Summary American Bitcoin debuts with strong operational metrics, competitive fleet efficiency, and high-profile Trump backing, but faces severe volatility and a stretched initial valuation. The company's hybrid mining and treasury model, reliant on Hut 8's infrastructure, reduces CapEx but exposes ABTC to hosting and dilution risks. American Bitcoin's financials are weak: negative equity, deep losses, and most of the BTC treasury encumbered, making the over $5B valuation appear unjustified versus peers. Given these risks and overvaluation, I lean toward a Hold rating on ABTC until it demonstrates improved financial performance and sustainable margins. American Bitcoin Overview American Bitcoin Corp. (NASDAQ: ABTC) has made a splashy debut on Nasdaq, which has been marked by severe volatility and a staggering initial valuation compared to the state of financials or underlying crypto assets. The hybrid Bitcoin miner-plus treasury company, backed by the Trump brothers, Donald Trump Jr. and Eric Trump, is the latest entrant in the now increasingly crowded Bitcoin ( BTC-USD ) mining and crypto treasury management space. Here's a brief walk down memory lane on how ABTC came to be: The story of American Bitcoin is rooted in a series of strategic maneuvers that shaped the company's business model and the accelerated listing on Nasdaq. American Bitcoin’s origin began as a wholly-owned subsidiary of Hut 8 Mining Corp . ( HUT ) early this year. The move was part of a larger strategy by Hut 8 to spin off the majority of its Bitcoin mining operations into a separate, publicly tradable entity. The goal for Hut 8 was to reposition itself as a pure-play energy infrastructure company, leveraging its growing energy capacity (currently around 1020 MW with plans to develop up to 2.5 GW ) for a wider range of services, which include AI hosting and high-performance computing deployments. By this strategy, Hut 8 aimed to attract a more diverse set of customers and investors and potentially reduce the volatility associated with pure-play crypto mining. This is where American Bitcoin came into the picture. As part of the spin-off, Hut 8 contributed the majority of its ASIC miners (about 60,000 ASIC miners) to the new entity, initially called American Data Centers - an investment vehicle with financial backing and board representation from Donald Trump Jr. and Eric Trump - which was then rebranded as American Bitcoin. The new company , with Hut 8 retaining an 80% majority stake, is designed to be a dedicated Bitcoin accumulation platform (through mining and through opportunistic purchases). Donald Trump Jr. and Eric Trump hold the majority of the remaining 20% stake in American Bitcoin. The colocation and shared-infrastructure strategy between American Bitcoin and Hut 8 entails Bitcoin mining becoming a shared service between HUT and American Bitcoin, where ASIC colocation replaces direct site ownership and build-out. Hut 8 provides the site, racks, and power for a hosting charge, while ABTC and other miner clients manage and run their ASICs on HUT’s infrastructure. The main advantage is lower upfront CapEx requirements and tighter SG&A efficiency for miners, from such shared infrastructure. The final step in the formation of American Bitcoin came with a stock-for-stock merger with Gryphon Digital Mining last week. Gryphon was a smaller, Nasdaq-listed Bitcoin mining company. The merger provided American Bitcoin with an immediate public listing under the new ABTC ticker. ABTC Stock - Hefty Operational Metrics, but Dilution, and Volatility Risks Abound Operationally, American Bitcoin is kicking off on an impressive and competitive level. The colocation model with Hut 8 is a clear advantage as I've mentioned, and HUT’s 80% stake means favorable terms for ABTC, as HUT will mostly structure agreements that will improve the economics of its majority-owned subsidiary. On a more granular level, some of the other critical operational metrics to look at for the new ABTC entity, such as the hashrate and the value of the assets held in its treasury, are also up to the current industry trends. Miners' fleet efficiency as of July 2025 (Power Mining, Compass Mining) On the Bitcoin mining front, American Bitcoin reports roughly 24 EH/s of installed hashrate post merger, which are powered by around 60,000 ASICs contributed by Hut 8, the combined fleet from Gryphon as part of the merger, as well as 16,299 ASICs purchased under a $314 million agreement with Bitmain in which American Bitcoin pledged 2,234 BTC as collateral last month. The 24 EH/s hashrate translates to an efficiency of 16.4 J/Th. Thus, American Bitcoin is starting with an impressive fleet efficiency of around 16.4 J/TH, which is competitive with new-gen fleets run by larger miners. In their last reports, Mara Holdings ( MARA ) disclosed fleet efficiency of 18.3 J/Th in their Q2 report, Riot Platforms ( RIOT ) saw 21 J/Th in August, which brings ABTC’s 16.4 EH/s to an advantage in a direct comparison with top mining peers. Moving forward, as reports are released for the new ABTC entity, another important metric to track is the all-in power cost for its mining business. This cost metric, together with the fleet efficiency, will be the factors that determine gross mining margins from the company's Bitcoin mining arm. Several well-established mining peers report all-in power around 4 cents/kWh and below. While the new cost structure of the merged Gryphon–American Bitcoin entity is undisclosed for now, Gryphon announced a natural gas deal last December that targeted a potential cost of around 3 cents/kWh. The new merged entity will potentially assume this agreement if the deal closes (note: there has been no announcement from Gryphon or the merged ABTC entity on the completion of the natural gas deal yet). If this deal, however, closes and benefits ABTC, this will be a solid starting point for the American Bitcoin entity right out of the gate and will help the company match some of the best all-in power cost in the industry. Riot currently sees around 2.6 cents per kWh all-in cost (disclosed in Riot's August 2025 production update ). A sub 3 cents/kWh will put ABTC at an upper-tier cost efficiency level, close to the industry's leaders. With the operational metrics of the company's mining arm highlighted so far, ABTC is also pursuing a crypto treasury strategy and the cues from the company so far shows that it will be an equally important business unit for the company. On the treasury side, ABTC currently holds 2,443 BTC (~$271 million at current BTC spot prices). Of the 2,443 BTC, 2,234 BTC are encumbered as collateral in the pledge for its $314 million Bitmain ASIC purchase agreement I mentioned earlier in this piece. Data by YCharts As we have witnessed with Bitcoin treasury companies, their funding sources include debt instruments such as convertible notes and equity issuance, with the potential to become a dilution machine. In the case of ABTC, I’d lean towards an increased risk of becoming a dilution machine because the balance sheet is already thin. Gryphon was unprofitable pre-merger and had balance sheet deficit, and the Q2 2025 financials show a weak top line and deep losses: Q2 2025 revenue dropped to $1.38 million, gross and operating margins were deeply negative with an operating margin around –174 % TTM, and net loss widened by 31%, to $5.26 million. That structural weakness pushes ABTC to its ATM and other dilutive funding sources, which already include a $2.1 billion ATM equity program . On first week of trading last week, ABTC hit roughly a $5 billion valuation. Compared with its financials and in relation to its underlying asset (as a treasury company), I think that valuation is stretched, and I think ABTC lacks the fundamentals to justify that attraction as an institutional-grade investment for now. Some investors will still buy for headline exposure to the Trump names. At a debut market cap near $5 billion, ABTC is trading at about an 18x multiple to its NAV (considering its 2,443 BTC holdings at current BTC spot price of $111k). The ~18x multiple to NAV understates the real risk because most of the treasury is encumbered, leaving only about 209 BTC free from the 2,443 BTC gross assets. In practical terms, much of the company’s headline NAV is locked. By contrast, several peers show more conservative market backing to their treasuries. MARA holds roughly 52,477 BTC and trades at about parity (1:1) to its BTC treasury on a market cap to BTC value basis. RIOT holds about 19,309 BTC and trades at roughly 2.3x its BTC treasury value. Both peers report more robust liquidity and have materially stronger operations. MARA reported strong Q2 revenue and positive net income. RIOT reported improving margins and adjusted EBITDA strength in Q2. Those fundamentals support their multiples. If ABTC uses all ATM proceeds to buy BTC, issuance could be accretive to BTC-per-share. The arithmetic is simple: if proceeds per new share exceed the current dollar BTC value represented by a share, then BTC-per-share rises after the buy. But if proceeds fund operating losses, hosting, or capex without returning equivalent asset value, then dilution destroys BTC-per-share. Balance sheet shows negative equity (Company filing) Given Gryphon’s pre-merger financial state, marked by negative equity and thin cash, then the merger costs, pledged BTC, and ongoing hosting obligations to Hut 8, I think it is unlikely that all or the biggest part of ATM cash will be used to buy large amounts of BTC. There will likely be stronger incentives to fund equipment, pay hosting, and service obligations first. That raises the odds of dilution hurting existing holders. Ultimately, the spin-off of Hut 8’s mining business and the merger with Gryphon have presented a lopsided risk and reward profile between HUT and ABTC. In my view, Hut 8 is walking away with the safer, cash-flowing business as it focuses on being an infrastructure and power operator moving forward, while ABTC inherits the volatility, execution risk, and the burden of proving it can mine profitably under someone else’s roof. I think the initial hype, spurred by the high-profile backing, will soon fade for ABTC, and valuation multiples will normalize closer to treasury value, unless it proves improved financials in the coming quarters. Takeaway Ultimately, while ABTC is a promising new entrant with impressive operational metrics, the significant financial vulnerabilities and a stretched valuation warrant caution. I’m leaning towards a Hold in this initiating coverage for ABTC.
