American Bitcoin Secures 44% Implied Discount Mining Equipment Procurement Agreement from Bitmain Using BTC as Collateral
American Bitcoin disclosed that it has obtained a mining equipment procurement agreement from Bitmain with an implied discount of approximately 44% by using BTC as collateral.
In February of this year, the company purchased 11,298 Bitmain S21 XP ASIC miners for approximately $49.4 million, with a total hash rate of about 3.05 EH/s. 80% of the payment was completed by pledging 314 BTC, with a two-year redemption arrangement set up.
The BTC collateral in the agreement is valued at approximately $125,900 per coin (while the market average at that time was less than $70,000). If the BTC price is higher than the agreed valuation after two years, cash can be used for redemption while retaining the upside; if lower, redemption can be waived, with Bitmain bearing the depreciation loss.
As of March 31, the company has pledged a total of 3,090 BTC to Bitmain (fair value approximately $211 million), corresponding to a mining equipment procurement liability of about $364 million.
Source: Public Information
ABAB AI Insight
American Bitcoin was previously founded by former Bitmain executives and seasoned mining professionals. This agreement continues its path of 'using BTC itself as leverage to procure mining equipment,' similar to MicroStrategy's strategy of financing with Bitcoin collateral, but further embeds the collateral directly into the hardware supply chain, forming a closed-loop capital cycle.
In terms of capital path, the company obtains mining equipment at far below market prices through high valuation collateralization of BTC, essentially exchanging the potential upside of Bitcoin for current hash rate expansion. Funding shifts from direct cash purchases to a collateral + redemption hybrid structure, motivated by maximizing hash rate deployment speed during Bitcoin bull market cycles while partially transferring price decline risks to Bitmain.
Similar to how several North American mining companies used BTC collateralized loans to expand during 2021-2022, and similar structured financing between companies like Core Scientific and suppliers, the Bitcoin mining industry is currently transitioning from pure cash expansion to a model of collateral leverage + supply chain binding control.
Essentially, this represents capital concentration: through BTC collateral agreements, pricing power shifts from traditional cash purchases to a coalition of Bitcoin holders and mining equipment manufacturers, with the mechanism being that high agreement valuations amplify leverage effects, allowing Bitcoin's upside to remain within the company while downside risks can be selectively transferred, thus forming a stronger hash rate accumulation capability during industry cycles.
ABAB News · Cognitive Law
True leverage experts use the appreciation potential of assets to buy the tools that produce them.
When collateral valuation is far above market price, the risk shifts from the buyer to the seller.
In a Bitcoin bull market, the smartest capital is always using Bitcoin itself to mine more Bitcoin.