American Bitcoin (NASDAQ:ABTC) reported third-quarter net income of approximately $126 million, reversing a second-quarter loss, as gains on its Bitcoin holdings offset pressure on mining margins from higher energy costs.
The company mined approximately 891 Bitcoin during the quarter, down from 932 in the second quarter. Revenue fell to approximately $63.4 million from $67 million, while the cost to mine each Bitcoin increased to about $42,100 from $36,500, Chief Executive Officer Mike Ho said on the earnings call.
Ho attributed the increase in mining costs primarily to seasonal energy prices. The company prioritized economic returns over maximum uptime as summer electricity demand rose, he said.
Bitcoin Gains Lift Results
Gross profit declined to approximately $25.8 million from $33 million in the prior quarter, and gross margin narrowed to about 41% from 49%. Cost of revenue rose to approximately $37.5 million from $34 million.
Net income of approximately $126 million compared with a net loss of $57.2 million in the second quarter. Adjusted EBITDA was approximately $221 million, compared with a loss of $45 million.
The results included approximately $197.3 million in noncash gains on digital assets, compared with a loss of approximately $71.2 million in the prior quarter, Ho said. Bitcoin appreciated approximately 39% during the third quarter, increasing the value of the company’s reserves.
Ho cautioned that mark-to-market adjustments can create significant swings in quarterly earnings, but said the company manages its Bitcoin reserve as a long-term asset. “Our approach does not change with the quarterly mark,” he said.
Reserve Growth and Bitcoin Sales
Co-founder and Chief Strategy Officer Eric Trump said American Bitcoin ended September with 8,427 Bitcoin and had surpassed 8,500 at the time of the call. The company did not purchase Bitcoin on the open market or issue shares through its at-the-market program during the quarter, he said.
Trump said the company held approximately 11,600 satoshis per share as of September 30, up 5% from approximately 11,000 at the end of June. A satoshi is a fraction of a Bitcoin. Management identifies growth in Bitcoin per share as a central measure of its strategy.
American Bitcoin sold approximately 465 Bitcoin during the quarter to cover operating costs, Ho said in response to a question from JonesTrading Equity Research Associate Sky Moore. He described the sales as systematic, with Bitcoin from gross production sold almost immediately to cover operating expenses, particularly energy.
Asked by Maxim Group analyst Matthew Galinko about using derivatives to generate additional income, Ho said the company monitors those markets and could consider selling call options during periods of heightened volatility. At current implied volatility levels, however, he said the company was not seeing a significant premium over spot sales.
Mining Expansion and Power Costs
In response to H.C. Wainwright analyst Mike Colonnese, Ho said decisions about expanding the mining fleet depend on factors including hash price, expected returns from mining machines, equipment spending, energy markets, power prices and available hedges. The company underwrites investments to a minimum return on capital, he said, without specifying a threshold.
Ho said manufacturers currently have inventory of newer-generation mining machines and that American Bitcoin could add capacity at existing sites by replacing older equipment. Once machines arrive, installation and tuning can happen quickly, he said, although manufacturer inventory and logistics are outside the company’s control.
Asked how the company is preparing for the next Bitcoin halving, Ho pointed to operational efficiency and said the company mines only when it is profitable. He also said American Bitcoin looks globally for energy opportunities, while high-performance computing has competed for power.
Ho said some mining peers have shifted toward powered land leases or developing data centers for artificial intelligence. Bitcoin mining can use sites where power is available before other data-center infrastructure, such as fiber connectivity, is ready, he said.
About American Bitcoin (NASDAQ:ABTC)
Gryphon Digital Mining is an innovative venture in the bitcoin space. Gryphon Digital Mining, formerly known as Akerna Corp., is based in DENVER.
