8-K: Akerna and Gryphon Merger Advances with SEC Approval and Shareholder Vote Scheduled

The proposed merger between Akerna and Gryphon Digital Mining is progressing, with the SEC declaring the S-4 registration statement effective and a shareholder vote scheduled for January 29, 2024.

Summary

• Akerna Corp. and Gryphon Digital Mining are moving forward with their merger, a transaction that has been in progress since January 27, 2023.
• The SEC has declared Akerna's S-4 registration statement effective on January 9, 2024, a key step towards the merger.
• Akerna's stockholders will vote on the merger at a special meeting on January 29, 2024, with 41% of outstanding shares under agreements to vote in favor.
• Gryphon stockholders will provide written consent, with 72% of outstanding shares under agreements to vote in favor.
• The merger is expected to close on or before January 31, 2024.
• The combined company is expected to be a pure-play, ESG-committed, net-carbon neutral bitcoin miner.
• Akerna plans to sell its cannabis software business simultaneously with the merger.
• The combined company is expected to list on the Nasdaq Capital Market under the ticker GRYP.
• Gryphon has a breakeven cost per BTC of approximately $15,746 based on year-to-date data through September 30, 2023.
• Gryphon has a 22.5% gross profit royalty agreement with a third-party bitcoin miner.

Sentiment

Score: 8

Explanation: The document conveys a positive outlook on the merger, highlighting key milestones and Gryphon's strong operational metrics. The high levels of shareholder support and the focus on carbon neutrality are also positive indicators.

Positives

• The SEC's approval of the S-4 is a significant step forward for the merger.
• High levels of shareholder support from both Akerna and Gryphon increase the likelihood of the merger's success.
• The merger is expected to create a focused, carbon-neutral bitcoin mining company.
• Gryphon's low breakeven cost per Bitcoin suggests strong profitability potential.
• Gryphon's high bitcoin efficiency and low capital expenditure per terahash indicate operational excellence.
• Gryphon's royalty agreement provides a unique revenue stream.
• Gryphon has been recognized for its clean energy use with a Green Proofs for Bitcoin certification.

Negatives

• The merger is still subject to shareholder approvals and other closing conditions.
• There are risks associated with the integration of the two companies.
• The sale of Akerna's cannabis software business is also a condition of the merger.
• The company is subject to the volatility of the bitcoin market.
• There is a risk that the combined company may not be able to obtain sufficient additional capital.
• There is a risk that the combined company may not realize the anticipated benefits of the merger.

Risks

• The merger may not close if conditions are not met, including shareholder approval.
• There are uncertainties regarding the timing of the merger and the ability of each company to complete the transaction.
• Akerna's ability to manage operating expenses and transaction costs is a risk.
• Failure to obtain necessary governmental approvals could delay or prevent the merger.
• Adjustments to the exchange ratio could impact the ownership percentages of Akerna and Gryphon stockholders.
• The market price of Akerna's stock relative to the exchange ratio is a risk.
• Unexpected costs or adverse reactions to the merger could negatively impact the combined company.
• The combined company may not be able to secure sufficient capital to advance its business plan.
• The company is subject to the volatility of the bitcoin market.
• There is a risk that the combined company may not realize the anticipated benefits of the merger.

Future Outlook

The combined company aims to be a leading carbon-neutral bitcoin miner, with a focus on operational efficiency and profitability. The merger is expected to close on or before January 31, 2024, subject to shareholder approvals and other closing conditions. The combined company is expected to list on the Nasdaq Capital Market under the ticker GRYP.

Management Comments

• Gryphon deeply appreciates the patience and understanding of its stockholders during the journey to going public.
• Gryphon is thrilled to share important updates about its progress within regulatory bounds.
• Gryphon remains committed to building on its legacy of excellence as it anticipates listing on the Nasdaq.

Industry Context

This merger reflects a trend of consolidation and specialization within the cryptocurrency mining industry, with companies seeking to achieve greater scale and efficiency. The focus on carbon neutrality also aligns with increasing investor and regulatory scrutiny of the environmental impact of bitcoin mining.

Comparison to Industry Standards

• Gryphon's bitcoin efficiency of 76 BTC/EH in September 2023 is significantly higher than the peer average of 63 BTC/EH, indicating superior operational performance.
• Gryphon's invested capital efficiency of $44/TH is substantially lower than the peer average of $116/TH, demonstrating a more capital-efficient approach.
• Gryphon's performance is compared to publicly disclosing peers in the bitcoin mining industry, highlighting its competitive advantage.
• Gryphon's management team has experience at companies such as Riot Blockchain and Marathon Digital Holdings, which are well-known in the bitcoin mining space.

Stakeholder Impact

• Akerna and Gryphon shareholders are expected to benefit from the merger through the creation of a focused, carbon-neutral bitcoin mining company.
• Employees of both companies may experience changes as a result of the merger.
• Customers of Akerna's cannabis software business may be impacted by the planned sale of that division.
• The merger could impact the competitive landscape of the bitcoin mining industry.

Next Steps

• Akerna will hold a special meeting of its stockholders on January 29, 2024, to vote on the merger.
• Gryphon will solicit written consents from its stockholders.
• The merger is expected to close on or before January 31, 2024.
• The combined company will seek listing on the Nasdaq Capital Market under the ticker GRYP.

Key Dates

Keywords

merger, bitcoin mining, cryptocurrency, Akerna, Gryphon Digital Mining, SEC, shareholder vote, carbon neutral, Nasdaq, GRYP