Gryphon Digital Mining(GRYP) - 2024 Q3 - Quarterly Report

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$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$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$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$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$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$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].