Summary American Bitcoin Corp. is rated 'Strong Sell' as it trades above NAV and faces ongoing Bitcoin price declines. ABTC's asset-light model leverages efficient miners and low-cost electricity, but current market conditions challenge near-term profitability. Management prudently avoids debt, focusing on equity-funded miner expansion and strategic treasury moves during the bearish cycle. Despite long-term potential, exposure to further Bitcoin downside heightens short-term risk. American Bitcoin Corp. ( ABTC ) is another Bitcoin ( BTC-USD ) mining and treasury company that launched at a steep valuation during peak investor optimism, near the end of the bullish BTC cycle. ABTC has fallen more than 80%, and, since the Bitcoin bearish cycle persists, I believe the stock may continue falling throughout 2026. Previously, I wrote three articles about these BTC bearish cycles here on Seeking Alpha, and while I have a short bias for BTC in 2026, I am studying stocks that may become an investing opportunity in the future, once cryptocurrencies stop falling, which I only expect to happen near the end of the year. What I am trying to grasp in this article is: Does ABTC have the right business model to position it to profit from a future bullish cycle and even outperform Bitcoin itself? The Company ABTC began after Hut 8 Corp. ( HUT ) decided to spin off its operations to become a purely energy infrastructure company and not be limited by certain uses like crypto mining or AI data centers. So, ABTC owns bitcoin miners that operate at facilities managed by Hut 8. ABTC pays monthly fees and all the costs incurred by Hut 8’s oversight, maintenance, repair, and contracted power delivery. With this strategy, the company can prioritize its BTC strategy by buying miners instead of land, buildings, or electrical infrastructure. To scale operations, the company will seek financing by selling common stocks and convertible securities when management considers market conditions favorable, using the proceeds to expand its BTC mining power. The company also plans to build and help initiatives within the Bitcoin ecosystem to facilitate Bitcoin adoption, but this could pose a risk, depending on how it invests resources. In the Q3 2025 earnings call , management explained its strategy going forward, and there are several advantages regarding the company’s model and management’s decisions. A positive raised by management is the energy strategy used, which includes behind-the-meter sites, meaning that the miners are connected to power sources before they are connected to the grid. So, they can utilize cheaper electricity that would otherwise be wasted (curtailed). Additionally, since Bitcoin mining is very flexible, the company can shut down operations during periods of high electricity prices for its front-of-the-meter sites, but it also benefits from shutting down mining operations during the ERCOT 4CP program, which is the way electricity costs are determined in the ERCOT region, and this helps the company to greatly reduce its electricity bill over the long run. To put it in perspective, ABTC reported a weighted average fleet efficiency of 16.3 J/TH (the lower the better), better than Cipher Mining’s ( CIFR ) fleet efficiency of 16.8 J/TH, and pretty close to CleanSpark’s 16.07 J/TH, which is one of the best in the industry. Another positive is that management was at least aware of the risks in November 2025, when BTC prices had already started falling, and management didn’t signal any interest in leveraging the treasury strategy with debt, like Strategy Inc. ( MSTR ) did. Instead, their goal was to build their equity value by acquiring more miners so they would have a larger collateral to leverage at the right moment. On the other hand, the Company purchased approximately 306 Bitcoin for $35.3 million, at an approximate price of $115,321, from early October to mid-November. In my view, this was the wrong decision. Maybe acquiring more miners would have been the best option, considering how fast prices were falling, but still, it was better than using debt. Overall, I view it as a good sign that management understood cycle risk and is being prudent in capital allocation for this bearish period. Q3 results Revenue increased from $11.6 million in Q3 2024 to $64.2 million in Q3 2025 due to the purchase and installation of higher-efficiency miners. 563 Bitcoins were mined with an average price of $114,000 while the company was upgrading its fleet. Cost of revenue increased from $11.1 million to $28.3 million, which marked a significant gross margin increase, due to a more efficient fleet and also due to the average BTC price increasing from $61,000 to $114,000 in the period. General and Administrative (G&A) expenses increased from $4.8 million to $8.1 million. However, most of this cost increase was related to a one-off $5.2 million cost related to the business combination with Gryphon Digital Mining and $1.2 million in stock-based compensation, which will no longer exist. So, removing these items, G&A costs actually declined from $4.8 million in Q3 2024 to about $1.7 million. The company reported an accounting loss of $5.5 million as a “loss on digital assets” and depreciation and amortization of $15.2 million, which led to operating income increasing from negative $10.2 million to a positive $7.2 million, also leading to a $3.5 million net income after taxes and loss on derivatives. The income statement showed some improvements, which we know won’t continue in the coming quarters due to the lower BTC prices, but it is good to see, for example, the G&A costs reducing significantly. On the balance sheet, the company is operating with negative working capital, as current liabilities exceed current assets. However, that is due to the transaction made with Bitmain to acquire new miners, which was actually a great deal by ABTC. The company pledged 2,776 Bitcoins in total (end of September plus the amount pledged in October) in exchange for Bitmain miners. These bitcoins are held in a segregated wallet as collateral, and ABTC has the option to redeem them at a fixed price in about one and a half years from now. So, given that Bitcoin prices are falling, what I think is going to happen is the pledge period expires, ABTC gives the 2,776 Bitcoins (valued at a much lower price) to Bitmain, and ABTC keeps the miners, which may be turning profitable by then. The company disclosed 5,843 Bitcoin in its reserves, which is valued at around $409 million, using a $70,000 estimated Bitcoin price. Adding $370 million of property, plant, and equipment, minus $106 million from accounts payable related to the acquisition of Bitmain miners disclosed on the balance sheet, plus $7.9 million in cash, results in about $681 million Net Asset Value ((NAV)), which is lower than the current market cap, at the time of writing, of $1.17 billion. To me, this may be a good opportunity to short the stock, as it is still valued above NAV and Bitcoin prices may still fall. In comparison, Strategy Inc. is already trading below NAV, and ABTC may, in the future, also trade below NAV. Risk Investing in crypto-related stocks has regulatory risks, since it is a relatively new asset; the regulatory environment could face changes, leading to significant losses to the investor. Because I am outlining a possible short position, if Bitcoin prices rise, it could trigger a short squeeze, leading to significant losses to the short sellers. Conclusion While I believe Bitcoin prices may continue to fall, which leads to a short bias towards the stock, I view ABTC positively over the long run with a solid business model, combining one of the most efficient hardware with the world's cheapest electricity prices, while it is also planning treasury strategies for the future, avoiding debt in this short-term bear market to accumulate and leverage at the right moment. For now, since the stock is trading above NAV and I expect Bitcoin prices to continue falling, I view the stock as a “Strong Sell.”
