Eric Trump's Bitcoin company makes $126 million in profits, but there's a problem

Eric Trump's mining company, American Bitcoin, has posted a net profit of $126 million. Nevertheless, the quarterly figures show a less positive picture. The production of Bitcoin is becoming more and more expensive, while the proceeds from mining are declining. This raises questions about the company's strategy.

American Bitcoin announced Wednesday that its third-quarter earnings came in at $126 million. A quarter earlier, the company suffered a loss of more than 57 million dollars.

However, the gain was largely due to an accounting appreciation of $197.3 million on the Bitcoin (BTC) holdings. This amount does not represent direct income from mining.

Excluding the increases in value and other financial items, the company would have recorded an operating loss of approximately $5.5 million, according to its results. In addition, it suffered a separate loss of $64.3 million on derivatives.

Meanwhile, mining revenue fell by more than five percent to $63.4 million. The cost of producing one Bitcoin increased by about fifteen percent, from $36,500 to $42,100. Gross profit from mining fell from 33 million to 25.8 million dollars. The profit margin fell from 49 to 41 percent.

According to CEO Mike Ho, higher electricity prices were mainly responsible for the rising costs.

The figures reveal a growing difference between American Bitcoin and other major mining companies. Competitors such as Riot Platforms, MARA Holdings and Core Scientific are increasingly investing in data centers for artificial intelligence (AI). American Bitcoin, on the other hand, is committed to producing and collecting Bitcoin. At the end of September, the company owned about 8,427 BTC, up from 3,418 a year earlier.

According to David Gamble of asset manager Enigma Holdings, cheap Bitcoin production does not automatically mean that a company creates value for shareholders.

Mining companies must constantly invest in new equipment, while competition for cheap electricity is increasing. AI data centers can also outperform Bitcoin mining in some locations, although switching is not feasible for every business.

American Bitcoin produced 891 BTC last quarter, up from 932 in the previous quarter. Investors reacted negatively to the results. The stock fell by about fifteen percent to 5.31 dollars on Thursday.