American Bitcoin has witnessed a staggering decline, erasing $500 million in shareholder value since September, as indicated by a recent Forbes report. The company’s stock, once valued at $13.2 billion upon its Nasdaq debut on September 3, has plummeted by 92% since then. At that time, American Bitcoin held only $270 million worth of Bitcoin, raising questions about its sustainability and strategic decisions.
The company’s ambitious plan to buy more Bitcoin involved dumping 149 million shares. Initially, Eric Trump promoted American Bitcoin as a mining operation that would produce Bitcoin at an estimated cost of $57,000 per coin. However, as costs soared to approximately $92,000 per Bitcoin—including expenses related to machinery, marketing, and capital allocation—the diminishing margins became even more apparent when Bitcoin prices decreased.
The mechanics of American Bitcoin’s share dumping reveal a troubling trend. In the first 27 days post-launch, the company sold 11 million shares for $90 million, averaging $8 per share. It followed this with another sale of 7 million shares for $44 million at around $6 per share, and a further disposal of 47 million shares for $106 million, resulting in a dismal average of $2.25 per share. By March 25, the company amassed $111 million from selling another 84 million shares.
Overall, American Bitcoin has reportedly spent roughly $525 million since its inception on cryptocurrency that is now valued at $390 million, leading to a significant loss of $135 million in shareholder value.
In a separate financial maneuver, American Bitcoin committed to a $330 million fleet upgrade, striking a deal that does not require upfront cash payments. Instead, the company pledged Bitcoin to secure options on this upgrade. If Bitcoin prices recover, American Bitcoin can pay in cash and maintain ownership of the pledged cryptocurrency. Conversely, if prices remain low, the pledged Bitcoin will be forfeited. Since making this purchase, Bitcoin prices have fallen by 30%.
As of March 25, the company had pledged 3,090 Bitcoin while only having mined approximately 1,800. This poses a critical risk; if prices do not improve before the options expire in August 2027, all mined Bitcoin could effectively be lost.
Evidently, a substantial portion of American Bitcoin’s operational strategy is not centered on mining but rather on raising capital through share sales to acquire Bitcoin from the open market. The company has just two full-time employees, as its operational functions—such as managing real estate and data centers—are outsourced. With Bitcoin prices having dropped 31% since the company’s launch, it faces steep challenges. The current all-in mining cost remains at $90,000 per Bitcoin, exceeding the current market value by $13,000, and shares are down 29% year-to-date.
As American Bitcoin grapples with these operational and financial hurdles, its ability to navigate the volatile landscape of cryptocurrency remains uncertain. Investors and analysts alike are closely monitoring the company’s moves as it seeks to recover from these significant losses and stabilize its business model.
