Gryphon Digital Mining, Inc

And welcome to the Gryphon Digital Mining Second Quarter 2024 Earnings Call. On the call are Rob Chang, Chief Executive Officer of the company, and Simeon Salzman, Chief Financial Officer of the company. Before I turn the call over to Mr. Chang, please note that statements made on this call that are not historical facts may be forward-looking statements from the Company's management made within the meanings of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amended concerning future events. Words such as may, should, projects, expects, intends, plans, believes, anticipates, hopes, estimates, and variations of such words and similar expressions are intended to identify forward-looking statements. These statements are subject to numerous conditions, many of which are beyond the control of the company, including those set forth in the risk factor section of the company's Form 10-K for the year ended December 31, 2023. as updated by the company's subsequent disclosures filed with the SEC. Copies of these documents are available on the SEC's website at www.sec.gov. Actual results may differ materially from those expressed or implied by such forward-looking statements. Any forward-looking statements made on this call are made only as of today's date and the company does not undertake any obligation to update or supplement any statements to reflect subsequent developments. Now I would like to turn the call over to Mr. Rob Chang. Rob, please proceed.

Thank you, Operator, and thank you, everyone, for joining us today to discuss Griffin Digital Mining's second quarter 2024 results. I'm excited to share that Griffin has achieved remarkable progress in both hash rate and energy efficiency during the second quarter of 2024, setting new benchmarks for the company. We recorded a quarterly average hash rate of 899 petahashes per second in Q2 2024, which represents a 20% increase from the same quarter in the previous year. Additionally, we reached a new peak in energy efficiency, achieving 28.5 joules per terahash in June, We believe these accomplishments highlight our dedication to operational excellence and position us strongly for future expansion. Underpinning these fantastic operational results was our Q2 miner upgrade program coming in ahead of schedule, enhancing our operational efficiency while strengthening our competitive position. As a result, Griffin's self-mining hashrate has now reached approximately 0.94 exahashes per second. I'm also pleased to highlight that in Q2, we learned that Griffin was selected to join the Russell Microcap Index. We feel that our inclusion in this index reflects the significant progress we have made in the capital markets in the short time we've been public. Now, shifting gears from the capital markets back to the Bitcoin market, recently we have seen some pullbacks in the price of Bitcoin, which is not uncommon. Historically, Bitcoin has tended to base around the $50,000 level during these pullbacks. However, if we overlay the price action following previous halvings, we see that Bitcoin has historically doubled within six months post-halving. If these patterns hold, we believe the current market represents the bottom of the upcycle, and we expect the price of Bitcoin to trend higher in the coming months. We believe that recent market weakness can be attributed to factors such as Germany selling off some of its Bitcoin holdings and the general perception of Bitcoin as a risk-on asset amidst instability in the Middle East. Despite these short-term fluctuations, we believe that the fundamentals of Bitcoin remain strong with a fixed supply of 21 million coins against the ongoing devaluation of fiat currencies. We project that Griffin is well-positioned to navigate these market conditions due to our uncommon cost structure. Our profit share-based contracts with our host provider allow our production costs to flex downwards in correlation with Bitcoin prices, providing downside protection. We expect that this gives us a competitive advantage over peers with fixed costs who may struggle to operate efficiently in a lower price environment. As we move further beyond the having, a clear distinction is emerging between companies that can operate efficiently and those that struggle. While some are considering sales or strategic options, Griffin is actively pursuing growth, positioning itself to take advantage of consolidation opportunities and strengthen its foothold during this industry transition. To that end, during the quarter, we remain focused on opportunities to grow our hash rate in a highly accretive manner. We have vetted over 25 prospects, conducting due diligence, legal analysis, and site visits. We are enthusiastic about the possibilities and will judiciously pursue ventures that align with our stringent criteria, emphasizing accretion and impact. Lastly, I would like to address the recent announcement regarding our CFO's decision to step down to spend more time with his family and to pursue other professional opportunities. We appreciate everything Sim has done for the company and wish him well. He will be staying through November 15th to shepherd the transition process, and we have initiated a search for his successor. Rest assured, this transition will be seamless, and Sim will be on the next earning call as well. I'll now turn it over to Sim to review our financial results before closing with some additional remarks. Sim?

Thank you, Rob. I will now highlight our financial results for the quarter ended June 30th, 2024. Griffin mined approximately 84 Bitcoin, generating mining revenues of 5.5 million in Q2 2024 compared to 4.9 million in the same period in the prior year. Break-even costs in Q2 2024 were approximately 45,452 compared to 34,063 in Q1 2024. The change in breakeven costs quarter over quarter reflect the halving event that occurred in late April, whereas the Bitcoin rewards decreased by 50% combined with the increase in global hash rate. For that three months period ending June 30th, 2024 and June 30th, 2023, the company incurred pass-through variable energy costs of 6.0654 cents per kilowatt hour, and 0.0569 cents per kilowatt hour respectively, a change of 15%. In addition, the daily average global hash rate increased by 68% over that same period from 357.7 exahash to 602.1 exahash per day during each respective quarter. Please note that over the same period, Bitcoin's average price changed from 25,428 59,572 or an increase of 134% resulting in a change in profitability for each Bitcoin mined. We believe Bitcoin costs and total cash costs at the mine level are the most relevant factors for assessing Bitcoin mining operations. Highlighting these metrics gives investors and analysts better transparency for comparative analysis across mining companies. Turning to our results of our consolidated statements of operations, Our net loss of 4 million in Q2 2024 includes net non-cash expenses of 2.5 million. Net non-cash expenses consisted of items including depreciation, stock-based comp expense, fair value of common stock issued to consultants, unrealized loss on marketable equity securities, change in the fair value of notes payable, and unrealized gain on digital assets. This compares to a net loss in Q2 2023 of 2.6 million. which includes net non-cash expenses of 4.8 million. Our adjusted EBITDA, which we believe is an important gauge of our operational effectiveness and financial well-being, stood at approximately negative $3 million for the quarter ended June 30, 2024, compared to 4.2 million for the quarter ended June 30, 2023. This loss was largely attributed to higher-than-normal marketing expenses as the company moved to showcase its recent merger and listing on NASDAQ, Net loss per basic and diluted share for Q2 2024 was negative 10 cents based on basic and diluted weighted average shares outstanding of approximately 39 million shares. This compares to net loss per basic and diluted share of Q2 2023 of negative 18 cents. Weighted average shares outstanding was approximately 14.4 million. Our average efficiency for our active fleet of approximately 88,825 Bitcoin mining machines was around 28 jewels per terahash as of June 30th, 2024. As of June 30th, 2024, our balance sheet reports approximately 1.2 million of cash and cash equivalents, 1 million in Bitcoin, and approximately 19.1 million due for the note denominated in Bitcoin. As of December 31st, 2023, our balance sheet reported approximately 0.9 million in cash and cash equivalents, 2.1 million in Bitcoin, and 14.9 million due for the note denominated in Bitcoin. We would like to note that the change in the fair value of the note payable as of June 30th, 2024 is due to its structure being denominated in Bitcoin and as such reflects a direct correlation to the price of Bitcoin as of the period end. We have not increased our position of Bitcoin due and we remain fully hedged to our production. To reiterate Rob's comments, we remain laser focused on pursuing growth in a financially disciplined, accretive manner. With that, I'll turn it back to Rob to discuss Griffin's 2024 strategy.