American Bitcoin - Q4 2025

Transcript

Operator (participant)

Good morning. Welcome to American Bitcoin's Fourth Quarter and Full Year 2025 financial results conference call. Speaking on today's call are Co-founder and Chief Strategy Officer, Eric Trump, and Chief Executive Officer, Michael Ho. Executive Chairman, Asher Genoot, and President and Interim Chief Financial Officer, Matt Prusak, will be available during the question and answer session. Following prepared remarks, we will open the line for questions. This call is being recorded. A transcript will be made available on American Bitcoin's website. American Bitcoin issued its fourth quarter and full year 2025 earnings release earlier today, which can be found on the company's website at abtc.com and on the company's EDGAR profile at sec.gov. Certain statements made during this call may constitute forward-looking statements within the meaning of applicable securities law.

These statements reflect current expectations and are subject to risks and uncertainties that could cause actual results to differ materially, including certain key risks detailed in the company's SEC filings. Except as required by law, the company may undertake no obligation to update or revise any forward-looking statements. During the call, management may reference non-GAAP measures such as adjusted EBITDA. Management believes these metrics, alongside GAAP results, provide valuable insight into the company's performance. Reconciliations of GAAP and non-GAAP results are included in the tables accompanying today's earnings release. With that, I'll turn the call over to Eric Trump, Co-founder and Chief Strategy Officer of American Bitcoin.

Eric Trump (Co-founder and Chief Strategy Officer)

Good morning, everybody, welcome back. We launched American Bitcoin on March 31st, 2025. We went public on September 3rd, just over five months later. We held our first earnings call on November fourteenth, and the praise that came out of that call, really, the praise and acclaim was truly incredibly special. Today, only five months and 23 days since ABTC went public, not even a year since we launched the company, we are fast becoming the leader in the Bitcoin world, and I truly think we have the greatest brand of all. I would argue that not a single company in the space has grown their public Bitcoin treasury rankings faster. Today, with over 6,000 Bitcoin on the balance sheet, we are the seventeenth largest public Bitcoin accumulator on Earth. The pace of what the team has built is something that I'm incredibly proud of.

On our last call, I talked about two races in this space: the race to accumulate the most Bitcoin and the race to accumulate the most Bitcoin at the lowest cost. Three months later, that conviction has only gotten stronger. We are delivering strong sequential growth this quarter. We continue to mine Bitcoin at a structural discount to spot, and we meaningfully expanded our reserve. Mike will take you through those numbers and details. What I want people to understand about American Bitcoin is incredibly straightforward. We are focused on building the most efficient way to compound Bitcoin ownership through the public equity markets. We mine Bitcoin cheaper than you can buy it. We hold it, and we grow ownership of Bitcoin over time.

Very few companies, if any, have this structural advantage, and despite volatility in the digital asset market, we are one of the only companies who can sustain their tremendous meaningful margin based on our low-cost mining and incredibly efficient SG&A. There's a lot of noise in this industry, yet we stay focused. We maintain a highly disciplined cost structure, and we remain committed to building something durable, not something that gets attention for a quarter and then fades. We are growing American Bitcoin to be the strongest and most respected company in its class. The world is still very early to cryptocurrency, but that's our distinct advantage. Institutional adoption is barely getting started. Every day, another bank in the country is announcing the ability to custody digital assets, and Bitcoin is leading that race.

We've seen the announcements from Chase, from Charles Schwab, Fidelity, BlackRock, and countless others. The list goes on and on. That's before ETFs and incredible forward-looking legislation and adoption by other major markets, countries, and populations all over the world. The infrastructure layer of this asset class is where generational value gets created, and we're building it right here in North America, anchored in the United States, in the great state of Texas, powered primarily by great American energy and supported by our great American infrastructure. I want to thank our shareholders for their incredible confidence in this team. I want to recognize Mike, Asher, Matt, and everybody at American Bitcoin. There is no team more committed to growth, and there is no team who will work harder for all of you. Mike will walk you through how this strategy translates into results this quarter.

We appreciate you all being on. Mike, go ahead.

Michael Ho (Co-Founder and CEO)

Thanks, Eric. Good morning, everyone. I want to take a few minutes to walk through not just what happened this quarter or this year, but how we think about this business and where we are taking it. The numbers matter, and I will get to them, but I want to start with the architecture, because the architecture is what makes the numbers durable. American Bitcoin launched in March 2025, went public through completing our reverse merger with Gryphon Digital Mining in September, held our first earnings call in November, and as of year-end, held approximately 5,400 Bitcoin in reserve. Likewise, our Satoshis per share stood at 554 at the end of the fourth quarter, up from 371 at the end of the third quarter. That is a 49% increase in a single quarter.

Our focus is on building the Bitcoin reserve over time and enhancing per-share exposure alongside it. Those results reflect the iterated layers of our business model. I will walk through each, cover our financial results, and then share where we are headed. The foundation of American Bitcoin is industrial-scale Bitcoin mining, anchored in the United States and powered primarily by American energy. Installed capacity at year-end was approximately 25 exahash per second, with fleet efficiency of approximately 16.3 J/TH. During the fourth quarter, we mined 783 Bitcoin, bringing production since ABTC's launch to approximately 1,654 Bitcoin. Approximately one-third of our total Bitcoin reserve has been accumulated directly through mining. That is not incidental.

Mining produces Bitcoin at a structural discount to what it would cost to acquire on the open market. That discount is the economic engine of this business. We decreased our cost of revenue per Bitcoin mined to approximately $46.9 thousand in the fourth quarter, compared to approximately $50.2 thousand in the third quarter. We added no net new hash rate in the fourth quarter by design. The focus was optimization, stabilizing machines from the third quarter ramp, tuning fleet performance, and managing intelligent curtailment around ERCOT energy pricing signals. A similar stabilization dynamic occurred between the second and the third quarter, when margins improved as more efficient machines came online and earlier capacity normalized. That step change was tied to that specific deployment cycle and should not be viewed as a recurring pattern. The Hut 8 partnership is central to this layer.

Our primary facility at Vega draws 205 MW from the ERCOT grid and an adjacent wind farm, with direct-to-chip liquid cooling supporting up to 180 kW per rack. It is purpose-built for high-density Bitcoin computes. Hut 8 invests in the infrastructure stack, American Bitcoin invests in ASICs and Bitcoin. That separation of capital responsibilities is designed to align incentives and support efficient scaling over time. Our objective with mining is to produce Bitcoin below market costs. In turn, our objective with the treasury is to further grow that Bitcoin position. Together, they form what we call our dual accumulation model. As of December 31st, we held 5,401 Bitcoin in reserve, up from 3,418 at the end of the third quarter. We accumulated through mining production as well as at-market purchases and strategic transactions.

The mix of our total reserve is roughly one-third mined, two-thirds purchased. The result is a reserve built through both operational output and balance sheet activity. As of year-end, we had raised approximately $240 million in gross proceeds under our at-the-market program, or about 11% of total capacity. That disciplined utilization is intentional. We deploy capital when we believe it strengthens for sure Bitcoin ownership. Unlike pure treasury vehicles that accumulate at spot, our model first produces Bitcoin at a structural discount and then expands the position through treasury activity. As Bitcoin matures as an institutional asset class, we believe there is significant value in becoming an institutional-grade interface to Bitcoin, a platform that combines production economics, treasury scale, and operational credibility. We remain focused on Bitcoin. We're not pursuing business lines that would dilute that focus.

The companies that earn durable premiums are the ones that clearly define their mandate and execute against it consistently. We intend to be one of those companies. As we scale, we are continuing to build the operational depth and the internal systems necessary to support a larger platform, ensuring our structure evolves alongside the business. This quarter was defined by execution. In a volatile Bitcoin price environment, we expanded revenue and preserved balance sheet strength without compromising our long-term strategy. As a reminder, prior to March 31st, 2025, American Bitcoin's operations were reported as the Bitcoin mining sub-segment of Hut 8's Compute segment. On March 31st, 2025, Hut 8 contributed substantially all of its Bitcoin miners to American Data Centers, Inc, which was subsequently renamed American Bitcoin Corp.

On September 3rd, 2025, American Bitcoin completed a stock-for-stock merger with Gryphon Digital Mining, Inc. and was deemed the accounting acquirer. As a result, financial results for periods prior to March 31st, 2025, reflect operations as part of Hut 8 and are not directly comparable to standalone periods. With that context, let me turn to our financial results. Revenue for the fourth quarter was $78.3 million, up 22% sequentially from $64.2 million in the third quarter, and full-year revenue was $185.2 million. While revenue provides scale context, we focus more closely on margin profile, production efficiency, and reserve growth as the primary indicators of performance.... Against that backdrop, margins provide a clearer view of underlying operating performance.

Cost of revenue for the fourth quarter was $36.7 million, up from $28.3 million in the third quarter. Overall cost of revenue for the 12 months ended December 31st, 2025, was $92 million. Gross margin was approximately 53% in the fourth quarter, compared to 56% in the third quarter, and approximately 50% for the year overall. Gross margin was 49% in the second quarter before improving to 56% in the third quarter as earlier capacity stabilized. During the fourth quarter, the price of Bitcoin declined approximately 23%, resulting in a non-cash fair value adjustment reflected separately on the income statement. That adjustment did not affect gross margin, which continued to reflect the operating economics of the mining business.

Stepping back, the fourth quarter results reflect a business that maintained operating discipline and margin integrity despite volatility in Bitcoin's market price. G&A was $7.3 million in the fourth quarter, down from $8.1 million in the third quarter. For the full year of 2025, G&A totaled $33.4 million. As a percentage of revenue, G&A declined to approximately 9% in the fourth quarter from 13% in the third quarter. Revenue grew 22%, while G&A dollars declined. That is operating leverage. Turning to the bottom line, net income or loss reflects the impact of non-cash fair value accounting adjustments during the quarter. Under current accounting standards, changes in the market price of Bitcoin between quarter end dates flow through the income statement as a fair value adjustment.

Therefore, net loss for the fourth quarter was $59.5 million, driven primarily by a $112.2 million non-cash loss on digital assets. Net loss for the 12 months ended December 31st, 2025, was $153.2 million. To be clear, this is not a cash event. We did not sell Bitcoin. Operationally, the business generated positive contribution before those non-cash accounting effects, and the underlying Mining and Treasury economics remained healthy throughout the quarter. Adjusted EBITDA was negative $77.6 million for the fourth quarter, and negative $157.3 million for the full year. Those figures include an impact of non-cash digital asset fair value adjustments. Looking ahead, our priorities are clear. We continue to focus on optimizing fleet efficiency.

Improvements in joules per terahash can enhance Bitcoin production economics and support margin performance over time. We remain focused on disciplined capacity expansion. We have access to additional capacity and to next-generation ASICs technology. We will deploy when we believe the investment returns more Bitcoin over its useful life than it costs in Bitcoin terms. We would rather be right than be first. We continue to compound the reserve through mining and strategic purchases, and we continue to reinforce the three-layer architecture. Layer 1 provides production economics. Layer 2 compounds the division. Layer 3 positions this company to the next phase of institutional adoption. Each layer strengthens the others. This company launched less than a year ago.

In that time, we believe we have built a revenue model that scales, a reserve that compounds, a margin profile that held through a meaningful decline in Bitcoin, and an organizational foundation that is ready for the next phase. We have done it with a lean cost structure and a clear framework for how we allocate every dollar. The majority of our operations are anchored in the United States, powered predominantly by American energy, and built in communities that benefit from our presence. We're focused on Bitcoin, we're focused on execution, and we are building something durable. I want to thank our shareholders, our partners at Hut 8, and the entire American Bitcoin team. Operator, we will now open the line for questions.

Operator (participant)

To ask a question, simply press star one on your telephone keypad. Again, that's star one to ask a question. Our first question from Roth Capital is from the line of Darren Aftahi, please go ahead.

Darren Aftahi (Managing Director and Senior Research Analyst)

Guys, can you hear me okay?

Michael Ho (Co-Founder and CEO)

Yeah, we hear you.

Darren Aftahi (Managing Director and Senior Research Analyst)

Great. Congrats on the progress. Nice to see a really nice cost for Bitcoin number. A couple of things. Can you just speak to, in light of kind of the movement in the price of Bitcoin, just the dual-fold strategy of acquiring in the market versus procuring more power? I think I kind of heard you say maybe hint that there could be some power outside the United States if you went down that route, but just any kind of color on what your kind of 2026 initiatives may be. Thank you.

Michael Ho (Co-Founder and CEO)

Happy to do so. Good to chat with you again. It hasn't been too long since yesterday. When we look at growth and what being a Bitcoin company means, you have Bitcoin mining, which is security of the Bitcoin network.

You have our Treasury, which is Layer 2, which is the liquidity of the Bitcoin network. Three is the ecosystem of the Bitcoin network. How do we increase adoption? Why we think that American Bitcoin is so well-positioned is because we are not reliant on a singular strategy. I think when you look at kind of a lot of the headwinds that treasury companies have faced, is because if you're not trading at a place where there is an ample market to be able to raise money and buy Bitcoin, you're kind of just stuck in waiting. If you look at our last quarter, I mean, revenue grew, gross margins continued to hold, SG&A went down as a % of revenue.

From a financial perspective, I think you have one of the strongest quarters of just continuing to compound the foundation that was built in starting the company. As we look forward into this year, when markets are more bearish, it's actually the best time to look at opportunities and build, because things are a lot cheaper. As we look forward in 2026, you'll see us just continue to accumulate Bitcoin, being sensitive and thoughtful to how do we accumulate Bitcoin, taking into account Bitcoin per share, so it's accretive to all the shareholders, and we'll continue to use a multi-pronged strategy.

That's continuing to increase the security layer of Bitcoin, continuing to add to the liquidity in the markets, and potentially looking at ways that we can use the brand that we built and that Eric has done such a good job of getting a global platform for, to see if we can increase adoption of the underlying asset itself with some interesting partnerships that we're looking at. Across the board, we don't have a single-pronged strategy, and in markets like this, honestly, it's the best time to build and build the foundation for when the markets rebound and start growing.

Darren Aftahi (Managing Director and Senior Research Analyst)

Great. One more, if I may. Obviously, there's an appreciation aspect of Bitcoin, but anything you're thinking about doing in terms of yield as you build your Bitcoin stack? Thank you.

Matt Prusak (President and Interim CFO)

Sure, I can say it's Matt. Hi there. There's a few aspects that we think about for this. Obviously, mining is our baseline means of accumulation, but the Layer 2 and Layer 3 are both prongs of our strategy that could help us with the yield aspect of the business. Layer 2 would be more what you would call the traditional finance or TradFi way of approaching yield. This would be through different financial instruments, and Michael obviously is spearheading a lot of our capital market strategy with the traditional counterparties. There's also the Layer 3 options. You know, we've seen a Cambrian explosion of Bitcoin, DApps, decentralized applications, and the overall Bitcoin ecosystem in Q4 and into Q1. We're monitoring closely which of those partnerships could be the most accretive to American Bitcoin.

We want to pursue a very asset-light way of doing this. Our goal is Satoshis per share here, but we believe that there are some partnerships out there that we're, you know, we're looking forward to delving further into in the future, that will allow us to generate more yield on the stack above and beyond the mining.

Asher Genoot (Executive Chairman)

It's important to note, most of the people sitting on this call speaking today, have lived through the cycles of Bitcoin. We see what happens when people kind of overextend, try to get too greedy with yield. As we look at opportunities to generate yield, the core and most important principle is how do we protect the underlying Bitcoin stack? We believe that shareholders buy a share of American Bitcoin because they want us to increase that exposure year-over-year and increase their ownership of underlying Bitcoin. Any yield strategies we look at will be extremely conservative, having lived through 2022 and the most recent kind of bearish markets. Yield is great in a period of time when you're receiving it, but not great if it actually puts your underlying Bitcoin and has it being compromised.

As we think about yield, different things that we've done historically and will continue to do, is use third-party custodians, where we're not actually giving up control of the Bitcoin, we're still owning the full control of the cold wallets. Things like that, which is really, really important for making sure that the actual asset base remains protected, even if you're looking at yield-generating strategies.

Darren Aftahi (Managing Director and Senior Research Analyst)

Appreciate it, guys. Thank you.

Operator (participant)

From Clear Street, our next question comes from the line of Brian Dobson. Please go ahead.

Brian Dobson (Senior Research Analyst)

Hey, good morning. Thanks for taking my question. As you're looking ahead, how do you consider capital allocation between growing the mining business, and call it Bitcoin purchases on the open market? Is there a level where you're favoring one over the other? How might that thought process change as we approach the next halving?

Asher Genoot (Executive Chairman)

We're looking at the... If you look at Bitcoin mining and how that business has grown, we've always taken a really novel approach towards growing Bitcoin mining. Just being able to put cash out by Bitcoin miners that show up in six to 12 months isn't the most accretive way to grow. If you look at what American Bitcoin did with Vega, it was actually able to receive a call option and say, "Look, if Bitcoin is trading at a certain price in terms of hash rate, we can step into the machines and be able to generate revenue almost immediately." You saw that happen through the rapid increase of growth rate of exahash over the last year in 2025 with American Bitcoin. When we look into 2026, the core driver is increasing Bitcoin over the long term.

Any dollar that we spend that is not directly buying Bitcoin, the underwriting principle is that it will increase Bitcoin over the long term. When we think about Bitcoin mining, every dollar we spend today that would go into a miner, our underwriting principle is, at the end of that period of time when that machine is retired, did we increase the Bitcoin holdings that we otherwise would have gotten by just buying Bitcoin? Overall, as we're thinking about capital allocation, we're still increasing Bitcoin, as you see, day by day.

... slowly building day by day by day, incrementally. If you look back at the last year, there's been massive movements. Our perspective is daily dollar cost averaging is a great way to grow. We believe in Bitcoin in the long term, and when there are right and opportunistic moments where we believe that we can get a strong return on mining, we will do so. The core driver is let's increase Bitcoin on the balance sheet and when it's opportunistic to bring on mining, because the machines, we get a good structured deal, we are able to grow that, we have cheap energy costs, and we'll do so.

Eric Trump (Co-founder and Chief Strategy Officer)

I think that's what makes this business so unique, is when you looked at kind of the years in Bitcoin mining, when you had a lot of Bitcoin miners just chase exahash, sometimes you chase it at the compromise of underlying economics because that was your only way of growth. Our growth metric is simple: increase Bitcoin and increase Bitcoin for sure over the long term. When there are buying opportunities, we will look at those opportunities as a way to increase Bitcoin on the balance sheet faster than just buying Bitcoin itself. When those opportunities don't exist, we'll just keep on accumulating Bitcoin day by day.

Brian Dobson (Senior Research Analyst)

Yeah, thanks. From a higher level, you know, the debt segment has certainly been under pressure over recent months and, you know, your mining business, it distinguishes you within the segment. I guess, as you're looking at peers and competitors who've been under pressure, how do you think that market shakes out over the coming year or so?

Eric Trump (Co-founder and Chief Strategy Officer)

Brian, it's a great question. I mean, you know, at the end of the day, I think we're very different than all of our competitors, right? I mean, we mine Bitcoin. I just want this number to sink in for everybody. We mine Bitcoin at a 53% discount to spot this quarter. You know, doing so, we increased our Bitcoin holdings by 58% this quarter. We ran a 53% gross margin, right? There's no one else that can do that. In fact, frankly, when, you know, as difficulty rates fell on mining, it allowed us to mine additional Bitcoin each and every single day, right? Difficulty rates coming down actually helped us while, you know, most of our competitors kind of, you know, went dark.

You've got a lot of companies out there that, you know, are kind of flat. They haven't really done anything. They haven't increased their BTC holdings because they couldn't. This has actually been a tremendously good time for our company because we've been mining more Bitcoin, we've been maintaining our margins, and obviously, you know, the Bitcoin on our balance sheet is growing substantially. There are other benefits. There are other benefits, including tax benefits to mining at lower amounts, et cetera, that we can get into later, but this has been a fantastic period for us.

Brian Dobson (Senior Research Analyst)

Excellent. Thanks very much.

Operator (participant)

From B. Riley Securities, your next question is from the line of Fedor Shabalin. Please go ahead.

Fedor Shabalin (Research Analyst)

Thank you very much, operator, and good morning, everyone. Gents, you mentioned that assets tend to be cheap during the bear market. My question is, are you considering any M&A activity, whether that's acquiring additional sites, power capacity or maybe other strategic assets? Thank you.

Eric Trump (Co-founder and Chief Strategy Officer)

Guys, absolutely. Are we considering M&A opportunities? Absolutely. I think we've developed the greatest brand in Bitcoin. I think we have the best name in Bitcoin. I think we have the best story to tell in Bitcoin. Obviously, you see the results today. I would argue that there's not another company that, you know, that can match what we've done. I can tell you there's a lot of people coming out of the woodwork, you know, to partner up with us in some way, shape, or form, on a lot of ends, right?

On the energy end, obviously on the data end, you know, whether or not we explore those or we stay very pure to just our core, we are doing fantastically well, and if there's a great opportunity that's accretive, you better believe we'll run toward it faster than anybody. I mean, I said this in my opening remarks, we are a company that's less than six months old. I mean, we literally got listed on the Nasdaq, you know, less than six months ago. In totality, we're less than one year old. I mean, we literally formed this company less than one year ago, you know, obviously, every day you see us climbing that stack. We're now the 17th largest public Bitcoin accumulator.

You've probably seen a lot of my tweets go out there, but it feels like every week, we're passing another company and passing another company and climbing that ladder. We're very excited. If that means M&A activity, and us acquiring others, us partnering with others, other, you know, you know, from any standpoint, whether it be the stat standpoint, whether it be the energy standpoint, whether it be the mining standpoint, I think there's tremendous opportunity for us. We're an incredibly hot brand and incredibly hot company, and I think that's almost a definite for the future in some capacity.

Fedor Shabalin (Research Analyst)

Thank you. This is helpful. My follow-up is a few questions on related to performance. If you can just expand on the key drivers behind the gain on derivatives in the fourth quarter, I see a nice increase quarter-over-quarter. This is one. The second, well, what is your EBITDA breakeven Bitcoin price currently, if you can provide color on this? Thank you.

Eric Trump (Co-founder and Chief Strategy Officer)

As we think about the way that we've been expanding our Bitcoin, and our Bitcoin mining, there are scenarios in which we've been able to basically increase the Bitcoin mining without actually outlaying cash, we're able to receive the upside of Bitcoin appreciation, meanwhile, being able to compound Bitcoin itself. That's where you see some of those derivative trades coming in. We've shared this before, in some scenarios when we buy the miners, we're able to actually use the Bitcoin, lock it in at a mark-to-market price, be able to take the full upside of that Bitcoin if we wanted to buy it out in two years with cash. If Bitcoin goes down, then we can kind of forego that Bitcoin and be able to use that cash to buy Bitcoin at the market price.

That's where you'll see some of the fluctuations on kind of, on the derivative side that reflect some of those transactions that we do in the most accretive way to be able to grow Bitcoin mining rather than just outlaying cash out there.

Fedor Shabalin (Research Analyst)

Thank you very much. Continue. Best of luck.

Operator (participant)

From H.C. Wainwright, your next question comes from the line of Kevin Dede. Please go ahead.

Kevin Dede (Managing Director and Senior Technology Analyst)

Morning, Asher, Mike, Eric, thanks for having me on the call. You folks talked to this great discount in mining versus spot. Can you elaborate on your position with Bitmain now as that contract stands, and how you might tap it, and how long that option might last?

Asher Genoot (Executive Chairman)

As you know, we've been in this space for a long period of time. We have great relations with every major manufacturer in the space. Bitmain has been a great partner of ours, but we continue to have conversations with all of the manufacturers and producers of this equipment. At the end of the day, the suppliers know, folks who are close to us know, we will optimize for the best deal to do what's best for shareholders. We're looking at continued accretive and creative structures with Bitmain, in addition to other manufacturers as well. The markets are very good, as we mentioned, when there's not a lot of people buying these machines, 'cause then we can get really creative in being able to build at a lower cost in a more creative structure.

More to come on that note, but we're continuously looking at ways to grow in creative, in a creative ways that are similar to what we've done historically. We'll continue to do things that are new and novel to drive shareholder value and Bitcoin accumulation over the long term.

Kevin Dede (Managing Director and Senior Technology Analyst)

Asher, do you see Bitmain building a U3 version of the S23?

Asher Genoot (Executive Chairman)

Potentially, if we want to go build a large facility, but that's to come. I think right now they have different form factors. Obviously, they've rolled out two U-factors, three U-factors, but before American Bitcoin on the Hut 8 side, we really worked with them to create the direct liquid chip U-factored machine that we deployed at Vega and we're using now. We continue to not only look at being consumers of Bitcoin, miners and ASICs, but also being technological innovation partners with them and being able to help drive where the technology and innovation goes as we build the infrastructure.

Kevin Dede (Managing Director and Senior Technology Analyst)

You mentioned custody giving you some flexibility on yield. Can you speak to specifically who you're custodying with? What sort of, I guess, what dimension of flexibility you have, and whether or not you plan on diversifying your custody positions?

Asher Genoot (Executive Chairman)

Yeah, our custody partners are great. We have Anchorage Digital, we have Coinbase, we have BitGo, we have some of the largest custody partners out there in the world today. When we talk about yield generation opportunities, what we mean is, a lot of times when you need to generate yield, you actually have to send your Bitcoin to that counterparty, and then they give you yield. We're not okay with rehypothecation. When we look at potential yield generator opportunities, we are able to maintain control of the custody account where the Bitcoin is held, and then we have a triparty agreement in looking at different yield generating opportunities that we may underwrite. That's the key.

What we've learned in this ecosystem is counterparty risk is the bigger risk you take on if you want to generate yield, and we want to always be in control of the keys of our wallets. That's what we mean by we are able to control the custody of the actual coins, meanwhile, looking at opportunities where we can generate yield on top of them.

Kevin Dede (Managing Director and Senior Technology Analyst)

Would you mind commenting a little bit on your pool strategy, you know, vis-a-vis layer, your Layer 3? Is there a chance that you might develop your own or design your own and obviate, you know, intermediaries there?

Asher Genoot (Executive Chairman)

We work with partners today. Foundry, for example, is a strong partner of ours. They're a U.S.-based pool. We really believe that more and more hash rate should be securitized by the U.S. That's obviously a big portion of why we continue to invest in America to be a security backbone of the Bitcoin network. When you look at operating as a pool, ultimately what you're taking is probability and volatility risk. As a business, do we need to add another layer of risk exposure, or do we rather know how many X of hash are we producing and how many Bitcoin does that mine? We're looking at a variety of opportunities within the third ecosystem layer.

We definitely have pool operators looking to partner into JV, but there's a whole host of opportunities that are much broader, that touch a much larger base. It's adoption around not just Bitcoin mining, but Bitcoin as an asset class itself, and figuring out ways we can help be a vehicle and help be an enabler for more adoption of Bitcoin on a national and global level.

Matt Prusak (President and Interim CFO)

Yeah, just to add on that. I think as you look at Layer 3, I think building an ecosystem, accelerating Bitcoin adoption, which is one of our North Stars, is a thing where if we wanted to go fast in any of these ventures, we could go alone. If we want to go far as an ecosystem, we have to go together. We're always communicating with different partners, building every part of the value chain to try and find what the most accretive way to do that is. As we think about our shareholder base and the folks that we're working on behalf of, we want to make sure that we're doing everything so that they can capture the value that we hope to create within the Bitcoin ecosystem.

Kevin Dede (Managing Director and Senior Technology Analyst)

Last one, Asher, I promise. How long do we have to wait before we'll know if mining goes into the Corpus site?

Asher Genoot (Executive Chairman)

I like that that's a double-sided question on both sides. American Bitcoin has a lot of interesting opportunities. If you actually look at the portfolio Hut 8 has today that's dedicated to mining, I mean, we have about 700 MW that's still dedicated to Bitcoin compute, and American Bitcoin is really utilizing only half of that today. There's a lot of opportunity and incremental growth within the existing portfolio that exists. There's other opportunities, as Eric had mentioned, that American Bitcoin is looking at from a growth and energy perspective. I mean, as you look at American Bitcoin's growth from a mining perspective, there's tons of avenues of growth, tons of energy opportunities, and it's not one site that allows them to grow.

Hope that's kinda gives you clarity on American Bitcoin's potential and its growth here. Ultimately, at the end of the day, American Bitcoin is not looking at growth for growth's sake. American Bitcoin is very clearly looking at accumulating Bitcoin over the long term, and that's why all the deals that you see American Bitcoin doing will be a lot more novel and creative in terms of how do we actually structure that upside, and how do we make sure that any investments that we make, that by the time those investments are finished, we actually accumulate more Bitcoin at the end of that, rather than just buying it at the market today. I think if you look at a lot of mining historically, probably for many companies, buying Bitcoin would have just been a better bet.

American Bitcoin was structured and built as a company to fundamentally approach Bitcoin accumulation in a very, very different way. It's not a treasury company, it's not a Bitcoin mining company. It is a multi-pronged Bitcoin company that looks at securitizing the Bitcoin network, adding liquidity to the Bitcoin ecosystem, and increasing adoption of the underlying asset across the world.

Kevin Dede (Managing Director and Senior Technology Analyst)

Thank you so much, gents, for entertaining all my questions. I really appreciate it.

Operator (participant)

From BTIG, you have a question from Greg Lewis. Please go ahead.

Gregory Lewis (Managing Director and Energy and Infrastructure Analyst)

Good morning, everybody, and thanks for taking my question. you know, Asher and Michael, I know we've been talking to this a little bit, but just kinda curious, you know, at a high level, you know, as we think about Bitcoin mining as a business, there's definitely been an ongoing changing of the guard, right? Where some of the initial leaders are pivoting out. This is a huge opportunity for American Bitcoin as we stand here. I guess a couple questions around that. One is, you know, just given the fact that, you know, rig production doesn't really stop, right? Whether it's Bitmain or Canaan or Bitdeer, we're seeing more or other MicroBT, others. The companies are continuing to produce more mining rigs. That looks like it's pressuring rig pricing.

I guess when you talk about being countercyclical, how are you thinking about the opportunity to do rig orders? Also, how has the market evolved, just given your position around the ability to do some of that maybe asset financing? Is that something that we're thinking about, if we were to do a big rig purchase? I guess I'm curious on those two things.

Asher Genoot (Executive Chairman)

Hi, Greg. You're absolutely right. When it comes to the supply cycle for the manufacturers, the manufacturers have to commit to wait for allocations well in advance, throughout the year, and by the time they take delivery, it's usually two quarters behind, where they're taking inventory risk, where they're looking through to the environment of where Bitcoin price is and where the demand in the market is. Oftentimes, the manufacturers will sit on inventory, not reflective of where the current demand or the price of Bitcoin is trading, which is an incredible opportunity for us to be able to look to work strategic deals in real time or inventory that is in supply and can be deployed near immediately.

When we look at how we structure these deals, we're very objective in what we're solving for, that's ultimately, are we adding more Bitcoin per share? Are we adding more Bitcoin to our balance sheets? Some of the structures we've done in the past is how we can leverage our Bitcoin collateral to use the Bitcoin to then purchase the ASICs, take title of the ASICs. We benefit from the mining yields from the ASICs, with the optionality to be able to buy back that Bitcoin, should Bitcoin appreciate throughout that period of two years or longer. We maintain both the upside of the Bitcoin appreciation, as well as we receive the net mined Bitcoins from the machine purchases.

When you look at American Bitcoin, structurally, not only are so many players leaving the market and it's creating a huge open space, but structurally, it is almost impossible for a new company and other companies to compete because of the symbiotic relationship with Hut 8. Hut 8 loves the demands that they're able to receive from American Bitcoin because it allows Hut 8 to develop more sites at and be able to de-risk the development risk. From an American Bitcoin side, you have some of the lowest cost power that you're getting with American with Hut 8 managing the infrastructure stack. I mean, something we haven't even talked about historically is if we think about mining, we went from mining and running 1,000 or two machines five years ago, to now running hundreds of thousands of machines.

Eric Trump (Co-founder and Chief Strategy Officer)

The software we're using is incredible. Not only are we curtailing and we're trading around energy prices, but our team has actually implemented our own internal AI bots, where we're actually able to look at all of the API and data we're getting from every single machine, optimize those. People in the field are able to ask their chat bots, where are they seeing areas for efficiency and improvement on the sites? Here, as Mike mentioned, you have a financial structural advantage because of where we are, who we are, and the demand that we're driving because of the relationships we've built over such a long period of time. You have an infrastructural advantage because of the scale of the infrastructure that Hut 8 is able to provide as a partner.

You have a technological advancement because of all of the investments that we've been making in the technology of operating this at a world-class status. Lastly, you have some of the lowest SG&A at American Bitcoin in doing all of this together, it's very, very difficult for others to compete, whether it be the largest miners in the world who now are leaving or the new incomers. American Bitcoin was built to be different, and it is different, and the numbers speak for themselves quarter-over-quarter.

I just want to double-click on that technology piece. We've come a long way from the days where we had to walk down the aisles and look for the one red light to troubleshoot. To Asher's point, we now use AI mapping, and all of that is a lot more streamlined and automated these days. Also, when it comes to Bitcoin mining, it's very simple. We only increase capacity when it's profitable, and we've been doing so very profitably. This quarter, our average realized energy cost was $35.7 megawatt an hour, or said differently, $0.0357.

All right.

Brian Dobson (Senior Research Analyst)

Yeah.

Eric Trump (Co-founder and Chief Strategy Officer)

Yes.

Brian Dobson (Senior Research Analyst)

Great. Thanks, guys.

Eric Trump (Co-founder and Chief Strategy Officer)

Guys, I think that's it for the analyst questions. You know, maybe I'll just wrap by saying this. I think one thing that we didn't touch on this call, was our SG&A. I come out of the real estate world, you have to be SG&A conscious. If you look at the miners across the sectors, the SG&A costs that they're running, frankly, some of them are atrocious. We decreased our SG&A costs roughly 30.77% to 9% SG&A this quarter. Unbelievable. We were at 13%, which was by far the lowest in class, at least that we know of, and many times lower than some of our competitors. Now we're single digits. We're at 9% SG&A for fourth quarter.

That just speaks to this team. It speaks to how efficiently we're going to run. There's a lot of questions about mining. I mean, we have some of the best energy procurement anywhere, and that's because of, obviously, the relationship with Hut 8. They do it as well as anybody. We have unlimited potential in terms of bringing additional mining into this company. Obviously, Mike and Asher did a great job speaking to the cost of machines and some of the kind of the novel approaches that we can take to bring more mining online if we choose to do so, and if it's accretive, ultimately, to shareholders. Again, we increased our BTC holdings 58% this quarter. We mined at a 53% discount, and American Bitcoin is absolutely flying.

I can tell you, the brand that we've created is something incredibly special. There's nowhere I go that people don't mention American Bitcoin. To be able to do this with great friends, some of the smartest people in the world, but to be able to do this in America, largely anchored in the great state of Texas, with American energy, with American infrastructure, this is a company that I'm incredibly proud of. This is a company that I put my heart and soul into, and I can tell you this team is gonna continue to make everybody incredibly proud. Congratulations on these results, guys. I could not be more proud of everything we've accomplished in such a short time, and we will continue to sprint ahead.

Thank you very much, everybody, on this call, and we look forward to speaking to you next quarter.

Michael Ho (Co-Founder and CEO)

Thank you.

Operator (participant)

Thank you again for joining us today. This does conclude today's conference call. You may now disconnect.