Summary American Bitcoin reported Q2 FY26 results with revenue and EPS missing expectations, but operational metrics showed record Bitcoin production and strong fleet efficiency. ABTC's cost to mine remained competitive at ~$36,500 per Bitcoin, while SG&A expenses were well controlled, supporting stable mining economics despite higher energy costs. Valuation has reset significantly, but a large working capital deficit (~$111 million) and substantial miner purchase obligations ($371.7 million) constrain financial flexibility. I maintain a Hold rating on ABTC, pending evidence of improved liquidity, and reduction of miner purchase liabilities without heavy dilution. American Bitcoin ( ABTC ) released Q2 FY26 earnings yesterday, and the headline numbers were below the Street’s expectations. Though the crypto investment community has come to terms with the realities of the current crypto bear market for Bitcoin ( BTC-USD ) miners and has largely recalibrated expectations around near-term profitability and earnings growth, ABTC's top-line miss by roughly 7% and the wider-than-expected EPS loss were still disappointing. ABTC reported Q2 revenue of $67 million, up around 8% sequentially from $62.1 million in Q1 but below consensus expectations of ~$72.0 million. GAAP net loss was $57.2 million, or $0.80 per diluted share, compared with Street expectations for near break-even earnings. Adjusted EBITDA remained under pressure at negative $45 million as lower Bitcoin prices in Q2 offset stronger mining activities in the quarter. Q2 FY26 numbers at a glance (Investor deck) Operationally is where ABTC exceeded expectations on the metrics in Q2. ABTC delivered a record quarterly Bitcoin production of 932 BTC, up 14% from 817 BTC in Q1, while maintaining fleet efficiency of roughly 16 J/TH across ~25 EH/s of energized hash rate. The successful energization of ~11,298 next-gen ASIC miners running at ~13.5 J/Th efficiency at the parent Hut 8's ( HUT ) Drumheller site back in April drove quarterly Bitcoin production to that record. The new miners bring ABTC’s average efficiency across its total 89,242 miners to ~16 J/Th. ABTC’s fleet efficiency remains among the best among publicly traded miners. That fleet efficiency also contributes to ABTC’s ability to mine Bitcoin at one of the most competitive cash mining costs among publicly traded Bitcoin miners. ABTC’s cost to mine in Q2 was ~$36,500 per Bitcoin, which was not a notable increase compared to ~$36,200 per Bitcoin in Q1, despite higher energy costs at some of its sites. Bitcoin miners cash mining cost per BTC (TheEnergyMag) The more impressive part of ABTC’s operations in Q2 is that the miner increased BTC production in Q2 without a disproportionate increase in corporate overhead. SG&A expenses (which made up nearly the entirety of the OpEx) remained well controlled at ~11% of revenue ($7.7 million against revenue of $67 million, compared to $6.9 million against revenue of $62.1 million in Q1 which was ~11.1% of revenue). This proves that ABTC’s mining economics remained broadly stable despite increase in energy costs. OpEx and SG&A trend (TradingView) Hosting obligations remain an ongoing expense for ABTC, but Hut 8's turnkey infrastructure continues to allow ABTC expand mining capacity without assuming the significant CaPex requirements associated with developing and operating large-scale mining campuses independently. For investors not very familiar with ABTC and its relationship with HUT, ABTC was formed after HUT spun off the majority of its Bitcoin mining business into a separate publicly traded company while retaining around 80% ownership stake. Under this structure, HUT provides the power infrastructure, hosting facilities, and operational support, while ABTC owns and operates the mining fleet themselves and executes its Bitcoin accumulation strategy, allowing each company to focus on their respective business models while benefiting from a closely aligned partnership. When I initiated coverage on ABTC back in September last year, I pointed out that this shared-infrastructure model with Hut 8 would reduce capital intensity for ABTC while allowing the company to scale more efficiently, ultimately building operating leverage for the miner. Q2 results have largely validated that thesis, which culminated in the deployment of the 11,298 next-gen miners while keeping expenses in control and increasing Bitcoin production, Bitcoin held, and the value of Bitcoin held on a per share basis. ABTC’s treasury holdings also expanded. ABTC ended Q2 with a little over 8,000 BTC (8,002 BTC as of Q2 end to be precise, and ~8,300 today), despite the earnings miss. While ABTC’s stashed Bitcoin has increased, the more important question is whether Bitcoin per diluted share also increased. Satoshi per share (Investor deck) Bitcoin treasury growth alone does not create shareholder value, if that growth is accompanied by heavy dilution. ABTC’s Bitcoin per share metric (or as ABTC puts it, Satoshi per share; as they built their metric on the smallest divisible unit of Bitcoin, equivalent to one hundred millionth or 0.00000001 of a single BTC) has also been improving alongside the treasury holdings. Back in Q1 , ABTC’s satoshi per share [SPS] increased by ~20% over Q4 FY25 figure to reach 663 satoshis per share (or ~9,943 SPS if we adjust the historical satoshi per share figures to show ABTC's subsequent 1-for-15 reverse stock split ). "We produced Bitcoin at a 52% gross margin despite a 22% decline in Bitcoin price, reflecting meaningful cost improvements that partially offset the price headwind. Our cost to mine fell to approximately $36,200 per Bitcoin, down from roughly $46,900 in Q4 2025. Satoshis per share reached approximately 663, a roughly 20% increase in a single quarter. Every share of American Bitcoin owns more Bitcoin today than it did three months ago. That is the story. - Matthew Prusak, President of American Bitcoin. Q1 FY26 earnings” That trend continued into Q2. While ABTC expanded its Bitcoin treasury from 7,021 BTC at the end of Q1 to 8,002 BTC as of Q2 end, share count increased by only about 3% over the same period (as disclosed by management). As a result, satoshi per share increased by another ~11% sequentially to reach ~10,989 satoshis per share (factoring post reverse split math). Overall, though Q2 disappointed on the headline financial metrics, operating metrics were encouraging. Valuation Has Reset But Obligations Need to Decline While Liquidity Improves This is where I think the market has changed the most since my September initiation. Back then, my biggest concern was not ABTC's operating business. It was that ABTC launched in September last year, which was near the tip of the crypto bull market, and had a very high valuation. Bitcoin went on to reach ~$123k all-time high a few weeks later in October, and has lost ~50% since that peak. At the time of my initiation, ABTC commanded a steep valuation with market cap approaching $5.8 billion despite holding only around 2,400 BTC on its balance sheet and inheriting Gryphon's weak financial position at the time (ABTC entered the public markets through the merger with Gryphon). The stock traded at an aggressive premium to its underlying Bitcoin holdings, while established peers like MARA Holdings ( MARA ) and Riot Platforms ( RIOT ) traded at materially lower treasury multiples despite possessing larger Bitcoin reserves, stronger liquidity profiles, and more mature mining operations. ABTC’s speculative premium has now largely disappeared, as the stock now trades around $430 million market cap, down ~93% from the highs around September/October last year. ABTC has seen months of selling pressure. The 1-for-15 reverse split and continued balance sheet concerns have compressed the valuation to far more rational levels. Unlike in September last year, where investors were primarily paying for future expectations and the Trump affiliation to ABTC (Eric Trump serving as Chief Strategy Officer and a member of the Board of Directors, alongside co-founder Donald Trump Jr.), today's valuation more closely reflects the underlying operating business and Bitcoin treasury with some risks baked in. But despite impressive improvements in key operational metrics, including the fleet efficiency, energized hashrate, number of Bitcoin mined, and satoshi per share, and how much the valuation has reset, I still maintain a Hold on ABTC. The working capital deficit that was another concern back in September is still mostly unresolved. ABTC's Q2 balance sheet reported current assets of $25.7 million against current liabilities of $136.7 million, resulting in a working capital deficit of ~$111 million. This also translates to a current ratio around 0.19x, showing a tight short-term liquidity despite impressive operational metrics. ABTC’s current liabilities are primarily comprised of $76.2 million in current operating lease liabilities, $42.3 million due to HUT, $15.1 million in accounts payable and accrued expenses, and $3.1 million in income taxes payable. Blance sheet (10-Q filing) $76.2 million current lease liability and the $42.3 million due to HUT together account for nearly 87% of current liabilities, which shows that the Hut 8 relationship, while it has been beneficial to ABTC operationally, also creates meaningful recurring financial obligations that investors should continue to monitor. Miner purchase liability (10-Q filing) Beyond the near-term liquidity, ABTC also carries a non-current miner purchase liability of $371.7 million related to its ASIC miner purchase agreement with Bitmain. The miner purchase liability further encumbers around $184.9 million worth (works out to ~3,090 BTC based on Q2 fair value BTC price) of the company's Bitcoin treasury, which have been pledged as collateral under the Bitmain purchase agreement. The pledged Bitcoin fair value of ~$184.9 million at Q2 end, secured roughly half of the outstanding $371.7 million purchase obligation, meaning the other half could be funded through other sources of capital which could include debt or dilution, as cashflow remains negative. Operating cash flow was negative in Q2 despite the improved operating metrics, with ~$63.8 million cash burned in operating activities so far in the first six months of this fiscal year. Why a Hold is Prudent Despite the encouraging operational performance and the successful execution of the Bitcoin treasury strategy, which has now seen SPS increase in both Q1 and Q2, I believe a Hold on ABTC is the more prudent stance at this juncture. ABTC is now one of the few pure play publicly traded miners remaining almost entirely dependent on Bitcoin mining revenue and therefore fully exposed to Bitcoin price volatility. I think an upgrade to Buy would require something more decisive, like evidence that the improving operational metrics are beginning to translate into better financial performance. That includes positive operating cash flow, sustained improvement in Bitcoin per share in Q3, and a materially stronger liquidity position, either through internally generated cash flow or refinancing of near-term obligations on favorable terms to drive meaningful reduction in current liabilities. I would also like to see evidence that the ABTC's $371.7 million miner purchase obligations are gradually being reduced without relying heavily on additional equity issuance, so that the satoshi per share gains management has delivered over the past two quarters can be preserved. Overall, based on the operational metrics and the current balance sheet reality I have discussed, I think ABTC’s operational growth is being subsidized by a balance sheet structure that could prove difficult to sustain in the long run, except Bitcoin price gains materially. This keeps me at a Hold.
