American Bitcoin Corp.: Form 10-Q for the period ended Sep 30, 2025

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the financial condition and results of operations of the Company should be read together with its condensed and combined financial statements and the related notes and the other financial information included elsewhere in this Quarterly Report and with the Proxy Statement/Prospectus, the Annual Report, and the Current Report. This discussion contains forward-looking statements that involve risks and uncertainties. The Company’s actual business, financial condition, and results of operations could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Quarterly Report and in the Proxy Statement/Prospectus, the Annual Report, and the Current Report. See also “Cautionary Note Regarding Forward-Looking Statements” in this Quarterly Report. The Company's historical results are not necessarily indicative of the results that may be expected for any period in the future.

Overview

The Company is a purpose-built Bitcoin accumulation vehicle and aims to pursue that goal through a levered strategy that combines efficient Bitcoin mining, disciplined Bitcoin reserve expansion and focused ecosystem engagement. References to the "Company" herein refer to:

(i) the “Bitcoin mining” sub-segment of Parent’s “Compute” segment prior to the effectiveness of the Transactions on March 31, 2025;

(ii) Historical ABTC following the effectiveness of the Transactions on April 1, 2025 until the consummation of the Mergers on September 3, 2025; and

(iii) American Bitcoin Corp. (formerly known as Gryphon Digital Mining, Inc.) following the consummation of the Mergers on September 3, 2025.

See “—Basis of Presentation” below.

Q3 2025 Highlights

• As of November 13, 2025, ABTC had accumulated approximately 4,090 Bitcoin in reserve, which includes Bitcoin held in custody or pledged for miner purchases, and owned approximately 77,944 Bitcoin miners with a cumulative hashrate of 25.0 EH/s and weighted average fleet efficiency of 16.3 J/TH.
• Launch of 2025 At-The-Market Offering Program. On September 3, 2025, the Company entered into a Controlled Equity Offering Sales Agreement to establish an at-the-market equity program (the "2025 ATM"), allowing the Company to offer and sell up to $2.1 billion of its Class A common stock from time to time. From the launch the 2025 ATM until September 30, 2025, the Company issued and sold 11,017,341 shares of its Class A common stock under the 2025 ATM for gross proceeds of $90.0 million, at a weighted average issuance price per share of $8.17, and incurred issuance costs of $2.0 million. During the period from October 1, 2025 to November 13, 2025, the Company issued and sold 7,178,767 shares of its Class A common stock for gross proceeds of $44.1 million, at a weighted average issuance price per share of $6.14, and incurred issuance costs of $0.2 million.
• Merger with Gryphon. On May 9, 2025, Gryphon, Merger Sub Inc., Merger Sub LLC, and Historical ABTC entered into the Merger Agreement. On September 3, 2025, in accordance with the terms of the Merger Agreement, among other things, (i) Merger Sub Inc. merged with and into Historical ABTC, with Historical ABTC surviving the merger (the “First Merger”) as a wholly owned direct subsidiary of Gryphon (the corporation surviving the First Merger, the “First Merger Surviving Corporation”) and (ii) immediately after the First Merger, the First Merger Surviving Corporation merged with and into Merger Sub LLC, with Merger Sub LLC surviving the merger (the “Second Merger” and, taken together with the First Merger, the “Business Combination”) as a wholly owned direct subsidiary of Gryphon. Gryphon was renamed to American Bitcoin Corp. after the Closing. This transaction was accounted for under the acquisition method as a reverse acquisition with Historical ABTC identified as the accounting acquirer for financial statement reporting purposes.
• ABTC Bitmain Purchase Agreement. On August 5, 2025, pursuant to the Put Option Agreement between Historical ABTC and Parent, Parent assigned its option to purchase up to approximately 17,280 Bitmain U3S21EXPH Bitcoin miners (collectively, the “Bitmain Miners”) for a maximum aggregate purchase price of approximately $320.0 million, not including any applicable tariffs, duties or similar charges, to Historical ABTC. Historical ABTC exercised the option on August 5, 2025 and entered into an On-Rack Sales and Purchase Agreement (the “ABTC Bitmain Purchase Agreement”) with Bitmain Georgia (“Bitmain Georgia”) to purchase the Bitmain Miners in one or more tranches for a total purchase price of up to approximately $320.0 million (subject to adjustments, offsets and costs as set forth in the ABTC Bitmain Purchase Agreement). Concurrently with the execution of the ABTC Bitmain Purchase Agreement, Historical ABTC purchased 16,299 Bitmain Miners, representing a total of approximately 14.02 EH/s, for a total purchase price of approximately $314.0 million, which was reduced by the application of a deposit and certain expenses of approximately $46.0 million previously paid to Bitmain Georgia by Parent, through the pledge of approximately 2,234 Bitcoin at a mutually agreed upon fixed price. In September 2025, the Company purchased the remaining 981 Bitmain Miners for a total purchase price of $18.9 million, also paid through the pledge of Bitcoin at a mutually agreed upon fixed price. In October 2025, the Company pledged additional Bitcoin at a mutually agreed upon fixed price, and Bitmain Georgia refunded the $46.0 million comprising of the deposit and certain expenses to Parent satisfying the Company’s repayment obligation. The Bitcoin pledged under the ABTC Bitmain Purchase Agreement has a redemption period of 24 months from each pledge date.

Basis of Presentation

On March 31, 2025, Parent, ADC, and the stockholders of ADC entered into a Contribution and Stock Purchase Agreement (the “Agreement”), pursuant to which Parent contributed to ADC substantially all of Parent’s wholly-owned ASIC miners, in exchange for newly issued Class B Common Stock of ADC, representing 80% of the total and combined voting power and 80% of the issued and outstanding equity interests of ADC after giving effect to the issuance (the “Transactions”). In connection with the Transactions, ADC was renamed American Bitcoin Corp. and became a majority-owned subsidiary of Parent.

Until the effectiveness of the Transactions on March 31, 2025, the Company’s operations historically operated as the “Bitcoin mining” sub-segment of Parent’s “Compute” segment and not as a standalone company; therefore, separate financial statements had not historically been prepared for the Company prior to April 1, 2025. The Company's Unaudited Condensed and Combined Financial Statements represent the historical assets, liabilities, operations and cash flows directly attributable to the Company starting April 1, 2025 and prior, have been prepared on a carveout basis through the use of a management approach from Parent’s consolidated financial statements and accounting records and are presented on a standalone basis as if the operations have been conducted independently from Parent.

Following the effectiveness of the Transactions on March 31, 2025, the Company began operating as a standalone entity with its own accounting and financial records; therefore, starting April 1, 2025, the Company’s results of operations are the results directly attributed to its standalone operations rather than the Bitcoin mining operations of Parent. The Company’s Unaudited Condensed and Combined Balance Sheets as of September 30, 2025, reflects the assets and liabilities that the Company directly owns or is legally obligated to satisfy post-Transactions.

Prior to the effectiveness of the Transactions on March 31, 2025, all revenues and costs, as well as assets and liabilities directly associated with Parent’s Bitcoin mining sub-segment activities were included in the Company’s Unaudited Condensed and Combined Financial Statements, including Parent’s strategic Bitcoin reserve (which remained with Parent following the effectiveness of the Transactions). Additional costs allocated to the Company include corporate general and administrative expenses which consisted of various categories, including but not limited to: employee compensation and benefits, professional services, facilities and corporate office expenses, information technology, interest expenses, and stock-based compensation. The corporate and general administrative expenses allocated were primarily based on a percentage of revenue basis that was considered to be a reasonable reflection of the utilization of the services provided or benefit received during the periods presented, depending on the nature of the service received. Management believes the assumptions underlying the Company’s Unaudited Condensed and Combined Financial Statements, including the expense methodology and resulting allocation, are reasonable for all periods presented. However, the allocations may not include all of the actual expenses that would have been incurred by the Company had it operated as a standalone entity during such periods and may not reflect its results of operations, financial position and cash flows had it been a standalone company during the periods presented. Actual costs that might have been incurred had the Company been a standalone company would depend on a number of factors, including the Company’s organizational structure, what corporate functions the Company might have performed directly or outsourced, and strategic decisions the Company might have made in areas such as executive management, legal, and other professional services, and certain corporate overhead functions. These costs also may not be indicative of the expenses that the Company may incur in the future or would have incurred if the Company had obtained these services from a third party.

All intracompany transactions within the Company prior to the effectiveness of the Transactions on March 31, 2025 have been eliminated. All intercompany transactions between the Company and Parent on or before March 31, 2025 are considered to be effectively settled in the Company’s Unaudited Condensed and Combined Financial Statements at the time the transactions are recorded. The total net effect of these intercompany transactions considered to be settled are reflected in the Company’s Unaudited Condensed and Combined Statement of Cash Flows within financing activities and in the Company’s Unaudited Condensed and Combined Balance Sheets as net Parent investment. At March 31, 2025, as described in the description of the Transactions above, the total net Parent investment has been settled.

Prior to the effectiveness of the Transactions on March 31, 2025, the Company’s equity balance in its Unaudited Condensed and Combined Financial Statements represents the excess of total liabilities over assets. Net Parent investment is primarily impacted by contributions from Parent that are the result of net funding provided by or distributed to Parent.

Prior to the effectiveness of the Transactions on March 31, 2025, cash was managed through bank accounts controlled and maintained by Parent. The Company did not have legal ownership of any bank accounts containing cash balances prior to March 31, 2025. As such, cash held in commingled accounts with Parent is presented within net Parent investment on the Company’s Unaudited Condensed and Combined Balance Sheets. Subsequent to March 31, 2025, the Company has set up its own legally separate bank accounts to appropriately directly settle its liabilities and to manage its own cash.

Prior to the effectiveness of the Transactions on March 31, 2025, the Company was not a co-obligor on Parent’s third-party, long-term debt obligations nor was the Company expected to pay any portion of Parent’s third-party, long-term debt. However, proceeds from Parent’s third-party debts were used to finance the Company’s purchase of ASICs or directly used for the Company’s Bitcoin mining-related activities and were therefore included in the Company’s Unaudited Condensed and Combined Financial Statements. While the Company is not a legal obligor, certain Bitcoin mining assets of the Company were pledged as collateral as disclosed in Note 5. Following the effectiveness of the Transactions on March 31, 2025, the Company is no longer connected to any of Parent’s third-party debt obligations.

The Condensed and Combined Financial Statements included in this Quarterly Report have been prepared in accordance with generally accepted accounting principles, in the United States (“GAAP”).

Bitcoin Mining

The Company generates revenue from Bitcoin rewards by providing computation services to third-party mining pool operators, which combine the computing power of Bitcoin miners to increase the chance of solving a block and getting paid by the network. The Company provides the service of performing computations of its Bitcoin miners to these mining pool operators and receives in return a payout of Bitcoin based on a contractual formula which primarily calculates the computing power provided to the mining pool as a percentage of the total computing power of the network, regardless of whether the mining pool actually receives the Bitcoin award from the network.

As of September 30, 2025, the Company mined Bitcoin at four sites:

• Alpha (Niagara Falls, New York);
• Medicine Hat (Medicine Hat, Alberta);
• Salt Creek (Orla, Texas); and
• Vega (Amarillo, Texas)

Until April 30, 2024, the Company also had Bitcoin mining operations hosted at sites in Kearney, Nebraska and Granbury, Texas. The Company also previously mined Bitcoin at a site in Drumheller, Alberta, which has been non-operational since March 2024. The closure was due to the site’s lack of profitability as a result of several factors, mostly elevated energy costs and underlying voltage issues.

During February and March 2025, the Company’s mining activity was reduced due to a planned fleet upgrade, which was completed on April 4, 2025. During the three months ended September 30, 2025, the fleet upgrade resulted in higher efficiency Antminer S21+ miners, which improved Bitcoin Mining operations.

In connection with the Transactions, Parent and the Company entered into a Master Managed Services Agreement ("MMSA") and a Master Colocation Services Agreement ("MCSA") providing for Parent and its personnel to perform day-to-day commercial and operational management services and ASIC colocation services to the Company, respectively, in each case on an exclusive basis for so long as such agreements remain in effect. Parent and the Company also entered into a Shared Services Agreement, pursuant to which Parent and its personnel would provide back-office support services to the Company.

On April 1, 2025, pursuant to the MCSA and MMSA, the Company entered into service orders with Parent to host its Bitcoin miners at Alpha, Medicine Hat, and Salt Creek. The Company subsequently entered into a service order with Parent to host additional Bitcoin miners at Parent’s Vega site, starting in August 2025.

Key Factors Affecting ABTC’s Performance

Price of Bitcoin

The Company's business is heavily dependent on the price of Bitcoin, which is traded globally and has historically experienced significant volatility. The Company generates revenue from Bitcoin rewards that it earns through third-party mining pool operators and Bitcoin it acquires through at-market purchases to further build its strategic reserve. Under ASU 2023-08, *Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“*ASU 2023-08”), Bitcoin is revalued at fair value at the end of each reporting period, with changes to fair value recognized in net income. As a result, fluctuations in the price of Bitcoin may significantly impact the Company's results of operations.

Bitcoin network difficulty and hashrate

The Company's business is not only impacted by the volatility in Bitcoin prices, but also by increases in the competition for Bitcoin production, specifically for Bitcoin mining. This increased competition is described as the network hashrate resulting from the growth in the overall quantity and quality of miners working to solve blocks on the Bitcoin blockchain, and the difficulty index associated with the secure hashing algorithm employed in solving the blocks. Increased difficulty reduces the mining proceeds of the equipment proportionally and eventually requires Bitcoin miners like the Company, to upgrade their equipment to remain profitable and compete effectively with other miners. Conversely, a decline in network hashrate results in a decrease in difficulty, increasing mining proceeds and profitability.

Block reward and halving

The current Bitcoin reward for solving a block is 3.125 Bitcoin. The Bitcoin network is programmed such that the Bitcoin block reward is halved every 210,000 blocks mined, or approximately every four years. This reduction in reward spreads out the release of Bitcoin over a long period of time as fewer Bitcoin are mined with each halving event. Bitcoin halving events impact the number of Bitcoin we mine which, in turn, may have a potential impact on our results of operations. The last halving event occurred in April 2024, and the next halving event is expected to occur in 2028.

Power costs

Power costs are a significant component of the Company's cost to mine a Bitcoin. Power costs can be highly volatile and sensitive to various factors outside of the Company's control. The Company is subject to variable power prices and market rate fluctuations through its MCSA with Parent, through which power costs are incurred as a pass-through expense. Increased power costs impact the profitability of the Company's Bitcoin mining operations.

Non-GAAP Financial Measures

In addition to the Company's results determined in accordance with GAAP, it relies on Adjusted EBITDA to evaluate its business, measure its performance, and make strategic decisions. Adjusted EBITDA is a non-GAAP financial measure. The Company defines Adjusted EBITDA as net income or loss, adjusted for impacts of interest expense, income tax (benefit) provision, depreciation and amortization, loss on sale of property and equipment, gain or loss on derivatives, gain on warrant liability, gain on debt extinguishment, the removal of non-recurring transactions, loss from discontinued operations, net of income tax benefit, and stock-based compensation expense in the period presented. You are encouraged to evaluate each of these adjustments and the reasons that the Company's Board of Directors (the "Board") and management team consider them appropriate for supplemental analysis.

The Board and the Company's management team use Adjusted EBITDA to assess its financial performance because it allows them to compare the Company's operating performance on a consistent basis across periods by removing the effects of the Company's capital structure (such as varying levels of interest expense and income), asset base (such as depreciation and amortization), and other items (such as non-recurring transactions mentioned above) that impact the comparability of financial results from period to period.

Net income (loss) is the GAAP measure most directly comparable to Adjusted EBITDA. In evaluating Adjusted EBITDA, you should be aware that in the future the Company may incur expenses that are the same as or similar to some of the adjustments in such presentation. The Company's presentation of Adjusted EBITDA should not be construed as an inference that its future results will be unaffected by unusual or non-recurring items. There can be no assurance that the Company will not modify the presentation of Adjusted EBITDA in the future, and any such modification may be material. Adjusted EBITDA has important limitations as an analytical tool and you should not consider Adjusted EBITDA in isolation or as a substitute for analysis of the Company's results as reported under GAAP. Because Adjusted EBITDA may be defined differently by other companies in the Company's industry, its definition of this non-GAAP financial measure may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.

For a reconciliation to the Company's most directly comparable financial measure calculated and presented in accordance with GAAP, please see “—Results of Operations” below.

Results of Operations

Three Months Ended September 30, 2025 and 2024

Adjusted EBITDA reconciliation:

(1) Non-recurring transactions for the three months ended September 30, 2025 represent approximately $5.2 million of Merger related transaction costs. Non-recurring transactions for the three months ended September 30, 2024 represent approximately $0.4 million of restructuring costs.

Revenue

Revenue was $64.2 million and $11.6 million for the three months ended September 30, 2025 and 2024, respectively. This $52.6 million increase was primarily due to increased mining efficiencies at the Medicine Hat and Salt Creek sites as a result of the Company's fleet upgrade, which not only involved the installation of higher-efficiency machines, but also targeted infrastructure upgrades at Parent's sites to support higher rack-level power density. Additionally, the Company's purchase of the Bitmain Miners at the Vega site under the ABTC Bitmain Purchase Agreement in August and September 2025 added an additional 14.86 EH/s to the Company's mining fleet. Both of these factors led to an increase in Bitcoin mined (563 Bitcoin mined during the three months ended September 30, 2025, versus 190 Bitcoin mined during the three months ended September 30, 2024). Additionally, there was an increase in the average revenue per Bitcoin mined from approximately $61,105 to approximately $114,097 due to an increase in the price of Bitcoin.

Cost of revenue

Cost of revenue was $28.3 million and $11.1 million for the three months ended September 30, 2025 and 2024, respectively. This $17.2 million increase was primarily due to the increased consumption resulting from additional miners operating at the sites, increased uptime of those miners, and an increase in the power cost per megawatt hour from $28.40 for the three months ended September 30, 2024, compared to $42.41 for the three months ended September 30, 2025.

Depreciation and amortization

Depreciation and amortization expense was $15.2 million and $4.3 million for the three months ended September 30, 2025 and 2024, respectively. The $10.9 million increase was primarily driven by increased depreciation due to the Company's fleet upgrade and its purchase of the Bitmain Miners at the Vega site under the ABTC Bitmain Purchase Agreement in August and September 2025 resulting in a larger depreciable asset base.

General and administrative expenses

General and administrative (“G&A”) expenses were $8.1 million and $4.8 million for the three months ended September 30, 2025 and 2024, respectively. The $3.3 million increase in G&A expenses was primarily driven by a $5.2 million of transaction costs related to the Merger, partially offset by a $1.2 million decrease in stock-based compensation expense, as the Company does not currently offer stock-based compensation, and an overall decrease in G&A expenses resulting from savings realized from the Shared Services Agreement with Parent, which began on April 1, 2025.

Loss on digital assets

Losses on digital assets were $5.5 million for the three months ended September 30, 2025 compared to losses on digital assets of $1.6 million for the three months ended September 30, 2024. On March 31, 2025, in connection with the Transactions, Parent’s strategic Bitcoin reserve remained with Parent. Therefore, immediately following the effectuation of the Transactions on March 31, 2025, Historical ABTC had no Bitcoin in reserve. Starting April 1, 2025, the Company began to build its own strategic Bitcoin reserve. The Company accumulated 3,418 Bitcoin as a standalone entity in the three months ended September 30, 2025 compared to 9,106 Bitcoin accumulated by the Company in the three months ended September 30, 2024. The loss on digital assets for the three months ended September 30, 2025 were due to the Bitcoin price of $114,068 as of September 30, 2025 being lower than the average cost basis of Bitcoin accumulated by the Company in the three months ended September 30, 2025 of $116,808. In contrast, the price of Bitcoin as of June 30, 2024 was approximately $62,668, which increased to approximately $63,301 as of September 30, 2024. This increase in Bitcoin price was offset by the impact of foreign currency translation adjustments during the quarter, resulting in a loss of $1.6 million.

Other (expense) income

Other expense was $2.0 million for the three months ended September 30, 2025, compared to other income of $9.0 million for the three months ended September 30, 2024. The decrease of $11.0 million was primarily driven by a $6.0 million decrease in gain on debt extinguishment, and a $4.7 million decrease in gain on derivatives related to the Company's Bitcoin redemption option and call options.

Income tax (provision) benefit

The Company's income tax provision was $1.8 million for the three months ended September 30, 2025, compared to an income tax benefit of $0.6 million for the three months ended September 30, 2024. This $2.3 million increase in income tax provision was primarily due to the Company's income from continuing operations for the three months ended September 30, 2025.

Results of Operations

Nine Months Ended September 30, 2025 and 2024

41

Adjusted EBITDA reconciliation:

(1) Non-recurring transactions for the nine months ended September 30, 2025 represented approximately $7.5 million of Merger related transaction costs. Non-recurring transactions for the nine months ended September 30, 2024 represented approximately $1.9 million of restructuring costs and $0.9 million of transaction costs.

Revenue

Revenue was $106.8 million and $55.9 million for the nine months ended September 30, 2025 and 2024, respectively. This $50.9 million increase largely due to increased mining efficiencies at the Medicine Hat and Salt Creek sites as a result of the Company’s fleet upgrade, which not only involved the installation of higher-efficiency machines, but also targeted infrastructure upgrades at Parent’s sites to support higher rack-level power density. Additionally, the Company’s purchase of the Bitmain Miners at the Vega site under the ABTC Bitmain Purchase Agreement in August and September 2025 added an additional 14.86 EH/s to the Company’s mining fleet. Both of these factors led to an increase in Bitcoin mined (1,006 Bitcoin mined during the nine months ended September 30, 2025, of which 871 was attributed to the Company following the Transactions, versus 993 Bitcoin mined during the nine months ended September 30, 2024). Additionally, there was an increase in the average revenue per Bitcoin mined from approximately $56,274 to approximately $106,206 due to an increase in the price of Bitcoin.

Cost of revenue

Cost of revenue was $55.3 million and $39.6 million for the nine months ended September 30, 2025 and 2024, respectively. This $15.7 million increase primarily due to the increased consumption resulting from additional miners operating at the sites, and increased uptime of those miners.

Depreciation and amortization

Depreciation and amortization expense was $31.6 million and $17.8 million for the nine months ended September 30, 2025 and 2024, respectively. The $13.8 million increase was primarily driven by increased depreciation due to the Company's fleet upgrade and its purchase of the Bitmain Miners at the Vega site under the ABTC Bitmain Purchase Agreement in August and September 2025 resulting in a larger depreciable asset base.

General and administrative expenses

G&A expenses were $26.1 million and $23.6 million for the nine months ended September 30, 2025 and 2024, respectively. The $2.5 million increase in G&A expenses was primarily driven by $7.5 million of transaction costs related to the Merger, offset partially by a $4.2 million decrease in stock-based compensation expense and an overall $0.8 million decrease in G&A expenses resulting from savings realized from the Shared Services Agreement with Parent, which began on April 1, 2025.

Loss (gains) on digital assets

Loss on digital assets was $114.8 million for the nine months ended September 30, 2025, compared to gains on digital assets of $201.1 million for the nine months ended September 30, 2024. On March 31, 2025, in connection with the Transactions, Parent’s strategic Bitcoin reserve remained with Parent. Therefore, immediately following the effectuation of the Transactions on March 31, 2025, the Company had no Bitcoin in reserve. Starting April 1, 2025, the Company began to build its own strategic Bitcoin reserve. The loss on digital assets for the nine months ended September 30, 2025 was primarily due to this decrease in Bitcoin held by the Company (10,171 Bitcoin held as of December 31, 2024 compared to 3,418 Bitcoin held as of September 30, 2025). While Bitcoin prices increased from approximately $93,354 as of December 31, 2024 to approximately $114,068 as of September 30, 2025, the price of Bitcoin at the time of Transactions on March 31, 2025 was approximately $82,534 per Bitcoin, which represents a decrease from the price as of December 31, 2024, and resulted in a $112.4 million loss in digital assets recognized for the period of time up to the Transactions during the nine months ended September 30, 2025. In contrast, gains on digital assets of $201.1 million for the nine months ended September 30, 2024, were due to the increase in the price of Bitcoin from approximately $42,288 as of December 31, 2023, to approximately $63,303 as of September 30, 2024.

Other income

Other income was $18.9 million and $22.4 million for the nine months ended September 30, 2025 and 2024, respectively. The decrease of $3.5 million was primarily driven by a $6.0 million decrease in gain on debt extinguishment, and a $1.1 million decrease in gain on derivatives related to the Company's Bitcoin redemption option and call options. This was partially offset by a $3.5 million decrease in interest expense due to the Company no longer incurring interest expense after the completion of the Transactions on March 31, 2025.

Income tax benefit (provision)

Income tax benefit was $10.8 million for the nine months ended September 30, 2025, compared to an income tax provision of $24.8 million for the nine months ended September 30, 2024. The $35.6 million increase in income tax benefit was primarily due to the losses on digital assets for the nine months ended September 30, 2025.

Loss from discontinued operations

Loss from discontinued operations was nil and $4.8 million for the nine months ended September 30, 2025 and 2024, respectively. On March 6, 2024, the Company announced the closure of the Drumheller site in Alberta, Canada in connection with restructuring and optimization initiatives designed to strengthen financial performance. Of the $4.8 million loss related to the closure of the Drumheller site, $3.1 million was a result of the impairment of the long-term asset and $3.3 million loss was from other operational activities. These losses were partially offset by a $1.6 million income tax benefit.

Liquidity and Capital Resources

Prior to the Transactions on March 31, 2025, the Company operated as the "Bitcoin mining" sub-segment of Parent's "Compute" segment and not as a standalone company; therefore, its primary sources of liquidity included cash from Hut 8, proceeds from sales of Bitcoin, Parent’s strategic Bitcoin reserve, and capital raised from investors.

Subsequent to the effectuation of the Transactions, the Company's primary sources of liquidity include capital raised from investors, including equity sales, and its strategic Bitcoin reserve, which it started to accumulate following the effectiveness of the Transactions on April 1, 2025. The Company's primary cash needs are for Bitcoin purchases to pursue its Bitcoin accumulation strategy, working capital to support its operations, and equipment financing, including the purchase of additional Bitcoin miners.

On June 27, 2025, the Company issued and sold 159,537,377 shares of its Class A common stock for aggregate gross proceeds in cash and Bitcoin of approximately $220.1 million, and aggregate net proceeds of approximately $215.3 million after deducting certain fees and expenses incurred in connection with the issuance, including aggregate commissions of $4.8 million. $10.0 million worth of the shares were sold for consideration of Bitcoin in lieu of cash at an exchange rate of one Bitcoin to $104,000. During the nine months ended September 30, 2025, the Company used $205.6 million of these proceeds to purchase approximately 1,726 Bitcoin at a weighted average price of approximately $119,120.

On September 3, 2025, the Company entered into a Controlled Equity Offering Sales Agreement to establish the 2025 ATM, allowing the Company to offer and sell up to $2.1 billion of its Class A common stock from time to time. From the launch of the 2025 ATM to September 30, 2025, the Company issued and sold 11,017,341 shares of its Class A common stock under the 2025 ATM for gross proceeds of $90.0 million, at a weighted average issuance price per share of $8.17, and incurred issuance costs of $2.0 million. During the period from October 1, 2025 to November 13, 2025, the Company issued and sold 7,178,767 shares of its Class A common stock for gross proceeds of $44.1 million.

The Company's ability to meet its anticipated cash requirements will depend on various factors including its ability to maintain its existing business, compete with existing and new competitors in existing and new markets and offerings, pursue strategic transactions, access capital markets, and respond to global and domestic economic, geopolitical, social conditions and their impact on demand for the Company's offerings.

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.

Cash Flows

The following table summarizes our cash flows for the nine months ended September 30, 2025 and September 30, 2024:

Operating Activities

Net cash used in operating activities was $43.1 million and $77.6 million for the nine months ended September 30, 2025 and 2024, respectively. Net cash used in operating activities for nine months ended September 30, 2025 resulted from a net loss of 93.7 million, partially offset by deduction of non-cash adjustments of $8.9 million and favorable changes in working capital of $41.7 million. Net cash used in operating activities for the nine months ended September 30, 2024, resulted from net income of $168.8 million, partially offset by deduction of non-cash adjustments of $227.5 million and unfavorable changes in working capital of $18.9 million.

Investing Activities

Net cash used in investing activities totaled $280.9 million for the nine months ended September 30, 2025, primarily consisting of $287.8 million of Bitcoin purchased, partially offset by $3.4 million in proceeds from the sale of digital assets, $2.6 million in proceeds from the sale of property and equipment, and $0.9 million acquired as part of the Mergers. Net cash provided by investing activities totaled $35.4 million for the nine months ended September 30, 2024, consisting of $63.4 million in proceeds from Bitcoin sales, partially offset by $24.4 million in deposits paid to purchase property and equipment and $3.6 million in purchases of property and equipment.

Financing Activities

Net cash provided by financing activities was $331.9 million for the nine months ended September 30, 2025, which was primarily a result of $955.2 million of non-cash adjustment from the effectuation of the Transactions on March 31, 2025, $205.3 million from the issuance of Class A common stock in June 2025 private placement, net of fees, and $88.0 million from the issuance of Class A common stock through the 2025 ATM, net of fees. These were partially offset by the issuance of $115.8 million of shares of Class B common stock to Parent in accordance with the Transactions and to settle the net Parent investment of $800.8 million. Net cash provided by financing activities was $42.2 million for the nine months ended September 30, 2024, primarily consisting of $32.8 million of net Parent investment and $20.8 million of net proceeds from covered call premiums, partially offset by $11.5 million in loan repayments.

Critical Accounting Policies and Estimates

The Company's management’s discussion and analysis of its financial condition and results of operations is based on its Unaudited Condensed and Combined Financial Statements, which have been prepared in accordance with GAAP. The preparation of these Unaudited Condensed and Combined Financial Statements requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. The Company evaluates its estimates and assumptions on an ongoing basis and bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for the judgments the Company makes about the carrying value of assets and liabilities that are not readily apparent from other sources. Because these estimates can vary depending on the situation, actual results may differ from these estimates. Making estimates and judgments about future events is inherently unpredictable and is subject to significant uncertainties, some of which are beyond the Company's control. Should any of these estimates and assumptions change or prove to have been incorrect, it could have a material impact on the Company's results of operations, financial position, and statement of cash flows.

There have been no material changes to the Company's critical accounting policies and estimates disclosed in the Annual Report other than as described in Note 2. Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements in the Company's Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes.

Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements. The most significant accounting estimates inherent in the preparation of our financial statements include estimates associated with revenue recognition, determining the useful lives and recoverability of long-lived assets, impairment analysis of digital assets, and current and deferred income tax assets (including the associated valuation allowance) and liabilities.

Market Price Risk of Bitcoin

The Company holds a significant amount of Bitcoin and intends to accumulate additional Bitcoin; therefore, it is exposed to the impact of market price changes in Bitcoin.

As of September 30, 2025, the Company held 3,418 Bitcoin, and the fair value of a single Bitcoin was approximately $114,068. Therefore, the fair value of the Company's strategic Bitcoin reserve as of September 30, 2025, was approximately $389.9 million. Declines in the fair market value of Bitcoin will impact the cash value that would be realized if the Company were to sell its Bitcoin for cash, therefore having a negative impact on its liquidity.

Custodian Risk

The Company's Bitcoin is held with third-party custodians, including Anchorage, Bitgo, and Coinbase, that we select based on various factors, including their financial strength, security measures, insurance coverage and industry reputation. Custodian risk refers to the potential loss, theft, or misappropriation of the Company's Bitcoin assets due to operational failures, cybersecurity breaches, or financial difficulties experienced by these third parties. Although the Company periodically monitors the financial health, insurance coverage, and security measures of its custodians, reliance on such third parties inherently exposes the Company to risks that it cannot fully mitigate.

Credit Risk

Credit risk arises from the Company's practice of pledging Bitcoin as collateral in transactions with counterparties. The Company mitigates this risk by engaging with counterparties that it believes possess strong creditworthiness based on their size, credit quality, and reputation, among other factors. During the nine months ended September 30, 2025, the Company has not incurred any material loss from such transactions. However, there remains a risk that a counterparty could default on its obligations to the Company, which might result in a material loss. The Company continually assesses the credit risk associated with its counterparties and, if necessary, recognizes a loss provision or write-down. Credit risk also arises from the Company placing its cash and demand deposits in financial institutions. Although the Company strives to limit its exposure by placing cash and demand deposits with financial institutions with a high credit standing, there can be no assurances that it is able to mitigate its credit risk.

Tariff Risk

Changes in government and economic policies, incentives, or tariffs may also have an impact on equipment that the Company import. While the final scope and application of recently announced changes in U.S trade policy remain uncertain at this time, higher tariffs on imports and subsequent retaliatory tariffs could adversely impact the Company's ability to import equipment at levels that are cost effective. The Company plans to continue to adjust accordingly to such developments.

Evaluation of Disclosure Controls and Procedures

The Company's management, with the participation of its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act and regulations promulgated thereunder) as of September 30, 2025. Based on this evaluation, the Company's management concluded that its disclosure controls and procedures were effective as of September 30, 2025. The Company's disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by it in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls, and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate, to allow for timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

On September 3, 2025, following the consummation of the Mergers, the Company continued to maintain its own internal control over financial reporting and related processes; Gryphon's internal control over financial reporting and related processes were not integrated and have been excluded from the Company's assessment of the effectiveness of internal control over financial reporting as of September 30, 2025.

There were no changes in the Company's internal control over financial reporting that occurred during the three months ended September 30, 2025 that materially affected, or that are reasonably likely to materially affect the Company's internal control over financial reporting.

There have been no material changes from the risk factors set forth in those described in the Proxy Statement/Prospectus, in Part I, Item 1A, “Risk Factors” in the Annual Report, and in Exhibit 99.4 to the Current Report. The Company is subject to various risks and uncertainties that could materially adversely affect its business, financial condition, results of operations, and the trading price of its Class A common stock. You should carefully read and consider the risks and uncertainties included herein and in the Proxy Statement/Prospectus, in Part I, Item 1A, “Risk Factors” in the Annual Report, and in Exhibit 99.4 to the Current Report, together with all of the other information in the Proxy Statement/Prospectus, the Annual Report, the Current Report, and this Quarterly Report, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Company’s consolidated financial statements and related notes, and other documents that the Company files with the SEC. The risks and uncertainties described in these reports may not be the only ones the Company faces. Additional risk factors not presently known to the Company or that it currently deems immaterial may also impair the Company’s business, financial condition, or results of operations. The factors discussed in these reports, among others, could cause the Company’s actual results to differ materially from historical results and those expressed in forward-looking statements made by it or on its behalf in filings with the SEC, press releases, communications with investors, and oral statements.