Business Context and Reporting Period
Company: Gryphon Digital Mining, Inc. (GRYP)
Filing Type: Form 10-K (Annual Report)
Period: Fiscal year ended December 31, 2024
Business Overview: Gryphon is a Bitcoin mining company that operates approximately 9,660 ASIC miners at third-party hosted data centers in New York and Pennsylvania. In late 2024, the company pivoted its strategy to include the acquisition of energy assets for AI and High-Performance Computing (HPC) data center infrastructure. The company completed a reverse merger with Akerna Corp. in February 2024, exiting the cannabis SaaS business.
Key Financial Metrics
| Metric | 2024 | 2023 |
|---|---|---|
| Total Revenue | $20.54 million | $21.93 million |
| Net Loss | $(21.30) million | $(28.60) million |
| Operating Cash Flow | $(3.40) million | $3.01 million |
| Cash and Equivalents (Year End) | $0.74 million | $0.92 million |
| Bitcoin Mined | 334 BTC | 739 BTC |
| Cost to Mine (Excl. Depreciation) | $47,359 per BTC | $18,217 per BTC |
| Accumulated Deficit | $(67.74) million | $(47.18) million |
Debt and Liquidity: As of December 31, 2024, the company held $0.74 million in cash. Total liabilities were $14.64 million, including a $5.38 million non-current note payable and $9.05 million in accounts payable/accrued liabilities. The company has an At-The-Market (ATM) equity offering program with approximately $63.5 million in remaining capacity as of March 2025.
Material Changes vs. Prior Period
- Revenue Decline: Total revenue decreased 6.3% to $20.54 million. Mining revenue dropped slightly ($20.54M vs $21.05M) due to the April 2024 Bitcoin halving event (50% reduction in block rewards) and a 66% increase in global network hashrate, which reduced the number of coins mined despite a higher average Bitcoin price ($61,494 vs $28,487). Management services revenue ceased entirely ($0 vs $0.87M) following the termination of the Sphere 3D Master Services Agreement.
- Cost Increases: Cost of revenues increased 17.5% to $15.82 million, driven by higher energy costs and increased deployment of miners. General and administrative expenses surged 136.7% to $11.27 million, primarily due to $4.09 million in investor relations expenses and increased professional fees related to the merger and public company compliance.
- Debt Restructuring: In October 2024, the company restructured its Bitcoin-denominated note with Anchorage Lending. Approximately $9.1 million was converted to equity, $3.9 million to warrants, and $5 million remained as a new USD-denominated loan. This resulted in a $6.25 million gain on debt settlement.
- Accounting Change: The company adopted ASU 2023-08, requiring crypto assets to be measured at fair value. This resulted in a $1.57 million unrealized gain on digital assets in 2024.
Guidance, Outlook, Risks, and Contingencies
Outlook and Strategy: Management is aggressively pursuing a pivot to AI and HPC data centers. In January 2025, the company entered into an agreement to acquire Captus Energy (an 850-acre site in Alberta, Canada) for CAD $24.0 million to develop a 4GW scalable power generation facility. The company also signed new hosting agreements with Blockfusion (NY) and Mawson (PA) to expand mining capacity.
Going Concern: The independent auditor has expressed substantial doubt about the company's ability to continue as a going concern. The company has an accumulated deficit of $67.7 million and negative operating cash flow. Management believes current cash levels are insufficient to meet needs for the next 12 months without additional financing.
Material Risks:
- Nasdaq Delisting: The company received delisting notices in March 2025 for failing to meet the $1.00 minimum bid price and $35 million Market Value of Listed Securities (MVLS) requirements. A hearing is scheduled for April 2025.
- Regulatory/Litigation: The company is under review by the SBA and DOJ regarding a $2.2 million PPP loan forgiveness from 2021. Additionally, the company settled litigation with Sphere 3D in March 2025.
- Internal Controls: The company identified two material weaknesses in internal controls over financial reporting related to disclosure timeliness and communication of material information.
- Bitcoin Volatility: Profitability is directly correlated to Bitcoin price, which remains highly volatile.
Key Facts for Investor Verification
- Liquidity Runway: Verify the company's ability to raise capital immediately given the "substantial doubt" going concern opinion and only $0.74 million in cash on hand.
- Nasdaq Compliance: Monitor the outcome of the April 2025 hearing regarding the bid price and MVLS delisting notices.
- Captus Acquisition Funding: Confirm how the company intends to fund the remaining CAD $24.0 million purchase price for the Captus Energy acquisition, given current cash constraints.
- PPP Loan Status: Track the resolution of the SBA/DOJ review of the $2.2 million PPP loan, which could result in a demand for repayment and penalties.
- Internal Control Remediation: Assess the progress of remediation plans for the identified material weaknesses in financial reporting controls.