Gryphon Digital Mining(GRYP) - 2025 Q1 - Quarterly Report

Financial Performance - Gryphon's mining revenues decreased to $1,558,000 for Q1 2025 from $7,490,000 in Q1 2024, a decline of 79.2%[191] - Gryphon mined approximately 17 bitcoins in Q1 2025 compared to 142 bitcoins in Q1 2024, a decrease of 88%[182] - The cost of revenues decreased to $2,054,000 in Q1 2025 from $4,837,000 in Q1 2024, a reduction of 57.5%[195] - Gryphon's loss before provision for income taxes improved to $(6,280,000) in Q1 2025 from $(11,744,000) in Q1 2024, a reduction of 46.5%[192] - For the three months ended March 31, 2025, the company reported a net loss of $6.28 million, compared to a net loss of $11.74 million in the same period of 2024[235] - Adjusted EBITDA for Q1 2025 was $(4.37) million, a decrease from $1.90 million in Q1 2024[235] Cost and Expenses - The cost to mine one bitcoin increased to $120,117 in Q1 2025 from $34,070 in Q1 2024[183] - General and administrative expenses rose to $3,000,000 in Q1 2025 from $2,461,000 in Q1 2024, an increase of 21.9%[196] - Stock-based compensation expense increased to $772,000 for Q1 2025, up from $208,000 in Q1 2024, due to restricted stock units issued to the Board and management team[201] - Depreciation expense decreased to $1,071,000 for Q1 2025, down from $3,247,000 in Q1 2024, attributed to a reduction in the average remaining useful life of the mining fleet[202] Cash Flow and Financing - Net cash used in operating activities was approximately $3,219,000 in Q1 2025, compared to $983,000 in Q1 2024, with cash expenditures for operating activities totaling approximately $4,777,000[214] - Net cash used in investing activities was approximately $1,780,000 in Q1 2025, primarily for the purchase of mining equipment and cash disbursements for asset acquisition deposits[216] - Net cash provided by financing activities was approximately $4,582,000 in Q1 2025, significantly higher than $1,805,000 in Q1 2024, driven by proceeds from the issuance of common stock[217] - As of March 31, 2025, the company had cash and cash equivalents of $318,000, down from $735,000 as of December 31, 2024, and an accumulated deficit of approximately $73,652,000[210] - The company anticipates needing additional capital resources to fund operations and may consider selling additional equity or debt securities, which could dilute existing shareholders[211] Market and Operational Changes - The average value of bitcoin mined increased to $91,111 in Q1 2025 from $52,757 in Q1 2024, representing a 76% increase[183] - The average daily global hashrate increased by 42% from 564.7 exahash in Q1 2024 to 802.3 exahash in Q1 2025[194] - The company has suspended mining operations due to high industry hash rates and energy costs, and is reworking its agreement with Blockfusion to enable profitable mining[189] - Gryphon entered into a Master Co-Location Agreement with Mawson Hosting LLC to host up to 5,880 miners at a cost of approximately $23.50 per MW/hour[190] Asset Valuation and Accounting - The company incurred an unrealized loss on digital assets of $127,000 in Q1 2025, compared to an unrealized gain of $1,703,000 in Q1 2024, with Bitcoin's fair market value dropping from approximately $71,000 to $83,000[203] - Unrealized loss on marketable securities was $66,000 in Q1 2025, a significant improvement from a loss of $216,000 in Q1 2024, reflecting a decrease in the fair market value of underlying securities[205] - The company recognized a gain of $449,000 from the extinguishment of accounts payable following a settlement agreement with Sphere 3D[206] - The change in fair value of notes payable was recorded as $0 for Q1 2025, compared to $9.64 million in Q1 2024[235] - The company adopted ASU 2023-08 on January 1, 2024, resulting in a $740,000 increase in digital assets[236] - The company excluded $1.07 million in depreciation and $3,000 in interest expense from its adjusted EBITDA calculation for Q1 2025[235] - The company has implemented ASU 2023-07, which requires the disclosure of significant segment expenses and expanded interim disclosures[237] - The company considers accounting estimates critical if they involve highly uncertain assumptions and could materially impact financial results[230] - No new accounting standards updates (ASUs) were assessed as applicable to the company's financial position as of the issuance of the consolidated financial statements[232] - The company defines adjusted EBITDA as GAAP net income (loss) plus adjustments for depreciation, interest expense, income tax expense, and non-cash/non-recurring items[233] - The company emphasizes that non-GAAP financial measures should be read in conjunction with its GAAP financial statements for a comprehensive understanding of performance[234]