Gryphon Digital Mining, Inc

Greetings and welcome to the Griffin Digital Mining fourth quarter and full year 2024 earnings call. On the call are Steve Gutterman, Chief Executive Officer of the company, and Sim Salzman, Chief Financial Officer of the company. Before I turn the call over to Mr. Gutterman, Please note that the statements made on this call that are not historical facts may be forward-looking statements from the company's management made within the meaning 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 factors section of the company's Form 10-Q and 10-K 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 that the company does not undertake any obligation to update or supplement any such statements to reflect subsequent developments. Now I would like to turn the call over to Steve Gutterman. Steve, please proceed.

thank you operator good afternoon shareholders thank you for joining us today for our earnings call i'm excited to share our progress and vision for positioning griffin at the forefront of the rapidly growing demand for high performance computing driven by artificial intelligence i'll walk you through a brief company history and our evolution through a series of deliberate actions supporting our growth plans moving forward and how we're positioning ourselves for significant growth. Griffin Digital Mining was founded with a mission to mine Bitcoin profitably and sustainably. A key milestone last year was our reverse takeover of Akerna and public listing on the NASDAQ. 2024 was a good year for mining. We mined 334 coins. But as many of you know, Bitcoin mining is a highly competitive industry subject to several variables that are largely outside miners' control, namely Bitcoin price, network hash rate, and energy costs. With global hash rate continually rising and an ever-decreasing number of Bitcoins to be mined, we recognize the need to differentiate and focus on what we can control, our energy strategies. The cost and availability of power is critical to mining profitably, and more generally, power is becoming an increasingly scarce and valuable resource well beyond crypto mining. We believe that the currency of the next decade will be power, and the rapid advancement of artificial intelligence is driving an explosion in demand for high-performance computing infrastructure. Industry reports estimate incremental power demand over the next five years in North America alone equating to 50 to 70 percent of current U.S. household consumption. Building the energy infrastructure to meet that demand is akin to recreating half or more of the current power grid in a fraction of the time it took to build originally. Recognizing this need, we've seen a broader trend in our industry of Bitcoin miners acquiring energy assets to vertically integrate and control power costs. As a Bitcoin miner, we are well equipped to apply the expertise in identifying energy sources and deploying computing equipment to serve the growing demand for AI computing infrastructure. Therefore, As we look to the future, our corporate focus has shifted. While we view Bitcoin mining as a revenue bridge, our efforts over the last six months have been and will continue to be to develop world-class power assets that can be used to operate HPC and AI data centers. To that end, over the last six months, we've expanded our team, strengthened our balance sheet, and evaluated a range of energy assets to acquire and develop. We ultimately determined that natural gas presents the optimal combination of abundance, cost efficiency, and reliability. Specifically, in September, my role was expanded from director to CEO. We added Jimmy Tripolos, the former HUD-8 CEO, CFO as chairman, and in a massive win for the company, we announced that Sim Salzman, former Marathon CFO, would be continuing his role as CFO. Then in October, we announced a transformative debt restructuring with Anchorage Digital, converting $13 million of debt to equity at a premium to our stock price. We restructured the $5 million of debt on favorable terms. and we'll describe that in more detail, the impact on our cash flow has been substantial. Instead of having to sweep the majority of our mined Bitcoin to Anchorage, we now pay a nominal monthly interest payment of $17,708 on the remaining debt. And perhaps more importantly, Anchorage has become our largest shareholder and a key advisor. we appointed Dan Gregorin from Anchorage Digital to our board. In December, we added Eric Galley, formerly of Luminous Capital Management, as SVP of Energy Strategy. Recognizing the immense opportunity ahead, 100% of our management team and the majority of our board invested personally in our $2.8 million January equity raise, a testament to our collective conviction. The capstone of our strategic shift is the definitive agreement to acquire Cactus, which we signed in January. Cactus would position us to become one of the largest dedicated HPC and AI computing infrastructure providers with up to four gigawatts of potential power. I'll dive more deeply into Cactus, but first I'll pass it over to Sim to walk through the financials.

Thank you, Steve. I will now highlight our financial results for 2024. For the year ending December 31st, 2024, we mined approximately 334 Bitcoin and generated mining revenues of approximately 20.5 million compared to approximately 740 Bitcoin and generated revenues of approximately 21.1 million for the year ending December 31st, 2023. Breakeven costs per Bitcoin for the year ending December 31st, 2024 were $47,359 compared to $18,192 for the year ending December 31st, 2023. The change in breakeven costs year over year reflect the halving event that occurred in 2024, where the Bitcoin rewards decreased by 50%, combined with the increase in global hash rate of approximately 66%. From an energy perspective, the company's net cost of producing a Bitcoin for 2024 was approximately 6.97 cents per kilowatt hour. Our adjusted EBITDA stood at approximately negative 5.5 million for the year ending December 31st, 2024, compared to 94,000 for the year ended December 31st, 2023. I'd also like to note that included in our adjusted EBITDA numbers were approximately $6 million in legal and marketing fees associated primarily with one-time deal costs and going public. Absent these fees, our adjusted EBITDA would have been above break-even. We believe break-even costs and adjusted EBITDA are important gauges of our operational effectiveness. And then highlighting these metrics gives investors and analysts better transparency for comparative analysis across mining companies. reconciliation for the nearest gap measures can be found in our earnings release disseminated prior to this call. The company recognized net income of approximately $401,000 for the three-month period ending December 31, 2024, which includes net non-cash expenses of approximately negative $2.4 million. Net non-cash expenses consist of items including depreciation, employee stock-based compensation expense, fair market value of common stock issued to consultants, change in fair value of notes payable, gain on restructuring of Bitcoin-denominated note payable, and unrealized gain or loss on marketable equity security. This compares to a net loss of approximately $10.9 million for the three-month period ending December 31, 2023, which included net non-cash expenses of approximately $9 million. The company recognized a net loss of approximately $21.3 million for the year ended December 31, 2024, which included net non-cash expenses of approximately $14.9 million. Net non-cash expenses consisted of depreciation, employee stock-based compensation expense, fair market value of common stock issued to consultants, change in fair value of notes payable, gain on restructuring of Bitcoin-denominated note payable, and unrealized gain or loss on the marketable assets. equity securities. This compares to a net loss of approximately 28.6 million for the year ending December 31st, 2023, which included net non-cash expenses of approximately 27.9 million. As of December 31st, 2024, our balance sheet reported approximately 0.7 million of cash and cash equivalents, 1 million in Bitcoin, and approximately 5.6 million due for the note payable. As Steve noted, we completed a debt restructuring with Anchorage Digital, converting $19.6 million of debt to equity. As of December 31st, 2023, our balance sheet reported approximately $0.9 million in cash and cash equivalents, $2 million in Bitcoin, and $14.9 million due for the note denominated in Bitcoin. As mentioned during prior quarters, the change in the fair value of note denominated in Bitcoin reflected a direct correlation to the price of Bitcoin as of the period end. Following the restructuring, the remaining debt due to Anchorage is no longer denominated in Bitcoin. Before I turn it over to Steve, I'd like to take a moment to highlight the dramatic improvements we have made since Steve became CEO in late September. By our key metrics, we exited Q4 2024 in a stronger financial position than we entered it. During the fourth quarter, we increased cash and cash equivalents from $368,000 to $735,000. We reduced total liabilities by approximately $13 million by completing the restructuring of the Anchorage Note. We improved accumulated shareholders' equity from a deficit of $18.9 million to a deficit of $7 million. We improved the average trading volume of our stock from approximately 249,000 shares per day in Q3 to approximately 874,000 shares per day in Q4. With that, I'll turn it back to Steve for some additional comments.