Business Context and Reporting Period
Company: Gryphon Digital Mining, Inc. (trading symbol: GRYP; formerly Akerna Corp.)
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: June 30, 2025
Business Overview: Gryphon operates as a Bitcoin mining company, utilizing ASIC miners to solve cryptographic algorithms for the Bitcoin blockchain. The company is currently in the process of a reverse merger with American Bitcoin Corp. (ABTC), under which existing Gryphon shareholders are expected to own approximately 2.0% of the combined entity, while ABTC shareholders will own approximately 98.0%.
Key Financial Metrics
| Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 |
|---|---|---|
| Revenue (Mining) | $2,935,000 | $13,005,000 |
| Net Loss | $(11,537,000) | $(15,753,000) |
| Loss Per Share (Basic & Diluted) | $(0.16) | $(0.44) |
| Cash and Cash Equivalents (End of Period) | $678,000 | $1,219,000 |
| Digital Assets (Bitcoin) | $917,000 (8.56 BTC) | $1,016,000 (10.93 BTC) |
| Total Assets | $6,197,000 | $7,632,000 |
| Total Liabilities | $17,188,000 | $14,642,000 |
| Stockholders' Deficit | $(10,991,000) | $(7,010,000) |
| Operating Cash Flow | $(4,098,000) | $(782,000) |
| Financing Cash Flow | $5,856,000 | $2,040,000 |
Material Changes vs. Prior Period
- Revenue Decline: Mining revenue decreased by 77.4% to $2.935 million. This was driven by the Bitcoin halving event in April 2024 (reducing block rewards by 50%) and a 45% increase in global network hashrate, which reduced the number of coins mined despite an increase in the average Bitcoin price.
- Cost of Revenues: Decreased by 57.6% to $3.662 million, primarily due to fewer bitcoins mined, partially offset by higher energy costs ($0.0926/kWh vs. $0.0736/kWh in the prior period).
- Merger and Acquisition Costs: Significantly increased to $3.164 million (vs. $0.394 million prior year). This includes the write-off of deposits and fees related to terminated acquisition agreements with Giga Caddo, Erikson National Energy, and Captus Energy, as well as costs associated with the pending ABTC merger.
- Depreciation: Decreased by 75.7% to $1.586 million due to the aging of the mining fleet (average remaining useful life dropped from 52 months to 23 months).
- Debt Restructuring Impact: The prior period included a $6.895 million loss on the change in fair value of a Bitcoin-denominated note payable. This note was settled in October 2024; therefore, no such fair value adjustment occurred in the current period.
Guidance, Outlook, Risks, and Unusual Items
- ABTC Merger: The company is pursuing a merger with American Bitcoin Corp. (ABTC). Upon closing, Gryphon shareholders will be significantly diluted (owning ~2% of the combined company). The transaction is subject to regulatory approvals and shareholder votes. A termination fee of $5 million may be payable if the merger fails under certain circumstances.
- Liquidity and Going Concern: Management states that current cash levels ($678,000) are insufficient to meet anticipated needs for the next 12 months. The company relies on equity financing (ATM program and registered direct offerings) to fund operations. There is a material uncertainty regarding the company's ability to continue as a going concern without additional capital.
- Operational Suspension: Mining operations with Blockfusion were suspended in April 2025 due to high industry hashrates and energy costs.
- Terminated Acquisitions: The company terminated agreements to acquire Captus Energy, Giga Caddo, and Erikson National Energy during the period, resulting in the expensing of significant deposits.
- Internal Controls: The company identified a material weakness in internal controls over financial reporting due to insufficient staffing in the accounting department, leading to inadequate segregation of duties.
- Legal Proceedings: The company is facing a wrongful termination lawsuit from its former CEO, Robby Chang, and an ongoing SBA/DOJ inquiry regarding a previously forgiven PPP loan.
Investor Verification Checklist
- Merger Status: Verify the current status of the ABTC merger agreement, including any updates on regulatory approvals (HSR Act) and shareholder voting schedules.
- Cash Runway: Assess the sufficiency of the $678,000 cash balance against operating burn rates and the likelihood of successful equity raises via the ATM program.
- Dilution Impact: Confirm the final exchange ratio and the resulting ownership percentage for existing Gryphon shareholders post-merger.
- Operational Capacity: Review the status of the suspended Blockfusion operations and the utilization of the Mawson facility to understand future revenue potential.
- Legal Exposure: Monitor the outcome of the SBA/DOJ PPP loan inquiry and the Robby Chang wrongful termination litigation for potential financial liabilities.
- Internal Controls: Evaluate the progress of remediation efforts regarding the material weakness in financial reporting controls.