8-K: Gryphon Digital Mining Announces Merger with American Bitcoin Corp. and Regains Nasdaq Compliance

Gryphon Digital Mining, Inc. has announced a definitive merger agreement with American Bitcoin Corp. (ABTC), which will result in ABTC shareholders owning approximately 98% of the combined entity, while also confirming its regained compliance with Nasdaq listing standards.

Summary

• Gryphon Digital Mining, Inc. (Gryphon) has entered into an Agreement and Plan of Merger with American Bitcoin Corp. (ABTC), where ABTC will be the accounting acquirer and its business will become the core of the Combined Company.
• Upon closing, ABTC equity holders are expected to own approximately 98.0% of the outstanding Combined Company common stock on a fully diluted basis, with current Gryphon equity holders owning the remaining 2.0%.
• Gryphon received formal notification on June 6, 2025, confirming its regained compliance with Nasdaq Listing Rules 5550(a)(2) and 5550(b)(2), requiring a closing bid price of at least $1.00 per share and a market value of listed securities of at least $35 million, respectively.
• ABTC's business objective is Bitcoin accumulation through efficient Bitcoin mining, disciplined Bitcoin reserve expansion, and focused ecosystem engagement, operating over 60,000 Bitcoin miners with a cumulative hashrate of 10.17 EH/s and efficiency of 21.2 J/TH as of May 31, 2025.
• ABTC's Q1 2025 revenue decreased to $12.3 million from $30.3 million in Q1 2024, primarily due to reduced Bitcoin mined (135 BTC vs 592 BTC) caused by fleet upgrades, increased network difficulty, and the April 2024 halving event.
• ABTC reported a net loss of $100.6 million in Q1 2025, a significant decline from a net income of $230.4 million in Q1 2024, largely driven by $112.4 million in losses on digital assets due to a decrease in Bitcoin price from $93,354 to $82,534 during the quarter.
• For the full year 2024, ABTC's revenue increased to $71.5 million from $65.0 million in 2023, and net income significantly rose to $428.9 million from $39.6 million, primarily due to substantial gains on digital assets as Bitcoin price increased from $42,288 to $93,354.
• The Combined Company will adopt a multi-class capital structure where Class B Common Stock (primarily held by Hut 8) will carry 10,000 votes per share, concentrating voting control with Hut 8.

Sentiment

Score: 5

Explanation: The document presents a mixed sentiment. Positive aspects include Gryphon regaining Nasdaq compliance and the strategic rationale behind the merger for long-term Bitcoin accumulation. However, the significant dilution for Gryphon shareholders, the substantial Q1 2025 financial losses for ABTC (due to Bitcoin price fluctuations and halving impact), and numerous inherent risks associated with the merger and the volatile crypto mining industry temper overall optimism.

Positives

• Gryphon Digital Mining has successfully regained compliance with Nasdaq listing requirements, ensuring its continued listing on a major exchange.
• The merger with American Bitcoin Corp. (ABTC) is a strategic move aimed at creating a capital-efficient platform for long-term Bitcoin accumulation, leveraging ABTC's existing mining operations and strategic partnership with Hut 8.
• ABTC's business model prioritizes direct Bitcoin-generating assets (miners) over physical infrastructure ownership, aiming for below-market Bitcoin production costs and operational flexibility.
• ABTC has a significant Bitcoin miner fleet of over 60,000 machines with a cumulative hashrate of 10.17 EH/s and an efficient weighted average fleet efficiency of 21.2 J/TH as of May 31, 2025.
• ABTC successfully completed a fleet upgrade to higher efficiency Antminer S21+ miners on April 4, 2025, enhancing future operational efficiency.
• ABTC reported a substantial net income of $428.9 million for the year ended December 31, 2024, a significant improvement from $39.6 million in 2023, driven by favorable Bitcoin price movements.
• Cost of revenue for ABTC decreased by $5.1 million in Q1 2025 compared to Q1 2024, attributed to relocating miners to lower-cost sites and deploying Hut 8's energy curtailment software, Reactor.

Negatives

• Gryphon stockholders will experience significant ownership and voting power dilution, with their stake reduced to approximately 2.0% of the Combined Company on a fully diluted basis post-merger.
• ABTC reported a net loss of $100.6 million for the three months ended March 31, 2025, a substantial negative swing from a net income of $230.4 million in the same period of 2024, primarily due to a decrease in Bitcoin price.
• Adjusted EBITDA for ABTC significantly declined to a loss of $122.6 million in Q1 2025 from a gain of $281.5 million in Q1 2024.
• ABTC's revenue decreased by $18.0 million in Q1 2025 compared to Q1 2024, largely due to a reduction in Bitcoin mined (135 BTC vs 592 BTC) and the impact of the April 2024 halving event.
• The multi-class capital structure of the Combined Company, with Class B shares carrying 10,000 votes per share, concentrates voting control with Hut 8, limiting the influence of other stockholders.
• The multi-class structure may adversely affect the trading market for Class A Common Stock, potentially leading to exclusion from certain stock indices and opposition from institutional investors.
• Gryphon may be required to pay a termination fee of $5.0 million plus out-of-pocket expenses to ABTC if the merger is not completed under certain circumstances, which could harm Gryphon's stock price and future business.

Risks

• The completion of the Mergers is subject to various conditions, including stockholder and HSR Act approvals, and there is no guarantee these conditions will be satisfied, potentially leading to delays or abandonment.
• Gryphon stockholders will experience significant ownership and voting power dilution, owning only approximately 2.0% of the Combined Company on a fully diluted basis post-merger.
• The intended strategic and financial benefits of the Mergers may not be fully realized due to potential integration difficulties, unforeseen costs, or diversion of management attention.
• The market value of Gryphon and ABTC securities may change between the date of the preliminary proxy statement/prospectus and the Closing, and the fairness opinion obtained by Gryphon will not reflect subsequent changes.
• Regulatory authorities may impose conditions on HSR Act approval that could adversely affect the Combined Company or delay/prevent the Mergers.
• The Mergers may be completed even if certain events occur prior to closing that materially and adversely affect Gryphon or ABTC, such as general economic changes, cryptocurrency price fluctuations, or natural disasters.
• Conflicts of interest may arise due to Hut 8's controlling ownership in the Combined Company and shared directors/executive officers, potentially leading to decisions not aligned with other stockholders' interests.
• The proposed multi-class capital structure concentrates voting control with Hut 8, limiting the ability of other stockholders to influence corporate matters and potentially discouraging change-of-control transactions.
• The multi-class structure may adversely affect the trading market for Class A Common Stock, potentially leading to exclusion from certain stock indices and negative commentary from stockholder advisory firms.
• Future sales and issuances of the Combined Company's Common Stock, including under the 2025 Plan, could result in substantial dilution and cause the stock price to fall.
• Failure to comply with Nasdaq initial and continued listing standards could prevent the Combined Company's stock from being listed or result in delisting, negatively impacting liquidity and market price.
• The Combined Company's operating results may fluctuate significantly due to factors like digital asset prices, strategic decisions, and general market conditions, potentially causing stock price volatility.
• The Combined Company will incur increased costs as a public company, and its management team will need to devote substantial time to compliance initiatives, potentially diverting attention from business operations.
• ABTC's historical financial information, prepared on a carve-out basis, may not be representative of its results or financial condition if it had operated as a standalone public company, or of the Combined Company's future results.
• The unaudited pro forma condensed combined financial information is for illustrative purposes only and may not accurately reflect the Combined Company's actual financial position or results of operations after the Mergers.
• The market price of the Combined Company's Common Stock may decline following the Closing if the perceived benefits of the Mergers are not realized or if financial/industry analysts' expectations are not met.
• The Combined Company's Proposed Charter includes a forum selection clause that could limit stockholders' ability to obtain a favorable judicial forum for disputes.
• Anti-takeover provisions in the Proposed Charter and Bylaws, as well as Delaware law, could delay or prevent a change of control, potentially reducing the market value of Class A Common Stock.
• The Combined Company is not expected to pay dividends, meaning returns on investment will depend solely on stock price appreciation.
• Gryphon's net operating loss (NOL) carryforwards and tax credit carryforwards may be subject to limitation under Section 382 of the Code due to ownership changes from the Mergers and other transactions.
• The Mergers may not qualify as a reorganization for U.S. federal income tax purposes, potentially requiring U.S. Holders of ABTC Common Stock to recognize gain or loss.
• Key members of the Combined Company's management team may have limited experience managing a public company, potentially affecting their ability to navigate regulatory oversight and investor scrutiny.
• ABTC's business is highly concentrated in Bitcoin, making it susceptible to extreme price volatility, which can significantly impact financial results and the value of its securities.
• ABTC's ability to compete and maintain profitability depends on growing its hashrate, which requires continuous acquisition of new Bitcoin miners, subject to availability, cost, and capital resources.
• ABTC's Bitcoin assets are not insured by FDIC or SIPC and are held with third-party custodians, exposing them to risks of loss, theft, or being deemed property of a bankruptcy estate.
• ABTC faces significant competition from other Bitcoin miners and alternative investment vehicles like spot Bitcoin ETPs, which could reduce demand for its securities.
• The further development and acceptance of the Bitcoin network and other digital assets are uncertain, and a slowdown or cessation could adversely affect ABTC's business.
• Reliance on third-party mining pool service providers (Foundry, Luxor) for mining revenue payouts exposes ABTC to risks of system downtime, cyberattacks, or inaccurate record-keeping.
• Hedging transactions undertaken by ABTC to mitigate Bitcoin price exposure may not be successful and could expose the company to counterparty risk.
• Future Bitcoin halving events will reduce mining rewards, and there is no guarantee that Bitcoin's value will adjust to compensate for this reduction, potentially impacting profitability.
• The possibility of Bitcoin mining algorithms transitioning to proof-of-stake validation could render ABTC's proof-of-work mining operations less competitive.
• A malicious actor or botnet obtaining control of a majority of the Bitcoin network's processing power could manipulate the blockchain, adversely affecting ABTC's investment.
• Forks in the Bitcoin network may occur, potentially affecting the value of Bitcoin held by ABTC, and ABTC may not be able to realize the economic benefit of new assets from forks.
• ABTC's operations are 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 to operate and grow its business on favorable terms, if at all, leading to potential dilution or increased debt.
• Failure of critical systems related to ABTC's operations, such as power loss, equipment failure, or cyberattacks, could result in service interruptions, damage, and reduced revenue.
• ABTC is subject to risks associated with its need for significant electrical power, including price fluctuations, unavailability, and supply chain disruptions, which can impact profitability.
• Geopolitical, social, economic, and other events (e.g., tariffs, conflicts, inflation) in the United States, Canada, or elsewhere could materially adversely affect ABTC's business.
• ABTC is exposed to cybersecurity threats and breaches, which could result in loss of assets, reputational harm, and increased costs, and insurance coverage may be insufficient.
• Internet-related disruptions at mining sites could force ABTC to reduce or cease operations, materially affecting its business.
• ABTC's success depends on key personnel from both ABTC and Hut 8, and the loss of these individuals could adversely affect business and opportunities.
• As an early-stage company with limited operating history, ABTC faces uncertainties in achieving profitability, implementing its business plan, and adapting to changing conditions.
• ABTC may not adequately respond to rapid technological changes in the industry, potentially hindering its competitiveness.
• Inaccurate prediction of facility requirements or Hut 8's failure to develop/operate facilities could lead to delays or increased costs for ABTC's mining operations.
• Future acquisitions, strategic alliances, or joint ventures may negatively affect operating results, dilute shareholder ownership, increase debt, or incur significant expenses due to integration challenges or unknown liabilities.
• Operating in the United States and Canada exposes ABTC to international business risks, including adverse changes in foreign currency exchange rates, intellectual property protection difficulties, and political instability.
• Banks and financial institutions may be unwilling to provide banking services to digital asset-related businesses, potentially decreasing the usefulness of digital assets as a payment system and harming public perception.
• ABTC's operations are subject to evolving and uncertain legal, regulatory, governmental, and technological frameworks, with potential for significant fines, license revocations, or operational restrictions for non-compliance.
• The application of the U.S. Commodities Exchange Act and FinCEN regulations to ABTC's business is unclear and subject to change, potentially leading to additional regulatory obligations and compliance costs.
• ABTC could be deemed an investment company under the Investment Company Act of 1940, which would impose impractical or impossible restrictions on its business and require costly registration.
• Interactions with blockchain may inadvertently expose ABTC to specially designated nationals (SDN) or blocked persons, leading to investigations, fines, or restrictions.
• ABTC may be subject to substantial environmental or energy regulation, and legislative/regulatory changes could impose significant costs or restrictions on its operations.
• Increased scrutiny and changing expectations from stakeholders regarding ESG matters could result in additional costs or risks for ABTC.
• Physical risks related to climate change, such as severe weather events, pose a threat to ABTC's equipment and facilities, potentially leading to business interruption or uninsured losses.
• Legal proceedings, whether ordinary course or otherwise, could result in significant expenses, divert management attention, and adversely affect ABTC's business.
• Changes in tax laws or unanticipated tax liabilities in the U.S. or Canada could adversely affect ABTC's effective income tax rate and profitability.
• Intellectual property rights claims by third parties could adversely affect the operation of digital asset networks or ABTC's ability to hold/transfer digital assets.

Future Outlook

The Combined Company, to be renamed American Bitcoin Corp., intends to pursue a strategy focused on Bitcoin accumulation through efficient mining, disciplined Bitcoin reserve expansion, and ecosystem engagement. It aims to leverage its capital strategy to increase its Bitcoin in reserve per share and may explore partnerships for broader Bitcoin adoption. The company expects to raise additional capital through equity or debt financings to meet operating and capital needs, fund growth initiatives, and expand its Bitcoin reserve. The next Bitcoin halving is expected in 2028, which will further reduce mining rewards. The Combined Company will continue to rely on Hut 8 for colocation and management services.

Management Comments

• Steve Gutterman, Gryphon's Chief Executive Officer, is entitled to receive approximately $2,290,794 in connection with the Closing, consisting of $737,164 in severance payments and approximately $1,553,630 in value 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 connection with the Closing, consisting of $250,000 in severance payments and approximately $585,000 in value from accelerated vesting of restricted stock units.

Industry Context

The merger between Gryphon Digital Mining and American Bitcoin Corp. (ABTC) reflects a trend towards consolidation and strategic partnerships within the highly competitive and evolving Bitcoin mining industry. ABTC's 'infrastructure-light' model, relying on Hut 8 for hosting and management, aims to enhance capital efficiency in a sector characterized by significant capital expenditure for hardware and energy. The industry faces increasing competition, rising global hashrate, and the impact of Bitcoin halving events, which reduce mining rewards. The emergence of spot Bitcoin and Ether ETPs also introduces new avenues for investor exposure to digital assets, potentially diverting investment from direct mining companies. Regulatory scrutiny, particularly regarding energy consumption and financial compliance, continues to shape the operational landscape for Bitcoin miners.

Comparison to Industry Standards

• ABTC's strategy of prioritizing Bitcoin miner ownership and Bitcoin reserve growth over land, buildings, or electrical infrastructure contrasts with some competitors who invest heavily in physical infrastructure, aiming for greater operational flexibility and capital efficiency.
• The partnership with Hut 8 for colocation and management services allows ABTC to leverage an established operator's low-cost compute capacity across North America, a model that can be compared to other asset-light mining operations or those utilizing third-party hosting.
• ABTC's fleet efficiency of 21.2 J/TH (joules per Terahash) as of May 31, 2025, positions it competitively against other institutional Bitcoin mining operators, particularly those deploying newer generation Bitmain S21 series and MicroBt M5X/M6X series machines.
• The significant dilution of Gryphon shareholders (to 2% ownership) in favor of ABTC shareholders (98%) is a notable aspect of this merger, reflecting ABTC's dominant contribution to the combined entity's business and assets, which is a common outcome in reverse mergers where a private company effectively acquires a public shell.
• The adoption of a multi-class share structure with disproportionate voting rights (10,000 votes per Class B share for Hut 8) is a corporate governance choice seen in some technology and founder-controlled companies, but it deviates from standard one-share, one-vote principles common in many public companies, potentially impacting institutional investor appeal and index inclusion.

Management Changes

Corporate Governance

Legal Proceedings

• ABTC is not presently a party to any legal or regulatory proceedings that, in the opinion of its management, would individually or taken together 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.
• The document notes that additional information regarding certain pending litigation matters relating to Gryphon can be found in the 'Gryphon's Business Legal Proceedings' section of the preliminary proxy statement/prospectus, but details are not provided in this 8-K.

Related Party Transactions

• ABTC 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-owned Bitcoin miners.
• ABTC 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 entered into a Shared Services Agreement with USDMG for back-office support services, including accounting, HR, payroll, IT, legal, and vendor management.
• ABTC entered into a Put Option Agreement with Zephyr Infrastructure, LLC, a wholly-owned subsidiary of Hut 8, granting Zephyr the right to sell up to 17,280 Bitmain U3S21EXPH Bitcoin miners to ABTC.
• Hut 8, through its wholly-owned subsidiary American Bitcoin Holdings, LLC (ABH), is ABTC's controlling stockholder and is expected to be the controlling stockholder of the Combined Company, owning 80% of the Class B Common Stock and a majority of the total combined voting power.
• Cost allocations from Hut 8 (Parent) to ABTC for support functions (electricity, facilities, labor, finance, HR, IT, legal) are based on a percentage of revenue or fully allocated cost.
• Net parent investment in ABTC's financial statements reflects net funding provided by or distributed to Hut 8, and cash was historically managed through Hut 8's bank accounts.

Stakeholder Impact

• **Shareholders (Gryphon)**: Will experience significant dilution, with their ownership stake in the Combined Company reduced to approximately 2.0% on a fully diluted basis. Their ability to influence corporate matters will be substantially reduced due to Hut 8's concentrated voting control.
• **Shareholders (ABTC/Hut 8)**: ABTC equity holders will own approximately 98.0% of the Combined Company, and Hut 8 will maintain controlling voting power, providing significant influence over the Combined Company's strategic direction and operations.
• **Employees (Gryphon)**: Key executives (CEO, CFO, SVP Energy) are receiving severance payments and accelerated vesting of equity, indicating potential changes in their roles or departure from the Combined Company.
• **Employees (ABTC/Hut 8)**: ABTC's lean operational model relies heavily on Hut 8's team for expertise and back-office support, suggesting continued employment and integration for Hut 8 personnel.
• **Customers**: The merger aims to create a more capital-efficient platform, which could lead to more stable or competitive services in the long term, but short-term disruptions during integration are possible.
• **Suppliers**: Relationships with collaborators, suppliers, and vendors could be affected by the uncertainty surrounding the merger, potentially leading to deferred decisions or changes in existing business relationships. Hut 8 is a critical supplier for ABTC's mining operations.
• **Creditors**: Gryphon's debt is being repaid through the issuance of common stock, which impacts its creditors. ABTC is not a co-obligor on Hut 8's third-party debt, but certain ABTC assets were pledged as collateral for Hut 8's debts.

Next Steps

• Gryphon stockholders will need to vote on the Proposed Transactions and other related matters at a Special Meeting.
• The Combined Company will apply to have the Class A Common Stock listed on Nasdaq.
• The Combined Company will need to integrate Gryphon's and ABTC's businesses.
• ABTC expects to continue accumulating Bitcoin as part of its strategic reserve.
• ABTC may explore partnerships to facilitate broader Bitcoin adoption.
• ABTC may pursue opportunities to support protocol development, enhance network infrastructure, and contribute to Bitcoin's resilience and adoption.
• ABTC expects to raise additional capital through equity or debt financings, including an anticipated private placement of Class A Common Stock.

Key Dates

Keywords

Bitcoin Mining, Cryptocurrency, SEC Filing, Merger Agreement, Nasdaq Compliance, Digital Assets, Hashrate, Blockchain, Corporate Governance, Risk Factors, Financial Performance, Hut 8, ASIC Miners, Capital Markets, Regulatory Compliance, Form 8-K