The True Value of LM Funding America Inc. (NASDAQ: LMFA) Infrastructure-Linked Debt

In capital-intensive industries such as Bitcoin mining, the quality of debt often matters more than its absolute size. The key issue is whether leverage merely supports short-term liquidity or is directly tied to productive infrastructure that generates long-term value.

For LM Funding America, Inc. (NASDAQ: LMFA), a significant portion of its outstanding debt is directly linked to its owned Bitcoin mining infrastructure. This infrastructure not only supports ongoing operations but also serves as a value-creation engine through margin expansion, Bitcoin production, and treasury accumulation.

Defining Infrastructure-Linked Debt

Infrastructure-linked debt refers to borrowings used to finance or stabilize assets capable of generating economic output. In LMFA’s case, this output is Bitcoin mined through owned physical infrastructure, including mining sites, power access, and deployed hash rate.

As of September 30, 2025, LMFA reported approximately $7.82 million of net interest-bearing debt. Importantly, only part of this total is tied directly to revenue-generating mining infrastructure, with the core component concentrated in one primary lending relationship.

Core Infrastructure Debt: SE & AJ Liebel Loans

The most significant infrastructure-correlated debt consists of two secured loans from SE & AJ Liebel Limited Partnership:

• $5.0 million loan, maturing August 6, 2026
• $1.3 million additional loan, maturing September 15, 2027
• Interest rate: 12% per annum
• Collateral: Bitcoin, with a required collateral value of at least 110% of outstanding principal

Together, these loans account for over 80% of LMFA’s total debt and form the backbone of its infrastructure financing. Although collateralized by Bitcoin, the economic purpose of these borrowings is tied to LMFA’s mining infrastructure, not speculative activity. The capital has been used to support the operation, stabilization, and scaling of owned mining assets, ensuring continuity of Bitcoin production and avoiding forced asset sales during periods of volatility.

By contrast, the remaining debt serves mainly operational needs. The $1.5 million Brown Family Enterprises loan (11%, maturing March 2026) supports short-term liquidity, while the approximately $150K unsecured Imperial PFS facility is minor in scale. These obligations function as working capital rather than infrastructure leverage and do not directly drive long-term asset value.

Infrastructure as a Value Driver

LMFA’s strategy centers on owning and operating its mining infrastructure, including facilities in Oklahoma and Mississippi with total capacity of approximately 24 MW. Ownership delivers meaningful advantages: lower operating costs through the elimination of hosting fees, more predictable power economics, greater operational control, and improved mining margins—particularly during favorable Bitcoin price environments.

In this context, infrastructure-linked debt functions as productive capital rather than a balance sheet burden. Leverage supports assets capable of generating Bitcoin at costs meaningfully below market prices, creating a reinforcing value cycle: debt finances infrastructure, infrastructure enables Bitcoin production, and Bitcoin generation strengthens the balance sheet through cash flow and treasury accumulation.

Infrastructure Valuation as a Replacement-Cost Anchor

Industry benchmarks suggest that power and energy infrastructure is typically valued at approximately $400,000–$450,000 per megawatt (MW) of installed capacity. Applying the upper end of this conservative baseline to LMFA’s 24 MW footprint implies an infrastructure value of roughly $10.8 million on a replacement-cost basis.

Notably, this valuation framework reflects only the physical infrastructure itself. It excludes Bitcoin holdings, ongoing mining cash flows, and the optional upside from selling excess electricity back to the grid. As such, it provides a tangible asset-value anchor that highlights a potential disconnect between LMFA’s infrastructure footprint and how the market currently prices the company.

A Reframed View on Risk: Why Infrastructure-Linked Debt Is Manageable

Although mining-related leverage is often viewed as high-risk, LMFA’s current debt profile suggests that embedded financial risk is relatively contained.

First, most infrastructure-linked debt is collateralized and asset-backed, primarily through Bitcoin holdings with a required 110% collateral buffer. More importantly, LMFA’s owned infrastructure continues to generate Bitcoin, which can be used to service debt or reinforce collateral levels—reducing reliance on external capital markets.

Second, while stated interest costs appear elevated, they largely reflect borrowing conditions from a more restrictive rate environment. With the Federal Reserve having initiated an easing cycle and markets increasingly pricing in further rate cuts into 2026–2027, LMFA may benefit from improved refinancing conditions over time.

Finally, the purpose of the debt limits risk. These borrowings fund productive, revenue-generating assets rather than speculative expansion. Rising Bitcoin prices do not increase the debt burden but can materially enhance cash flow and treasury value, improving balance sheet flexibility.

Taken together, LMFA’s infrastructure-linked debt appears less a structural vulnerability and more a form of measured, opportunistic leverage—aligned with productive assets, collateral protection, and a supportive macro backdrop.

About LM Funding America

LM Funding America, Inc. (Nasdaq: LMFA), operates as a Bitcoin treasury and mining company. The Company was founded in 2008 and is based in Tampa, Florida. The Company also operates a technology-enabled specialty finance business that provides funding to nonprofit community associations primarily in the State of Florida. For more information, please visit https://www.lmfunding.com.

Forward-Looking Statements

This press release may contain forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” and “project” and other similar words and expressions are intended to signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions but rather are subject to various risks and uncertainties. Some of these risks and uncertainties are identified in the Company’s most recent Annual Report on Form 10-K and its other filings with the SEC, which are available at www.sec.gov. These risks and uncertainties include, without limitation, the risks of operating in the cryptocurrency mining business, our limited operating history in the cryptocurrency mining business and our ability to grow that business, the capacity of our Bitcoin mining machines and our related ability to purchase power at reasonable prices, our ability to identify and acquire additional mining sites, the ability to finance our site acquisitions and cryptocurrency mining operations, our ability to acquire new accounts in our specialty finance business at appropriate prices, changes in governmental regulations that affect our ability to collect sufficient amounts on defaulted consumer receivables, changes in the credit or capital markets, changes in interest rates, and negative press regarding the debt collection industry. The occurrence of any of these risks and uncertainties could have a material adverse effect on our business, financial condition, and results of operations.