Strategy and Operations - Gryphon's new strategy focuses on acquiring and developing energy assets for AI and high-performance computing (HPC) data center infrastructure since September 2024[28]. - Gryphon operates approximately 9,660 bitcoin ASIC mining computers, generating revenue based on a dollar per megawatt-hour (MWh) basis, which is variable depending on Bitcoin price and global hash rates[30]. - Gryphon entered into a Co-Location Mining Services Agreement with Blockfusion for hosting 3,780 bitcoin miners, entitled to 12 MW of power at a cost of $156,000 per month[31]. - The Mawson Agreement allows Gryphon to host up to 5,880 miners with 20 MW of power at approximately $23.50 per MW/hour, with a minimum fee of about $165,521 per month[32]. - Gryphon is acquiring Captus Generation Ltd. and related entities for CAD $24 million, with a focus on developing AI HPC infrastructure on 850 acres in Alberta[50]. - The Captus Site is considered highly suitable for development due to its redundant natural gas lines, grid connectivity, and access to non-potable water[51]. - Gryphon has delivered 3,996 bitcoin miners to Blockfusion and 6,719 miners to Mawson subsequent to December 31, 2024[31][32]. - The Company entered into an Asset Purchase Agreement to acquire four natural gas generators with a combined standby rating of 1,900 kW and 566 bitcoin ASIC mining computers with a total hashrate capacity of approximately 57,120 TH/s[55]. - The total purchase price for the Giga Acquisition remains $1,500,000, with an additional advance payment of $250,000 made to the Seller[56]. - As of December 31, 2024, the Company operates a miner fleet composed of 7,128 S19j Pro Antminers, 552 S19k Pro Antminers, 276 S21 Antminers, and 878 S19j Pro + Antminers, with a total hashrate capacity of approximately 1,000 TH/s[63]. Financial Performance and Risks - Gryphon's revenue is primarily derived from bitcoin mining, with the price of bitcoin ranging between approximately $39,000 and $106,000 in fiscal 2024, directly impacting profitability[87]. - The company's operating results are significantly tied to the value of bitcoin, which is subject to high volatility and regulatory uncertainties[88]. - Gryphon's ability to earn bitcoin rewards is directly proportional to its mining power (hashrate), which must continuously expand to remain competitive[92]. - Gryphon's average bitcoin holding period was 30 days for the year ended December 31, 2024, compared to 25 days for the year ended December 31, 2023[72]. - Gryphon's traditional revenue model involves mining and holding bitcoin, selling only what is necessary for operating expenses and reinvestment[72]. - Gryphon's financial statements are prepared on a going concern basis, indicating substantial doubt about its ability to continue operations[160]. - Gryphon's future profitability is uncertain, and it may incur additional losses and negative cash flows in the foreseeable future[162]. - Gryphon may face liquidity constraints and need additional capital, which may not be available on favorable terms[115]. - Gryphon's digital assets are not insured against theft, loss, or destruction, increasing the risk of significant financial losses for the company and its stockholders[129]. - Gryphon's reliance on a single model of miner increases operational risks, as any design flaws could affect the entire system[182]. Regulatory Environment - Regulatory scrutiny of the blockchain and bitcoin industries is increasing, with multiple U.S. federal agencies involved in rulemaking and oversight[83]. - The U.S. government is working towards establishing a unified federal regulatory regime for cryptocurrencies, which may impact Gryphon's operations[217]. - Regulatory changes could require Gryphon to register and comply with securities laws, potentially leading to extraordinary expenses or operational changes[219]. - Certain jurisdictions have deemed cryptocurrencies illegal, which could adversely affect Gryphon's ability to operate and the value of its Bitcoin holdings[225]. - Gryphon's business is exposed to extensive and evolving regulatory risks, which could adversely affect its operations and financial condition[213]. - The evolving regulatory landscape may lead to increased operational burdens or the need to cease certain operations if compliance becomes too costly[219]. Market Dynamics and Competition - Gryphon faces significant competition from larger companies with greater resources, which may hinder its ability to expand and remain competitive[192]. - Gryphon's business relies on a limited number of digital asset mining equipment suppliers, making it vulnerable to supply fluctuations and price volatility[179]. - The ongoing shortage of ASIC chips, a critical component for mining machines, may impact Gryphon's self-mining operations and costs[180]. - Gryphon's operations may be impacted by cybersecurity risks, including potential attacks on its systems and the loss of access to private keys[166]. - Gryphon's ability to raise additional capital is essential for funding operations and strategic growth initiatives, with potential dilution of existing stockholders' interests[159]. Technological and Operational Challenges - Gryphon's hash rate growth is critical to remain competitive, as the global network hash rate is expected to increase with greater Bitcoin adoption[156]. - Gryphon must continually add new miners to grow its hash rate in line with the Bitcoin network hash rate to remain competitive[177]. - The price of new miners has increased due to rising demand and scarcity, which may hinder Gryphon's ability to fund hash rate growth[177]. - Gryphon's mining operations depend on third-party mining pools, exposing it to risks from potential downtime or issues with the pool operator[184]. - Gryphon's hosting arrangements are uncertain and competitive, with potential regulatory changes affecting availability[185]. External Factors and Market Sentiment - Gryphon's success is contingent upon the continued market acceptance and value of bitcoin, which may be influenced by various external factors including regulatory changes and market dynamics[90]. - Geopolitical and economic crises could lead to large-scale sell-offs of digital assets, negatively impacting Bitcoin's value and Gryphon's business[102]. - The failure or insolvency of major exchanges like FTX has led to significant price volatility in the crypto asset markets, adversely affecting Gryphon's financial condition[96]. - A decline in Bitcoin adoption could weaken demand, negatively impacting Gryphon's business and leading to lower trading volumes and diminished liquidity[100]. - Internet disruptions could significantly impact Gryphon's ability to mine Bitcoin and the overall price of Bitcoin[154].

Financial Data and Key Metrics Changes - Gryphon mined approximately 61 Bitcoin and generated mining revenues of $3.7 million in Q3 2024, compared to 176 Bitcoin and $5.2 million in the same period in the prior year [10] - Breakeven costs per Bitcoin in Q3 2024 were $59,213, significantly higher than $21,501 in Q3 2023, reflecting the halving event and increased global hashrate [10] - Adjusted EBITDA was approximately negative $2.5 million for Q3 2024, an improvement from negative $4.7 million in Q3 2023 [11] - The company recognized a net loss of $5.9 million in Q3 2024, compared to a net loss of $8.1 million in Q3 2023 [12] Business Line Data and Key Metrics Changes - The company has enhanced its leadership team to accelerate growth, including the appointment of a new Chairman and Board members with significant industry experience [5][6] - A transformative debt restructuring was completed, converting $13 million of debt to equity and restructuring the remaining $5 million on favorable terms, significantly strengthening the financial position [6][7] Market Data and Key Metrics Changes - The market capitalization of Gryphon has moved north of $40 million, exceeding NASDAQ listing requirements [7] - The average Bitcoin price during the quarter was $59,224, with the current price exceeding $90,000 [26] Company Strategy and Development Direction - The company is focused on both core Bitcoin mining operations and strategic expansion into AI infrastructure hosting, leveraging low-cost power [4][17] - Gryphon aims to diversify revenue and accelerate growth by becoming a leading provider of high-performance computing for AI applications [18][19] - The company plans to make meaningful progress towards AI hosting through organic development and potential strategic M&A [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning to capitalize on the growing demand for AI compute, viewing it as a unique opportunity [17][18] - The company is committed to methodically building its core Bitcoin mining business while pursuing AI opportunities [19][20] Other Important Information - The company has secured ultra-low-cost power mining operations at around $0.01 per kilowatt hour, which is seen as a competitive advantage [9] - The debt restructuring has transformed a significant liability into a strength, with Anchorage becoming the largest shareholder and a key partner [38][39] Q&A Session Summary Question: Can you elaborate on your efforts in HPC? - The company is looking for new spaces to launch AI operations, not converting existing Bitcoin facilities [22] Question: Has anything happened with your cost of power recently? - The cost of power has been consistent, averaging around $0.062 to $0.063 per kilowatt hour, with efforts to find alternatives [23][24] Question: What was the average Bitcoin price during the quarter? - The average Bitcoin price was $59,224 [26] Question: How do you see the transition to lower-cost power? - The company is actively engaged in relocating its fleet and expects significant announcements by the end of the year [25][31] Question: What is the efficiency of the current fleet? - The current fleet is expected to be fully depreciated over the next 12 months, with profitability at Bitcoin prices above $65,000 [34] Question: What expertise will be needed for the HPC endeavor? - The company plans to add power experts and HPC specialists as it identifies significant power opportunities [40]

Mining Performance - For the three months ended September 30, 2024, Gryphon mined approximately 61 bitcoins, a decrease of 65% compared to 176 bitcoins mined in the same period of 2023[171]. - Mining revenues for Q3 2024 were $3,689,000, down 29% from $5,189,000 in Q3 2023[172]. - The cost to mine one bitcoin in Q3 2024 was $59,213, significantly higher than $22,625 in Q3 2023, reflecting increased operational costs[172]. - Gryphon's total bitcoin equivalent coins generated in Q3 2024 were 61, compared to 185 in Q3 2023, indicating a decline in mining efficiency[172]. - The average value of one mined bitcoin in Q3 2024 was $60,475, compared to $29,483 in Q3 2023, highlighting a substantial increase in bitcoin prices[172]. Financial Performance - Mining revenues increased to $16,694,000 for the nine months ended September 30, 2024, from $14,992,000 for the same period in 2023, representing an increase of $1,702,000 or 11.4%[188]. - The average value of Bitcoin rose to $60,000 for the nine months ended September 30, 2024, compared to $26,000 for the same period in 2023, an increase of $34,000 or 131%[188]. - Total revenues for the nine months ended September 30, 2024, were $16,694,000, up from $15,836,000 in 2023, reflecting a growth of $858,000 or 5.4%[187]. - Cost of revenues increased to $12,252,000 for the nine months ended September 30, 2024, from $9,542,000 in 2023, an increase of $2,710,000 or 28.4%[190]. - General and administrative expenses surged to $8,728,000 for the nine months ended September 30, 2024, from $3,250,000 in 2023, marking an increase of $5,478,000 or 168.6%[190]. - The Company reported a net loss of $21.7 million for the nine months ended September 30, 2024, and an adjusted EBITDA of $(3.53) million[262]. - For the three months ended September 30, 2024, the company reported a net loss of $5.95 million, an improvement from a net loss of $8.09 million in the same period of 2023, with an adjusted EBITDA of $(2.45) million[263]. Operational Costs - Gryphon's electricity cost per kilowatt hour decreased from $0.0709 in Q3 2023 to $0.0624 in Q3 2024, contributing to lower operational costs[176]. - General and administrative expenses surged to $2,439,000 for the three months ended September 30, 2024, up 203.4% from $804,000 in 2023[214]. - Professional fees increased to $1,128,000 for the three months ended September 30, 2024, from $479,000 in 2023, reflecting a rise of 135.5%[214]. Debt and Financing - Gryphon initiated an At The Market offering program with a total offering price of up to $70 million, having sold approximately 3.4 million shares for net proceeds of $2.8 million as of November 13, 2024[178]. - The restructuring of the Anchorage Loan resulted in the conversion of approximately $9.1 million into shares of Common Stock, issuing 8,287,984 shares at $1.10 per share[180]. - The New Loan Agreement includes a 4.25% interest rate and allows Anchorage to convert half of the outstanding principal at $1.10 per share and the remaining half at $1.50 per share[181]. - The Company entered into a Debt Repayment and Exchange Agreement on October 25, 2024, converting approximately $9.1 million of the Anchorage Loan into shares of common stock at $1.10 per share[249]. - The Restructured Loan has an interest rate of 4.25% payable monthly, with Anchorage given a first priority lien on all of Gryphon's assets[251]. - The BTC Note was amended to extend the maturity date to March 2026 and increase the interest rate to 6% per annum[239]. - Interest expense increased to $908,000 for the nine months ended September 30, 2024, from $530,000 in 2023, an increase of $378,000 or 71.3%[207]. Cash Flow and Liquidity - Cash and cash equivalents decreased to $368,000 as of September 30, 2024, down from $915,000 as of December 31, 2023[226]. - The accumulated deficit increased to approximately $68,137,000 as of September 30, 2024, compared to $47,175,000 as of December 31, 2023[226]. - The Company anticipates needing additional capital resources to fund operations and may consider selling additional equity or debt securities[227]. - For the nine months ended September 30, 2024, net cash used in operating activities was approximately $2,368,000, with cash proceeds from the sale of digital assets at approximately $16,649,000 and cash expenditures of approximately $19,017,000[230]. - Net cash used in investing activities for the same period was approximately $1,504,000, primarily for the purchase of mining equipment costing approximately $1,075,000[231]. - Net cash provided by financing activities was approximately $3,325,000, mainly from cash proceeds of $3,059,000 from the issuance of common stock[232]. Legal and Compliance Issues - The company identified a material weakness in internal control over financial reporting due to insufficient staffing in the accounting department, which could lead to potential misstatements[269]. - The company is committed to enhancing its internal controls by adding resources and utilizing external audit firms to address identified weaknesses[272]. - The company reached a settlement in the Core Litigation, resolving claims against it and dismissing the complaint with prejudice[286]. - Dutchie filed a complaint against the Company alleging unfair competition and tortious interference, but the court dismissed the case in October 2023, allowing for an appeal[291]. - TreCom filed suit against the Company seeking recovery of approximately $4.2 million for breach of contract, with a trial set to commence on December 2, 2024[293]. - The Company established a loss contingency of $0.2 million related to the TreCom matter, which remains outstanding as of September 30, 2024[293]. - The former CEO was terminated for cause on September 17, 2024, and subsequently filed a wrongful termination claim against the Company[294][295]. - A special committee was created by the Board to oversee the handling of the wrongful termination claim[296]. - The Company intends to vigorously defend against all ongoing litigation and claims[291][295][296]. - Litigation may have an adverse impact on the Company due to defense costs and diversion of management resources[296].

Financial Performance - Mining revenues for Q3 2024 were $3.7 million, down from $5.2 million in Q3 2023[3] - The company reported a net loss of $5.9 million in Q3 2024, an improvement from a net loss of $8.1 million in Q3 2023[4] - Adjusted EBITDA loss narrowed to $2.5 million in Q3 2024, compared to a loss of $4.7 million in Q3 2023[5] - Total revenues for the three months ended September 30, 2024, were $3,689,000, a decrease of 32.5% compared to $5,477,000 for the same period in 2023[16] - The company reported a net loss of $5,948,000 for the three months ended September 30, 2024, compared to a net loss of $8,086,000 for the same period in 2023, indicating an improvement of 26.1%[16] - The net loss for the nine months ended September 30, 2024, was $21,701,000, compared to a net loss of $17,619,000 for the same period in 2023, representing an increase in loss of approximately 23.5%[21] Mining Operations - Breakeven cost per Bitcoin increased to $59,213 in Q3 2024, compared to $22,625 in Q3 2023[3] - The company mined approximately 61 Bitcoin in Q3 2024, significantly lower than 176 Bitcoin mined in Q3 2023[5] - Mining activities generated revenues of $3,689,000 for the three months ended September 30, 2024, down from $5,189,000 in the prior year, reflecting a decline of 29%[16] Assets and Liabilities - Total current assets as of September 30, 2024, were $1.7 million, with total assets amounting to $7.5 million[6] - Current liabilities stood at $26.4 million as of September 30, 2024, following a successful debt restructuring[6] - Total current assets decreased to $1,688,000 as of September 30, 2024, from $5,398,000 at December 31, 2023, representing a decline of 68.7%[15] - Total liabilities increased to $26,408,000 as of September 30, 2024, compared to $19,433,000 at December 31, 2023, reflecting a rise of 36.5%[15] - The company’s accumulated deficit increased to $(68,137,000) as of September 30, 2024, compared to $(47,175,000) at the end of 2023, representing a deterioration of 44.4%[15] - The company reported total stockholders' deficit of $(18,863,000) as of September 30, 2024, compared to $(599,000) at December 31, 2023, indicating a significant increase in deficit[15] Cash Flow and Investments - Cash used in operating activities was $(2,368,000) for 2024, a significant decrease from the cash provided of $3,064,000 in 2023[21] - The company reported a net cash used in investing activities of $(1,504,000) in 2024, compared to $(1,902,000) in 2023, showing a reduction in cash outflow[21] - Cash at the end of the period was $368,000, down from $1,405,000 at the end of the previous year, reflecting a decrease of approximately 73.8%[21] Expenses and Impairments - General and administrative expenses surged to $2,439,000 for the three months ended September 30, 2024, compared to $804,000 in the same period last year, marking an increase of 203.6%[16] - The impairment of digital assets was recorded at $1,295,000 in 2024, while there was no impairment reported in 2023[21] - The depreciation expense for the nine months ended September 30, 2024, was $9,435,000, down from $11,906,000 in 2023, indicating a decrease of about 20.7%[21] Strategic Initiatives - The company aims to enhance financial flexibility and secure low-cost power deals to expand Bitcoin mining operations and explore AI computing opportunities[2] - Market capitalization exceeded $40 million, reflecting growing market confidence in the company's strategic direction[2] - The company plans to announce several initiatives in the coming months to maximize shareholder value[2] Stock and Shares - The weighted average shares outstanding for basic and diluted calculations increased to 40,611,068 for the three months ended September 30, 2024, compared to 14,450,688 in the prior year[16] - The company recognized a fair value of common stock issued to consultants amounting to $1,708,000 in 2024[21] - The proceeds from the sale of digital assets were $16,649,000 in 2024, an increase from $13,958,000 in 2023, representing a growth of approximately 19.2%[21]

Financial Data and Key Metrics Changes - Gryphon Digital Mining reported a quarterly average hash rate of 899 petahashes per second in Q2 2024, a 20% increase from the same quarter in the previous year [3] - Mining revenues for Q2 2024 were $5.5 million, compared to $4.9 million in the same period last year [8] - Breakeven costs increased to approximately $45,452 in Q2 2024 from $34,063 in Q1 2024, reflecting the halving event and increased global hash rate [8] - The net loss for Q2 2024 was $4 million, compared to a net loss of $2.6 million in Q2 2023 [10] - Adjusted EBITDA for Q2 2024 was approximately negative $3 million, compared to negative $4.2 million in Q2 2023 [10] Business Line Data and Key Metrics Changes - Gryphon mined approximately 84 Bitcoin in Q2 2024, with an average Bitcoin price increase from $25,428 to $59,572, a 134% rise [8][9] - The average efficiency for the active fleet of approximately 8,825 Bitcoin mining machines was around 28 joules per terahash as of June 30, 2024 [11] Market Data and Key Metrics Changes - The daily average global hash rate increased by 68% from 357.7 exahash to 602.1 exahash per day year-over-year [8] - Recent market fluctuations in Bitcoin prices were attributed to factors such as Germany selling off Bitcoin holdings and geopolitical instability [5] Company Strategy and Development Direction - The company is focused on growth and has vetted over 25 acquisition prospects, emphasizing accretive opportunities [7] - Gryphon aims to maintain a competitive advantage through a flexible cost structure that allows production costs to decrease with falling Bitcoin prices [6] - The company is actively pursuing low-cost power sources to enhance its operational efficiency and position for future growth [15] Management's Comments on Operating Environment and Future Outlook - Management believes the current market represents the bottom of the upcycle for Bitcoin, expecting prices to trend higher in the coming months [5] - The company is well-positioned to navigate market conditions due to its unique cost structure and operational efficiencies [6] - Management highlighted the importance of maintaining a low-cost profile in the post-halving environment to ensure long-term success [14] Other Important Information - Gryphon was selected to join the Russell Microcap Index, reflecting significant progress in capital markets [4] - The CFO announced his decision to step down, with a transition plan in place [7] Q&A Session Summary Question: Background on power draw and fleet upgrades - The company currently draws approximately 28 megawatts from its hydro-powered facility and is looking for opportunities to upgrade its machines [17][18] Question: General and administrative expenses outlook - Normal expenditures are around $2.2 million per month, with recent increases due to marketing expenses [20] Question: Insights on acquisition opportunities - The company is focusing on finding low-cost power and has passed on several opportunities due to unfavorable cost structures [21][24] Question: Approach to distressed private situations - Many companies overvalue themselves, and the company is waiting for market corrections to negotiate better deals [27][28] Question: Impact of low-cost operations on acquisitions - The company’s low-cost structure positions it well for potential acquisitions, especially in a tougher market [30] Question: Interest in specific acquisition targets - The company remains interested in several attractive acquisition opportunities and is actively engaged in discussions [32]

Financial Performance - Gryphon reported total mining revenue of $5.5 million in Q2 2024, a 12.2% increase from $4.9 million in Q2 2023[2]. - Mining activities revenue for Q2 2024 reached $5,515,000, an 11% increase from $4,963,000 in Q2 2023[15]. - Total revenues for the first half of 2024 were $13,005,000, compared to $10,359,000 in the same period of 2023, reflecting a 25.5% growth[15]. - The company recognized a net loss of $4.0 million in Q2 2024, compared to a net loss of $2.6 million in Q2 2023[3]. - The net loss for Q2 2024 was $4,009,000, compared to a net loss of $2,623,000 in Q2 2023, indicating a 52.7% increase in losses[15]. - Net loss for the six months ended June 30, 2024, was $15,753,000, compared to a net loss of $9,533,000 for the same period in 2023, representing a 65.5% increase in losses[17]. Operational Metrics - The company achieved a quarterly hashrate of 899 PH/s in Q2 2024, representing a 20% increase compared to Q2 2023[1]. - Breakeven cost per bitcoin in Q2 2024 was $45,452, up from $34,063 in Q2 2023, indicating increased operational costs[2]. - The company mined approximately 84 bitcoins in Q2 2024, down from 187 bitcoins in Q2 2023[4]. - Gryphon completed its miner upgrade program ahead of schedule, adding approximately 23 PH/s to its hashing power[3]. Expenses and Liabilities - Total operating expenses for Q2 2024 were $11,381,000, up from $7,967,000 in Q2 2023, representing a 42.5% increase[15]. - Current assets decreased to $3,244,000 as of June 30, 2024, down from $5,398,000 at the end of 2023, a decline of 39.9%[14]. - Total liabilities increased to $25,439,000 as of June 30, 2024, compared to $19,433,000 at the end of 2023, marking a 30.9% rise[14]. - The accumulated deficit grew to $(62,189,000) as of June 30, 2024, up from $(47,175,000) at the end of 2023, reflecting a 31.8% increase[14]. Cash Flow and Investments - Cash provided by operating activities was $(782,000) for the six months ended June 30, 2024, compared to $2,676,000 in the same period of 2023, indicating a significant decline in cash flow[17]. - Cash used in investing activities was $(954,000) for the first half of 2024, compared to $(1,902,000) in the same period of 2023, indicating a decrease of 49.9%[17]. - The company reported proceeds from the sale of digital assets of $12,969,000 for the first half of 2024, up from $9,155,000 in the same period of 2023, reflecting a 41.5% increase[17]. - Total cash at the end of the period was $1,219,000, an increase from $980,000 at the end of the same period in 2023[17]. Stock and Shareholder Actions - The company has authorized a stock repurchase program of up to $5 million to enhance shareholder value[3]. - The weighted average shares outstanding increased to 38,943,579 in Q2 2024 from 14,431,384 in Q2 2023, a growth of 170.5%[15]. - The company has issued common stock for cash totaling $1,395,000 during the reporting period[16]. - The company raised $2,054,000 from the issuance of common stock during the first half of 2024, with no such activity reported in the same period of 2023[17]. - Cash expenses for the issuance of common stock were $235,000 in the first half of 2024, with no expenses reported in the same period of 2023[17]. - The company reported a fair value of common stock issued to consultants amounting to $1,447,000 for the first half of 2024, compared to $126,000 in the same period of 2023, reflecting a substantial increase[17]. Market Position and Future Outlook - Gryphon qualified for inclusion in the Russell Microcap Index effective July 1, 2024[3]. - The company is focusing on acquiring low-cost power to ensure long-term success in bitcoin mining[2]. - The company reported a significant unrealized loss of $318,000 on digital assets in Q2 2024, compared to no loss in Q2 2023[15]. - Unrealized loss on digital assets amounted to $1,385,000 for the first half of 2024, while the company reported no unrealized gains in the same period of 2023[17]. - The company incurred depreciation expense of $6,539,000 for the first half of 2024, down from $7,839,000 in the same period of 2023, showing a 16.5% reduction[17].

Mining Performance - For the three months ended June 30, 2024, Gryphon mined approximately 84 bitcoins, a decrease of 55% compared to 187 bitcoins mined in the same period of 2023[124] - Gryphon's mining revenues for Q2 2024 were $5,515,000, representing a 10.9% increase from $4,963,000 in Q2 2023[126] - Mining revenues increased to $13,005,000 for the six months ended June 30, 2024, from $9,803,000 for the same period in 2023, representing a growth of $3,202,000 or 32.7%[138] Cost and Revenue Analysis - The cost to mine one bitcoin increased to $45,452 in Q2 2024, up from $15,096 in Q2 2023, reflecting a significant rise in operational costs[126] - Gryphon's breakeven cost of total BTC equivalent was $45,452 in Q2 2024, compared to $14,115 in Q2 2023, highlighting increased operational challenges[126] - The average value of one mined bitcoin in Q2 2024 was $65,655, compared to $26,540 in Q2 2023, indicating a substantial increase in bitcoin prices[126] - The average value of Bitcoin rose to $59,000 for the six months ended June 30, 2024, compared to $26,000 for the same period in 2023, an increase of $34,000 or 131%[138] - Total revenues for the six months ended June 30, 2024, were $13,005,000, up from $10,359,000 in 2023, reflecting a growth of $2,646,000 or 25.5%[136] Operating Expenses - Total operating expenses increased to $20,431,000 for the six months ended June 30, 2024, from $14,590,000 in 2023, an increase of $5,841,000 or 40.0%[136] - General and administrative expenses surged to $6,289,000 for the six months ended June 30, 2024, from $2,446,000 in 2023, marking an increase of $3,843,000 or 157.1%[140] - General and administrative expenses surged to $3,828,000 for the three months ended June 30, 2024, compared to $1,092,000 in 2023, marking a 250.6% increase[159] Financial Losses - Loss from operations increased to $(7,426,000) for the six months ended June 30, 2024, compared to $(4,231,000) in 2023, a rise of $3,195,000 or 75.5%[136] - The Company reported a loss from operations of $5,866,000 for the three months ended June 30, 2024, compared to a loss of $2,684,000 in 2023, reflecting an increase of $3,182,000 or 118.6%[155] - The Company reported a net loss of $(15,753,000) for the six months ended June 30, 2024, compared to $(9,533,000) in 2023[195] Cash Flow and Financing - Cash and cash equivalents as of June 30, 2024, were $1,219,000, up from $915,000 as of December 31, 2023[171] - The Company anticipates that its current cash levels will not be sufficient to meet its operational needs for at least the next 12 months, indicating a need for additional capital resources[172] - Net cash used in operating activities for the six months ended June 30, 2024, was approximately $(782,000), compared to $2,676,000 in 2023, reflecting a decrease in cash proceeds from digital currency sales[176] - Net cash provided by financing activities was approximately $2,040,000 for the six months ended June 30, 2024, compared to $(63,000) in 2023, driven by cash proceeds from the issuance of common stock[177] Interest and Unrealized Gains - Interest expense increased to $620,000 for the six months ended June 30, 2024, from $368,000 in 2023, an increase of $252,000 or 68.5%[151] - The Company recognized a $1,385,000 unrealized gain on digital assets as of June 30, 2024, following the implementation of ASU No. 2023-08[147] - The Company recognized a $318,000 unrealized gain on digital assets as of June 30, 2024, following the implementation of ASU No. 2023-08[166] Corporate Strategy and ESG - Gryphon operates approximately 8,800 bitcoin ASIC mining computers, utilizing 28 megawatts of power at its primary hosting facility in New York, which relies on renewable hydro energy[123] - Gryphon's strategy focuses on ESG-led mining, aiming to create a net carbon neutral bitcoin miner by partnering with power hosting providers committed to climate science[123] Legal and Compliance Issues - The company was involved in litigation with Sphere 3D, alleging breach of contract and fiduciary duty, with Gryphon filing counterclaims against Sphere 3D[205][206] - The Core Complaint against the company sought damages of $100 million, but a settlement was reached, dismissing all claims against the company[213] - The company received a PPP Loan of $2.2 million, which was previously forgiven, but the SBA is reviewing this determination for potential reversal[215][216] - The company is cooperating with a DOJ inquiry regarding the PPP Loan, with no formal demands for repayment made yet[217] Internal Controls and Governance - As of June 30, 2024, the company's disclosure controls and procedures were deemed ineffective due to insufficient staffing in the accounting and financial reporting department[200] - The identified material weakness could lead to a reasonable possibility of material misstatements in financial statements not being prevented or detected timely[201] - The company plans to enhance internal resources for technical accounting and financial reporting, potentially hiring a full-time person dedicated to internal controls[201] - The company is utilizing external third-party audit firms to improve controls related to its material weaknesses[202] - The company is committed to ongoing evaluation and improvement of its internal control over financial reporting[203] Debt and Financial Obligations - The BTC Note was amended to extend the maturity date to March 2026 and increase the interest rate to 6% per annum[182] - The Company has a collateral coverage ratio requirement of 110% under the BTC Note, and as of June 30, 2024, it was not in breach of this ratio[185] - The merger and acquisition cost was $394,000 related to the disposal of its subsidiary MJ Freeway, which occurred on February 8, 2024[154]

Financial Data and Key Metrics Changes - For Q1 2024, the company reported a net loss of $11.7 million, compared to a net loss of $6.9 million in Q1 2023, indicating a deterioration in financial performance [6] - Adjusted EBITDA for Q1 2024 was approximately $1.9 million, down from $4.2 million in Q1 2023, reflecting challenges in operational effectiveness [7] - The average breakeven cost for bitcoin mining increased to approximately $34,000 in Q1 2024 from $23,800 in Q4 2023, driven by rising energy costs and mining difficulty [14][25] Business Line Data and Key Metrics Changes - The company mined approximately 142 bitcoin in Q1 2024, generating mining revenues of $7.5 million, up from $4.8 million in the same period last year [14] - The daily average global hash rate increased by 88% year-over-year, contributing to the company's operational metrics [4] Market Data and Key Metrics Changes - Bitcoin's price surged from $22,830 to $52,746, a 131% increase, enhancing profitability for each bitcoin mined [5] - The company’s self-mining hash rate reached approximately 0.94 exahash per second, with plans to expand towards a target of 10 exahash [24][11] Company Strategy and Development Direction - The company aims to expand its hash rate in an accretive manner through organic growth and M&A, focusing on distressed asset acquisitions [11][21] - The management emphasizes maintaining a low-cost structure and driving operational efficiencies to remain competitive in the industry [11][10] - The company has initiated a share buyback program, allowing for the repurchase of up to $5 million of common stock, reflecting confidence in its strategy [12] Management Comments on Operating Environment and Future Outlook - Management highlighted the impact of the bitcoin halving event, which is expected to lead to industry consolidation, positioning the company as a potential consolidator [13] - The management expressed optimism about the future, citing a commitment to environmental stewardship and maintaining a carbon-neutral operation [11][10] Other Important Information - The company reported cash and cash equivalents of approximately $1.7 million and $4.2 million in bitcoin as of March 31, 2024, indicating a stable liquidity position [8] - The increase in debt reported is attributed to the structure being denominated in bitcoin, reflecting the correlation with bitcoin's price [9] Q&A Session Summary Question: Can you talk about your strategy utilizing both the ATM and the buyback? - The company views both tools as part of a good capital management strategy, considering share buybacks when the stock price is deemed unreasonably low [28][29] Question: Can you quantify the risk related to the PPP loan investigation? - Management indicated that the risk is currently unquantifiable, but the note was for about $2.2 million, with a remote probability of significant issues arising [32][36] Question: What opportunities do you see for M&A? - The company is actively exploring distressed asset acquisitions, with a focus on companies that are struggling post-halving due to lack of capital [37] Question: What are your organic growth opportunities? - Management stated that M&A will likely trigger organic growth, as they prefer to avoid significant capital raises at this time [39] Question: How do you view your debt levels? - The company clarified that its bitcoin-denominated debt is fully hedged and does not pose a risk, despite appearing larger on the balance sheet due to market valuation changes [49] Question: What is your strategy regarding geographic positioning? - The company is open to opportunities globally, prioritizing regions with good rule of law and favorable economics for operations [60][62]

Financial Performance - Total mining revenue in Q1 2024 was $7.5 million, a 56.3% increase from $4.8 million in Q1 2023[4] - The company reported a net loss of $11.7 million in Q1 2024, compared to a net loss of $6.9 million in Q1 2023[4] - Adjusted EBITDA for Q1 2024 was $1.9 million, down from $4.2 million in Q1 2023[4] - Total revenues for Q1 2024 were $7,490,000, a 47.7% increase from $5,076,000 in Q1 2023[21] - Mining activities generated revenues of $7,490,000 in Q1 2024, compared to $4,840,000 in Q1 2023, reflecting a 54.1% growth[21] - The net loss for Q1 2024 was $11,744,000, compared to a net loss of $6,910,000 in Q1 2023, indicating a 70.5% increase in losses[21] - Net loss per share for Q1 2024 was $(0.36), compared to $(0.28) in Q1 2023[21] Mining Operations - Breakeven cost per bitcoin in Q1 2024 was $34,063, significantly higher than $12,910 in Q1 2023[4] - Gryphon completed its miner upgrade program ahead of schedule, adding approximately 23 PH/s to hashing power and improving average fleet efficiency to 28.5 J/T[4] - The self-mining hash rate capacity reached approximately 0.94 EH/s following the upgrades[4] - The company mined approximately 142 Bitcoin in Q1 2024, down from 212 Bitcoin in Q1 2023[4] Expenses and Liabilities - Total operating expenses increased to $9,050,000 in Q1 2024, up from $6,764,000 in Q1 2023, representing a 33.6% rise[21] - As of March 31, 2024, total assets were $17.8 million, while total liabilities were $30.2 million[9] - The company experienced a change in fair value of notes payable, resulting in an expense of $9,638,000 in Q1 2024[24] Cash Flow and Shareholder Value - Cash and cash equivalents at the end of Q1 2024 were $1,737,000, down from $2,016,000 at the end of Q1 2023[24] - The company reported a net cash used in operating activities of $(983,000) for Q1 2024, compared to net cash provided of $1,807,000 in Q1 2023[24] - Proceeds from the issuance of common stock amounted to $1,395,000 in Q1 2024[24] - The company has authorized a stock repurchase program of up to $5 million to enhance shareholder value[4] Future Projections - Based on a projected average Bitcoin price of $70,000, the company expects a gross profit of approximately $16.6 million from current mining operations in 2024[7] Digital Asset Revenue - Digital asset revenue was reported at $(7,490,000) for Q1 2024, compared to $(4,840,000) in Q1 2023[24]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from / to Commission file number 001-39096 GRYPHON DIGITAL MINING, INC. (Exact name of registrant as specified in its charter) | Delaware | 83-2242651 | | --- | --- | | (Stat ...