Yahoo Finance data, a gap of nearly 15%.

The company mined 891 BTC during the quarter, down from 932 BTC in the previous three months. It also said higher electricity prices were the main reason mining costs increased.

“I don’t necessarily think their accumulation strategy is flawed, but I do think it raises questions about long-term sustainability,” Gamble said, pointing to increasing mining difficulty and the need to keep investing in newer and more efficient technology to compete.

Compared with the same period last year, revenue was nearly unchanged, falling from $64.2 million to $63.4 million. Reported profit, however, jumped from $3.5 million to $126 million, largely reflecting gains on the company’s Bitcoin holdings.

Rivals turn to AI as American Bitcoin builds reserves

American Bitcoin’s strategy comes as competitors like Riot Platforms, MARA Holdings and Core Scientific rapidly expand into AI.

Riot is building large AI data centers, according to its latest earnings. Meanwhile MARA is expanding into AI while continuing to mine Bitcoin. Core Scientific, on the other hand, has already shifted much of its business toward AI data centers.

American Bitcoin, by contrast, continues building its BTC reserves, holding 8,427 BTC at the end of September, up from 3,418 BTC a year earlier.

“The real competitive advantage in this industry is shifting toward energy infrastructure,” Gamble said. “It’s no longer just about how much Bitcoin you can mine or how much hashrate you can deploy.”

Gamble also explained that Bitcoin miners and AI companies are competing for the same power supply, and AI data centers could make more money than Bitcoin mining in some areas.

“That doesn’t mean every mining facility can simply transition into AI,” he said. “You still have to account for depreciation, equipment replacement, financing costs, and the opportunity cost of deploying that capital elsewhere.”

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