Why the Trump family-backed American Bitcoin is a different sort of power play
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The Trump family has a bitcoin mining company that started trading on the Nasdaq Wednesday.
Why it matters: Running mining rigs is one of the most policy-sensitive corners of the crypto industry, with its number one cost input being the price of power.
Catch up quick: American Bitcoin, backed by Eric Trump and Donald Trump Jr., began publicly trading on Wednesday following a merger with a small-cap bitcoin miner, which allowed it to skip a traditional IPO process.
- It opened trading at around $8, leaping to $13 and then settling down to just under $10 by midday. At its height Wednesday it had a market cap of over $7.5 billion, per the Financial Times. It's trading around $6.35 midday Thursday.
How it works: According to an investor presentation, American Bitcoin has a three-pronged strategy to provide leadership in the U.S. bitcoin industry:
- Mine bitcoin. That is, the classic giant data centers that have generated so much discussion.
- Accumulate bitcoin. The company plans to use its capital efficient access to the public markets to buy bitcoin as well as mine it, which makes it a partial digital-asset treasury firm. It's already started buying.
- "Amplify value via brand, audience and treasury." This is the most nebulously defined plank, but also the most familiar to Trumpworld watchers: hype.
Zoom in: Later in the presentation the company talks about building platforms and monetizing its surface area in the industry.
- This could mean entering into some sort of software as a service play, offering a way for lots of smaller miners to enhance their efficiency.
The big picture: The Trumps are entering the industry as competition has gotten fierce.
- The collective computing power that miners are throwing at the Bitcoin network has never been higher. Energy prices are costly and transaction fees are low. It's a tough business and getting tougher.
Between the lines: The cost of energy is crucial to a mining operation.
- Texas is the industry capital in the U.S. due to its cheap power and a less regulated energy market.
What we're watching: Nukes. We'll be curious to see if American Bitcoin comes out ahead of other miners in cutting deals with new nuclear plants, if they start getting permits.
- The Trump sons announced American Bitcoin earlier in March via their partnership with Hut 8 (now located in Miami ever since a 2023 merger).
- In May, the president signed an executive order to foster nuclear power expansion in the U.S., which would be a boon for data centers of all kinds.
- American Bitcoin is currently touting its partnership with Hut 8 as its source for market-beating power deals.
💭 Our thought bubble: This could be yet another play to profit off of the presidency, but bitcoin mining takes a lot more elbow grease than running a meme coin or a second-tier stablecoin.
