American Bitcoin Corp. (ABTC), a mining company with ties to the Trump family, reported a staggering $59 million net loss in the fourth quarter of 2022, as the value of its digital assets plummeted alongside the broader cryptocurrency market. The Miami-based firm, which trades on the Nasdaq, saw its revenue rise to $78.3 million for the three months ending Dec. 31, a 22% increase from the same period in 2021, but this figure fell short of analyst expectations of $79.6 million. For the full year, American Bitcoin reported a revenue of $185.2 million.
A Tough Quarter for Digital Asset Holders
Bitcoin, the world’s largest cryptocurrency, experienced a significant decline of about 23% in the fourth quarter, putting pressure on companies like American Bitcoin that hold substantial reserves of the digital asset. According to new Financial Accounting Standards Board (FASB) rules, firms must mark their digital asset holdings to market each reporting period. As a result, American Bitcoin recorded a $227 million non-cash loss due to the revaluation of its bitcoin treasury.
Building Reserves Despite Market Woes
Despite the challenging market conditions, American Bitcoin managed to increase its bitcoin holdings to over 6,000 BTC by the end of the year, up from 5,401 BTC. Co-founder Eric Trump highlighted that roughly one-third of these holdings were acquired through the company’s mining operations, while the remaining two-thirds were accumulated through open-market purchases and strategic transactions. The firm, which is 20% owned by Eric Trump and Donald Trump Jr., went public in September, just weeks before bitcoin hit a record high above $126,000. However, shares have since fallen nearly 90% from their peak near $9 last year, trading at $1.06 in early trading on Thursday, down about 22% over the past 12 months.
Strategic Capital Raises and Mining Margins
American Bitcoin raised $150.5 million during the quarter through an at-the-market stock offering, using the capital to bolster its bitcoin holdings. This move increased the company’s per-share bitcoin exposure by nearly 50%. The firm operates industrial-scale mining facilities, supported by majority owner Hut 8, and managed to maintain a 53% gross margin on its mining operations during the fourth quarter, indicating that production costs remained below prevailing spot prices despite the market downturn.
Industry Peers Navigate the Downturn
Other companies in the mining sector have adopted different strategies to weather the storm. Some, like MARA Holdings and Riot Platforms, have explored converting parts of their operations to artificial intelligence infrastructure. Others have sold portions of their bitcoin reserves to strengthen liquidity. Hut 8, which holds a majority stake in American Bitcoin, reported its own fourth-quarter results, ending the year with an 8,500-megawatt development pipeline and securing a new $200 million revolving credit facility with Two Prime. It also expanded an existing credit facility with Coinbase to $200 million, bringing total available credit capacity to $400 million.
Looking Forward
The fourth-quarter loss of $59.45 million, compared to a profit of $3.48 million in the same period a year earlier, underscores the volatile nature of the cryptocurrency market. However, American Bitcoin’s CEO, Mike Ho, remains optimistic, citing the expansion of its mining platform and bitcoin reserves as key milestones. As the company continues to navigate the challenges of the crypto winter, its ability to adapt and maintain a strong financial position will be crucial in positioning itself for future growth.
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