425: Gryphon Digital Mining Announces Merger with American Bitcoin Corp., Regains Nasdaq Compliance Amidst Strategic Shift and Q1 Operational Challenges

Gryphon Digital Mining, Inc. has announced its merger with American Bitcoin Corp. (ABTC), which will result in ABTC shareholders owning approximately 98% of the combined entity, while Gryphon also confirmed regaining 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 is deemed the accounting acquirer.
• 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 Gryphon equity holders owning 2.0%.
• Gryphon received formal notification on June 6, 2025, confirming its regained compliance with Nasdaq Listing Rules 5550(a)(2) (minimum $1.00 bid price) and 5550(b)(2) (minimum $35 million market value of listed securities).
• ABTC's business objective is Bitcoin accumulation through efficient mining, disciplined reserve expansion, and ecosystem engagement, owning 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 operations are primarily hosted and managed by Hut 8, which will be the exclusive provider of colocation and digital asset mining operations services to ABTC post-merger.
• ABTC reported a significant decrease in revenue to $12.3 million for the three months ended March 31, 2025, down from $30.3 million in the same period of 2024, primarily due to reduced Bitcoin mined (135 BTC vs. 592 BTC) caused by fleet upgrades and the April 2024 halving event.
• Despite the revenue decline, the average revenue per Bitcoin mined increased to $91,500 in Q1 2025 from $51,302 in Q1 2024, reflecting higher Bitcoin prices.
• ABTC shifted from a net income of $230.4 million in Q1 2024 to a net loss of $100.6 million in Q1 2025, largely influenced by a $112.4 million loss on digital assets due to Bitcoin price fluctuations.
• Adjusted EBITDA for ABTC declined sharply to a loss of $122.6 million in Q1 2025 from a gain of $281.4 million in Q1 2024.
• For the full year 2024, ABTC's revenue increased to $71.5 million from $65.0 million in 2023, and net income was $428.9 million, significantly up from $39.6 million in 2023, driven by substantial gains on digital assets due to rising Bitcoin prices.
• ABTC's strategic Bitcoin reserve, which started accumulating on April 1, 2025, reached approximately 215 Bitcoin as of May 31, 2025.
• The Combined Company will operate under a multi-class capital structure, with Class B Common Stock (primarily held by Hut 8) carrying 10,000 votes per share, concentrating voting control with Hut 8.
• Gryphon's CEO, CFO, and SVP, Energy, are expected to receive severance and accelerated vesting of RSUs in connection with the Closing, indicating changes in management roles post-merger.

Sentiment

Score: 4

Explanation: While the merger provides a clear strategic direction and Nasdaq compliance is positive, the significant dilution for Gryphon shareholders and the substantial decline in ABTC's Q1 2025 financial performance (revenue, net income, Adjusted EBITDA) indicate immediate operational challenges and a negative short-term outlook. The long-term success hinges on volatile Bitcoin prices, effective integration, and navigating a complex regulatory landscape, introducing considerable uncertainty.

Positives

• Gryphon Digital Mining successfully regained compliance with Nasdaq listing rules, ensuring continued listing on The Nasdaq Capital Market.
• The merger with American Bitcoin Corp. (ABTC) establishes a clear strategic focus on Bitcoin accumulation through efficient mining and disciplined reserve expansion.
• ABTC's fleet upgrade to higher efficiency Antminer S21+ miners was completed on April 4, 2025, resulting in a cumulative hashrate of 10.17 EH/s and an improved weighted average fleet efficiency of 21.2 J/TH, positioning for future operational efficiency.
• The average revenue per Bitcoin mined significantly increased to $91,500 in Q1 2025 from $51,302 in Q1 2024, reflecting a favorable Bitcoin price environment.
• ABTC's cost of revenue 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 proprietary energy curtailment software, Reactor.
• ABTC achieved substantial net income of $428.9 million and Adjusted EBITDA of $517.6 million for the full year ended December 31, 2024, primarily due to significant gains on digital assets from increased Bitcoin prices.

Negatives

• Gryphon shareholders 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's revenue for the three months ended March 31, 2025, decreased by $18.0 million (59.3%) to $12.3 million compared to $30.3 million in the prior year period, primarily due to a 77.2% reduction in Bitcoin mined (135 BTC vs. 592 BTC).
• ABTC reported a net loss of $100.6 million for Q1 2025, a substantial decline from a net income of $230.4 million in Q1 2024, largely driven by a $112.4 million loss on digital assets.
• Adjusted EBITDA for ABTC turned negative, reporting a loss of $122.6 million in Q1 2025, compared to a positive $281.4 million in Q1 2024.
• The multi-class capital structure of the Combined Company, with Hut 8 controlling 80% of Class B Common Stock (10,000 votes per share), concentrates voting control and limits the influence of other stockholders.
• Gryphon may be required to pay ABTC a termination fee of $5.0 million plus out-of-pocket expenses if the merger agreement is terminated under certain circumstances.

Risks

• The completion of the Mergers is subject to various conditions, including stockholder approvals, and there is no guarantee these conditions will be satisfied, potentially leading to delays or abandonment.
• The Combined Company's business, financial condition, and results of operations are highly concentrated in Bitcoin and are susceptible to extreme volatility in Bitcoin prices, which can significantly impact financial results.
• ABTC's ability to compete and maintain profitability is dependent on growing its hashrate, which requires continuous acquisition of new Bitcoin miners, and there is no assurance of timely availability or sufficient capital for these purchases.
• ABTC's Bitcoin holdings are not insured by FDIC or SIPC and are subject to risks of loss, damage, or theft due to security breaches, cyberattacks, or custodian failures, which may not be covered by insurance.
• The Bitcoin reward for successfully uncovering a block will halve several times in the future (e.g., April 2024 halving reduced rewards from 6.25 to 3.125 Bitcoin), which could adversely affect revenue if Bitcoin value or mining difficulty do not adjust favorably.
• ABTC is highly dependent on Hut 8 for colocation, management, and back-office services under exclusive agreements, and any failure by Hut 8 to perform its obligations could materially adversely affect ABTC's business.
• ABTC may experience liquidity constraints and may need to raise additional capital through equity or debt financings, which could result in significant dilution for existing stockholders or restrictive debt terms.
• ABTC's operations are subject to temporary or permanent interruption due to critical system failures, power loss, equipment failure, natural disasters, or cybersecurity threats.
• The Bitcoin mining industry is highly competitive, and ABTC faces competition from other institutional operators for critical inputs like miners and low-cost electricity, and its infrastructure-light model may not provide a lasting competitive advantage.
• ABTC's Bitcoin miners are hosted at sites leased by Hut 8, and the termination or higher renewal rates of these leases could adversely affect ABTC's operations.
• The legal and regulatory environment for digital assets is rapidly evolving and uncertain, potentially subjecting ABTC to new laws, regulations, or interpretations (e.g., FinCEN, CFTC, SEC), which could increase compliance costs or restrict operations.
• 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.
• The historical financial information of ABTC, prepared on a carve-out basis from Hut 8, may not be representative of its results or financial condition as a standalone public company or of the Combined Company after the Mergers.
• The Combined Company's ability to use Gryphon's net operating loss carryforwards (NOLs) and certain tax credit carryforwards may be subject to limitation in connection with the Mergers and other ownership changes under Section 382 of the Code.
• The Mergers may not qualify as a reorganization for U.S. federal income tax purposes, which could require U.S. Holders of ABTC Common Stock to recognize gain or loss upon the exchange of shares.
• The proposed multi-class capital structure may adversely affect the trading market for Class A Common Stock, as certain stock index providers exclude or limit companies with such structures, potentially leading to less demand.

Future Outlook

The Combined Company, to be renamed American Bitcoin Corp., intends to pursue a strategy focused on Bitcoin accumulation through efficient Bitcoin mining, disciplined Bitcoin reserve expansion, and focused ecosystem engagement. It aims to leverage its relationship with Hut 8 for colocation and management services and plans to continue acquiring new Bitcoin miners to grow its hashrate. The company expects to raise additional capital through equity or debt financings to meet operating and capital needs and fund growth initiatives, including open-market Bitcoin purchases. The next Bitcoin halving event is expected in 2028.

Management Comments

• "Forward-looking statements are not statements of historical fact, but instead represent management's expectations, estimates, and projections regarding future events based on certain material factors and assumptions at the time the statement was made."
• "While considered reasonable by Gryphon as of the date of this 8-K, such statements are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance, or achievements to be materially different from those expressed or implied by such forward-looking statements."
• "ABTC's business objective is Bitcoin accumulation and it aims to pursue that goal through a levered strategy that combines efficient Bitcoin mining, disciplined Bitcoin reserve expansion and focused ecosystem engagement."
• "Bitcoin accumulation is not a side effect of ABTC's business. It is the business."
• "ABTC's commitment to Bitcoin extends beyond short-term operational returns to the network's long-term health and security."
• "Management currently does not hedge ABTC's foreign exchange risk."
• "ABTC plans to adjust accordingly to such developments [tariffs]."

Industry Context

The merger positions the Combined Company as a dedicated Bitcoin accumulation vehicle within the highly competitive and evolving Bitcoin mining industry. The industry faces challenges such as increasing network difficulty, the impact of Bitcoin halving events on mining rewards, and the need for continuous investment in high-efficiency mining hardware. The recent approval of spot Bitcoin and Ether ETPs by the SEC introduces new avenues for investors to gain digital asset exposure, potentially affecting demand for direct investment in mining companies. The industry is also subject to increasing scrutiny regarding energy consumption and evolving regulatory frameworks globally, which could impact operational costs and business models.

Comparison to Industry Standards

• ABTC's weighted average fleet efficiency of 21.2 J/TH as of May 31, 2025, indicates a focus on energy efficiency, which is a critical competitive factor in the Bitcoin mining industry, especially given rising energy costs and environmental concerns.
• The strategic partnership with Hut 8, a 'proven developer and operator of low-cost compute capacity across North America,' suggests a reliance on established infrastructure and operational expertise, which can be a competitive advantage compared to smaller, less integrated miners.
• ABTC's strategy of prioritizing ownership of Bitcoin miners and Bitcoin reserve growth over physical infrastructure (land, buildings) aims for capital efficiency, differentiating it from vertically integrated mining operations that invest heavily in real estate and power infrastructure.
• The accumulation of 215 Bitcoin in reserve since April 1, 2025, demonstrates a commitment to a 'Bitcoin accumulation' strategy, which contrasts with some miners who primarily sell mined Bitcoin to cover operational expenses.

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 that arise in the course of its business.

Related Party Transactions

• ABTC has entered into a Master Colocation Services Agreement (MCSA) with Hut 8 (Parent) for colocation and hosting services for ABTC-owned Bitcoin miners at Hut 8 facilities.
• ABTC has entered into a Master Management Services Agreement (MMSA) with Hut 8 for management, oversight, strategy, compliance, and operational services for its Bitcoin mining operations.
• ABTC has entered into a Shared Services Agreement with Hut 8 for back-office support services, including accounting, HR, payroll, IT, legal, and vendor management.
• 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 up to 17,280 Bitmain Antminer U3S21EXPH Bitcoin miners to ABTC for a maximum aggregate purchase price of approximately $320 million.
• 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 including related party transactions.
• Prior to the March 31, 2025, Transactions, ABTC's operations were historically part of Hut 8's Bitcoin mining sub-segment, with significant support functions and costs allocated from Hut 8.

Stakeholder Impact

• **Shareholders (Gryphon)**: Will experience significant dilution of ownership and voting power (reduced to ~2.0% of Combined Company), and their ability to influence management will be substantially reduced due to Hut 8's controlling stake and the multi-class share structure.
• **Shareholders (ABTC/Hut 8)**: Will gain significant control and ownership (ABTC equity holders ~98.0% of Combined Company), with Hut 8 maintaining majority voting power, aligning the Combined Company's strategy with Hut 8's objectives.
• **Employees (Gryphon)**: Key personnel (CEO, CFO, SVP Energy) are expected to receive severance and accelerated vesting, indicating potential departures or significant role changes post-merger.
• **Customers/Suppliers**: Uncertainty during the merger pendency could affect relationships, potentially leading to deferred decisions or changes in existing business relationships.
• **Regulators**: The Combined Company will face ongoing scrutiny and evolving regulations in the digital asset industry, requiring significant compliance efforts and potentially incurring additional costs.
• **Creditors**: Gryphon's outstanding debt is expected to be repaid through share issuance, and ABTC is no longer connected to any Parent debt post-March 31, 2025, which could impact creditor relationships and risk profiles.

Next Steps

• Gryphon stockholders need to vote on the proposed transactions and other matters at a Special Meeting.
• The definitive proxy statement and other relevant documents will be mailed to Gryphon stockholders for voting on the Proposed Transactions.
• Gryphon and ABTC will continue efforts to satisfy the conditions to Closing the Mergers.
• The Combined Company will apply to have the Class A Common Stock listed on Nasdaq.
• The Combined Company will continue to advance the business strategies of ABTC, focusing on Bitcoin accumulation and operational efficiency.
• ABTC expects to raise additional capital through strategic financing initiatives, including on public markets post-merger.

Key Dates

Recommendation

Keywords

Bitcoin Mining, Cryptocurrency, Merger, SEC Filing, Nasdaq Compliance, Digital Assets, Hashrate, Bitcoin Halving, Corporate Governance, Financial Performance, Risk Factors, Capital Raise, Hut 8, American Bitcoin Corp, Gryphon Digital Mining