Trump Brothers' American Bitcoin Posts Third Straight Loss

The Miami-based miner reported a net loss of $57.2mn, or 80 cents a share, for the three months ended 30 Jun, compared with a $3.4mn profit a year earlier and an $81.8mn loss in Q1, according to the earnings release. Revenue more than doubled year-on-year to about $67mn, up 8.0% from $62.1mn in Q1.

Bitcoin (BTC) fell roughly 12% quarter-on-quarter, weighing on the fair value of the company's growing reserve. The token was trading around $63,900 on Tuesday morning, down about 44% over the past year.

The result deepens a losing streak for a company that made bitcoin accumulation its sole business at the top of the cycle.

Record production, thinner economics

American Bitcoin mined about 932 BTC in Q2, its highest quarterly output on record and up from 817 BTC in Q1. The jump was driven largely by the April energization of about 11,298 next-generation miners at the Drumheller site in Alberta, a Canadian province whose cheap natural gas power and light-touch regulation have made it a North American mining hub. 

The site is run by parent Hut 8 Corp (Nasdaq: HUT), which owns 80% of American Bitcoin and hosts all its mining under a long-term services agreement. The upgrade helped keep production cost roughly flat at $36,500 per BTC.

But the ramp came against a squeeze on unit economics. Mining revenue per bitcoin produced was about $71,900, down 5.0% from $76,000 in Q1, reflecting the average BTC price during April-June. That left a gross margin close to 50% at the mining-operation level.

Where the profit went

That headline cost figure excludes several line items that weighed on the bottom line. Depreciation on the company's ASIC fleet, stock-based compensation and general and administrative expense of $7.7mn (up from $6.9mn in Q1) all fall below the gross margin line.

So does interest on financing arrangements with Bitmain, under which American Bitcoin has pledged roughly 3,090 BTC to acquire new ASIC mining machines. Combined with the $71.2mn non-cash writedown on digital-asset holdings, those items pushed the quarter into a $57.2mn net loss even as gross mining profit ran at about $33mn.

A bigger stack

The company's strategic reserve grew to roughly 8,002 BTC as of 30 Jun from about 7,021 BTC three months earlier, a 14% increase. A larger stack compounds record production into more upside when the token rallies. It also amplifies mark-to-market drag when the token falls, as Q2's $71.2mn writedown showed. 

Satoshis per share, a per-share measure of holdings expressed in satoshis (the smallest unit of bitcoin), rose about 11% to around 10,989, as holdings expanded faster than the 3.0% growth in shares outstanding.

Down 95% from peak

Shares briefly fell about 3.3% to $5.34 in early New York trading on Monday before recovering to close at $5.85, up 5.98% on the day. The stock has dropped roughly 95% from its September debut peak, prompting a 1-for-15 reverse split on 2 Jul to preserve the company's Nasdaq listing.

Co-Founder and Chief Strategy Officer Eric Trump pushed back against comparisons with digital-asset treasury (DAT) firms such as Strategy and Metaplanet, arguing the miner produces bitcoin at "roughly $0.50 on the dollar," meaning its cost to mine is roughly half of market price, rather than buying at market. CEO Mike Ho said the company stayed focused on "what we can control" through the quarter's headwinds.