LM Funding’s Hybrid Strategy Tested in Volatile Crypto Market

TAMPA, FL – December 04, 2025 – While the broader cryptocurrency market reeled from a November “bloodbath” that erased nearly $1 trillion in value, Bitcoin mining firm LM Funding America, Inc. (NASDAQ: LMFA) projected an image of stability. In its latest operational update, the company announced steady Bitcoin production and a strategic move that generated revenue not from mining, but from selling power back to the grid. The report highlights a multi-faceted strategy that combines cryptocurrency mining, energy arbitrage, and a legacy specialty finance business—a hybrid model now facing a significant test in one of the sector's most challenging periods.

LM Funding’s announcement detailed the mining of 6.9 net Bitcoin in November, a slight dip from the previous month. However, the company’s CEO, Bruce M. Rodgers, attributed this to a calculated decision. “Bitcoin production was slightly lower as we took advantage of a late-month spike in power prices and curtailed mining to sell energy back to the grid, generating approximately $76,000 in curtailment and energy sales,” he stated. This maneuver underscores a critical, and increasingly vital, tactic for survival and profitability in the capital-intensive world of Bitcoin mining.

Beyond Mining: The Energy Arbitrage Hedge

For many outside the industry, Bitcoin mining appears to be a straightforward digital gold rush: use powerful computers to solve complex problems and earn cryptocurrency. The reality, however, is a sophisticated dance with global energy markets. LM Funding’s ability to generate $76,000 in November by not mining is a prime example of this evolution. This practice, known as power curtailment or energy arbitrage, is becoming a cornerstone of modern mining operations.

The company operates mining facilities in Oklahoma and Mississippi, regions with energy market dynamics that allow for such strategies. By entering into flexible power agreements, miners like LM Funding can act as a large, controllable load on the electrical grid. When energy demand and prices are low, they run their machines at full capacity. But when demand surges—during a heatwave or cold snap—and wholesale electricity prices spike, they can power down their operations and sell their contracted energy back to the grid, often at a significant profit. This provided a $152,000 revenue stream for the company in the third quarter of 2025 alone.

This strategy serves multiple purposes. Financially, it creates an alternative revenue stream that acts as a natural hedge against Bitcoin’s notorious price volatility. While the value of a mined Bitcoin can swing wildly, revenue from energy sales is tied to more predictable, albeit spiky, terrestrial market forces. Operationally, it transforms a massive energy consumer into a valuable partner for grid stability. In an era of increasing strain on power infrastructure, particularly with the rise of intermittent renewable sources, the ability of miners to rapidly reduce their load provides a crucial demand-response service. This symbiotic relationship is being recognized by lawmakers in states like Oklahoma, which have enacted tax incentives for miners who participate in such load-balancing programs.

A Tale of Two Businesses: Diversification or Distraction?

Further complicating the picture is LM Funding's dual identity. Founded in 2008, long before its pivot to cryptocurrency, the company operates a “technology-enabled specialty finance business.” This legacy segment provides funding to nonprofit community associations by purchasing their delinquent accounts, managing the collection process, and earning revenue from fees and interest.

In the third quarter of 2025, this business contributed approximately $141,000 to the company's $2.2 million in total revenue. While a modest figure, it represents a stream of cash flow completely disconnected from the crypto market's turbulence. In a sector where many pure-play miners have been forced to sell their Bitcoin holdings to cover operational costs, this small but stable income could provide a strategic cushion. The question for investors is whether this diversification represents a resilient business model or a distraction from the company's primary focus on becoming a significant player in Bitcoin mining.

While the company has described its finance arm as taking a “backseat,” its continued operation suggests a deliberate attempt to maintain a foothold in a more traditional and predictable market. This hybrid approach sets it apart from competitors who have gone all-in on digital assets, offering a unique, if complex, risk profile.

Navigating a Market of Giants

Despite its innovative strategies, LM Funding remains a small fish in a vast and competitive ocean. The company’s energized hashrate of 0.71 exahashes per second (EH/s) is dwarfed by industry giants. For perspective, competitor CleanSpark reported an operational hashrate of 150 EH/s and mined 587 Bitcoins in November, while Riot Platforms produced 428 BTC with a hashrate of 36.6 EH/s. These larger players hold Bitcoin treasuries in the tens of thousands, compared to LM Funding’s 301.8 BTC.

The current market environment, described by analysts as the “harshest margin environment” for miners due to falling Bitcoin prices and record-high network difficulty, is particularly brutal for smaller operations. The break-even cost to mine a single Bitcoin in November was estimated to be between $90,000 and $110,000 for many, squeezing profits to near zero.

In this context, LM Funding's plan to energize a 2-megawatt immersion expansion in Oklahoma, projected to boost its hashrate by nearly 10%, is a necessary step for survival and growth. Immersion cooling technology allows for greater machine efficiency and overclocking, which can improve profitability. However, it is an incremental move in a landscape defined by massive consolidation and diversification. Larger competitors are not only expanding their mining capacity but are also pivoting to become broader digital infrastructure companies, leveraging their power capacity for high-performance computing (HPC) and Artificial Intelligence (AI) workloads—a strategic shift LM Funding has yet to announce.

This scale difference is reflected in the market’s valuation of the company. On November 30, LM Funding’s stock closed at $0.99 per share. On that same day, the company calculated the value of its Bitcoin holdings to be approximately $2.25 per share. This significant disconnect suggests that investors may be heavily discounting the stock due to its small scale, the intense competitive pressures, or general bearish sentiment on the mining sector's long-term profitability. For LM Funding, closing this valuation gap will depend on proving that its disciplined approach and hybrid strategy can deliver sustainable growth in a market that currently favors scale above all else.