425: Gryphon Digital Mining to Merge with American Bitcoin Corp.

Gryphon Digital Mining, Inc. is set to acquire American Bitcoin Corp. in a stock-for-stock merger, with the combined entity focusing on Bitcoin accumulation and efficient mining operations.

Summary

• Gryphon Digital Mining, Inc. (GRYP) is acquiring American Bitcoin Corp. (ABTC) in a stock-for-stock merger, expected to close in early September 2025.
• Upon completion, ABTC equity holders will own approximately 98% of the combined company, which will be renamed American Bitcoin Corp. and trade on Nasdaq under the ticker ABTC.
• ABTC, a Bitcoin accumulation vehicle, reported a significant increase in revenue for the three months ended June 30, 2025, reaching $30.3 million, up from $13.9 million in the prior year, driven by increased mining efficiencies and higher Bitcoin prices.
• For the six months ended June 30, 2025, ABTC's revenue decreased slightly to $42.6 million from $44.3 million, primarily due to reduced Bitcoin mined during a fleet upgrade and the April 2024 halving event, partially offset by higher Bitcoin prices.
• ABTC successfully raised $220.1 million in gross proceeds ($215.3 million net) through a private placement of Class A common stock on June 27, 2025.
• Between July 1 and September 2, 2025, ABTC utilized $205.6 million of these proceeds to acquire approximately 1,726 Bitcoin, expanding its strategic reserve.
• As of September 1, 2025, ABTC owned over 76,000 Bitcoin miners with a cumulative hashrate of approximately 24.2 EH/s and had accumulated approximately 2,443 Bitcoin in reserve.
• ABTC exercised an option on August 5, 2025, to purchase 16,299 Bitmain Miners for approximately $314.0 million, paid by pledging approximately 2,234 Bitcoin, with a commitment to repay Hut 8 Corp. $46.0 million by December 31, 2025.

Sentiment

Score: 7

Explanation: The filing details a significant merger and successful capital raise, positioning the combined entity for growth in Bitcoin mining and accumulation. While historical financial performance for ABTC (pre-separation from Hut 8) shows volatility and losses, the post-separation Q2 2025 results for ABTC are positive, and the strategic moves indicate a clear path forward. Risks inherent to the crypto industry remain, but the proactive steps taken are favorable.

Positives

• Significant revenue growth for ABTC in Q2 2025, up 118% to $30.3 million, driven by increased mining efficiency and higher Bitcoin prices.
• Successful completion of a fleet upgrade on April 4, 2025, leading to higher efficiency Antminer S21+ miners and improved Bitcoin mining operations.
• Successful private placement raising $220.1 million in gross proceeds, demonstrating strong investor confidence.
• Strategic expansion of Bitcoin reserve with the purchase of approximately 1,726 Bitcoin for $205.6 million between July 1 and September 2, 2025.
• Acquisition of 16,299 Bitmain Miners, adding approximately 14.02 EH/s to the hashrate, significantly expanding mining capacity.
• Reduced General and Administrative (G&A) expenses for ABTC in Q2 2025 by $3.4 million, primarily due to decreased stock-based compensation and savings from shared services with Hut 8.
• ABTC reported a net income of $3.4 million and Adjusted EBITDA of $15.2 million for the three months ended June 30, 2025, a substantial improvement from a net loss of $61.1 million and negative Adjusted EBITDA of $72.5 million in the prior year.

Negatives

• ABTC's revenue for the six months ended June 30, 2025, decreased by $1.7 million compared to the prior year, primarily due to reduced Bitcoin mined (443 vs 803) during a fleet upgrade and the April 2024 halving event.
• ABTC reported a net loss of $97.2 million and negative Adjusted EBITDA of $107.3 million for the six months ended June 30, 2025, largely due to a $109.4 million loss on digital assets as Hut 8 retained its strategic Bitcoin reserve upon ABTC's separation.
• The closure of the Drumheller site in March 2024 due to lack of profitability, primarily from elevated energy costs and underlying voltage issues, resulted in a $4.8 million loss from discontinued operations in H1 2024.
• Increased cost of revenue for ABTC in Q2 2025 by $3.7 million, driven by increased miner uptime and a higher cost per megawatt hour of power ($41.91 vs $32.76).
• Increased depreciation and amortization expense for ABTC in Q2 2025 and H1 2025 due to a larger depreciable asset base from the fleet upgrade.

Risks

• The proposed merger may not close as expected or at all if conditions are not satisfied, or if an event, change, or other circumstance gives rise to termination rights.
• Risks related to American Bitcoin Corp.'s initial listing and trading on Nasdaq following the closing of the proposed transaction.
• The anticipated benefits of the proposed transaction may not be realized when expected or at all, and the vision, goals, and trajectory of the combined company may not be timely achieved.
• Integration of the two companies may be more difficult, time-consuming, or costly than expected, potentially diverting management's attention from ongoing business operations.
• The business is heavily dependent on the volatile price of Bitcoin, which can significantly impact revenue, mark-to-market adjustments, and liquidity.
• Exposure to custodian risk, including potential loss, theft, or misappropriation of Bitcoin assets due to operational failures, cybersecurity breaches, or financial difficulties of third-party custodians.
• Credit risk arises from pledging Bitcoin as collateral in transactions with counterparties and from placing cash and demand deposits in financial institutions.
• Changes in government and economic policies, incentives, or tariffs could adversely impact the ability to import Bitcoin mining equipment cost-effectively.
• Power costs are a significant component of Bitcoin mining expenses and can be highly volatile and sensitive to factors outside of the company's control.
• Increased Bitcoin network difficulty and hashrate can reduce mining proceeds and profitability, requiring equipment upgrades to remain competitive.
• Future Bitcoin halving events, such as the one expected in 2028, will reduce the block reward, impacting the number of Bitcoin mined.

Future Outlook

The combined company, to be renamed American Bitcoin Corp., aims to pursue a levered strategy combining efficient Bitcoin mining, disciplined Bitcoin reserve expansion, and focused ecosystem engagement. It expects to be listed and trade on Nasdaq, with the merger closing in early September 2025. The company believes that cash flows generated from capital raised from investors and its strategic Bitcoin reserve will meet its anticipated cash requirements in the short-term and long-term.

Management Comments

• Management believes that the assumptions underlying ABTCs condensed and combined financial statements included in Exhibit 99.2 to the Current Report, including the expense methodology and resulting allocation, are reasonable for all periods presented.
• Management believes that adjusting these gains and losses in the unaudited pro forma condensed combined statements of operations better reflects the current Combined Companys financial results as (i) the Combined Company intends to accumulate Bitcoin, which would result in mark-to-market impacts on the Combined Companys balance sheet for each reporting period and (ii) following the Closing, the Combined Company will only retain the Bitcoin accumulated by ABTC following the Contributions.
• On the basis of current information, management does not believe there is a reasonable possibility that any material loss will result from any claims, lawsuits, and proceedings to which ABTC is subject to either individually or in the aggregate.

Industry Context

The merger creates a significant new player in the Bitcoin mining industry, combining Gryphon's public listing with ABTC's substantial mining assets and strategic Bitcoin accumulation focus. The industry continues to face challenges from Bitcoin price volatility, increasing network difficulty, and the impact of halving events, alongside rising power costs. ABTC's strategy of fleet upgrades and disciplined Bitcoin reserve expansion aligns with broader industry trends towards efficiency and balance sheet strength in a competitive and capital-intensive environment.

Comparison to Industry Standards

• ABTC's weighted average fleet efficiency of approximately 16.4 J/TH (as of September 1, 2025) is competitive within the Bitcoin mining industry, where leading-edge miners typically operate below 20 J/TH. For example, Bitmain's Antminer S21 series, which ABTC is deploying, is known for its high efficiency.
• The strategic accumulation of Bitcoin reserves, as demonstrated by ABTC's purchase of 1,726 Bitcoin and total reserve of 2,443 Bitcoin, is a common strategy among major publicly traded Bitcoin miners like Marathon Digital Holdings (MARA) and Riot Platforms (RIOT) to capitalize on potential future Bitcoin price appreciation.
• The acquisition of 16,299 Bitmain Miners, adding 14.02 EH/s, significantly scales ABTC's operational capacity, positioning it among the larger North American miners, comparable to the expansion efforts seen from companies like CleanSpark (CLSK) and Cipher Mining (CIFR).
• The reliance on colocation services from Hut 8 Corp. for hosting and management is a common operational model, allowing ABTC to leverage existing infrastructure and expertise, similar to how some smaller miners utilize third-party hosting providers.

Corporate Governance

Legal Proceedings

• ABTC is subject to various claims, lawsuits, and governmental proceedings relating to its business and transactions arising in the ordinary course of business.
• Management, with the assistance of outside counsel, does not believe there is a reasonable possibility that any material loss will result from any current claims, lawsuits, and proceedings.

Related Party Transactions

• ABTC entered into a Master Colocation Services Agreement (MCSA) with Hut 8 Corp. on March 31, 2025, for colocation and hosting services for its Bitcoin miners. Fees and expenses billed were $14.4 million for the three and six months ended June 30, 2025.
• ABTC entered into a Master Management Services Agreement (MMSA) with Hut 8 Corp. on March 31, 2025, for management, oversight, strategy, compliance, and operational services. Fees and expenses billed were $1.5 million for the three and six months ended June 30, 2025.
• ABTC entered into a Shared Services Agreement with Hut 8 Corp. on March 31, 2025, for back-office support services (accounting, HR, IT, legal). Fees and expenses billed were $1.8 million for the three and six months ended June 30, 2025.
• Hut 8 Corp. assigned its Put Option Agreement to ABTC on August 5, 2025, allowing ABTC to purchase Bitmain Miners. ABTC is obligated to repay Hut 8 Corp. $46.0 million by December 31, 2025, for a prior deposit and expenses related to these miners.

Stakeholder Impact

• Shareholders (Gryphon): Their shares will be reclassified into Class A common stock, and they will own approximately 2% of the combined company, which will be renamed American Bitcoin Corp. and trade under ABTC. This represents significant dilution but potentially aligns them with a larger, more capitalized entity.
• Shareholders (ABTC/Hut 8): ABTC equity holders will own approximately 98% of the combined company, indicating a strong controlling interest and potential for significant value creation from the merger.
• Employees: The merger and integration process may lead to organizational changes, but the filing does not specify direct impacts on employment. The Shared Services Agreement with Hut 8 suggests continued leveraging of existing personnel for back-office functions.
• Customers/Suppliers: ABTC's continued operations and expansion plans, including miner purchases, will benefit suppliers like Bitmain Georgia. The colocation and management agreements with Hut 8 ensure continued business for Hut 8 as a service provider.
• Creditors: The capital raise and strategic Bitcoin reserve accumulation enhance the combined company's liquidity and financial stability, potentially benefiting creditors.

Next Steps

• Closing of the merger between Gryphon Digital Mining, Inc. and American Bitcoin Corp. in early September 2025.
• Reclassification of Gryphon's common stock and creation of new Class B and Class C common stock.
• Renaming of Gryphon to American Bitcoin Corp. and trading on Nasdaq under the ticker symbol ABTC.
• Purchase of approximately 981 additional Bitmain Miners by ABTC on or before October 5, 2025.
• Repayment of $46.0 million to Hut 8 Corp. by ABTC on or prior to December 31, 2025.
• Evaluation of the potential impacts of the One Big Beautiful Bill Act (OBBBA) on ABTC's financial position.

Key Dates

Recommendation

The merger with American Bitcoin Corp. and the associated capital raise are significant strategic moves that position the combined entity for growth in the Bitcoin mining sector. The improved Q2 2025 financial performance for ABTC as a standalone entity, coupled with aggressive miner acquisition and Bitcoin accumulation, are positive indicators. However, the substantial dilution for existing Gryphon shareholders (2% ownership post-merger) and the inherent volatility and risks of the Bitcoin mining industry, including fluctuating Bitcoin prices, network difficulty, and power costs, warrant a cautious approach. The long-term success hinges on effective integration, execution of the growth strategy, and favorable market conditions. A 'hold' recommendation allows investors to observe the initial performance of the combined entity and its ability to navigate industry challenges before making further investment decisions.

Keywords

Bitcoin mining, cryptocurrency, merger, SEC filing, Gryphon Digital Mining, American Bitcoin Corp, GRYP, ABTC, digital assets, hashrate, capital raise, financial results, corporate governance, risk management, Hut 8