Business context and reporting period
Entity and period mismatch: The supplied filing is Gryphon Digital Mining, Inc.’s Form 10-K for the fiscal year ended December 31, 2023, filed April 1, 2024—not an American Bitcoin Corp. filing and not a standalone 2023 fourth-quarter report. The audited financial statements are for Akerna Corp.’s former cannabis-software business. Gryphon’s mining business is described in the filing, but its audited financial statements are identified as forthcoming in a separate Form 8-K/A.
On February 9, 2024, Akerna completed a business combination with Legacy Gryphon, sold its legacy business, changed its name to Gryphon Digital Mining, Inc., and began trading as GRYP. Former Gryphon shareholders held approximately 92.5% of the combined company on a fully diluted basis. Accordingly, the 2023 financial results below should not be read as Gryphon’s Bitcoin-mining results.
Financial results and key metrics
Audited results in this 10-K: legacy Akerna business
| Metric | 2023 | 2022 | Change |
|---|---|---|---|
| Continuing-operations revenue | $6.84 million | $10.46 million | Down 35% |
| Gross profit / margin | $3.44 million / 50% | $5.55 million / 53% | Profit down 38%; margin down 3 percentage points |
| Operating loss | $6.90 million | $43.08 million | Loss narrowed |
| Net loss | $11.58 million | $79.06 million | Loss narrowed |
| Adjusted EBITDA (non-GAAP) | $(5.30) million | $(10.20) million | Loss narrowed |
| Cash and restricted cash at year-end | $0.77 million | $7.88 million | Down $7.11 million |
| Cash used in operating activities | $5.89 million | $10.90 million | Use decreased |
Revenue fell primarily because of business-unit disposals and abandonment, customer churn, weaker government-platform revenue, and reduced consulting activity. The 2022 comparison included a $26.5 million impairment charge in continuing operations; there was no corresponding charge in 2023. Discontinued operations generated losses of $2.98 million in 2023 and $32.78 million in 2022.
At December 31, 2023, legacy Akerna reported total assets of $1.36 million, current liabilities of $10.37 million, and stockholders’ deficit of $9.01 million. Reported debt was $5.15 million, all classified as current; this is legacy Akerna debt, not the mining-company Anchorage loan. The auditor cited a working-capital deficit, operating losses, and need for additional funds as raising substantial doubt about Akerna’s ability to continue as a going concern. Management said its plans did not alleviate that doubt.
Mining-business disclosures
The filing does not provide a clear audited 2023 revenue, profit, cash-flow, margin, or liquidity figure for Legacy Gryphon’s Bitcoin-mining operations. It describes approximately 7,400 miners in one overview, while the year-end fleet breakdown lists 7,128 S19j Pro, 229 S19k Pro, 309 S19 Pro, and 876 S19j Pro+ units—8,542 in total. The difference is not reconciled in the supplied filing text.
Gryphon reported electricity costs at its Coinmint facility of $0.073/kWh at December 31, 2023, with a 52-week rolling average of $0.066/kWh. It stated that it used approximately 25 MW at the site. The Anchorage loan amendment set interest at 6% and required payments tied to mining revenue; the filing reports an outstanding principal balance of 351.58 BTC at year-end 2023. It also requires collateral coverage of 110% and includes restrictive covenants. A clear USD year-end value for this Bitcoin-denominated balance is not provided in the cited text.
Material changes versus the prior comparable period
- Legacy Akerna’s continuing revenue declined 35% and gross margin declined from 53% to 50% year over year; expenses and losses were also lower, in part due to restructuring, business exits, and the absence of the prior-year impairment.
- Akerna sold or abandoned multiple cannabis-software businesses during 2023 and completed the sale of MJF in February 2024 as part of its exit from that business.
- Gryphon’s Core-hosted 133 miners—about 1% of its fleet—were relocated by year-end 2023. The Core-related claims were settled and released in January 2024.
- The Anchorage loan’s interest rate increased from 5% to 6% in 2023; the amended maturity is March 2026, and payments are linked to mining revenue.
Outlook, risks, contingencies, and unusual items
No quantified earnings or production guidance is provided. Gryphon described a strategy of mining and generally holding Bitcoin, selling only what is needed for operating costs and reinvestment. It uses curtailment when forecast electricity costs exceed expected mining revenue and says its power mix is net carbon neutral. The filing discusses the anticipated 2024 Bitcoin reward halving as a significant risk; it gives no assurance that Bitcoin prices will offset lower block rewards.
- Liquidity and going concern: Gryphon warns it may need additional debt or equity financing and cannot assure financing will be available on acceptable terms. Its mining-business auditor financial statements are not included in this 10-K.
- Debt and collateral: The Anchorage loan is secured, includes a 110% collateral-coverage requirement, and restricts certain debt, asset, hosting, custody, and other actions. A breach could permit acceleration and foreclosure.
- Bitcoin and operating exposure: Profitability is sensitive to Bitcoin prices, network difficulty/hash rate, block rewards, electricity prices, equipment availability, hosting arrangements, and regulatory changes. Operations are concentrated in New York and rely on third-party hosts and mining equipment suppliers.
- Cybersecurity incident: A threat actor impersonating a Sphere 3D executive induced transfer of 26 BTC, valued at about $560,000 at the time. The Bitcoin was not recovered; Gryphon paid Sphere 3D the equivalent amount in dollars and recorded the payment as 2023 general and administrative expense. Gryphon says it changed controls afterward.
- Legal matters: Gryphon and Sphere 3D dispute alleged breach and termination of their management-services agreement, which Gryphon says runs through August 2026; the filing provides no estimate of potential loss or recovery. Akerna’s former $2.2 million PPP loan had been forgiven, but the SBA was reviewing forgiveness and the DOJ requested documents; neither had made a repayment demand as of the filing. Legacy Akerna also disclosed a $0.2 million TreCom contingency and pending Dutchie litigation.
- Controls: Management concluded Akerna’s disclosure controls and internal control over financial reporting were ineffective at December 31, 2023 due to material weaknesses. Remediation plans were suspended in connection with the merger.
- Other unusual items: Legacy Akerna reported a $1.9 million expense for strategic-transaction and merger costs in 2023. The February 2024 merger and business sale materially changed the company’s business and capital structure after the reporting date.
Important facts investors should verify
- Confirm the issuer and reporting scope: this is a Gryphon/Akerna 10-K, and the audited 2023 statements presented are for legacy Akerna, not American Bitcoin Corp. or Legacy Gryphon’s mining operations.
- Review the separate filing containing Legacy Gryphon’s audited 2023 and 2022 financial statements, including mining revenue, Bitcoin production and holdings, cash flows, debt, and liquidity.
- Reconcile the reported miner counts and verify year-end operating hash rate, fleet status, hosting capacity, and actual power costs.
- Review the Anchorage loan balance, collateral coverage, repayment terms, covenants, and potential conversion or dilution provisions.
- Track the Sphere 3D dispute, PPP-loan review, Dutchie and TreCom matters, and the effect of the cybersecurity reimbursement and control changes.
- Assess post-merger cash needs, financing access, share dilution, internal-control remediation, and the effect of the Bitcoin halving on unit economics.