8-K/A: Gryphon Digital Mining Amends Merger Filing with American Bitcoin Corp., Details Financials and Risks

Gryphon Digital Mining, Inc. filed an amendment to its merger agreement with American Bitcoin Corp., providing updated financial information, operational details, and extensive risk factors related to the proposed transaction.

Summary

• The filing is an Amendment No. 1 to Gryphon Digital Mining, Inc.'s Current Report on Form 8-K, primarily updating information under Item 9.01 related to the proposed merger with American Bitcoin Corp. (ABTC).
• Upon the closing of the mergers, ABTC is deemed the accounting acquirer, and Gryphon stockholders are expected to own 2.0% of the outstanding Combined Company common stock on a fully diluted basis, while ABTC stockholders will own 98.0%.
• Hut 8 Corp., through its wholly-owned subsidiary American Bitcoin Holdings, LLC (ABH), is expected to own approximately 64.37% of the then-outstanding Combined Company Common Stock, representing approximately 80.00% of the total combined voting power.
• ABTC's business objective is Bitcoin accumulation through efficient Bitcoin mining, disciplined Bitcoin reserve expansion, and focused ecosystem engagement.
• As of May 31, 2025, ABTC owned over 60,000 Bitcoin miners with a cumulative hashrate of 10.17 EH/s and a weighted average fleet efficiency of 21.2 J/TH.
• ABTC accumulated approximately 215 Bitcoin in reserve since launching on April 1, 2025.
• On June 27, 2025, ABTC completed the first closing of a private placement, raising aggregate gross proceeds of $220,059,080 and net proceeds of approximately $215 million, intended for Bitcoin and/or miner purchases.
• ABTC's revenue for the three months ended March 31, 2025, decreased to $12.338 million from $30.357 million in the same period of 2024, primarily due to a decrease in Bitcoin mined (135 Bitcoin vs. 592 Bitcoin) and the April 2024 halving event.
• ABTC reported a net loss of $(100.623) million for the three months ended March 31, 2025, a significant shift from a net income of $230.410 million in the prior year period, largely driven by $112.394 million in losses on digital assets due to a decrease in Bitcoin price.
• For the year ended December 31, 2024, ABTC's revenue increased to $71.537 million from $64.981 million in 2023, and net income was $428.935 million, up from $39.613 million in 2023, primarily due to increased Bitcoin prices.

Sentiment

Score: 5

Explanation: The sentiment is neutral to slightly negative. While ABTC showed strong full-year 2024 performance driven by Bitcoin price appreciation and successfully raised capital, its most recent quarterly results (Q1 2025) show significant declines in revenue and a substantial net loss. The merger involves extreme dilution for Gryphon shareholders, and the document outlines extensive risks related to Bitcoin volatility, operational dependencies, and regulatory uncertainties, balancing out any positives.

Positives

• ABTC's strategic objective is Bitcoin accumulation, aiming for a capital-efficient platform for long-term Bitcoin ownership.
• ABTC maintains a substantial and efficient Bitcoin miner fleet, owning over 60,000 miners with a cumulative hashrate of 10.17 EH/s and a weighted average efficiency of 21.2 J/TH as of May 31, 2025.
• ABTC successfully raised approximately $215 million in net proceeds from a private placement on June 27, 2025, to fund its strategic and Bitcoin accumulation goals.
• ABTC's cost of revenue decreased by $5.1 million for the three months ended March 31, 2025, compared to the same period in 2024, due to relocating miners to lower-cost sites and deploying energy curtailment software.
• ABTC's full-year 2024 financial performance showed strong growth, with net income of $428.935 million and Adjusted EBITDA of $517.608 million, largely benefiting from Bitcoin price appreciation during that period.

Negatives

• Gryphon stockholders will face significant ownership and voting power dilution, with their stake in the Combined Company expected to be only 2.0% on a fully diluted basis.
• ABTC's revenue for Q1 2025 significantly decreased by $18.019 million to $12.338 million, primarily due to a substantial reduction in Bitcoin mined (135 Bitcoin vs. 592 Bitcoin in Q1 2024) and the impact of the April 2024 halving event.
• ABTC reported a net loss of $(100.623) million for Q1 2025, a sharp decline from a net income of $230.410 million in Q1 2024, mainly driven by $112.394 million in losses on digital assets due to a decrease in Bitcoin price.
• Adjusted EBITDA for ABTC plummeted to $(122.618) million in Q1 2025 from $281.450 million in Q1 2024.
• Gryphon may be required to pay ABTC a termination fee of $5.0 million, plus out-of-pocket expenses, if the merger is not completed under certain circumstances.
• Gryphon's Chief Executive Officer, Chief Financial Officer, and Senior Vice President, Energy, are entitled to severance payments and accelerated vesting of restricted stock units totaling approximately $3.538 million upon the Closing of the merger.

Risks

• The completion of the Mergers is uncertain and subject to various conditions, including stockholder approvals, which if not satisfied, could prevent the Closing and potentially require Gryphon to pay a $5.0 million termination fee to ABTC.
• The pendency of the Mergers could cause substantial disruptions and uncertainty for both Gryphon and ABTC, potentially affecting employee retention and business relationships.
• Gryphon stockholders will experience significant ownership and voting power dilution, with ABTC stockholders expected to own 98.0% and Hut 8 controlling approximately 80.00% of the total combined voting power of the Combined Company.
• The anticipated strategic and financial benefits of the Mergers may not be fully realized, and the integration of the two companies could be more difficult, time-consuming, or costly than expected.
• ABTC's business is highly concentrated in Bitcoin, making it extremely vulnerable to fluctuations in Bitcoin price, which directly impacts its financial condition and results of operations.
• Failure to grow ABTC's hashrate could impair its competitiveness, as profitability in Bitcoin mining depends on maintaining computing power relative to the global network hashrate.
• ABTC may face challenges in purchasing Bitcoin miners at scale or experience delays in obtaining new miners due to supply chain issues, geopolitical factors, or manufacturer capacity constraints.
• Holding Bitcoin exposes ABTC to risks such as lack of insurance, security breaches, cyberattacks, and the potential for custodially-held Bitcoin to be considered property of a custodian's bankruptcy estate.
• Competition from other investment vehicles, including spot Bitcoin exchange-traded products (ETPs), could divert investor interest from the Combined Company's securities.
• ABTC's reliance on third-party mining pool service providers (Foundry, Luxor) for revenue payouts carries risks of system downtime, cyberattacks, or inaccurate record-keeping.
• Future Bitcoin halving events will reduce block rewards, requiring a corresponding increase in Bitcoin price or decrease in mining difficulty to maintain profitability.
• A potential shift in the Bitcoin network from proof-of-work to proof-of-stake validation could render ABTC's mining operations less competitive.
• The risk of a malicious actor or botnet obtaining control of a majority of the Bitcoin network's processing power could lead to blockchain manipulation.
• Forks in the Bitcoin network may occur, which could affect the value of Bitcoin held by ABTC, and ABTC may not be able to realize the economic benefit of new assets from such forks.
• ABTC's operations are highly dependent on maintaining a good relationship with Hut 8, and termination or non-renewal of their agreements could materially adversely affect ABTC's business.
• ABTC may experience liquidity constraints and may be unable to raise additional capital needed for operations and growth, potentially leading to significant dilution if equity financing is pursued.
• Failure of critical systems related to ABTC's operations, such as power loss, equipment failure, or cyberattacks, could significantly disrupt business and reduce revenue.
• ABTC is subject to risks associated with its significant electrical power needs, including power unavailability, price fluctuations, and potential curtailment of operations.
• ABTC's business may be heavily impacted by geopolitical, social, economic, and other events, including tariffs, which could increase equipment import costs and disrupt supply chains.
• The evolving and uncertain legal, regulatory, and governmental frameworks for digital assets could lead to significant compliance costs, fines, or operational restrictions for ABTC.
• There is a risk that ABTC could be deemed an investment company under the Investment Company Act of 1940, which would impose impractical or impossible restrictions on its business.
• ABTC's interactions with the blockchain may inadvertently expose it to specially designated nationals (SDN) or blocked persons, potentially leading to sanctions or penalties.
• ABTC may be subject to substantial environmental or energy regulation, including climate change initiatives, which could impose significant costs or restrictions on Bitcoin mining.
• ABTC may be involved in legal proceedings from time to time, which could be time-consuming, divert management attention, and incur significant expenses or liabilities.
• Changes in tax laws or unanticipated tax liabilities could adversely affect ABTC's effective income tax rate and profitability.
• ABTC may not effectively protect its intellectual property rights, or its intellectual property may infringe on third-party rights, which could adversely affect its business.
• The historical financial information of ABTC, prepared on a carve-out basis, may not be representative of its results or financial condition as a standalone public company or the Combined Company.
• The unaudited pro forma condensed combined financial information is for illustrative purposes only and may not be indicative of the Combined Company's future actual results.
• The market price of the Class A Common Stock may be volatile or decline regardless of the Combined Company's operating performance, and an active trading market may not develop or be sustained.
• The proposed multi-class capital structure of the Combined Company will concentrate voting control with Hut 8 and certain principal shareholders, limiting the influence of other stockholders.
• Hut 8's interests may conflict with the interests of the Combined Company and its other stockholders.
• The Combined Company will rely on exemptions from certain Nasdaq corporate governance requirements for controlled companies, potentially reducing protections for stockholders.
• Future sales and issuances of the Combined Company's Common Stock could result in dilution and cause the stock price to fall.
• Failure by the Combined Company to comply with Nasdaq listing standards could result in a delisting of the Class A Common Stock.
• The Combined Company's operating results may fluctuate significantly or fall below the expectations of investors or securities analysts, causing stock price volatility.
• The Combined Company will incur increased costs and its management team will need to devote substantial time to compliance initiatives as a public company.
• Key members of the Combined Company's management team may have limited experience managing a public company.
• The Combined Company's ability to use Gryphon's net operating loss carryforwards and certain tax credit carryforwards may be subject to limitation under Section 382 of the Code.
• If the Mergers do not qualify as a reorganization for U.S. federal income tax purposes, U.S. Holders of ABTC Common Stock will be required to recognize gain or loss.
• The Combined Company is not expected to pay dividends on Combined Company Common Stock.
• A forum selection clause in the Proposed Charter could limit Combined Company stockholders' ability to obtain a favorable judicial forum for disputes.
• Anti-takeover provisions in the Proposed Charter and Proposed Bylaws of the Combined Company could delay or prevent a change of control.
• If equity research analysts do not publish research or publish unfavorable reports about the Combined Company, its stock price and trading volume could decline.

Future Outlook

The Combined Company intends to pursue a strategy focused on Bitcoin accumulation through efficient Bitcoin mining, disciplined Bitcoin reserve expansion, and strategic ecosystem engagement. It aims to leverage its relationship with Hut 8 for operational services and access to high-efficiency capacity expansions. The Combined Company expects to continue accumulating Bitcoin and may raise additional capital through equity or debt financings to fund its growth initiatives. However, the realization of anticipated strategic and financial benefits from the Mergers is subject to various risks and uncertainties, and the Combined Company's future results could differ materially from expectations.

Management Comments

• Steve Gutterman, Gryphon's Chief Executive Officer, is entitled to receive approximately $2,290,794 in total value upon the Closing, comprising $737,164 in severance payments and approximately $1,553,630 from accelerated vesting of restricted stock units.
• Simeon Salzman, Gryphon's Chief Financial Officer, is entitled to receive approximately $412,500 in severance payments, payable in twelve equal monthly installments.
• Eric Gallie, Gryphon's Senior Vice President, Energy, is entitled to receive approximately $835,000 in total value upon the Closing, consisting of $250,000 in severance payments (payable in twelve equal monthly installments) and approximately $585,000 from accelerated vesting of restricted stock units.

Industry Context

The announcement reflects the ongoing consolidation and strategic maneuvering within the highly competitive Bitcoin mining industry. ABTC's 'infrastructure-light' model, relying on Hut 8 for colocation and management services, highlights a trend towards operational flexibility and capital efficiency in a sector characterized by significant capital investment in physical infrastructure. The industry faces challenges from Bitcoin price volatility, increasing network difficulty, and the impact of halving events on mining rewards. The emergence of spot Bitcoin and Ether ETPs also introduces new competition for investor capital, potentially affecting the valuation of direct Bitcoin mining companies. Regulatory scrutiny on digital assets and environmental concerns related to energy consumption in Bitcoin mining continue to shape the industry landscape.

Management Changes

Corporate Governance

Legal Proceedings

• ABTC is not presently a party to any legal or regulatory proceedings that, in its management's opinion, would individually or collectively have a material adverse effect on its business, financial condition, or results of operations.
• ABTC is subject to regulatory oversight by numerous federal, state, local, and other regulators and may become subject to various legal proceedings, inquiries, investigations, and demand letters in the course of its business.
• Gryphon has certain pending litigation matters, as referenced in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Related Party Transactions

• ABTC has entered into a Master Colocation Services Agreement (MCSA) with U.S. Data Mining Group, Inc. (USDMG), a wholly-owned subsidiary of Hut 8, for colocation and hosting services for ABTC's Bitcoin miners.
• ABTC has entered into a Master Management Services Agreement (MMSA) with USDMG for management, oversight, strategy, compliance, operational, and other services for its Bitcoin mining operations.
• ABTC has entered into a Shared Services Agreement with USDMG, pursuant to which USDMG provides back-office support services to ABTC.
• ABTC has entered into a Put Option Agreement with Zephyr Infrastructure, LLC, a wholly-owned subsidiary of Hut 8, granting Zephyr the right to sell Bitcoin miners purchased under a Bitmain agreement to ABTC.
• Hut 8, through its wholly-owned subsidiary ABH, is ABTC's controlling stockholder and is expected to be the controlling stockholder of the Combined Company, with the power to determine decisions at stockholder meetings, including related party transactions.
• Prior to March 31, 2025, ABTC's operations were historically part of Hut 8's Bitcoin mining sub-segment, with various costs allocated from Hut 8 to ABTC, including employee compensation, professional services, and facilities expenses.

Stakeholder Impact

• Shareholders of Gryphon will experience significant dilution of their ownership and voting power in the Combined Company.
• Shareholders of both Gryphon and ABTC face risks related to the non-realization of anticipated strategic and financial benefits from the Mergers.
• Employees of Gryphon's management team (CEO, CFO, SVP Energy) will receive substantial severance and accelerated vesting of equity upon the Closing, indicating potential changes in their roles or departure.
• Employees of both companies may experience uncertainty and disruption due to the pendency of the Mergers and the subsequent integration process.
• Customers, suppliers, vendors, regulators, and other business partners may defer decisions or seek to change existing business relationships with Gryphon or ABTC during the merger's pendency.
• Creditors of Gryphon may be impacted by the repayment of Gryphon debt through the issuance of shares and the cashless exercise of warrants, as well as the overall financial health of the Combined Company.

Next Steps

• Gryphon stockholders will need to vote on the Proposed Transactions and other related matters at a Special Meeting.
• Gryphon will need to maintain its listing on the Nasdaq Stock Market LLC until the Closing of the Mergers.
• The Combined Company will proceed with the integration of Gryphon's and ABTC's businesses following the Closing.
• ABTC intends to continue accumulating Bitcoin and may pursue further equity or debt financings to support its strategic and Bitcoin accumulation goals.
• The Combined Company will need to comply with Nasdaq's initial and continued listing standards post-merger.

Key Dates

Keywords

Bitcoin mining, digital assets, cryptocurrency, merger, SEC filing, 8-K/A, Gryphon Digital Mining, American Bitcoin Corp, Hut 8, corporate governance, financial results, risk factors, Nasdaq, blockchain, ASIC miners, capital raise, dilution, halving