Financial Performance - Gryphon Digital Mining reported mining revenues of $3.845 million for Q4 2024, an increase from $3.689 million in Q3 2024[6] - The company achieved a net income of $0.4 million in Q4 2024, compared to a net loss of $11.0 million in fiscal 2023[6] - Total revenues for 2024 were $20,539,000, a decrease of 6.3% from $21,925,000 in 2023[24] - The net loss for 2024 was $21,300,000, an improvement from a net loss of $28,599,000 in 2023, representing a 25.6% reduction[24] - The net loss per share improved to $(0.51) in 2024 from $(0.83) in 2023[24] - Adjusted EBITDA for the year ended December 31, 2024, was $(5.52 million), compared to $0.094 million in 2023[14] Mining Operations - Gryphon mined approximately 61 Bitcoin in Q4 2024, a decrease from 176 Bitcoin mined in Q4 2023[6] - The breakeven cost per Bitcoin in Q4 2024 was $75,872, significantly higher than $23,902 in Q4 2023[6] - Mining activities generated revenues of $20,539,000, while management services contributed $873,000 in 2023, which is no longer reported in 2024[24] Assets and Liabilities - Total assets decreased from $18.834 million in 2023 to $7.632 million in 2024, while total liabilities reduced from $19.433 million to $14.642 million[22] - Gryphon reduced total debt by over 70% through the conversion of $13 million of debt into equity and favorable restructuring of remaining debt[9] Cash Flow and Financing - Cash provided by financing activities was $5,963,000 in 2024, compared to a cash outflow of $109,000 in 2023[26] - Cash and cash equivalents at the end of the period were $735,000, down from $915,000 in 2023[26] Stock Performance - The average trading volume of Gryphon's stock increased from approximately 249,000 shares per day in Q3 2024 to approximately 874,000 shares per day in Q4 2024[6] Strategic Initiatives - The company is focused on closing the Captus Energy Acquisition, which is viewed as a billion-dollar opportunity[4] - The company reported a gain of $6,248,000 from the settlement of the BTC Note in 2024[26] - The company incurred merger and acquisition costs of $394,000 in 2024, with no such costs reported in 2023[24] Expenses - Total operating expenses decreased to $38,286,000 in 2024 from $41,103,000 in 2023, reflecting a reduction of 6.9%[24] - The impairment of miners was recorded at $8,335,000 in 2023, which was not reported in 2024[24] Capital Raising - The company successfully closed a $2.85 million offering with 100% management and majority board participation[9]

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 plans to acquire 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 after the respective agreements[31][32]. - The Company has 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 combined 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]. - Gryphon's operations will continue to expand as it acquires additional miners as opportunities arise[63]. - The Company has entered into a cohosting location agreement with Blockfusion, utilizing approximately 12MW of electricity to host approximately 3,780 bitcoin mining machines[61]. Financial Performance and Revenue Model - Gryphon's average holding period for mined bitcoin was 30 days for the year ended December 31, 2024, compared to 25 days for the year ended December 31, 2023[72]. - Gryphon contributes 100% of its Bitcoin hashing power to Foundry USA Pool, which represents approximately 0.3% of the total hashing power of the pool[69]. - Gryphon's revenue model involves mining and holding bitcoin, selling only the bitcoin necessary to cover operating expenses and reinvest in operational expansion[72]. - The market price of bitcoin was extremely volatile in fiscal 2024, ranging between approximately $39,000 and $106,000, directly impacting Gryphon's revenue and profitability[87]. - Gryphon's revenues are solely derived from bitcoin mining, which is influenced by the number of bitcoin rewards mined and the value of bitcoin, making the company vulnerable to price fluctuations[88]. Risks and Challenges - The company faces risks from regulatory changes, as multiple U.S. federal agencies are actively considering regulations that could impact bitcoin mining and related activities[81]. - Gryphon's ability to expand operations is contingent on bitcoin's future price, and failure to meet capital expenditure assumptions could adversely affect its business[87]. - The insolvency of major exchanges like FTX has led to increased market volatility and decreased confidence in the crypto ecosystem, which could adversely impact Gryphon's investment[97]. - The long-term growth and viability of digital assets, including Bitcoin, depend on multiple factors such as adoption rates and market confidence[100]. - A decline in Bitcoin adoption could weaken demand, negatively affecting Gryphon's business and stock value[100]. - Geopolitical and economic crises may lead to significant price volatility in Bitcoin, impacting Gryphon's financial condition[102]. - Gryphon may face liquidity constraints and require additional capital, which may not be available on favorable terms[115]. - The lack of regulation in digital asset exchanges exposes Gryphon to negative publicity and potential loss of confidence in the cryptocurrency market[116]. - Strategic acquisitions may dilute stockholders and strain financial resources, with integration posing additional challenges[123]. - 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]. - The Bitcoin mining reward was recently halved to 3.125 BTC on April 19, 2024, and this halving process will continue until the total amount of Bitcoin rewards reaches 21 million, expected around 2140[136]. - Gryphon aims to maintain a breakeven profitability floor significantly below the network average to mitigate the impacts of halving[138]. - The price of Bitcoin may be negatively affected by large redemptions from other investment vehicles tracking Bitcoin markets, impacting Gryphon's Bitcoin holdings[143]. - The development of central bank digital currencies could compete with Bitcoin, potentially decreasing its value and adversely affecting Gryphon's financial condition[145]. - Internet disruptions could significantly impact Bitcoin's network operations and Gryphon's ability to mine Bitcoin, adversely affecting its business[154]. - Gryphon's independent accounting firm's report expresses substantial doubt about its ability to continue as a "going concern"[160]. - Gryphon's operations are subject to risks associated with cybersecurity, including potential theft or loss of bitcoin assets[165]. - Gryphon's reliance on a single model of miner (Bitmain Antminer) increases operational risks related to design flaws and system failures[182]. - Gryphon's hosting arrangements are uncertain and competitive, with potential regulatory changes affecting availability[185]. - Gryphon faces significant competition from larger companies with greater resources, which may hinder its ability to expand and remain competitive[192]. - Rapid technological changes in the blockchain industry require Gryphon to adapt quickly, or it risks falling behind competitors[195]. Regulatory Environment - Gryphon's business is impacted by evolving regulatory landscapes, which may result in significant fines and reputational harm if compliance is not met[213]. - The company is monitoring potential new regulations in the digital asset industry, particularly in response to recent market collapses and bankruptcies[214]. - Regulatory scrutiny has increased significantly, with investigations and inquiries from U.S. federal and state regulators expected to continue[216]. - The U.S. government is working towards establishing a unified federal regulatory regime for cryptocurrencies, which may impact Gryphon's operations[217]. - Regulatory actions in countries like China and Russia could severely restrict the use of Bitcoin, adversely impacting Gryphon's business[226]. - Gryphon's compliance with the Office of Financial Assets Control's sanctions program is complicated by the pseudonymous nature of blockchain transactions[227]. - Increased scrutiny regarding environmental, social, and governance (ESG) practices may lead to additional costs or risks for Gryphon[228].

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]. - Gryphon's 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 global hashrate of the Bitcoin network has shown a consistent upward trend, impacting Gryphon's mining output negatively[176]. - Mining revenues decreased to $3,689,000 for the three months ended September 30, 2024, down from $5,189,000 for the same period in 2023, a decline of 28.9%[211]. Financial Performance - Total revenues for the three months ended September 30, 2024, were $3,689,000, a decrease of $1,788,000 or 32.6% from $5,477,000 in 2023[210]. - Mining revenues increased to $16,694,000 for the nine months ended September 30, 2024, up from $14,992,000 in the same period of 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, compared to $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 loss from operations of $5,445,000 for the three months ended September 30, 2024, compared to a loss of $9,198,000 in 2023, a reduction of 40.8%[210]. - For the nine months ended September 30, 2024, the company reported a net loss of $21.7 million 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]. Debt and Financing - Gryphon has entered into a new loan agreement with Anchorage, with an interest rate of 4.25% and a principal amount of $5 million[181]. - As of October 24, 2024, Gryphon owed 304 bitcoins, valued at approximately $18 million based on an average bitcoin price of $60,286[179]. - The restructuring of the Anchorage Loan included converting approximately $9.1 million into shares of common stock, resulting in the issuance of 8,287,984 shares[180]. - 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]. - The company recognized interest expense of $608,000 for the nine months ended September 30, 2024, with $93,000 still accrued[253]. Cash Flow and Capital Resources - Cash and cash equivalents decreased to $368,000 as of September 30, 2024, 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 Regulatory Matters - The Company obtained a PPP Loan of $2.2 million, which was initially forgiven on September 3, 2021, but the SBA is now reviewing this forgiveness for potential reversal[289]. - The Company received a civil investigative demand from the DOJ regarding the PPP Loan, but there has been no formal demand for return of the loan proceeds[290]. - 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 a lawsuit 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 Core Complaint alleged a breach of miner hosting agreements, seeking $100 million in damages, but was settled with all claims against the company being released[286]. Management and Internal Controls - The company identified a material weakness in internal control over financial reporting due to insufficient staffing in the accounting department, which could lead to material misstatements[269]. - The company plans to enhance its internal controls by hiring additional personnel and utilizing external audit firms to address identified weaknesses[272]. - Robby Chang was terminated as CEO 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 made by Mr. Chang[296]. - The Company intends to vigorously defend against all ongoing litigation and claims[291][293][295]. Other Developments - The Coinmint Agreement, which provided hosting services for mining operations, was terminated on October 31, 2024[235]. - The adoption of ASU 2023-08 on January 1, 2024, resulted in a $739,000 increase in the company's digital assets[264]. - Gryphon has sold approximately 3.4 million shares under its At The Market offering program for total net proceeds of $2.8 million as of November 13, 2024[178].

Financial Performance - Mining revenues for Q3 2024 were $3.7 million, a decrease 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 32.6% compared to $5,477,000 for the same period in 2023[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, reflecting an increase in losses[16] - Digital asset revenue for the nine months ended September 30, 2024, was $(16,695,000), compared to $(14,992,000) in 2023, reflecting a decline in revenue of about 11.4%[21] Mining Operations - The company mined approximately 61 Bitcoin in Q3 2024, down from 176 Bitcoin in Q3 2023[5] - Breakeven cost per Bitcoin increased to $59,213 in Q3 2024, compared to $22,625 in Q3 2023[3] Assets and Liabilities - Total current liabilities as of September 30, 2024, were $26.4 million, with total assets of $7.5 million[6] - Total current assets decreased to $1,688,000 as of September 30, 2024, down from $5,398,000 as of December 31, 2023, indicating a significant reduction in liquidity[15] - Mining equipment, net, decreased to $4,737,000 as of September 30, 2024, from $12,916,000 as of December 31, 2023, showing a decline in capital assets[15] - Accounts payable and accrued liabilities increased to $7,142,000 as of September 30, 2024, compared to $3,649,000 as of December 31, 2023, indicating rising obligations[15] - The total stockholders' deficit increased to $(18,863,000) as of September 30, 2024, from $(599,000) as of December 31, 2023, reflecting deteriorating financial health[15] Cash Flow and Expenses - The company reported a net cash used in operating activities of $(2,368,000) for the nine months ended September 30, 2024, compared to a net cash provided of $3,064,000 in 2023[21] - Cash at the end of the period was $368,000, down from $1,405,000 at the end of the same period in 2023, representing a decrease of approximately 73.8%[21] - The company incurred depreciation expenses of $9,435,000 for the nine months ended September 30, 2024, compared to $11,906,000 in 2023, showing a reduction of about 20.7%[21] - The company reported a significant increase in general and administrative expenses, which rose to $2,439,000 for the three months ended September 30, 2024, compared to $804,000 for the same period in 2023[16] Equity and Financing - The company successfully restructured approximately $13 million of debt into equity at a 100% premium to the stock price at the time[2] - Market capitalization exceeded $40 million, surpassing NASDAQ listing requirements[2] - The company raised $1,395,000 from the issuance of common stock through a private placement during the nine months ended September 30, 2024[21] - The cash acquired in connection with the reverse recapitalization was $500,000, which was not present in the previous year[21] Future Outlook - The company aims to expand Bitcoin mining operations and explore opportunities in AI computing[2] - Future initiatives are expected to be announced in the coming months to enhance shareholder value[2] Other Financial Metrics - The unrealized loss on marketable securities was $(21,000) for the three months ended September 30, 2024, compared to $(75,000) for the same period in 2023, indicating a slight improvement[16] - The impairment of digital assets was recorded at $1,295,000 for the nine months ended September 30, 2024, while there was no impairment recorded in the previous year[21] - The company reported a realized gain from the sale of digital assets of $16,649,000 for the nine months ended September 30, 2024, compared to $13,958,000 in 2023, indicating an increase of approximately 19.2%[21] - The total cash flows from investing activities resulted in a net cash used of $(1,504,000) for the nine months ended September 30, 2024, compared to $(1,902,000) in 2023, reflecting a decrease in cash outflow of about 21%[21]

Financial Performance - Total mining revenue for Q2 2024 was $5.5 million, up from $4.9 million in Q2 2023[2] - The company reported a net loss of $4.0 million in Q2 2024, compared to a net loss of $2.6 million in Q2 2023[3] - Adjusted EBITDA loss was $3.0 million in Q2 2024, an improvement from a loss of $4.2 million in Q2 2023[3] - The net loss for the quarter was $4,009,000, compared to a net loss of $2,623,000 in the same quarter of the previous year, indicating an increase in losses of approximately 52.7%[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] Mining Operations - Gryphon achieved a quarterly hashrate of 899 PH/s in Q2 2024, a 20% increase compared to Q2 2023[1] - Gryphon mined approximately 84 bitcoins in Q2 2024, down from 187 bitcoins in Q2 2023[4] - The breakeven cost per bitcoin in Q2 2024 was $45,452, compared to $34,063 in Q2 2023[2] - Mining activities revenue increased to $5,515,000 for the quarter ended June 30, 2024, compared to $4,963,000 for the same period in 2023, reflecting a growth of 11.1%[15] Expenses and Liabilities - Current liabilities as of June 30, 2024, totaled $25.4 million, with total assets of $11.4 million[5] - Current liabilities rose significantly from $19,433,000 at the end of 2023 to $25,439,000 as of June 30, 2024, an increase of about 30.9%[14] - General and administrative expenses surged to $3,828,000 for the quarter ended June 30, 2024, compared to $1,092,000 in the same quarter of 2023, marking an increase of approximately 250.5%[15] - The company reported a total operating expense of $11,381,000 for the quarter, up from $7,967,000 in the same quarter of the previous year, which is an increase of about 42.4%[15] - The accumulated deficit increased from $47,175,000 at the end of 2023 to $62,189,000 as of June 30, 2024, reflecting a rise of approximately 31.8%[16] Cash Flow and Assets - The company’s cash and cash equivalents increased to $1,219,000 as of June 30, 2024, from $915,000 at the end of 2023, representing a growth of about 33.2%[14] - Total assets decreased from $18,834,000 on December 31, 2023, to $11,448,000 as of June 30, 2024, representing a decline of approximately 39.2%[14] - Total cash at the end of the period was $1,219,000, up from $980,000 at the end of June 2023[17] - Cash used in operating activities was $(782,000) for the six months ended June 30, 2024, compared to cash provided of $2,676,000 in the same period of 2023[17] - Cash flows from investing activities showed a net cash outflow of $(954,000) for the first half of 2024, compared to $(1,902,000) in 2023[17] - Net cash provided by financing activities was $2,040,000 for the first half of 2024, compared to a net cash used of $(63,000) in 2023[17] Strategic Initiatives - The company completed its miner upgrade program ahead of schedule, adding approximately 23 PH/s to its hashing power[3] - Gryphon has authorized a stock repurchase program of up to $5 million to enhance shareholder value[3] - The company incurred merger and acquisition costs of $394,000 during the quarter, indicating ongoing strategic activities in this area[15] - The company is focusing on acquiring low-cost power to ensure long-term success in bitcoin mining[2] Digital Assets - Unrealized loss on digital assets amounted to $1,385,000 for the first half of 2024, while the company recorded an impairment of digital assets of $233,000 in 2023[17] - The company reported proceeds from the sale of digital assets of $12,969,000 in the first half of 2024, an increase from $9,155,000 in 2023[17] - Digital assets used for principal and interest payment of notes payable amounted to $3,283,000 in the first half of 2024, down from $6,243,000 in 2023[17]

Mining Performance - For the three months ended June 30, 2024, Gryphon mined approximately 84 bitcoins, a decrease of 55.1% 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, up from $9,803,000 in the same period of 2023, representing a growth of $3,202,000 or 32.7%[138] - Mining revenues increased to $5,515,000 for the three months ended June 30, 2024, up from $4,963,000 for the same period in 2023, representing an increase of $552,000 or 11.1%[156] 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] - Cost of revenues increased to $8,640,000 for the six months ended June 30, 2024, from $5,560,000 in 2023, marking a rise of $3,080,000 or 55.4%[140] - General and administrative expenses surged to $6,289,000 for the six months ended June 30, 2024, compared to $2,446,000 in 2023, 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 250.5% increase[159] Bitcoin Value Trends - 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 in the prior year, an increase of $34,000 or 131%[138] - The average value of Bitcoin rose to $65,000 for the three months ended June 30, 2024, compared to $28,000 for the same period in 2023, an increase of $38,000 or 134%[156] Financial Position and Cash Flow - 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 had an accumulated deficit of approximately $62,189,000 as of June 30, 2024, compared to $47,175,000 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[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 used in investing activities was approximately $(954,000) for the six months ended June 30, 2024, down from $(1,902,000) in 2023, primarily due to the purchase of mining equipment[177] - 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] Loss and Operational Challenges - Loss from operations was $7,426,000 for the six months ended June 30, 2024, compared to a loss of $4,231,000 in the same period of 2023, reflecting an increase in loss of $3,195,000 or 75.5%[136] - 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, indicating a worsening financial performance[195] - Adjusted EBITDA for the six months ended June 30, 2024, was $(1,079,000), a significant decline from $6,601,000 in 2023, highlighting operational challenges[195] Legal and Compliance Issues - The company was involved in litigation with Sphere 3D, alleging breach of contract, with claims seeking damages of $100 million[213] - The company successfully settled the Core Complaint, which had alleged breach of miner hosting agreements, resulting in the dismissal of claims against the company[213] - The company received a PPP Loan of $2.2 million, which was forgiven in full, but the SBA is reviewing this determination for potential reversal[215] - The company is cooperating with a DOJ inquiry regarding the PPP Loan, with no formal demands for repayment made yet[217] - A trial related to the TreCom litigation is set to commence on December 2, 2024, with the company establishing a loss contingency of $0.2 million[220] 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 actively working to improve its internal control over financial reporting and will report progress to the Audit Committee periodically[203] Strategic Initiatives - Gryphon has deployed approximately 8,800 S19j Pro and S21 Antminers, focusing on creating a net carbon neutral bitcoin mining operation[122] - Gryphon's strategy includes working with power hosting partners committed to providing net carbon neutral energy, utilizing approximately 28 megawatts of space at its primary facility[123] - The Company plans to raise up to $70.0 million through an at-the-market issuance sales agreement to fund general corporate purposes and potential acquisitions[173] Market and Hashrate Trends - The global hashrate of the Bitcoin network increased sequentially by 9.1%, 21.6%, 19.0%, and 6.7% over the last four quarters ending June 30, 2024, impacting mining efficiency[130]

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 47.5% increase from $5,076,000 in Q1 2023[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] - The company mined approximately 142 Bitcoin in Q1 2024, down from 212 Bitcoin in Q1 2023[4] - Mining activities generated $7,490,000 in revenue, compared to $4,840,000 in the same period last year, reflecting a 54.1% growth[21] Expenses and Liabilities - Total operating expenses increased to $9,050,000 in Q1 2024 from $6,764,000 in Q1 2023, representing a 33.5% rise[21] - As of March 31, 2024, total assets were $17.8 million, while total liabilities were $30.2 million[9] Cash Flow and Stock - 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 $1,807,000 provided in Q1 2023[24] - Proceeds from the issuance of common stock amounted to $1,395,000 in Q1 2024, with no proceeds reported in Q1 2023[24] Asset Valuation - The unrealized gain on digital assets was $(1,703,000) in Q1 2024, while there was no unrealized gain reported in Q1 2023[24] - The company experienced a change in fair value of notes payable, resulting in a loss of $9,638,000 in Q1 2024, compared to a loss of $8,189,000 in Q1 2023[21] Strategic Initiatives - 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 has authorized a stock repurchase program of up to $5 million to enhance shareholder value[4] - 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]

Mining Performance - For Q1 2024, Gryphon mined approximately 142 bitcoins, a decrease of 33% from 212 bitcoins mined in Q1 2023[164] - Mining revenues for 2023 totaled $21,052,000, with Q1 2024 revenues at $7,490,000, reflecting a 55% increase from Q1 2023's $4,840,000[165] - The cost to mine one bitcoin increased significantly from $12,910 in Q1 2023 to $34,063 in Q1 2024, indicating a rise of 164%[165] - Gryphon's breakeven cost for total Bitcoin Equivalent Coins generated was $34,063 in Q1 2024, compared to $12,385 in Q1 2023, marking a 175% increase[166] - The average value of one mined bitcoin rose from $22,830 in Q1 2023 to $52,746 in Q1 2024, an increase of 131%[165] Financial Overview - Total revenues for the three months ended March 31, 2024, were $7,490,000, up 47.6% from $5,076,000 in the same period of 2023[176] - Cost of revenues increased to $4,837,000 for the three months ended March 31, 2024, from $2,737,000 in 2023, a rise of 76.7%[180] - General and administrative expenses rose to $2,461,000 for the three months ended March 31, 2024, compared to $1,354,000 in 2023, an increase of 81.8%[181] - The company reported a loss from operations of $1,560,000 for the three months ended March 31, 2024, a slight improvement from a loss of $1,688,000 in the same period of 2023[176] - Other expenses increased significantly to $10,184,000 for the three months ended March 31, 2024, compared to $5,222,000 in 2023, marking a 95.0% increase[176] - The company reported a net loss of $11,744,000 for Q1 2024, compared to a net loss of $6,910,000 in Q1 2023[217] Cash Flow and Capital Resources - The company had cash and cash equivalents of $1,737,000 as of March 31, 2024, up from $915,000 as of December 31, 2023[199] - The accumulated deficit increased to approximately $58,180,000 as of March 31, 2024, from $47,175,000 as of December 31, 2023[199] - The company anticipates needing additional capital resources to fund operations and may consider selling additional equity or debt securities[200] - Net cash used in operating activities for Q1 2024 was approximately $983,000, compared to a net cash provided of $1,807,000 in Q1 2023[202][203][204] - Cash proceeds from the sale of digital currency in Q1 2024 were approximately $6,106,000, with operating expenditures of approximately $7,089,000[203] - Net cash provided by financing activities in Q1 2024 was approximately $1,805,000, primarily from cash proceeds of $1,395,000 from the issuance of common stock[202][206] Operational Strategy - Gryphon has deployed approximately 8,800 S19j Pro Antminers, with a focus on using net carbon neutral energy in its operations[160][162] - Gryphon's strategy includes working with power hosting partners committed to climate science, utilizing approximately 28 megawatts of renewable hydro energy[163] - The Coinmint Agreement involves hosting services for 7,200 S19j Pro Antminer machines at a hydro-powered facility[207] Market and Asset Valuation - The average value of Bitcoin rose to approximately $53,000 for the three months ended March 31, 2024, compared to $23,000 for the same period in 2023, an increase of approximately 130%[178] - Gryphon's electricity costs increased from $0.059 per kilowatt hour in Q1 2023 to $0.082 per kilowatt hour in Q1 2024, reflecting a 39% rise[168] - The global hashrate of the Bitcoin network increased sequentially by 18.9%, 9.1%, 21.6%, and 19.0% over the last four quarters ending March 31, 2024[168] Future Offerings - The company has initiated a new At The Market offering program with an aggregate offering price of up to $70,000,000, having sold 32,032 shares for total net proceeds of $44,958 as of May 9, 2024[175] - The company filed a prospectus supplement for an offering of up to $70.0 million of common stock under an at-the-market issuance sales agreement[201] - The company has a remaining capacity of $69,955,042 under the ATM as of May 9, 2024[201] Accounting and Financial Adjustments - Adjusted EBITDA for Q1 2024 was approximately $1,895,000, down from $4,235,000 in Q1 2023[217] - The adoption of ASU 2023-08 resulted in a $739,000 increase in digital assets as of January 1, 2024[218] - The company has no off-balance sheet arrangements that could materially affect its financial condition[209]

Merger and Acquisition Details - The merger between Akerna Corp. and Gryphon Digital Mining, Inc. will be accounted for as a reverse acquisition, with Gryphon as the accounting acquirer[1]. - Gryphon will retain a majority voting and equity interest in the combined company, and its executive management team will lead the new organization[2]. - The merger is expected to create synergies that could lead to improved operational efficiencies and market expansion opportunities[4]. - The merger with Gryphon Digital Mining is expected to result in Akerna stockholders owning approximately 7.5% of the combined company[12]. - The estimated purchase price for the merger with Gryphon is approximately $16.3 million, based on Akerna's equity to be acquired, utilizing a closing stock price of $0.2855 per share as of February 9, 2024[27]. - The merger is expected to be accounted for as a "reverse acquisition," with Gryphon considered the accounting acquirer[25]. Financial Performance - Revenue reported at $6.836 billion, with a gross profit of $3.435 billion, resulting in a gross margin of approximately 50.3%[10]. - Operating expenses totaled $10.334 billion, leading to a loss from operations of $6.899 billion[10]. - Net loss from continuing operations was $8.603 billion, with a diluted net loss per share of $1.56[10]. - The total operating expenses included $5.677 billion in general and administrative costs, significantly impacting overall profitability[10]. Asset and Liability Overview - The unaudited pro forma condensed combined balance sheet as of December 31, 2023, reflects total assets of $18,834,000 and total liabilities of $19,482,000[6]. - Total current assets for the combined entity are projected to be $4,983,000, while total current liabilities are estimated at $19,933,000[7]. - The combined entity's financial information is for illustrative purposes and may not reflect actual future performance[4]. Accounting and Financial Adjustments - The combined company anticipates a significant adjustment in accounting policies post-merger, which may materially affect financial statements[5]. - Management will conduct a final review of Akerna's accounting policies to ensure conformity with Gryphon's standards post-acquisition[5]. - The pro forma statement of operations for the year ended December 31, 2023, is being prepared to illustrate the financial impact of the merger[9]. - The pro forma adjustments for the year ended December 31, 2023 include the conversion of $3.1 million in Senior Convertible Notes and $3.4 million in Series C Preferred Stock into 16,499,513 and 15,134,896 shares of common stock, respectively[28]. - The company anticipates recognizing goodwill of $20.2 million in connection with the merger, classified as a business combination[28]. - The pro forma adjustments reflect an estimated transaction cost of $2.0 million for advisory, legal, and accounting fees incurred by Akerna prior to the merger[28]. Business Unit Sales and Transactions - The sale of MJ Freeway LLC and Ample Organics Inc. to MJ Acquisition for $5 million is contingent upon the closing of the merger[15]. - The additional cash payment in the sale transaction was reduced from $4 million to $1.85 million[16]. - Akerna completed the sale of 365 Cannabis for $0.5 million, with an earn-out obligation valued at $2.3 million[18]. - The sale of Last Call Analytics was completed for $0.1 million, with results classified as discontinued operations[19]. - The company has completed the wind down of its remaining business units, including Veridian, Trellis, and Solo, in the fourth quarter of 2023, following the abandonment of software service and support for these units[20]. - The conversion price of Senior Convertible Notes was reduced to $0.50 per share to facilitate the merger[17]. Shareholder Information - Akerna's common shares outstanding as of December 31, 2023, total 10,352,069, with an estimated total of 57,172,921 shares outstanding immediately prior to the merger[29]. - The weighted average shares outstanding for the year ended December 31, 2023, have been calculated as if the merger occurred on January 1, 2023, reflecting various conversions and issuances[30]. - The company has eliminated revenues and direct expenses associated with MJ Freeway, which will not continue as a result of the sale transaction[30]. - The historical financial information of Akerna has been adjusted to eliminate results from abandoned business units and certain corporate activities that will not continue post-merger[21].

Bitcoin Mining Operations - Gryphon operates approximately 7,400 bitcoin ASIC mining computers, generating revenue measured on a dollar per megawatt-hour (MWh) basis, which is variable based on Bitcoin price, difficulty, transaction volume, and global hash rates[38]. - Gryphon has deployed a total of approximately 9,000 S19 series Antminers from Bitmain, with operations launched in September 2021[35]. - Gryphon's hosted capacity at Core Scientific represented approximately 1% of its overall fleet, which has been relocated without material impact on operations[69]. - Gryphon contributes 100% of its Bitcoin hashing power to Foundry USA Pool, which has a total hashing power of approximately 172 EH/S, with Gryphon providing about 0.5% of that[86]. - Gryphon's miner fleet consists of 7,128 S19j Pro Antminers, 229 S19k Pro Antminers, 309 S19 Pro Antminers, and 876 S19j Pro + Antminers, with a total hashrate capacity of approximately 100 TH/s to 120 TH/s per miner[81]. - Gryphon's operations include preventative maintenance and efficiency measures to enhance profitability and competitiveness[122]. - Gryphon's mining operations are heavily dependent on electricity costs, which are expected to account for a significant portion of overall costs[154]. - Gryphon's ability to compete is tied to its hash rate growth, which must keep pace with the increasing global network hash rate[138]. - Gryphon's mining operations depend on third-party mining pools, exposing it to risks if the pool operator experiences downtime or other issues[176]. - Gryphon's reliance on a small number of digital asset mining equipment suppliers poses risks, as demand for mining machines may outpace supply, impacting growth expectations and financial condition[170]. Financial Performance and Revenue Model - Gryphon's revenue model involves mining and holding Bitcoin, selling only the necessary amount to cover operating expenses and reinvest in operational expansion[89]. - Gryphon's revenues from bitcoin mining are dependent on the number of bitcoin rewards mined and the value of Bitcoin, which has historically been volatile, with a price range in fiscal 2023 between approximately $16,600 and $44,000[103]. - Gryphon's operational strategy focuses on low-cost hosting and partnerships with providers for net carbon neutral power[79]. - Gryphon's bitcoin mining reward will halve from 6.25 to 3.125 in 2024, impacting revenue if Bitcoin prices do not adjust accordingly[119]. - Gryphon aims to maintain a breakeven profitability floor significantly below the network average to mitigate halving impacts[121]. - Gryphon's ability to achieve profitability is contingent on the bitcoin reward for solving blocks being sufficiently high[151]. - Gryphon's average holding period for Bitcoin was 25 days, an increase from under 7 days prior to December 31, 2022[89]. - Gryphon's operations will continue to expand as it acquires additional miners when opportunities arise[81]. Regulatory Environment and Compliance - The regulatory environment for cryptocurrency is evolving, with potential impacts on Gryphon's business from new laws and regulations[95]. - Gryphon recognizes the risks posed by the evolving regulatory environment and potential disruptions in the crypto asset markets, which could impact its operations[104]. - Regulatory changes in jurisdictions where Gryphon operates could impact its ability to conduct business, necessitating potential costly relocations[183]. - The U.S. regulatory environment for cryptocurrencies is evolving, with potential new laws and regulations expected to impact Gryphon's operations[206]. - Regulatory scrutiny has increased significantly, particularly following the collapse of FTX, with investigations from multiple U.S. agencies[206]. - Future regulatory changes could impose additional compliance burdens on Gryphon, potentially leading to increased operational costs[208]. - Gryphon's activities may necessitate compliance with anti-money laundering regulations, leading to extraordinary expenses and operational challenges[198]. - Gryphon's ability to continue as a going concern may be adversely affected by regulatory actions in countries that restrict cryptocurrency use[215]. Risks and Challenges - Gryphon faces significant competition from larger companies with greater resources and experience, which may hinder its ability to expand and improve its network[184]. - Gryphon may struggle to access sufficient capital for operations and growth initiatives, which could hinder competitiveness and financial condition[140]. - Gryphon's independent accounting firm's report expresses substantial doubt about its ability to continue as a going concern[144]. - Gryphon may incur additional losses and negative cash flows, necessitating potential future debt or equity financing[146]. - Gryphon's business may be negatively impacted by the development of competing blockchain technologies, making it difficult to adapt and realize anticipated profits[187]. - Gryphon's reliance on a single model of miner increases operational risks, as any design flaws could adversely affect Gryphon's entire mining system[173]. - Gryphon's stock price may be volatile and subject to fluctuations based on various external factors, including market performance and regulatory developments[218]. - Gryphon's future growth depends on attracting and retaining qualified personnel in a competitive market[149]. Environmental and Sustainability Commitments - Gryphon's primary hosting facility in New York utilizes 28 megawatts of space powered by renewable hydro energy, aligning with its mission for carbon neutrality[36]. - Gryphon has entered into agreements to purchase 74,075 carbon credits to offset its carbon footprint from bitcoin mining activities, maintaining its commitment to carbon-free energy sources[99]. - Gryphon's commitment to ESG principles includes avoiding bitcoin mining at facilities using carbon-based electricity sources, reinforcing its focus on sustainability[99]. - Climate change may impose additional costs and risks on Gryphon's operations, potentially impacting its financial condition[192]. Legal and Litigation Matters - Gryphon is currently engaged in litigation, including the Sphere 3D Litigation, which may result in significant liabilities or damages affecting its financial condition[225]. - The Company has a PPP Loan of $2.2 million obtained under the CARES Act, which was initially forgiven by the SBA, but is now under review for potential reversal[228]. - The SBA is considering a full denial of the previously forgiven amount based on the Company's eligibility for the PPP Loan, which could negatively impact its financial position[229]. - There exists a risk that the SBA or DOJ could determine the Company does not qualify for forgiveness of the PPP Loan, leading to potential repayment obligations and penalties[231].