Abits Group: A Micro-Cap Bitcoin Miner With Real Revenue and Room to Run

Abits Group is a BVI-incorporated, Hong Kong-headquartered company that operates bitcoin mining and hosting infrastructure through its U.S. subsidiary, Abit USA, Inc. The Duff, Tennessee facility is a self-owned 12MW operation with ~500 PH/s hashrate — the primary revenue driver. The Memphis, Tennessee hosting joint-venture with Mendenhall LLC launched April 2025, running 2,600 Antminer S19XP units producing ~300 PH/s, with ABTS receiving 66.5% of JV profits. Combined hashrate is approximately 800 PH/s. The company's competitive advantage is electricity costs below $0.04/kWh, placing it in the bottom quartile for North American miners. A water well investment further reduced site costs. The Memphis JV is still early-stage and contributed $0.43M in profit in Q3 2025 alone, demonstrating rapid payback potential.

LTM Revenue: ~$7.38M. Q3 2025 Revenue: $1.61M (+27.5% YoY). H1 2025 Revenue: $3.99M (+8.9% YoY). FY2024 Revenue: $6.71M (+299% YoY). Q3 2025 Operating Profit (pre-depreciation): $1.19M (+207% YoY). Q3 2025 Loss Before Tax: ($0.29M) vs ($0.66M) prior year — losses narrowing rapidly. Total Assets: $13.04M including $10M mining equipment and $2.49M in BTC holdings. Shareholders' Equity: $9.73M. Cash: $94K (critically low, offset by BTC holdings). Debt: $3.0M secured loan at 12% simple interest ($360K/yr). BTC Mined: 13.61 BTC in Q3 2025, 40.27 BTC in H1 2025 (down from 61.53 H1 2024 post-halving). Market cap of ~$7-10M trades below book value of $9.73M.

ABTS competes in the North American bitcoin mining space against Marathon Digital (MARA), Riot Platforms (RIOT), CleanSpark (CLSK), and dozens of smaller operators. At ~800 PH/s combined hashrate, ABTS is tiny compared to Marathon (~50 EH/s) or Riot (~30 EH/s). However, ABTS's sub-$0.04/kWh electricity costs are genuinely competitive — many larger miners pay $0.04-0.06/kWh. The company's edge is cost efficiency at small scale rather than raw hashrate. The Memphis hosting JV model is capital-light compared to building new facilities, allowing growth without massive upfront capex. Key competitive risks: S19XP miners are aging (not latest-gen), and as network difficulty rises, newer hardware will be needed to maintain profitability.

Bull catalysts: (1) Memphis JV ramp — only online since April 2025, already contributing $0.43M quarterly profit with room to optimize. (2) Revenue growth trajectory — 27.5% YoY in Q3, approaching $7.4M LTM. (3) Operating leverage — fixed cost base means incremental BTC production drops to bottom line. (4) Institutional discovery — FNY Investment Advisers disclosed a new position in Q3 2025. (5) Bitcoin price tailwinds — fixed cost structure amplifies any BTC price appreciation. (6) Recent 54% price surge (Feb 20) suggests renewed market attention. Bear catalysts: (1) $94K cash with $30K/month debt service — liquidity crisis risk. (2) Bitcoin price decline would compress margins immediately. (3) Nasdaq compliance risk — reverse split history, must maintain $1.00 minimum.

• Critically low cash reserves ($94K) — relies on BTC liquidation to fund operations and debt service
• Expensive debt: $3M loan at 12% interest ($360K/year), secured against all Duff facility assets
• Bitcoin price dependency — revenue and profitability are almost entirely a function of BTC prices
• Foreign Private Issuer with less rigorous reporting — no quarterly 10-Q filings, only voluntary disclosures
• High volatility (beta 2.82) — stock has traded between ~$2-5 in recent weeks
• Equipment aging — S19XP miners are not latest generation; future capex needed as network difficulty rises
• Post-halving headwind — BTC mined dropped from 61.53 (H1 2024) to 40.27 (H1 2025)
• Dilution risk — accumulated deficit of $79.5M suggests long history of losses and potential future capital raises