Investors lose $500M on American Bitcoin stock

Retail investors in American Bitcoin have lost around $500 million following a sharp decline in the company’s stock price. According to Forbes, shares fell by 92% after the company’s Nasdaq debut in September 2025. Meanwhile, co-founder Eric Trump saw his net worth increase. The case highlights structural risks in crypto mining investments.

American Bitcoin shares collapsed after IPO

After listing at a $13.2 billion valuation, American Bitcoin stock declined significantly.

Forbes reported that Eric Trump’s wealth rose from $190 million to $280 million. He did not invest personal funds into the business.

The company claimed a Bitcoin production cost of $57,000–$58,000 per coin. However, this figure excluded capital expenses.

True mining costs were higher than reported

The full cost of mining is much higher. Including capital expenditures, it reaches $90,000–$92,000 per BTC.

Key factors:

• operational costs only in initial estimates
• expensive mining hardware
• depreciation and marketing

The business structure also raises concerns. In partnership with Hut 8, American Bitcoin gained access to equipment but not infrastructure.

Additionally:

• data centers are controlled by the partner
• operations are outsourced
• only two employees are on staff

This weakens the company’s operational foundation.

Investors may rethink strategies

The situation may affect investor confidence in mining stocks.

Possible outcomes:

• increased caution among retail investors
• reassessment of mining company valuations
• greater scrutiny of cost structures
• reduced interest in IPOs

The company also faces financial risks. It purchased mining equipment worth $330 million using Bitcoin as collateral.

Mining remains market-dependent

American Bitcoin raised capital through equity issuance and used it to buy Bitcoin.

According to Forbes:

• $525 million spent on BTC purchases
• current value around $390 million
• losses of about $135 million

Around 70% of holdings were acquired, not mined. This signals reliance on equity-driven strategies.

The business model is based on arbitrage:

• issuing shares at high valuations
• buying Bitcoin with raised capital

In a declining market, this model becomes fragile. If trends persist, the company may lose its pledged 3,090 BTC.

The case illustrates broader risks in the mining sector. Profitability depends on both market conditions and financial structure.

Read also: Trump-linked miner enters top Bitcoin holders