American Bitcoin Corp 8-K, filed Sep 3, 2025
American Bitcoin Corp. (ABTC)
About this 8-K
American Bitcoin Corp filed this 8-K on September 3, 2025, reporting on events of September 2, 2025.
Items reported
- Item 1.01: Entered into a material agreement
- Item 1.02: Ended a material agreement
- Item 2.01: Completed an acquisition or sale of assets
- Item 3.02: Unregistered sale of equity
- Item 3.03: Change to shareholders' rights
- Item 5.01: Change in control
- Item 5.02: Director or officer change, or executive pay
- Item 5.03: Charter or bylaw amendment, or fiscal year change
- Item 5.05: Code of ethics change or waiver
- Item 7.01: Regulation FD disclosure
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Introductory Note
As previously disclosed, on May 9, 2025, American Bitcoin Corp., a Delaware corporation (f/k/a Gryphon Digital Mining, Inc.) (the “Company,” “we” or “us”), GDM Merger Sub I Inc., a Delaware corporation and wholly owned direct subsidiary of Gryphon (as defined below) (“Merger Sub Inc.”), GDM Merger Sub II LLC, a Delaware limited liability company and wholly owned direct subsidiary of Gryphon (“Merger Sub LLC”), and American Bitcoin Corp., a Delaware corporation (“Historical ABTC”), entered into an Agreement and Plan of Merger (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 “Mergers”) as a wholly owned direct subsidiary of Gryphon. The Company prior to the consummation of the Mergers is referred to in this Current Report on Form 8-K (this “Report”) as “Gryphon” and, following the consummation of the Mergers, is referred to in this Report as the “Combined Company.” All references in this Report to the “Board” refer to the board of directors of Gryphon, prior to the consummation of the Mergers, or the Combined Company, following the consummation of the Mergers, as applicable.
Prior to the consummation of the Mergers (the “Closing”), on September 2, 2025, Gryphon effected a five-for-one (5:1) reverse stock split of its common stock, par value $0.0001 per share (“Gryphon Common Stock”), by filing a certificate of amendment (the “Reverse Stock Split Amendment”) to Gryphon’s amended and restated certificate of incorporation with the Secretary of State of the State of Delaware, as described in more detail in this Report (the “Reverse Stock Split”).
Also on September 2, 2025, following the effectiveness of the Reverse Stock Split Amendment and prior to the Closing, Gryphon filed a Second Amended and Restated Certificate of Incorporation (the “Second A&R Charter”) with the Secretary of State of the State of Delaware in accordance with the applicable provisions of the Delaware General Corporation Law (the “DGCL”). Among other things, the Second A&R Charter reclassified and renamed each issued and outstanding share of Gryphon Common Stock (after giving effect to the Reverse Stock Split) as one fully paid and nonassessable share of Class A Common Stock, par value $0.0001 per share (“Combined Company Class A Common Stock”) (the “Reclassification”). The Second A&R Charter also created two new series of common stock designated as Class B Common Stock, par value $0.0001 per share (“Combined Company Class B Common Stock”), and Class C Common Stock, par value $0.0001 per share (the “Combined Company Class C Common Stock,” and together with the Combined Company Class A Common Stock and the Combined Company Class B Common Stock, the “Combined Company Common Stock”). Each share of Combined Company Class A Common Stock entitles the holder to one vote per share, each share of Combined Company Class B Common Stock entitles the holder to 10,000 votes per share and each share of Combined Company Class C Common Stock entitles the holder to 10 votes per share.
At the effective time of the First Merger (the “First Effective Time”), each share of Class A common stock, par value $0.0001 per share, of Historical ABTC (“Historical ABTC Class A Common Stock”) and each share of Class B common stock, par value $0.0001 per share, of Historical ABTC (“Historical ABTC Class B Common Stock,” and together with the Historical ABTC Class A Common Stock, “Historical ABTC Common Stock”) issued and outstanding immediately prior to the First Effective Time, other than shares of Historical ABTC Common Stock held immediately prior to the First Effective Time by Historical ABTC (as treasury stock or owned by any subsidiary of Historical ABTC) and other than dissenting shares, were converted into the right to receive a number of shares of Combined Company Class A Common Stock or Combined Company Class B Common Stock, respectively, equal to the exchange ratio as set forth in the Merger Agreement (the “Merger Consideration”).
The stockholders of Gryphon previously voted to approve the issuance of the Merger Consideration and the adoption of the Second A&R Charter, among other matters related to the Merger Agreement, at a special meeting of stockholders held on August 27, 2025.
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As a result of the Mergers and the issuance of the Merger Consideration, holders of Historical ABTC Common Stock as of immediately prior to the First Effective Time collectively hold approximately 98.0% of the issued and outstanding Combined Company Common Stock, on a fully diluted basis, and the holders of equity interests of Gryphon as of immediately prior to the First Effective Time collectively hold approximately 2.0% of the issued and outstanding Combined Company Common Stock, on a fully diluted basis. The issuance of Combined Company Class A Common Stock as Merger Consideration to former stockholders of Historical ABTC was registered with the SEC pursuant to an effective Registration Statement on Form S-4 (File No. 333-287865).
In connection with and immediately following the consummation of the Mergers, Gryphon changed its name to “American Bitcoin Corp.” by filing a certificate of amendment to the Second A&R Charter with the Secretary of State of the State of Delaware (the “Name Change Amendment”).
Immediately after giving effect to the Mergers, there were approximately 908,588,140 shares of Combined Company Common Stock issued and outstanding, including 159,537,377 shares of Combined Company Class A Common Stock and 732,224,903 shares of Combined Company Class B Common Stock issued to former stockholders of Historical ABTC as Merger Consideration.
The foregoing description of the Merger Agreement and the Mergers does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which was filed as Exhibit 2.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on May 12, 2025. The material terms of the Merger Agreement are also described in more detail in the definitive proxy statement/prospectus of Gryphon (the “Proxy Statement/Prospectus”) filed with the SEC on July 31, 2025, in the section titled “The Merger Agreement” beginning on page 101.
Item 1.01 Entry into a Material Definitive Agreement.
On September 3, 2025, the Combined Company entered into separate indemnification agreements with each of its directors and executive officers that, among other things, provide for indemnification and advancement of certain expenses and costs relating to claims, suits or proceedings arising from such person’s service as an officer or director of the Combined Company, as applicable, to the maximum extent permitted by Delaware law.
The foregoing description of the indemnification agreements does not purport to be complete and is qualified in its entirety by reference to the text of the form of indemnification agreement, a copy of which is attached hereto as Exhibit 10.1 and the terms of which are incorporated by reference herein.
Item 1.02 Termination of a Material Definitive Agreement.
Concurrently with the Closing, the Combined Company repaid all obligations outstanding under, and concurrently terminated, the Loan, Guaranty and Security Agreement, dated as of October 25, 2024 (the “Loan Agreement”), by and among Anchorage Lending CA, LLC, Gryphon and certain of Gryphon’s subsidiaries party thereto. A summary of the material terms and conditions of the Loan Agreement is contained in our Current Report on Form 8-K filed with the SEC on October 28, 2024.
Item 2.01 Completion of Acquisition or Disposition of Assets.
The disclosure set forth in the “Introductory Note” above is incorporated into this Item 2.01 by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The disclosure set forth in the “Introductory Note” above is incorporated into this Item 5.03 by reference. The Combined Company Class B Common Stock issued as Merger Consideration pursuant to the terms of the Merger Agreement was issued in reliance upon the exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).
Item 3.03 Material Modification to Rights of Security Holders.
The disclosure set forth in the “Introductory Note” above and in the third paragraph of Item 5.01 is incorporated into this Item 3.03 by reference.
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Reverse Stock Split
The Reverse Stock Split was previously approved at a special meeting of Gryphon stockholders held on May 24, 2025. At that meeting, Gryphon stockholders approved a reverse split of the Gryphon Common Stock at a ratio in the range of two-for-one (2:1) to forty-for-one (40:1), to be effected at any time prior to the one-year anniversary of the special meeting and with the exact ratio to be determined by the Board in its discretion and without further approval or authorization of Gryphon’s stockholders.
On August 22, 2025, the Board determined to proceed with the Reverse Stock Split at a ratio of five-for-one (5:1). On September 2, 2025, Gryphon filed the Reverse Stock Split Amendment with the Secretary of State of the State of Delaware. The Reverse Stock Split became effective as of 5:00 p.m. Eastern Time on September 2, 2025 (the “Split Effective Time”).
At the Split Effective Time, every five issued and outstanding shares of Gryphon Common Stock were combined automatically into one share of Gryphon Common Stock. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who otherwise were entitled to receive a fraction of a share because they held a number of shares not evenly divisible by the Reverse Stock Split ratio were automatically entitled to receive one whole share in lieu of such fractional share. No cash was paid for fractional shares. The Reverse Stock Split applied uniformly to all Gryphon stockholders and, other than as a result of this rounding of fractional shares, the ownership percentage of each stockholder remained unchanged immediately following the Reverse Stock Split.
The Reverse Stock Split also applies to shares of Gryphon Common Stock issuable upon exercise or conversion of Gryphon’s outstanding equity awards and warrants. Proportional adjustments will be made to the number of shares issuable upon the exercise of Gryphon’s outstanding equity awards, in accordance with the terms of such awards, and its equity compensation plans, and the number of shares issuable upon the exercise of Gryphon’s outstanding warrants will be adjusted in accordance with the terms of such warrants.
The Reverse Stock Split reduced the number of outstanding shares of Gryphon Common Stock from approximately 82.8 million to approximately 16.6 million (before giving effect to the issuance of the Merger Consideration at the Closing).
Prior to the Split Effective Time, the Gryphon Common Stock traded on the Nasdaq Capital Market under the ticker symbol “GRYP.” The Combined Company Class A Common Stock (giving effect to the Reverse Stock Split, the Reclassification, the Closing and the Name Change Amendment) will commence trading on the Nasdaq Capital Market on September 3, 2025, with the new CUSIP number 02462A104 under the ticker symbol “ABTC.”
Second A&R Charter; A&R Bylaws
In connection with the Mergers, the Board adopted resolutions to amend and restate the bylaws of the Combined Company (the “A&R Bylaws”), effective as of the Closing.
The material terms of the Second A&R Charter (as amended by the Name Change Amendment), the A&R Bylaws and the general effect of their adoption upon the rights of Combined Company security holders are discussed in more detail in the sections of the Proxy Statement/Prospectus titled “The Charter Proposal (Proposal 2)” beginning on page 131, “The Advisory Charter Proposals (Proposals 3-7)” beginning on page 132 and “Comparison of Rights of Holders of ABTC and Combined Company Capital Stock” beginning on page 246.
The descriptions of the Reverse Stock Split Amendment, the Second A&R Charter, the Name Change Amendment and the A&R Bylaws contained in this Report do not purport to be complete and are qualified in their entirety by reference to the full text of such documents, copies of which are attached as Exhibit 3.1, Exhibit 3.2, Exhibit 3.3 and Exhibit 3.4, respectively, to this Report and incorporated by reference herein.
Item 5.01 Changes in Control of Registrant.
The disclosure set forth in the “Introductory Note” above and in Item 5.02 of this Report is incorporated into this Item 5.01 by reference.
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A change in control of the Company occurred on September 3, 2025. As a result of the Mergers, American Bitcoin Holdings LLC (“ABH”), a Delaware limited liability company and a wholly owned subsidiary of Hut 8 Corp. (“Hut 8”), holds 585,779,924 shares of Combined Company Class B Common Stock, representing approximately 80% of the voting power of the Combined Company’s capital stock.
As previously disclosed, the Combined Company, ABH and certain other holders of Combined Company Class B Common Stock are party to an Investors’ Rights Agreement, dated as of May 9, 2025 (the “Investors’ Rights Agreement”), the operative provisions of which became effective at the Closing. A description of the material terms of the Investors’ Rights Agreement is contained in the section of the Proxy Statement/Prospectus titled “Agreements Related to the Merger Agreement—Investors’ Right’s Agreement” beginning on page 126, and is incorporated herein by reference. That summary is qualified in its entirety by reference to the full text of the Investors’ Rights Agreement, which was filed as Exhibit 10.4 to our Current Report on Form 8-K filed with the SEC on May 12, 2025.
There are no other arrangements known to the Combined Company, including any pledge by any person of securities of the Combined Company, the operation of which may at a subsequent date result in a change in control of the Combined Company.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
The disclosure contained in Item 1.01 of this Report is incorporated into this Item 5.02 by reference.
Resignation of Directors and Executive Officers
Effective as of the Closing, each of Steve Gutterman, Simeon Salzman, Eric Gallie, Jimmy Vaiopoulos, Brittany Kaiser, Jessica Billingsley, Heather Cox, Dan Grigorin and Robby Chang resigned from any and all positions they held as a director or officer of Gryphon and/or any of its subsidiaries, including from any and all committees and subcommittees of the Board. Additionally, Messrs. Gutterman, Salzman and Gallie each entered into a separation and release agreement in connection with the termination of their employment with Gryphon, pursuant to which they will receive their contractual severance entitlements under their previously disclosed employment agreements.
Appointment of Directors
Effective as of the Closing, the size of the Board was fixed at five members, and each of Richard Busch, Justin Mateen, Michael Broukhim, Asher Genoot and Michael Ho was appointed to the Board, with Mr. Genoot appointed as a Class I director, Messrs. Busch and Broukhim appointed as Class II directors, and Messrs. Mateen and Ho appointed as Class III directors.
Effective as of the Closing, the Combined Company’s audit committee consists of Messrs. Broukhim, Mateen and Busch, with Mr. Broukhim serving as the chair of the committee. The Board has determined that each member of the audit committee qualifies as an independent director under the independence requirements of the Sarbanes-Oxley Act of 2002, as amended, Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and applicable Rules of The Nasdaq Stock Market, LLC (the “Nasdaq Corporate Governance Rules”) and listing requirements, and that Mr. Broukhim qualifies as an “audit committee financial expert,” as defined in Item 407(d)(5) of Regulation S-K, and possesses financial sophistication, as defined under the rules of Nasdaq.
Richard Busch
Mr. Busch, 60, has been a partner in the litigation section of King & Ballow since September 1998 and is Head of the Entertainment and Intellectual Property sections of King & Ballow. Prior to joining King & Ballow, Mr. Busch served as Law Clerk to the Honorable John V. Parker, Chief Judge of the United States District Court for the Middle District of Louisiana. He holds a Bachelor of Arts from Augustana College and a Juris Doctorate from Loyola University Law School.
The Combined Company believes that Mr. Busch is qualified to serve on the Board due to the breadth and depth of his experience in advising businesses on a variety of transactional, corporate and regulatory matters.
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Justin Mateen
Mr. Mateen, 39, served as a member of the board of directors of Historical ABTC prior to the Mergers (the “Historical ABTC Board”) from March 2025 until the Closing. He co-founded Tinder in August 2012, serving as its Chief Marketing Officer from August 2012 until July 2014, and remaining an advisor until August 2017. Mr. Mateen founded JAM Fund in August 2020 and has been an early investor in companies including Brex, Curative Health, Deel, Kalshi, Speak, Varda and Whop, among many others. In 2021 and 2022, Business Insider and Tribe Capital ranked Mr. Mateen as the best early-stage investor in the United States, placing him at the number one spot on the Seed 100 list. In 2020, Forbes listed Mr. Mateen at number seven on their list of the decade’s top Founders under 30. Mr. Mateen is also involved in various real estate projects spanning hotels, industrial, retail, office and multi-family across the United States. He holds a Bachelor of Business Administration from USC Marshall School of Business.
The Combined Company believes that Mr. Mateen is qualified to serve on the Board due to the breadth and depth of his experience in investing in and supporting early-stage companies as well as his experience building and scaling a business.
Michael Broukhim
Mr. Broukhim, 40, served as a member of the Historical ABTC Board from March 2025 until the Closing. He has been the Co-Founder and Co-Chief Executive Officer of FabFitFun, Inc. since June 2010 and a Partner at Green Meadow Ventures since April 2020. Mr. Broukhim has served as an Adjunct Professor at the University of Southern California since August 2014. He holds a Bachelor of Arts from Harvard University and a Juris Doctorate from Stanford Law School.
The Combined Company believes that Mr. Broukhim is qualified to serve on the Board due to his extensive experience in building and scaling a business and his experience in investing in and supporting growth stage companies.
Asher Genoot
Mr. Genoot, 30, served as a member of the Historical ABTC Board from March 2025 until the Closing. He has also served as the Chief Executive Officer of Hut 8 since February 2024, previously serving as its President since the consummation of its business combination with U.S. Data Mining Group, Inc. (“USBTC”). He has served as director of Hut 8 since the consummation of its business combination with USBTC. Mr. Genoot served as President and Chief Operating Officer and a director of USBTC from its inception in December 2020 until the consummation of the business combination. He has been a serial entrepreneur who started his first business, the Ivy Crest Institute of International Education, at the age of 19 in Shanghai, China and sold it shortly after. Following that experience, Mr. Genoot served as the founder and Chief Executive Officer at Curio, a Shanghai-based education company that expanded across the country from April 2016 to May 2019. He served on the board of directors of Ionic from January to June 2024. He also has experience as the Managing Director at Flagship Endeavors, a brand incubator, a position he held from January 2019 to December 2020. Mr. Genoot graduated from the University of Southern California with a Bachelor in Business Administration.
The Combined Company believes that Mr. Genoot is qualified to serve as the Executive Chairman of the Combined Company and on the Board due to the extensive Bitcoin mining and operations experience he brings as Chief Executive Officer of Hut 8 and as the Co-founder and former President and Chief Operating Officer of USBTC.
Michael Ho
Mr. Ho, 32, served as Executive Chairman of Historical ABTC and a member of the Historical ABTC Board from March 2025 until the Closing. He has also served as the Chief Strategy Officer and a director of Hut 8 since the consummation of its business combination with USBTC. Mr. Ho previously served as Chief Executive Officer of USBTC and as Chairman of its board of directors from its inception in December 2020 until the consummation of its business combination with Hut 8. Mr. Ho has experience as a serial entrepreneur, having founded numerous businesses in the digital and traditional trade sectors. He served as the Chief Executive Officer of Vancouver Motorcars Ltd. (formerly Advant Automotive Inc.) from January 2012 to April 2015. Mr. Ho then served as the Chief Executive Officer of MKH International Ltd., from July 2015 to December 2018. During this six year period, Mr. Ho specialized in currencies, international trade, structured financings and equity structuring. Mr. Ho also has extensive experience in the industry, having begun mining digital assets in 2014. In 2017, Mr. Ho began setting up businesses procuring, managing and selling turnkey digital asset mining facilities.
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The Combined Company believes that Mr. Ho is qualified to serve on the Board due to the extensive Bitcoin mining and capital markets experience Mr. Ho brings as Executive Chairman of Historical ABTC, Chief Strategy Officer of Hut 8 and the Co-founder and former Chief Executive Officer of USBTC.
As a result of the Mergers, the Combined Company qualifies as a “controlled company” under the Nasdaq Corporate Governance Rules. The Combined Company intends to rely on certain “controlled company” exemptions, including exemptions from the requirements that (a) the Combined Company must adopt a formal written compensation committee charter and have a compensation committee of at least two members, each of which must be an “Independent Director” (as defined in the Nasdaq Corporate Governance Rules), and (b) the Combined Company must adopt a formal written charter or board resolution addressing the nomination process whereby director nominees are selected either by (i) Independent Directors constituting a majority of the Board’s Independent Directors in a vote in which only Independent Directors participate or (ii) a nominations committee comprised solely of Independent Directors.
Appointment of Executive Officers
Effective as of the Closing, the Board appointed Mr. Genoot as the Combined Company’s Executive Chairman, Mr. Ho as the Combined Company’s Chief Executive Officer and Matt Prusak as the Combined Company’s President and Interim Chief Financial Officer.
Each executive officer of the Combined Company serves at the discretion of the Board and holds office until his or her successor is duly elected and qualified or until his or her earlier death, disability, resignation or removal. There are no family relationships among any of the Combined Company’s directors or executive officers.
Matt Prusak
Mr. Prusak, 32, served as the Chief Executive Officer of Historical ABTC from March 2025 until the Closing. He previously served as Chief Executive Officer of Ionic from January to August 2024. Prior to that, Mr. Prusak served as Chief Commercial Officer of USBTC (later merged into Hut 8) from June 2021 to January 2024 and Chief Business Officer of Curative from March 2020 to February 2021. He holds a Bachelor of Arts from the University of Southern California, a Master of Management Science from Tsinghua University and a Master of Business Administration from Stanford University Graduate School of Business.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
The disclosure set forth in the “Introductory Note” and in Item 3.03 of this Report is incorporated into this Item 5.03 by reference.
Item 5.05 Amendments to the Registrant’s Code of Ethics, or Waiver of a Provision of the Code of Ethics.
Effective as of the Closing, in connection with the consummation of the Mergers, the Board adopted a new Code of Business Conduct and Ethics (the “Code of Conduct”), which is applicable to all employees, officers and directors of the Combined Company. The Code of Conduct supersedes Gryphon’s previously adopted code of business conduct and ethics. The adoption of the Code of Conduct did not result in any explicit or implicit waiver of any provision of Gryphon’s previously adopted code of business conduct and ethics. The full text of the Code of Conduct is attached to this Report as Exhibit 14.1.
Item 7.01 Regulation FD Disclosure.
On September 3, 2025, the Combined Company issued a press release announcing, among other things, the Closing. The press release is furnished as Exhibit 99.1 to this Report.
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The information in this Item 7.01, including Exhibit 99.1, is furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to liabilities under that section, and shall not be deemed to be incorporated by reference into the filings of the Combined Company under the Securities Act or the Exchange Act, regardless of any general incorporation language in such filings.
Item 8.01 Other Events.
The Combined Company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations for the three and six months ended June 30, 2025, an updated description of the Combined Company’s business, updated risk factors of the Combined Company and an updated description of the Combined Company’s securities are attached to this Report as Exhibits 99.2, 99.3, 99.4 and 99.5, respectively, and are incorporated into this Item 8.01 by reference.
Item 9.01 Financial Statements and Exhibits.
| (a) | Financial Statements of Businesses Acquired |
The audited combined financial statements of Historical ABTC as of December 31, 2024 and 2023 and for the years ended December 31, 2024, 2023 and 2022, are attached to this Report as Exhibit 99.6 and are incorporated herein by reference.
The unaudited combined financial statements of Historical ABTC as of and for the three months ended March 31, 2025, and as of and for the three and six months ended June 30, 2025, are attached to this Report as Exhibit 99.7 and are incorporated herein by reference.
| (b) | Pro Forma Financial Information |
The unaudited pro forma condensed combined balance sheet as of June 30, 2025, the unaudited pro forma condensed combined statement of operations for the three and six months ended June 30, 2025 and the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2024, are attached to this Report as Exhibit 99.8 and are incorporated herein by reference.
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| (d) | Exhibits |
The following exhibits are being filed or furnished, as applicable, with this Report:
| * | Certain exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2). The Company agrees to furnish supplementally a copy of any omitted exhibit or schedule to the SEC upon its request. |
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Forward-Looking Statements
This Report includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Rule 175 promulgated thereunder, and Section 21E of the Exchange Act, and Rule 3b-6 promulgated thereunder, which statements involve inherent risks and uncertainties. Examples of forward-looking statements, include, but are not limited to, statements relating to the Combined Company’s continued listing on Nasdaq after the Closing and the vision, goals and trajectory of the Combined Company.
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 the Combined Company as of the date hereof, 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, including, but not limited to: the outcome of any legal proceedings that may be instituted against the Combined Company; the possibility that the anticipated benefits of the Mergers are not realized when expected or at all; the possibility that the vision, goals, and trajectory of the Combined Company are not timely achieved or realized or achieved or realized at all; the possibility that the integration of Historical ABTC into the Combined Company may be more difficult, time-consuming or costly than expected; and other factors that may affect future results of the Combined Company. Additional factors that could cause results to differ materially from those described above can be found in the Proxy Statement/Prospectus, in our most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2024, in Exhibit 99.4 to this Report and in other documents we have filed with the SEC.
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Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| AMERICAN BITCOIN CORP. | |||
| Date: September 3, 2025 | By: | /s/ Matt Prusak | |
| Name: | Matt Prusak | ||
| Title: | President and Interim Chief Financial Officer | ||
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Exhibit 3.1
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
OF GRYPHON DIGITAL MINING, INC.
Gryphon Digital Mining, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), does hereby certify as follows:
1. The name of the Corporation is Gryphon Digital Mining, Inc.
2. The Certificate of Incorporation of the Corporation is amended by adding the following new paragraph to the end of Article FOURTH:
Effective as of 5:00 p.m. Eastern Time on September 2, 2025 (the “Effective Time”), each five (5) shares of the Common Stock issued and outstanding (or held in treasury) immediately prior to the Effective Time (the “Old Common Stock”) shall automatically be reclassified and combined into one (1) validly issued, fully paid and non-assessable share of the Corporation’s Common Stock, $0.0001 par value per share (the “New Common Stock”), without any action by the holder thereof, subject to treatment of fractional shares set forth below (the “Reverse Stock Split”). No fractional shares of New Common Stock shall be issued as a result of the Reverse Stock Split. Any stockholder of record of Old Common Stock immediately prior to the Effective Time that would otherwise be entitled to a fractional share as a result of the Reverse Stock Split (after aggregation of such stockholder's shares of New Common Stock) shall be entitled, upon the Effective Time, to receive one whole share of New Common Stock in lieu of such fractional share.
From and after the Effective Time, certificates that, immediately prior to the Effective Time, represented shares of Old Common Stock shall thereafter represent the number of shares of New Common Stock into which such shares shall have been reclassified and combined as a result of the Reverse Stock Split, including the treatment of fractional shares set forth above. Each book entry position that theretofore represented shares of Old Common Stock shall thereafter represent that number of shares of New Common Stock into which the shares of Old Common Stock represented by such book entry position shall have been reclassified and combined; provided, that each person holding of record a book entry position that represented shares of Old Common Stock shall receive, a new book entry position evidencing and representing the number of shares of New Common Stock to which such person is entitled under the foregoing reclassification and combination, including treatment of fractional shares set forth above.
3. This Certificate of Amendment has been duly adopted by the Board of Directors and stockholders of the Corporation in accordance with Section 242 of the General Corporation Law of the State of Delaware.
4. This Certificate of Amendment shall be effective upon filing.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be duly executed in its corporate name as of the 2nd day of September, 2025.
| GRYPHON DIGITAL MINING, INC. | |||
| By: | /s/ Steve Gutterman | ||
| Name: | Steve Gutterman | ||
| Title: | Chief Executive Officer | ||
[Signature Page to Certificate of Amendment to Certificate of Incorporation]
Exhibit 3.2
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
GRYPHON DIGITAL MINING, INC.
Pursuant to Sections 242 and 245 of the
General Corporation Law of the State of Delaware
September 2, 2025
Gryphon Digital Mining, Inc. (the “Corporation”), a corporation organized and existing under the General Corporation Law of the State of Delaware (the “DGCL”), does hereby certify as follows:
1. The name of the Corporation is Gryphon Digital Mining, Inc. The original Certificate of Incorporation of the Corporation was filed with the office of the Secretary of State of the State of Delaware (the “Delaware Secretary”) on October 3, 2018, under the name MTech Acquisition Holdings Inc. The Amended and Restated Certificate of Incorporation of the Corporation was filed with the Delaware Secretary on June 17, 2019 (as amended from time to time, the “First Amended and Restated Certificate”), under the name Akerna Corp.
2. This Second Amended and Restated Certificate of Incorporation was duly adopted in accordance with Section 242 and Section 245 of the DGCL.
3. This Second Amended and Restated Certificate of Incorporation restates and integrates and further amends the First Amended and Restated Certificate, as heretofore amended or supplemented.
4. The text of the First Amended and Restated Certificate of Incorporation is hereby amended and restated to read in its entirety as set forth in Exhibit A attached hereto.
[Signature page follows]
IN WITNESS WHEREOF, the Corporation has caused this Second Amended and Restated Certificate of Incorporation to be duly executed by an authorized officer this 2nd day of September, 2025.
| GRYPHON DIGITAL MINING, INC. | |||
| By: | /s/ Steve Gutterman | ||
| Name: | Steve Gutterman | ||
| Title: | Chief Executive Officer | ||
[Signature Page to Second Amended and Restated Certificate of Incorporation]
EXHIBIT A
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
GRYPHON DIGITAL MINING, INC.
ARTICLE
I
NAME
The name of the corporation is Gryphon Digital Mining, Inc. (the “Corporation”).
ARTICLE
II
REGISTERED OFFICE AND AGENT
The address of the Corporation’s registered office in the State of Delaware is 850 New Burton Road, Suite 201, Dover, County of Kent, 19904, and the name of its registered agent at such address is Cogency Global Inc.
ARTICLE
III
PURPOSE AND POWERS
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “DGCL”) as it now exists or may hereafter be amended and supplemented.
ARTICLE
IV
CAPITAL STOCK
The total number of shares of all classes of stock which the Corporation is authorized to issue is 735,000,000,000, comprised of: (a) 635,000,000,000 shares of Common Stock, $0.0001 par value per share (the “Common Stock”), of which (i) 500,000,000,000 shares shall be a series designated as Class A Common Stock (the “Class A Common Stock”), (ii) 10,000,000,000 shares shall be a series designated as Class B Common Stock (the “Class B Common Stock”) and (iii) 125,000,000,000 shares shall be a series designated as Class C Common Stock (the “Class C Common Stock”); and (b) 100,000,000,000 shares of Preferred Stock, $0.0001 par value per share (the “Preferred Stock”).
Upon the effective time of the filing of this Second Amended and Restated Certificate of Incorporation (the “Effective Time”), and without any further action of the Corporation or any stockholder of the Corporation, each share of common stock, par value $0.0001 per share (“Former Common Stock”), of the Corporation that is issued and outstanding immediately prior to the Effective Time shall be automatically reclassified and converted into one (1) share of Class A Common Stock. Each stock certificate or book-entry position that, immediately prior to the Effective Time, represented shares of Former Common Stock shall, from and after the Effective Time, automatically and without the necessity of presenting the same for the exchange, represent that number of shares of Class A Common Stock into which the shares formerly represented by such certificate or book-entry position have been automatically reclassified and converted pursuant to this Article IV.
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ARTICLE
V
RIGHTS OF CAPITAL STOCK
The designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class and series of capital stock of the Corporation are as follows:
A. Common Stock.
1. General; Equal Status. Except as otherwise provided in this Article V or required by applicable law, shares of Common Stock shall have the same rights, privileges, preferences and powers, rank equally (including as to dividends and distributions, and upon any liquidation, dissolution, distribution of assets or winding up of the Corporation), share ratably and be identical in all respects and as to all matters. The voting, dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights, powers and privileges of any series of Preferred Stock as may be designated by the Board of Directors of the Corporation (the “Board of Directors”) and outstanding at any time.
2. Voting.
(i) Except where required by applicable law, the holders of shares of Class A Common Stock, Class B Common Stock and Class C Common Stock shall vote together as a single class on any matter submitted to the stockholders of the Corporation for a vote or approval. Except as required by applicable law, each share of Class A Common Stock shall entitle the holder to one (1) vote for each share of Class A Common Stock held, each share of Class B Common Stock shall entitle the holder to ten thousand (10,000) votes for each share of Class B Common Stock held and each share of Class C Common Stock shall entitle the holder to ten (10) votes for each share of Class C Common Stock held, in each case, on any matter submitted to the stockholders of the Corporation for a vote or approval.
(ii) Unless required by applicable law, there shall be no cumulative voting. The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by (in addition to any vote of the holders of one or more series of Preferred Stock entitled to vote thereon) the affirmative vote of the holders of a majority in voting power of the outstanding shares of capital stock of the Corporation entitled to vote thereon, irrespective of the provisions of Section 242(b)(2) of the DGCL.
(iii) Except as otherwise required by applicable law, holders of Common Stock shall not be entitled to vote on any amendment to this Second Amended and Restated Certificate of Incorporation (including any certificate of designation relating to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Second Amended and Restated Certificate of Incorporation (including any certificate of designation relating to any series of Preferred Stock) or pursuant to the DGCL.
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3.Conversion of Class B Common Stock and Class C Common Stock.
(i) Right to Convert. At any time, any holder of shares of Class B Common Stock or Class C Common Stock, at the option of such holder, may convert any share of Class B Common Stock or Class C Common Stock held by such holder at any time after the date of issuance of such share, in each case, at the office of the Corporation or any transfer agent for such stock, into one (1) validly issued, fully paid and nonassessable share of Class A Common Stock.
(ii) Mechanics of Conversion. In the event of an optional conversion pursuant to Article V, Part A, Section 3(i), before any holder of Class B Common Stock or Class C Common Stock shall be entitled voluntarily to convert the same, in each case, into shares of Class A Common Stock, such holder shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent for such stock, and shall give written notice to the Corporation at such office that such holder elects to convert the same and shall state therein the name or names in which such holder wishes the certificate or certificates for shares of Class A Common Stock to be issued. The Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Class A Common Stock to which such holder shall be entitled as aforesaid. Such optional conversion shall be deemed to have been made immediately prior to the close of business on the date of surrender of the shares of Class B Common Stock or Class C Common Stock, as applicable, to be converted, and the person or persons entitled to receive the shares of Class A Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Class A Common Stock on such date. Shares of Class B Common Stock and Class C Common Stock converted pursuant to Article V, Part A, Sections 3(i) shall be automatically retired and canceled.
(iii) Policies and Procedures. The Board of Directors, or a committee thereof, may, from time to time, establish such policies and procedures, not in violation of applicable law or this Second Amended and Restated Certificate of Incorporation, relating to the conversion of shares of Class B Common Stock or Class C Common Stock, in each case, into shares of Class A Common Stock as it may deem necessary or advisable. The Corporation may, from time to time, require that a holder of shares of Class B Common Stock or Class C Common Stock furnish affidavits or other proof to the Corporation as it deems necessary to verify the ownership of shares of Class B Common Stock or Class C Common Stock, as applicable.
(iv) Reservation of Shares. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Class A Common Stock, solely for the purpose of effecting the conversion of the shares of Class B Common Stock and Class C Common Stock, such number of shares of Class A Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Class B Common Stock and Class C Common Stock into shares of Class A Common Stock.
4. Notices. Except as otherwise provided herein, any notice required or permitted by the provisions of this Part A of Article V to be given to a holder of shares of Common Stock shall be mailed, postage prepaid, to the post office address last shown on the records of the Corporation for such holder, given by the holder to the Corporation for the purpose of notice or given by electronic communication in compliance with the provisions of the DGCL, and shall be deemed sent upon such mailing or electronic transmission. If no such address appears or is given, notice shall be deemed given at the place where the principal executive office of the Corporation is located.
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5. Redemption. The Common Stock is not redeemable at the option of the holder thereof and the Corporation shall have no obligation to redeem the Common Stock.
6. Dividends. Subject to the rights, powers and preferences applicable to any series of Preferred Stock, if any, outstanding at any time, the holders of each series of Common Stock shall be entitled to receive, on a per share basis, the same form and amount of dividends and other distributions of cash, property or shares of stock of the Corporation as may be declared by the Board of Directors from time to time with respect to shares of any other series of Common Stock out of assets or funds of the Corporation legally available therefor; provided, however, that in the event that such dividend is paid in the form of shares of a series of Common Stock that differs from the series of Common Stock held by any holder or rights to acquire a series of Common Stock that differs from a series of Common Stock held by any holder, as applicable, such holder shall receive the series of Common Stock or rights to acquire the series of Common Stock corresponding to the series of Common Stock held by such holder, as the case may be.
7. Liquidation, Dissolution, Etc. In the event of a voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of the Corporation, the holders of each series of Common Stock shall be entitled to share equally, on a per share basis, in all assets of the Corporation of whatever kind available for distribution to the holders of Common Stock.
8. Subdivision or Combination. If the Corporation in any manner subdivides, combines or reclassifies the outstanding shares of Class A Common Stock, Class B Common Stock or Class C Common Stock, the outstanding shares of the other such series shall, concurrently therewith, be subdivided, combined or reclassified in the same proportion and manner such that the same proportionate equity ownership amongst the holders of outstanding Class A Common Stock, Class B Common Stock and Class C Common Stock on the record date for such subdivision, combination or reclassification is preserved, unless different treatment of the shares of each such series is approved by (i) the holders of a majority of the outstanding Class A Common Stock, (ii) the holders of a majority of the outstanding Class B Common Stock and (iii) the holders of a majority of the outstanding Class C Common Stock, each of (i), (ii) and (iii) voting as separate series.
9. Treatment in a Merger. The consideration received per share by the holders of each series of Common Stock in any merger, consolidation, reorganization or other business combination shall be identical; provided, however, that if (i) such consideration consists, in whole or in part, of shares of capital stock of, or other equity interests in, the Corporation or any other corporation, partnership, limited liability company or other entity, and (ii) the powers, designations, preferences and relative, optional or other special rights and qualifications, limitations and restrictions of shares of capital stock or other equity interests received in respect of the shares of Class A Common Stock, Class B Common Stock and Class C Common Stock differ solely to the extent that the powers, designations, preferences and relative, optional or other special rights and qualifications, limitations and restrictions of the Class A Common Stock, the Class B Common Stock and the Class C Common Stock differ as described in this Article V, then the powers, designations, preferences and relative, optional or other special rights and qualifications, limitations and restrictions of such shares of capital stock or other equity interests may differ to the extent that the powers, designations, preferences and relative, optional or other special rights and qualifications, limitations and restrictions of the Class A Common Stock, the Class B Common Stock and the Class C Common Stock differ as provided herein (including, without limitation, with respect to the voting rights and conversion provisions hereof); and provided further, that, if the holders of any series of Common Stock are granted the right to elect to receive one of two or more alternative forms of consideration, the foregoing provisions shall be deemed satisfied if holders of the other series of Common Stock are granted corresponding election rights.
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B. Preferred Stock.
1. Shares of Preferred Stock may be issued from time to time in one or more series, each of such series to have such terms as stated in the resolution or resolutions providing for the establishment of such series adopted by the Board of Directors as hereinafter provided. Authority is hereby expressly granted to the Board of Directors to issue, from time to time, shares of Preferred Stock in one or more series, and, in connection with the establishment of any such series, by resolution or resolutions to determine and fix the designation of and the number of shares comprising such series, and such voting powers, full or limited, or no voting powers, and such other powers, designations, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions thereof, if any, including, without limitation, dividend rights, conversion rights, redemption privileges and liquidation preferences, as shall be stated in such resolution or resolutions, all to the fullest extent permitted by the DGCL. Without limiting the generality of the foregoing, the resolution or resolutions providing for the establishment of any series of Preferred Stock may, to the extent permitted by applicable law, provide that such series shall be superior to, rank equally with or be junior to the Preferred Stock of any other series. The powers, preferences and relative, participating, optional and other special rights of each series of Preferred Stock, and the qualifications, limitations or restrictions thereof, if any, may be different from those of any and all other series at any time outstanding. Except as otherwise expressly provided in the resolution or resolutions providing for the establishment of any series of Preferred Stock, no vote of the holders of shares of Preferred Stock or Common Stock shall be a prerequisite to the issuance of any shares of any series of the Preferred Stock so authorized in accordance with this Second Amended and Restated Certificate of Incorporation. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by (in addition to any vote of the holders of one or more series of Preferred Stock entitled to vote thereon) the affirmative vote of the holders of a majority in voting power of the outstanding shares of capital stock of the Corporation entitled to vote thereon, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law.
ARTICLE
VI
BOARD OF DIRECTORS
For the management of the business and for the conduct of the affairs of the Corporation it is further provided that:
A. Powers of the Board. In addition to the powers and authority expressly conferred upon them by applicable law or by this Second Amended and Restated Certificate of Incorporation or the Bylaws of the Corporation (as amended and/or restated from time to time, the “Bylaws”), the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation.
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B. Classification of the Board. Except as may be provided in a resolution or resolutions of the Board of Directors providing for any series of Preferred Stock with respect to any directors elected (or to be elected) by the holders of such series and except as otherwise required by applicable law, the directors shall be divided into three classes, designated as Class I, Class II and Class III, as nearly equal in number as possible. Directors shall be assigned to each class in accordance with a resolution or resolutions adopted by the Board of Directors. Class I directors shall initially serve for a term expiring at the first annual meeting of stockholders following the Effective Time, Class II directors shall initially serve for a term expiring at the second annual meeting of stockholders following the Effective Time and Class III directors shall initially serve for a term expiring at the third annual meeting of stockholders following the Effective Time. At each annual meeting of stockholders commencing with the first annual meeting of stockholders following the Effective Time, the directors of the class to be elected at each annual meeting of stockholders shall be elected for a three-year term. If the total number of such directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any such additional director of any class elected to fill a newly created directorship resulting from an increase in such class, in accordance with Article VI, Part E shall hold office for a term that shall coincide with the remaining term of that class, but in no case shall a decrease in the total number of directors remove or shorten the term of any incumbent director. Notwithstanding the foregoing provisions of this Article VI, Part B, each director shall serve until his or her successor is duly elected and qualified or until his or her death, resignation, disqualification, retirement, or removal.
C. Number of Directors. Except as may be provided in a resolution or resolutions of the Board of Directors providing for any series of Preferred Stock with respect to any directors elected (or to be elected) by the holders of such series and except as otherwise required by applicable law, the total number of authorized directors constituting the Board of Directors shall be fixed from time to time exclusively by the Board of Directors pursuant to a resolution adopted by the Board of Directors.
D. Removal of Directors. Except as may be provided in a resolution or resolutions of the Board of Directors providing for any series of Preferred Stock with respect to any directors elected (or to be elected) by the holders of such series, as may be provided in that certain Investors’ Rights Agreement, dated as of May 9, 2025 (the “IRA”), by and among the Corporation and the stockholders party thereto, and except as otherwise required by applicable law, the Board of Directors or any individual director may be removed from office at any time (i) prior to the Voting Threshold Date (as defined below), with or without cause, by the affirmative vote of the holders of a majority of the voting power of the outstanding shares of capital stock of the Corporation then entitled to vote generally in the election of directors, and (ii) from and after the Voting Threshold Date, only for cause, by the affirmative vote of the holders of a majority of the voting power of the outstanding shares of capital stock of the Corporation then entitled to vote generally in the election of directors.
E. Vacancies and Newly Created Directorships. Except as may be provided in a resolution or resolutions providing for any series of Preferred Stock with respect to any directors elected (or to be elected) by the holders of such series, as may be provided in the IRA and except as otherwise required by applicable law, any vacancies on the Board of Directors resulting from death, resignation, disqualification, retirement, removal or other causes and any newly created directorships resulting from any increase in the number of directors shall, unless the Board of Directors determines by resolution that any such vacancies or newly created directorships shall be filled by the stockholders, be filled only by the affirmative vote of a majority of the directors then in office, even though less than a quorum of the Board of Directors, and not by the stockholders. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director’s successor shall have been elected and qualified or until such director’s death, resignation, disqualification, retirement, or removal.
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F. Bylaws. Subject to any additional vote required by this Second Amended and Restated Certificate of Incorporation, in furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, repeal, alter, amend or rescind the Bylaws. The affirmative vote of at least a majority of the Board of Directors then in office shall be required in order for the Board of Directors to adopt, repeal, alter, amend or rescind the Bylaws. The stockholders shall also have power to adopt, repeal, alter, amend or rescind the Bylaws. In addition to any vote of the holders of any class or series of stock of the Corporation required by applicable law or by this Second Amended and Restated Certificate of Incorporation (including any Preferred Stock outstanding at any time), such adoption, repeal, alteration, amendment or rescission of the Bylaws by the stockholders shall require the affirmative vote of the holders of at least sixty-six and two-third percent (66 2/3%) of the voting power of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.
G. Elections of Directors. Elections of directors need not be by ballot unless the Bylaws shall so provide.
ARTICLE
VII
MEETINGS OF STOCKHOLDERS
A. Subject to the rights of the holders of any series of Preferred Stock with respect to actions by the holders of shares of such series, from and after the Voting Threshold Date (as defined below), (i) no action shall be taken by the stockholders of the Corporation except at a duly called annual or special meeting of stockholders called in accordance with the Bylaws and (ii) no action shall be taken by the stockholders of the Corporation by written consent. Prior to the Voting Threshold Date, any action that is required or permitted to be taken by the stockholders of the Corporation may be effected by consent in lieu of a meeting. “Voting Threshold Date” shall mean 5:00 p.m. New York City time on the first day falling on or after the date on which the outstanding shares of Class B Common Stock cease to represent at least fifty percent (50%) of the total voting power of the outstanding shares of capital stock of the Corporation then entitled to vote generally in the election of directors.
B. Advance notice of stockholder nominations for the election of directors and of other business proposed to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws. Any business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes identified in the notice of meeting.
C. Subject to the rights of the holders of any series of Preferred Stock with respect to actions by the holders of shares of such series, special meetings of the stockholders of the Corporation may be called for any purpose or purposes, at any time only by or at the direction of the Board of Directors, the Chairperson of the Board of Directors, the Executive Chairman of the Board of Directors, the Chief Executive Officer, a President or, prior to the Voting Threshold Date, the Secretary upon the written request of the stockholders of the Corporation representing in the aggregate not less than a majority of the voting power of the outstanding shares of capital stock of the Corporation entitled to vote on the matter or matters to be brought before the proposed special meeting, in each case, in accordance with the Bylaws, and shall not be called by any other person or persons.
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ARTICLE
VIII
DIRECTOR AND OFFICER LIABILITY
To the fullest extent permitted by the DGCL, as the same exists or may hereafter be amended, a director or officer of the Corporation shall not be personally liable either to the Corporation or to any of its stockholders for monetary damages arising from a breach of fiduciary duty owed to the Corporation or its stockholders. If the DGCL or any other law of the State of Delaware is amended after approval by the stockholders of this Article VIII to authorize corporate action further eliminating or limiting the personal liability of directors or officers, then the liability of a director or officer, as applicable, of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL as so amended. Any repeal or modification of the foregoing provisions of this Article VIII by the stockholders of the Corporation shall not adversely affect any right or protection of a director or officer of the Corporation existing at the time of, or increase the liability of any director or officer of the Corporation with respect to any acts or omissions of such director or officer occurring prior to, such repeal or modification. For purposes of this Article VIII, “officer” shall mean only a person who, at the time of an act or omission as to which liability is asserted, falls within the meaning of the term “officer,” as defined in Section 102(b)(7) of the DGCL.
ARTICLE
IX
INDEMNIFICATION
A. Actions, Suits and Proceedings Other than by or in the Right of the Corporation. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that the person is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other entity (including any employee benefit plan) (all such persons being referred to hereafter as an “Indemnitee”), or by reason of any action alleged to have been taken or omitted in such person’s capacity as a director or officer of the Corporation or in any other capacity while serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other entity (including any employee benefit plan), against all expenses (including attorneys’ fees), judgments, fines, taxes or penalties and amounts paid in settlement actually and reasonably incurred by or on behalf of Indemnitee in connection with such action, suit or proceeding if Indemnitee acted in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the Indemnitee’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the Indemnitee’s conduct was unlawful.
B. Actions or Suits by or in the Right of the Corporation. The Corporation shall indemnify any Indemnitee who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that Indemnitee is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other entity (including any employee benefit plan), or by reason of any action alleged to have been taken or omitted in such person’s capacity as a director, officer, employee or agent of the Corporation or in any other capacity while serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other entity (including any employee benefit plan), against all expenses (including attorneys’ fees) actually and reasonably incurred by or on behalf of Indemnitee in connection with the defense or settlement of such action or suit if Indemnitee acted in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made under this Article IX in respect of any claim, issue or matter as to which Indemnitee shall have been adjudged to be liable to the Corporation, unless, and only to the extent that the Chancery Court (as defined below) or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses (including attorneys’ fees) which the Chancery Court or such other court shall deem proper.
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C. Indemnification for Expenses. Notwithstanding any other provisions of this Article IX, to the extent that an Indemnitee has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Article IX, Part A or B, or in defense of any claim, issue or matter therein, Indemnitee shall be indemnified against all expenses (including attorneys’ fees) actually and reasonably incurred by or on behalf of Indemnitee in connection therewith. Without limiting the foregoing, if any action, suit or proceeding is disposed of, on the merits or otherwise (including a disposition without prejudice), without (i) the disposition being adverse to Indemnitee, (ii) an adjudication that Indemnitee was liable to the Corporation, (iii) a plea of guilty or nolo contendere by Indemnitee, (iv) an adjudication that Indemnitee did not act in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Corporation, and (v) with respect to any criminal proceeding, an adjudication that Indemnitee had reasonable cause to believe his or her conduct was unlawful, Indemnitee shall be considered for the purposes hereof to have been wholly successful with respect thereto.
D. Notification and Defense of Claim. As a condition precedent to an Indemnitee’s right to be indemnified, such Indemnitee must notify the Corporation in writing as soon as practicable of any action, suit or proceeding involving such Indemnitee for which indemnification will or could be sought. With respect to any action, suit or proceeding of which the Corporation is so notified, the Corporation will be entitled to participate therein at its own expense and/or to assume the defense thereof at its own expense, with legal counsel reasonably acceptable to Indemnitee. After notice from the Corporation to Indemnitee of its election so to assume such defense, the Corporation shall not be liable to Indemnitee for any legal or other expenses subsequently incurred by Indemnitee in connection with such action, suit or proceeding, other than as provided below in this Article IX. Indemnitee shall have the right to employ his or her own counsel in connection with such action, suit or proceeding, but the fees and expenses of such counsel incurred after notice from the Corporation of its assumption of the defense thereof shall be at the expense of Indemnitee unless (i) the employment of counsel by Indemnitee has been authorized by the Corporation, (ii) counsel to Indemnitee shall have reasonably concluded that there may be a conflict of interest or position on any significant issue between the Corporation and Indemnitee in the conduct of the defense of such action, suit or proceeding or (iii) the Corporation shall not in fact have employed counsel to assume the defense of such action, suit or proceeding, in each of which cases, the fees and expenses of one counsel for Indemnitee shall be at the expense of the Corporation, except as otherwise expressly provided by this Article IX. The Corporation shall not be required to indemnify Indemnitee under this Article IX for any amounts paid in settlement of any action, suit or proceeding effected without its written consent. The Corporation shall not settle any action, suit or proceeding in any manner which would impose any judgment, penalty, admission or limitation on Indemnitee without Indemnitee’s written consent. Neither the Corporation nor Indemnitee will unreasonably withhold or delay its consent to any proposed settlement.
E. Advancement of Expenses. In the event of any threatened or pending action, suit or proceeding of which the Corporation receives notice under this Article IX, any expenses (including attorneys’ fees for attorneys retained in accordance with Part D above) incurred by or on behalf of any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that the person is or was a director or officer of the Corporation, or while a director or officer of the Corporation is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other entity (including any employee benefit plan) in defending an action, suit or proceeding or any appeal therefrom shall be paid by the Corporation in advance of the final disposition of such matter; provided, however, that the payment of such expenses incurred by or on behalf of such person in advance of the final disposition of such matter shall be made only upon receipt of an undertaking by or on behalf of such person to repay all amounts so advanced in the event that it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such person is not entitled to be indemnified by the Corporation as authorized in this Article IX. Such undertaking shall be accepted without reference to the financial ability of such person to make such repayment. Any advances or undertakings to repay pursuant to this Part E shall be unsecured and interest-free.
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F. Procedure for Indemnification. In order to obtain indemnification or advancement of expenses pursuant to Parts A through E of this Article IX, an Indemnitee or person entitled to advancement of expenses pursuant to Article IX, Part E above shall submit to the Corporation a written request. Any such indemnification or advancement of expenses shall be made as soon as practicable after written demand by Indemnitee or such person therefor is presented to the Corporation, and in any event within (i) in the case of indemnification under Article IX, Part C or advancement of expenses, 20 business days after receipt by the Corporation, of the written request of Indemnitee or such person, or (ii) in the case of all other indemnification, 45 business days after receipt by the Corporation of the written request of Indemnitee, unless with respect to requests under this subclause (ii), the Corporation (y) has assumed the defense pursuant to Article IX, Part D (and none of the circumstances described in Article IX, Part D that would nonetheless entitle Indemnitee to indemnification for the fees and expenses of separate counsel have occurred) or (z) determined, by clear and convincing evidence, within such 45 business day period referred to above that Indemnitee did not meet the applicable standard of conduct. Such determination in clause (z), and any determination that advanced expenses must be repaid to the Corporation, shall be made in each instance (a) by a majority vote of the directors consisting of persons who are not at that time parties to the action, suit or proceeding in question (“disinterested directors”), whether or not a quorum, (b) by a committee of disinterested directors designated by majority vote of disinterested directors, whether or not a quorum, (c) if there are no disinterested directors, or if the disinterested directors so direct, by independent legal counsel (who may, to the extent permitted by applicable law, be regular legal counsel to the Corporation) in a written opinion, or (d) by the stockholders of the Corporation. Any determination made under this Article IX, Part F shall not create any presumption or bind any court in determining whether indemnification or repayment of advanced expenses is required.
G. Limitations. Notwithstanding anything to the contrary in this Article IX, the Corporation shall not indemnify an Indemnitee pursuant to this Article IX (i) in connection with an action, suit or proceeding (or part thereof) initiated by such Indemnitee unless the initiation thereof was approved by the Board of Directors, or (ii) to the extent such Indemnitee or person entitled to advancement of expenses pursuant to Article IX, Part E above, is reimbursed from the proceeds of insurance, and in the event the Corporation makes any indemnification or advancement payments to an Indemnitee or such person and such Indemnitee or such person is subsequently reimbursed from the proceeds of such insurance, such Indemnitee or such person shall promptly refund indemnification or advancement payments to the Corporation to the extent of such insurance reimbursement.
H. Subsequent Amendment. No amendment, termination or repeal of this Article IX or of the relevant provisions of the DGCL or any other applicable laws shall adversely affect or diminish in any way the rights of any Indemnitee to indemnification or person entitled to advancements pursuant to Article IX, Part E above to such advancement under the provisions hereof with respect to any action, suit or proceeding arising out of or relating to any actions, transactions or facts occurring prior to the final adoption of such amendment, termination or repeal.
I. Other Rights. The indemnification and advancement of expenses provided by this Article IX shall not be deemed exclusive of any other rights to which an Indemnitee seeking indemnification or a person seeking advancement of expenses pursuant to Article IX, Part E above may be entitled under any law (common or statutory), agreement or vote of stockholders or disinterested directors or otherwise, both as to action in Indemnitee’s or such person’s official capacity and as to action in any other capacity while holding office for the Corporation. In addition, the Corporation may, to the extent authorized from time to time by its Board, grant indemnification rights to other employees or agents of the Corporation or other persons serving the Corporation and such rights may be equivalent to, or greater or less than, those set forth in this Article IX.
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J. Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, manager, member, employee or agent of another corporation, partnership, limited liability company, joint venture, trust or other entity against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of Section 145 of the DGCL.
K. Savings Clause. If this Article IX or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each Indemnitee as to any expenses (including attorneys’ fees), liabilities, losses, judgments, fines, Employee Retirement Income Security Act of 1974, as amended (ERISA) taxes or penalties and amounts paid in settlement in connection with any action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Corporation, to the fullest extent permitted by any applicable portion of this Article IX that shall not have been invalidated and to the fullest extent permitted by applicable law.
L. Definitions. For purposes of this Article IX, references to the “Corporation” shall include, in addition to the resulting corporation, any constituent corporation, partnership, limited liability company or joint venture, trust or other entity (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, managers, members, and employees or agents so that any person who is or was a director, officer, manager, member, employee or agent of such constituent, or is or was serving at the request of such constituent as a director, officer, manager, member, employee or agent of another corporation, partnership, limited liability company, joint venture, trust or other entity, shall stand in the same position under the provisions of this Article IX with respect to the resulting or surviving corporation, partnership, limited liability company, or joint venture or other enterprise as such person would have with respect to such constituent if its separate existence had continued.
M. Scope. The Corporation shall indemnify any Indemnitee and advance expenses to a person pursuant to Article IX, Part E above to the fullest extent permitted by the DGCL, and if the DGCL is amended after adoption of this Article IX to expand further the indemnification or advancements permitted to Indemnitees or such persons, then the Corporation shall indemnify such persons to the fullest extent permitted by the DGCL, as so amended.
N. Continuation of Rights. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article IX shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent, as applicable, and shall inure to the benefit of the heirs, executors and administrators of such a person.
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ARTICLE
X
SECTION 203
The Corporation shall not be governed by or subject to Section 203 of the DGCL (or any successor provision thereto).
ARTICLE
XI
BUSINESS OPPORTUNITIES
To the fullest extent permitted by Section 122(17) of the DGCL (or any successor provision), the Corporation, on behalf of itself and its subsidiaries, renounces and waives any interest or expectancy of the Corporation and its subsidiaries in, or in being offered an opportunity to participate in, directly or indirectly, any potential transactions, matters or business opportunities (including, without limitation, any business activities or lines of business that are the same as or similar to those pursued by, or competitive with, the Corporation or any of its subsidiaries or any dealings with customers or clients of the Corporation or any of its subsidiaries) (each a “Corporate Opportunity”) that are from time to time presented to any holder of Class B Common Stock or any of such holder’s officers, directors, directors of its subsidiaries, employees, agents, stockholders, members, managers, partners, representatives, affiliates or subsidiaries (other than the Corporation and its subsidiaries), even if the transaction, matter or opportunity is one that the Corporation or its subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so. To the fullest extent permitted by law, no holder of Class B Common Stock nor any of such holder’s officers, directors, directors of their subsidiaries, employees, agents, stockholders, members, managers, partners, representatives, affiliates or subsidiaries (other than the Corporation and its subsidiaries) shall be liable to the Corporation or any of its subsidiaries for breach of any fiduciary or other duty, as a director or officer or otherwise, by reason of the fact that such person pursues, acquires or participates in such Corporate Opportunity, directs such Corporate Opportunity to another person or fails to communicate, offer or present such Corporate Opportunity, or information regarding such Corporate Opportunity, to the Corporation or its subsidiaries, unless, in the case of any such person who is a director or officer of the Corporation, such business opportunity is expressly offered to such director or officer in writing solely in his or her capacity as a director or officer of the Corporation. Any person purchasing or otherwise acquiring or holding any interest in any shares of stock of the Corporation shall be deemed to have notice of and have consented to the provisions of this Article XI. Neither the alteration, amendment or repeal of this Article XI, nor the adoption of any provision of this Second Amended and Restated Certificate of Incorporation inconsistent with this Article XI, nor, to the fullest extent permitted by applicable law, any modification of law, shall eliminate or reduce the effect of this Article XI in respect of any Corporate Opportunity first identified or any other matter occurring, or any cause of action, suit or claim that, but for this Article XI, would accrue or arise, prior to such alteration, amendment, repeal, adoption or modification. If any provision or provisions of this Article XI shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (a) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article XI (including, without limitation, each portion of any paragraph of this Article XI containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (b) to the fullest extent possible, the provisions of this Article XI (including, without limitation, each such portion of any paragraph of this Article XI containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law. This Article XI shall not limit any protections or defenses available to, or indemnification or advancement rights of, any director or officer of the Corporation under this Second Amended and Restated Certificate of Incorporation, the Bylaws, applicable law, any agreement or otherwise.
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ARTICLE
XII
EXCLUSIVE FORUM
A. Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery (the “Chancery Court”) of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) and any appellate court thereof (the “Chosen Courts”) shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action, suit or proceeding brought on behalf of the Corporation, (ii) any action, suit or proceeding asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or stockholder of the Corporation to the Corporation or to the Corporation’s stockholders, (iii) any action, suit or proceeding arising pursuant to any provision of the DGCL, the Bylaws or this Second Amended and Restated Certificate of Incorporation (as any of the foregoing may be amended from time to time), (iv) any action, suit or proceeding as to which the DGCL confers jurisdiction on the Chancery Court, or (v) any action, suit or proceeding asserting a claim governed by the internal affairs doctrine. If any action, suit or proceeding the subject matter of which is within the scope of the immediately preceding sentence is filed in a court other than the Chosen Courts (a “Foreign Action”) in the name of any stockholder, such stockholder shall be deemed to have consented to (a) the personal jurisdiction of the Chosen Courts in connection with any action brought in any such court to enforce the provisions of the immediately preceding sentence and (b) having service of process made upon such stockholder in any such action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder.
B. Unless the Corporation consents in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States of America shall be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended (and as may be further amended from time to time).
C. Notwithstanding the foregoing, the provisions of Part A of this Article XII shall not apply to suits brought to enforce any liability or duty created by the Securities Exchange Act of 1934 or any other claim over which the federal courts of the United States have exclusive jurisdiction.
D. Any person or entity purchasing or otherwise acquiring or holding any interest in any security of the Corporation (including, but not limited to, shares of capital stock of the Corporation) shall be deemed to have notice of and consented to the provisions of this Article XII.
ARTICLE
XIII
AMENDMENTS
A. Except as otherwise provided in this Second Amended and Restated Certificate of Incorporation, the Corporation reserves the right to amend, alter, change or repeal any provision contained in this Second Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation; provided, however, that, notwithstanding any other provision of this Second Amended and Restated Certificate of Incorporation or any provision of law that might otherwise permit a lesser vote or no vote, but in addition to any vote of the holders of any class or series of the stock of the Corporation, and, as applicable, such other approvals of the Board of Directors, as are required by applicable law or by this Second Amended and Restated Certificate of Incorporation, (a) the affirmative vote of the holders of sixty-six and two-third percent (66 2/3%) of the voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend or repeal, or adopt any provision of this Second Amended and Restated Certificate of Incorporation inconsistent with, (i) Article IV, (ii) Article V, (iii) Article VI, (iv) Article VII, (v) Article VIII, (vi) Article IX, (vii) Article X, (viii) Article XI, (ix) Article XII or (x) this Article XIII, and (b) for so long as any shares of Class B Common Stock are outstanding, the affirmative vote of the holders at least eighty percent (80%) of the shares of Class B Common Stock outstanding at the time of such vote, voting as a separate series, shall be required to amend or repeal, or adopt any provision of this Second Amended and Restated Certificate of Incorporation inconsistent with Article V, Part A or this clause (b) of Article XIII, Part A.
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B. If any provision or provisions of this Second Amended and Restated Certificate of Incorporation shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Second Amended and Restated Certificate of Incorporation (including, without limitation, each portion of any paragraph of this Second Amended and Restated Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not, to the fullest extent permitted by applicable law, in any way be affected or impaired thereby and (ii) to the fullest extent permitted by applicable law, the provisions of this Second Amended and Restated Certificate of Incorporation (including, without limitation, each such portion of any paragraph of this Second Amended and Restated Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law.
* * * * *
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Exhibit 3.3
CERTIFICATE OF AMENDMENT
TO
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
GRYPHON DIGITAL MINING, INC.
Pursuant to Section 242 of the
General Corporation Law of the State of Delaware
Gryphon Digital Mining, Inc. (the “Corporation”), a corporation organized and existing under the General Corporation Law of the State of Delaware (the “DGCL”), does hereby certify as follows:
First. The name of the corporation is Gryphon Digital Mining, Inc. The original Certificate of Incorporation of the Corporation was filed with the office of the Secretary of State of the State of Delaware (the “Delaware Secretary”) on October 3, 2018, under the name MTech Acquisition Holdings Inc. The Amended and Restated Certificate of Incorporation of the Corporation was filed with the Delaware Secretary on June 17, 2019, under the name Akerna Corp.
Second. The Second Amended and Restated Certificate of Incorporation of the Corporation was filed with the Delaware Secretary on September 2, 2025, under the name Gryphon Digital Mining, Inc. (as amended from time to time, the “Second Amended and Restated Certificate”).
Third. Article I of the Second Amended and Restated Certificate is hereby amended to read in its entirety as set forth below:
ARTICLE I
NAME
The name of the corporation is American Bitcoin Corp. (the “Corporation”).
Fourth. The foregoing amendment was duly adopted in accordance with Section 242 of the DGCL.
Fifth. Except as amended hereby, all of the provisions of the Second Amended and Restated Certificate shall continue in full force and effect.
[Signature page follows]
IN WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment as of this 3rd day of September, 2025.
| GRYPHON DIGITAL MINING, INC. | ||
| By: | /s/ Matt Prusak | |
| Name: | Matt Prusak | |
| Title: | President | |
[Signature Page to Certificate of Amendment to Certificate of Incorporation]
Exhibit 3.4
Amended and Restated Bylaws of
American Bitcoin Corp.
(a Delaware corporation)
Table of Contents
| Page | |||
| Article I Corporate Offices | 1 | ||
| 1.1 | Registered Office | 1 | |
| 1.2 | Other Offices | 1 | |
| Article II Meetings of Stockholders | 1 | ||
| 2.1 | Place of Meetings | 1 | |
| 2.2 | Annual Meeting | 1 | |
| 2.3 | Special Meeting | 1 | |
| 2.4 | Advance Notice of Business to be Brought before a Meeting | 2 | |
| 2.5 | Advance Notice of Nominations for Election of Directors at a Meeting | 5 | |
| 2.6 | Additional Requirements for Valid Nomination of Candidates to Serve as Director and, if Elected, to be Seated as Directors | 9 | |
| 2.7 | Notice of Stockholders’ Meetings | 10 | |
| 2.8 | Action by Written Consent in Lieu of a Meeting | 10 | |
| 2.9 | Quorum | 10 | |
| 2.10 | Adjourned Meeting; Notice | 11 | |
| 2.11 | Conduct of Business | 11 | |
| 2.12 | Voting | 12 | |
| 2.13 | Record Date for Stockholder Meetings and Other Purposes | 12 | |
| 2.14 | Proxies | 13 | |
| 2.15 | List of Stockholders Entitled to Vote | 13 | |
| 2.16 | Inspectors of Election | 14 | |
| 2.17 | Delivery to the Corporation | 14 | |
| Article III Directors | 15 | ||
| 3.1 | Powers | 15 | |
| 3.2 | Number of Directors | 15 | |
| 3.3 | Election, Qualification and Term of Office of Directors | 15 | |
| 3.4 | Resignation and Vacancies | 15 | |
| 3.5 | Place of Meetings; Meetings by Telephone | 15 | |
| 3.6 | Regular Meetings | 16 | |
| 3.7 | Special Meetings; Notice | 16 | |
| 3.8 | Quorum | 16 | |
| 3.9 | Board Action without a Meeting | 17 | |
| 3.10 | Fees and Compensation of Directors | 17 | |
| Article IV Committees | 17 | ||
| 4.1 | Committees of Directors | 17 | |
| 4.2 | Committee Minutes | 17 | |
| 4.3 | Meetings and Actions of Committees | 17 | |
| 4.4 | Subcommittees | 18 | |
| Article V Officers | 18 | ||
| 5.1 | Officers | 18 | |
| 5.2 | Appointment of Officers | 18 | |
| 5.3 | Subordinate Officers | 18 | |
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Table of Contents
(continued)
| Page | |||
| 5.4 | Removal and Resignation of Officers | 19 | |
| 5.5 | Vacancies in Offices | 19 | |
| 5.6 | Representation of Shares of Other Corporations | 19 | |
| 5.7 | Authority and Duties of Officers | 19 | |
| 5.8 | Compensation | 19 | |
| Article VI Records | 19 | ||
| Article VII General Matters | 20 | ||
| 7.1 | Execution of Corporate Contracts and Instruments | 20 | |
| 7.2 | Stock Certificates | 20 | |
| 7.3 | Special Designation of Certificates | 21 | |
| 7.4 | Lost Certificates | 21 | |
| 7.5 | Shares Without Certificates | 21 | |
| 7.6 | Construction; Definitions | 21 | |
| 7.7 | Dividends | 21 | |
| 7.8 | Fiscal Year | 21 | |
| 7.9 | Seal | 22 | |
| 7.10 | Transfer of Stock | 22 | |
| 7.11 | Stock Transfer Agreements | 22 | |
| 7.12 | Registered Stockholders | 22 | |
| 7.13 | Waiver of Notice | 22 | |
| Article VIII Notice | 23 | ||
| 8.1 | Delivery of Notice; Notice by Electronic Transmission | 23 | |
| Article IX Amendments | 24 | ||
| Article X Definitions | 24 | ||
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Amended and Restated Bylaws of
American Bitcoin Corp.
Article
I
Corporate Offices
1.1 Registered Office. The address of the registered office of American Bitcoin Corp. (the “Corporation”) in the State of Delaware, and the name of its registered agent at such address, shall be as set forth in the Corporation’s certificate of incorporation, as the same may be amended and/or restated from time to time (the “Certificate of Incorporation”).
1.2 Other Offices. The Corporation may have additional offices at any place or places, within or outside the State of Delaware, as the Corporation’s board of directors (the “Board”) may from time to time establish or as the business of the Corporation may require.
Article
II
Meetings of Stockholders
2.1 Place of Meetings. Meetings of stockholders shall be held at such place, if any, within or outside the State of Delaware, designated by the Board. The Board may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the General Corporation Law of the State of Delaware (the “DGCL”). In the absence of any such designation or determination, stockholders’ meetings shall be held at the Corporation’s principal executive office.
2.2 Annual Meeting. The Board shall designate the date and time of the annual meeting. At the annual meeting, directors shall be elected and other proper business properly brought before the meeting in accordance with Section 2.4 of these bylaws may be transacted. The Board may postpone, reschedule or cancel any previously scheduled annual meeting of stockholders.
2.3 Special Meeting.
Except as otherwise required by applicable law, special meetings of the stockholders may be called, postponed, rescheduled or cancelled only in such manner as set forth in the Certificate of Incorporation.
No business may be transacted at any special meeting of stockholders other than the business specified in the notice of such meeting.
2.4 Advance Notice of Business to be Brought before a Meeting.
(a) At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (i) specified in a notice of meeting given by or at the direction of the Board, (ii) if not specified in a notice of meeting, otherwise brought before the meeting by the Board, the Executive Chairman of the Board or the Chairperson of the Board or (iii) otherwise properly brought before the meeting by a stockholder present in person who (A)(1) was a record owner of shares of the Corporation both at the time of giving the notice provided for in this Section 2.4 and at the time of the meeting, (2) is entitled to vote at the meeting and (3) has complied with this Section 2.4 in all applicable respects or (B) properly made such proposal in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (as so amended and inclusive of such rules and regulations, the “Exchange Act”). The foregoing clause (iii) shall be the exclusive means for a stockholder to propose business to be brought before an annual meeting of the stockholders. The only matters that may be brought before a special meeting are the matters specified in the notice of meeting given by or at the direction of the person calling the meeting pursuant to Section 2.3, and stockholders shall not be permitted to propose business to be brought before a special meeting of the stockholders. For purposes of this Section 2.4 of these bylaws, “present in person” shall mean that the stockholder proposing that the business be brought before the annual meeting of the Corporation, or a qualified representative of such proposing stockholder, appear at such annual meeting. A “qualified representative” of such proposing stockholder shall be a duly authorized officer, manager or partner of such stockholder or any other person authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders. Stockholders seeking to nominate persons for election to the Board must comply with Section 2.5 and Section 2.6 of these bylaws, and this Section 2.4 shall not be applicable to nominations for election to the Board except as expressly provided in Section 2.5 and Section 2.6 of these bylaws.
(b) Without qualification, for business to be properly brought before an annual meeting by a stockholder, the stockholder must (i) provide Timely Notice (as defined below) thereof in writing and in proper form to the Secretary of the Corporation and (ii) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.4. To be timely, a stockholder’s notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the one-year anniversary of the preceding year’s annual meeting (in the case of the first annual meeting of stockholders following the filing and effectiveness of the Second Amended and Restated Certificate of Incorporation of the Corporation, the date of the preceding year’s annual meeting shall be deemed to be September 6, 2024); provided, however, that if the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice by the stockholder to be timely must be so delivered, or mailed and received, not later than the ninetieth (90th) day prior to such annual meeting or, if later, the tenth (10th) day following the day on which public disclosure of the date of such annual meeting was first made by the Corporation (such notice within such time periods, “Timely Notice”). In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period (or extend any time period) for the giving of Timely Notice as described above.
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(c) To be in proper form for purposes of this Section 2.4, a stockholder’s notice to the Secretary shall set forth:
(i) As to each Proposing Person (as defined below), (A) the name and address of such Proposing Person (including, if applicable, the name and address that appear on the Corporation’s books and records); (B) the number of shares of each class or series of stock of the Corporation that are, directly or indirectly, owned of record or beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) by such Proposing Person, except that such Proposing Person shall in all events be deemed to beneficially own any shares of any class or series of stock of the Corporation as to which such Proposing Person has a right to acquire beneficial ownership at any time in the future; (C) the date or dates on which such shares were acquired; (D) the investment intent of such acquisition; and (E) any pledge by such Proposing Person with respect to any of such shares (the disclosures to be made pursuant to the foregoing clauses (A) through (E) are referred to as “Stockholder Information”);
(ii) As to each Proposing Person, (A) the material terms and conditions of any “derivative security” (as such term is defined in Rule 16a-1(c) under the Exchange Act) that constitutes a “call equivalent position” (as such term is defined in Rule 16a-1(b) under the Exchange Act) or a “put equivalent position” (as such term is defined in Rule 16a-1(h) under the Exchange Act) or other derivative or synthetic arrangement in respect of any class or series of shares of the Corporation (“Synthetic Equity Position”) that is, directly or indirectly, held or maintained by, held for the benefit of, or involving such Proposing Person, including, without limitation, (I) any option, warrant, convertible security, stock appreciation right, future or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of shares of the Corporation, (II) any derivative or synthetic arrangement having the characteristics of a long position or a short position in any class or series of shares of the Corporation, including, without limitation, a stock loan transaction, a stock borrow transaction or a share repurchase transaction or (III) any contract, derivative, swap or other transaction or series of transactions designed to (x) produce economic benefits and risks that correspond substantially to the ownership of any class or series of shares of the Corporation, (y) mitigate any loss relating to, reduce the economic risk (of ownership or otherwise) of, or manage the risk of share price decrease in, any class or series of shares of the Corporation, or (z) increase or decrease the voting power in respect of any class or series of shares of the Corporation of such Proposing Person, including, without limitation, due to the fact that the value of such contract, derivative, swap or other transaction or series of transactions is determined by reference to the price, value or volatility of any class or series of shares of the Corporation, whether or not such instrument, contract or right shall be subject to settlement in the underlying class or series of shares of the Corporation, through the delivery of cash or other property, or otherwise, and without regard to whether the holder thereof may have entered into transactions that hedge or mitigate the economic effect of such instrument, contract or right, or any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the price or value of any class or series of shares of the Corporation; provided that, for the purposes of the definition of “Synthetic Equity Position,” the term “derivative security” shall also include any security or instrument that would not otherwise constitute a “derivative security” as a result of any feature that would make any conversion, exercise or similar right or privilege of such security or instrument becoming determinable only at some future date or upon the happening of a future occurrence, in which case the determination of the amount of securities into which such security or instrument would be convertible or exercisable shall be made assuming that such security or instrument is immediately convertible or exercisable at the time of such determination; and, provided, further, that any Proposing Person satisfying the requirements of Rule 13d-1(b)(1) under the Exchange Act (other than a Proposing Person that so satisfies Rule 13d-1(b)(1) under the Exchange Act solely by reason of Rule 13d-1(b)(1)(ii)(E)) shall not be required to disclose any Synthetic Equity Position that is, directly or indirectly, held or maintained by, held for the benefit of, or involving such Proposing Person as a hedge with respect to a bona fide derivatives trade or position of such Proposing Person arising in the ordinary course of such Proposing Person’s business as a derivatives dealer, (B) any rights to dividends on the shares of any class or series of stock of the Corporation owned beneficially by such Proposing Person that are separated or separable from the underlying shares of the Corporation, (C) any material pending or threatened legal proceeding in which such Proposing Person is a party or material participant involving the Corporation or any of its officers or directors, or any affiliate of the Corporation, (D) any other material relationship between such Proposing Person, on the one hand, and the Corporation or any affiliate of the Corporation, on the other hand, (E) any direct or indirect material interest in any material contract or agreement of such Proposing Person with the Corporation or any affiliate of the Corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement), (F) any proportionate interest in shares of the Corporation or a Synthetic Equity Position held, directly or indirectly, by a general or limited partnership, limited liability company or similar entity in which any such Proposing Person (1) is a general partner or, directly or indirectly, beneficially owns an interest in a general partner of such general or limited partnership or (2) is the manager, managing member or, directly or indirectly, beneficially owns an interest in the manager or managing member of such limited liability company or similar entity, (G) a representation that such Proposing Person intends or is part of a group which intends to deliver a proxy statement or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal or otherwise solicit proxies from stockholders in support of such proposal and (H) any other information relating to such Proposing Person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies or consents by such Proposing Person in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act (the disclosures to be made pursuant to the foregoing clauses (A) through (H) are referred to as “Disclosable Interests”); provided, however, that Disclosable Interests shall not include any such disclosures with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner; and
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(iii) As to each item of business that the stockholder proposes to bring before the annual meeting, (A) a brief description of the business desired to be brought before the annual meeting, the reasons for conducting such business at the annual meeting and any material interest in such business of each Proposing Person, (B) the text of the proposal or business (including the text of any resolutions proposed for consideration and, in the event that such business includes a proposal to amend the Certificate of Incorporation or bylaws of the Corporation, the language of the proposed amendment) and (C) any other information relating to such item of business that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act; provided, however, that the disclosures required by this paragraph (iii) shall not include any disclosures with respect to any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner.
(d) For purposes of this Section 2.4, the term “Proposing Person” shall mean (i) the stockholder providing the notice of business proposed to be brought before an annual meeting, (ii) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the business proposed to be brought before the annual meeting is made and (iii) any participant (as defined in paragraphs (a)(ii)-(vi) of Instruction 3 to Item 4 of Schedule 14A) with such stockholder in such solicitation.
(e) The Board may request that any Proposing Person furnish such additional information as may be reasonably required by the Board. Such Proposing Person shall provide such additional information within ten (10) days after it has been requested by the Board.
(f) A Proposing Person shall update and supplement its notice to the Corporation of its intent to propose business at an annual meeting, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.4 shall be true and correct as of the record date for stockholders entitled to vote at the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation (A) not later than five (5) business days after the record date for stockholders entitled to vote at the meeting (in the case of the update and supplement required to be made as of such record date) and (B) not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof). For the avoidance of doubt, the obligation to update and supplement as set forth in this paragraph or any other Section of these bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any proposal or to submit any new proposal, including by changing or adding matters, business or resolutions proposed to be brought before a meeting of the stockholders.
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(g) Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at an annual meeting that is not properly brought before the meeting in accordance with this Section 2.4. The presiding person of the meeting shall, if the facts warrant, determine that the business was not properly brought before the meeting in accordance with this Section 2.4, and if such presiding person should so determine, such presiding person shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.
(h) This Section 2.4 is expressly intended to apply to any business proposed to be brought before an annual meeting of stockholders other than any proposal made in accordance with Rule 14a-8 under the Exchange Act and included in the Corporation’s proxy statement. In addition to the requirements of this Section 2.4 with respect to any business proposed to be brought before an annual meeting, each Proposing Person shall comply with all applicable requirements of the Exchange Act with respect to any such business. Nothing in this Section 2.4 shall be deemed to affect the rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.
(i) For purposes of these bylaws, “public disclosure” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act.
2.5 Advance Notice of Nominations for Election of Directors at a Meeting.
(a) Nominations of any person for election to the Board at an annual meeting or at a special meeting (but only if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling such special meeting) may be made at such meeting only (i) by or at the direction of the Board, including by any committee or persons authorized to do so by the Board or these bylaws or (ii) by a stockholder present in person who (A) was a record owner of shares of the Corporation both at the time of giving the notice provided for in this Section 2.5 and at the time of the meeting, (B) is entitled to vote at the meeting and (C) has complied with this Section 2.5 and Section 2.6 as to such notice and nomination. For purposes of this Section 2.5, “present in person” shall mean that the stockholder nominating any person for election to the Board at the meeting of the Corporation, or a qualified representative of such stockholder, appear at such meeting. A “qualified representative” of such proposing stockholder shall be a duly authorized officer, manager or partner of such stockholder or any other person authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders. The foregoing clause (ii) shall be the exclusive means for a stockholder to make any nomination of a person or persons for election to the Board at an annual meeting or special meeting.
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(b)
(i) Without qualification, for a stockholder to make any nomination of a person or persons for election to the Board at an annual meeting, the stockholder must (i) provide Timely Notice (as defined in Section 2.4(b) of these bylaws) thereof in writing and in proper form to the Secretary of the Corporation, (ii) provide the information, agreements and questionnaires with respect to such stockholder and its candidate for nomination as required to be set forth by this Section 2.5 and Section 2.6 and (iii) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.5 and Section 2.6.
(ii) Without qualification, if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling a special meeting, then for a stockholder to make any nomination of a person or persons for election to the Board at a special meeting, the stockholder must (A) provide timely notice thereof in writing and in proper form to the Secretary of the Corporation at the principal executive offices of the Corporation, (B) provide the information with respect to such stockholder and its candidate for nomination as required by this Section 2.5 and Section 2.6 and (C) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.5. To be timely, a stockholder’s notice for nominations to be made at a special meeting must be delivered to, or mailed and received at, the principal executive offices of the Corporation not earlier than the one hundred twentieth (120th) day prior to such special meeting and not later than the ninetieth (90th) day prior to such special meeting or, if later, the tenth (10th) day following the day on which public disclosure (as defined in Section 2.4) of the date of such special meeting was first made (such notice within such time periods, “Special Meeting Timely Notice”).
(iii) In no event shall any adjournment or postponement of an annual meeting or special meeting or the announcement thereof commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.
(iv) In no event may a Nominating Person provide Timely Notice or Special Meeting Timely Notice with respect to a greater number of director candidates than are subject to election by stockholders at the applicable meeting. If the Corporation shall, subsequent to such notice, increase the number of directors subject to election at the meeting, such notice as to any additional nominees shall be due on the later of (i) the conclusion of the time period for Timely Notice (with respect to an annual meeting of stockholders), (ii) the conclusion of the time period for Special Meeting Timely Notice (with respect to a special meeting) or (iii) the tenth day following the date of public disclosure (as defined in Section 2.4) of such increase.
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(c) To be in proper form for purposes of this Section 2.5, a stockholder’s notice to the Secretary shall set forth:
(i) As to each Nominating Person (as defined below), the Stockholder Information (as defined in Section 2.4(c)(i), except that for purposes of this Section 2.5, the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(c)(i));
(ii) As to each Nominating Person, any Disclosable Interests (as defined in Section 2.4(c)(ii), except that for purposes of this Section 2.5 the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(c)(ii) and the disclosure with respect to the business to be brought before the meeting in Section 2.4(c)(iii) shall be made with respect to the election of directors at the meeting); provided that, in lieu of including the information set forth in Section 2.4(c)(ii)(G), the Nominating Person’s notice for purposes of this Section 2.5 shall include a representation as to whether the Nominating Person intends or is part of a group which intends to deliver a proxy statement and solicit the holders of shares representing at least 67% of the voting power of shares entitled to vote on the election of directors in support of director nominees other than the Corporation’s nominees in accordance with Rule 14a-19 promulgated under the Exchange Act; and
(iii) As to each candidate whom a Nominating Person proposes to nominate for election as a director, (A) all information relating to such candidate for nomination that is required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14(a) under the Exchange Act (including such candidate’s written consent to being named in a proxy statement and accompanying proxy card relating to the Corporation’s next meeting of stockholders at which directors are to be elected and to serving as a director for a full term if elected), (B) a description of any direct or indirect material interest in any material contract or agreement between or among any Nominating Person, on the one hand, and each candidate for nomination or his or her respective associates or any other participants in such solicitation, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 under Regulation S-K if such Nominating Person were the “registrant” for purposes of such rule and the candidate for nomination were a director or executive officer of such registrant (the disclosures to be made pursuant to the foregoing clauses (A) and (B) are referred to as “Nominee Information”) and (C) a completed and signed questionnaire, representation and agreement as provided in Section 2.6(a).
(d) For purposes of this Section 2.5, the term “Nominating Person” shall mean (a) the stockholder providing the notice of the nomination proposed to be made at the meeting, (b) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the nomination proposed to be made at the meeting is made and (c) any participant (as defined in paragraphs (a)(ii)-(vi) of Instruction 3 to Item 4 of Schedule 14A of the Exchange Act) with such stockholder in such solicitation.
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(e) The Board may request that any Nominating Person furnish such additional information as may be reasonably required by the Board. Such Nominating Person shall provide such additional information within ten (10) days after it has been requested by the Board.
(f) A stockholder providing notice of any nomination proposed to be made at a meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.5 shall be true and correct as of the record date for stockholders entitled to vote at the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation (A) not later than five (5) business days after the record date for stockholders entitled to vote at the meeting (in the case of the update and supplement required to be made as of such record date) and (B) not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof). For the avoidance of doubt, the obligation to update and supplement as set forth in this paragraph or any other Section of these bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any nomination or to submit any new nomination.
(g) In addition to the requirements of this Section 2.5 with respect to any nomination proposed to be made at a meeting, each Nominating Person shall comply with all applicable requirements of the Exchange Act with respect to any such nominations. Notwithstanding the foregoing provisions of this Section 2.5, unless otherwise required by law, (i) no Nominating Person shall solicit proxies in support of director nominees other than the Corporation’s nominees unless such Nominating Person has complied with Rule 14a-19 promulgated under the Exchange Act in connection with the solicitation of such proxies, including the provision to the Corporation of notices required thereunder in a timely manner and (ii) if any Nominating Person (1) provides notice pursuant to Rule 14a-19(b) promulgated under the Exchange Act and (2) subsequently fails to comply with the requirements of Rule 14a-19(a)(2) and Rule 14a-19(a)(3) promulgated under the Exchange Act, including the provision to the Corporation of notices required thereunder in a timely manner, or fails to timely provide reasonable evidence sufficient to satisfy the Corporation that such Nominating Person has met the requirements of Rule 14a-19(a)(3) promulgated under the Exchange Act in accordance with the following sentence, then the nomination of each such proposed nominee shall be disregarded, notwithstanding that the nominee is included as a nominee in the Corporation’s proxy statement, notice of meeting or other proxy materials for any annual meeting (or any supplement thereto) and notwithstanding that proxies or votes in respect of the election of such proposed nominees may have been received by the Corporation (which proxies and votes shall be disregarded). If any Nominating Person provides notice pursuant to Rule 14a-19(b) promulgated under the Exchange Act, such Nominating Person shall deliver to the Corporation, no later than seven (7) business days prior to the applicable meeting, reasonable evidence that it has met the requirements of Rule 14a-19(a)(3) promulgated under the Exchange Act.
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2.6 Additional Requirements for Valid Nomination of Candidates to Serve as Director and, if Elected, to be Seated as Directors.
(a) To be eligible to be a candidate for election as a director of the Corporation at an annual or special meeting, a candidate must be nominated in the manner prescribed in Section 2.5 and the candidate for nomination, whether nominated by the Board or by a stockholder of record, must have previously delivered (in accordance with the time period prescribed for delivery in a notice to such candidate given by or on behalf of the Board), to the Secretary at the principal executive offices of the Corporation, (i) a completed written questionnaire (in the form provided by the Corporation upon written request of any stockholder of record therefor) with respect to the background, qualifications, stock ownership and independence of such proposed nominee and (ii) a written representation and agreement (in the form provided by the Corporation upon written request of any stockholder of record therefor) that such candidate for nomination (A) is not and, if elected as a director during his or her term of office, will not become a party to (1) any agreement, arrangement or understanding with, and has not given and will not give any commitment or assurance to, any person or entity as to how such proposed nominee, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) or (2) any Voting Commitment that could limit or interfere with such proposed nominee’s ability to comply, if elected as a director of the Corporation, with such proposed nominee’s fiduciary duties under applicable law, (B) is not, and will not become a party to, any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation or reimbursement for service as a director of the Corporation that has not been disclosed therein or to the Corporation and (C) if elected as a director of the Corporation, will comply with all applicable corporate governance, conflict of interest, confidentiality, stock ownership and trading and other policies and guidelines of the Corporation applicable to directors and in effect during such person’s term in office as a director (and, if requested by any candidate for nomination, the Secretary of the Corporation shall provide to such candidate for nomination all such policies and guidelines then in effect).
(b) The Board may also require any proposed candidate for nomination as a director to furnish such other information as may reasonably be requested by the Board in writing prior to the meeting of stockholders at which such candidate’s nomination is to be acted upon. Without limiting the generality of the foregoing, the Board may request such other information in order for the Board to determine the eligibility of such candidate for nomination to be an independent director of the Corporation or to comply with the director qualification standards and additional selection criteria in accordance with the Corporation’s Corporate Governance Guidelines. Such other information shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation (or any other office specified by the Corporation in any public announcement) not later than five (5) business days after the request by the Board has been delivered to, or mailed and received by, the Nominating Person.
(c) A candidate for nomination as a director shall further update and supplement the materials delivered pursuant to this Section 2.6, if necessary, so that the information provided or required to be provided pursuant to this Section 2.6 shall be true and correct as of the record date for stockholders entitled to vote at the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation (or any other office specified by the Corporation in any public announcement) (A) not later than five (5) business days after the record date for stockholders entitled to vote at the meeting (in the case of the update and supplement required to be made as of such record date) and (B) not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof). For the avoidance of doubt, the obligation to update and supplement as set forth in this paragraph or any other Section of these bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any nomination or to submit any new proposal, including by changing or adding nominees, matters, business or resolutions proposed to be brought before a meeting of the stockholders.
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(d) In addition to the requirements of this Section 2.6 with respect to any nomination proposed to be made at a meeting, each Nominating Person shall comply with all applicable requirements of the Exchange Act with respect to any such nominations.
(e) No candidate shall be eligible for nomination as a director of the Corporation unless such candidate for nomination and the Nominating Person seeking to place such candidate’s name in nomination has complied with Section 2.5 and this Section 2.6, as applicable. The presiding person at the meeting shall, if the facts warrant, determine that a nomination was not properly made in accordance with Section 2.5 and this Section 2.6, and if such presiding person should so determine, such presiding person shall so declare such determination to the meeting, the defective nomination shall be disregarded and any ballots cast for the candidate in question (but in the case of any form of ballot listing other qualified nominees, only the ballots cast for the nominee in question) shall be void and of no force or effect.
(f) Notwithstanding anything in these bylaws to the contrary, no candidate for nomination shall be eligible to be seated as a director of the Corporation unless nominated and elected in accordance with Section 2.5 and this Section 2.6.
2.7 Notice of Stockholders’ Meetings. Unless otherwise provided by law, the Certificate of Incorporation or these bylaws, the notice of any meeting of stockholders shall be sent or otherwise given in accordance with Section 8.1 of these bylaws not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. The notice shall specify the place, if any, date and time of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.
2.8 Action by Written Consent in Lieu of a Meeting. The right of the stockholders to act by written consent in lieu of a meeting shall be as set forth in the Certificate of Incorporation.
2.9 Quorum. Unless otherwise provided by law, the Certificate of Incorporation or these bylaws, the holders of a majority in voting power of the stock issued and outstanding and entitled to vote, present in person, or by remote communication, if applicable, or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders. Where a separate vote by class or series is required, the presence in person or by proxy of the holders of a majority in voting power of the outstanding shares of such class or series shall be necessary and sufficient to constitute a quorum with respect to that matter. A quorum, once established at a meeting, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, a quorum is not present or represented at any meeting of the stockholders, then either (i) the person presiding over the meeting or (ii) a majority in voting power of the stockholders, present in person, or by remote communication, if applicable, or represented by proxy, shall have power to recess the meeting or adjourn the meeting from time to time in the manner provided in Section 2.10 of these bylaws until a quorum is present or represented. At any recessed or adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.
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2.10 Adjourned Meeting; Notice. When a meeting is adjourned to another time or place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken or are provided in any other manner permitted by the DGCL. At any adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for determination of stockholders entitled to vote is fixed for the adjourned meeting, the Board shall fix as the record date for determining stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote at the adjourned meeting, and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at such meeting as of the record date so fixed for notice of such adjourned meeting.
2.11 Conduct of Business. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the person presiding over the meeting. The Board may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board, the person presiding over any meeting of stockholders shall have the right and authority to convene and (for any or no reason) to recess and/or adjourn the meeting, to prescribe such rules, regulations and procedures (which need not be in writing) and to do all such acts as, in the judgment of such presiding person, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board or prescribed by the person presiding over the meeting, may include, without limitation, the following: (i) determination of the time of the opening and the closing of the polls for each matter upon which the stockholders will vote at the meeting; (ii) the establishment of an agenda or order of business for the meeting; (iii) rules and procedures for maintaining order at the meeting and the safety of those present (including, without limitation, rules and procedures for removal of disruptive persons from the meeting); (iv) limitations on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as the person presiding over the meeting shall determine; (v) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (vi) limitations on the time allotted to questions or comments by participants. The presiding person at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting (including, without limitation, determinations with respect to the administration and/or interpretation of any of the rules, regulations or procedures of the meeting, whether adopted by the Board or prescribed by the person presiding over the meeting), shall, if the facts warrant, determine and declare to the meeting that a matter of business was not properly brought before the meeting and if such presiding person should so determine, such presiding person shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board or the person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
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2.12 Voting.
Except as may be otherwise provided in the Certificate of Incorporation or the DGCL, each holder of Class A Common Stock, par value $0.0001 per share, of the Corporation (“Class A Common Stock”) shall be entitled to one (1) vote per share of Class A Common Stock held of record by such holder; each holder of Class B Common Stock, par value $0.0001 per share, of the Corporation (“Class B Common Stock”) shall be entitled to ten thousand (10,000) votes per share of Class B Common Stock held of record by such holder; each holder of Class C Common Stock, par value $0.0001 per share, of the Corporation (“Class C Common Stock”) shall be entitled to ten (10) votes per share of Class C Common Stock held of record by such holder; and each holder of any other class or series of capital stock of the Corporation shall be entitled to one (1) vote for each share of capital stock of such class or series held of record by such holder.
Except as otherwise provided by the Certificate of Incorporation, at all duly called or convened meetings of stockholders at which a quorum is present, for the election of directors, a plurality of the votes cast shall be sufficient to elect a director. Unless a different or minimum vote is required by the Certificate of Incorporation, these bylaws, the rules or regulations of any stock exchange applicable to the Corporation, applicable law or pursuant to any regulation applicable to the Corporation or its securities pursuant to which the matter is being submitted to stockholders for approval, in which case such different or minimum vote shall be the required vote on such matter, each matter presented to the stockholders at a duly called or convened meeting at which a quorum is present shall be decided by the affirmative vote of the holders of a majority in voting power of the votes cast (excluding abstentions and broker non-votes) on such matter.
2.13 Record Date for Stockholder Meetings and Other Purposes.
In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall, unless otherwise required by law, not be more than sixty (60) days nor less than ten (10) days before the date of such meeting. If the Board so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be the close of business on the next day preceding the day on which notice is first given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting; and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.
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In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment or any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of capital stock, or for the purposes of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.
2.14 Proxies.
Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law, including Rule 14a-19 promulgated under the Exchange Act, filed in accordance with the procedure established for the meeting, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL. A proxy may be in the form of an electronic transmission which sets forth or is submitted with information from which it can be determined that the transmission was authorized by the stockholder.
Any stockholder directly or indirectly soliciting proxies from other stockholders must use a proxy card color other than white, which shall be reserved for the exclusive use by the Board.
2.15 List of Stockholders Entitled to Vote. The Corporation shall prepare, no later than the tenth (10th) day before each meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting (provided, however, that if the record date for determining the stockholders entitled to vote is less than ten (10) days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the tenth (10th) day before the meeting date), arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. The Corporation shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of ten (10) days ending on the day before the meeting date: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the Corporation’s principal executive office. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. Such list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them. Except as otherwise provided by law, the stock ledger shall be the only evidence as to who are the stockholders entitled to examine the list of stockholders required by this Section 2.15 or to vote in person or by proxy at any meeting of stockholders.
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2.16 Inspectors of Election.
Before any meeting of stockholders, the Corporation shall appoint an inspector or inspectors of election to act at the meeting or its adjournment and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If any person appointed as inspector or any alternate fails to appear or fails or refuses to act, then the person presiding over the meeting shall appoint a person to fill that vacancy.
Such inspectors shall:
(a) determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting and the validity of any proxies and ballots;
(b) count all votes or ballots;
(c) count and tabulate all votes;
(d) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspector(s); and
(e) certify its or their determination of the number of shares represented at the meeting and its or their count of all votes and ballots.
Each inspector, before entering upon the discharge of the duties of inspector, shall take and sign an oath faithfully to execute the duties of inspection with strict impartiality and according to the best of such inspector’s ability. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein. The inspectors of election may appoint such persons to assist them in performing their duties as they determine.
2.17 Delivery to the Corporation. Whenever this Article II requires one or more persons (including a record or beneficial owner of stock) to deliver a document or information to the Corporation or any officer, employee or agent thereof (including any notice, request, questionnaire, revocation, representation or other document or agreement), except as otherwise requested or consented to by the Corporation, such document or information shall be in writing exclusively (and not in an electronic transmission) and shall be delivered exclusively by hand (including, without limitation, overnight courier service) or by certified or registered mail, return receipt requested, and the Corporation shall not be required to accept delivery of any document not in such written form or so delivered. For the avoidance of doubt, the Corporation expressly opts out of Section 116 of the DGCL with respect to the delivery of information and documents (other than a document authorizing another person to act for a stockholder by proxy at a meeting of stockholders pursuant to Section 212 of the DGCL) to the Corporation required by this Article II.
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Article
III
Directors
3.1 Powers. Except as otherwise provided by the Certificate of Incorporation or the DGCL, the business and affairs of the Corporation shall be managed by or under the direction of the Board.
3.2 Number of Directors. Subject to the Certificate of Incorporation, the total number of directors constituting the Board shall be determined from time to time by resolution of the Board. No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.
3.3 Election, Qualification and Term of Office of Directors. Except as provided in Section 3.4 of these bylaws, and subject to the Certificate of Incorporation, each director, including a director elected to fill a vacancy or newly created directorship, shall hold office until the expiration of the term of the class, if any, for which elected and until such director’s successor is elected and qualified or until such director’s earlier death, resignation, disqualification or removal. Directors need not be stockholders. Any class shall consist, as nearly as possible, of one-third of the total number of directors constituting the entire Board. The Certificate of Incorporation or these bylaws may prescribe qualifications for directors.
3.4 Resignation and Vacancies.
Any director may resign at any time upon notice given in writing or by electronic transmission to the Corporation. The resignation shall take effect at the time specified therein or upon the happening of an event specified therein, and if no time or event is specified, at the time of its receipt. When one or more directors so resigns and the resignation is effective at a future date or upon the happening of an event to occur on a future date, a majority of the directors then in office, including those who have so resigned, shall have the power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in Section 3.3.
Unless otherwise provided in the Certificate of Incorporation or these bylaws, vacancies resulting from the death, resignation, disqualification or removal of any director, and newly created directorships resulting from any increase in the authorized number of directors shall be filled only by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Any director appointed in accordance with the preceding sentence shall hold office for the remainder of the term of the class, if any, to which the director is appointed and until such director’s successor shall have been elected and qualified.
3.5 Place of Meetings; Meetings by Telephone.
The Board may hold meetings, both regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the Certificate of Incorporation or these bylaws, members of the Board, or any committee designated by the Board, may participate in a meeting of the Board, or any committee, by means of conference telephone, video conferencing or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting pursuant to this bylaw shall constitute presence in person at the meeting.
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3.6 Regular Meetings. Regular meetings of the Board may be held within or outside the State of Delaware and at such time and at such place as which has been designated by the Board and publicized among all directors, either orally or in writing, by telephone, including a voice-messaging system or other system designed to record and communicate messages, facsimile, telegraph or telex, or by electronic mail or other means of electronic transmission. No further notice shall be required for regular meetings of the Board.
3.7 Special Meetings; Notice.
Special meetings of the Board for any purpose or purposes may be called at any time by the Chairperson of the Board, the Executive Chairman of the Board, the Chief Executive Officer or a majority of the total number of directors constituting the Board.
Notice of the time and place of special meetings shall be:
(a) delivered personally by hand or by courier;
(b) sent by United States first-class mail, postage prepaid;
(c) sent by electronic mail; or
(d) sent by other means of electronic transmission,
directed to each director at that director’s address or electronic mail address, or other address for electronic transmission, as the case may be, as shown on the Corporation’s records.
If the notice is (i) delivered personally by hand or by courier, (ii) sent by electronic mail or (iii) sent by other means of electronic transmission, it shall be delivered or sent at least twenty-four (24) hours before the time of the holding of the meeting. If the notice is sent by U.S. mail, it shall be deposited in the U.S. mail at least one (1) day before the time of the holding of the meeting. The notice need not specify the place of the meeting (if the meeting is to be held at the Corporation’s principal executive office) nor the purpose of the meeting.
3.8 Quorum. At all meetings of the Board, unless otherwise provided by the Certificate of Incorporation, a majority of the total number of directors shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board, except as may be otherwise specifically provided by statute, the Certificate of Incorporation or these bylaws. If a quorum is not present at any meeting of the Board, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.
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3.9 Board Action without a Meeting. Unless otherwise restricted by the Certificate of Incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission. After an action is taken, the consent or consents relating thereto shall be filed with the minutes of the proceedings of the Board, or the committee thereof, in the same paper or electronic form as the minutes are maintained. Such action by written consent or consent by electronic transmission shall have the same force and effect as a unanimous vote of the Board, or committee thereof, as the case may be.
3.10 Fees and Compensation of Directors. Unless otherwise restricted by the Certificate of Incorporation or these bylaws, the Board shall have the authority to fix the compensation, including fees and reimbursement of expenses, of directors for services to the Corporation in any capacity.
Article
IV
Committees
4.1 Committees of Directors. The Board may designate one (1) or more committees, each committee to consist, of one (1) or more of the directors of the Corporation. The Board may designate one (1) or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board or in these bylaws, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval or (ii) adopt, amend or repeal any bylaw of the Corporation.
4.2 Committee Minutes. Each committee shall keep regular minutes of its meetings and report the same to the Board when required.
4.3 Meetings and Actions of Committees.
Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of:
(a) Section 3.5 (place of meetings; meetings by telephone);
(b) Section 3.6 (regular meetings);
(c) Section 3.7 (special meetings; notice);
(d) Section 3.9 (board action without a meeting); and
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(e) Section 7.13 (waiver of notice),
with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the Board and its members. However:
(i) the time of regular meetings of committees may be determined either by resolution of the Board or by resolution of the committee;
(ii) special meetings of committees may also be called by resolution of the Board or the chairperson of the applicable committee; and
(iii) the Board may adopt rules for the governance of any committee to override the provisions that would otherwise apply to the committee pursuant to this Section 4.3, provided that such rules do not violate the provisions of the Certificate of Incorporation or applicable law.
At all meetings of committees, unless otherwise provided by the Certificate of Incorporation, a majority of the total number of the members of the committee shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the committee, except as may be otherwise specifically provided by statute, the Certificate of Incorporation or these bylaws. If a quorum is not present at any meeting of the committee, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.
4.4 Subcommittees. Unless otherwise provided in the Certificate of Incorporation, these bylaws or the resolutions of the Board designating the committee, a committee may create one (1) or more subcommittees, each subcommittee to consist of one (1) or more members of the committee, and delegate to a subcommittee any or all of the powers and authority of the committee.
Article
V
Officers
5.1 Officers. The officers of the Corporation shall include a Chief Executive Officer, a President and a Secretary. The Corporation may also have, at the discretion of the Board, a Chairperson of the Board, an Executive Chairman of the Board, a Vice Chairperson of the Board, a Chief Financial Officer, a Treasurer, one (1) or more Vice Presidents, one (1) or more Assistant Vice Presidents, one (1) or more Assistant Treasurers, one (1) or more Assistant Secretaries and any such other officers as may be appointed in accordance with the provisions of these bylaws. Any number of offices may be held by the same person. No officer need be a stockholder or director of the Corporation.
5.2 Appointment of Officers. The Board shall appoint the officers of the Corporation, except such officers as may be appointed in accordance with the provisions of Section 5.3 of these bylaws.
5.3 Subordinate Officers. The Board may appoint, or empower the Chief Executive Officer or, in the absence of a Chief Executive Officer, the President, to appoint, such other officers and agents as the business of the Corporation may require. Each of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the Board may from time to time determine.
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5.4 Removal and Resignation of Officers.
Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by the Board or, except in the case of an officer chosen by the Board, by any officer upon whom such power of removal may be conferred by the Board.
Any officer may resign at any time by giving written notice to the Corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in the notice of resignation, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party.
5.5 Vacancies in Offices. Any vacancy occurring in any office of the Corporation shall be filled by the Board or as provided in Section 5.2.
5.6 Representation of Shares of Other Corporations. The Chairperson of the Board, the Executive Chairman, the Chief Executive Officer, or the President of this Corporation, or any other person authorized by the Board, the Chief Executive Officer or the President, is authorized to vote, represent and exercise on behalf of this Corporation all rights incident to any and all shares or voting securities of any other corporation or other person standing in the name of this Corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.
5.7 Authority and Duties of Officers. All officers of the Corporation shall respectively have such authority and perform such duties in the management of the business of the Corporation as may be provided herein or designated from time to time by the Board and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board.
5.8 Compensation. The compensation of the officers of the Corporation for their services as such shall be fixed from time to time by or at the direction of the Board. An officer of the Corporation shall not be prevented from receiving compensation by reason of the fact that such officer is also a director of the Corporation.
Article
VI
Records
A stock ledger consisting of one or more records in which the names of all of the Corporation’s stockholders of record, the address and number of shares registered in the name of each such stockholder and all issuances and transfers of stock of the corporation are recorded in accordance with Section 224 of the DGCL shall be administered by or on behalf of the Corporation. Any records administered by or on behalf of the Corporation in the regular course of its business, including its stock ledger, books of account and minute books, may be kept on, or by means of, or be in the form of, any information storage device, or method, or one or more electronic networks or databases (including one or more distributed electronic networks or databases), provided that the records so kept can be converted into clearly legible paper form within a reasonable time and, with respect to the stock ledger, that the records so kept (i) can be used to prepare the list of stockholders specified in Sections 219 and 220 of the DGCL, (ii) record the information specified in Sections 156, 159, 217(a) and 218 of the DGCL and (iii) record transfers of stock as governed by Article 8 of the Uniform Commercial Code as adopted in the State of Delaware.
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Article
VII
General Matters
7.1 Execution of Corporate Contracts and Instruments. The Board, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the Board or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount. Except as provided in Section 2.17 of these bylaws, any document, including, without limitation, any consent, agreement, certificate or instrument, required by the DGCL, the Certificate of Incorporation or these bylaws to be executed by any officer, director, stockholder, employee or agent of the Corporation may be executed using electronic signature to the fullest extent permitted by applicable law. All other contracts, agreements, certificates or instruments to be executed on behalf of the Corporation may be executed using electronic signature to the fullest extent permitted by applicable law.
7.2 Stock Certificates.
The shares of the Corporation shall be represented by certificates, provided that the Board by resolution may provide that some or all of the shares of any class or series of stock of the Corporation shall be uncertificated. Certificates for the shares of stock, if any, shall be in such form as is consistent with the Certificate of Incorporation and applicable law. Every holder of stock represented by a certificate shall be entitled to have a certificate signed by, or in the name of the Corporation by, any two officers authorized to sign stock certificates representing the number of shares registered in certificate form. The Chairperson or Vice Chairperson of the Board, the Executive Chairman, Chief Executive Officer, the President, Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Corporation shall be specifically authorized to sign stock certificates. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.
The Corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, or upon the books and records of the Corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the Corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.
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7.3 Special Designation of Certificates. If the Corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or on the back of the certificate that the Corporation shall issue to represent such class or series of stock (or, in the case of uncertificated shares, set forth in a notice provided pursuant to Section 151 of the DGCL); provided, however, that except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements, there may be set forth on the face of back of the certificate that the Corporation shall issue to represent such class or series of stock (or, in the case of any uncertificated shares, included in the aforementioned notice) a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
7.4 Lost Certificates. The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.
7.5 Shares Without Certificates. The Corporation may adopt a system of issuance, recordation and transfer of its shares of stock by electronic or other means not involving the issuance of certificates, provided the use of such system by the Corporation is permitted in accordance with applicable law.
7.6 Construction; Definitions. Unless the context requires otherwise, the general provisions, rules of construction and definitions in the DGCL shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural and the plural number includes the singular.
7.7 Dividends.
The Board, subject to any restrictions contained in either (i) the DGCL or (ii) the Certificate of Incorporation, may declare and pay dividends upon the shares of its capital stock. Dividends may be paid in cash, in property or in shares of the Corporation’s capital stock.
The Board may set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the Corporation, and meeting contingencies.
7.8 Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board and may be changed by the Board.
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7.9 Seal. The Corporation may adopt a corporate seal, which shall be adopted and which may be altered by the Board. The Corporation may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.
7.10 Transfer of Stock. Shares of the Corporation shall be transferable in the manner prescribed by law and in these bylaws and subject to any transfer restrictions contained in the Certificate of Incorporation. Shares of stock of the Corporation shall be transferred on the books of the Corporation only by the holder of record thereof or by such holder’s attorney duly authorized in writing, upon surrender to the Corporation of the certificate or certificates representing such shares endorsed by the appropriate person or persons (or by delivery of duly executed instructions with respect to uncertificated shares), with such evidence of the authenticity of such endorsement or execution, transfer, authorization and other matters as the Corporation may reasonably require, and accompanied by all necessary stock transfer stamps. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing the names of the persons from and to whom it was transferred. The Corporation shall have power and authority to make such rules and regulations as it may deem necessary or proper concerning the issuance, transfer and registration of certificates for shares of stock of the Corporation.
7.11 Stock Transfer Agreements. The Corporation shall have the power to enter into and perform any agreement with any number of stockholders of any one or more classes or series of stock of the Corporation to restrict the transfer of shares of stock of the Corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.
7.12 Registered Stockholders.
The Corporation:
(a) shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, to vote, to receive notifications and otherwise to exercise all the rights and powers as such owner; and
(b) shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware.
7.13 Waiver of Notice. Whenever notice is required to be given under any provision of the DGCL, the Certificate of Incorporation or these bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a person at a meeting (in person or by remote communication) shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the Certificate of Incorporation or these bylaws.
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Article
VIII
Notice
8.1 Delivery of Notice; Notice by Electronic Transmission.
Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under any provisions of the DGCL, the Certificate of Incorporation or these bylaws may be given in writing directed to the stockholder’s mailing address (or by electronic transmission directed to the stockholder’s electronic mail address, as applicable) as it appears on the records of the Corporation and shall be given (1) if mailed, when the notice is deposited in the U.S. mail, postage prepaid, (2) if delivered by courier service, the earlier of when the notice is received or left at such stockholder’s address or (3) if given by electronic mail, when directed to such stockholder’s electronic mail address unless the stockholder has notified the Corporation in writing or by electronic transmission of an objection to receiving notice by electronic mail. A notice by electronic mail must include a prominent legend that the communication is an important notice regarding the Corporation.
Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under any provision of the DGCL, the Certificate of Incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice or electronic transmission to the Corporation. Notwithstanding the provisions of this paragraph, the Corporation may give a notice by electronic mail in accordance with the first paragraph of this Section 8.1 without obtaining the consent required by this paragraph.
Any notice given pursuant to the preceding paragraph shall be deemed given:
| (i) | if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and |
| (ii) | if by any other form of electronic transmission, when directed to the stockholder. |
Notwithstanding the foregoing, a notice may not be given by an electronic transmission from and after the time that (1) the Corporation is unable to deliver by such electronic transmission two (2) consecutive notices given by the Corporation and (2) such inability becomes known to the Secretary or an Assistant Secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice, provided, however, the inadvertent failure to discover such inability shall not invalidate any meeting or other action.
An affidavit of the Secretary or an Assistant Secretary or of the transfer agent or other agent of the Corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
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Article
IX
Amendments
In furtherance and not in limitation of the powers conferred upon it by the DGCL, the Board is expressly empowered to adopt, amend or repeal the bylaws of the Corporation. The stockholders also shall have the power to adopt, amend or repeal the bylaws of the Corporation by the affirmative vote of the holders of at least sixty-six and two-third percent (66 2/3%) of the voting power of all the then-outstanding shares of capital stock of the Corporation entitled to vote thereon.
Article
X
Definitions
As used in these bylaws, unless the context otherwise requires, the following terms shall have the following meanings:
An “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, including the use of, or participation in, one or more electronic networks or databases (including one or more distributed electronic networks or databases) or electronic mail, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.
An “electronic mail” means an electronic transmission directed to a unique electronic mail address (which electronic mail shall be deemed to include any files attached thereto and any information hyperlinked to a website if such electronic mail includes the contact information of an officer or agent of the Corporation who is available to assist with accessing such files and information).
An “electronic mail address” means a destination, commonly expressed as a string of characters, consisting of a unique user name or mailbox (commonly referred to as the “local part” of the address) and a reference to an internet domain (commonly referred to as the “domain part” of the address), whether or not displayed, to which electronic mail can be sent or delivered.
The term “person” means any individual, general partnership, limited partnership, limited liability company, corporation, trust, business trust, joint stock company, joint venture, unincorporated association, cooperative or association or any other legal entity or organization of whatever nature, and shall include any successor (by merger or otherwise) of such entity.
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Exhibit 10.1
INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT (this “Agreement”) is made and effective as of [●], 2025, by and between American Bitcoin Corp., a Delaware corporation (the “Company”), and [●] (“Indemnitee”).
WHEREAS, it is essential to the Company to retain and attract as directors and/or officers the most capable persons available;
WHEREAS, Indemnitee is a director and/or officer of the Company;
WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other proceedings with claims being asserted against directors and/or officers of public companies;
WHEREAS, the Company’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) requires the Company to indemnify, and provide for the mandatory advancement of expenses to, its directors and officers to the extent and subject to the conditions provided therein, and Indemnitee serves as a director and/or officer of the Company, in part, in reliance on such provisions in the Company’s Certificate of Incorporation;
WHEREAS, the Company has determined that its inability to retain and attract as directors and officers the most capable persons available would be detrimental to the interests of the Company and that the Company therefore should provide such persons with assurances that they will be entitled in the future to indemnification and advancement of expenses and, to the extent applicable, coverage by directors’ and officers’ liability insurance; and
WHEREAS, in recognition of Indemnitee’s need for substantial protection against personal liability, and in order to enhance the likelihood of Indemnitee’s continued service to the Company, and in part to provide Indemnitee with specific contractual assurance that the rights to indemnification and advancement of expenses set forth in the Company’s Certificate of Incorporation will be available to Indemnitee (regardless of, among other things, any amendment to or recission of the applicable provisions of the Certificate of Incorporation, any change in the composition of the Board of Directors, or any Change in Control (each, as defined below)), the Company wishes to provide in this Agreement for the indemnification of, and advancement of expenses to, Indemnitee to the fullest extent (whether partial or complete) permitted by applicable law, on the terms and conditions set forth in this Agreement, and, to the extent that a directors’ and officers’ liability insurance policy is maintained with respect to the Company’s directors and officers, the Company wishes to provide Indemnitee with assurance of the continued coverage of Indemnitee under such directors’ and officers’ liability insurance policy.
NOW, THEREFORE, in consideration of the foregoing, the covenants and agreements contained in this Agreement, and of Indemnitee’s willingness to continue to serve as a director and/or officer of the Company and to serve at the Company’s request as an officer, director, employee, manager, member, partner, tax matters partner, partnership representative, agent, fiduciary, or trustee of, or in any other capacity with, another Person (as defined below) or any employee benefit plan, and intending to be legally bound hereby, the parties hereto agree as follows:
1. Certain Definitions:
(a) Board of Directors: means the Board of Directors of the Company.
(b) Change in Control: means (i) the sale, transfer or other disposition of all or substantially all of the Company’s assets, (ii) any merger, consolidation or other business combination transaction of the Company with or into another Person, other than a transaction in which the holders of at least a majority of the shares of Voting Securities of the Company outstanding immediately prior to such transaction continue to hold (either by such shares remaining outstanding or by their being converted into shares of Voting Securities of the surviving entity) a majority of the total voting power represented by the shares of Voting Securities of the Company (or the surviving entity) outstanding immediately after such transaction or (iii) the direct or indirect acquisition (including by way of a tender or exchange offer) by any Person or Persons acting as a group (other than by Hut 8 Corp. or its affiliates) of beneficial ownership or a right to acquire beneficial ownership of shares representing a majority of the voting power of the then outstanding shares of capital stock of the Company. A Change in Control shall not include a transaction if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction or solely as a result of any person or group of persons ceasing to own a majority of the voting power of the then outstanding shares of capital stock of the Company.
(c) Claim: means any threatened, asserted, pending, or completed civil, criminal, administrative, investigative, or other action, suit, or proceeding of any kind whatsoever, including any arbitration or other alternative dispute resolution mechanism, any appeal of any kind from any of the foregoing, any inquiry or investigation, whether instituted by the Company, any governmental agency or any other party, that Indemnitee in good faith believes could lead to the institution of any action, suit, or proceeding, whether civil, criminal, administrative, investigative, or other.
(d) DGCL: means the General Corporation Law of the State of Delaware.
(e) ERISA: means the Employee Retirement Income Security Act of 1974, as amended.
(f) Exchange Act: means the Securities Exchange Act of 1934, as amended.
(g) Expenses: means all direct and indirect costs, expenses, and other monetary obligations (including, without limitation, attorneys’ fees and disbursements, experts’ fees, court costs, retainers, appeal bond premiums, arbitration costs, arbitrators’ fees, transcript fees, duplicating, printing, and binding costs, as well as telecommunications, postage, and courier charges) paid or actually and reasonably incurred by or on behalf of Indemnitee in connection with investigating, prosecuting, defending, being a witness in, or participating in (including on appeal), or preparing to investigate, prosecute, defend, be a witness in, or participate in, any Claim arising out of, relating to, or resulting from any Indemnifiable Event, and shall include (without limitation) all of the foregoing, including attorneys’ fees and disbursements, incurred by or on behalf of Indemnitee in connection with enforcing Indemnitee’s rights under this Agreement, including preparing and submitting any notices, requests or supporting statements for indemnification, advancement or reimbursement, or any other right provided to Indemnitee by this Agreement (including, without limitation, all such fees or expenses incurred in connection with legal proceedings contemplated by Section 2(d) hereof).
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(h) Indemnifiable Amounts: means (i) any and all liabilities, Expenses, damages, judgments, fines, penalties, ERISA excise taxes, and amounts paid in settlement (including all interest, assessments, penalties and other charges paid or payable in connection with or in respect of such liabilities, Expenses, damages, judgments, fines, penalties, ERISA excise taxes, or amounts paid in settlement) actually and reasonably incurred by or on behalf of Indemnitee in connection with any Claim arising out of, relating to, or resulting from an Indemnifiable Event, and (ii) any liability that an Indemnitee incurs that arises out of, relates to or results from Indemnitee’s acting on behalf of the Company (whether as a fiduciary or otherwise) in connection with the operation, administration, or maintenance of an employee benefit plan or any related trust or funding mechanism (whether such liability is in the form of an excise tax assessed by the United States Internal Revenue Service, a penalty assessed by the Department of Labor, restitution to such a plan or trust or other funding mechanism or to a participant or beneficiary of such plan, trust, or other funding mechanism, or otherwise).
(i) Indemnifiable Event: means any event or occurrence, whether occurring before, on, or after the date of this Agreement, arising out of, relating to, or resulting from the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, employee, manager, member, partner, tax matters partner, partnership representative, trustee, agent, fiduciary, or similar capacity, of a Subsidiary of the Company or another corporation, limited liability company, partnership, joint venture, employee benefit plan, trust, or other entity or enterprise, or by reason of any act or omission by Indemnitee in any such capacity (in each case, regardless of whether or not Indemnitee is acting or serving in any such capacity, or has such status, at the time any Claim is brought or any Indemnifiable Amount is incurred). The term “Company,” where the context requires when used in this Agreement, shall be construed to include each such Subsidiary or other corporation, limited liability company, partnership, joint venture, employee benefit plan, trust, or other entity or enterprise referred to in the immediately preceding sentence.
(j) Independent Legal Counsel: means an attorney or firm of attorneys, selected pursuant to and in accordance with the provisions of Section 3, who is experienced in matters of Delaware corporate law and who, at the time of any determination, shall not have performed services for the Company (or any of its Subsidiaries) or Indemnitee within the preceding three-year period (other than with respect to matters concerning the rights of Indemnitee or any other director or officer of the Company or its Subsidiaries or Affiliates under (i) this Agreement or any similar indemnification agreements, (ii) the Certificate of Incorporation or the Company’s Second Amended and Restated Bylaws (the “Bylaws”), each as amended and then in effect, and (iii) the DGCL and any other applicable law.).
(k) Jointly Indemnifiable Claim: means any Claim for which Indemnitee may be entitled to indemnification from the Company pursuant to this Agreement and from an Other Indemnifying Entity (as defined below) pursuant to applicable law, any indemnification agreement, or the certificate of incorporation, bylaws, partnership agreement, limited liability company agreement, or comparable organizational documents of such Other Indemnifying Entity.
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(l) Other Indemnifying Entity: means any corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other entity or enterprise (other than the Company or any of its wholly owned Subsidiaries), but excluding any insurer under any insurance policy maintained by the Company, from which Indemnitee may be entitled to indemnification and/or advancement of Expenses with respect to any Indemnifiable Amounts for which, in whole or in part, the Company may also have an indemnification or advancement obligation to Indemnitee pursuant to the terms of this Agreement.
(m) Person: means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity, or other entity.
(n) Reviewing Party: means, with respect to any Claim for which Indemnitee is seeking indemnification, (i) the Board of Directors, (ii) any duly appointed committee of the Board of Directors which has been authorized authority by the Board of Directors to make determinations as to indemnification hereunder and who is not a party to, or otherwise involved in (including as a witness), the particular Claim for which Indemnitee is seeking indemnification, or (iii) Independent Legal Counsel.
(o) Subsidiary: means, with respect to any Person, any corporation, partnership, limited liability company or other entity of which such Person owns, directly or indirectly, a majority of the Voting Securities.
(p) Voting Securities: means, with respect to any Person, any securities of such Person that are entitled to vote generally in the election of directors (or members of a comparable governing body) of such Person.
2. Basic Indemnification Arrangement; Advancement of Expenses.
(a) In the event that Indemnitee was, is or becomes subject to, a party to, or a witness or other participant in, or is threatened to be made subject to, a party to, or a witness or other participant in, a Claim by reason of, or arising out of, relating to, or resulting from, in whole or part, an Indemnifiable Event, subject to Section 2(d), the Company shall indemnify Indemnitee, or shall cause Indemnitee to be indemnified, for all Indemnifiable Amounts incurred in connection with such Claim, to the fullest extent permitted by applicable law in effect on the date hereof; provided, however, that, to the extent that any change in applicable law (whether by statute or judicial decision) permits greater indemnification by agreement than would be afforded currently under this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change; provided, further, that no change in applicable law after the date hereof shall have the effect of reducing the benefits available to Indemnitee hereunder based on applicable law as in effect on the date hereof or as such benefits may be expanded or otherwise improved as a result of any other changes to applicable law that become effective after the date hereof but prior to such change. Payments of Indemnifiable Amounts shall be made as soon as practicable following a determination pursuant to Section 2(d), but in any event no later than thirty (30) days after written demand for indemnification is delivered to the Company, unless (and to the extent) a determination is made pursuant to Section 2(d) that Indemnitee is not entitled to indemnification hereunder for such Indemnifiable Amounts.
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(b) If so requested in writing by Indemnitee, the Company shall advance or reimburse Indemnitee, or cause Indemnitee to be advanced or reimbursed (within ten (10) days following the Company’s receipt of such written request), any and all Expenses actually and reasonably incurred by Indemnitee (an “Expense Advance”). The Company shall, in accordance with such written request (but without duplication), pay, or cause to be paid, such Expenses on behalf of Indemnitee, unless Indemnitee shall have elected to pay such Expenses and be reimbursed by the Company for such Expenses, in which case, the Company shall reimburse, or cause to be reimbursed, Indemnitee for such Expenses. To the fullest extent permitted applicable law, Indemnitee’s right to an Expense Advance is absolute and shall not be subject to any prior determination by the Reviewing Party (or any other Person) that Indemnitee has satisfied any applicable standard of conduct. Indemnitee hereby undertakes to repay any and all amounts advanced or reimbursed by the Company as Expense Advances (without interest) if and to the extent it is ultimately determined in accordance with Section 2(d) that Indemnitee is not entitled under this Agreement to be indemnified by the Company in respect thereof. No other form of undertaking shall be required of Indemnitee other than execution of this Agreement. If Indemnitee commences legal proceedings within ninety (90) days after any determination that Indemnitee is not entitled to be indemnified hereunder in the Court of Chancery of the State of Delaware to secure a determination that Indemnitee is entitled to be indemnified pursuant to this Agreement, then Indemnitee shall not be required to reimburse the Company for any Expense Advance unless and until a final, non-appealable, judicial determination is made that Indemnitee is not entitled to indemnification hereunder.
(c) Notwithstanding anything in this Agreement to the contrary, Indemnitee shall not be entitled to indemnification or advancement of Expenses pursuant to this Agreement in connection with any Claim initiated by Indemnitee unless (i) the Company has joined in, or the Board of Directors has authorized or consented to, the initiation of such Claim or (ii) the Claim is brought by Indemnitee to enforce Indemnitee’s rights under this Agreement (including an action pursued by Indemnitee to secure a determination that Indemnitee is entitled to be indemnified pursuant to the terms of this Agreement).
(d) Notwithstanding the foregoing, (i) the obligations of the Company under Section 2(a) shall be subject to the condition that the Reviewing Party shall not have determined (in a written opinion, in any case in which the Independent Legal Counsel is the Reviewing Party pursuant to Section 3 hereof) that Indemnitee is not entitled to be indemnified under applicable law, in whole or in part, and (ii) the obligation of the Company to make an Expense Advance pursuant to Section 2(b) shall be subject to the requirement that, if, when, and to the extent that the Reviewing Party ultimately determines that Indemnitee is not entitled to be indemnified under applicable law, in whole or in part, the Company shall be entitled to be reimbursed by Indemnitee pursuant to the undertaking set forth in Section 2(b) hereof; provided, however, that if the Reviewing Party determines that Indemnitee is not entitled to be indemnified, in whole or in part, under applicable law, Indemnitee shall have the right to commence an action in the Court of Chancery of the State of Delaware to secure a determination as to whether Indemnitee is entitled to be indemnified under the terms of this Agreement or any provision of the Certificate of Incorporation now or hereafter in effect in connection with any Claims arising out of, relating to, or resulting from any Indemnifiable Event, or challenging any determination by the Reviewing Party (or any aspect thereof) in respect of Indemnitee’s right to indemnification hereunder, including the legal or factual bases therefor, in which case any determination made by the Reviewing Party that Indemnitee is not entitled to be indemnified hereunder, in whole or in part, shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final, non-appealable, judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). If there has not been a Change in Control, the Reviewing Party shall be, or shall be designated by, the Board of Directors, and if there has been a Change in Control, the Reviewing Party shall be the Independent Legal Counsel referred to in Section 3. If there has been no determination by the Reviewing Party within thirty (30) days after a written demand for indemnification has been delivered to the Company, Indemnitee shall have the right to commence an action in the Court of Chancery of the State of Delaware seeking a determination of Indemnitee’s right to indemnification hereunder. The Company hereby consents to service of process and to appear in any such action brought by Indemnitee pursuant to this Section 2(d). Subject to the foregoing, any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee.
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3. Change in Control. The Company agrees that, if there is a Change in Control of the Company, then, with respect to all determinations and other matters relating to the rights of Indemnitee to indemnification and Expense Advances under this Agreement or under any provision of the Certificate of Incorporation now or hereafter in effect with respect to any Claims arising out of, relating to, or resulting from Indemnifiable Events, the Company shall seek legal advice only from Independent Legal Counsel selected by the Company and approved by Indemnitee (which approval shall not be unreasonably withheld, delayed or conditioned). Such Independent Legal Counsel, among other things, shall render its written opinion to the Company and Indemnitee as to whether and to what extent Indemnitee is entitled to be indemnified under applicable law with respect to Indemnifiable Amounts arising out of such Claims. The Company agrees to pay, and be solely responsible for, all fees and disbursements of the Independent Legal Counsel in connection with the above and to reimburse and indemnify such Independent Legal Counsel against any and all expenses (including attorneys’ fees), claims, liabilities, and damages arising out of, relating to, or resulting from this Agreement or its engagement or services pursuant to the terms hereof.
4. Indemnification for Additional Expenses. The Company shall indemnify Indemnitee, or cause Indemnitee to be indemnified, against any and all Expenses (including all attorneys’ fees and disbursements) actually and reasonably incurred by Indemnitee in connection with any action brought by Indemnitee pursuant to Section 2(d) hereof seeking a determination as to (a) Indemnitee’s right to indemnification or an Expense Advance pursuant to this Agreement or any provision of the Certificate of Incorporation now or hereafter in effect with respect to any Claims arising out of, relating to, or resulting from Indemnifiable Events and (b) recovery under any directors’ and officers’ liability insurance policies maintained by the Company, regardless of whether Indemnitee is determined to be entitled to such indemnification, Expense Advance, or insurance recovery, as the case may be, and, if requested in writing by Indemnitee, the Company shall advance such Expenses to Indemnitee, subject to and in accordance with Section 2(b) hereof.
5. Partial Indemnity, etc. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for a portion of the Expenses or other Indemnifiable Amounts in respect of a Claim but not for the entire amount thereof, the Company shall indemnify Indemnitee for the portion thereof to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise (including dismissal without prejudice) in defense of any or all Claims arising out of, relating to, or resulting from any Indemnifiable Event, or in defense of any issue or matter therein, Indemnitee shall be indemnified against all Expenses and other Indemnifiable Amounts incurred in connection therewith.
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6. Burden of Proof. In connection with any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the Reviewing Party, or the court, or other finder of fact or appropriate Person shall presume that Indemnitee has satisfied the applicable standard of conduct and is entitled to indemnification, and the burden of proof shall be on the Company to establish by clear and convincing evidence that Indemnitee is not so entitled.
7. Reliance as Safe Harbor. For all purposes of this Agreement, and without creating any presumption as to a lack of good faith, Indemnitee shall be deemed to have acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company if Indemnitee’s actions or omissions to act are taken in good faith reliance upon the records of the Company, including its financial statements, or upon information, opinions, reports, or statements furnished to Indemnitee by the officers or employees of the Company or any of its Subsidiaries in the course of their duties, or by committees of the Board of Directors, or by any other Person (including legal counsel, accountants, and financial advisors) as to matters Indemnitee reasonably believes are within such other Person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Company. In addition, the knowledge and actions, or failures to act, of any director, officer, agent, or employee of the Company shall not be imputed to Indemnitee for all purposes of determining Indemnitee’s right to indemnity hereunder.
8. No Other Presumptions. For purposes of this Agreement, the termination of any Claim by judgment, order, settlement (whether with or without court approval), or conviction, or upon a plea of nolo contendere or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court or other tribunal has determined that indemnification is not permitted by applicable law. In addition, neither the failure of the Reviewing Party to have made a determination as to whether Indemnitee has met any particular standard of conduct or had any particular belief, nor an actual determination by the Reviewing Party that Indemnitee has not met such standard of conduct or did not have such belief, prior to the commencement of legal proceedings by Indemnitee pursuant to Section 2(d) to secure a judicial determination that Indemnitee is entitled to indemnification under this Agreement shall be a defense to Indemnitee’s claim seeking such determination or create a presumption that Indemnitee has not met any particular standard of conduct or did not have any particular belief.
9. Nonexclusivity, etc. The rights of Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the Certificate of Incorporation, the Bylaws, the DGCL, any other applicable law or otherwise. To the extent that there is a conflict or inconsistency between the terms of this Agreement and the Certificate of Incorporation, it is the intent of the parties hereto that Indemnitee shall enjoy the greater benefits regardless of whether contained herein or in the Certificate of Incorporation. No amendment or alteration of the Certificate of Incorporation or any other agreement or instrument shall adversely affect the rights provided to Indemnitee under this Agreement.
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10. Liability Insurance. To the extent the Company maintains an insurance policy or policies providing directors’ and officers’ liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any Company director or officer, as applicable. If the Company has such insurance in effect at the time the Company receives from Indemnitee any notice of the commencement of any Claim arising out of, relating to, or resulting from an Indemnifiable Event for which Indemnitee is entitled to be indemnified hereunder, the Company shall give prompt notice of the commencement of such Claim to the insurers in accordance with the procedures set forth in the applicable policy. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable with respect to Indemnitee arising out of, resulting from or relating to such Claim in accordance with the terms of such policy.
11. Amendments, etc. No supplement, modification, or amendment of this Agreement shall be binding on any party hereto unless executed in writing by or on behalf of each of the Company and Indemnitee. No waiver of any of the provisions of this Agreement shall be binding on any party hereto, unless set forth in a writing executed by such party, nor shall any waiver be deemed or constitute a waiver of any other provisions hereof (whether or not similar), nor shall any such waiver constitute a continuing waiver.
12. Subrogation. In the event of any payment by or on behalf of the Company under this Agreement, except to the extent otherwise provided in Section 14, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents and take all other actions reasonably requested to secure such rights and to enable the Company effectively to bring suit to enforce such rights. The Company shall pay or reimburse Indemnitee for all Expenses actually and reasonably incurred by Indemnitee in connection with such subrogation.
13. No Duplication of Payments. Except to the extent otherwise provided in Section 14, the Company shall not be liable under this Agreement to make any payment to or on behalf of Indemnitee in connection with any Indemnifiable Amounts actually and reasonably incurred by Indemnitee to the extent Indemnitee has otherwise received payment (under any insurance policy or any provision of the Certificate of Incorporation or otherwise) in respect of such Indemnifiable Amounts.
14. Jointly Indemnifiable Claims. Given that certain Jointly Indemnifiable Claims may arise out of, relate to, or result from Indemnitee’s status as both a director or officer of the Company and as a director, officer, employee, manager, member, partner, tax matters partner, partnership representative, trustee, agent, fiduciary, or similar capacity of one or more Other Indemnifying Entities, or Indemnitee’s service in such capacities, the Company acknowledges and agrees that the Company shall be fully and primarily responsible for the payment to Indemnitee in respect of all Indemnifiable Amounts and advancement of Expenses in connection with any such Jointly Indemnifiable Claim, pursuant to and in accordance with the terms of this Agreement, irrespective of any right of recovery Indemnitee may have from such Other Indemnifying Entities. Under no circumstance shall the Company be entitled to any right of subrogation against, or contribution by, such Other Indemnifying Entities, and no right of recovery Indemnitee may have from such Other Indemnifying Entities shall reduce or otherwise alter the rights of Indemnitee or the obligations of the Company hereunder. In the event that any of the Other Indemnifying Entities shall make any payment to Indemnitee in respect of any Indemnifiable Amounts or advancement of Expenses with respect to any Jointly Indemnifiable Claim, the Other Indemnifying Entity making such payment shall be subrogated to the extent of such payment to all rights of recovery of Indemnitee against the Company, and Indemnitee shall execute all documents and take all other actions reasonably requested to secure such rights and to enable each of the Other Indemnifying Entities effectively to bring suit to enforce such rights. Each of the Other Indemnifying Entities shall be third-party beneficiaries with respect to this Section 14, entitled to enforce this Section 14 against the Company as though each such Other Indemnifying Entity were a party to this Agreement.
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15. Notification and Defense of Claims.
(a) Indemnitee shall notify the Company in writing as soon as practicable of any Claim arising out of, relating to, or resulting from an Indemnifiable Event or for which Indemnitee could seek Expense Advances, including a brief description (based upon information then available to Indemnitee) of the nature of, and the facts underlying, and amount of monetary damages sought in connection with, such Claim. The failure by Indemnitee to timely notify the Company hereunder shall not relieve the Company from any liability hereunder, except to the extent of any final, non-appealable, award in respect of a Claim for which Indemnitee’s failure to provide the Company with such timely notice deprived the Company of a reasonable opportunity to participate at its expense in the defense of such Claim.
(b) The Company shall be entitled to participate in the defense of any Claim arising out of, relating to, or resulting from an Indemnifiable Event, or to assume the defense thereof, with counsel chosen by the Company; provided that if Indemnitee believes, after consultation with counsel selected by Indemnitee, that in the event that (i) the use of the counsel chosen by the Company to represent Indemnitee would present such counsel with an actual or potential conflict of interest, (ii) the named parties in any such Claim (including any impleaded parties) include the Company or any Subsidiary of the Company, on the one hand, and Indemnitee, on the other hand, and Indemnitee concludes, after consultation with counsel selected by Indemnitee, that there may be one or more legal defenses available to Indemnitee that are different from or in addition to those available to the Company or any Subsidiary of the Company, or (iii) representation of Indemnitee by such counsel chosen by the Company would be precluded under the applicable standards of professional conduct then prevailing, then Indemnitee shall be entitled to retain separate counsel reasonably satisfactory to the Company (but not more than one law firm, plus, if applicable, one local counsel in any given jurisdiction in respect of any particular Claim) at the Company’s expense. The Company shall not be liable to Indemnitee under this Agreement for any Indemnifiable Amounts comprised of amounts paid in settlement of any Claim effected without the Company’s prior written consent. The Company shall not, without the prior written consent of Indemnitee, effect any settlement of any Claim arising out of, relating to, or resulting from an Indemnifiable Event to which Indemnitee is a party unless such settlement involves solely the payment of money (payment of which Indemnitee has no liability) and includes a complete and unconditional release of Indemnitee from all liability for all Claims arising out of, relating to, or resulting from, or based on the same underlying facts, events and circumstances that are the subject matter of such Claim. Neither the Company nor Indemnitee shall unreasonably withhold, condition, or delay its consent to any proposed settlement; provided that Indemnitee may withhold consent to any settlement that does not provide for such complete and unconditional release of Indemnitee.
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16. Binding Effect, etc. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, assigns (including any direct or indirect successor to the Company by purchase, merger, consolidation or otherwise to all or substantially all of the businesses or assets of the Company and its Subsidiaries), heirs, executors, administrators and personal and legal representatives. This Agreement shall continue in effect with respect to all Indemnifiable Events that occur for so long as Indemnitee continues to serve as a director or officer of the Company or to serve, at the request of the Company, as a director, officer, employee, manager, member, partner, tax matters partner, partnership representative, trustee, agent, fiduciary, or similar capacity, of a Subsidiary of the Company or another corporation, limited liability company, partnership, joint venture, employee benefit plan, trust, or other entity or enterprise, or by reason of any act or omission by Indemnitee in any such capacity (in each case, regardless of whether or not Indemnitee is acting or serving in any such capacity, or has such status, at the time any Claim is brought or any Indemnifiable Amount is incurred). The Company shall take all actions necessary to require and cause any successor (whether direct or indirect by purchase, merger, consolidation, or otherwise) to all or substantially all of the businesses or assets of the Company and its Subsidiaries to assume and agree in writing to perform the Company’s obligations under this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.
17. Severability. The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, illegal, void, or otherwise unenforceable in any respect, and the validity and enforceability of any such provision in every other respect and of all of the other provisions hereof shall not be in any way impaired as a result thereof, and shall remain enforceable to the fullest extent permitted by applicable law.
18. Notices. All notices, requests for indemnification or Expense Advances, consents, waivers and other communications hereunder by either party hereto shall be deemed to be sufficient if set forth in a written document executed by such party and delivered to the other party hereto in person or by a nationally recognized overnight courier or by email, in each case, addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by either party and delivered to the other party in accordance with this Section 18(a):
(a) If to the Company, to:
American Bitcoin Corp.
1101 Brickell Avenue, Suite 1500
Miami, Florida 33131
Email:
Attn: Legal Department
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(b) If to Indemnitee, to the address set forth below Indemnitee’s signature on the signature page hereof.
All such notices, requests for indemnification or Expense Advances, consents, waivers and other communications delivered in accordance with Section 18(a) shall be deemed to have been given or made (i) if delivered in person, upon such delivery, (ii) if sent by overnight courier, the next business day after delivery to such overnight courier and (iii) if sent by email, when sent to the email addresses specified in Section 18(a) (or such other email address as may be specified in a writing delivered to the other party in accordance with Section 18(a)).
19. Headings. The headings of the sections and paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction or interpretation thereof.
20. Execution; Counterparts. This Agreement may be executed electronically (including by DocuSign) or by pdf signature and may be executed in counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same agreement. Only one such counterpart signed by the party against whom enforceability is sought need be produced to evidence the existence of this Agreement.
21. Governing Law; Submission to Jurisdiction. This Agreement and all claims arising out of, relating to or resulting from this Agreement, or the parties’ rights and obligations hereunder, or either party’s compliance with the terms hereof, shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of laws. Each of the parties hereby agrees that any and all disputes, claims and actions arising out of, relating to or resulting from this Agreement, or the parties’ rights and obligations hereunder, or either party’s compliance with the terms hereof, shall be resolved by, and brought in, the Court of Chancery of the State of Delaware, and the parties hereto hereby irrevocably submit to the exclusive jurisdiction of such court over any such dispute, claim and action. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such dispute, claim or action brought in the Court of Chancery of the State of Delaware or any defense of inconvenient forum for the maintenance of such dispute, claim or action. Each of the parties hereto agrees that a judgment in any action brought in the Court of Chancery of the State of Delaware may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
22. Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (A) ARISING UNDER, RELATING TO OR RESULTING FROM THIS AGREEMENT OR (B) THE PARTIES’ PERFORMANCE OF THEIR OBLIGATIONS HEREUNDER AND COMPLIANCE WITH THE TERMS HEREOF, IN EACH CASE, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY THE COURT OF CHANCERY OF THE STATE OF DELAWARE WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH SUCH COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first written above.
| AMERICAN BITCOIN CORP. | |||
| By: | |||
| Name: | |||
| Title: | |||
| [Indemnitee] | |||
| [ADDRESS] | |||
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Exhibit 14.1
AMERICAN
BITCOIN CORP.
CODE OF BUSINESS CONDUCT AND ETHICS
ADOPTED SEPTEMBER 3, 2025
| I. | INTRODUCTION |
At American Bitcoin Corp., we are committed to conducting our business in compliance with the law and the highest standards of ethics and integrity. As part of this commitment, American Bitcoin Corp. requires compliance with this Code of Business Conduct and Ethics (this “Code”) by all directors, officers and other employees (collectively, “you”) of American Bitcoin Corp. and each of its direct and indirect subsidiaries (collectively, “ABTC”, “we”, “us”, “our” or the “Company”). This Code is in addition to ABTC’s other policies, directives and procedures. Any individual violating this Code will be subject to disciplinary action, up to and including termination of employment or other relationship with the Company.
This Code is meant to be a resource to assist you in carrying out our values and achieving our goals. This Code endeavors to address common issues that you may encounter in your employment or service at ABTC, but it cannot address every question that may arise. We are committed to establishing an environment that encourages and allows all ABTC personnel to seek and receive prompt guidance as to questionable conduct so that you do not engage in conduct that is unlawful, unethical or creates a real or perceived conflict with your duties to the Company. If you have questions about this Code or about the best course of action to take in a particular situation, you should seek guidance from the legal department.
| II. | COMPLIANCE WITH LAWS, RULES AND REGULATIONS |
ABTC operates across various legal jurisdictions and regulatory environments. All ABTC directors, officers and other employees must strictly comply with all laws, rules, regulations and standards of the geographic areas where we do business. We expect you to acquire appropriate knowledge of the legal requirements relating to your duties sufficient to enable you to recognize potential issues and to know when to seek advice from the legal department.
| III. | EMPLOYMENT PRACTICES AND WORK ENVIRONMENT |
ABTC is firmly committed to providing equal opportunity in all aspects of employment, fostering a work environment free from unlawful discrimination and harassment, and maintaining a safe and healthy workplace for all employees. We expect you to treat others with courtesy, dignity and respect, and to refrain from any act that is designed to cause, or does cause, illegal discrimination or harassment of any kind.
You are also expected to work in a safe and responsible manner. All employees must comply with all occupational, health and safety laws and internal procedures, including for the reporting of accidents, injuries and unsafe equipment, practices or conditions. Acts or threats of violence will not be tolerated, nor will the use, possession or distribution of illegal drugs or other intoxicants while on Company premises or when conducting Company business.
| IV. | COMPETITION AND FAIR DEALING |
We seek to maintain and grow our business by pursuing a strategy that combines efficient Bitcoin mining, disciplined Bitcoin reserve expansion and focused ecosystem engagement — not through improper or anticompetitive practices. ABTC is committed not only to free competition, but to competition that is fair and ethical. This applies particularly to competitive intelligence gathering and to statements about our offerings and those of our competitors. ABTC prohibits using illegal or unethical means to obtain confidential information from our business partners or competitors. We also prohibit improperly taking advantage of others through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair dealing practice.
If you are unsure of appropriate practices, you should consult the legal department for additional guidance.
| V. | PROTECTING ASSETS AND INFORMATION |
The assets and information we share and you are provided at ABTC help us efficiently carry out our respective duties and make informed business decisions. It is important for you to use these resources appropriately and to ensure they always remain secure.
| A. | Protection and Proper Use of Assets |
Theft, carelessness and waste have a direct impact on ABTC’s profitability. Each director, officer and employee should protect the Company’s assets and ensure their efficient use. All ABTC assets should be only be used in a manner that is consistent with ABTC’s policies and directives or for legitimate business purposes. If you become aware of loss, damage, theft, misuse or waste of assets, or have any questions about your proper use of them, you should consult with the legal department.
Company assets include intellectual property such as patents, trademarks, copyrights and trade secrets. The rights to all intellectual property created with ABTC materials, on ABTC time, at ABTC’s expense or within the scope of your responsibilities at ABTC belong to the Company. The unauthorized use or distribution of ABTC’s intellectual property is not permitted. You should review this Code’s Confidential Information section for further guidance on your obligation to safeguard the Company’s intellectual property from unauthorized disclosure.
| B. | Confidential Information |
One of our most important assets is the information that we generate in the course of business, whether technical, operational, business, financial or otherwise.
You should only disclose the Company’s confidential information if properly authorized or required by law. You must also safeguard confidential information that third parties entrust to us and must abide by any non-disclosure agreements we have with those parties. Your obligation to protect the Company’s confidential information does not end when you leave ABTC. You may not retain, use or disclose any of the Company’s confidential information after your employment or service with ABTC ends.
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Some examples of confidential information include, but are not limited to, strategic plans, processes and procedures, forecasts, operational expertise, mining operations, treasury management strategies, financing strategies and other compilations of information not available to the general public.
| VI. | CONFLICTS OF INTEREST |
All directors, officers and employees should engage in honest and ethical conduct, including avoiding any actual or apparent conflicts of interest. A conflict of interest occurs when a person’s private interest interferes, or even appears to interfere, with the interests of the Company. A conflict of interest situation can arise when you engage in an activity that prevents you from objectively or effectively performing your duties to the Company, such as outside employment or when you make significant personal investments in or pursue business opportunities with ABTC’s competitors or partners. In these and other conflict of interest situations, it is important that you act in ABTC’s best interests, not your own. All directors, officers and employees must comply with the applicable policies on these matters. Directors and officers also must comply with additional rules and should refer to ABTC’s Related Person Transactions Policy for further guidance.
| A. | Duty to Disclose Conflicts of Interest |
You are responsible for assessing your own situation, including your outside activities, investments and business and personal relationships, and promptly disclosing to the legal department any actual, apparent or potential conflicts of interest. If you have questions about a potential conflict, you should discuss your particular situation with the legal department.
| B. | Corporate Opportunities |
Except as otherwise set forth in ABTC’s organizational documents, if you become aware of a business or financial opportunity as part of your work with ABTC, you are not permitted to use any such information or take that opportunity for your own personal gain, and you should not use Company property or information, or your position within the Company, for personal gain. You owe a duty to ABTC to advance its legitimate interests when the opportunity arises and must not compete with ABTC in any manner.
| VII. | IMPROPER PAYMENTS |
As we engage with business partners, government officials and other stakeholders, we earn their trust and business through the same hard work and integrity we apply to all our relationships and activities. We never seek to gain advantages through unfair, unethical or illegal business practices, including improper payments. All directors, officers and employees must comply with the applicable policies on these matters set forth in ABTC’s other policies and procedures.
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| VIII. | POLITICAL ACTIVITIES AND CONTRIBUTIONS |
You must comply with all campaign finance and ethics laws. All directors, officers and employees must comply with the applicable policies on these matters set forth in ABTC’s other corporate policies and procedures.
If you are aware of any conduct which violates ABTC’s policies or applicable law, you must immediately notify the legal department and refrain from participation in such questionable conduct until you are advised that it is allowable. See ABTC’s Whistleblower policy.
| IX. | ACCURACY OF RECORDS AND DISCLOSURES |
Ensuring accurate and complete business and financial records is critically important to ABTC’s ability to make informed business decisions and meet our reporting obligations to external stakeholders. Our business records can include, but are not limited to, financial reports, accounting records, timecards, business plans, environmental reports, accident reports and expense reports. You must follow all policies and procedures, including those related to appropriate record storage and destruction, and are responsible for learning to properly apply the procedures to any books or records that you use or manage. You must never conceal, alter, damage or destroy any Company record and must follow Company instructions to maintain and preserve records in the event of investigation or litigation.
| A. | Proper Accounting and Financial Integrity |
ABTC’s financial accounting system was established to record and control all of the Company’s financial transactions. All Company records must be accurately maintained, and all transactions must be executed only in accordance with management’s general or specific authorization. The Company’s books, records and accounts must accurately and fairly reflect, within our normal system of accounting, all Company transactions, including the acquisition and disposition of ABTC’s assets.
You should never approve or make, on behalf of ABTC, any payment with the intention, understanding or awareness that any part of such payment is to be used for any purpose other than that described by the documents supporting the payment. All payments made by, or on behalf of, the Company must be supported by the appropriate documentation, properly describing their purposes.
All our Company’s assets and liabilities must be recorded in our regular books in accordance with generally accepted accounting procedures. Under no circumstances should there be any unrecorded fund or asset, and you must never knowingly make any improper or inaccurate entry in the Company’s books and records. If you have questions about our records requirements, you should seek appropriate guidance. If you believe that questionable accounting or auditing conduct or practices have occurred or are occurring, you should immediately notify the General Counsel or the Chair of the Audit Committee. For further information, see this Code’s Reporting Illegal and Unethical Behavior section and the Company’s Whistleblower Policy.
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| B. | Public Disclosures |
It is our policy to make full, fair, accurate, timely and understandable disclosure in compliance with all applicable laws and regulations in all reports and documents that ABTC files with, or submits to, the U.S. Securities and Exchange Commission and in all other public communications made by the Company. All directors, officers and employees are required to comply with this policy and to abide by ABTC’s standards, policies and procedures designed to promote compliance with this policy. You may not make public statements on ABTC’s behalf without proper authorization. See ABTC’s Regulation FD and Disclosure Policy.
| X. | INSIDER TRADING |
You may have access to or become aware of material non-public information relating to ABTC or other entities. No director, officer or employee may trade or advise others to trade the Company’s securities while in possession of material non-public information. Using inside information for personal financial benefit or to “tip” others who might make an investment decision on the basis of such information is not only unethical, but a violation of insider trading laws.
It is also illegal for any director, officer or employee to trade in the securities of other entities about which they learn material non-public information through the course of their employment or service with ABTC. If you have questions about the securities laws or the Company’s internal trading policies and procedures, you should refer to our Insider Trading Policy or contact the legal department.
| XI. | COMPLIANCE PROCEDURES |
The legal department is responsible for overseeing our compliance with all applicable laws, regulations, governmental policies, this Code and all other relevant Company policies and procedures. You should contact the legal department for clarification or interpretation of any of such policies or the provisions of this Code.
| A. | Reporting Illegal or Unethical Behavior |
Information about known or suspected violations of any applicable laws, rules or regulations or ABTC policies, including this Code, on the part of any director, officer, employee or other third party such as an independent agent, adjuster, appraiser, supplier, counterparty, partner or vendor must be reported immediately to the legal department or otherwise in accordance with this Code and the Company’s other policies and directives, including the Whistleblower Policy.
| B. | Anti-Retaliation |
ABTC is committed to complying with all applicable laws and regulations to protect its personnel against unlawful discrimination or retaliation in connection with their reporting of, or participating in, investigations involving potential misconduct. If any ABTC personnel believe that they have been subjected to any form of retaliation, including but not limited to harassment, threat, demotion, discharge or discrimination by ABTC or any of its agents for good faith reporting of a compliant or participating in an investigation, we strongly encourage you to notify the General Counsel or a member of the legal department so that the Company may take appropriate corrective action. You may also report retaliation via any of the channels described in ABTC’s Whistleblower Policy.
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Any employee, manager, or supervisor who engages in retaliation will be subject to disciplinary action, up to and including termination of employment.
| C. | Investigations and Outcomes |
All reports of suspected violations will be taken seriously and properly investigated. All directors, officers and employees are required to cooperate fully with any internal investigation into potential violations or misconduct. Based on the nature of the suspected violation, other representatives involved in the investigation may include the Company’s internal audit function, if any, or an independent third party. Following the investigation, the investigation team may, if necessary, recommend corrective actions to the appropriate managers for implementation.
The reporting person’s identity will be kept confidential to the extent practical and appropriate, subject to applicable legal and regulatory requirements. Requests for information by law enforcement officials should be immediately referred to the legal department. See ABTC’s Whistleblower Policy.
| XII. | WAIVERS AND REVISIONS |
Waivers of or exceptions to this Code will be granted only in rare circumstances. Any waiver of this Code for a director or officer, or any amendment of this Code, may only be made by ABTC’s Board of Directors or the appropriate committee of the Board of Directors and will be promptly disclosed in accordance with applicable laws, rules and regulations. All related person transactions must be approved by the Audit Committee in accordance with ABTC’s Related Person Transactions Policy. Waivers for all other employees will be considered by the Chief Executive Officer or Executive Chairman, together with the legal department.
| XIII. | Certification of this code |
Due to the importance of adhering to these principles of business conduct and ethics, ABTC requires directors, officers and employees to submit an annual certification confirming that they have received and read, understood, agree to comply with and abide by the standards and procedures contained in, this Code and our other corporate and governance policies. Abiding by the standards and procedures outlined in this Code and ABTC’s other policies and procedures is a condition of continued employment with ABTC and continued service as a director.
| XIV. | LEGALLY PROTECTED COMMUNICATIONS |
Nothing in this Code shall be interpreted or applied in any way to (i) restrict, prohibit or interfere with (a) any individual lawfully making reports to, or communicating or cooperating with, any government agency or law enforcement entity regarding possible violations of federal law or regulation, based on reasonable belief, in accordance with applicable law, including the provisions and rules promulgated under Section 21F of the U.S. Securities Exchange Act of 1934, as amended, or Section 806 of the Sarbanes-Oxley Act of 2002, or of any other express whistleblower protection provisions of state or federal law or regulation or (b) any individual's right or ability to receive an award from any governmental body for information provided to such governmental body, or (ii) require notification or prior approval by ABTC of any reporting described in clause (i) hereof.
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Exhibit 99.1
American Bitcoin Debuts on Nasdaq as “ABTC”
Differentiated, pure-play Bitcoin accumulation platform is purpose-built to drive Bitcoin-per-share growth with leading scale and efficiency
MIAMI, FL, September 3, 2025 (PR NEWSWIRE) – American Bitcoin Corp. (Nasdaq: ABTC) (“American Bitcoin” or the “Company”), a Bitcoin accumulation platform focused on building America’s Bitcoin infrastructure backbone, today begins trading on the Nasdaq under the ticker symbol “ABTC” following the completion of its stock-for-stock merger with Gryphon Digital Mining, Inc. American Bitcoin delivers institutional-grade exposure to Bitcoin through a differentiated business model that integrates scaled Bitcoin mining operations with disciplined accumulation strategies.
“Today, American Bitcoin becomes a premier public vehicle for investors seeking scalable, singular exposure to the defining asset class of our time,” said Eric Trump, Co-founder and Chief Strategy Officer of American Bitcoin. “Our Nasdaq debut marks a historic milestone in bringing Bitcoin into the core of U.S. capital markets and advancing our mission to make America the undisputed leader of the global Bitcoin economy.”
“American Bitcoin embodies the values that define American strength: freedom, transparency, and independence,” said Donald Trump Jr., stockholder of American Bitcoin. “With our Nasdaq listing, we are elevating this mission onto the global stage, giving investors a vehicle we believe will strengthen the U.S. financial system and help build a more resilient national economy.”
“With the backing of the public markets, we believe American Bitcoin is now positioned to set the standard in Bitcoin accumulation,” said Asher Genoot, Executive Chairman of American Bitcoin and CEO of Hut 8 Corp. (Nasdaq | TSX: HUT) (“Hut 8”), which launched American Bitcoin in 2025 as a majority-owned subsidiary. “By combining Bitcoin mining, opportunistic market purchases, and the backing of Hut 8’s energy and digital infrastructure, we have created a vehicle designed to drive rapid, efficient Bitcoin-per-share growth.”
American Bitcoin Highlights
| ● | Mandate: A Singular Focus on Bitcoin Accumulation. American Bitcoin’s objective is to maximize Bitcoin per share through rapid, efficient Bitcoin accumulation. |
| ● | Business Model: A Multi-Lever Accumulation Strategy. American Bitcoin employs a differentiated, dual accumulation strategy that integrates self-mining operations and opportunistic Bitcoin purchases, which provides the flexibility to respond to market conditions and focus on maximizing return on invested capital. Mining at a significant discount to market price enforces a structural cost advantage over accumulation vehicles without integrated mining operations. |
| ● | Operating Leverage: Infrastructure Access and Cost Efficiency. Through its partnership with Hut 8, American Bitcoin monetizes next-generation ASIC technology and leverages Hut 8’s scaled colocation infrastructure platform to mine Bitcoin without the need to commit significant capital to build and operate proprietary data centers. Shared services are designed to deliver SG&A efficiency, allowing a greater share of capital to be allocated toward scaling exahash and increasing Bitcoin reserves. |
About American Bitcoin
American Bitcoin Corp., a majority-owned subsidiary of Hut 8 Corp., is a Bitcoin accumulation platform focused on building America’s Bitcoin infrastructure platform. The Company delivers institutional-grade exposure to Bitcoin through an industry-first business model that integrates scaled self-mining operations with disciplined accumulation strategies. For more information, visit abtc.com and follow the Company on X at @AmericanBTC.
Cautionary Note Regarding Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder, which statements involve inherent risks and uncertainties. Examples of forward-looking statements, include, but are not limited to, statements relating to the trading of the Company’s stock on Nasdaq, the Company’s Bitcoin accumulation strategy, the ability of the Company to mine Bitcoin efficiently and below market prices, the Company’s relationship with Hut 8 and changes in the price of Bitcoin.
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 the Company as of the date of this press release, 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, including, but not limited to: the price of Bitcoin and concentration of Bitcoin holdings; failure to grow hashrate; the purchase of miners; competition from other methods of investing in Bitcoin; uncertainty in the development and acceptance of the Bitcoin network; reliance on third-party mining pool service providers; hedging transactions; Bitcoin halving events; failure to realize the anticipated benefits of the merger transactions; dependence on Hut 8; liquidity constraints and failure to raise additional capital; failure of critical systems; competition from current and future competitors; changes in leasing arrangements; hazards and operational risks; electrical power requirements; geopolitical, social, economic, and other events and circumstances; cybersecurity threats and breaches; Internet-related disruptions; dependence on key personnel; having a limited operating history; rapidly changing technology; predicting facility requirements; acquisitions, strategic alliances or joint ventures; operating and expanding internationally; legal, regulatory, governmental, and technological uncertainties; physical risks related to climate change; involvement in legal proceedings; stock price volatility; the Company’s multi-class capital structure and status as a controlled company; and other factors that may affect the future business, results, financial position and prospects of the Company. Additional factors that could cause results to differ materially from those described above can be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, the proxy statement/prospectus filed by the Company with the U.S. Securities and Exchange Commission (the “SEC”) on July 31, 2025, in the Company’s Current Report on Form 8-K filed with the SEC on September 3, 2025 and in other documents filed by the Company from time to time with the SEC.
American Bitcoin Corp. Investor Relations
ir@americanbtc.com
American Bitcoin Corp. Public Relations
media@americanbtc.com
Exhibit 99.2
ABTC 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 American Bitcoin Corp., a Delaware corporation (“ABTC”), should be read together with the consolidated condensed and combined financial statements and the related notes of ABTC and the other financial information included in the Exhibits to the Current Report on Form 8-K to which this Exhibit is attached (the “Current Report”). This discussion contains forward-looking statements that involve risks and uncertainties. ABTC’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 the Exhibits to the Current Report. See “Cautionary Note Regarding Forward-Looking Statements” in the Current Report. ABTC’s historical results are not necessarily indicative of the results that may be expected for any period in the future.
Overview
ABTC 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. ABTC did not historically operate as a standalone company. Unless otherwise indicated, ABTC’s results of operations prior to April 1, 2025 reflected herein refer to the Bitcoin mining operations of Hut 8 Corp., a Delaware corporation (“Hut 8” and including its consolidated subsidiaries, “Parent”), represented by the “Bitcoin mining” sub-segment of Hut 8’s “Compute” segment. See “⸻Basis of Presentation” below.
ABTC, formerly known as ADC, was incorporated in the state of Delaware in November 2024. On March 31, 2025, Hut 8, ADC, and the stockholders of ADC entered into a Contribution and Stock Purchase Agreement (the “Contribution Agreement”), pursuant to which Hut 8 contributed to ADC substantially all of Hut 8’s wholly-owned Bitcoin miners, representing the business of ABTC, 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 “Contributions”). In connection with the Contributions, ADC was renamed American Bitcoin Corp. and became a majority-owned subsidiary of Hut 8.
In connection with the Contributions, Hut 8 and ABTC entered into the MMSA and the MCSA (each, as defined below) providing for Hut 8 and its personnel to perform day-to-day commercial and operational management services and Bitcoin mining colocation services to ABTC, respectively, in each case on an exclusive basis for so long as such agreements remain in effect. Hut 8 and ABTC also entered into the Shared Services Agreement, pursuant to which Hut 8 and its personnel would provide back-office support services to ABTC and a Put Option Agreement, pursuant to which Hut 8 has the right to sell to ABTC any Bitcoin miners purchased by Hut 8 under an agreement it has with Bitmain Technologies Georgia Limited (“Bitmain Georgia”) 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. On March 31, 2025, through the Contributions, ABTC became a majority-owned subsidiary of Hut 8.
In May 2025, ABTC entered into an Agreement and Plan of Merger with Gryphon Digital Mining, Inc. (Nasdaq: GRYP) (“Gryphon”), GDM Merger Sub I Inc. and GDM Merger Sub II LLC, pursuant to which Gryphon will acquire ABTC in a stock-for-stock merger transaction (the “ABTC Merger”). At the closing of the ABTC Merger, holders of ABTC capital stock will receive newly issued stock representing, in the aggregate, approximately 98% of the fully diluted outstanding stock of Gryphon as of immediately following the ABTC Merger. Upon the completion of the ABTC Merger, Gryphon is expected to reclassify its common stock as Class A common stock and create two new classes of common stock, Class B common stock and Class C common stock, be renamed “American Bitcoin Corp,” and trade on the Nasdaq Capital Market under the ticker symbol “ABTC.” The ABTC Merger is expected to close in early September 2025, subject to certain approvals and closing conditions.
On June 27, 2025, ABTC issued and sold 11,002,954 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 period from July 1, 2025 to September 2, 2025, ABTC used $205.6 million of these proceeds to purchase approximately 1,726 Bitcoin, at a weighted average price of approximately $119,120 per Bitcoin, to expand its strategic Bitcoin reserve.
On August 5, 2025, pursuant to the Put Option Agreement, Hut 8 assigned its option to purchase the Bitmain Miners to ABTC. 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 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, ABTC purchased 16,299 of the Bitmain Miners, representing a total of approximately 14.02 EH/s, for a total purchase price of approximately $314.0 million, paid through the pledge of Bitcoin at a mutually agreed upon fixed price. Such purchase price was reduced by the application of a deposit and certain expenses of approximately $46.0 million previously paid to Bitmain Georgia by Hut 8 and which ABTC has agreed to repay to Hut 8 on or prior to December 31, 2025. Pursuant to the ABTC Bitmain Purchase Agreement, the remaining Bitmain Miners must be purchased by ABTC on or before October 5, 2025, and may be purchased with cash and/or by pledging additional Bitcoin. The Bitcoin pledged under the ABTC Bitmain Purchase Agreement has a redemption period of 24 months from each pledge date.
As of September 1, 2025, ABTC had accumulated approximately 2,443 Bitcoin in reserve, of which approximately 2,234 Bitcoin were pledged to Bitmain Georgia, and owned over 76,000 Bitcoin miners with a cumulative hashrate of approximately 24.2 EH/s and weighted average fleet efficiency of approximately 16.4 J/TH.
Basis of Presentation
Prior to effectuating the Contributions on March 31, 2025, ABTC’s operations were historically operated as the “Bitcoin mining” sub-segment of Hut 8’s “Compute” segment and not as a standalone company. ABTC’s condensed and combined financial statements included in the Exhibits to the Current Report, representing the historical assets, liabilities, operations and cash flows directly attributable to ABTC, have been prepared on a carve-out basis through the use of a management approach from Hut 8’s consolidated financial statements and accounting records and are presented on a stand-alone basis as if the operations have been conducted independently from Hut 8. Historically, separate financial statements have not been prepared for ABTC and it has not operated as a standalone business from Hut 8. ABTC’s condensed and combined financial statements included in the Exhibits to the Current Report have been prepared in accordance with generally accepted accounting principles, in the United States (“U.S. GAAP”). Following the Contributions on March 31, 2025, ABTC began operating as a standalone entity with its own accounting and financial records. ABTC’s condensed and combined balance sheet as of June 30, 2025 reflects the assets and liabilities that ABTC directly owns or is legally obligated to satisfy post-Contributions. Following the effectiveness of the Contributions on March 31, 2025, ABTC’s results of operations are the results directly attributed to its standalone operations rather than the Bitcoin mining operations of Hut 8.
Prior to effectuating the Contributions on March 31, 2025, the revenues and costs as well as assets and liabilities directly associated with what was historically Hut 8’s Bitcoin mining activities were included in ABTC’s condensed and combined financial statements included in the Exhibits to the Current Report, including Hut 8’s strategic Bitcoin reserve. However, upon the effectiveness of the Contributions on March 31, 2025, Hut 8 retained its strategic Bitcoin reserve and none of the Bitcoin were transferred to ABTC.
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Prior to effectuating the Contributions on March 31, 2025, additional costs allocated to ABTC included 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 share-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 that the assumptions underlying ABTC’s condensed and combined financial statements included in the Exhibits to the Current Report, 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 ABTC and may not reflect its results had ABTC been a standalone company during the periods presented. Actual costs that might have been incurred had ABTC been a standalone company would depend on a number of factors, including the organizational structure, what corporate functions ABTC might have performed directly or outsourced, and strategic decisions that ABTC 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 ABTC will incur in the future or would have incurred if ABTC had obtained these services from a third party.
Prior to effectuating the Contributions on March 31, 2025, all intracompany transactions within ABTC had been eliminated. All intercompany transactions between ABTC and Hut 8 were considered to be effectively settled in the financial statements at the time the transactions were recorded. The total net effect of these intercompany transactions were considered to be settled before the close of the Contributions on March 31, 2025, and are reflected in ABTC’s condensed and combined statement of cash flows within financing activities and in the condensed balance sheets as net Parent investment. On March 31, 2025, the total net Parent investment was settled. Subsequent to March 31, 2025, all intercompany transactions between ABTC and Hut 8 under the Master Management Services Agreement (the “MMSA”) and Master Colocation Services Agreement (the “MCSA”), each entered into on March 31, 2025, were reflected in ABTC’s financial statements.
Prior to effectuating the Contributions on March 31, 2025, ABTC’s equity balance in its condensed and combined financial statements included in the Exhibits to the Current Report represent the excess assets less total liabilities. Net Parent investment was primarily impacted by contributions from Hut 8, which were the result of net funding provided by or distributed to Hut 8. Subsequent to March 31, 2025, ABTC recorded and tracked all the transactions related to equity separate as on a standalone basis.
Prior to effectuating the Contributions on March 31, 2025, cash was managed through bank accounts controlled and maintained by Hut 8. ABTC 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 Hut 8 was presented within net Parent investment on the condensed and combined balance sheets. Subsequent to March 31, 2025, ABTC set up its own legally separate bank accounts to directly settle its liabilities and to manage its own cash.
Prior to effectuating the Contributions on March 31, 2025, ABTC was not a co-obligor on Hut 8’s third-party, long-term debt obligations nor was ABTC expected to pay any portion of Hut 8’s third-party long-term debt. However, proceeds from Hut 8’s third-party debts were used to finance ABTC’s purchase of Bitcoin miners or directly used for Bitcoin mining-related activities and were included in ABTC’s condensed and combined financial statements included in the Exhibits to the Current Report. While ABTC is not a legal obligor, certain Bitcoin mining assets of the ABTC were pledged as collateral as disclosed in the notes to ABTC’s unaudited condensed and combined financial statements included in the Exhibits to the Current Report. Following the effectiveness of the Contributions on March 31, 2025, ABTC was no longer connected to any Hut 8’s third-party debt obligations.
References in this section to ABTC activity prior to April 1, 2025 refer to the historical operations conducted through the “Bitcoin mining” sub-segment of Hut 8’s or USBTC’s “Compute” segment, as applicable.
3
Bitcoin Mining
ABTC 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. ABTC 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 June 30, 2025, ABTC mined Bitcoin at three sites:
| ● | Alpha (Niagara Falls, New York); | |
| ● | Medicine Hat (Medicine Hat, Alberta); and | |
| ● | Salt Creek (Orla, Texas). |
Until April 30, 2024, ABTC also had Bitcoin mining operations hosted at sites in Kearney, Nebraska and Granbury, Texas. ABTC 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, ABTC’s mining activity was reduced due to a planned fleet upgrade, which was completed on April 4, 2025. During the three months ended June 30, 2025, the fleet upgrade resulted in higher efficiency Antminer S21+ miners, which improved Bitcoin Mining operations.
On April 1, 2025, pursuant to the MCSA and MMSA, ABTC entered into service orders with Hut 8 to host its Bitcoin miners at each of the three sites listed above, Alpha, Medicine Hat and Salt Creek. ABTC subsequently entered into a service order with Hut 8 to host additional Bitcoin miners at Hut 8’s Vega site, starting in August 2025.
Key Factors Affecting ABTC’s Performance
Price of Bitcoin
ABTC’s business is heavily dependent on the price of Bitcoin, which is traded globally and has historically experienced significant volatility. ABTC generates revenue from Bitcoin rewards that it earns through third-party mining pool operators. ABTC may also acquire Bitcoin through at-market purchases to further build its strategic reserve. ABTC adopted ASU 2023-08, effective January 1, 2022. Under ASU 2023-08, Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets, 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 ABTC’s results of operations.
Bitcoin network difficulty and hashrate
ABTC’s business is not only impacted by the volatility in Bitcoin prices, but also by increases in the competition for Bitcoin production. This increased competition results from growth in network hashrate, driven by 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 ABTC 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.
4
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. These events are referred to as halving events. This reduction in reward spreads out the release of Bitcoin over a long period of time as fewer Bitcoin are mined with each halving. Bitcoin halving events impact the number of Bitcoin ABTC mines which, in turn, may have a potential impact on ABTC’s 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 ABTC’s cost to mine a Bitcoin. Power costs can be highly volatile and sensitive to various factors outside of ABTC’s control. ABTC is subject to variable power prices and market rate fluctuations through its MCSA with Hut 8, through which power costs are incurred as a pass-through expense. Increased power costs impact the profitability of ABTC’s Bitcoin mining operations. See “Risk Factors—We are subject to risks associated with our need for significant electrical power” in Exhibit 99.4 to the Current Report.
Non-GAAP Financial Measures
In addition to ABTC’s results determined in accordance with U.S. GAAP, ABTC relies on Adjusted EBITDA to evaluate its business, measure performance, and make strategic decisions. Adjusted EBITDA is a non-GAAP financial measure. ABTC defines Adjusted EBITDA as net income (loss), adjusted for the impacts of interest expense, income tax provision or benefit, depreciation and amortization, gain or loss on derivatives, the removal of non-recurring transactions, gain or loss on sale of property and equipment, loss from discontinued operations, and stock-based compensation expense in the periods presented. You are encouraged to evaluate each of these adjustments and the reasons ABTC’s Board and management team consider them appropriate for supplemental analysis.
ABTC’s Board and management team use Adjusted EBITDA to assess its financial performance as it allows them to compare its operating performance on a consistent basis across periods by removing the effects of its 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 U.S. GAAP measure most directly comparable to Adjusted EBITDA. In evaluating Adjusted EBITDA, you should be aware that in the future ABTC may incur expenses that are the same as or similar to some of the adjustments in such presentation. ABTC’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 ABTC 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 ABTC’s results as reported under U.S. GAAP. Because Adjusted EBITDA may be defined differently by other companies in ABTC’s industry, ABTC’s 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 ABTC’s most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, please see “—Results of Operations” below.
5
Results of Operations
Three Months Ended June 30, 2025 and 2024
| Three Months Ended | ||||||||||||
| June 30, | Increase | |||||||||||
| (in USD thousands) | 2025 | 2024 | (Decrease) | |||||||||
| Revenue | $ | 30,285 | $ | 13,913 | $ | 16,372 | ||||||
| Cost of revenue (exclusive of depreciation and amortization shown below) | 15,337 | 11,638 | 3,699 | |||||||||
| Operating expenses (income): | ||||||||||||
| Depreciation and amortization | 9,951 | 6,353 | 3,598 | |||||||||
| General and administrative expenses | 3,642 | 7,023 | (3,381 | ) | ||||||||
| (Gains) losses on digital assets | (3,037 | ) | 71,842 | (74,879 | ) | |||||||
| Total operating expenses (income) | 10,556 | 85,218 | (74,662 | ) | ||||||||
| Operating income (loss) | 4,392 | (82,943 | ) | 87,335 | ||||||||
| Other income (expense): | ||||||||||||
| Interest expense | — | (2,565 | ) | 2,565 | ||||||||
| Gain on derivatives | — | 17,219 | (17,219 | ) | ||||||||
| Total other income | — | 14,654 | (14,654 | ) | ||||||||
| Income (loss) from continuing operations before taxes | 4,392 | (68,289 | ) | 72,681 | ||||||||
| Income tax (provision) benefit | (961 | ) | 8,490 | (9,451 | ) | |||||||
| Net income (loss) from continuing operations | $ | 3,431 | $ | (59,799 | ) | $ | 63,230 | |||||
| Loss from discontinued operations (net of income tax of nil and $0.5 million, respectively) | — | (1,262 | ) | 1,262 | ||||||||
| Net income (loss) | $ | 3,431 | $ | (61,061 | ) | $ | 64,492 | |||||
| Other comprehensive (loss) income: | ||||||||||||
| Foreign currency translation adjustments | — | (8,204 | ) | 8,204 | ||||||||
| Total comprehensive income (loss) | $ | 3,431 | $ | (69,265 | ) | $ | 72,696 | |||||
Adjusted EBITDA reconciliation:
| Three Months Ended | ||||||||||||
| June 30, | Increase | |||||||||||
| (in USD thousands) | 2025 | 2024 | (Decrease) | |||||||||
| Net income (loss) | $ | 3,431 | $ | (61,061 | ) | $ | 64,492 | |||||
| Interest expense | — | 2,565 | (2,565 | ) | ||||||||
| Income tax (benefit) provision | 961 | (8,490 | ) | 9,451 | ||||||||
| Depreciation and amortization | 9,951 | 6,353 | 3,598 | |||||||||
| Gain on derivatives | — | (17,219 | ) | 17,219 | ||||||||
| Non-recurring transactions (1) | 857 | 1,675 | (818 | ) | ||||||||
| Loss from discontinued operations (net of income tax of nil and $0.5 million, respectively) | — | 1,262 | (1,262 | ) | ||||||||
| Stock-based compensation expense | — | 2,453 | (2,453 | ) | ||||||||
| Adjusted EBITDA | $ | 15,200 | $ | (72,462 | ) | $ | 87,662 | |||||
| (1) | Non-recurring transactions for the three months ended June 30, 2025 represent approximately $0.9 million of ABTC related transaction costs. Non-recurring transactions for the three months ended June 30, 2024 represent approximately $1.5 million of miner relocation costs and $0.2 million of restructuring costs. |
6
Revenue
Revenue was $30.3 million and $13.9 million for the three months ended June 30, 2025 and 2024, respectively. This $16.4 million increase was primarily driven by increased mining efficiencies at the Medicine Hat and Salt Creek sites as a result of ABTC’s fleet upgrade, which involved the installation of higher-efficiency machines. The fleet upgrade led to an increase in the number of Bitcoin mined (308 Bitcoin mined during the three months ended June 30, 2025, versus 212 Bitcoin mined during the three months ended June 30, 2024). Additionally, there was an increase in the average revenue per Bitcoin mined from $65,731 to $98,425 due to an increase in the price of Bitcoin.
Cost of revenue
Cost of revenue was $15.3 million and $11.6 million for the three months ended June 30, 2025 and 2024, respectively. This $3.7 million increase was primarily driven by the increased uptime of miners and an increase in the cost per megawatt hour of power from $32.76 to $41.91.
Depreciation and amortization
Depreciation and amortization expense was $10.0 million and $6.4 million for the three months ended June 30, 2025 and 2024, respectively. The $3.6 million increase was primarily driven by increased depreciation due to ABTC’s fleet upgrade resulting in a larger depreciable asset base.
General and administrative expenses
General and administrative (“G&A”) expenses were $3.6 million and $7.0 million for the three months ended June 30, 2025 and 2024, respectively. The $3.4 million decrease in G&A expenses was primarily driven by a $2.5 decrease in stock-based compensation expense and an overall decrease in G&A expenses resulting from savings realized from the Shared Services Agreement with Hut 8, which began on April 1, 2025.
(Gains) losses on digital assets
Gains on digital assets were $3.0 million for the three months ended June 30, 2025, compared to losses on digital assets of $71.8 million for the three months ended June 30, 2024. On March 31, 2025, in connection with the Contributions, Hut 8’s strategic Bitcoin reserve remained with Parent. Therefore, immediately following the effectuation of the Contributions on March 31, 2025, ABTC had no Bitcoin in reserve. Starting April 1, 2025, ABTC began to build its own strategic Bitcoin reserve. The number of Bitcoin attributable to the quarter ended June 30, 2025 was 404 under ABTC as a standalone entity compared to 9,102 attributable to the quarter ended June 30, 2024. The gains on digital assets for the three months ended June 30, 2025 were due to the increase in Bitcoin price from approximately $82,534 as of March 31, 2025, to approximately $107,173 as of June 30, 2025. In contrast, the price of Bitcoin as of March 31, 2024, of approximately $71,289 decreased to approximately $62,668 as of June 30, 2024.
Other income
Other income was nil for the three months ended June 30, 2025, compared to other income of $14.6 million for the three months ended June 30, 2024. The $14.6 million of other income was comprised of a $17.2 million gain on derivatives related to ABTC’s Bitcoin redemption option and call options, which was partially offset by $2.6 million of interest expense for the three months ended June 30, 2024, compared to no other income for the three months ended June 30, 2025 as ABTC had no debt or derivatives in the period.
Income tax (provision) benefit
ABTC’s income tax provision was $1.0 million for the three months ended June 30, 2025, compared to an income tax benefit of $8.5 million for the three months ended June 30, 2024. This $9.5 million increase was primarily due to deferred taxes related to the gains on digital assets for the three months ended June 30, 2025.
7
Results of Operations
Six Months Ended June 30, 2025 and 2024
| Six Months Ended | ||||||||||||
| June 30, | Increase | |||||||||||
| (in USD thousands) | 2025 | 2024 | (Decrease) | |||||||||
| Revenue | $ | 42,623 | $ | 44,270 | $ | (1,647 | ) | |||||
| Cost of revenue (exclusive of depreciation and amortization shown below) | 26,988 | 28,448 | (1,460 | ) | ||||||||
| Operating expenses (income): | ||||||||||||
| Depreciation and amortization | 16,375 | 13,478 | 2,897 | |||||||||
| General and administrative expenses | 18,010 | 18,829 | (819 | ) | ||||||||
| Losses (gains) on digital assets | 109,357 | (202,698 | ) | 312,055 | ||||||||
| Loss on sale of property and equipment | 2,454 | — | 2,454 | |||||||||
| Total operating expenses (income) | 146,196 | (170,391 | ) | 316,587 | ||||||||
| Operating (loss) income | (130,561 | ) | 186,213 | (316,774 | ) | |||||||
| Other income (expense): | ||||||||||||
| Interest expense | — | (3,861 | ) | 3,861 | ||||||||
| Gain on derivatives | 20,862 | 17,219 | 3,643 | |||||||||
| Total other income | 20,862 | 13,358 | 7,504 | |||||||||
| (Loss) income from continuing operations before taxes | (109,699 | ) | 199,571 | (309,270 | ) | |||||||
| Income tax benefit (provision) | 12,507 | (25,406 | ) | 37,913 | ||||||||
| Net (loss) income from continuing operations | $ | (97,192 | ) | $ | 174,165 | $ | (271,357 | ) | ||||
| Loss from discontinued operations (net of income tax of nil and $1.6 million, respectively) | — | (4,816 | ) | 4,816 | ||||||||
| Net (loss) income | $ | (97,192 | ) | $ | 169,349 | $ | (266,541 | ) | ||||
| Other comprehensive (loss) income: | ||||||||||||
| Foreign currency translation adjustments | 4,467 | (23,341 | ) | 27,808 | ||||||||
| Total comprehensive (loss) income | $ | (92,725 | ) | $ | 146,008 | $ | (238,733 | ) | ||||
Adjusted EBITDA reconciliation:
| Six Months Ended | ||||||||||||
| June 30, | Increase | |||||||||||
| (in USD thousands) | 2025 | 2024 | (Decrease) | |||||||||
| Net (loss) income | $ | (97,192 | ) | $ | 169,349 | $ | (266,541 | ) | ||||
| Interest expense | — | 3,861 | (3,861 | ) | ||||||||
| Income tax (benefit) provision | (12,507 | ) | 25,406 | (37,913 | ) | |||||||
| Depreciation and amortization | 16,375 | 13,477 | 2,898 | |||||||||
| Loss on sale of property and equipment | 2,454 | — | 2,454 | |||||||||
| Gain on derivatives | (20,862 | ) | (17,219 | ) | (3,643 | ) | ||||||
| Non-recurring transactions (1) | 2,239 | 2,411 | (172 | ) | ||||||||
| Loss from discontinued operations (net of income tax of nil and $1.6 million, respectively) | — | 4,816 | (4,816 | ) | ||||||||
| Stock-based compensation expense | 2,145 | 5,092 | (2,947 | ) | ||||||||
| Adjusted EBITDA | $ | (107,348 | ) | $ | 207,193 | $ | (314,541 | ) | ||||
| (1) | Non-recurring transactions for the six months ended June 30, 2025 represented approximately $2.2 million of ABTC related transaction costs. Non-recurring transactions for the six months ended June 30, 2024 represented approximately $1.5 million of miner relocation costs and $0.9 million of restructuring costs. |
8
Revenue
Revenue was $42.6 million and $44.3 million for the six months ended June 30, 2025 and 2024, respectively. This $1.7 million decrease was primarily driven by a decrease in Bitcoin mined (443 Bitcoin mined during the six months ended June 30, 2025, versus 803 Bitcoin mined during the six months ended June 30, 2024). The decrease in Bitcoin mined was due to reduced uptime at the Medicine Hat and Salt Creek sites during February and March 2025 in order to complete the fleet upgrade. The decrease was also due to an increase in network difficulty and the halving event in April 2024. These decreases in Bitcoin mining revenue were partially offset by an increase in the average revenue per Bitcoin mined from $55,105 to $96,321 due to an increase in the price of Bitcoin.
Cost of revenue
Cost of revenue was $27.0 million and $28.4 million for the six months ended June 30, 2025 and 2024, respectively. This $1.4 million decrease was primarily driven by the termination of the third-party hosting agreement at the Kearney and Granbury sites in March 2024, which had a higher variable hosting fee, as well as reduced uptime of the miners at the Medicine Hat and Salt Creek sites in order to complete the fleet upgrade.
Depreciation and amortization
Depreciation and amortization expense was $16.4 million and $13.5 million for the six months ended June 30, 2025 and 2024, respectively. The $2.9 million increase was primarily driven by increased depreciation due to the fleet upgrade resulting in a higher depreciable asset base.
General and administrative expenses
G&A expenses were $18.0 million and $18.8 million for the six months ended June 30, 2025 and 2024, respectively. The $0.8 million decrease in G&A expenses was driven by an overall decrease in G&A expenses resulting from savings realized from the Shared Services Agreement with Hut 8, which began on April 1, 2025.
Loss (gains) on digital assets
Loss on digital assets was $109.4 million for the six months ended June 30, 2025, compared to gains on digital assets of $202.7 million for the six months ended June 30, 2024. On March 31, 2025, in connection with the Contributions, Hut 8’s strategic Bitcoin reserve remained with Parent. Therefore, immediately following the effectuation of the Contributions on March 31, 2025, ABTC had no Bitcoin in reserve. Starting April 1, 2025, ABTC began to build its own strategic Bitcoin reserve. The loss on digital assets for the six months ended June 30, 2025 was primarily due this decrease in Bitcoin held by ABTC (10,171 Bitcoin held as of December 31, 2024 compared to 404 Bitcoin held as of June 30, 2025). This was slightly offset by increased Bitcoin prices from approximately $93,354 as of December 31, 2024 to approximately $107,173 as of June 30, 2025. In contrast, gains of $202.7 million for the six months ended June 30, 2024, were due to the increase in the price of Bitcoin. The price of Bitcoin as of December 31, 2023, of approximately $42,288 increased to approximately $62,668 as of June 30, 2024.
Other income
Other income was $20.9 million and $13.4 million for the six months ended June 30, 2025 and 2024, respectively. This $7.5 million increase was primarily driven by an increase of $3.6 million in gain on derivatives related to the Bitcoin redemption option and call options and a decrease of $3.6 million in interest expense due to ABTC no longer incurring interest expense after March 31, 2025, as a result of the Contributions.
Income tax benefit (provision)
Income tax benefit was $12.5 million for the six months ended June 30, 2025, compared to an income tax provision of $25.4 million for the six months ended June 30, 2024. The decrease in income tax provision was primarily due to deferred taxes related to the losses on digital assets for the six months ended June 30, 2025.
9
Loss from discontinued operations
Loss from discontinued operations was nil and $4.8 million for the six months ended June 30, 2025 and 2024, respectively. On March 6, 2024, ABTC announced the closure of its 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
Historically, ABTC’s primary sources of liquidity included cash from Hut 8, proceeds from sales of Bitcoin, Hut 8’s strategic Bitcoin reserve, and capital raised from investors.
Subsequent to the effectuation of the Contributions on March 31, 2025, ABTC’s primary sources of liquidity include cash, capital raised from investors, and its strategic Bitcoin reserve, which ABTC started to accumulate following the effectiveness of the Contributions on March 31, 2025. ABTC’s primary cash needs are for working capital to support its operations, equipment financing, including the purchase of additional Bitcoin miners through the ABTC Bitmain Purchase Agreement, and to pursue open-market Bitcoin purchases.
On June 27, 2025, ABTC issued and sold 11,002,954 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 period from July 1, 2025, to September 2, 2025, ABTC used $205.6 million of these proceeds to purchase approximately 1,726 Bitcoin at a weighted average price of approximately $119,120.
Concurrently with the execution of the ABTC Bitmain Purchase Agreement, ABTC purchased 16,299 of the Bitmain Miners, representing a total of approximately 14.02 EH/s, for a total purchase price of approximately $314.0 million, paid through the pledge of approximately 2,234 Bitcoin at a mutually agreed upon fixed price after accounting for a deposit and certain expenses of approximately $46 million previously paid to Bitmain Georgia by Hut 8, which ABTC will repay on or prior to December 31, 2025.
ABTC’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 ABTC’s offerings.
ABTC 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.
10
Cash Flows
The following table summarizes ABTC’s cash flows for the six months ended June 30, 2025 and June 30, 2024:
| Six Months Ended | ||||||||
| June 30, | ||||||||
| (in USD thousands) | 2025 | 2024 | ||||||
| Cash flows used in operating activities | $ | (44,003 | ) | $ | (28,592 | ) | ||
| Cash flows provided by investing activities | $ | 5,992 | $ | 48,973 | ||||
| Cash flows provided by (used in) financing activities | $ | 243,936 | $ | (20,381 | ) | |||
Operating Activities
Net cash used in operating activities was $44.0 million for the six months ended June 30, 2025, resulting from a net loss of $97.2 million, offset by the deduction of non-cash adjustments of $48.1 million and favorable changes in assets and liabilities of $5.1 million. Net cash used in operating activities was $28.6 million for the six months ended June 30, 2024, resulting from net income of $169.3 million, offset by non-cash adjustments of $195.5 million and unfavorable changes in assets and liabilities of $2.4 million.
Investing Activities
Net cash provided by investing activities totaled $6.0 million for the six months ended June 30, 2025, primarily consisting of $3.4 million in proceeds from Bitcoin sales, and $2.6 million in proceeds from the sale of property and equipment. Net cash provided by investing activities totaled $49.0 million for the six months ended June 30, 2024, consisting of $51.3 million in proceeds from Bitcoin sales, partially offset by $2.3 million in purchases of property and equipment.
Financing Activities
Net cash provided by financing activities was $243.9 million for the six months ended June 30, 2025, which was primarily a result of $955.2 million from the effectuation of the Contributions on March 31, 2025, and $205.3 million from a June 2025 private placement proceeds from the issuance of shares, net of fees, partially offset by the issuance of shares in accordance with the Contributions to Hut 8 of $115.8 million and to settle the net Parent investment from Hut 8 of $800.8 million. Net cash used in financing activities was $20.4 million for the six months ended June 30, 2024, primarily consisting of $9.8 million in loan repayments and $10.6 million of net Parent investment to Hut 8.
Critical Accounting Policies and Estimates
ABTC’s management’s discussion and analysis of its financial condition and results of operations is based on ABTC’s condensed and combined financial statements ended December 31, 2024 and June 30, 2025, included in the Exhibits to the Current Report, which have been prepared in accordance with U.S. GAAP and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, contingent assets and liabilities, each as of the date of the condensed and combined financial statements, and revenues and expenses during the periods presented. On an ongoing basis, ABTC’s management evaluates these estimates and assumptions, and the effects of any such revisions are reflected in the combined financial statements in the period in which they are determined to be necessary. Actual outcomes could differ materially from those estimates in a manner that could have a material effect on ABTC’s condensed and combined financial statements. Set forth below are the policies and estimates that ABTC has identified as critical to its business operations and understanding its results of operations, based on the high degree of judgment utilized or complexity in their application.
11
While ABTC’s significant accounting policies are described in more detail in Note 2. Significant Accounting Policies and Recent Accounting Pronouncements to ABTC’s condensed and combined financial statements for the period ended December 31, 2024, and Note 2. Significant Accounting Policies and Recent Accounting Pronouncements to ABTC’s condensed and combined financial statements for the period ended June 30, 2025, included in the Exhibits to the Current Report, ABTC believes the following accounting policies and estimates to be the most critical to fully understand and evaluate this management discussion and analysis:
| ● | use of estimates; |
| ● | fair value measurement; |
| ● | digital assets; |
| ● | property and equipment, net; |
| ● | impairment of long-lived assets; |
| ● | impairment of goodwill; |
| ● | derivatives; |
| ● | segment reporting; |
| ● | revenue recognition; |
| ● | cost of revenues (exclusive of depreciation and amortization); |
| ● | stock based compensation; |
| ● | income taxes; |
| ● | foreign currency; |
| ● | business combinations; and |
| ● | Hut 8 net investment. |
Use of Estimates
The preparation of financial statements in conformity with U.S. 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 ABTC’s financial statements include estimates associated with revenue recognition, determining the useful lives and recoverability of long-lived assets, goodwill, impairment analysis digital assets, allocation of costs, derivatives, stock based compensation, and current and deferred income tax assets (including the associated valuation allowance) and liabilities.
Regulatory Update
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law, which includes a broad range of tax reform provisions, including extending and modifying certain key Tax Cuts and Jobs Act provisions (both domestic and international), and provisions allowing accelerated tax deductions for qualified property and research expenditures. ABTC is currently evaluating the potential impacts that the OBBBA may have on its financial position.
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Quantitative and Qualitative Disclosures About Market Risk
Market Price Risk of Bitcoin
ABTC holds a significant amount of Bitcoin and intends to accumulate additional Bitcoin; therefore, ABTC is exposed to the impact of market price changes in Bitcoin. As of June 30, 2025, ABTC held 404 Bitcoin, and the fair value of a single Bitcoin was approximately $107,173. Therefore, the fair value of ABTC’s Bitcoin holdings as of June 30, 2025, was approximately $43.3 million. Declines in the fair market value of Bitcoin will impact the mark-to-market adjustments ABTC records every reporting period, as well as the cash value that would be realized if ABTC were to sell Bitcoin for cash, therefore having a negative impact on ABTC’s liquidity.
Custodian Risk
ABTC’s holds Bitcoin with third-party custodians that ABTC selects based on various factors, including their financial strength, security measures, insurance coverage and industry reputation. ABTC has also pledged Bitcoin as collateral in transactions with counterparties who hold ABTC’s Bitcoin in their own wallets. Custodian risk refers to the potential loss, theft, or misappropriation of ABTC’s Bitcoin assets due to operational failures, cybersecurity breaches, or financial difficulties experienced by these third parties. Although ABTC periodically monitors the financial health, insurance coverage, and security measures of its custodians and counterparties, reliance on such third parties inherently exposes ABTC to risks that it cannot fully mitigate.
Credit Risk
Credit risk arises from ABTC’s practice of pledging Bitcoin as collateral in transactions with counterparties. ABTC 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 six months ended June 30, 2025, ABTC has not incurred any material loss from such transactions. However, there remains a risk that a counterparty could default on its obligations to ABTC, which might result in a material loss. ABTC continually assesses the credit risk associated with its counterparties and, if necessary, recognizes a loss provision or write-down. Credit risk also arises from ABTC placing its cash and demand deposits in financial institutions. Although ABTC 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 ABTC is able to mitigate its credit risk.
Interest Rate Risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. ABTC may receive loans from Hut 8 or other lenders in which changes in market interest rates could affect ABTC’s operations over certain periods.
Tariff Risk
Changes in government and economic policies, incentives, or tariffs may also have an impact on Bitcoin mining equipment that ABTC imports. While the final scope and application of recently announced changes in U.S. trade policy remains uncertain at this time, higher tariffs on imports and subsequent retaliatory tariffs could adversely impact ABTC’s ability to import equipment at levels that are cost effective. ABTC plans to adjust accordingly to such developments.
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Exhibit 99.3
Description of American Bitcoin Corp.’s Business
Introductory Note and Glossary
References to “we,” “our,” “us” and “ABTC” refer to American Bitcoin Corp. (formerly known as Gryphon Digital Mining, Inc.), together with its subsidiaries.
On September 3, 2025, we completed our stock-for-stock merger transactions (the “Mergers”) pursuant to the Agreement and Plan of Merger, dated as of May 9, 2025 (the “Merger Agreement”), by and among us, GDM Merger Sub I Inc., GDM Merger Sub II LLC and pre-merger American Bitcoin Corp. (“Historical ABTC”), pursuant to which we acquired Historical ABTC and we changed our name from Gryphon Digital Mining, Inc. to American Bitcoin Corp. Shortly before the closing of the Mergers, we effected a 5-for-1 reverse stock split of our common stock (the “Reverse Stock Split”) and our common stock was reclassified as Class A common stock. At the closing of the Mergers, we issued shares of Class A common stock, par value $0.0001 per share (our “Class A Common Stock”) and Class B common stock, par value $0.0001 per share to Historical ABTC stockholders based upon an agreed exchange ratio specified in the Merger Agreement. In connection with the closing of the Mergers, our Class A Common Stock began trading on the Nasdaq Capital Market under the symbol “ABTC.”
“ABH” means American Bitcoin Holdings, LLC, a wholly owned subsidiary of Hut 8.
“ADC” means American Data Centers Inc., a Delaware corporation.
“Bitmain” means Bitmain Technologies Limited.
“CFTC” means the U.S. Commodity Futures Trading Commission.
“Coinbase” means Coinbase Custody Trust Company, LLC.
“Contributions” means the Stock Purchase and Contribution Agreement dated March 31, 2025, by and between ABH and ADC, pursuant to which ABH contributed to ADC substantially all of the Bitcoin miners then wholly owned by Hut 8 and its affiliates, at an aggregate book value of approximately $120 million, in exchange for newly issued shares of ABTC Class B Common Stock representing, in the aggregate, 80.0% of the issued and outstanding capital stock of ADC.
“EH/s” means exahash per second, which is a unit of measurement for measuring the speed at which cryptocurrency mining hardware operates.
“FinCEN” means the Financial Crimes Enforcement Network.
“Foundry” means Foundry Digital LLC.
“Historical ABTC Class A Common Stock” means Class A Common Stock, par value $0.0001 per share, of Historical ABTC.
“Historical ABTC Class B Common Stock” means Class B Common Stock, par value $0.0001 per share, of Historical ABTC.
“Hut 8” means Hut 8 Corp.
“J/TH” means joules per Terahash, which is a unit of measurement for measuring the speed at which cryptocurrency mining hardware operates.
“Zephyr” means Zephyr Infrastructure, LLC, a Delaware limited liability company and wholly owned subsidiary of Hut 8.
Cautionary Statement Concerning Forward-Looking Statements
This Exhibit contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Exhibit, including statements regarding the Mergers, the other proposed transactions contemplated thereby and future financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “continue,” “could,” “design,” “estimate,” “expect,” “intend,” “may,” “plan,” “potentially,” “predict,” “seek,” “should,” “will” or the negative of these terms or other similar expressions.
These forward-looking statements include, but are not limited to, statements concerning the following:
| ● | our plans, strategies and objectives of future operations; |
| ● | our proposed new services or developments; |
| ● | our business, operations, economic conditions and financial performance; |
| ● | future hardware or network investments to scale our mining capacity; |
| ● | the attraction and retention of highly qualified personnel; |
| ● | our ability to maintain and grow our Bitcoin reserve; |
| ● | our ability to protect our intellectual property rights; |
| ● | expectations concerning our relationships and actions with third parties; |
| ● | our ability to compete with existing and new competitors in existing and new markets and offerings; |
| ● | our ability to acquire new businesses or pursue strategic transactions; |
| ● | global and domestic economic conditions and their impact on our financial performance and operations; and |
| ● | future regulatory, judicial and legislative changes in our industry. |
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You should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These forward-looking statements are based on current expectations and beliefs concerning future developments and their potential effects. These statements are based upon information available as of the date of this Exhibit and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete.
Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation, competitive responses to the Mergers; unexpected costs, charges or expenses resulting from the Mergers; potential adverse reactions or changes to business relationships resulting from the announcement or the closing of the Mergers; and legislative, regulatory, political and economic developments. There may be additional risks and uncertainties that we consider immaterial or which are currently unknown. It is not possible to predict or identify such risks and uncertainties. The foregoing review of important factors that could cause actual events to differ from expectations should not be construed as exhaustive or exclusive and should be read in conjunction with statements that are included herein and elsewhere. Further information concerning us may emerge from time to time.
For a discussion of the factors that may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied in such forward-looking statements or for a discussion of risks associated with us, see the section titled “Risk Factors” in Exhibit 99.4 to the Current Report on Form 8-K dated September 3, 2025 (the “Current Report”).
If any of these risks or uncertainties, or any risks or uncertainties presently unknown to us or that we currently consider immaterial, materializes or any of these assumptions proves incorrect, our results could differ materially from the forward-looking statements. All forward-looking statements in this Exhibit are current only as of the date on which the statements were made. We do not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any statement is made or to reflect the occurrence of unanticipated events, except as otherwise required by the federal securities laws.
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Our Business
Overview
Our business objective is Bitcoin accumulation and we aim to pursue that goal through a levered strategy that combines efficient Bitcoin mining, disciplined Bitcoin reserve expansion and focused ecosystem engagement.
Our Strategy
Our strategy consists of three distinct layers:
| Layer 1 Build the Engine |
Layer 2 Scale the Reserve |
Layer 3 Lead the Ecosystem |
| Build efficient operations to produce Bitcoin below market cost. | Leverage capital availability to scale Bitcoin reserve. | Harness operational scale and treasury accumulation for ecosystem leadership. |
Together, these layers reinforce our vision of a capital-efficient platform for long-term Bitcoin accumulation, built to align with the network’s growth and the emergence of Bitcoin as a potential sovereign-grade asset.
Layer 1: Build the Engine
Our foundation is built on producing Bitcoin below-market cost through a capital efficient, infrastructure-light operating model. Rather than deploying capital into physical infrastructure ownership, we prioritize direct Bitcoin-generating assets: we own Bitcoin miners that operate at facilities managed by Hut 8, a proven developer and operator of low-cost compute capacity across North America.
This strategic approach enables us to convert capital directly into Bitcoin exposure while minimizing fixed infrastructure investments. By prioritizing ownership of Bitcoin miners and Bitcoin reserve growth over land, buildings or electrical infrastructure, we focus on maintaining operational flexibility and capital efficiency. As of September 1, 2025, we owned over 76,000 Bitcoin miners with a cumulative hashrate of approximately 24.2 EH/s and weighted average fleet efficiency of approximately 16.4 J/TH. Our Bitcoin miner fleet primarily comprises Bitmain S21 series and MicroBt M5X and M6X series machines. Through our strategic partnership with Hut 8, we maintain access to a robust pipeline of high-efficiency capacity expansions.
Bitcoin mining serves as our foundational engine for Bitcoin accumulation, not as an end in itself. Our Layer 1 strategy is designed to maximize long-term Bitcoin ownership per dollar of capital deployed, creating what we believe is a sustainable competitive advantage in below-market Bitcoin production.
Layer 2: Scale the Reserve
In addition to building an efficient engine to drive low-cost Bitcoin production, we aim to leverage our capital strategy to increase the size of our Bitcoin reserve. Our goal is to utilize public markets and strategic financing structures to access efficient capital and leverage that capital to increase our Bitcoin in reserve per share.
Additional capital will be needed to continue our planned operations and continue to pursue our Bitcoin reserve accumulation strategy. We plan to raise significant amounts of additional capital, including in amounts that may exceed our current estimates of enterprise value and future market capitalization, and we may sell common stock, convertible securities or other equity securities in one or more transactions at prices and amounts and in a manner we determine from time to time in order to do so.
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As of September 1, 2025, we had accumulated approximately 2,443 Bitcoin in reserve, which included approximately 2,234 Bitcoin pledged to Bitmain pursuant to the ABTC Bitmain Purchase Agreement (as defined below). We consider our reserve a core strategic asset, managed adaptively to support balance sheet strength with a view to enhancing long-term stockholder value.
We consider our Bitcoin holdings to be long-term in nature and expect to continue accumulating Bitcoin. We have not set any specific target for the amount of Bitcoin we seek to hold. Instead, we evaluate market conditions on an ongoing basis to determine whether and when to raise additional capital to expand our Bitcoin reserve.
Bitcoin accumulation is not a side effect of our business. It is the business. Our Layer 2 strategy is designed to transform our Bitcoin production into long-term Bitcoin ownership.
Layer 3: Lead the Ecosystem
We intend to leverage our operational scale, mining expertise and Bitcoin reserve to drive strategic ecosystem leadership that supports Bitcoin accumulation and network growth. As our mining operations and reserve position mature, Layer 3 represents the natural evolution from participant to catalyst in Bitcoin’s institutional adoption and infrastructure development. We believe our position as a Bitcoin accumulator and low-cost Bitcoin miner creates distinctive opportunities to influence ecosystem development in ways that reinforce our core accumulation strategy while contributing to Bitcoin’s long-term ecosystem success.
We recognize transaction fees as Bitcoin mining’s long-term economic foundation and view initiatives that grow sustainable, fee-generating network activity as aligned with our Bitcoin accumulation strategy. We may explore partnerships that facilitate broader Bitcoin adoption while maintaining disciplined capital allocation.
Our commitment to Bitcoin extends beyond short-term operational returns to the network’s long-term health and security. We may pursue opportunities to support protocol development, enhance network infrastructure and contribute to Bitcoin’s resilience and adoption in ways that align with shareholder value creation.
Our potential Layer 3 initiatives will be evaluated against our fundamental objective of maximizing Bitcoin ownership per share.
Our Operations
Bitcoin Mining Sites
Historical ABTC entered into a Master Colocation Services Agreement (the “MCSA”) with Hut 8, to which we succeeded pursuant to the Mergers, under which certain affiliates of Hut 8 provide us with colocation and hosting services for our Bitcoin miners. As of September 3, 2025, immediately following the Closing of the Mergers, we operated our Bitcoin Miners at four sites under the MCSA:
| ● | Alpha (Niagara Falls, NY); |
| ● | Salt Creek (Orla, TX); |
| ● | Medicine Hat (Medicine Hat, AB); and |
| ● | Vega (Texas Panhandle). |
Historical ABTC also entered into a Master Management Services Agreement (the “MMSA”) with Hut 8, to which we succeeded pursuant to the Mergers, under which certain affiliates of Hut 8 provide us with management, oversight, strategy, compliance, operational and other services for our Bitcoin mining operations hosted at Hut 8’s facilities under the MCSA. For additional information on the MCSA and MMSA, see “⸺Material Agreements” below.
Bitcoin Mining Pools
We receive Bitcoin mining rewards from our mining activity through third-party ming pool operators, Foundry and Luxor. Mining pools allow Bitcoin miners to combine their processing power, increasing their chances of solving a block and getting paid by the network. We provide computing power to mining pools, which use this computing power to operate nodes and validate blocks on the blockchain.
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The pools then distribute our pro rata share of Bitcoin mined to us based on the computing power (hashrate) we contribute. Our daily payout through these pools is calculated based on our hashrate contribution, delivered to the pool in the applicable calculation period, after deducting the applicable pool fee, if any. Our pool fees are currently below 1.0% of our daily payout. In addition, pool participants will receive transaction fees as the mining pool solves blocks on a pro rata basis with respect to each pool participant’s hashrate contributed.
Protection of Bitcoin Assets
We use third-party custody solutions, including Coinbase Custody and Anchorage Digital Bank N.A., to safeguard our Bitcoin, mainly in “cold storage” wallets. We do not self-custody our Bitcoin or hold, sell or transact in Bitcoin or any other digital asset for any person other than ourself.
We enable and use two-factor authentication to access systems (“Custody Applications”) provided by our custodians. All account users are required to complete two-factor authentication setup prior to log-in. An authorized persons listing is maintained and evaluated as part of regular user access reviews, limiting access to Custody Applications. Any changes to the Custody Applications related to users, withdrawals or other operational tasks require approval from multiple authorized persons.
If withdrawal transactions are ever required, for example, to rebalance holdings across custodians, only certain whitelisted wallets can receive funds withdrawn from the Custody Applications. A verification video call, in addition to approval from two (2) authorized persons, is required for any new whitelisted withdrawal.
Recent Developments
Bitmain Miner Purchase
On August 5, 2025, Historical ABTC entered into the ABTC Bitmain Purchase Agreement with Bitmain and concurrently purchased 16,299 of the Bitmain Miners, representing a total of approximately 14.02 EH/s, for a total purchase price of approximately $314 million, paid through the pledge of Bitcoin. See “⸺Material Agreements ⸺ Put Option Agreement and Bitmain Miner Purchase” below for additional information.
Material Agreements
Master Colocation Services Agreement
On March 31, 2025, in connection with the Contributions, Historical ABTC entered into the MCSA with U.S. Data Mining Group, Inc., a Nevada corporation and a wholly owned subsidiary of Hut 8 (“USDMG”), to which we are a successor in connection with the Mergers. The MCSA and the service orders under the MCSA provide for certain affiliates of Hut 8 to provide us with colocation and hosting services for our mining equipment at Hut 8-owned or leased facilities, on specific terms set forth in service orders to the MCSA.
Under the terms of the MCSA, we pay to USDMG (or its applicable affiliate that owns or leases the facility at which our Bitcoin miners are hosted) fees generally consisting of a monthly recurring charge, as set forth in each service order, plus 100% of the costs, fees, disbursements and expenses paid or incurred by USDMG or its applicable affiliate in connection with the use, operation, maintenance and of the relevant facility (including costs related to the delivery of contracted power) and any installation charges, non-recurring costs or amounts for additional services incurred during the term of the applicable service order.
As of September 3, 2025, immediately following the closing of the Mergers, we had entered into four service orders under the MCSA at Hut 8’s Alpha, Medicine Hat, Salt Creek and Vega sites.
The MCSA includes other customary provisions, including with respect to facility access, use of contracted power, maintenance and repair of facilities and insurance.
The MCSA requires us to indemnify USDMG and its affiliates from and against any losses relating to or arising out of our use of and access to the relevant facility, acts or omissions by us constituting gross negligence and the breach of any covenant or obligation by us under the MCSA. The MCSA requires USDMG to indemnify us from and against any losses relating to or arising out of acts or omissions of USDMG constituting gross negligence and the breach of any covenant or obligation of USDMG under the MCSA.
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Except as may otherwise be specified in any service order under the MCSA, the initial term of each service order is five years, subject to automatic extension for a further five-year term unless either party provides the other with written notice not to extend at least 120 days before the expiration of the initial term. The MCSA is terminable by either party at any time upon 30 days’ prior written notice to the other party if there are no active service orders under the MCSA and have not been for a period of 12 months prior to such termination.
The MCSA (and any service order thereunder) is also terminable by either party upon an event of default by the other party (including the other party’s failure to pay any amounts due under the MCSA or to comply with its other obligations under the MCSA, subject to specified cure periods). An event of default by either party under the MMSA or any related service order also constitutes an event of default under the MCSA.
Master Management Services Agreement
On March 31, 2025, in connection with the Contributions, Historical ABTC entered into the MMSA with USDMG, to which we are a successor in connection with the Mergers. The MMSA and the service orders under the MMSA provide for certain affiliates of USDMG and their personnel to provide us with management, oversight, strategy, compliance, operational and other services for our Bitcoin mining operations hosted at Hut 8’s facilities under the MCSA.
Under the terms of the MMSA, we pay to USDMG (or its applicable affiliate) service fees generally consisting of a fixed fee, payable monthly, for general management, operational and compliance services, plus a monthly fee equal to 100% of specified “pass-through costs” incurred during the term of the applicable service order, including costs and expenses incurred by or on behalf of USDMG (or its applicable service provider affiliate) for labor, maintenance, repairs and infrastructure expenses and the provision of services by third parties.
As of September 3, 2025, immediately following the closing of the Mergers, we had entered into four service orders under the MMSA for management services at Hut 8’s Alpha, Medicine Hat, Salt Creek and Vega sites.
The MMSA includes other customary provisions, including with respect to facility access, cooperation in the provision of the services, preservation of records, ownership of data and intellectual property and maintenance of insurance.
The MMSA requires us to indemnify USDMG and its affiliates from and against any losses relating to or arising out of acts or omissions by us constituting gross negligence and the breach of any covenant or obligation by us under the MMSA. The MMSA requires USDMG to indemnify us from and against any losses relating to or arising out of acts or omissions of USDMG constituting gross negligence, the breach of any covenant or obligation of USDMG under the MMSA and the performance of services under the MMSA.
Except as may otherwise be specified in any service order under the MMSA, each service order under the MMSA is coterminous with the corresponding service order under the MCSA for colocation services at the same site. The MMSA (and any service order thereunder) is terminable by either party upon an event of default by the other party (including the other party’s failure to pay any amounts due or to comply with its other obligations under the MMSA, subject to specified cure periods). An event of default by either party under the MCSA or any related service order also constitutes an event of default under the MMSA.
Services Agreement
On March 31, 2025, in connection with the Contributions, Historical ABTC entered into the Services Agreement with USDMG, to which we are a successor in connection with the Mergers, pursuant to which USDMG and its affiliates provide back-office support services to us, including accounting and financial reporting, HR support, payroll, benefits, IT support and management, legal and compliance and vendor management services.
Under the terms of the Shared Services Agreement, we pay to USDMG a monthly fee equal to the fully allocated cost, determined on a “pass through” basis, to USDMG and its affiliates for providing services under the Shared Services Agreement to us.
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The Shared Services Agreement has a term of five years, but is terminable with respect to any individual service by either party upon 30 days’ written notice to the other party. The Shared Services Agreement is also terminable by either party upon written notice to the other party in the event of (i) a material breach of the Shared Services Agreement by the other party, if the breach is not cured to the reasonable satisfaction of the terminating party within 30 days of such written notice or (ii) if the non-terminating party makes a general assignment for the benefit of creditors or becomes insolvent.
Put Option Agreement and Bitmain Miner Purchase
On March 31, 2025, in connection with the Contributions, Historical ABTC entered into the Put Option Agreement with Zephyr, pursuant to which Zephyr had the right to sell to Historical ABTC any Bitcoin miners purchased by Zephyr under the Bitmain Agreement between Zephyr and Bitmain. The Bitmain Agreement in turn provided for Zephyr’s right to purchase from Bitmain up to approximately 17,280 Bitmain U3S21EXPH Bitcoin miners (collectively, the “Bitmain Miners”) for a maximum aggregate purchase price of approximately $320 million, not including any applicable tariffs, duties or similar charges.
Under the terms of the Put Option Agreement, Zephyr had the right to cause us, at any time and from time to time ending on the 30th day following the termination of the purchase option period under the Bitmain Agreement and the delivery of all Bitcoin miners purchased by Zephyr under the Bitmain Agreement, to purchase all or any amount of the Bitmain Miners, at the same per-unit price as is paid to Bitmain and without any additional markup, premium or administrative charge thereon, subject to specified exceptions in the event that Historical ABTC did not (at any time Zephyr’s put right is exercised) have sufficient legally available funds to pay the applicable purchase price.
On August 5, 2025, pursuant to the Put Option Agreement, Zephyr assigned its option to purchase the Bitmain Miners to Historical ABTC. Historical ABTC exercised the option on August 5, 2025, and entered into On-Rack Sales and Purchase Agreement (the “ABTC Bitmain Purchase Agreement”) with Bitmain to purchase the Bitmain Miners in one or more tranches for a total purchase price of up to approximately $320 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 of the Bitmain Miners, representing a total of approximately 14.02 EH/s, for a total purchase price of approximately $314 million, paid through the pledge of Bitcoin at a mutually agreed-upon fixed price. Such purchase price was reduced by the application of a deposit and certain expenses of approximately $46 million previously paid to Bitmain by Zephyr and which we must repay to Zephyr on or prior to December 31, 2025. The remaining Bitmain Miners must be purchased by us on or before October 5, 2025, and may be purchased with cash and/or by pledging additional Bitcoin. The Bitcoin pledged under the ABTC Bitmain Purchase Agreement has a redemption period of 24 months from each pledge date.
Exclusivity Agreement
On March 31, 2025, in connection with the Contributions, Historical ABTC entered into an Exclusivity Agreement with Hut 8 (the “Exclusivity Agreement”), to which we are a successor in connection with the Mergers. The Exclusivity Agreement provides that, until such time as both the MMSA and the MCSA (or any successor agreements) have expired or been terminated, Hut 8 and its affiliates will be the exclusive providers to us of (i) hosting and colocation services with respect to all digital asset mining equipment owned by us and (ii) digital asset mining operations services, whether pursuant to the MMSA or otherwise.
Team
We currently have five employees, including two full-time employees, as well as a shared services agreement with Hut 8. This model enables us to reduce our SG&A expenses, leveraging the Hut 8 team’s expertise and economies of scale in the operation and management of Bitcoin mining facilities.
Competition
The Bitcoin mining space faces competition from a range of ecosystem participants, each supplying hashrate to the Bitcoin network. These participants include individual hobbyists to utility-scale, institutional mining operations, including us. We consider institutional Bitcoin mining operators to be our primary source of competition given the limited supply of critical inputs, such as Bitcoin miners and sites with industrial-scale access to low-cost electricity. This category is comprised of both public and private entities around the world. The Bitcoin mining industry is a highly competitive and evolving industry and new competitors and/or emerging technologies could enter the market and affect our competitiveness in the future.
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Government Regulation
The laws and regulations applicable to our offerings are evolving and subject to interpretation and change. We operate in a complex and rapidly evolving regulatory environment and are subject to a wide range of laws and regulations enacted by federal, state and local governments, governmental agencies and regulatory authorities, including the SEC, the CFTC, the Federal Trade Commission and the FinCEN, as well as similar entities in Canada and other countries. Other regulatory bodies, governmental or semi-governmental, have shown an interest in regulating or investigating companies engaged in the blockchain or digital asset businesses.
For example, businesses that are engaged in the transmission and custody of Bitcoin and other digital assets, including brokers and custodians, can be subject to FinCEN regulations as money services businesses as well as state money transmitter licensing requirements. The potential application of these policies to Bitcoin mining continues to evolve.
Bitcoin and other digital assets are subject to anti-fraud regulations under federal and state commodity and/or securities laws and digital asset derivative instruments are regulated by the CFTC and SEC. Certain jurisdictions, including, among others, New York and a number of countries other than the United States, have developed regulatory requirements specifically for digital assets and companies that transact in them. Furthermore, regulations may substantially change in the future and it is presently not possible to know how regulations will apply to our business or when they will be effective. For example, in January 2025, the SEC announced the launch of a new crypto task force focused on developing a regulatory framework for crypto assets and related goals. In addition, the recent U.S. presidential election and change of administration could have a significant impact on the digital asset industry and our business in the United States. For example, in January 2025, President Trump signed an Executive Order titled “Strengthening American Leadership in Digital Financial Technology,” which, among other things, stated that the current administration’s policy will be “to support the responsible growth and use of digital assets, blockchain technology and related technologies across all sectors of the economy” by “providing regulatory clarity and certainty” regarding digital assets and blockchain technologies.
As the regulatory and legal environment evolves, we may become subject to new laws and regulations, which may affect Bitcoin mining, Bitcoin accumulation and other activities. For instance, various bills have been proposed and passed in the U.S. Congress related to digital assets, which may be adopted and have an impact on us and our business. In July 2025, the U.S. House of Representatives passed the Digital Asset Market Clarity Act (the “CLARITY Act”), a comprehensive digital asset market structure and regulation bill. In addition, also in July 2025, President Trump signed into law the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), establishing a legislative framework for the regulation of payment stablecoins and marking the first federal legislation for the regulation of digital assets in the United States. It is difficult to predict whether, or when, the CLARITY Act or another bill that would regulate digital asset markets and digital asset trading platforms may become law or what any such bill may entail. In addition, in January 2023, the U.S. House of Representatives announced its first ever Financial Services Subcommittee on Digital Assets and its intention to develop a regulatory framework for the digital asset industry. Bipartisan leadership of the Senate Banking Committee announced that goal as well. The U.S. Treasury Department has also requested additional authorities to address such risks. In addition, proposed tariffs to be imposed by the United States on imports from certain countries and potential counter-tariffs in response could materially affect us and our business.
We are unable to predict the impact that any new standards, legislation, laws or regulations may have on our business at the date hereof. For additional discussion regarding the potential risks existing and future regulations pose to our business, see “Risk Factors — Risks Related to Bitcoin” in Exhibit 99.4 to the Current Report.
Facilities
We do not currently maintain our own facilities and believes that facilities, to the extent needed to meet future needs, may be obtained on commercially reasonable terms. For more information regarding our use of Hut 8’s facilities for Bitcoin mining, please see “⸺Material Agreements ⸺ Master Colocation Services Agreement.”
Intellectual Property
We do not currently have any patents, copyrights or other intellectual property protections, other than trademarks relating to our name and logos.
Legal Proceedings
We are not presently a party to any legal or regulatory proceedings that in the opinion of our management, if determined adversely to us, would individually or taken together have a material adverse effect on our business, financial condition or results of operations. However, we are subject to regulatory oversight by numerous federal, state, local and other regulators and we may become subject to various legal proceedings, inquiries, investigations and demand letters that arise in the course of our business.
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Exhibit 99.4
Risk FACTORS
Introductory Note
References to “we,” “our,” “us” and “ABTC” refer to American Bitcoin Corp. (formerly known as Gryphon Digital Mining, Inc.), together with its subsidiaries.
On September 3, 2025, we completed our stock-for-stock merger transactions (the “Mergers”) pursuant to the Agreement and Plan of Merger, dated as of May 9, 2025 (the “Merger Agreement”), by and among us, GDM Merger Sub I Inc., GDM Merger Sub II LLC and pre-merger American Bitcoin Corp. (“Historical ABTC”), pursuant to which we acquired Historical ABTC and we changed our name from Gryphon Digital Mining, Inc. to American Bitcoin Corp. Shortly before the closing of the Mergers, we effected a 5-for-1 reverse stock split of our common stock (the “Reverse Stock Split”) and our common stock was reclassified as Class A common stock. At the closing of the Mergers (the “Closing”), we issued shares of Class A common stock, par value $0.0001 per share (our “Class A common stock”) and Class B common stock, par value $0.0001 per share (our “Class B Common Stock”) to Historical ABTC stockholders based upon an agreed exchange ratio specified in the Merger Agreement. In connection with the closing of the Mergers, our Class A common stock began trading on the Nasdaq Capital Market (the “Nasdaq”) under the symbol “ABTC.”
We are faced with a market environment that cannot be predicted and that involves significant risks and uncertainties, many of which will be beyond our control. Investing in our Class A common stock involves a high degree of risk. Our business, prospects, financial condition and results of operations could be materially and adversely affected by a manifestation of any of these risks and uncertainties. In any such event, the trading price of our Class A common stock would likely decline and you might lose all or part of your investment. The risks described below are certain material risks, although not the only risks, relating to us. You should carefully consider the material risks, events and uncertainties that make an investment in us speculative or risky described below. You should also read and consider the additional information about us set forth in the Current Report on Form 8-K to which this Exhibit is attached, filed by us on September 3, 2025 (the “Current Report”), and the other filings we have made with the SEC at www.sec.gov. This Exhibit contains forward-looking statements that involve risks and uncertainties. Our results could materially differ from those anticipated in these forward-looking statements, as a result of certain factors including the risks described below and our other SEC filings. The risks and uncertainties described below are not the only ones we may face. Our operations could also be affected by factors, events or uncertainties that are not presently known to us or we currently do not consider to present significant risks to our business. Therefore, you should not consider the following risks to be a complete statement of all the potential risks or uncertainties that we may face.
Glossary
“1940 Act” means the Investment Company Act of 1940.
“2025 Plan” means the amendment and restatement of the Gryphon Digital Mining, Inc. 2024 Omnibus Incentive Plan, referred to as the Amended and Restated American Bitcoin Corp. 2025 Omnibus Incentive Plan.
“ABH” means American Bitcoin Holdings, LLC, a wholly owned subsidiary of Hut 8.
“ABTC Bitmain Purchase Agreement” means the On-Rack Sales and Purchase Agreement entered into between Historical ABTC and Bitmain to purchase the Bitmain Miners in one or more tranches for a total purchase price of up to approximately $320 million.
“ADC” means American Data Centers Inc., a Delaware corporation.
“ASU” means an Accounting Standards Update issued by FASB.
“Bitcoin miner” means Bitcoin mining computer.
“Bitmain” means Bitmain Technologies Limited.
“Bitmain Miners” means up to 17,280 Antminer U3S21EXPH Bitcoin miners.
“Board” means the board of directors of ABTC.
“BSA” means the U.S. Bank Secrecy Act.
“CEA” means the U.S. Commodities Exchange Act of 1936.
“Contributions” means the Stock Purchase and Contribution Agreement dated March 31, 2025, by and between ABH and ADC, pursuant to which ABH contributed to ADC substantially all of the Bitcoin miners then wholly owned by Hut 8 and its affiliates, at an aggregate book value of approximately $120 million, in exchange for newly issued shares of Historical ABTC Class B Common Stock representing, in the aggregate, 80.0% of the issued and outstanding capital stock of ADC.
“EH/s” means exahash per second, which is a unit of measurement for measuring the speed at which cryptocurrency mining hardware operates.
“Exchange Act” means the Securities Exchange Act of 1934.
“Exclusivity Agreement” means the Exclusivity Agreement, dated March 31, 2025, by and between Historical ABTC and Hut 8, that, until such time as both the MMSA and the MCSA (or any successor agreements) have expired or been terminated, Hut 8 and its affiliates will be the exclusive providers to us of (i) hosting and colocation services with respect to all digital asset mining equipment owned by us and (ii) digital asset mining operations services, whether pursuant to the MMSA or otherwise.
“FinCEN” means the Financial Crimes Enforcement Network.
“Foundry” means Foundry Digital LLC.
“Halving” means the process incorporated into many proof-of-work consensus algorithms that reduces the coin reward paid to Bitcoin miners over time according to a pre-determined schedule.
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“Historical ABTC Common Stock” means the Class A Common Stock, par value $0.0001 per share, and Class B Common Stock, par value $0.0001 per share, of Historical ABTC.
“Hut 8” means Hut 8 Corp.
“Independent Directors” means a person other than one of our Executive Officers or employees or any other individual having a relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, pursuant to the Nasdaq Corporate Governance Rules.
“Investors’ Rights Agreement” means the Investors’ Rights Agreement, dated as of May 9, 2025, by and among the pre-Mergers Company, Historical ABTC and the holders of Historical ABTC Class B Common Stock, other than ABH.
“J/TH” means joules per Terahash, which is a unit of measurement for measuring the speed at which cryptocurrency mining hardware operates.
“MCSA” means Master Colocation Services Agreement, dated March 31, 2025, by and between Historical ABTC and US. Data Mining Group, Inc.
“MMSA” means the Master Management Services Agreement, dated March 31, 2025, by and between Historical ABTC and USDMG.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933.
“Shared Services Agreement” means the Services Agreement, dated March 31, 2025, by and between Historical ABTC and USDMG.
“Voting Threshold Date” means the date at which the holders of Class B Common Stock cease to represent at least 50% of the total voting power of the outstanding shares of capital stock of ABTC then entitled to vote generally in the election of directors.
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Risk Factors
Risks Related to Bitcoin
We presently, and we expect to continue to be, highly concentrated in Bitcoin. Bitcoin is a highly volatile asset and fluctuations in the price of Bitcoin are likely to influence our business, financial condition and results of operations and the value of our securities.
Our investments are expected to be highly concentrated in a single asset, Bitcoin. We generate revenue from Bitcoin rewards that we earn through mining in facilities operated and managed by Hut 8. We also acquire additional Bitcoin through at-market purchases to build our strategic reserve of Bitcoin. However, Bitcoin is a highly volatile asset and fluctuations in the price of Bitcoin are likely to influence our business, financial condition and results of operations and the value of our securities. Our business, financial condition and results of operations and the value of our securities would be adversely affected if the price of Bitcoin decreased substantially, including as a result of:
| ● | decreased user and investor confidence in Bitcoin, including due to the various factors described herein; |
| ● | investment and trading activities, such as (i) trading activities of highly active retail and institutional users, speculators, Bitcoin miners and investors, (ii) actual or expected significant dispositions of Bitcoin by large holders, including vehicles investing in Bitcoin or tracking Bitcoin markets and (iii) actual or perceived manipulation of the spot or derivative markets for Bitcoin or spot Bitcoin exchange traded products; |
| ● | negative publicity, media coverage or sentiment due to events in or relating to or perception of, Bitcoin or the broader digital assets industry, for example, (i) public perception that Bitcoin can be used as a vehicle to circumvent sanctions or to fund criminal or terrorist activities; (ii) expected or pending civil, criminal, regulatory enforcement or other high profile actions against major participants in the Bitcoin ecosystem; (iii) additional filings for bankruptcy protection or bankruptcy proceedings of major digital asset industry participants, such as the bankruptcy proceeding of FTX and its affiliates; and (iv) the actual or perceived environmental impact of Bitcoin mining and related activities, including environmental concerns raised by private individuals, governmental and non-governmental organizations and other actors related to the energy resources consumed in the Bitcoin mining process; |
| ● | changes in consumer preferences and the perceived value or prospects of Bitcoin; |
| ● | competition from other digital assets that exhibit better speed, security, scalability or energy efficiency, that feature other more favored characteristics, that are backed by governments or reserves of fiat currencies or that represent ownership or security interests in physical assets; |
| ● | a decrease in the price of other digital assets, including stablecoins or the crash or unavailability of stablecoins that are used as a medium of exchange for Bitcoin purchase and sale transactions, such as the crash of the stablecoin Terra USD in 2022, to the extent the decrease in the price of such other digital assets or the unavailability of such stablecoins may cause a decrease in the price of Bitcoin or adversely affect investor confidence in digital assets generally; |
| ● | disruptions, failures, unavailability or interruptions in service of Bitcoin exchanges; |
| ● | cyber theft of Bitcoin from online wallet providers or news of such theft from such providers or from individuals’ online wallets; |
| ● | the filing for bankruptcy protection by, liquidation of or market concerns about the financial viability of digital asset custodians, exchanges, lending platforms, investment funds or other digital asset industry participants; |
| ● | regulatory, legislative, enforcement and judicial actions that adversely affect the price, ownership, transferability, trading volumes, legality or public perception of Bitcoin or that adversely affect the operations of or otherwise prevent digital asset custodians, exchanges, lending platforms or other digital assets industry participants from operating in a manner that allows them to continue to deliver services to the digital assets industry; |
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| ● | further reductions in mining rewards of Bitcoin, including block reward halving events or increases in the costs associated with Bitcoin mining, including increases in electricity costs and hardware and software used in mining, that may cause a decline in support for the Bitcoin network; |
| ● | scaling challenges, including transaction congestion or slow settlement times and higher transaction fees, associated with processing transactions on the Bitcoin network; |
| ● | macroeconomic changes, such as changes in the level of interest rates and inflation, fiscal and monetary policies of governments, trade restrictions and fiat currency devaluations; |
| ● | developments in mathematics or technology, including in digital computing, algebraic geometry and quantum computing, that could result in the cryptography used by the Bitcoin blockchain becoming insecure or ineffective; and |
| ● | changes in national and international economic and political conditions. |
In addition, we adopted ASU 2023-08, Intangibles - Goodwill and Other - Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). ASU 2023-08 requires us to measure our Bitcoin holdings at fair value in our combined balance sheet, with gains and losses in the fair value of our Bitcoin recognized in net income for each reporting period. The price of Bitcoin has historically been subject to dramatic price fluctuations and is highly volatile and may cause our quarterly results to fluctuate significantly, which could have an adverse effect on the value of our securities. We expect the adoption of ASU 2023-08 will increase the volatility of our financial results. As a result, our Bitcoin holdings have and may in the future significantly affected our financial results and if we continue to increase our overall Bitcoin holdings pursuant to our strategy, those holdings may have an even greater impact on our financial results and the value of our securities.
If we fail to grow our hashrate, we may be unable to compete and our business, financial condition and results of operations could suffer.
Generally, a Bitcoin miner’s chance of solving a block on the Bitcoin blockchain and earning a Bitcoin reward is a function of the Bitcoin miner’s hashrate (i.e., the amount of computing power devoted to supporting the Bitcoin blockchain), relative to the global network hashrate. As demand for Bitcoin has increased, the global network hashrate has increased and to the extent more adoption of Bitcoin occurs, we would expect the demand for Bitcoin would increase, drawing more mining companies into the industry and further increasing the global network hashrate. As new and more powerful Bitcoin miners are deployed, the global network hashrate will continue to increase, meaning a Bitcoin miner’s percentage of the total daily rewards will decline unless it deploys additional hashrate at pace with the growth of global hashrate. Accordingly, to compete, we believe we will need to continue to acquire new Bitcoin miners, both to replace those lost to ordinary wear-and-tear and other damage and to increase our hashrate to keep up with a growing global network hashrate. However, there can be no assurance that we will have the resources to acquire new Bitcoin miners and increase our hashrate in order to maintain the profitability of our mining operations. See “— We may be unable to purchase Bitcoin miners at scale or face delays or difficulty in obtaining new Bitcoin miners at scale.”
Furthermore, predicting the growth in network hashrate is extremely difficult. Generally, we would expect hashrate increases to be correlated with increases in Bitcoin price, but that has not always been the case, including during recent periods of time during 2022 and 2023. To the extent that hashrate increases but the price of Bitcoin does not, there can be no assurance that we will be able to recover our investment in the hardware and processing power required to upgrade our mining operations and the results of our Bitcoin mining operations will suffer.
We may be unable to purchase Bitcoin miners at scale or face delays or difficulty in obtaining new Bitcoin miners at scale.
Our Bitcoin mining operations can only be profitable if the costs, inclusive of hardware and electricity costs, associated with mining Bitcoin are lower than the price of the Bitcoin mined at the time of sale. As the cost of obtaining new Bitcoin miners increases, the cost of producing Bitcoin also increases. For example, Bitcoin miners experience ordinary wear-and-tear from operation and may also face more significant malfunctions caused by factors which may be beyond our control. Additionally, as technology evolves, we may acquire newer models of Bitcoin miners to remain competitive in the market. The continual upgrade and refresh of mining machines requires substantial capital investment and we may face challenges in doing so on a timely basis based on the price and availability of new Bitcoin miners and our access to adequate capital resources. There have previously been periods of shortage in new Bitcoin miners available for purchase and a delay in delivery schedules for new Bitcoin miner purchases.
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There is no assurance that Bitcoin miner manufacturers or any other equipment manufacturers will be able to keep pace with potential surges in demand for mining equipment. It is uncertain how manufacturers will respond to increased global demand and whether they fulfill purchase orders fully and in a timely manner. For example, on August 5, 2025, pursuant to the ABTC Bitmain Purchase Agreement, Historical ABTC purchased 16,299 Bitmain Antminer U3S21EXPH Bitcoin miners, representing approximately 14.02 EH/s, for a total purchase price of approximately $314 million, other than a deposit and certain expenses of approximately $46 million previously paid to Bitmain by Hut 8, paid through the pledge of Bitcoin at a mutually agreed upon fixed price. Pursuant to the ABTC Bitmain Purchase Agreement, we must purchase approximately 981 additional Bitmain Antminer U3S21EXPH Bitcoin miners on or before October 5, 2025, and such Bitcoin miners may be purchased with cash and/or by pledging Bitcoin. However, there is no assurance that Bitmain will be able to fulfill deliveries of Bitcoin miners to us fully and in a timely manner. Supply chain issues or geopolitical matters, including the relationship of the United States and Canada between each other and with China and other countries may also impact equipment manufacturers’ ability to fully and timely fulfill purchase orders. In the event that Bitcoin miner manufacturers or other suppliers are not able to keep pace with or fail to satisfy, demand, we may not be able to purchase Bitcoin miners or other equipment in sufficient quantities or on the delivery schedules required to meet our business needs. Bitcoin miner manufacturers may require advance deposits for Bitcoin miner purchases. Therefore, we may need to tie up significant amounts of capital for prolonged periods before we receive and are able to deploy purchased Bitcoin miners to generate revenue. Should any suppliers default on purchase agreements with us, we may need to pursue recourse under international jurisdictions, which could be costly and time-consuming. The outcome of any actions initiated in such international jurisdictions and our ability to enforce judgments (if any) issued in our favor on such jurisdictions is inherently uncertain given differences in legal systems, biases against foreign litigants in certain jurisdictions and other factors outside our control. Furthermore, there is no guarantee that we would succeed in recovering any of the deposits paid for such purchases, including our Bitcoin pledged under the ABTC Bitmain Purchase Agreement, which could materially and adversely affect our business, financial condition and results of operations.
We may be subject to additional risks associated with holding Bitcoin for our own account and with pledging our Bitcoin.
Our Bitcoin are not insured and we do not hold our Bitcoin with a banking institution or a member of the Federal Deposit Insurance Corporation (“FDIC”) or the Securities Investor Protection Corporation (“SIPC”). Therefore, our Bitcoin are not subject to the protections enjoyed by depositors with FDIC or SIPC member institutions. Instead, we safeguard and keep our Bitcoin private by utilizing storage solutions provided by custodians, including Coinbase Custody Trust Company, LLC and Anchorage Digital Bank N.A. Although our Bitcoin custodians use security procedures with various elements, such as redundancy, segregation and cold storage, to minimize the risk of loss, damage and theft, neither the custodians nor we can guarantee the prevention of such loss, damage or theft, whether caused intentionally, accidentally or by force majeure. In light of the significant amount of Bitcoin we hold and expect to continue to hold, these additional risks, including security breaches or cyberattacks or the risk that our Bitcoin could be determined to be property of a bankruptcy estate, are of particular concern and any loss, whether temporary or permanent, of our Bitcoin could adversely affect our business, financial condition and results of operations.
In addition, we pledge, and may in the future pledge, some of our Bitcoin in transactions with counterparties. For example, on August 5, 2025, in connection with the purchase of 16,299 Bitmain Antminer U3S21EXPH Bitcoin miners pursuant to ABTC Bitmain Purchase Agreement, Historical ABTC paid the total purchase price of approximately $314 million, other than a deposit and certain expenses of approximately $46 million previously paid to Bitmain by Hut 8, paid through the pledge of approximately 2,234 Bitcoin to Bitmain at a mutually agreed upon fixed price. Such pledging activity requires us to rely on the security protocols and internal controls of counterparties or trading platforms to safeguard our Bitcoin. Such counterparties and/or trading platforms may be subject to hacks resulting in the loss of digital assets and they may be undercapitalized or over-exposed, such that they may not have adequate insurance necessary to cover any loss or may not compensate for loss where permitted under the laws of the relevant jurisdiction. In addition, malicious actors may be able to intercept our Bitcoin when we pledge or otherwise transfer our Bitcoin in connection with such transactions. Credit risk also arises from our practice of pledging Bitcoin, including pursuant to the ABTC Bitmain Purchase Agreement. Counterparties to whom Bitcoin is pledged could default on their obligations to us, which could result in material losses. Our ability to monitor the credit quality and default risk of our counterparties is limited, and our ability to recover such Bitcoin collateral could be impacted by our counterparties’ financial health and operational stability, and if such counterparties experience financial distress, insolvency or bankruptcy, we may be unable to recover our Bitcoin, in which events, our recourse may be limited and could be time-consuming, costly and uncertain in outcome.
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Bitcoin may only be controlled by the possessor of both the unique public key and private key relating to the local or online digital wallet in which they are held. We are required to publish the public key relating to a digital wallet in use once we first verify a spending transaction from that digital wallet and broadcasts such information into the respective network. We safeguard the private keys relating to our Bitcoin by relying on our custody providers. However, to the extent a private key is lost, destroyed or otherwise compromised and no backup of the private key is accessible, we will be unable to access our Bitcoin and the private key will not be capable of being restored by the Bitcoin network. Any loss of private keys relating to digital wallets used to store our Bitcoin could adversely affect our business, financial condition and results of operations.
Bitcoin and other blockchain-based digital assets have been and may in the future be, subject to security breaches, cyberattacks or other malicious activities. A successful security breach or cyberattack on us or our custodians could result in a partial or total loss of our Bitcoin in a manner that may not be covered by insurance or indemnity provisions of the custody agreement with a custodian who holds our Bitcoin. Access to our Bitcoin could also be restricted by natural events (such as an earthquake or flood) or human actions (such as a terrorist attack). Such a loss could have a material adverse effect on our business, financial condition and results of operations.
In addition, we believe that existing law and the terms and conditions of our contractual arrangements with our custodians would not result in the Bitcoin held by our custodians being considered part of the custodian’s bankruptcy estate were the custodian to file for bankruptcy. However, applicable insolvency law is not fully developed with respect to the holding of digital assets in custodial accounts and, if our custodially-held Bitcoin were, in the event of a bankruptcy of any of our custodians, nevertheless considered to be the property of a bankruptcy estate, the Bitcoin custodially-held on our behalf could be subject to bankruptcy proceedings and we could be treated as a general unsecured creditor of the custodian, inhibiting our ability to exercise ownership rights with respect to such Bitcoin. Any such outcome could have a material adverse effect on our business, financial condition and results of operations.
Furthermore, we may temporarily store all or a portion of our Bitcoin on various digital asset trading platforms, which requires us to rely on the security protocols and internal controls of these trading platforms to safeguard our Bitcoin. Such trading platforms have been subject to hacks resulting in the loss of digital assets in the past and they may be undercapitalized or over-exposed, as seen with FTX, such that they may not have adequate insurance necessary to cover any loss or may not compensate for loss where permitted under the laws of the relevant jurisdiction. In addition, malicious actors may be able to intercept our Bitcoin when we transact in or otherwise transfer our Bitcoin via such trading platforms. An actual or perceived security breach or data security incident at the digital asset trading platforms with which we have accounts could harm our ability to operate, result in loss of our assets, damage our reputation and negatively affect the market perception of our effectiveness, all of which could adversely affect our business, financial condition and results of operations.
Further, it is possible that, through computer or human error, theft or other criminal action, our Bitcoin could be transferred in incorrect amounts or to unauthorized third parties or accounts. In general, Bitcoin transactions are irrevocable and stolen or incorrectly transferred Bitcoin may be irretrievable and we may have extremely limited or no effective means of recovering such Bitcoin. As a result, any incorrectly executed or fraudulent Bitcoin transactions could adversely affect our business, financial condition and results of operations.
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Our operations, investment strategies and profitability may be adversely affected by competition from other methods of investing in Bitcoin.
We compete with other users and/or companies that are mining Bitcoin and we also face significant competition from other users and/or companies that are processing transactions on one or more digital asset networks, as well as other potential financial vehicles, including securities, derivatives or futures backed by or linked to, digital assets through entities such as exchange-traded funds. For instance, on January 10, 2024, the SEC approved the listing and trading of spot Bitcoin exchange-traded products (“ETPs”), the shares of which can be sold in public offerings and are traded on U.S. national securities exchanges. The approved ETPs commenced trading directly to the public on January 11, 2024, with a trading volume of $4.6 billion on the first trading day. Additionally, on May 23, 2024, the SEC approved rule changes permitting the listing and trading of spot ETPs that invest in ether, the main crypto asset supporting the Ethereum blockchain. The approved spot ETPs commenced trading directly to the public on July 23, 2024. The listing and trading of spot ETPs for ether offers investors another alternative to gain exposure to digital assets, which could result in a decline in the trading price of Bitcoin as well as a decline in the value of such securities relative to the value of Bitcoin holdings.
Investors may view our Class A common stock as an alternative to an investment in an ETP, and choose to purchase shares of a spot Bitcoin ETP instead of such securities. They may do so for a variety of reasons, including if they believe that ETPs offer a “pure play” exposure to Bitcoin that is generally not subject to federal income tax at the entity level as we will be, or the other risk factors applicable to an operating business. Additionally, unlike spot Bitcoin ETPs, we (i) do not seek for our securities to track the value of the underlying Bitcoin we hold before payment of expenses and liabilities, (ii) do not benefit from various exemptions and relief under the Exchange Act, including Regulation M, and other securities laws, which enable ETPs to continuously align the value of their shares to the price of the underlying assets they hold through share creation and redemption, (iii) are a Delaware corporation rather than a statutory trust, and do not operate pursuant to a trust agreement that would require us to pursue one or more stated investment objectives, and (iv) are not required to provide daily transparency as to our Bitcoin holdings or our daily net asset value. Furthermore, recommendations by broker-dealers to buy, hold or sell complex products and non-traditional ETPs, or an investment strategy involving such products, may be subject to additional or heightened scrutiny that would not be applicable to broker-dealers making recommendations with respect to any of our securities.
Market and financial conditions and other conditions beyond our control may make it more attractive to invest in other financial vehicles or to invest in Bitcoin directly. The emergence of other financial vehicles and exchange-traded funds have been scrutinized by regulators and such scrutiny and the negative impressions or conclusions resulting from such scrutiny could be applicable to us and impact our ability to successfully pursue our strategy or operate at all or to establish or maintain a market for our securities. Such circumstances could have a material adverse effect on our business, financial condition and results of operations and potentially the value of any Bitcoin that we mine or otherwise acquire or hold for our own account, ultimately harming our investors.
The further development and acceptance of the Bitcoin network and other digital assets is subject to a variety of factors that are difficult to evaluate. The slowing or stopping of the development or acceptance of Bitcoin and other digital asset systems may adversely affect our business, financial condition and results of operations.
The use of digital assets to, among other things, buy and sell goods and services and complete transactions, is part of a new and rapidly evolving industry that employs digital assets, including Bitcoin, based upon a computer-generated mathematical and/or cryptographic protocol. The growth of this industry in general and the use of Bitcoin in particular, is subject to a high degree of uncertainty and the slowing or stopping of the development or acceptance of developing protocols may occur unpredictably.
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During 2022 and early 2023, some well-known digital asset market participants, including Celsius Network, Voyager Digital Ltd., Three Arrows Capital and Genesis Global Holdco LLC, declared bankruptcy, resulting in a loss of confidence in participants of the digital asset ecosystem, negative publicity surrounding digital assets more broadly, decreased liquidity and extreme price volatility. There was no direct material impact on our business from such bankruptcies, however, we may be impacted indirectly.
Furthermore, the closure and temporary shutdown of major digital asset exchanges and trading platforms, such as FTX Trading Ltd. (“FTX”), due to fraud or business failure, disrupted investor confidence in digital assets and led to a rapid escalation of oversight of the digital asset industry. Thus, the failures of key market participants and systemic contagion risk is expected to, as a consequence, invite stricter regulatory scrutiny. This could have a negative impact on further development and acceptance of digital asset networks and digital assets, including Bitcoin.
Other factors that could affect further development and acceptance of digital asset networks and other digital assets include:
| ● | continued worldwide growth in the adoption and use of digital assets as a medium of exchange or store of value; |
| ● | governmental regulation of Bitcoin and its use or restrictions on or regulation of access to and operation of the Bitcoin network or similar digital asset systems; |
| ● | limitations on financial institutions processing funds for Bitcoin transactions, processing wire transfers to or from Bitcoin exchanges, Bitcoin-related companies or service providers or servicing or maintaining accounts for persons or entities transacting in Bitcoin; |
| ● | changes in consumer demographics and public tastes and preferences; |
| ● | the maintenance and development of the open-source software protocol of the network, including software updates and changes to network protocols that could introduce bugs or security risks; |
| ● | the increased consolidation of contributors to the Bitcoin blockchain through mining pools; |
| ● | the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies; |
| ● | the use of the networks supporting digital assets for developing smart contracts and distributed applications; |
| ● | general economic conditions and the regulatory environment relating to digital assets; |
| ● | environmental and other regulatory restrictions on the use of power to mine Bitcoin and a resulting decrease in global Bitcoin mining operations; |
| ● | an increase in Bitcoin transaction costs and a resultant reduction in the use of and demand for Bitcoin; and |
| ● | negative consumer sentiment and perception of Bitcoin specifically and digital assets generally. |
The outcome of these factors could have negative effects on our business, financial condition and results of operations as well as potentially negative effect on the value of any Bitcoin that we mine or otherwise acquire or hold for our own account, which would harm investors in our securities and adversely affect the market price of our Class A common stock.
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Our reliance on third-party mining pool service providers, including Foundry and Luxor, for our mining revenue payouts may have a negative impact on our business, financial condition and results of operations.
We receive Bitcoin rewards from our mining activity through third-party mining pool operators, including Foundry and Luxor. Mining pools allow Bitcoin miners to combine their processing power, increasing their chances of solving a block and getting paid by the network. We provide computing power to mining pools, which use this computing power to operate nodes and validate blocks on the blockchain. The pools then distribute our pro-rata share of Bitcoin mined to us based on the computing power we contribute.
Under our mining pool agreements with Foundry and Luxor, our daily payout is calculated based on our hashrate contribution delivered to the pool in the applicable calculation period, after deducting the applicable pool fee, if any. Our pool fee in relation to these agreements is currently below 1.0% of our daily payout.
Should one of our pool operator’s systems suffer downtime due to a cyberattack, software malfunction or other similar issues, it will negatively impact our ability to mine and receive Bitcoin mining rewards. Furthermore, we are dependent on the accuracy of the mining pool operators’ record keeping and internal controls to prevent any fraud and to accurately record the total processing power provided by us and other mining pool participants to the pool for a given Bitcoin mining application in order to assess the proportion of that total processing power we provided. While we have internal methods of tracking both our processing power provided and the total used by the pool, the mining pool operator uses its own recordkeeping to determine our proportion of a given reward. We have little means of recourse against mining pool operators if it determines the proportion of the reward paid out to us by the mining pool operator is incorrect, other than leaving the pool. If we are unable to consistently obtain accurate proportionate rewards from our mining pool operators, we may experience reduced reward for our efforts, which would have an adverse effect on our business, financial condition and results of operations.
From time to time, we may enter into certain hedging transactions to mitigate our exposure to fluctuations in the price of Bitcoin, which may expose us to risks associated with such transactions, including counterparty risk.
From time to time, we may enter into certain hedging transactions to mitigate our exposure to the market price of Bitcoin. Engaging in hedging transactions may expose us to risks associated with such transactions, including counterparty risk. Hedging against a decline in the values of portfolio investments caused by volatile Bitcoin market prices does not eliminate the possibility of fluctuations in the values of such positions or prevent losses if the values of such positions decline for other reasons. Such hedging transactions may also limit the opportunity for gain if the values of the portfolio investments should increase. Moreover, it may not be possible to hedge against a particular fluctuation that is so generally anticipated by the markets that a hedging transaction at an acceptable price is unavailable. In light of these and other factors, we may not be successful in mitigating our exposure to volatile Bitcoin prices through any hedging transactions we undertake.
The Bitcoin reward for successfully uncovering a block will halve several times in the future and Bitcoin’s value may not adjust to compensate us for the reduction in the rewards we receive from our mining efforts.
Halving is a process incorporated into many proof-of-work consensus algorithms that reduces the coin reward paid to Bitcoin miners over time according to a pre-determined schedule. This reduction in reward spreads out the release of digital assets over a long period of time resulting in an ever smaller number of coins being mined. At a predetermined block, the mining reward is cut in half, hence the term “halving.” For example, the mining reward for Bitcoin declined from 6.25 to 3.125 Bitcoin on April 19, 2024. This process is scheduled to occur once every 210,000 blocks, until the total amount of Bitcoin rewards issued reaches 21 million.
As the number of Bitcoin awarded for solving a block in a blockchain decreases, our ability to achieve profitability becomes more difficult. While the Bitcoin price has had a history of price fluctuations around the halving of our rewards, there is no guarantee that in future periods when a halving occurs the price change will be favorable or would compensate for the reduction in mining reward. If a corresponding and proportionate increase in the trading price of Bitcoin or a proportionate decrease in mining difficulty does not follow these anticipated halving events, the revenue we earn from our Bitcoin mining operations would see a corresponding decrease, which would have a material adverse effect on our business, financial condition and results of operations. If the award of Bitcoin rewards for solving blocks and transaction fees are not sufficiently high, we may not have an adequate incentive to continue mining and may decrease or cease our Bitcoin mining operations.
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The development and acceptance of competing blockchain platforms or technologies may cause consumers to use alternative distributed ledgers or other alternatives.
The development and acceptance of competing blockchain platforms or technologies may cause industry participants and consumers to abandon Bitcoin. As Bitcoin is the only digital asset we mine, we could face difficulty adapting to emergent digital ledgers, blockchains or alternatives thereto. This could prevent us from realizing the anticipated profits from our investments. Such circumstances could have a material adverse effect on our business, financial condition and results of operations and the value of any Bitcoin that we mine or otherwise acquire or hold for our own account.
The characteristics of Bitcoin have been and may in the future continue to be, exploited to facilitate illegal activity such as fraud, money laundering, tax evasion and ransomware scams. Furthermore, the exchanges on which Bitcoin trades are relatively new and, in most cases, largely unregulated and may therefore be more exposed to fraud and failure than established, regulated exchanges for other assets. Such circumstances may result in a reduction in the price of Bitcoin and can adversely affect our business, financial condition and results of operations.
Bitcoin and the exchanges on which Bitcoin trades are relatively new and, in most cases, largely unregulated. Certain characteristics, including the speed with which Bitcoin transactions can be conducted, the ability to conduct transactions without the involvement of regulated intermediaries, the ability to engage in transactions across multiple jurisdictions, the irreversible nature of certain Bitcoin transactions and encryption technology that anonymizes these transactions make Bitcoin and digital currencies generally, particularly susceptible to use in illegal activity such as fraud, money laundering, tax evasion and ransomware scams. Furthermore, many Bitcoin exchanges do not typically provide the public with significant information regarding their ownership structure, management teams, corporate practices or regulatory compliance. As a result, the marketplace may lose confidence in or may experience problems relating to, Bitcoin exchanges, including prominent exchanges handling a significant portion of the volume of Bitcoin trading.
While we maintain policies and procedures reasonably designed to promote compliance with applicable anti-money laundering and sanctions laws, if we are found to have transacted with bad actors that have used Bitcoin to launder money or persons subject to sanctions, we may be subject to regulatory proceedings and may be prohibited or restricted from engaging in further transactions or dealings in Bitcoin. Furthermore, negative perception, a lack of stability in the broader Bitcoin markets and the closure or temporary shutdown of Bitcoin exchanges due to fraud, business failure, hackers, malware or government-mandated regulation may reduce confidence in Bitcoin and result in greater volatility in the prices of Bitcoin. A number of Bitcoin exchanges have been closed due to fraud, failure or security breaches. In many of these instances, the customers of such Bitcoin exchanges were not compensated or made whole for the partial or complete losses of their account balances in such Bitcoin exchanges. To the extent investors view our securities as linked to the value of our Bitcoin holdings, such a negative perception of Bitcoin exchanges could have a material adverse effect on the market price of our Class A common stock and our business, financial condition and results of operations.
It may be illegal now or in the future, to acquire, own, hold, sell or use Bitcoin or other digital assets, participate in blockchains or utilize similar digital assets in one or more countries.
Although currently digital assets generally are not regulated or are lightly regulated in most countries, countries such as China have taken harsh regulatory action to curb the use of digital assets and may continue to take regulatory action in the future that could severely restrict the right to acquire, own, hold, sell or use these digital assets or to exchange them for fiat currency. For example, in 2021 China instituted a blanket ban on all digital asset mining and transactions, including overseas digital asset exchange services taking place in China, effectively making all digital asset-related activities illegal in China. In certain nations, it is illegal to accept payment in Bitcoin or other digital assets for consumer transactions and banking institutions are barred from accepting deposits of Bitcoin. Such restrictions may adversely affect us as the large-scale use of Bitcoin as a means of exchange is presently confined to certain regions globally. Such circumstances could have a material adverse effect on our business, financial condition and results of operations and potentially the value of any Bitcoin that we mine or otherwise acquire or hold for our own account, ultimately harming our investors.
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A failure to properly monitor and upgrade the Bitcoin network’s protocol could damage that network and an investment in our securities.
As an open-source project, Bitcoin does not generate revenues for its contributors and contributors are generally not compensated for maintaining and updating the Bitcoin network protocol. The lack of guaranteed financial incentives for contributors to maintain or develop the Bitcoin network and the lack of guaranteed resources to adequately address emerging issues with the Bitcoin network may reduce incentives to address the issues adequately or in a timely manner. To the extent that contributors may fail to adequately update and maintain the Bitcoin network protocol, there may be a material adverse effect on our business, prospects or operations and potentially the value of any Bitcoin that we mine or otherwise acquire or hold for our own account.
There is a possibility of Bitcoin mining algorithms transitioning to “proof of stake” validation, which could make us less competitive and adversely affect our business, financial condition and results of operations.
“Proof of stake” is an alternative method in validating digital asset transactions. Should the Bitcoin network shift from a “proof of work” validation method to a “proof of stake” validation method, mining would require less energy, which may render companies, such as us, less competitive. Furthermore, if our Bitcoin miners or other mining infrastructure cannot be modified to accommodate changes in rule or protocol of the Bitcoin network, our business, financial condition and results of operations will be significantly affected.
If a malicious actor or botnet obtains control of a majority of the processing power active on any digital asset network, including the Bitcoin network, the blockchain may be manipulated in a manner that adversely affects an investment in us.
If a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains a majority of the processing power dedicated to mining on any digital asset network, including the Bitcoin network, it may be able to alter the blockchain by constructing fraudulent blocks or preventing certain transactions from completing in a timely manner or at all. In such alternate blocks, the malicious actor or botnet could control, exclude or modify the ordering of transactions, though it could not generate new digital assets or transactions using such control. Using alternate blocks, the malicious actor could “double-spend” its own digital assets (i.e., spend the same digital assets in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintains control. To the extent that such malicious actor or botnet did not yield its control of the processing power on the Bitcoin or other network or the Bitcoin or other community did not reject the fraudulent blocks as malicious, reversing any changes made to the blockchain may not be possible.
Bitcoin miners ceasing operations would reduce the collective processing power on the Bitcoin network, which would adversely affect the confirmation process for transactions (i.e., temporarily decreasing the speed at which blocks are added to the Bitcoin blockchain until the next scheduled adjustment in difficulty for block solutions). If a reduction in processing power occurs, the Bitcoin network may be more vulnerable to a malicious actor obtaining control in excess of 50% of the processing power on the Bitcoin network. Although there are no known reports of malicious activity or control of the Bitcoin blockchain achieved through controlling over 50% of the processing power on the network, it is believed that certain mining pools may have exceeded and could exceed, the 50% threshold. The possible crossing of the 50% threshold indicates a greater risk in that a single mining pool could exert authority over the validation of Bitcoin transactions. To the extent that the Bitcoin or other digital asset ecosystems, including developers and administrators of mining pools, do not act to ensure greater decentralization of Bitcoin or other digital asset mining processing power, the feasibility of a malicious actor obtaining control of the processing power on the Bitcoin or other network will increase, which may adversely impact our business, financial condition and results of operations.
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Forks in the Bitcoin network may occur in the future, which may affect the value of Bitcoin held by us.
Contributors can propose refinements or improvements to the Bitcoin network’s source code that alter the protocols and software that govern the Bitcoin network and the properties of Bitcoin, including the irreversibility of transactions and limitations on the mining of new Bitcoin. This is known as a “fork.” In the event a developer or group of developers proposes modifications to the Bitcoin network that are not accepted by a majority of Bitcoin miners and users, but that are nonetheless accepted by a substantial plurality of Bitcoin miners and users, two or more competing and incompatible blockchain implementations could result running in parallel, yet lacking interchangeability and necessitating exchange-type transactions to convert currencies between the two forks. This is known as a “hard fork.”
The value of Bitcoin after the creation of a fork is subject to many factors, including the value of the fork product, market reaction to the creation of the fork product and the occurrence of additional forks in the future. It may be unclear following a fork which fork represents the original asset and which is the new asset. If we hold Bitcoin at the time of a hard fork into two digital assets, industry standards would dictate that we would be expected to hold an equivalent amount of the old and new assets following the fork. However, we may not be able or it may not be practical, to secure or realize the economic benefit of the new asset for various reasons. For instance, we may determine that there is no safe or practical way to custody the new asset, that trying to do so may pose an unacceptable risk to our holdings in the old asset or that the costs of taking possession and/or maintaining ownership of the new digital asset exceed the benefits of owning the new digital asset. Additionally, laws, regulation or other factors may prevent us from benefiting from the new asset even if there is a safe and practical way to custody and secure the new asset. As such, we may not be able to realize the economic benefit of a fork, either immediately or ever, which could adversely affect the value of the Bitcoin we hold as well as our business, financial condition and results of operations.
Our processes with respect to curtailment may adversely affect our ability to mine Bitcoin.
We may curtail the energy used by our Bitcoin mining operations in times of heightened energy prices or, in the case of a grid-wide electricity shortage, either voluntarily or through Hut 8’s agreements with utility providers. We may also encounter other situations where utilities or government entities restrict or prohibit the provision of electricity to Bitcoin mining operations. In these cases, our ability to mine Bitcoin may be negatively affected.
Risks Related to Our Business and Operations
We may not realize all of the anticipated benefits of the Mergers.
We may not realize all of the anticipated benefits of the Mergers. There is a risk that some or all of the expected benefits of the Mergers may fail to materialize or may not occur within the time periods anticipated by us. The realization of such benefits may be affected by a number of factors, many of which are beyond our control. The challenge of coordinating previously independent businesses makes evaluating our business and future financial prospects difficult. Prior to the completion of the Mergers, we and Historical ABTC operated independently. The success of the Mergers, including anticipated benefits, will depend, in part, on the ability to successfully integrate the operations of both companies. The past financial performance of each of us and Historical ABTC may not be indicative of our future financial performance. Realization of the anticipated benefits in the Mergers will depend, in part, on our ability to successfully integrate our and Historical ABTC’s businesses. We will be required to devote significant management attention and resources to integrating our business practices and support functions. The diversion of management’s attention and any delays or difficulties encountered in connection with the coordination of our operations could have an adverse effect on the business, financial results, financial condition or the market price of our Class A common stock. The coordination process may also result in additional and unforeseen expenses. Failure to realize all of the anticipated benefits of the Mergers may impact on our financial performance and the market price of our Class A common stock.
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Our operations are dependent upon maintaining a good relationship with Hut 8.
Historical ABTC entered into the MCSA, MMSA, Exclusivity Agreement and Shared Services Agreement (each as defined herein and collectively, the “Hut 8 Agreements”) with Hut 8 and/or certain of its wholly owned subsidiaries, to which we have succeeded, pursuant to which Hut 8 and/or certain of its wholly owned subsidiaries provide us with Bitcoin miner colocation services, managed services and day to day management services required to maintain our mining operations. The Hut 8 Agreements provide, among other things, that Hut 8 and/or certain of its wholly owned subsidiaries will use commercially reasonable efforts to provide us with colocation and management services for our Bitcoin miners as well as a number of other day-to-day corporate management services for us.
As part of our strategy, we aim to leverage our relationship with Hut 8 in obtaining certain necessary services, including Bitcoin miner colocation services, managed services and day to day management services.
We are highly dependent on Hut 8 and the Hut 8 Agreements for the development and execution of our business model. If Hut 8 is unable, refuses or fails to perform its obligations under the Hut 8 Agreements, in whole or in part, whether due to certain economic or market conditions, bankruptcy, insolvency, lack of liquidity, operational failure, fraud or for any other reason, it will have a material adverse effect on our business and there is a possibility that we will not be able to continue development and execution of our current business model.
If the Hut 8 Agreements are terminated or not renewed, we may not be able to find an alternative provider for such services on favorable terms or at all, which is likely to have a material adverse effect on our business, prospects, financial condition and operating results.
Furthermore, Hut 8, through its wholly owned subsidiary ABH, is our controlling stockholder. The Hut 8 Agreements currently constitute related party transactions between us and Hut 8. Hut 8 is also entitled to appoint a majority of the members of the Board and it has the power to determine the decisions to be taken at meetings of our stockholders, including in respect of related party transactions, such as the Hut 8 Agreements, corporate restructurings and the date of payment of dividends and other capital distributions. Thus, the decisions of Hut 8 as our controlling shareholder on these matters, including its decisions with respect to its or our performance under the Hut 8 Agreements, may be contrary to the expectations or preferences of our other stockholders and could have a material adverse effect on our business, prospects, financial condition and operating results. See “––Material Agreements” in Exhibit 99.3 to the Current Report.
We expect to raise significant amounts of additional capital to execute our strategy. We may be unable to raise the additional capital needed to operate and grow our business.
Liquidity risk is the risk that we will not be able to meet our financial obligations as they fall due. We plan to settle our financial obligations out of cash and cash equivalents, including from any potential sales of our Bitcoin. However, the capital required to operate our business and implement our growth initiatives is substantial. In addition, future capital raises and financings are an important part of our future plans and Bitcoin accumulation goals. As a result, we expect to raise additional funds through equity or debt financings in order to meet our operating and capital needs, fund our growth initiatives and/or respond to competitive pressures or unanticipated working capital requirements, especially if the price of Bitcoin declines. However, we may be unable to do so in a timely manner, in sufficient quantities or on terms acceptable to us, if at all. If we are unable to raise the additional capital needed to maintain our operations and execute on our growth initiatives, we may be less competitive in our industry and our business, financial condition and results of operations may suffer and the value of our securities may be materially and adversely affected. If we were to raise equity financing, any of our stockholders may experience significant dilution of their ownership interest and the value of their investment could decline. Furthermore, if we were to raise debt financing, our debtors would likely have priority over holders of equity with respect to order of payment preference. We may be required to accept terms that restrict our ability to incur additional indebtedness or take other actions, including terms that require us to maintain a specified level of liquidity or other balance sheet ratios that may not be in the interests of our stockholders.
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Failure of critical systems related to our operations could have a material adverse effect on our business, financial condition and results of operations.
The critical systems related to our operations are subject to failure and such failure could result in service interruptions to us and/or damage to our equipment, which could significantly disrupt our normal business operations, harm our reputation and reduce our revenue. The destruction or severe impairment of any of the facilities at which our Bitcoin miners are hosted could result in significant downtime.
Our operations are subject to temporary or permanent interruption by factors that include but are not limited to:
| ● | failure by us or our suppliers, including Hut 8, to provide adequate service or maintain equipment; |
| ● | power loss or plant downtimes; |
| ● | equipment failure; |
| ● | human error and accidents; |
| ● | theft, sabotage and vandalism; |
| ● | network connectivity downtime and fiber cuts; |
| ● | service interruptions resulting from server relocation; |
| ● | security breaches of infrastructure maintained by our suppliers, including Hut 8; |
| ● | failure by us or our suppliers, including Hut 8, to obtain, maintain and comply with the terms and conditions of applicable government permits and approvals; |
| ● | physical, electronic and cybersecurity breaches; |
| ● | animal incursions; |
| ● | fire, earthquake, hurricane, tornado, flood and other natural disasters; |
| ● | extreme temperatures; |
| ● | water damage; |
| ● | public health emergencies; and |
| ● | terrorism. |
The occurrence of any of these events may have a material adverse effect on our business, financial condition and results of operations.
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We may not be able to compete effectively against our current and future competitors.
The industry in which we operate is highly competitive and continuously evolving. We expect competition to further intensify as the industry that we operate in continues to grow. As we expand in our existing markets and enters new markets, we are expected to compete against an increasing number of companies operating both within North America and abroad that may be more established or have greater financial and other resources and/or expertise.
Driven by the proliferation of energy-intensive applications such as Bitcoin mining and high performance computing, demand for energy capacity continues to outpace supply. At the same time, supply chain disruptions and regulatory constraints have extended lead times for critical infrastructure, including Bitcoin miners, generators and transformers. Grid interconnection bottlenecks have further constrained access to power and Bitcoin mining infrastructure development. In this evolving landscape, we compete directly with other Bitcoin mining companies for, among other things, Bitcoin miners, access to low-cost efficient mining infrastructure and Bitcoin rewards.
We also face significant competition from other potential financial vehicles, including securities, derivatives or futures backed by or linked to, digital assets through entities, and other companies and other entities pursuing a strategy similar to us. A growing number of companies are adopting Bitcoin and other digital assets as primary treasury reserve assets, resulting in an increasingly competitive landscape among such companies. As more companies implement similar digital asset strategies, we will face heightened competition for capital, investor interest and market share within this expanding sector. We may compete for capital with, among others, ETPs, other Bitcoin mining companies, digital asset exchanges and service providers and other companies that hold Bitcoin or other digital assets as treasury reserve assets. Increased competition for capital could adversely affect the availability and cost of financing that may be required for us to execute on our strategy, and adversely affect our business, financial condition, results of operations and the price of our Class A common stock.
We believe our success depends on our ability to scale low-cost Bitcoin production through our infrastructure-light model, including through our relationship with Hut 8 and the Hut 8 Agreements. However, this model might not provide the competitive advantage we anticipate or if it does, such competitive advantage might not endure. If we are unable to compete successfully or if competing successfully requires us to take costly actions in response to the actions of our competitors, our business, financial condition and results of operations could be adversely affected.
Our Bitcoin miners are hosted at sites leased by Hut 8 and the termination or higher renewal rate of these leases could have a material adverse effect on our business, financial condition and results of operations.
Our Bitcoin miners are hosted at sites leased by Hut 8 and there can be no assurance that Hut 8 will remain in compliance with the leases, that the landlord will continue to support Hut 8 and our operations and that the leases will not be terminated despite negotiation for long term lease periods and renewal provisions. When the initial terms of Hut 8’s existing leases expire, in some instances, Hut 8 may have the right to extend the terms of the leases for one or more renewal periods. Upon the end of Hut 8’s initial term or, if applicable, the renewal periods, Hut 8 would have to renegotiate its lease terms with the applicable landlords. We may not be able to directly control or influence such negotiations and the terms and conditions of such Hut 8 leases. Hut 8 may not be able to renew such leases on terms favorable to it or us or at all. The termination of a lease or the renewal of such leases on less favorable terms could have a material adverse effect on our business, financial condition and results of operations.
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The facilities at which we host our Bitcoin miners may experience damage, including damages that may not be covered by insurance.
The facilities at which we currently host our Bitcoin miners and any future sites at which we will host our Bitcoin miners are subject to a variety of risks relating to physical condition and operation, including, but not limited to:
| ● | the presence of construction or repair defects or other structural or building damage; |
| ● | any noncompliance with or liabilities under applicable environmental, health or safety regulations or requirements or building permit requirements; |
| ● | any damage resulting from natural or manmade disasters; and |
| ● | claims by employees and others for injuries sustained at facilities at which we host our Bitcoin miners. |
The measures we take to protect against these risks may not be sufficient. The realization of any hazard or operational risk may result in business interruption, liability or litigation. We maintain an amount of insurance protection that we consider adequate, but we cannot provide any assurance that our insurance will be sufficient or effective under all circumstances and against all hazards or liabilities to which we may be subject and, even if we have insurance coverage for a particular circumstance, we may be subject to a large deductible and maximum cap. We, either directly or through shared policies with Hut 8, carry liability, property, business interruption and other insurance policies to cover certain insurable risks to us. We select the types of insurance, the limits and the deductibles based on our specific risk profile, the cost of the insurance coverage versus its perceived benefit and general industry standards. Our insurance policies contain certain industry standard exclusions for events such as war and nuclear reaction. A successful claim for which we are not fully insured could materially harm our business, financial condition and results of operations. Further, due to rising insurance costs and changes in the insurance markets, we cannot provide any assurance that our insurance coverage will continue to be available at all or at rates or on terms similar to those presently available. Any losses not covered by insurance could have a material adverse effect on our business, financial condition and results of operations.
We are subject to risks associated with our need for significant electrical power.
Our operations require significant amounts of electrical power and our business, financial condition and results of operations may be impacted by the unavailability of power and price fluctuations in the power market. Market prices for power, capacity and other ancillary services are unpredictable and tend to fluctuate substantially. Unlike most other commodities, electric power can only be stored on a very limited basis and generally must be produced concurrently with its use. As a result, power prices are subject to significant volatility due to supply and demand imbalances, especially in the day-ahead and spot markets. Power availability and prices may also be materially impacted by other factors outside of our control, including:
| ● | changes in generation capacity in the markets in which our Bitcoin miners operate, including changes in the supply of power as a result of the development of new plants, expansion, reduction or retirement of existing plants, the continued operation of uneconomic power plants due to state subsidies or additional or reduced transmission capacity; |
| ● | environmental regulations and legislation; |
| ● | electric supply disruptions, including plant outages and transmission disruptions; |
| ● | changes in power transmission infrastructure; |
| ● | fuel price volatility; |
| ● | fuel transportation capacity constraints or inefficiencies; |
| ● | development of new fuels, new technologies and new forms of competition for the production of power; |
| ● | changes in law, including judicial decisions; |
| ● | weather conditions, including extreme weather conditions and seasonal fluctuations, including the effects of climate change; |
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| ● | changes in commodity prices and the supply of commodities, including natural gas, coal and oil; |
| ● | changes in the demand for power or in patterns of power usage; |
| ● | economic and political conditions; |
| ● | supply and demand for energy commodities; |
| ● | supply chain disruption of electrical components needed to transmit energy; |
| ● | availability of competitively priced alternative energy sources; |
| ● | ability to procure satisfactory levels of inventory; and |
| ● | changes in capacity prices and capacity markets. |
Such factors and the associated fluctuations in power availability and prices could affect the cost of power for our operations, which are passed through from Hut 8 to us through the MCSA.
Although Hut 8 maintains limited backup power at certain sites, it may not be feasible to run our operations on back-up power generators in the event of a restriction on electricity or a power outage. Planned or unplanned outages at the power grids that we rely on may require Hut 8 to purchase power at then-current market prices and pass along such costs to us, which could have a negative impact on the cost structure of our operations. To the extent we are unable to receive adequate power supply and are forced to reduce or cease our operations due to the unavailability or cost of electrical power, our business, financial condition and results of operations would be adversely affected.
Furthermore, there can be no assurance that power suppliers will service Hut 8’s facilities that our Bitcoin miners are hosted at or that such suppliers will continue to provide us with power for any period of time. These agreements may be terminated or we may lose access to power under certain other circumstances and we may not be able to find an adequate replacement at a reasonable cost or at all, especially in light of the limited availability of power and grid constraints in many markets. The inability of Hut 8 to secure a power purchase agreement or the termination of a power purchase agreement could have a material adverse effect on our business, financial condition and results of operations.
Moreover, there may be significant competition for suitable locations with access to affordable power to host our Bitcoin miners if we look to expand our operations. We will also depend on Hut 8 allocating the use of current and future sites suitable for hosting our Bitcoin miners if we desire to expand our operations, and there is a risk that Hut 8 may refuse to deliver the services ordered by us under the Hut 8 Agreements or allocate space in future facilities to our Bitcoin miners if Hut 8 perceives that it may deliver those services on more economically advantageous terms to other third parties or to other entities affiliated with Hut 8. See “––Material Agreements” in Exhibit 99.3 to the Current Report.
Our business may be heavily impacted by geopolitical, social, economic and other events and circumstances in the United States, Canada or elsewhere.
Our business may be heavily impacted by geopolitical, social, economic and other events and circumstances in the United States, Canada and elsewhere. These include natural disasters, pandemics (like the COVID-19 pandemic), geopolitical tensions, acts of terrorism, hostilities or the perception that hostilities may be imminent, military conflicts and acts of war (such as the Russia-Ukraine conflict) and related responses, including sanctions or other restrictive actions, interest rate fluctuations, inflationary issues and associated changes in monetary policy or potential economic recession, commodity prices, legislative and regulatory changes, foreign currency fluctuations, international tariffs, fluctuations in capital markets and broad trends in industry and finance. For example, equipment necessary for our operations and our offerings is manufactured in large part outside of the United States. There is currently significant uncertainty about the future relationship between the United States and other countries, including Canada, Mexico, China, the European Union and others, with respect to trade policies, treaties, tariffs and taxes. These events and circumstances are largely outside of our influence and control and, while the impact of such events or circumstances is not presently known, any of them could adversely affect our business, financial condition and results of operations.
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We may be exposed to cybersecurity threats and breaches.
Threats to network and data security are increasingly diverse and sophisticated and security breaches, computer malware and computer hacking attacks have been an increasing concern. Despite our efforts and processes in place to prevent them, our computer servers and systems may be vulnerable to cybersecurity risks, including denial-of-service attacks, physical or electronic break-ins, employee theft or misuse and similar disruptions from unauthorized tampering. As techniques used to breach security change frequently and are generally not recognized until launched against a target, we may not be able to promptly detect that a cyber breach has occurred, implement security measures in a timely manner or, if and when implemented, we may not be able to determine the extent to which these measures could be circumvented. Recent developments in the cyber threat landscape include use of artificial intelligence (“AI”) and machine learning, as well as an increased number of cyber extortion and ransomware attacks, with the potential for higher ransom demand amounts and increasing sophistication and variety of ransomware techniques and methodology. Further, any adoption of AI by us or by third parties may pose new security challenges. A party who is able to compromise the security measures on our networks or the security of our infrastructure could misappropriate our or our employees’ proprietary or sensitive information or cause interruptions or malfunctions in our operations. We also may be required to expend significant capital and resources to protect against such threats or to alleviate problems caused by cyber breaches in our physical or virtual security systems. Any breaches that may occur in the future could expose us to increased risk of lawsuits, regulatory penalties, damage relating to loss of proprietary information, harm to our reputation and increases in our security costs, which could have a material adverse effect on our business, financial condition and results of operations. Furthermore, we hold our Bitcoin with third-party custodians. If our custodians are exposed to a cyberattack or breach, we may temporarily or permanently lose access to some or all of our Bitcoin, which would have a material adverse effect on our business, financial condition and results of operations.
The cybersecurity regulatory landscape continues to evolve and compliance with the proposed reporting requirements could further complicate our ability to resolve cyberattacks. Although we maintain insurance coverage for certain cyber risks, such coverage may be unavailable or insufficient to cover our losses.
We may face the risk of Internet-related disruptions.
Our mining operations are dependent upon access to the Internet. Neither we nor Hut 8 are an Internet provider and as such, we, through Hut 8, rely on other third parties to provide us with access to the Internet. There can be no assurance that Internet providers will service the Hut 8 sites that our Bitcoin miners are hosted at or that once a provider has decided to deliver Internet connectivity to such sites, it will continue to do so for any period of time. If we face a significant disruption in Internet connectivity to the sites where our Bitcoin miners are hosted, we may be required to reduce the impacted operations or cease them altogether. If this occurs, our business, financial condition and results of operations may be materially and adversely affected.
Our success depends on key personnel whose continued service is not guaranteed.
We depend on the efforts of our key personnel and the key personnel of Hut 8, including our and Hut 8’s senior leadership, many of whom have strong technology, finance, real estate and/or Bitcoin mining expertise and industry reputations. They are important to our success for many reasons, including that they attract investors and business and investment opportunities and assist us in negotiations with investors, lenders and industry personnel. If we lost their services, or Hut 8 lost the services of its key personnel, our business and investment opportunities and our relationships with lenders and other capital markets participants and industry personnel could suffer. As the number of our competitors increases or their competitive strength increases, it becomes more likely that a competitor would attempt to hire certain of these individuals away from us or Hut 8. The loss of any of these key personnel would result in the loss of these and other benefits and could materially and adversely affect our business, financial condition and results of operations.
We are, and Historical ABTC was, an early-stage company with limited operating history.
Historical ABTC was an early-stage company with very limited operating history, and we are an early-stage company currently and have a very limited operating history. No assurances can be made that we will achieve profitability in the near future, if ever. Accordingly, you should consider our business prospects in light of the costs, uncertainties, delays and difficulties frequently encountered by companies in the early stages of development. Potential investors should carefully consider the risks and uncertainties that a company with a limited operating history will face. In particular, potential investors should consider that we may be unable to:
| ● | successfully implement or execute our business plan or demonstrate that our business plan is sound; |
| ● | adjust to changing conditions or keep pace with increased demand; |
| ● | attract and retain an experienced management team; or |
| ● | raise sufficient funds to effectuate our business plan. |
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We may not adequately respond to price fluctuations and rapidly changing technology.
Competitive conditions within the industry in which we operate require that we use sophisticated technology in the operation of our business. This industry is characterized by rapid technological changes, enhancements and evolving industry standards. New technologies, techniques or offerings could emerge that might offer better performance than the technologies we currently utilize and we may have to manage transitions to these new technologies to remain competitive. We intend to continue to invest in hardware, equipment and technology at our facilities. We may not be successful, generally or relative to our competitors, in timely implementing new technology into our systems or doing so in a cost-effective manner. During the course of implementing any such new technology into our operations, we may experience system interruptions and failures during such implementation. Furthermore, there can be no assurances that we will recognize, in a timely manner or at all, the benefits that we may expect as a result of implementing new technology into our operations. As a result, our business, financial condition and results of operations may suffer.
If we do not accurately predict our facility requirements or if Hut 8 fails to successfully develop and operate facilities at which we may host our miners, it could have a material adverse effect on our business, financial condition and results of operations.
The costs of operating in the facilities used by us will constitute a significant portion of our capital and operating expenses. We evaluate our short- and long-term infrastructure and facilities requirements in order to manage growth and ensure adequate capacity for our planned and existing mining operations. However, there can be no assurance that we will accurately predict our short- and long-term requirements.
We are dependent on Hut 8 for the maintenance, development and expansion of future facilities. In order to sustain our growth in certain of our existing and new markets, Hut 8 may expand an existing data center, lease a new facility or acquire suitable land, with or without structures, to build new data centers, which we may use for our operations. These projects expose Hut 8 to many risks, the cost of which may be passed along to us in the form of delays in providing adequate capacity for our Bitcoin miners or increases in the costs of operating in the facilities used by us, which could have an adverse effect on our business, financial condition and results of operations. Some of the risks associated with the development, redevelopment and construction of data centers by Hut 8 or others include:
| ● | construction delays; |
| ● | power and power grid constraints; |
| ● | lack of availability and delays for data center and/or power equipment, including items such as generators and switchgear; |
| ● | delays related to permitting and approvals to open from public agencies and utility companies; and |
| ● | unexpected lack of power access. |
Delays, difficulty finding replacement products, continued high inflation and additional or unexpected disruptions to Hut 8’s supply chain could significantly affect the cost of our existing or anticipated projects. Furthermore, there may not be suitable properties available in Hut 8’s markets that are accessible to us with the necessary combination of high-power capacity and fiber connectivity or selection may be limited. We expect that we will continue to experience limited availability of power and grid constraints in many markets as well as shortages of associated equipment because of the current high demands and finite nature of these resources. These shortages could result in challenges in ensuring adequate capacity for our planned and existing mining operations, which could have a material adverse effect on our business, financial condition and results of operations.
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We may acquire other businesses and/or assets or form strategic alliances or joint ventures that could negatively affect our operating results, dilute shareholder ownership, increase debt or cause us to incur significant expenses.
As part of our growth strategy, in the future, we may pursue acquisitions of businesses and/or assets and/or enter into strategic alliances or joint ventures. However, we cannot offer any assurance that any such acquisition or partnership will be successful. We may not be able to identify suitable partners or acquisition candidates and may not be able to complete such transactions on favorable terms, if at all. If we complete any acquisitions, we may not be able to integrate these acquisitions successfully into our existing business. In addition, in the event that we acquire any existing businesses, we may assume unknown or contingent liabilities.
Any such acquisitions also could result in the issuance of stock, incurrence of debt, contingent liabilities, write-offs of intangible assets or goodwill, restructuring and other related expenses or litigation, any of which could have a negative impact on our business, financial condition and results of operations. Integration of an acquired company may also disrupt ongoing operations and carry substantial compliance burdens and costs, which may limit our ability to realize the anticipated benefits of such acquisitions and which may require management resources that would otherwise be focused on developing and expanding our existing business. We may experience losses related to potential investments in other companies, which could materially and adversely affect our business, financial condition and results of operations. Furthermore, the benefits of any acquisition, strategic alliance or joint venture may also take considerable time to develop and we cannot be certain that any particular acquisition, strategic alliance or joint venture will produce the intended benefits in a timely manner or to the extent anticipated or at all.
We operate in the United States and Canada, and may further expand our operations internationally, which may expose us to risks, including currency risks, associated with doing business internationally.
We currently operate in the United States and Canada, and may expand our operations to other international jurisdictions in the future. As a result, we are and may increasingly become exposed to risks inherent in conducting business outside of the United States. These risks include the following:
| ● | adverse changes in foreign currency exchange rates; |
| ● | increased difficulty in protecting our intellectual property rights and trade secrets, including litigation costs and the outcome of such litigation in jurisdictions outside the United States; |
| ● | increased exposure to events that could impair our ability to operate internationally with third parties such as problems with such third parties’ operations, finances, insolvency, labor relations, manufacturing capabilities, costs, insurance, natural disasters, public health emergencies or other catastrophic events; |
| ● | unexpected legal or government action or changes in legal or regulatory requirements; |
| ● | difficulties in managing, growing and staffing international operations; |
| ● | social, economic or political instability; |
| ● | potential negative consequences from changes to taxation or tariff policies; |
| ● | challenges to the transfer pricing of cross-border intercompany transactions; |
| ● | increased difficulty in ensuring compliance by employees, agents and contractors with our policies as well as with the laws of multiple jurisdictions, including international environmental, health and safety laws and increasingly complex regulations relating to the conduct of international commerce, including import/export laws and regulations, economic sanctions laws and regulations and trade control; and |
| ● | increased exposure to cybersecurity risks in foreign jurisdictions that may materially and adversely affect our business, financial condition and results of operations. |
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Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Our functional currency is the U.S. dollar and most purchases are transacted in U.S. dollars. However, our Canadian operations use Canadian dollars as their functional currency. Potential future operations outside of Canada and the United States may use other local currencies as their function currency. As a result, we are and may increasingly become exposed to fluctuations in currency exchange rates, which could negatively affect our business, financial condition and results of operations. Our management currently does not hedge our foreign exchange risk.
We may incur significant expenses as a result of our international operations and potential expansion and we may not be successful in converting those expenditures into increased profitability. Our failure to successfully manage these risks could harm our international operations and growth and have an adverse effect on our business, financial condition and results of operations.
Banks and financial institutions may not provide banking services or may cut off services, to businesses that provide digital asset-related services or that accept digital assets as payment.
Although a number of significant U.S. banks and investment institutions allow customers to carry and invest in Bitcoin and other digital assets, the acceptance and use by banks of digital assets, including Bitcoin, varies. However, a number of companies that provide Bitcoin or other digital asset-related services have been unable to find banks or financial institutions that are willing to provide them with bank accounts and other services. This risk may be further exacerbated in light of several high-profile bankruptcies in the digital assets industry, as well as bank failures, which have disrupted investor confidence in digital assets and led to a rapid escalation of oversight of the digital asset industry. For example, certain banks have implemented enhanced know-your-customer and anti-money laundering requirements in connection with potential digital asset customers. These enhanced requirements may make it more difficult for digital asset-related companies to find banking or financial services.
A number of companies and individuals or businesses associated with digital assets may have had and may continue to have their existing bank accounts closed or services discontinued with financial institutions. We also may be unable to maintain these services for our business.
The difficulty that many businesses that provide Bitcoin or other digital asset-related services have and may continue to have in finding banks and financial institutions willing to provide them services may decrease the usefulness of digital assets as a payment system and harm public perception of digital assets. Similarly, the usefulness of digital assets as a payment system and the public perception of digital assets could be damaged if banks or financial institutions were to close the accounts of businesses providing Bitcoin or other digital asset-related services. This could occur as a result of compliance risk, cost, government regulation or public pressure. The risk applies to securities firms, clearance and settlement firms, national stock and commodities exchanges, the over-the-counter market and the Depository Trust Company. Such factors would have a material adverse effect on our business, financial condition and results of operations.
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Risks Related to Certain Regulations and Laws, Including Tax Laws
Our operations are subject to various legal, regulatory, governmental and technological uncertainties.
Our platform includes Bitcoin miners at three Bitcoin mining sites in North America. Our business operating across multiple jurisdictions subjects us to extensive laws, rules, regulations, policies orders, determinations, directives and legal and regulatory interpretations and guidance.
Many of these legal and regulatory regimes were adopted prior to the advent of the internet, mobile technologies, digital assets, AI and/or related technologies. As a result, some applicable laws and regulations do not contemplate or address unique issues associated with the crypto economy, are subject to significant uncertainty and vary widely across U.S. and Canadian federal, state, provincial and local and international jurisdictions. These legal and regulatory regimes, including the laws, rules and regulations thereunder, evolve frequently and may be modified, interpreted and applied in an inconsistent manner from one jurisdiction to another and may conflict with one another. Moreover, the complexity and evolving nature of our business and the significant uncertainty surrounding the regulation of the crypto industry requires us to exercise judgment as to whether certain laws, rules and regulations apply to us and it is possible that governmental bodies and regulators may disagree with our conclusions. To the extent we have not complied or are deemed to have not complied, with such laws, rules and regulations, we could be subject to significant fines, revocation of licenses, limitations on our operations, reputational harm and other regulatory consequences, each of which may be significant and could adversely affect our business, financial condition and results of operations.
Additionally, various governmental and regulatory bodies, including legislative and executive bodies, in the United States, Canada and in other countries may adopt new laws and regulations, the direction and timing of which may be influenced by changes in the governing administrations and major events in the economy. For example, in light of the recent change in administration in the United States, there is considerable uncertainty and potential conflict regarding and among existing laws, judicial orders and bans, new presidential executive orders, regulatory frameworks, leadership changes and enforcement priorities and strategies. Penalties for non-compliance with any of these orders or regulations may be significant. Proposed tariffs to be imposed by the United States on imports from certain countries and potential counter-tariffs in response, could lead to increased costs and supply chain disruptions. If we are not able to navigate these changes, it could have a material adverse effect on our business, financial condition and results of operations.
Due to our business activities, we may be subject to examinations, oversight, reviews, investigations and inquiries, many of which have broad discretion to audit and examine our business. Moreover, laws and regulations related to economic sanctions, export controls, anti-bribery and anti-corruption and other international activities may restrict or limit our ability to engage in transactions or dealings with certain counterparties in or with, certain countries or territories or in certain activities. We cannot guarantee compliance with all such laws and regulations and failure to comply with such laws and regulations could expose us to fines, penalties or costly and expensive investigations. Any new laws, regulations or interpretations may result in additional litigation, regulatory investigations and enforcement or other actions, including preventing or delaying if and how we conduct our business. Adverse changes to or our failure to comply with, any laws and regulations may have an adverse effect on our business, financial condition and results of operations.
The application of the CEA and the regulations promulgated thereunder, to our business is unclear and is subject to change in a manner that is difficult to predict.
The application of the CEA and the regulations promulgated thereunder by the CFTC to our business is unclear and is subject to change in a manner that is difficult to predict. To the extent we become or are deemed to be subject to regulation by the U.S. Commodity Futures Trading Commission (“CFTC”) in connection with our business activities, we may incur additional regulatory obligations and compliance costs, which may be significant.
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The CFTC has stated and judicial decisions involving CFTC enforcement actions have confirmed, that Bitcoin and other digital assets fall within the definition of a “commodity” under the CEA and the regulations promulgated by the CFTC thereunder (“CFTC Rules”). As a result, the CFTC has general enforcement authority to police against manipulation and fraud in the spot markets for Bitcoin and other digital assets. From time to time, manipulation, fraud and other forms of improper trading by other participants involved in the markets for Bitcoin and other digital assets have resulted in and may in the future result in, CFTC investigations, inquiries, enforcement action and similar actions by other regulators, government agencies and civil litigation. Such investigations, inquiries, enforcement actions and litigation may cause negative publicity for Bitcoin and other digital assets, which could adversely impact mining profitability, the value of such assets and the market price of our Class A common stock.
In addition to the CFTC’s general enforcement authority, the CFTC has regulatory and supervisory authority with respect to commodity futures, options and/or swaps (“Commodity Interests”) and certain transactions in commodities offered to retail purchasers on a leveraged, margined or financed basis. Changes in our activities, the CEA, CFTC Rules or the interpretations and guidance of the CFTC may subject us to additional regulatory requirements, licenses and approvals, which could result in significant increased compliance and operational costs.
Furthermore, trusts, syndicates and other collective investment vehicles operated for the purpose of trading in Commodity Interests may be subject to regulation and oversight by the CFTC and the National Futures Association as “commodity pools.” If our mining activities or transactions in Bitcoin were deemed by the CFTC to involve Commodity Interests and the operation of a commodity pool for our shareholders, we could be subject to regulation as a commodity pool operator and required to register as such. Such additional registrations may result in increased expenses, thereby materially and adversely impacting our stockholders, financial condition and results of operations. If we determine it is not possible or practicable to comply with such additional regulatory and registration requirements, we may seek to cease certain of our operations. Any such action may adversely affect an investment in our business and in the market price of our Class A common stock.
If regulatory changes or interpretations require our registration as a “money services business” under the regulations promulgated by FinCEN under the authority of the BSA or otherwise under state laws, we may incur significant compliance costs.
FinCEN regulates providers of certain services with respect to “convertible virtual currency,” including Bitcoin. Businesses engaged in the transfer of convertible virtual currencies are subject to registration and licensure requirements at the U.S. federal level and also under U.S. state laws. While FinCEN has issued guidance that digital assets mining, without engagement in other activities, does not require registration and licensure with FinCEN, this could be subject to change as FinCEN and other regulatory agencies continue their scrutiny of the Bitcoin network and digital assets generally. To the extent that our business activities cause us to be deemed a “money services business” under the regulations promulgated by FinCEN under the authority of the BSA, we may be required to comply with FinCEN regulations, including those that would mandate us to implement anti-money laundering programs, make certain reports to FinCEN and maintain certain records.
To the extent that our activities would cause us to be deemed a “money transmitter” or equivalent designation under state law in any state in which we may operate, we may be required to seek a license or otherwise register with a state regulator and comply with state regulations that may include the implementation of anti-money laundering programs, including implementing a know-your-counterparty program and transaction monitoring, maintenance of certain records and other operational requirements.
Such additional federal or state regulatory obligations may cause us to incur extraordinary expenses. Furthermore, we may not be capable of complying with certain federal or state regulatory obligations applicable to “money services businesses” and “money transmitters,” such as monitoring transactions and blocking transactions, because of the nature of the Bitcoin blockchain. If we are deemed to be subject to and determine not to comply with such additional regulatory and registration requirements, we may cease or alter our activities.
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If we were deemed to be an investment company under the 1940 Act, applicable restrictions could make it impractical or impossible for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition and results of operations.
Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if (i) it is or holds itself out as being, engaged primarily or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (ii) it engages or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. We do not believe that we are an “investment company,” as such term is defined in either of those sections of the 1940 Act. We intend to conduct our operations so that we will not be deemed an investment company. We believe that we are not and will not be primarily engaged in the business of investing, reinvesting or trading in securities and we do not hold ourselves out as being engaged in those activities. The SEC and its staff have taken the position that certain digital assets fall within the definition of a “security” under the U.S. federal securities laws. Although public statements by senior officials and the staff of the SEC indicate that the SEC does not intend to take the position that Bitcoin is a security (in its current form), such statements are not official policy statements by the SEC and reflect only the speakers’ views, which are not binding on the SEC or any other agency or court.
As a result of our investments and our Bitcoin mining activities, it is possible that the investment securities we hold in the future could exceed 40% of our total assets, exclusive of U.S. government securities and cash items, particularly if the SEC’s position on Bitcoin changes and, accordingly, we could become an inadvertent investment company. An inadvertent investment company can avoid being classified as an investment company if it can rely on one of the exclusions or exemptions under the 1940 Act. One such exemption, Rule 3a-2 under the 1940 Act, allows an inadvertent investment company a grace period of one year from the earlier of (a) the date on which an issuer owns securities and/or cash having a value exceeding 50% of the issuer’s total assets on either a consolidated or unconsolidated basis and (b) the date on which an issuer owns or proposes to acquire investment securities having a value exceeding 40% of the value of such issuer’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. As of the date of this Exhibit, we do not believe we are an inadvertent investment company. If we do become an inadvertent investment company in the future, we may take actions to cause the investment securities held by us to be less than 40% of our total assets, which may include acquiring assets with our cash and/or Bitcoin on hand or liquidating investment securities or Bitcoin or seeking a no-action letter from the SEC if we are unable to acquire sufficient assets or liquidate sufficient investment securities in a timely manner. Liquidating investment securities or Bitcoin could result in losses.
As the Rule 3a-2 exemption is available to a company no more than once every three years and assuming no other exclusion or exemption is available to us, we would have to keep within the 40% limit for at least three years after we relies on Rule 3a-2 and subsequently cease being an inadvertent investment company. This may limit our ability to make certain investments or enter into joint ventures that could otherwise have a positive impact on our earnings. In any event, we do not intend to become an investment company engaged in the business of investing and trading securities.
Classification as an investment company under the 1940 Act requires registration with the SEC. If an investment company fails to register, it would have to stop doing almost all business and its contracts would become voidable. Registration is time consuming, expensive and restrictive and may require a restructuring of our business and we would be very constrained in the kind of business we could do as a registered investment company. Further, we would become subject to substantial regulation concerning management, operations, transactions with affiliated persons and portfolio composition, and would need to file reports under the 1940 Act regime. The cost of such compliance would result in us incurring substantial additional expenses and the failure to register if required would have a materially adverse impact on our business, financial condition and results of operations. Furthermore, our classification as an investment company could adversely affect our ability to engage in future combinations, acquisitions or other transactions on a tax-free basis.
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Our interactions with a blockchain may expose us to specially designated nationals (“SDN”) or blocked persons and new legislation or regulation could adversely impact our business or the market for digital assets.
The Office of Financial Assets Control (“OFAC”) of the U.S. Department of the Treasury requires us to comply with its sanction program and not conduct business with persons named on its SDN list. However, because of the pseudonymous nature of blockchain transactions, we may inadvertently and without our knowledge engage in transactions with persons named on OFAC’s SDN list. We prohibit any transactions with such SDN individuals and take commercially reasonable steps to avoid such transactions, but we may not be adequately capable of determining the ultimate identity of the individual with whom we transact with respect to transacting in Bitcoin. Moreover, there is a risk that some bad actors will continue to attempt to use digital assets, including Bitcoin, as a potential means of avoiding federally imposed sanctions.
We are unable to predict the nature or extent of new and proposed legislation and regulation affecting the digital asset industry or the potential impact of the use of Bitcoin or other digital assets by SDN or other blocked or sanctioned persons, which could have material adverse effects on our business, financial condition and results of operations and our industry more broadly. Further, we may be subject to investigation, administrative or court proceedings and civil or criminal monetary fines and penalties as a result of any enforcement actions, all of which could harm our business, financial condition and results of operations.
We may be subject to substantial environmental or energy regulation and may be adversely affected by legislative or regulatory changes.
Our business is subject to extensive U.S. and Canadian federal, state, provincial and local laws. Compliance with or changes to, the requirements under these legal and regulatory regimes may cause us to incur significant additional costs or adversely impact our ability to compete on favorable terms with competitors. Our plans and strategic initiatives are based, in part, on our understanding of current environmental and energy regulations, policies and initiatives. If new regulations are imposed or if existing regulations are modified, the assumptions made underlying our plans and strategic initiatives may be inaccurate and we may incur additional costs to adapt our plans, if we are able to adapt them at all, to such changes. Failure to comply with such requirements could result in the shutdown of non-complying operations, the imposition of liens, fines and/or civil or criminal liability, costly litigation or substantial delays or modifications to our operations or strategic initiatives. Changes to these laws and regulations could result in temporary or permanent restrictions on our operations. Compliance with or opposing such regulation, may be costly. In addition, we may be responsible for any on-site liabilities associated with the environmental condition of facilities at which we host our Bitcoin miners, regardless of when the liabilities arose and whether they are now known or unknown.
In addition, there continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty for our business because Bitcoin mining, with its energy demand, may become a target for future environmental and energy regulation. New legislation and increased regulation regarding climate change could impose significant costs on us and our suppliers, including costs related to increased energy requirements, capital equipment, environmental monitoring and reporting and other costs to comply with such regulations. Further, any future climate change regulations could also negatively impact our ability to compete with companies situated in areas not subject to such limitations. Given the political significance and uncertainty around the impact of climate change and how it should be addressed, we cannot predict how legislation and regulation will affect our business, financial condition and results of operations. Further, even without such regulation, increased awareness and any adverse publicity in the global marketplace about potential impacts on climate change by us or other companies in our industry could harm our reputation. Any of the foregoing could result in a material adverse effect on our business, financial condition and results of operations.
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Increased scrutiny and changing expectations from stakeholders with respect to our practices and the impacts of climate change may result in additional costs or risks.
Companies across many industries are facing increasing scrutiny related to environmental, social and governance (“ESG”) matters. Investor advocacy groups, certain institutional investors, investment funds and other influential investors are increasingly focused on ESG and in recent years have placed increasing importance on the non-financial impacts of their investments. If environmental laws or regulations or industry standards are either changed or adopted and impose significant operational restrictions and compliance requirements on our operations, our business, financial condition and results of operations could be negatively impacted.
We may be adversely affected by physical risks related to climate change and our response to it.
Severe weather events, such as droughts, wildfires, flooding, heat waves, hurricanes, typhoons and winter storms and other natural and manmade events pose a threat to our operations through physical damage to equipment and facilities that host our Bitcoin miners, power supply disruption and long-term effects on the cost of electricity. The frequency and intensity of severe weather events are reportedly increasing as part of broader climate changes. Changes in global weather patterns may also pose long-term risks of physical impacts to our business. We cannot be certain that any plans we have will mitigate the impacts of such disasters or events. Failure to mitigate such events could adversely affect our business, financial condition and results of operations.
We may be involved in legal proceedings from time to time, which could adversely affect us.
From time to time we may be a party to legal and regulatory proceedings, including matters involving governmental agencies or regulators, entities with whom we do business and other proceedings, whether arising in the ordinary course of business or otherwise. We could also be subject to demands or litigation relating to the Mergers. Responding to such demands can be expensive and divert management time and resources. We evaluate our exposure to legal and regulatory proceedings and establish reserves, if required, for the estimated liabilities in accordance with generally accepted accounting principles. Assessing and predicting the outcome of these matters involves substantial uncertainties and contingencies. Such matters can be time-consuming, divert management’s attention and resources, cause us to incur significant expenses or liabilities or require us to change our business practices. In addition, the expenses and liabilities of litigation and other proceedings and the timing of these expenses from period to period, are difficult to estimate, subject to change and could adversely affect our business, financial condition and results of operations.
In addition, responding to lawsuits brought against us and governmental inquiries or legal actions that we may initiate may be expensive, time-consuming and disruptive to normal business operations. Moreover, the results of complex legal proceedings and governmental inquiries could adversely affect our business, financial condition and results of operations and we could incur substantial monetary liability and/or be required to change our business practices.
Changes in tax laws or unanticipated tax liabilities could adversely affect our effective income tax rate and profitability.
We are subject to income taxes in various jurisdictions in the United States and Canada and may become subject to taxation in additional jurisdictions as we expand. Our effective tax rate could be adversely affected in the future by several factors, including changes in the valuation of deferred tax assets and liabilities, changes in tax laws and regulations or their interpretations and application, changes in the geographic mix of our earnings and the outcome of income tax audits in any of the jurisdictions in which we operate or are otherwise subject to tax.
A significant change in U.S. or Canadian tax laws and regulations may materially and adversely impact our income tax liability, provision for income taxes and effective tax rate. We regularly assess these matters to determine the adequacy of our income tax provision, which is subject to significant judgment.
In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. Although we believe our tax estimates are reasonable, the outcome of income tax audits and related litigation could be materially different than that reflected in our historical income tax provisions and accruals. There can be no assurance that the resolution of any audits or litigation will not have an adverse effect on our business, financial condition and results of operations.
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Intellectual property rights claims may adversely affect the operation of some or all digital asset networks.
Third parties may assert intellectual property claims relating to the holding and transfer of digital assets, including Bitcoin and their source code. Regardless of the merit of any intellectual property or other legal action, any threatened action that reduces confidence in some or all digital asset networks’ long-term viability or the ability of end-users to hold and transfer digital assets, including Bitcoin, may adversely affect the value of the Bitcoin we hold as well as our business, financial condition and results of operations. Additionally, a meritorious intellectual property claim could prevent us and other end-users from accessing some or all digital asset networks or holding or transferring their digital assets. As a result, an intellectual property claim against us or other large digital asset network participants could adversely affect our business, financial condition and results of operations.
Developments regarding the treatment of Bitcoin for applicable U.S. and Canadian federal, state, provincial, local and other tax purposes could adversely impact our business.
Due to the new and evolving nature of Bitcoin and the absence of comprehensive guidance with respect to Bitcoin and related transactions, many significant aspects of the applicable U.S. and Canadian federal, state, provincial, local and other tax treatment of transactions involving Bitcoin, such as the purchase and sale of Bitcoin and the receipt of staking rewards and other digital asset incentives and rewards products, are uncertain and it is unclear what guidance may be issued in the future with respect to the tax treatment of Bitcoin and related transactions.
Current Internal Revenue Service (“IRS”) guidance indicates that for U.S. federal income tax purposes digital assets, including Bitcoin, should be treated and taxed as property and transactions involving the payment of Bitcoin for goods and services should be treated in effect as barter transactions. The IRS has also released guidance to the effect that, under certain circumstances, hard forks and airdrops of digital currencies may give rise to taxable events and guidance with respect to the determination of the tax basis of digital currencies. However, current IRS guidance does not address other significant aspects of the U.S. federal income tax treatment of digital assets and related transactions. Moreover, although current IRS guidance addresses the treatment of certain hard forks and airdrops, there continues to be uncertainty with respect to the timing and amount of income inclusions for various crypto asset transactions, including staking rewards, other digital asset incentives and reward products. Generally, while current IRS guidance creates a potential tax reporting requirement for any circumstance where the ownership of a Bitcoin passes from one person to another, it preserves the right to apply capital gains treatment to those transactions, which may be favorable for investors in Bitcoin.
There can be no assurance that the IRS will not alter its existing position with respect to digital assets in the future or that Canadian federal or applicable state, provincial, local and other taxing authorities or courts will follow or continue to follow, the approach of the IRS with respect to the treatment of digital assets, including Bitcoin. Generally, any alteration of existing guidance or issuance of new or different guidance may have negative consequences, including the imposition of a greater tax burden on investors in Bitcoin or imposing a greater cost on the acquisition and disposition of Bitcoin. In either case, this may have a negative effect on the trading price of Bitcoin or otherwise negatively impact our business, financial condition and results of operations. In addition, future technological and operational developments that may arise with respect to digital currencies may increase the uncertainty of its treatment for applicable U.S. and Canadian federal, state, provincial, local and other tax purposes.
We may not protect our intellectual property rights and other proprietary rights effectively.
We may not be able to obtain broad protection in the United States, Canada or elsewhere for our current or future intellectual property and other proprietary rights. Protecting our intellectual property rights and other proprietary rights may require significant expenditure of our financial, managerial and operational resources. Any of our intellectual property rights and other proprietary rights, whether registered, unregistered, issued or unissued, may be challenged by others or invalidated through administrative proceedings and/or litigation. Moreover, the steps that we may take to protect our intellectual property and other proprietary rights may not be adequate to protect such rights or prevent third parties from infringing or misappropriating such rights. A third party might try to reverse engineer or otherwise obtain and use our technology without our permission. We cannot guarantee that others will not readily ascertain by proper means the proprietary technology used in or embodied by our services or technology or that others will not independently develop substantially equivalent products, services or technology or that we can meaningfully protect the rights to unpatented products, services or technology. We cannot guarantee that our agreements with our employees, consultants, advisors, sublicensees and strategic partners will provide meaningful protection for our intellectual property and other proprietary rights.
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Our intellectual property may infringe claims of third-party intellectual property rights or other proprietary rights, which could adversely affect our business and profitability.
Our commercial success may depend, in part, on our ability to operate without infringing third-party intellectual property rights or other proprietary rights. For example, there may be issued patents of which we are not aware that our services or technology infringe on. Also, there may be patents that we believe that we do not infringe on, but that we may ultimately be found to by a court of law or government regulatory agency. Moreover, patent applications, in some cases, are maintained in secrecy until patents are issued. Because patents can take many years to issue, there may be currently pending applications of which we are unaware that may later result in issued patents that our services or technology allegedly infringe on. If a third party brings any claim against us based on third-party intellectual property rights and/or other proprietary rights, we will be required to spend significant resources to defend and challenge such claim, as well as to invalidate any such rights. Any such claim, if initiated against us, whether or not it is resolved in our favor, could result in significant expense to us and divert the efforts of technical and management personnel, which could have a material adverse effect on our business, financial condition and results of operations.
Risks Related to Ownership of Our Class A Common Stock
The market price of our Class A common stock may be volatile or may decline regardless of our operating performance.
Although Class A common stock is listed on Nasdaq, an active trading market for our Class A common stock may never develop or be sustained. The price that our Class A common stock trades at immediately following the Mergers, or that our common stock traded at prior to the completion of the Mergers, may not necessarily reflect the price at which investors in the market will be willing to buy and sell it on a sustained basis. In addition, an active trading market for our Class A common stock may not develop or, if it is developed, may not be sustained. The lack of an active market may impair your ability to sell your shares of Class A common stock at the time you wish to sell them or at a price that you consider reasonable. An inactive market may also impair our ability to raise capital by selling securities and may impair our ability to acquire other businesses or technologies using our securities as consideration, which, in turn, could materially adversely affect our business. The market price of our Class A common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:
| ● | overall performance of the equity markets; |
| ● | our operating performance and the performance of other similar companies; |
| ● | the published opinions and third-party valuations by banking and market analysts; |
| ● | changes in our projected operating results, if any, that we provide to the public, our failure to meet these projections or changes in recommendations by securities analysts; |
| ● | regulatory or legal developments; |
| ● | the level of expenses related to operations; |
| ● | our failure to achieve our goals in the timeframe we announce; |
| ● | announcements of acquisitions, strategic alliances or significant agreements by us; |
| ● | recruitment or departure of key personnel; |
| ● | the economy as a whole and market conditions in our industry; |
| ● | trading activity by stockholders who may own or transact in significant amounts of our Class A common stock, including upon the expiration on any contractual restrictions on such trading activity; |
| ● | the size of our public float; |
| ● | political uncertainty and/or instability in the United States; and |
| ● | any other factors discussed in this Exhibit. |
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In addition, the equity markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many digital asset mining and cryptocurrency companies. Stock prices of many digital asset mining and cryptocurrency companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have filed securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and adversely affect our business, financial condition and results of operations.
Our multi-class capital structure concentrates voting control with Hut 8 and certain of our other principal shareholders, who have the ability to control the direction of our business and significantly influence all matters submitted to our stockholders for approval.
A number of provisions relating to our multi-class structure of capital stock are rare or otherwise not common among other corporations with multiple class structures. For instance, each share of our Class B Common Stock is entitled to 10,000 votes per share, each share of our Class C common stock, par value $0.0001 per share (“Class C Common Stock”) is entitled to ten (10) votes per share and each share of our Class A common stock is entitled to one vote per share. Additionally, our Amended and Restated Certificate of Incorporation (the “Charter”) provides that transfers by holders of our Class B Common Stock and Class C Common Stock will not result in those shares automatically converting to Class A common stock. Moreover, our Charter does not provide for any automatic conversion of shares of our Class B Common Stock and Class C Common Stock into Class A common stock, regardless of identity of the holders thereof or the size of their holdings of the same. See “Description of Capital Stock” in Exhibit 99.5 to the Current Report.
Hut 8 currently owns approximately 80% of the shares of our Class B Common Stock and a majority of the total combined voting power of our outstanding capital stock. Hut 8, together with our other greater than 5% stockholders, own 89.3% of the shares of our Class B Common Stock, in total representing a majority of the total combined voting power of our outstanding capital stock.
For so long as Hut 8 owns shares of our capital stock that represent a majority of the combined voting power of our outstanding capital stock, it will be able to control any corporate action that requires a stockholder vote, regardless of the vote of any other stockholder (subject to certain limited exceptions for certain class votes). As a result, Hut 8 has (and is expected to continue to have) the ability to control significant corporate activities, including, but not limited to:
| ● | subject to the provisions of the Investors’ Rights Agreement, the election of the Board and, through the Board, decision-making with respect to our business direction and policies, including the appointment and removal of our officers; |
| ● | acquisitions or dispositions of businesses or assets, mergers or other business combinations; |
| ● | issuances of shares of our Class A common stock, Class B Common Stock and Class C Common Stock and changes to our capital structure generally; |
| ● | corporate opportunities that may be suitable for us and Hut 8, subject to the corporate opportunity provisions in our Charter; |
| ● | financing activities, including the issuance of debt securities and/or the incurrence of other indebtedness generally; |
| ● | stock repurchases or the payment of one-time or recurring dividends; and |
| ● | the number of shares available for issuance under equity incentive plans. |
This voting control limits the ability of other stockholders to influence corporate matters and, as a result, we may take actions that stockholders other than Hut 8 do not view as beneficial. This voting control may also discourage or have the effect of delaying, deferring or preventing transactions involving a change of control in us, including transactions in which holders of shares of our Class A common stock might otherwise receive a premium for their shares.
Even if Hut 8 owns shares of our capital stock representing less than a majority of the total combined voting power of our outstanding capital stock, so long as Hut 8 owns shares representing a significant percentage of our total combined voting power, Hut 8 will continue to have the ability to substantially influence these significant corporate activities.
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Our multi-class capital structure may adversely affect the trading market for our Class A common stock.
It cannot be determined whether our multi-class structure results in a lower or more volatile market price for our Class A common stock, or gives rise to adverse publicity or other adverse consequences. Certain stock index providers exclude or limit the ability of companies with multi-class share structures from being added to certain of their indices. In addition, several stockholder advisory firms and large institutional investors oppose the use of multiple class structures. As a result, our multi-class capital structure may make us ineligible for inclusion in certain indices and may discourage such indices from selecting us for inclusion, may cause stockholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure and may result in large institutional investors not purchasing shares of our Class A common stock. Given the sustained flow of investment funds into passive strategies that seek to track certain indices, any exclusion from certain stock indices could result in less demand for our Class A common stock. Any actions or publications by stockholder advisory firms or institutional investors critical of our corporate governance practices or capital structure could also adversely affect the value of our Class A common stock. See “Description of Capital Stock” in Exhibit 99.5 to the Current Report.
Hut 8’s interests may conflict with our interests and the interests of our other stockholders.
Various conflicts of interest between us and Hut 8 could arise. We have five directors, all of whom have been designated by Hut 8 and two of whom are current directors or executive officers of Hut 8 and ABTC. Ownership interests of these individuals and Hut 8 in our capital stock and ownership interests of our directors and officers in Hut 8 capital stock or service by an individual as either a director and/or officer of both companies, could create or appear to create potential conflicts of interest when such individuals are faced with decisions relating to us. These could include:
| ● | corporate opportunities; |
| ● | the impact that operating or capital decisions (including the incurrence of indebtedness) relating to our business may have on Hut 8’s consolidated financial statements and/or current or future indebtedness (including related covenants); |
| ● | business combinations involving us; |
| ● | our dividend and stock repurchase policies; |
| ● | management stock ownership; and |
| ● | any intercompany agreements and services between us and Hut 8. |
Potential conflicts of interest could also arise if we decide to enter into new commercial arrangements with Hut 8 in the future or in connection with Hut 8’s desire to enter into new commercial arrangements with third parties. Additionally, Hut 8 may be constrained by the terms of agreements relating to its indebtedness from taking actions or permitting us to take actions, that may be in our best interest.
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Furthermore, disputes may arise between us and Hut 8 relating to our business relationships and these potential conflicts of interest may make it more difficult for us to favorably resolve such disputes, including those related to: tax, employee benefits, indemnification and other matters arising from the Mergers; the nature, quality and pricing of services Hut 8 agrees to provide to us; sales or other disposals by Hut 8 of all or a portion of its ownership interest in us; and business combinations involving us.
We may not be able to resolve any potential conflicts and even if we do, the resolution may be less favorable to the us than if we were dealing with an unaffiliated third party. While we will be controlled by Hut 8, we may not have the leverage to negotiate amendments to our various agreements with Hut 8 (if required) on terms as favorable to us as those we would negotiate with an unaffiliated third party.
We rely on exemptions from certain Nasdaq corporate governance requirements for controlled companies.
Hut 8 owns more than 50% of the combined voting power of our outstanding capital stock, so we are a “controlled company” under the Rules of The Nasdaq Stock Market, LLC (the “Nasdaq Corporate Governance Rules”). As a “controlled company,” we are exempt from compliance with certain marketplace rules related to corporate governance, including that: (i) a majority of the Board must be comprised of “Independent Directors” (as defined in the Nasdaq Corporate Governance Rules), (ii) we must adopt a formal written compensation committee charter and have a compensation committee of at least two members, each of which must be an independent director, and (iii) we must adopt a formal written charter or board resolution addressing the nomination process whereby director nominees are selected either by: (a) Independent Directors constituting a majority of the Board’s Independent Directors in a vote in which only Independent Directors participate or (b) a nominations committee comprised solely of Independent Directors.
We rely on certain “controlled company” exemptions. As a result, we do not have a compensation committee and do not have a nominations committee or independent nominating function. Accordingly, for so long as we remain a “controlled company” and avail ourself of these exemptions, our stockholders will not have the same protections afforded to stockholders of companies that are subject to all of the requirements of the Nasdaq Corporate Governance Rules.
Future sales and issuances of our Class A common stock or rights to purchase Class A common stock, including pursuant to the 2025 Plan, could result in dilution and could cause the market price of our Class A common stock to fall.
Additional capital will be needed to continue our planned operations and pursue our strategy. We plan to raise significant amounts of additional capital, including in amounts that may exceed our current estimates of enterprise value and future market capitalization, and may sell common stock, convertible securities or other equity securities in one or more transactions at prices and amounts and in a manner we determine from time to time in order to do so. To the extent we raise additional capital by issuing equity securities, our stockholders are likely to experience substantial dilution and some or all of our financial measures on a per share basis could be reduced. If we sell common stock, convertible securities or other equity securities in more than one transaction, investors are likely to be materially diluted by subsequent sales. These sales may also result in material dilution to our existing stockholders and new investors could gain rights superior to existing stockholders. The perception of, including as a result of any announcement or public knowledge of our intentions, or actual occurrence of, frequent and large capital raising transactions could adversely affect our stock price and increase its volatility.
Pursuant to the 2025 Plan, the Board is authorized to grant stock options and other equity-based awards to our employees, directors and consultants, which equity-based awards would also cause dilution to our stockholders. The number of shares of our Class C Common Stock to be reserved for issuance under the 2025 Plan is equal to approximately 20% of the total number of fully diluted outstanding shares of our common stock at the Closing. In addition, pursuant to the 2025 Plan, the number of shares of our Class C Common Stock reserved for issuance will automatically increase on January 1st of each year, for a period of not more than ten years, commencing on January 1, 2026, and ending on (and including) January 1, 2035, by the lesser of (a) a number of shares of common stock equal to the excess of (i) 20% of the number of issued and outstanding fully diluted shares of common stock on December 31st of the preceding calendar year over (ii) the number of shares reserved for issuance under the 2025 Plan as of such date and (b) such number of shares determined by the Board. Pursuant to this automatic increase and subsequent issuances under the 2025 Plan, stockholders may experience additional dilution, which could cause the market price of our Class A common stock to fall.
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Sales of a substantial number of shares of Class A common stock by our stockholders in the public market could cause our Class A common stock price to fall.
Sales of a substantial number of shares of our Class A common stock in the public market or the perception that these sales might occur could significantly reduce the market price of our Class A common stock and impair our ability to raise adequate capital through the sale of additional equity securities.
Sales of these shares of our Class A common stock or perceptions that they will be sold, could cause the trading price of our Class A common stock to decline. In addition, a significant number of shares of our common stock are subject to contractual restriction on resale, and may be sold at or around a similar time upon expiration of such restrictions. We are unable to predict what effect, if any, market sales of securities held by our significant stockholders, directors or officers or the availability of these securities for future sale will have on the market price of our Class A common stock.
We effected the Reverse Stock Split on September 2, 2025, and the liquidity of our Class A common stock may be adversely effected.
On September 2, 2025, we effected a reverse stock split at a ratio of five-for-one of the pre-Mergers Company’s issued and outstanding shares of common stock. The liquidity of the shares of our Class A common stock may be affected adversely by the Reverse Stock Split given the reduced number of shares of our Class A common stock that are outstanding following the Reverse Stock Split, particularly if the market price of our Class A common stock does not increase. There can be no assurance that the share prices of our Class A common stock will attract new investors, including institutional investors. As a result, the trading liquidity and price of our Class A common stock may be adversely affected by the Reverse Stock Split.
Our operating results may fluctuate significantly or fall below the expectations of investors or securities analysts, each of which may cause our Class A common stock price to fluctuate or decline.
It is expected that our operating results will be subject to annual and quarterly fluctuations. Our net income and other operating results will be affected by numerous factors, including:
| ● | our execution of any collaboration or similar arrangements and the timing of payments we may make or receive under existing or future arrangements or the termination or modification of any such existing or future arrangements; |
| ● | the market price of digital assets, including Bitcoin; |
| ● | additions and departures of key personnel; |
| ● | strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy; and |
| ● | changes in general market and economic conditions. |
If our operating results fall below the expectations of investors or securities analysts, the price of our Class A common stock could decline substantially. Furthermore, any fluctuations in our operating results may, in turn, cause the price of our Class A common stock to fluctuate substantially.
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We incur and will continue to incur increased costs as a result of operating as a public company and our management team is required to devote substantial time to compliance initiatives.
As a public company, we incur significant legal, accounting and other expenses that Historical ABTC did not incur as a private company. In addition, the Sarbanes-Oxley Act and rules subsequently implemented by the SEC and Nasdaq have imposed various requirements on public companies, including establishment and maintenance of effective disclosure and internal control over financial reporting and corporate governance practices. Our management and other personnel devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations increase our legal and financial compliance costs and will make some activities more time-consuming and costly.
We are subject to the reporting requirements of the Exchange Act, which requires, among other things, that we file with the SEC annual, quarterly and current reports with respect to our business and financial condition as well as other disclosure and corporate governance requirements. If we are not able to comply with the requirements in a timely manner or at all, our financial condition or the market price of our Class A common stock may be harmed.
Among other things, our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our compliance with these requirements will require that we incur substantial accounting and related expenses and expend significant management efforts.
Pursuant to Section 404 of the Sarbanes-Oxley Act, we are required to furnish a report by our management on our internal control over financial reporting, which may include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To the extent that we remain a “smaller reporting company” with less than $100 million in annual revenues, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. We dedicate resources and maintain a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite such efforts, there is a risk that neither we nor our independent registered public accounting firm, if required, will be able to conclude that our internal control over financial reporting remains effective as required by Section 404. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.
As of June 30, 2025, our disclosure controls and procedures were not effective and we identified a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in our control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness identified related to a lack of sufficient personnel staffing in our accounting and financial reporting department. As a result, we were not able to achieve adequate segregation of duties and were not able to provide for adequate review of the financial statements. Remediation efforts are ongoing. We may not be able to fully remediate the material weakness until internal controls have been operating effectively for a sufficient period of time.
Moreover, we may identify additional deficiencies in our internal control over financial reporting that are deemed to be material weaknesses. If we cannot provide reliable financial reports, prevent fraud and operate successfully as a public company, investors could lose confidence in the accuracy and completeness of our financial reports, our reputation and operating results may be harmed, the market price of our Class A common stock could decline and we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities.
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The historical financial information of Historical ABTC presented herein may not be representative of its results or financial condition if Historical ABTC had been operated as a standalone public company and as a result may not be representative of our results or financial condition.
Historical ABTC did not operate as a standalone company. Prior to the establishment of Historical ABTC, the operations of Historical ABTC were carried out by companies owned or controlled by Hut 8. Historical ABTC’s condensed combined financial statements, representing the historical assets, liabilities, operations and cash flows directly attributable to Historical ABTC, have been prepared on a carve-out basis through the use of a management approach from Hut 8’s consolidated financial statements and accounting records and are presented on a stand-alone basis as if the operations of Historical ABTC have been conducted independently from Hut 8. Historically, separate financial statements have not been prepared for Historical ABTC and it has not operated as a standalone business from Hut 8. Historical ABTC’s results of operations refer to Hut 8’s Bitcoin mining operations, represented by the “Bitcoin mining” sub-segment of Hut 8’s “Compute” segment. The historical results and financial condition of Historical ABTC may be different from those that would have resulted had Historical ABTC been operated as a standalone public company during the applicable periods or at the applicable dates. As a result, the historical financial information of Historical ABTC may not be indicative of our future operating results or financial position.
The unaudited pro forma condensed combined financial information presented by us may not be representative of our results.
The unaudited pro forma condensed combined financial information included in Exhibit 99.8 to the Current Report, has been presented for informational purposes only and is not necessarily indicative of the financial position or results of operations that actually would have occurred had the Mergers been completed as of the date indicated, nor is it indicative of our future operating results or financial position. The unaudited pro forma condensed combined financial information has been derived from our historical financial statements and Historical ABTC’s financial statements and adjustments and assumptions have been made regarding our business and financial position after giving effect to the Mergers. The information upon which these adjustments and assumptions have been made is preliminary and these kinds of adjustments and assumptions are difficult to make with accuracy. Moreover, the unaudited pro forma condensed combined financial information does not reflect all costs that are expected to be incurred by us as an operating company after the Mergers. The assumptions used in preparing the unaudited pro forma condensed combined financial information may not ultimately be accurate and other factors may affect our results and financial condition. The unaudited pro forma condensed combined financial information does not reflect the costs of integration activities contemplated as part of the Mergers. Accordingly, the unaudited pro forma condensed combined financial information does not reflect what our results or financial condition would have been had we and Historical ABTC been a consolidated entity during all periods presented.
Our Charter includes a forum selection clause, which limits our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees.
Our Charter provides that the Court of Chancery of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) is the sole and exclusive forum for (i) any derivative action, suit or proceeding brought on behalf of us; (ii) any action, suit or proceeding asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or stockholders to us or to our stockholders; (iii) any action, suit or proceeding arising pursuant to the DGCL or our Charter or our bylaws (the “Bylaws”) (as any of the foregoing may be amended from time to time); (iv) any action, suit or proceeding as to which the DGCL confers jurisdiction on the Chancery Court or (v) any action, suit or proceeding asserting a claim governed by the internal affairs doctrine.
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As a result, any action brought by any of our stockholders with regard to any of these matters will need to be filed in the Court of Chancery of the State of Delaware and cannot be filed in any other jurisdiction; provided that, the exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Our Charter also provides that the federal district courts of the United States of America will be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Nothing in our Charter or our Bylaws will preclude stockholders that assert claims under the Exchange Act from bringing such claims in state or federal court, subject to applicable law. There is uncertainty as to whether a court would enforce the exclusive forum provision in connection with claims arising under the Securities Act, and in any event, our stockholders cannot waive compliance with federal securities laws and the rules and regulations thereunder.
This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims. If a court were to find the choice of forum provision contained in our Charter to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business, results of operations and financial condition.
Anti-takeover provisions in our Charter and Bylaws, as well as provisions of Delaware law, could delay or prevent a change of control.
Certain provisions of our Charter and Bylaws could discourage unsolicited takeover proposals that stockholders might consider to be in their best interests. These documents include provisions that, among other things:
| ● | provide for a classified board of directors, as a result of which the Board is divided into three classes, with each class serving for staggered three-year terms; |
| ● | permit directors to be removed from the Board by stockholders only for cause by the affirmative vote of at least a majority of the combined voting power of the then-outstanding common stock (except that prior to the Voting Threshold Date (as defined herein), directors may be removed by our stockholders with or without cause by an affirmative vote of at least a majority of the combined voting power of the then-outstanding common stock); |
| ● | do not permit cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates; |
| ● | authorize the issuance of “blank check” preferred stock without any need for action by stockholders; |
| ● | limit the ability of stockholders to call special meetings of stockholders or to act by written consent in lieu of a meeting (except that prior to the Voting Threshold Date, special meetings of stockholders may be called by our secretary at the request of stockholders holding a majority of the combined voting power of our then-outstanding common stock and stockholder actions may be taken by written consent in lieu of a meeting); |
| ● | require the affirmative vote of at least 66 2/3% of the combined voting power of our then-outstanding common stock, voting as a single class, to amend certain provisions of our Charter; and |
| ● | establish advance notice requirements for nominations for election to the Board or for proposing matters that may be acted on by stockholders at stockholder meetings. |
The foregoing factors, as well as the significant ownership of our common stock by Hut 8 and other principal stockholders, could impede a merger, takeover or other business combination or discourage a potential investor from making a tender offer for our common stock, which, under certain circumstances, could reduce the market value of our Class A common stock. Further, we have opted out of Section 203 of the DGCL. Section 203 of the DGCL generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any interested stockholder for a period of three years following the date on which the stockholder became an interested stockholder. See “Description of Capital Stock” in Exhibit 99.5 to the Current Report.
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We do not expect to pay dividends on our Class A common stock and, consequently, your ability to achieve a return on your investment will depend on appreciation, if any, in the price of our Class A common stock.
We have never declared or paid any cash dividend on our Class A common stock. Historical ABTC has never declared or paid any cash dividend on Historical ABTC Common Stock. We expect we will retain future earnings for the development, operation and expansion of our business and we do not anticipate declaring or paying any cash dividends for the foreseeable future. There is no guarantee that shares of our Class A common stock will appreciate in value or even maintain the price at which stockholders have purchased their shares.
Key members of our management team have limited experience managing a public company.
Certain of our executive officers have, and other future members of our management team may have, limited experience managing a publicly traded company, interacting with public company investors and complying with the increasingly complex laws pertaining to public companies. These individuals may not successfully or efficiently manage the transition to being a public company subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These obligations and constituents require significant attention from our management team and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition and results of operations.
Our management will have broad discretion in the use of our cash and cash equivalents and may invest or spend these funds in ways with which you do not agree and in ways that may not increase the value of your investment.
Our management will have broad discretion over the use of our cash and cash equivalents. You may not agree with these decisions and our use of our cash and cash equivalents may not yield any return on your investment. Our management’s failure to apply these resources effectively could compromise our ability to pursue our growth strategy and we may not be able to yield a significant return, if any, on our investment of these net proceeds. You will not have the opportunity to influence our decisions on how to use our cash resources.
If equity research analysts do not publish research or reports or publish unfavorable research or reports about us, our business or our market, our stock price and trading volume could decline.
The trading market for our Class A common stock will be influenced by the research and reports that equity research analysts publish about us and our business. Equity research analysts may elect to not provide research coverage of us and such lack of research coverage may adversely affect the market price of our Class A common stock. In the event we do have equity research analyst coverage, we will not have any control over the analysts or the content and opinions included in their reports. The price of our Class A common stock could decline if one or more equity research analysts downgrade the stock or issue other unfavorable commentary or research. If one or more equity research analysts cease coverage of us or fail to publish reports on us regularly, demand for our Class A common stock could decrease, which in turn could cause our Class A common stock price or trading volume to decline.
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Exhibit 99.5
Description of CAPITAL STOCK
Introductory Note
References to “we,” “our” and “us” refer to American Bitcoin Corp. (formerly known as Gryphon Digital Mining, Inc.), together with its subsidiaries.
On September 3, 2025, we completed our stock-for-stock merger transactions (the “Mergers”) pursuant to the Agreement and Plan of Merger, dated as of May 9, 2025 (the “Merger Agreement”), by and among us, GDM Merger Sub I Inc., GDM Merger Sub II LLC and pre-merger American Bitcoin Corp. (“Historical ABTC”), pursuant to which we acquired Historical ABTC and we changed our name from Gryphon Digital Mining, Inc. to American Bitcoin Corp. Shortly before the closing of the Mergers, we effected a 5-for-1 reverse stock split of our common stock (the “Reverse Stock Split”) and our common stock was reclassified as Class A common stock. At the closing of the Mergers, we issued shares of Class A common stock, par value $0.0001 per share (the “Class A Common Stock”) and Class B common stock, par value $0.0001 per share (the “Class B Common Stock”) to Historical ABTC stockholders based upon an agreed exchange ratio specified in the Merger Agreement. In connection with the closing of the Mergers, our Class A Common Stock began trading on the Nasdaq Capital Market under the symbol “ABTC.”
This Exhibit contains a summary description of our capital stock. This summary is not meant to be a complete description of each security. The particular terms of any security to be issued by us will be set forth in a prospectus supplement and/or free writing prospectus or other offering document. Such a document will contain the material terms and conditions of the securities being offered.
DESCRIPTION OF CAPITAL STOCK
The following summary description of our common stock does not purport to be complete and is qualified in its entirety by reference to the full text of the DGCL, as it may be amended from time to time, our second amended and restated certificate of incorporation (the “Charter”) as amended by the certificate of amendment to the Charter, and our amended and restated bylaws (the “Bylaws”), which are filed as Exhibits 3.2, 3.3 and 3.4 to the Current Report on Form 8-K dated September 3, 2025.
Authorized Capital Stock
The total number of shares of capital stock which we have authority to issue is 735,000,000,000 shares. This authorized capital stock consists of (i) 635,000,000,000 shares of common stock, $0.0001 par value per share, comprised of: (a) 500,000,000,000 shares of Class A Common Stock, (b) 10,000,000,000 shares of Class B Common Stock and (c) 125,000,000,000 shares of Class C common stock, par value $0.0001 per share (the “Class C Common Stock”) and (ii) 100,000,000,000 shares of preferred stock, $0.0001 par value per share.
Common Stock
Voting Rights
Except as required by applicable law, each holder of Class A Common Stock is entitled to one vote per share, each holder of Class B Common Stock is entitled to 10,000 votes per share and each holder of Class C Common Stock is entitled to ten votes per share, in each case, on any matter submitted to stockholders for a vote or approval. Except where required by applicable law, the holders of Class A Common Stock, Class B Common Stock and Class C Common Stock generally vote together as a single class on all matters submitted to stockholders for a vote or approval. The Charter does not provide for cumulative voting, unless required by applicable law.
Dividends
Holders of each series of common stock will be entitled to receive, on a per share basis, the same form and amount of dividends and other distributions of cash, property and shares of stock as may be declared from time to time by our board of directors (the “board of directors”) with respect to shares of any other series of common stock out of legally available assets or funds, in each case subject to the rights, powers and preferences applicable to any series of preferred stock we may designate and issue in the future.
Conversion
Each share of Class B Common Stock and Class C Common Stock is convertible at any time at the option of the holder into one share of Class A Common Stock. The Charter does not provide for the automatic conversion of shares of Class B Common Stock and Class C Common Stock upon transfer thereof or based on sales or ownership thresholds.
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Liquidation
In the event of our liquidation, dissolution or winding up, the holders of each series of common stock will be entitled to share ratably in the net assets legally available for distribution to stockholders, if any, remaining after the payment of all debts and liabilities, subject to any preferential rights of any outstanding shares of preferred stock.
Rights and Preferences
Holders of each series of common stock have no preemptive, conversion (except as noted above) or subscription rights and there are no redemption or sinking fund provisions applicable to our Class A Common Stock, Class B Common Stock and Class C Common Stock.
Preferred Stock
The board of directors is permitted, without further action by the stockholders, to issue up to 100,000,000,000 shares of preferred stock in one or more series with such designations, powers, preferences, special rights, qualifications, limitations and restrictions as the board of directors may determine from time to time. The powers, preferences and relative, participating, optional and other rights of each series of preferred stock and the qualifications, limitations and restrictions thereof, if any, may differ from those of any and all other series outstanding. Issuance of preferred stock by the board of directors may result in such shares having dividend and/or liquidation preferences senior to the rights of the holders of common stock and could dilute the voting rights of the holders of common stock and the likelihood that such holders will receive dividend payments and payments upon a liquidation.
The board of directors could authorize the issuance of one or more series of preferred stock that could, depending on the terms of such series, impede a tender offer or other takeover attempt.
Charter and Bylaw Provisions; Takeover Statutes
A number of provisions in the Charter, Bylaws and the DGCL may have the effect of delaying, deferring or discouraging another person from acquiring control of us or removing our management.
Multiple Classes of Stock
As described above under the heading “Common Stock — Voting Rights,” the Charter provides for a triple class common stock structure, which provides holders of our Class B Common Stock with significant influence over all matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of us or our assets.
Undesignated Preferred Stock
The ability to authorize undesignated preferred stock will make it possible for the board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to effect a change in control of us. These and other provisions may have the effect of deterring hostile takeovers or delaying changes in control or our management.
Stockholder Action by Written Consent
The Charter provides that from and after the date at which the holders of Class B Common Stock cease to represent at least 50% of total voting power of the outstanding shares of our capital stock then entitled to vote generally in the election of our directors (the “Voting Threshold Date”), no action may be taken by our stockholders by written consent. Prior to the Voting Threshold Date, action may be taken by our stockholders by written consent.
Advance Notice of Proposals and Nominations
The Charter and Bylaws contain advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of the board of directors or a committee thereof.
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Classified Board; Election and Removal of Directors; Filing Vacancies
The Charter provides that the board of directors is divided into three classes, Class I, Class II and Class III, divided as nearly as equal in number as possible. The directors in each class serve for a three-year term, one class being elected each year by our stockholders, with staggered three-year terms. Class I directors shall initially serve for a term expiring at the next annual meeting of our stockholders, Class II directors shall initially serve for a term expiring at the subsequent annual meeting of our stockholders and Class III directors shall initially serve for a term expiring at the third annual meeting of our stockholders from following the closing of the Mergers. Only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms. Because our stockholders do not have cumulative voting rights, those stockholders holding a majority of the voting power of our outstanding capital stock are able to elect all of our directors.
Except as may be provided in the Investors’ Rights Agreement, dated as of May 9, 2025, by and between us, American Bitcoin and certain American Bitcoin stockholders (the “Investors’ Rights Agreement”), the Charter provides for the removal of any directors only for cause by the affirmative vote of a majority of the voting power of our capital stock; provided, however, that prior to the Voting Threshold Date, directors may be removed with or without cause by an action by written consent of our stockholders.
Furthermore, the board of directors will have the exclusive right to set the size of the board. Subject to any rights applicable to any then outstanding shares of preferred stock and except as may be provided in the Investors’ Rights Agreement, any vacancy occurring on the board of directors and any newly created directorship may be filled only by a majority of the remaining directors in office, even if less than a quorum and not by our stockholders unless the board of directors determines that such vacancies will be filled by stockholders. No decrease in the authorized number of directors shall remove or shorten the term of any incumbent director. This system of electing and removing directors and filling vacancies may discourage a third party from making a tender offer or otherwise attempting to obtain control of us because it generally makes it more difficult for stockholders to replace a majority of the directors.
In addition, the Investors’ Rights Agreement provides that, for so long as the ABTC Class B Investor Designee (as defined therein) beneficially owns any shares of common stock, such person will have the right to serve as a director.
Special Meetings
The Charter provides that special meetings of our stockholders may be called only by or at the direction of the board of directors, our chairperson or executive chairman, chief executive officer, president or, prior to the Voting Threshold Date, secretary upon the written request by stockholders holding a majority of the outstanding shares entitled to vote.
Amendment of Charter
The Charter provides that it generally may be amended by the holders of a majority of the voting power of our capital stock; provided, however, that certain provisions of the Charter related to the number of authorized shares of our capital stock, the designations and rights of our capital stock, the management of our business and the conduct of our affairs, stockholder meetings, liabilities of our directors and officers, indemnification of our directors and officers, restrictions on any business combination with any interested stockholder, business opportunities of certain of our stockholders, forum selection and amendments may only be amended by the affirmative vote of the holders of at least 66 2/3% of the voting power of our capital stock, voting together in a single class.
In addition, for so long as any shares of Class B Common Stock are outstanding, amendments to the provisions of the Charter related to the designations and rights of the common stock will require the affirmative vote of the holders of at least 80% of the voting power of our Class B Common Stock outstanding, voting as a separate series.
4
Amendment of Bylaws
The Bylaws may be altered, amended or repealed and new bylaws may be adopted, by the board of directors or with the affirmative vote of the holders of at least 66 2/3% of the voting power of our capital stock.
Delaware Anti-Takeover Law
Section 203 of the DGCL generally prohibits “business combinations,” including mergers, sales and leases of assets, issuances of securities and similar transactions by a corporation or a subsidiary with an interested stockholder who beneficially owns 15% or more of a corporation’s voting stock, within three (3) years after the person or entity becomes an interested stockholder, unless: (i) the board of directors of the target corporation has approved, before the acquisition time, either the business combination or the transaction that resulted in the person becoming an interested stockholder, (ii) upon consummation of the transaction that resulted in the person becoming an interested stockholder, the person owns at least 85% of the corporation’s voting stock (excluding shares owned by directors who are officers and shares owned by employee stock plans in which participants do not have the right to determine confidentially whether shares will be tendered in a tender or exchange offer) or (iii) after the person or entity becomes an interested stockholder, the business combination is approved by the board of directors and authorized at a meeting of stockholders by the affirmative vote of at least 66 2∕3% of the outstanding voting stock not owned by the interested stockholder.
A Delaware corporation may elect in its certificate of incorporation or bylaws not to be governed by this particular Delaware law. We have opted out of Section 203 of the DGCL in the Charter and are therefore not subject to Section 203.
Forum Selection
The Charter provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) will be the sole and exclusive forum for: (i) any derivative action, suit or proceeding brought on behalf of us; (ii) any action, suit or proceeding asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or stockholders to us or to our stockholders; (iii) any action, suit or proceeding arising pursuant to the DGCL, the Charter or the Bylaws (as any of the foregoing may be amended from time to time); (iv) any action, suit or proceeding as to which the DGCL confers jurisdiction on the Chancery Court; or (v) any action, suit or proceeding asserting a claim governed by the internal affairs doctrine.
As a result, any action brought by any of our stockholders with regard to any of these matters will need to be filed in the Court of Chancery of the State of Delaware and cannot be filed in any other jurisdiction; provided that, the exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. The Charter also provides that the federal district courts of the United States of America will be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Nothing in the Charter or the Bylaws precludes stockholders that assert claims under the Exchange Act from bringing such claims in state or federal court, subject to applicable law.
If any action the subject matter of which is within the scope described above is filed in a court other than a court located within the State of Delaware (a “Foreign Action”), in the name of any stockholder, such stockholder shall be deemed to have consented to the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce the applicable provisions of the Proposed Charter and Proposed Bylaws and having service of process made upon such stockholder in any such action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder.
This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.
5
Corporate Opportunities; Conflicts of Interest
The Charter provides that we will renounce any interest or expectancy in or in being offered an opportunity to participate in, any business opportunity of the holders of Class B Common Stock and their respective officers, directors, directors of their subsidiaries, employees, agents, stockholders, members, managers, partners, representatives, affiliates or subsidiaries (the “Class B Stockholder Group”). We will not renounce any interest in any corporate opportunity offered to any director or officer if such opportunity is expressly offered to such person in writing solely in his or her capacity as our director or officer.
The Charter provides that the Class B Stockholder Group will have no duty to refrain from (i) engaging in a corporate opportunity in the same or similar lines of business in which we or our affiliates engage or propose to engage in or (ii) otherwise competing with us or our affiliates. In the event that the Class B Stockholder Group acquires knowledge of a potential transaction or other business opportunity that may be a corporate opportunity, such person will have no duty to communicate or offer such transaction or business opportunity to us or our affiliates and they may take any such opportunity for themselves or offer it to another person or entity unless such knowledge was acquired solely in such person’s capacity as our director or officer.
Limitation on Liability and Indemnification of Officers and Directors
The DGCL authorizes corporations to limit or eliminate the personal liability of directors and officers to corporations and their stockholders for monetary damages for breaches of fiduciary duties, subject to certain exceptions. The Charter includes a provision that eliminates the personal liability of directors and officers for monetary damages for any breach of fiduciary duty as a director or officer, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL. These provisions eliminate the rights of us and our stockholders, through stockholders’ derivative suits on our behalf, to recover monetary damages from a director for breach of fiduciary duty as a director, including breaches resulting from grossly negligent behavior. This provision does not limit or eliminate the liability of any officer in any action by us or in our right, including any derivative claims. Exculpation under this provision will not apply to any director or officer if the director or officer has breached the duty of loyalty to us and our stockholders, acted in bad faith, knowingly or intentionally violated the law, authorized illegal dividends or redemptions or derived an improper benefit from their actions as a director or officer.
The Charter provides that we must generally indemnify and advance expenses to, our directors and officers to the fullest extent authorized by the DGCL. We are also expressly authorized to carry directors’ and officers’ liability insurance providing indemnification for our directors, officers and certain employees for some liabilities. Concurrently with the consummation of the Mergers, we entered into indemnification agreements with our directors and officers, which agreements require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.
The limitation of liability, indemnification and advancement provisions in the Charter may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. In addition, your investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.
Registration Rights
We have entered into the Investors’ Rights Agreement. The Investors’ Rights Agreement provides that certain holders of Class B Common Stock have the ability to require us to register under the Securities Act all or any portion of shares of common stock held by them and their permitted transferees, subject to customary requirements and limitations. These holders and their permitted transferees will also have piggyback registration rights, such that they may include their respective shares of common stock in certain future registrations of our securities. The demand registration rights and piggyback registration rights will each be subject to market cut-back exceptions.
The Investors’ Rights Agreement sets forth customary registration procedures. We have also agreed to indemnify certain of the holders of Class B Common Stock and their permitted transferees with respect to liabilities resulting from untrue statements or omissions in any registration statement used in any such registration, other than untrue statements or omissions resulting from information furnished to us for use in a registration statement by such persons.
Transfer Agent and Registrar
Our transfer agent and registrar for our Class A Common Stock is Continental Stock Transfer & Trust Company.
Listing
Our Class A Common Stock is listed on Nasdaq under the symbol “ABTC.”
6
Exhibit 99.6
Report of Independent Registered Public Accounting Firm
To the Board of Directors and
Stockholders of American Bitcoin Corp.
Opinion on the Financial Statements
We have audited the accompanying combined balance sheets of American Bitcoin Corp. (the “Company”) as of December 31, 2024 and 2023, and the combined related statements of operations, comprehensive income (loss), equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “combined financial statements”). In our opinion, the combined financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
| /s/ L J Soldinger Associates, LLC |
| We have served as the Company’s auditor since 2025. |
| Deer Park, Illinois |
| PCAOB ID: 318 |
| June 6, 2025 |
F-1
American Bitcoin Corp.
Combined Balance Sheets
(in USD thousands)
| December 31, 2024 | December 31, 2023 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Digital assets – held in custody | $ | — | $ | 4,583 | ||||
| Deposits and prepaid expenses | 42,650 | 11,145 | ||||||
| Derivative asset | 18,076 | — | ||||||
| Other current assets | — | 292 | ||||||
| Digital assets – pledged for miner purchase | 92,389 | — | ||||||
| Total current assets | 153,115 | 16,020 | ||||||
| Non-current assets | ||||||||
| Digital assets – held in custody – less current | 525,236 | 282,998 | ||||||
| Digital assets – pledged as collateral | 331,876 | 100,550 | ||||||
| Property and equipment, net | 43,089 | 63,067 | ||||||
| Goodwill | 53,082 | 57,595 | ||||||
| Deferred tax asset, net | — | 18,289 | ||||||
| Total non-current assets | 953,283 | 522,499 | ||||||
| Total assets | $ | 1,106,398 | $ | 538,519 | ||||
| Liabilities and equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | 31,012 | $ | 19,606 | ||||
| Income tax payable | 889 | 767 | ||||||
| Derivative liability | 18,437 | — | ||||||
| Loans and notes payable, current portion, net | — | 2,912 | ||||||
| Total current liabilities | 50,338 | 23,285 | ||||||
| Non-current liabilities | ||||||||
| Loans and notes payable, less current portion, net | — | 41,450 | ||||||
| Deferred tax liabilities | 40,993 | — | ||||||
| Total non-current liabilities | 40,993 | 41,450 | ||||||
| Total liabilities | 91,331 | 64,735 | ||||||
| Commitments and contingencies (Note 16) | ||||||||
| Equity | ||||||||
| Parent net investment | 1,063,414 | 462,787 | ||||||
| Accumulated other comprehensive income | (48,347 | ) | 10,997 | |||||
| Total equity | 1,015,067 | 473,784 | ||||||
| Total liabilities and equity | $ | 1,106,398 | $ | 538,519 | ||||
See accompanying Notes to Combined Financial Statements.
F-2
American Bitcoin Corp.
Combined Statement of Operations and Comprehensive Income (Loss)
(in USD thousands)
| December 31, 2024 | December 31, 2023 | December 31, 2022 | ||||||||||
| Revenue | $ | 71,537 | $ | 64,981 | $ | 65,701 | ||||||
| Cost of revenue (exclusive of depreciation and amortization shown below) | 39,509 | 43,609 | 42,391 | |||||||||
| Operating expenses (income): | ||||||||||||
| Depreciation and amortization | 22,744 | 14,407 | 16,836 | |||||||||
| General and administrative expenses | 34,486 | 34,198 | 18,361 | |||||||||
| (Gains) losses on digital assets | (509,303 | ) | (33,470 | ) | 22,866 | |||||||
| Impairment of long-lived assets | — | — | 49,667 | |||||||||
| Total operating (income) expenses | (452,073 | ) | 15,135 | 107,730 | ||||||||
| Operating income (loss) | 484,101 | 6,237 | (84,420 | ) | ||||||||
| Other (expense) income: | ||||||||||||
| Foreign exchange loss | — | (300 | ) | — | ||||||||
| Interest expense | (3,489 | ) | (8,811 | ) | (20,180 | ) | ||||||
| Gain on debt extinguishment | 5,966 | 23,683 | — | |||||||||
| Gain on derivatives | 6,780 | — | — | |||||||||
| Total other income | 9,257 | 14,572 | (20,180 | ) | ||||||||
| Income from continuing operations before taxes | 493,358 | 20,809 | (104,600 | ) | ||||||||
| Income tax (provision) benefit | (59,607 | ) | 18,804 | 392 | ||||||||
| Net income (loss) from continuing operations | 433,751 | 39,613 | (104,208 | ) | ||||||||
| Loss from discontinued operations (net of income tax benefit of $1.6 million, nil, and nil, respectively) | (4,816 | ) | — | — | ||||||||
| Net income (loss) | $ | 428,935 | $ | 39,613 | $ | (104,208 | ) | |||||
| Other comprehensive income (loss): | ||||||||||||
| Foreign currency translation adjustments | (59,344 | ) | 10,997 | — | ||||||||
| Total comprehensive income (loss) | $ | 369,591 | $ | 50,610 | $ | (104,208 | ) | |||||
See accompanying Notes to Combined Financial Statements.
F-3
American Bitcoin Corp.
Combined Statements of Equity (Deficit)
(in USD thousands)
| Parent Net Investment | Accumulated Other Comprehensive Income | Total Equity (Deficit) | ||||||||||
| Balance as of December 31, 2021 | $ | 64,671 | $ | — | $ | 64,671 | ||||||
| Cumulative effect upon adoption of ASU 2023-08 | 2,474 | — | 2,474 | |||||||||
| Net loss | (104,208 | ) | — | (104,208 | ) | |||||||
| Net Transfers from Parent | 14,351 | — | 14,351 | |||||||||
| Balance as of December 31, 2022 | $ | (22,712 | ) | $ | — | $ | (22,712 | ) | ||||
| Net income | 39,613 | — | 39,613 | |||||||||
| Net Transfers from Parent | 445,886 | — | 445,886 | |||||||||
| Cumulative Translation Adjustment | — | 10,997 | 10,997 | |||||||||
| Balance as of December 31, 2023 | $ | 462,787 | $ | 10,997 | $ | 473,784 | ||||||
| Net income | 428,935 | — | 428,935 | |||||||||
| Net Transfers from Parent | 171,692 | — | 171,692 | |||||||||
| Cumulative Translation Adjustment | — | (59,344 | ) | (59,344 | ) | |||||||
| Balance as of December 31, 2024 | $ | 1,063,414 | $ | (48,347 | ) | $ | 1,015,067 | |||||
See accompanying Notes to Combined Financial Statements.
F-4
American Bitcoin Corp.
Combined Statements of Cash Flows
(in USD thousands)
| Year Ended | ||||||||||||
| December 31, 2024 | December 31, 2023 | December 31 2022 | ||||||||||
| Operating activities: | ||||||||||||
| Net income (loss) | $ | 428,935 | $ | 39,613 | $ | (104,208 | ) | |||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||||||
| Depreciation and amortization | 22,744 | 14,407 | 16,836 | |||||||||
| Impairment of long-lived assets | — | — | 49,667 | |||||||||
| Stock compensation | 9,173 | 9,107 | 4,933 | |||||||||
| Bitcoin mining revenue | (71,537 | ) | (64,981 | ) | (65,701 | ) | ||||||
| Gains on digital assets | (509,303 | ) | (33,470 | ) | 22,866 | |||||||
| Deferred tax assets and liabilities | 58,719 | (19,572 | ) | 978 | ||||||||
| Gain on debt extinguishment | (5,966 | ) | (23,683 | ) | — | |||||||
| Income tax payable | 122 | 767 | — | |||||||||
| Gain on derivatives | (6,780 | ) | — | — | ||||||||
| Amortization of debt discount | 3,503 | 6,262 | 952 | |||||||||
| Paid-in-kind interest expense | — | 1,917 | 8,183 | |||||||||
| Loss on discontinued operations | 4,816 | — | — | |||||||||
| Changes in assets and liabilities: | ||||||||||||
| Deposits and prepaid expenses | (2,432 | ) | (2,304 | ) | (7,303 | ) | ||||||
| Accounts payable and accrued expenses | 13,973 | 15,972 | 220 | |||||||||
| Net cash used in operating activities | (54,033 | ) | (55,965 | ) | (72,577 | ) | ||||||
| Proceeds from sale of digital assets | 69,801 | 63,689 | 71,232 | |||||||||
| Bitcoin purchased | (100,708 | ) | — | — | ||||||||
| Deposit paid to purchase miners and mining equipment | (29,074 | ) | (966 | ) | (46,855 | ) | ||||||
| Purchases of property and equipment | (6,605 | ) | — | (72 | ) | |||||||
| Net cash (used in) provided by investing activities | (66,586 | ) | 62,723 | 24,305 | ||||||||
| Financing activities: | ||||||||||||
| Proceeds from loans payable | — | — | 50,000 | |||||||||
| Repayments of loans payable | (11,480 | ) | (10,783 | ) | (11,146 | ) | ||||||
| Debt issuance costs paid | — | (584 | ) | — | ||||||||
| Net parent investment | 132,099 | 4,609 | 9,418 | |||||||||
| Net cash (used in) provided by financing activities | 120,619 | (6,758 | ) | 48,272 | ||||||||
| Net increase (decrease) in cash and cash equivalents | — | — | — | |||||||||
| Cash, beginning of period | — | — | — | |||||||||
| Cash, end of period | $ | — | $ | — | $ | — | ||||||
F-5
American Bitcoin Corp.
Combined Statements of Cash Flows — (Continued)
(in USD thousands)
| Year Ended | ||||||||||||
| December 31, 2024 | December 31, 2023 | December 31 2022 | ||||||||||
| Supplemental cash flow information: | ||||||||||||
| Non-cash transactions | ||||||||||||
| Reclassification of deposits and prepaid expenses to property and equipment | $ | — | $ | 42,533 | $ | 81,469 | ||||||
| Debt extinguished | — | 96,688 | — | |||||||||
| Assets transferred in debt extinguishment | — | 73,005 | — | |||||||||
| Debt proceeds paid directly to vendor for miner deposit | — | — | 36,420 | |||||||||
| Debt proceeds not yet received included in deposits and prepaid expenses | — | — | 9,801 | |||||||||
| Mining revenue in accounts receivable, net | — | 292 | 26 | |||||||||
| Property and equipment in accounts payable and accrued expenses | — | — | 1,970 | |||||||||
| Common stock issued as part of debt restructuring | — | 791 | — | |||||||||
| Contribution from Parent in connection with debt extinguishment | 30,420 | — | — | |||||||||
| Assets acquired net of liabilities assumed on completion of the Business Combination | — | 420,658 | — | |||||||||
| Cumulative effect upon adoption of ASU 2023-08 | — | — | 2,474 | |||||||||
See accompanying Notes to Combined Financial Statements.
F-6
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 1. Description of business and basis of presentation
Description of business
American Bitcoin Corp. (“ABTC”), formerly known as American Data Centers Inc., is a Bitcoin mining company that was incorporated in the state of Delaware in November 2024. On March 31, 2025, through the Transactions (as defined below), ABTC became a majority-owned subsidiary of Hut 8 Corp. (including its consolidated subsidiaries, “Parent”). ABTC did not historically operate as a standalone company. Its results of operations reflected herein refer to Parent’s Bitcoin mining operations, represented by the “Bitcoin mining” sub-segment of Parent’s “Compute” segment. See “Basis of presentation” below. The business of ABTC is (i) the operation of application-specific integrated circuit (“ASIC”) miners for the purpose of mining Bitcoin and (ii) the strategic accumulation of Bitcoin.
The Transactions
Transaction with American Data Centers Inc.
On March 31, 2025, Parent, American Data Centers Inc. (“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, representing the business of ABTC, 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.
The Transactions were effectuated as follows:
On March 14, 2025, Parent created American Bitcoin Holdings LLC (“ABH”), a wholly-owned subsidiary, and on March 30, 2025, transferred substantially all of Parent’s wholly-owned ASIC miners to ABH as a transfer under common control.
On March 31, 2025, under the Agreement, ABH acquired shares of 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 in exchange for ABH’s ASIC miners, representing the business of ABTC. In connection with the Transactions, ADC was renamed American Bitcoin Corp.
In connection with the Transactions, Parent and ABTC entered into a Master Services Agreement and a Master Colocation Services Agreement providing for Parent and its personnel to perform day-to-day commercial and operational management services and ASIC colocation services to ABTC, respectively, in each case on an exclusive basis for so long as such agreements remain in effect. Parent and ABTC also entered into a Shared Services Agreement, pursuant to which Parent and its personnel would provide back-office support services to ABTC.
Transaction with Gryphon Digital Mining, Inc.
On May 9, 2025, Gryphon Digital Mining, Inc., a Delaware corporation (“Gryphon”), GDM Merger Sub I Inc., a Delaware corporation and wholly owned direct subsidiary of Gryphon (“Merger Sub Inc.”), GDM Merger Sub II LLC, a Delaware limited liability company and wholly owned direct subsidiary of Gryphon (“Merger Sub LLC”), and ABTC entered into an Agreement and Plan of Merger (the “Merger Agreement” and such transactions, the “Mergers”). Following the Mergers, Gryphon will be renamed American Bitcoin Corp. (the “Combined Company”) and ABTC’s business is expected to be the business of the Combined Company.
Following the closing of the transactions contemplated by the Merger Agreement, including the Mergers, (i) the aggregate number of shares of ABTC Class A common stock and Class B common stock issued to ABTC equity holders as consideration for the Merger is expected to represent approximately 98% of the outstanding equity interests of the Combined Company, on a fully diluted basis, and (ii) Gryphon equity holders are expected to own 2.0% of the outstanding equity interests of the Combined Company, on a fully diluted basis, after their shares of Gryphon common stock are reclassified into shares of Combined Company Class A common stock.
F-7
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 1. Description of business and basis of presentation (cont.)
Basis of presentation
ABTC’s operations were historically operated as the “Bitcoin mining” sub-segment of Parent’s “Compute” segment and not as a standalone company. ABTC’s Combined Financial Statements, representing the historical assets, liabilities, operations and cash flows directly attributable to ABTC, have been prepared on a carve-out basis through the use of a management approach from Parent’s consolidated financial statements and accounting records and are presented on a stand-alone basis as if the operations have been conducted independently from Parent. Historically, separate financial statements have not been prepared for ABTC and it has not operated as a standalone business from Parent.
On November 30, 2023, U.S. Data Mining Group, Inc., a Nevada corporation doing business as “US BITCOIN” (“USBTC”), Hut 8 Mining Corp., a corporation existing under the laws of British Columbia (“Legacy Hut”), and Parent entered into a business combination agreement pursuant to which Legacy Hut and its direct wholly-owned subsidiary, Hut 8 Holdings Inc., a corporation existing under the laws of British Columbia, amalgamated to continue as one British Columbia corporation (“Hut Amalco”) and both Hut Amalco and USBTC became wholly-owned subsidiaries of Parent (the “Business Combination”). For accounting purposes USBTC was deemed as the accounting acquirer. USBTC historically had a June 30 year-end, which was changed to December 31 for the period ended December 31, 2023. Consequently, the results of operations for the year ended December 31, 2022 represent the results of USBTC’s Bitcoin mining operations, which were included in USBTC’s “Bitcoin mining” sub-segment of its “Compute” segment. The results of operations for the year ended December 31, 2023 represent eleven months of USBTC’s Bitcoin mining operations and one month of combined company (USBTC and Legacy Hut) Bitcoin mining operations, in each case included in its “Bitcoin mining” sub-segment of its “Compute” segment. The results of operations for the year ended December 31, 2024 represent a full period of Parent’s Bitcoin mining operations, included in the “Bitcoin mining” sub-segment of its “Compute” segment.
The revenues and costs as well as assets and liabilities directly associated with what was historically Parent’s Bitcoin mining activities are included in ABTC’s Combined Financial Statements, including Parent’s strategic Bitcoin reserve. However, upon the effectuating of the Transactions on March 31, 2025, Parent retained its strategic Bitcoin reserve and none of the Bitcoin were transferred to the Combined Company. Additional costs allocated to ABTC include corporate general and administrative expenses which consist of various categories, including but not limited to: employee compensation and benefits, professional services, facilities and corporate office expenses, information technology, interest expenses, and share-based compensation. The corporate and general administrative expenses allocated are primarily based on a percentage of revenue basis that is 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 ABTC’s 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 ABTC and may not reflect its results had ABTC been a standalone company during the periods presented. Actual costs that might have been incurred had ABTC been a standalone company would depend on a number of factors, including the organizational structure, what corporate functions ABTC might have performed directly or outsourced, and strategic decisions ABTC 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 ABTC will incur in the future or would have incurred if ABTC had obtained these services from a third party.
All intracompany transactions within ABTC have been eliminated. All intercompany transactions between ABTC and Parent are considered to be effectively settled in the Combined Financial Statements at the time the transactions are recorded. The total of these intercompany transactions were considered to be settled before the close of the Transactions on March 31, 2025, and are reflected in the Combined Statement of Cash Flows within financing activities and in the Combined Balance Sheets as net parent investment.
F-8
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 1. Description of business and basis of presentation (cont.)
ABTC’s equity balance in these Combined Financial Statements represents the excess assets less total liabilities. Net parent investment is primarily impacted by contributions from Parent which are the result of net funding provided by or distributed to Parent.
Cash is managed through bank accounts controlled and maintained by Parent. ABTC does not have legal ownership of any bank accounts containing cash balances as of December 31, 2024 and 2023. As such, cash held in commingled accounts with Parent is presented within net parent investment on the Combined Balance Sheets.
ABTC is a not a co-obligor on Parent’s third-party, long-term debt obligations nor is ABTC 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 ABTC’s purchase of ASIC or directly used for Bitcoin mining-related activities and are included in ABTC’s Combined Financial Statements. While ABTC is not a legal obligor, certain Bitcoin mining assets of the ABTC were pledged as collateral as disclosed in Note 5.
Note 2. Significant accounting policies and recent accounting pronouncements
Recent accounting pronouncements
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Update ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 requires public business entities to provide additional disclosures in the notes to financial statements, disaggregating specific expense categories within relevant income statement captions. The prescribed categories include purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depreciation, depletion, and amortization related to oil-and-gas producing activities. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. ABTC is currently evaluating the impact of adopting the standard.
In December 2023, FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 expands existing income tax disclosures (1) for rate reconciliations by requiring disclosure of certain specific categories and additional reconciling items that meet quantitative thresholds and (2) for income taxes paid by requiring disaggregation by certain jurisdictions. ASU 2023-09 is effective for annual periods beginning after December 15, 2024; early adoption is permitted. ABTC is currently evaluating the impact of adopting this guidance on its Combined Financial Statements and disclosures.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 is intended to enhance reportable segment disclosures by requiring disclosures of significant segment expenses regularly provided to the Chief Operating Decision Maker (“CODM”), the title and position of the CODM, and an explanation of how the reported measures of segment profit and loss are used by the CODM in assessing segment performance and allocation of resources. ASU 2023-07 is effective for ABTC for annual periods beginning after December 31, 2023; early adoption is permitted. ABTC adopted ASU 2023-07 on January 1, 2024, on a retrospective basis to all periods presented and this adoption did not have a material impact to the Combined Financial Statements.
In August 2023, the FASB issued ASU No. 2023-05, Business Combinations — Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement (“ASU 2023-05”). ASU 2023-05 addresses the accounting for contributions made to a joint venture and requires contributions received by a joint venture to be measured at fair value upon formation. ASU 2023-05 is designed to provide useful information to investors and reduce diversity in accounting practice. The new standard is effective for ABTC for its fiscal year beginning January 1, 2025; early adoption is permitted. ABTC is currently evaluating the impact of adopting the standard.
F-9
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 2. Significant accounting policies and recent accounting pronouncements (cont.)
In December 2023, the FASB issued ASU No. 2023-08, Intangibles — Goodwill and Other — Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). The amendments in ASU No. 2023-08 are intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income. The amendments also improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period. The amendments are effective for all entities for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements. If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. Parent, which had a fiscal year-end of June 30 before changing its year-end to be December 31 in 2023, elected to early adopt ASU 2023-08 as of July 1, 2023. This adoption had a material impact on Parent’s financial statements. ABTC has chosen to early adopt this standard as of January 1, 2022. ABTC has never previously presented Combined Financial Statements and believes this adoption date is preferable because it provides consistency for all years presented. Digital assets received by ABTC through its revenue activities are accounted for in connection with ABTC’s Revenue recognition policy disclosed below.
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 in the preparation of ABTC’s Combined Financial Statements include estimates associated with revenue recognition, determining the useful lives and recoverability of long-lived assets, goodwill, digital assets, derivative asset and liability, the allocation of costs to ABTC for certain corporate and shared service functions in preparing the Combined Financial Statements on a carve-out basis, and current and deferred income tax assets (including the associated valuation allowance) and liabilities.
Fair value measurement
ABTC’s financial assets and liabilities are accounted for in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”) which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy requires an entity to maximize the use of observable inputs when measuring fair value and classifies those inputs into three levels:
| Level 1 — | Quoted prices (unadjusted) in active markets for identical assets or liabilities. | |
| Level 2 — | Observable, market-based inputs, other than quoted prices included in Level 1, for the assets or liabilities either directly or indirectly. | |
| Level 3 — | Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. |
Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on ABTC’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or a liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment.
F-10
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 2. Significant accounting policies and recent accounting pronouncements (cont.)
Assets and liabilities measured at fair value on a recurring basis
The following table presents information about ABTC’s assets and liabilities measured at fair value on a recurring basis and ABTC’s estimated level within the fair value hierarchy of those assets and liabilities as of December 31, 2024 and 2023:
| Fair value measured at December 31, 2024 | ||||||||||||||||
| (in USD thousands) | Total carrying value at December 31, 2024 | Quoted prices in active markets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||
| Digital assets | $ | 949,501 | $ | 949,501 | $ | — | $ | — | ||||||||
| Covered call options | (18,437 | ) | — | (18,437 | ) | — | ||||||||||
| Bitcoin redemption option | 18,076 | — | — | 18,076 | ||||||||||||
Digital assets are made up of $424.3 million of Bitcoin pledged as collateral for debt and for miner purchase and $525.2 million held in custody.
| Fair value measured at December 31, 2023 | ||||||||||||||||
| (in USD thousands) | Total carrying value at December 31, 2023 | Quoted prices in active markets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||
| Digital assets | $ | 388,131 | $ | 388,131 | $ | — | $ | — | ||||||||
Digital assets are made up of $100.6 million of Bitcoin pledged as collateral for debt and for miner purchases and $287.6 million held in custody.
In determining the fair value of its digital assets, ABTC uses quoted prices as determined by ABTC’s principal market, which is Coinbase Prime. As such, ABTC’s digital assets were determined to be Level 1 assets. See Digital assets below for a description of ABTC’s Digital asset accounting policy. In estimating the fair value of its covered call options (as defined below), ABTC uses the Black-Scholes pricing model, which includes several inputs and assumptions including the market price of the underlying asset (Bitcoin), the underlying asset’s implied volatility, the risk-free interest rate, and the expected term of the options. The expected term of the options is the contractual term of the options given the options can only be exercised on the expiry date. ABTC determined that the covered call options are Level 2 liabilities given all inputs are observable, but the options themselves are not traded in an active market. ABTC estimates the fair value of its Bitcoin redemption option using the Black-Scholes pricing model, which includes several inputs and assumptions including the market price of the underlying asset (Bitcoin), the underlying asset’s implied volatility, the risk-free interest rate, and the expected term of the redemption option. In addition, management’s assumption of the start of the redemption period, triggered by a shipment date of purchased property and equipment, is a significant unobservable input. For quantitative disclosure on the inputs used to fair value ABTC’s Bitcoin redemption option, see Note 11. Derivatives. ABTC determined that the Bitcoin redemption option is a Level 3 liability given a significant unobservable input is included in its valuation.
See Derivatives below for a description of ABTC’s Derivative instrument accounting policy.
Assets and liabilities measured at fair value on a non-recurring basis
In addition to assets and liabilities that are measured at fair value on a recurring basis, ABTC also measures certain assets and liabilities at fair value on a non-recurring basis. ABTC’s non-financial assets, including goodwill and property and equipment, are measured at fair value when there is an indication of impairment and the carrying amount exceeds the asset’s projected undiscounted cash flows. These assets are recorded at fair value only when an impairment charge is recognized. ABTC had nil, nil, and $49.7 million impairment from its continuing operations related to its non-financial assets and liabilities measured on a non-recurring basis during the years ended December 31, 2024, 2023, and 2022, respectively. ABTC recognized approximately $3.1 million of impairment losses from its discontinued operations related to the Drumheller site’s non-financial assets and liabilities measured on a non-recurring basis during the year ended December 31, 2024. There were no discontinued operations in the years ended December 31, 2023 and 2022. See the Impairment of long-lived assets and goodwill accounting policy below, as well as Note 3 for further discussion.
F-11
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 2. Significant accounting policies and recent accounting pronouncements (cont.)
The carrying amounts of ABTC’s financial assets and liabilities, such as accounts payable and accrued expenses, approximate fair value due to the short-term nature of these instruments. The carrying value of loans and notes payable and other long-term liabilities approximate fair value as the related interest rates approximate rates currently available to ABTC.
Digital assets
Bitcoin, representing ABTC’s digital assets, are measured at fair value as of each reporting period. The fair value of digital assets is measured using the period-end closing price from ABTC’s principal market, which is Coinbase Prime, in accordance with ASC 820. Since the digital assets are traded on a 24-hour period, ABTC utilizes the price as of midnight UTC time, which aligns with ABTC’s Bitcoin mining revenue recognition cut-off. Changes in fair value are recognized in (Gains) losses on digital assets, in Operating (income) expenses on the Combined Statements of Operations and Comprehensive Income (Loss). When ABTC sells digital assets, gains or losses from such transactions are measured as the difference between the cash proceeds and the carrying basis of the digital assets as determined on a First In-First Out basis and are also recorded within the same line item (Gains) losses on digital assets.
Digital assets received by ABTC through its revenue activities are accounted for in connection with ABTC’s Revenue recognition policy disclosed below.
During the fourth quarter of 2024, Parent made the decision to change its strategic treasury policy, retaining all Bitcoin mined in its operations to increase its Bitcoin holdings. As a result of its intent to hold its Bitcoin, Parent began classifying its digital assets held as a non-current asset on its Combined Balance Sheets, except for certain specific use cases. Decisions to utilize the Bitcoin will be made on a case-by-case basis. ABTC has classified certain digital assets as current on its Combined Balance Sheets in Digital Assets — pledged for miner purchase, in connection with the Bitcoin it purchased and subsequently pledged to Bitmain Technologies Delaware Limited (“BITMAIN”) in connection with a Future Sales and Purchase Agreement, as amended (the “BITMAIN Purchase Agreement”) to acquire ASIC miners. The BITMAIN Purchase Agreement is represented in the Derivative asset on the Combined Balance Sheets.
Property and equipment, net
Property and equipment, net are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Cost includes expenditures that are directly attributable to the acquisition of the asset, including those attributable to bringing the asset to its intended working condition. Construction in progress is not depreciated until the assets are placed in service.
Based on ABTC and the industry’s limited history to date, management is limited by the market data available. Furthermore, the data available also include data derived from the use of economic modelling to forecast future digital assets and the assumptions reflected in such forecasts, including digital assets price and network difficulty, as well as management assumptions, are inherently uncertain. Based on currently available data, management has determined that the straight-line method of depreciation best reflects the current expected useful life of mining equipment. Management reviews estimates at each reporting date and will revise such estimates as and when data become available. Management reviews the appropriateness of its assumptions related to residual value at each reporting date.
The estimated useful lives of ABTC’s property and equipment are generally as follows:
| Useful life (in years) | ||
| Miners and mining equipment | 2 – 4 |
F-12
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 2. Significant accounting policies and recent accounting pronouncements (cont.)
Upon the sale or retirement of property and equipment, the cost and accumulated depreciation and amortization are removed from ABTC’s Combined Balance Sheets and Combined Statements of Operations and Comprehensive Income (Loss) in the relevant reporting period.
Impairment of long-lived assets
ABTC continually monitors events and changes in circumstances that could indicate that the carrying amounts of its long-lived assets, including property and equipment, may not be recoverable. When such events or changes in circumstances occur, ABTC assesses recoverability by determining whether the carrying value of such assets will be recovered through the undiscounted expected future cash flows. If the future undiscounted cash flows are less than the carrying amount of these assets, ABTC recognizes an impairment loss based on any excess of the carrying amount over the fair value of the assets.
When recognized, impairment losses related to long-lived assets to be held and used in operations are recorded as costs and expenses in ABTC’s Combined Statements of Operations and Comprehensive Income (Loss).
Impairment of goodwill
ABTC reviews goodwill for impairment at the reporting unit level on an annual basis during the fourth quarter of each fiscal year and in between annual tests whenever events or changes in circumstances indicate that it is more likely than not that the carrying value of a reporting unit exceeds its fair value. In performing the goodwill impairment test, ABTC first performs a qualitative assessment, which requires ABTC to consider events or circumstances, including significant changes in the manner of ABTC’s use of the acquired assets or the strategy for ABTC’s overall business, significant underperformance relative to expected historical or projected development milestones, significant negative regulatory or economic trends, and significant technological changes that could render the asset (or asset group) obsolete. If, after assessing the totality of events or circumstances, ABTC determines that it is more likely than not that the fair value of its reporting unit is greater than the carrying amounts, then the quantitative goodwill impairment test is not performed.
If the qualitative assessment indicates that the quantitative analysis should be performed, ABTC next evaluates goodwill for impairment by comparing the fair value of its reporting unit to its carrying value, including the associated goodwill. To determine the fair value, ABTC uses the equal weighting of the market approach based on comparable publicly traded companies in similar lines of businesses and the income approach based on estimated discounted future cash flows. Cash flow assumptions consider historical and forecasted revenue, operating costs and other relevant factors.
Derivatives
ABTC accounts for the derivative contracts it enters into and the separated embedded derivative from convertible note as follows:
Bitcoin redemption option
Parent has entered into an agreement to purchase ASIC miners which includes a pledge of Bitcoin and right to redeem the pledged Bitcoin for a certain period after the redemption period starts. The redemption period starts when the purchased Bitcoin miners are shipped. The amount of Bitcoin that can be redeemed is pro-rata of the percentage of Bitcoin miners that are shipped. This Bitcoin redemption option does not qualify as an accounting hedge under FASB ASC Topic 815, Derivatives and Hedging (“ASC 815”). Accordingly, ABTC carries the Bitcoin redemption option at fair value and any gains or losses are recognized in profit or loss, respectively. Changes in the fair value are presented in the Combined Statements of Cash Flows within operating activities.
F-13
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 2. Significant accounting policies and recent accounting pronouncements (cont.)
Covered call options
From time to time, Parent sells options on Bitcoin that it owns (the “covered call options”). Parent sold covered call options during the year ended December 31, 2024 to generate cash flows on a portion of its Bitcoin held. These options do not qualify as accounting hedges under ASC 815. Accordingly, ABTC carries the covered call options at fair value and any gains or losses are recognized in profit or loss, respectively. Changes in the fair value are presented in the Combined Statements of Cash Flows within operating activities.
Segment reporting
Operating segments are defined as components of an enterprise for which separate financial information is available and regularly reviewed by the CODM to make strategic decisions, allocate resources, and assess financial performance. The CODM of ABTC for the Combined Financial Statements is the Chief Executive Officer of Parent. ABTC operates with one operating segment and uses net income as measures of profit or loss on a combined basis in making decisions regarding resource allocation and performance assessment. Additionally, the ABTC’s CODM regularly reviews ABTC’s expenses on a combined basis. The financial metrics used by the CODM help make key operating decisions.
The measure of segment assets is reported on the Combined Balance Sheets as total assets. Significant segment expenses are consistent with those presented on the Combined Statements of Operations and Comprehensive Income (Loss). Depreciation and amortization expense is reported on the Combined Statements of Cash Flows.
Revenue recognition
ABTC recognizes revenue under ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of this standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:
| ● | Step 1: Identify the contract with the customer |
| ● | Step 2: Identify the performance obligations in the contract |
| ● | Step 3: Determine the transaction price |
| ● | Step 4: Allocate the transaction price to the performance obligations in the contract |
| ● | Step 5: Recognize revenue when the company satisfies a performance obligation |
In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: (1) the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct), and (2) the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract).
If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct.
F-14
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 2. Significant accounting policies and recent accounting pronouncements (cont.)
The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. When determining the transaction price, an entity must consider the effects of all of the following:
| ● | Variable consideration |
| ● | Constraining estimates of variable consideration |
| ● | The existence of a significant financing component in the contract |
| ● | Noncash consideration |
| ● | Consideration payable to a customer |
Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate.
Bitcoin Mining
ABTC’s revenue is derived from Bitcoin mining. ABTC has entered into arrangements, as amended from time to time, with mining pool operators to perform hash computations for the mining pools, which is an output of ABTC’s ordinary activities. ABTC has the right to decide the point in time and duration for which it will provide hash computation services to the mining pools. As a result, ABTC’s enforceable right to compensation only begins when, and continues as long as, ABTC provides hash computation services to the mining pools. The contracts are terminable at any time by either party without substantive compensation to the other party for such termination. Therefore, ABTC has determined that the duration of the contract is less than 24 hours and that the contract continuously renews throughout the day. Upon termination, the mining pool operator (i.e., the customer) is required to pay ABTC any amount due related to previously satisfied performance obligations. ABTC has determined that the mining pool operator’s (i.e., the customer’s) renewal right is not a material right as the terms, conditions, and compensation amounts are at then market rates. There is no significant financing component in these transactions.
In exchange for providing hash computation services, which represents ABTC’s only performance obligation, ABTC is entitled to noncash consideration in the form of Bitcoin, calculated under payout models determined by the mining pool operators. The payout model used by the mining pools in which ABTC participated is the Full Pay Per Share (“FPPS”) model, which contains three components, (1) a fractional share of the fixed Bitcoin award from the mining pool operator (referred to as a “block reward”), (2) transaction fees generated from (paid by) blockchain users to execute transactions and distributed (paid out) to individual miners by the mining pool operator, and (3) mining pool operating fees retained by the mining pool operator for operating the mining pool. ABTC’s total compensation is calculated using the following formula: the sum of ABTC’s share of (a) block rewards and (b) transaction fees, less (c) mining pool operating fees. The following is a detailed description of each of the components of the FPPS model under which ABTC receives payment from the mining pools in which it participates:
| (1) | Block rewards represent ABTC’s share of the total amount of block subsidies that are expected to be generated on the Bitcoin network as a whole during the 24-hour period beginning at midnight UTC daily (the “measurement period”). The block reward earned by ABTC is calculated by dividing (a) the total amount of hash rate ABTC provides to the mining pool operator, by (b) the total Bitcoin network’s implied hash rate (as determined by the Bitcoin network difficulty), multiplied by (c) the total amount of block subsidies that are expected to be generated on the Bitcoin network as a whole during the measurement period. ABTC is entitled to its relative share of consideration even if a block is not successfully added to the blockchain by the mining pool in the measurement period. |
F-15
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 2. Significant accounting policies and recent accounting pronouncements (cont.)
| (2) | Transaction fees refer to the total fees paid by users of the network to execute transactions. ABTC is entitled to a pro-rata share of the total amount of transaction fees that are actually generated on the Bitcoin network as a whole during the measurement period. The transaction fees paid out by the mining pool operator to ABTC is calculated by dividing (a) the total amount of transaction fees that are actually generated on the Bitcoin network as a whole, by (b) the total amount of block subsidies that are actually generated on the Bitcoin network as a whole, multiplied by (c) ABTC’s block rewards earned as calculated in (1) above. ABTC is entitled to its relative share of consideration even if a block is not successfully added to the blockchain by the mining pool in the measurement period. |
| (3) | Mining pool operating fees are charged by the mining pool operator for operating the mining pool as set forth on a rate schedule to the mining pool contract. The mining pool operating fees reduce the total amount of compensation ABTC receives and are only incurred to the extent that ABTC has generated mining revenue during the measurement period. |
For each contract, ABTC measures noncash consideration at the Bitcoin spot price at the beginning of the day (midnight UTC time) on the date of contract inception, as determined by ABTC’s principal market, which is Coinbase Prime. ABTC recognizes this noncash consideration, which it receives each day miners operate, on the same day that control of the contracted service transfers to the mining pool operator, which is the same day as the contract inception.
Cost of revenues (exclusive of depreciation and amortization)
ABTC’s cost of revenue consists primarily of direct costs of generating revenue, including electric power costs, hosting costs, repairs and maintenance, occupancy, materials and supply costs, and labor.
Stock-based compensation
Employees of Parent provide services to ABTC, and those employees participate in Parent’s share-based incentive plan. ABTC does not have its own share-based incentive plan. As such, the awards to employees are reflected in parent net investment within the Combined Statements of Equity (Deficit) at the time they are expensed. The Combined Statements of Operations and Comprehensive Income (Loss) include the allocation of Parent employee stock-based compensation expense based off a percentage of revenue within general and administrative expense.
Income taxes
ABTC complies with the accounting and reporting requirements of ASC Topic 740, Income Taxes (“ASC 740”), which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income.
A valuation allowance is recorded if it is more-likely-than-not that some portion, or all, of a deferred tax asset will not be realized. In evaluating whether a valuation allowance is needed, ABTC considers all relevant evidence, including past performance, recent cumulative losses, projections of future taxable income, and the viability of tax planning strategies. If ABTC subsequently determines that there is sufficient evidence to indicate a deferred tax asset will be realized, the associated valuation allowance is reversed.
F-16
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 2. Significant accounting policies and recent accounting pronouncements (cont.)
ABTC recognizes positions taken or expected to be taken in a tax return in the Combined Financial Statements when it is more-likely-than-not that the position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount of benefit with greater than 50% likelihood of being realized upon ultimate settlement. ABTC recognizes any interest and penalties related to unrecognized tax benefits in income tax expense. There were no interest or penalties related to income taxes that have been accrued or recognized as of December 31, 2024, 2023, and 2022.
Foreign currency
The U.S. dollar is the functional and presentation currency of ABTC. Parent has consolidated subsidiaries that have a non-U.S. dollar functional currency. Assets and liabilities of foreign operations having a functional currency other than the U.S. dollar are translated at the rate of exchange prevailing at the reporting date and revenues and expenses at average rates during the period. Foreign currency translation adjustments are reflected within accumulated other comprehensive income (loss) in the Combined Statements of Equity (Deficit). Gains and losses from foreign currency transactions are included in profit or loss for the period. Foreign currency-denominated monetary assets and liabilities of Parent are translated using the rate of exchange prevailing at the reporting date, and non-monetary assets and liabilities measured at fair value are translated at the rate of exchange prevailing at the date when the fair value was determined. Revenues and expenses are measured at average rates during the period. Gains or losses on translation of these items are included in earnings. Foreign currency denominated non-monetary assets and liabilities, measured at historic cost, are translated at the rate of exchange at the transaction date. Certain foreign operations have been carved out and allocated to ABTC. Therefore, ABTC allocated a portion of these foreign currency impacts to its Financial Statements.
Business combinations
The net assets of businesses acquired are recorded at their fair value at the acquisition date and the Combined Financial Statements include their results of operations from that date. Any excess of acquisition consideration over the fair value of identifiable net assets acquired is recorded as goodwill. The major classes of assets and liabilities that ABTC allocates purchase price to, excluding goodwill, include ASIC miners, digital assets, and other current and long-term assets and liabilities.
Parent Net Investment
Parent net investment in the Combined Balance Sheets is presented in lieu of shareholders’ equity and represents Parent’s historical investment in ABTC, the accumulated net earnings (losses) after taxes and the net effect of settled transactions with and allocations from Parent. All cash transactions reflected in parent net investment by Parent in the accompanying Combined Balance Sheets have been considered as financing activities for purposes of the Combined Statements of Cash Flows.
Note 3. Discontinued Operations
On March 4, 2024, Parent announced the closure of its Drumheller, Alberta Bitcoin mining site after analysis of ABTC’s operations. It was determined that the profitability of the Drumheller site had been impacted significantly by various factors, including elevated energy costs and underlying voltage issues.
There is considerable management judgment necessary to determine the estimated future cash flows and fair values of ABTC’s long-lived assets, and, accordingly, actual results could vary significantly from such estimates, which fall under Level 3 within the fair value measurement hierarchy (see discussion of fair value measurements in Note 2).
F-17
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 3. Discontinued Operations (cont.)
The tables below outlines the results of discontinued operations for the years ended December 31, 2024, 2023, and 2022:
| December 31, | ||||||||||||
| (in USD thousands) | 2024 | 2023 | 2022 | |||||||||
| Revenue: | $ | 981 | $ | 736 | $ | — | ||||||
| Cost of revenue (exclusive of depreciation and amortization shown below): | 3,895 | 602 | — | |||||||||
| Operating expenses: | ||||||||||||
| Depreciation and amortization | 169 | 51 | — | |||||||||
| General and administrative expenses | 217 | 6 | — | |||||||||
| Impairment of long-lived assets | 3,104 | — | — | |||||||||
| Total operating expenses | 3,490 | 57 | — | |||||||||
| (Loss) income from discontinued operations before taxes | (6,404 | ) | 77 | — | ||||||||
| Income tax benefit | 1,588 | — | — | |||||||||
| Net (loss) income | $ | (4,816 | ) | $ | 77 | $ | — | |||||
| Cash flows from discontinued operations | December 31, | |||||||
| (in USD thousands) | 2024 | 2023 | ||||||
| Operating cash flows (used in) provided by discontinued operations | $ | (3,291 | ) | $ | 128 | |||
| Assets and Liabilities of discontinued operations | December 31, | |||||||
| (in USD thousands) | 2024 | 2023 | ||||||
| Assets | $ | — | $ | 3,104 | ||||
| Liabilities | — | — | ||||||
ABTC recorded impairment related to the mining equipment and mining infrastructure at the Drumheller site after the decision to cease operations at the site. Refer to Note 6. Property and equipment, net.
Note 4. Segment information
The following table presents summarized information for revenue by geographic area for the years ended December 31, 2024, 2023, and 2022:
| December 31, | ||||||||||||
| (in USD thousands) | 2024 | 2023 | 2022 | |||||||||
| Revenue | ||||||||||||
| United States | $ | 44,710 | $ | 59,740 | $ | 65,701 | ||||||
| Canada | 26,827 | 5,241 | — | |||||||||
| Total revenue | $ | 71,537 | $ | 64,981 | $ | 65,701 | ||||||
The following table presents summarized information for long-lived assets by geographic area:
| December 31, | ||||||||
| (in USD thousands) | 2024 | 2023 | ||||||
| United States | $ | 35,214 | $ | 51,296 | ||||
| Canada | 7,875 | 11,771 | ||||||
| Total Long-Lived Assets | $ | 43,089 | $ | 63,067 | ||||
F-18
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 5. Digital assets
The following table presents the changes in carrying amount of digital assets as of December 31, 2023 and, 2024:
| (in USD thousands) | Amount | |||
| Balance as of December 31, 2022 | $ | 757 | ||
| Bitcoin assumed through the Business Combination | 344,283 | |||
| Revenue recognized from Bitcoin mined | 64,981 | |||
| Mining revenue earned in prior period received in current period | 26 | |||
| Carrying value of Bitcoin sold | (63,689 | ) | ||
| Change in fair value of Bitcoin | 33,470 | |||
| Foreign currency translation adjustments | 8,595 | |||
| Mining revenue not received | (292 | ) | ||
| Balance as of December 31, 2023 | $ | 388,131 | ||
| Revenue recognized from Bitcoin mined | 71,537 | |||
| Revenue recognized from discontinued operations | 981 | |||
| Mining revenue earned in prior period received in current period | 292 | |||
| Bitcoin purchased | 100,708 | |||
| Carrying value of Bitcoin sold | (69,807 | ) | ||
| Change in fair value of Bitcoin | 509,303 | |||
| Foreign currency translation adjustments | (51,644 | ) | ||
| Balance as of December 31, 2024 | $ | 949,501 | ||
| Number of Bitcoin held as of December 31, 2024 | 10,171 | |||
| Number of Bitcoin pledged to BITMAIN as of December 31, 2024 | 968 | |||
| Cost basis of Bitcoin held as of December 31, 2024 | $ | 443,127 | ||
| Realized gains on the sale of Bitcoin for the year ended December 31, 2024 | $ | 10,045 | ||
Digital assets are either held in segregated custody accounts for the benefit of Parent, held in segregated custody accounts under Parent’s ownership and pledged as collateral under a borrowing arrangement or in connection with covered call options sold, or held by BITMAIN for the Bitcoin pledged in connection with the BITMAIN Purchase Agreement, as amended, for miner purchases from them. The details of the digital assets are as follows for the years ended:
| Amount | Number of digital assets | |||||||||||||||
| (in USD thousands) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Current | ||||||||||||||||
| Bitcoin held in custody | $ | — | $ | 4,583 | — | 109 | ||||||||||
| Total current digital assets – held in custody | — | 4,583 | — | 109 | ||||||||||||
| Current | ||||||||||||||||
| Bitcoin pledged for miner purchase | 92,389 | — | 968 | — | ||||||||||||
| Total current digital assets – pledged for miner purchase | 92,389 | — | 968 | — | ||||||||||||
| Non-current | ||||||||||||||||
| Bitcoin held in custody | 525,236 | 282,998 | 5,648 | 6,704 | ||||||||||||
| Total non-current digital assets – held in custody | $ | 525,236 | $ | 282,998 | 5,648 | 6,704 | ||||||||||
| Non-current | ||||||||||||||||
| Bitcoin pledged as collateral | 331,876 | 100,550 | 3,555 | 2,382 | ||||||||||||
| Total non-current digital assets – pledged as collateral | 331,876 | 100,550 | 3,555 | 2,382 | ||||||||||||
| Total digital assets | $ | 949,501 | $ | 388,131 | 10,171 | 9,195 | ||||||||||
F-19
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 5. Digital assets (cont.)
In November 2024, Parent entered into the BITMAIN Purchase Agreement, with BITMAIN to purchase approximately 30,000 BITMAIN Antminer S21+ ASIC miners. In December 2024, Parent completed its Bitcoin pledge by depositing 968 Bitcoin into a segregated wallet with BITMAIN, which remains subject to a three-month redemption right from the shipment date of the purchased ASIC miners, whereby Parent has the option to repurchase, with cash, the pledged Bitcoin at a mutually agreed upon fixed price. If Parent does not exercise this right within the redemption period, BITMAIN will retain full ownership of the pledged Bitcoin as consideration for the purchased ASIC miners.
As of December 31, 2024, Parent had pledged 968 Bitcoin with a fair value of $92.4 million, classified as Digital assets — pledged for miner purchase under current assets on its Consolidated Balance Sheets. A corresponding Miner purchase liability of $15.1 million was recorded under Accounts payable and accrued expenses under current liabilities on ABTC’s Combined Balance Sheets, reflecting its obligation to either redeem the pledged Bitcoin for cash or put it towards the purchase of ASIC miners by not redeeming the pledged Bitcoin at the end of the redemption period.
In accordance with ASC Topic 610-20 Other Income — Gains and Losses from the Derecognition of Nonfinancial Assets, ABTC assessed the transfer of nonfinancial assets, Bitcoin, under ASC 606. Specifically, ABTC noted that the Bitcoin pledged to BITMAIN under the BITMAIN Purchase Agreement constitutes a repurchase agreement under ASC 606. As a result, the Bitcoin was not derecognized upon transfer as Parent retains a repurchase option.
Due to the redemption right and ABTC’s continued economic exposure to the Bitcoin, the pledged Bitcoin is separately classified as Digital assets — pledged for miner purchase on the Combined Balance Sheets, which represents restricted Bitcoin.
ABTC recorded a Bitcoin redemption right derivative asset with an initial fair value of $15.1 million. See Note 11. Derivatives for further information on this derivative asset.
Note 6. Property and equipment, net
The components of property and equipment, net were as follows:
| December 31, | ||||||||
| (in USD thousands) | 2024 | 2023 | ||||||
| Miners and mining equipment | $ | 74,230 | $ | 84,617 | ||||
| Less: Accumulated depreciation | (31,141 | ) | (21,550 | ) | ||||
| Miners and mining equipment, net | $ | 43,089 | $ | 63,067 | ||||
Depreciation expense related to property and equipment was $22.7 million, $14.4 million, and $16.8 million, for the years ended December 31, 2024, 2023, and 2022, respectively.
Impairment of long-lived assets
On March 6, 2024, Parent announced the closure of its Drumheller site in Alberta, Canada. Parent further assessed the profitability of the site which indicated that an impairment triggering event had occurred. Accordingly, with the closure of the Drumheller site, the long-lived assets of the site were fully written down. This resulted in a write down of $3.1 million, which is reflected in the Loss from discontinued operations in ABTC’s Combined Statements of Operations and Comprehensive Income (Loss) for the year ended December 31, 2024.
There was no impairment on ABTC’s long-lived assets for the year ended December 31, 2023. During the year ended December 31, 2022, adverse changes in the business climate, including decreases in the price of Bitcoin throughout, 2022, and the resulting decrease in the market price of miners and mining equipment, indicated that an impairment triggering event had occurred. Testing performed indicated that the estimated fair value of the miners was less than their net carrying value as of December 31, 2022. An impairment charge of approximately $49.7 million was recognized, decreasing the net carrying value of these assets to their estimated fair value.
There is considerable management judgment necessary to determine the estimated future cash flows and fair values of ABTC’s long-lived assets, and, accordingly, actual results could vary significantly from such estimates, which fall under Level 3 within the fair value measurement hierarchy (see discussion of fair value measurements in Note 2).
F-20
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 7. Deposits and prepaid expenses
The components of deposits and prepaid expenses are as follows:
| December 31, | ||||||||
| (in USD thousands) | 2024 | 2023 | ||||||
| Deposits for miners | $ | 31,951 | $ | — | ||||
| Prepaid insurance | 135 | 1,331 | ||||||
| Electricity deposits | 10,564 | 9,814 | ||||||
| Total deposits and prepaid expenses | $ | 42,650 | $ | 11,145 | ||||
Note 8. Business Combinations
As discussed in Note 1, Parent was party to the Business Combination which combined the businesses of USBTC and Legacy Hut. USBTC was identified as the accounting acquirer for financial statement reporting purposes.
The following table details the final purchase price of the Business Combination consideration to the valuations of the identifiable tangible and intangible assets acquired and liabilities assumed as of November 30, 2023, by Parent and the assets and liabilities allocated to ABTC’s Combined Financial Statements. Goodwill was fully attributable to Bitcoin mining operations, and thus allocated to ABTC.
| (in USD thousands) | Fair Value Acquired by Parent | Fair Value Allocated to ABTC | ||||||
| Cash | $ | 23,031 | $ | — | ||||
| Accounts receivable | 2,073 | — | ||||||
| Deposits and prepaid expenses | 15,803 | 6,318 | ||||||
| Digital assets – held in custody | 254,330 | 254,089 | ||||||
| Digital assets – pledged as collateral | 90,194 | 90,194 | ||||||
| Property and equipment, net | 53,781 | 14,815 | ||||||
| Operating lease right-of-use asset | 12,426 | — | ||||||
| Intangible assets, net | 12,003 | — | ||||||
| Goodwill | 56,199 | 56,199 | ||||||
| Accounts payable and accrued expenses | (25,484 | ) | (957 | ) | ||||
| Operating lease liability | (12,120 | ) | — | |||||
| Finance lease liability | (1,433 | ) | — | |||||
| Loans payable | (49,776 | ) | — | |||||
| Total | $ | 431,027 | $ | 420,658 | ||||
Changes in the carrying amount of goodwill were as follows:
| December 31, | ||||||||
| (in USD thousands) | 2024 | 2023 | ||||||
| Balance at beginning of fiscal year | $ | 57,595 | $ | — | ||||
| Acquisition – Business Combination | — | 56,199 | ||||||
| Foreign currency translation adjustments | (4,513 | ) | 1,396 | |||||
| Total | $ | 53,082 | $ | 57,595 | ||||
As of December 31, 2024, there was no impairment of ABTC’s carrying amount of goodwill.
F-21
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 9. Accounts payable and accrued expenses
The components of accounts payable and accrued expenses are as follows:
| December 31, | ||||||||
| (in USD thousands) | 2024 | 2023 | ||||||
| Accounts payable | $ | 876 | $ | 6,478 | ||||
| Accrued state sales taxes | 7,275 | 7,275 | ||||||
| Accrued compensation costs | 2,151 | 1,881 | ||||||
| Accrued electricity costs | 5,609 | 1,884 | ||||||
| Miner purchase liability | 15,096 | — | ||||||
| Other accruals | 5 | 2,088 | ||||||
| Total accounts payable and accrued expenses | $ | 31,012 | $ | 19,606 | ||||
As described in Note 5, ABTC recorded a corresponding financial liability to settle the BITMAIN Purchase Agreement.
Note 10. Loans and notes payable
Details of ABTC’s loans and notes payable are as follows:
| (in USD thousands) | December 31, | |||||||||||||
| Issuance Date | Maturity Date | Interest Rate | 2024 | 2023 | ||||||||||
| Anchorage Note | ||||||||||||||
| February 3, 2023 | February 2, 2028 | 9.00 | % (1) | $ | — | $ | 44,634 | |||||||
| Total principal balance | — | 44,634 | ||||||||||||
| Less: unamortized discount and deferred financing costs | — | (272 | ) | |||||||||||
| Total carrying amount | $ | — | $ | 44,362 | ||||||||||
| Less: current portion | — | 2,912 | ||||||||||||
| Long-term portion | $ | — | $ | 41,450 | ||||||||||
| (1) | The interest rate as of December 31, 2023 for the Anchorage Note was 14.00%. |
As of September 27, 2024, the outstanding balance of the Anchorage Note (as defined below) was settled through a Debt Repayment Agreement (as defined below). Therefore, there are no maturities related to long-term debt as of December 31, 2024. See further discussion of the Debt Repayment Agreement below.
During the years ended December 31, 2024, 2023, and 2022, total principal payments of the debt, exclusive of debt extinguishment, were $11.5 million, $10.8 million, and $11.1 million, respectively. During the years ended December 31, 2024, 2023, and 2022, ABTC recorded amortization of debt issuance costs, included in interest expense, of $3.5 million, $6.3 million, $1.0 million, respectively. During the years ended December 31, 2024, 2023, and 2022, interest expense exclusive of the amortization of debt issuance costs was nil, $2.5 million, and $19.2 million, respectively.
ABTC accounts for all of its loans and notes payable in accordance with ASC 470-20, Debt with Conversion and Other Options (“ASC 470”), ASC 815, and ASC 480, Distinguishing Liabilities from Equity (“ASC 480”). ABTC evaluated all of its loans and notes payable, for all periods presented, to determine if there were any embedded components that qualified as derivatives to be separately accounted for.
Anchorage Note
In February 2023, Parent restructured its outstanding Equipment Loan and Security Agreements (the “Anchorage Note”) with Anchorage Lending CA, LLC (“Anchorage”). The restructuring was accounted for under ASC 470-50 Modifications and Extinguishments. The stated interest rate was 9.0% and was subject to adjustment after each year the loan was outstanding, if Parent did not elect to prepay the Anchorage Note. Interest rate changes were fixed not variable.
F-22
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 10. Loans and notes payable (cont.)
The Anchorage Note allowed Parent to pay the interest in kind (“PIK interest”) by capitalizing unpaid and accrued interest into the principal amount subject to certain conditions. Interest was earned on the first of each annual anniversary date and accrued on the principal balance and PIK interest from prior periods. In connection with the restructuring, the Parent paid approximately $0.7 million in closing fees, issued 2,960,000 shares of common stock of USBTC with an approximate value of $0.8 million (which shares were converted into shares of Parents’s common stock upon the closing of the Business Combination), and paid a termination fee of approximately $0.4 million. Monthly payments commenced on March 15, 2023, and represented 100% of net monthly cash flow from the immediately preceding calendar month activity related to certain ABTC ASIC miners as described below. The net monthly cash flow payment was allocated as follows: first, to pay all unpaid fees, costs, and expenses; second, to the payment of accrued and unpaid interest on the Anchorage Note; and third, to the principal amount of the Anchorage Note. If net monthly cash flows for a given month were zero or negative, then no monthly payment was due for such month.
The Anchorage Note was secured by approximately 21,000 miners at Parent’s Alpha and Salt Creek facilities and all property, equipment, machinery, and other assets located at Parent’s Alpha facility. On April 25, 2023, the Anchorage Note was amended so that interest accrued on the principal balance only and did not include prior period PIK interest.
On September 27, 2024, Parent entered into a Debt Repayment Agreement with Anchorage to exchange the $37.9 million outstanding balance of the Anchorage Note (exclusive of $1.5 million of deferred financing costs) as of the date of Debt Repayment Agreement for 2,313,435 shares of Parent’s common stock (the “Conversion”) at an exchange rate of $16.395 per share (the “Exchange Price”). Upon completion of the Conversion, the outstanding loan and all other related obligations of Parent under the Anchorage Note were satisfied (“Debt Repayment Agreement”). Additionally, as a result of the Conversion, ABTC derecognized the net carrying amount of the Anchorage Note as of the Conversion date of $36.4 million (inclusive of a $37.9 million outstanding balance and $1.5 million of deferred financing costs), recorded a gain on debt extinguishment of $6.0 million (inclusive of $0.2 million in debt extinguishment costs), and to net parent investment the fair value of the shares of Parent’s common stock issued, net of share issuance costs. Under the Debt Repayment Agreement, Parent agreed to file a registration statement with respect to the resale of the common stock issued under the Debt Repayment Agreement and provided Anchorage other customary rights with respect to such registration.
In the event that, on or prior to December 31, 2024, Parent (i) sold any shares of Parent’s common stock, other than pursuant to certain excluded issuances, at a price per share that is less than the Exchange Price or (ii) issued any debt or equity instrument of Parent or affiliates that was convertible into or exchangeable for shares of Parent common stock, other than pursuant to certain excluded issuances, at an initial conversion or exchange price, as applicable, that was less than the Exchange Price (“Better Offer”), then in each case, the Debt Repurchase Agreement would have been deemed to be amended to reflect a new Exchange Price that was the lowest Better Offer and Parent was required to forthwith issue to Anchorage additional shares of Parent common stock to reflect an Exchange Price that is equal to the lowest Better Offer. There were no issuances meeting these provisions on or prior to December 31, 2024, and therefore no additional shares of Parent common stock were issued to Anchorage.
NYDIG Loan
On July 27, 2021, Parent entered into a Master Equipment Finance Agreement with Arctos Credit, LLC, a Delaware limited liability company (“Arctos,” and such agreement the “MEFA”). Pursuant to the MEFA, Arctos advanced funds to Parent that were used to finance Bitcoin mining operations. The MEFA was collateralized by ASIC miners. On December 27, 2021, the MEFA was amended and NYDIG Trust Company LLC (“NYDIG”) replaced Arctos as the lender.
F-23
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 10. Loans and notes payable (cont.)
In December 2022 Parent received a note of default on its borrowing with NYDIG. On February 3, 2023, in connection with a restructuring of its debt obligations with NYDIG, Parent entered into an Asset Purchase Agreement with NYDIG pursuant to which Parent transferred certain of its assets, including certain of its equipment, real estate, and contracts to NYDIG in full satisfaction of the MEFA debt and the release of the security interests. As of February 3, 2023, Parent owes no amount of the MEFA debt to NYDIG and NYDIG holds no remaining security interests in the assets of Parent. As a result, Parent extinguished the outstanding balance and recorded a gain on extinguishment of $23.7 million. Because this debt related to Bitcoin mining operations and was collateralized by ASIC miners, this gain was allocated to ABTC and is recorded as a gain on debt extinguishment in the Combined Statements of Operations and Comprehensive Income (Loss).
Note 11. Derivatives
The following table presents ABTC’s Combined Balance Sheets classification of derivatives carried at fair value:
| (in USD thousands) | Balance | December 31, 2024 | December 31, 2023 | |||||||||||||||
| Derivative | Sheet Line | Asset | Liability | Asset | Liability | |||||||||||||
| Derivatives not designated as hedging instruments: | ||||||||||||||||||
| Bitcoin redemption option | Derivative asset | $ | 18,076 | $ | — | $ | — | $ | — | |||||||||
| Covered call options | Derivative liability | — | 18,437 | — | — | |||||||||||||
| Total derivatives | $ | 18,076 | $ | 18,437 | $ | — | $ | — | ||||||||||
The following table presents the effect of derivatives on ABTC’s Combined Statements of Operations and Comprehensive Income (Loss):
| (in USD thousands) Derivative | Statement of Operations Line | Year Ended 2024 | Year Ended 2023 | Year Ended 2022 | ||||||||||
| Derivatives not designated as hedging instruments: | ||||||||||||||
| Bitcoin redemption option | Gain on derivatives | $ | 2,980 | $ | — | $ | — | |||||||
| Covered call options | Gain on derivatives | 3,800 | — | — | ||||||||||
| Total derivatives | $ | 6,780 | $ | — | $ | — | ||||||||
Bitcoin redemption option
In December 2024, in connection with the BITMAIN Purchase Agreement, Parent pledged 968 Bitcoin to BITMAIN in connection with a purchase of approximately 30,000 BITMAIN Antminer S21+ ASIC miners. Parent has the option to redeem the pledged Bitcoin at a mutually agreed upon fixed price starting from and for up to three months after the shipment date of the purchased miners. The amount of Bitcoin that can be redeemed is pro-rata of the percentage of miners shipped. ABTC accounted for this Bitcoin redemption option as a Level 3 derivative asset as noted in Note 2. A significant unobservable input included in the fair value estimate of the Bitcoin redemption option is the estimated shipment date of the purchased miners, which management estimated to begin at the end of January 2025 as of December 31, 2024.
As of December 31, 2024 and December 18, 2024, Parent estimated the fair value of the Bitcoin redemption option using the Black-Scholes pricing model with the following inputs and inputs noted in the paragraph above:
| December 31, 2024 | December 18, 2024 | |||||||
| Implied volatility | 61.54 | % | 61.32 | % | ||||
| Risk-free interest rate | 4.27 | % | 4.32 | % | ||||
The following table provides a summary of activity and change in fair value of the Bitcoin redemption option (Level 3 derivative asset):
| (in USD thousands) | Year Ended December 31, 2024 | Year Ended December 31, 2023 | ||||||
| Balance, beginning of period | $ | — | $ | — | ||||
| Additions | 15,096 | — | ||||||
| Change in fair value | 2,980 | — | ||||||
| Balance, end of period | $ | 18,076 | $ | — | ||||
F-24
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 11. Derivatives (cont.)
Covered call options
During April 2024, Parent sold covered call options on 2,125 Bitcoin notional for proceeds of $20.8 million and during the year ended December 31, 2024, recorded a realized gain of $20.8 million as all such call options expired unexercised. As noted in Note 2, Parent sold covered call options on Bitcoin to generate cash flow on a portion of its Bitcoin. Parent pledged Bitcoin as collateral with one of its Bitcoin custodians, in a quantity equal to the notional amount, for these covered call options sold. The collateral was returned to Parent upon the expiration of the call options. The covered call options were only exercisable upon the date of expiry, were automatically exercised if the underlying reference price was greater than the strike price of the call option, and were net cash settled on the business day immediately following expiry. The reference price was the Bitcoin Reference Rate published by the CME Group and Crypto Facilities Ltd., or any successor (“BRR”), between 4:00 pm and 4:30 pm London time for a given date. The covered call options were carried at fair value and were Level 2 liabilities as noted in Note 2.
During October 2024, Parent sold additional covered call options on 2,000 Bitcoin notional for proceeds of $2.9 million. During November 2024, Parent rolled these call options into new call options with the same Bitcoin notional. Parent achieved this roll by exchanging its previous call options sold for new call options. As a result of the roll, Parent paid $1.5 million in cash and recorded a realized loss of $23.3 million during the year ended December 31, 2024. Parent has pledged Bitcoin as collateral with one of its Bitcoin custodians in a quantity equal to the notional amount for these covered call options sold. The collateral continues to be pledged in the same manner after the roll. The covered call options exchanged in the roll were only exercisable upon the date of expiry, were automatically exercised if the underlying reference price was greater than the strike price of the call option, and were settled with delivery of the underlying Bitcoin. The reference price was the BRR at 4:00 pm London time for a given date. The covered call options were carried at fair value and were Level 2 liabilities as noted in Note 2. The new call options received by Parent in the roll have the same terms as the call options exchanged by Parent in the roll, except that the reference price is the Coinbase Prime Bitcoin price quoted in U.S. Dollars at 4:00 pm London time for a given date.
Note 12. Stock-based compensation
As of December 31, 2024, Parent had three stock-based compensation plans, the Hut 8 Mining Corp. Omnibus Long-Term Incentive Plan, the Hut 8 Corp. Rollover Option Plan, and the Hut 8 Corp. 2023 Omnibus Incentive Plan. The components and classification of stock-based compensation expense related to stock awards issued under these plans have been allocated from Parent to ABTC. The total stock-based compensation expense allocated to ABTC for the years ended December 31, 2024, 2023, and 2022 was $9.2 million, $9.1 million, and $4.9 million, respectively. Stock-based compensation expense is included in general and administrative expenses in the Combined Statements of Operations and Comprehensive Income (Loss) for all the periods presented.
Note 13. Income taxes
The accompanying Combined Financial Statements reflect the income tax provision and related balances of Bitcoin mining activities as historically reported by Parent in its financial statements for the years ended December 31, 2024, 2023 and 2022. The income tax provision amounts presented in the Combined Financial Statements have been prepared following the separate return method, as if ABTC had filed separate income tax returns, although it was not a separate legal entity for tax filing purposes for the periods presented.
Under the separate return method, current and deferred income taxes are allocated to ABTC in a manner that is systematic, rational, and consistent with the asset and liability method prescribed by ASC 740, “Income Taxes.” ABTC’s provision for income taxes may differ from the amounts reflected in Parent’s consolidated financial statements due to the following: (1) differing interpretations of standalone tax positions; (2) differing financial statement periods under audit; and (3) ABTC used actual amounts from the filed tax returns, rather than estimates from the provision, for the years ended December 31, 2023 and 2022. This approach yields deferred assets and liabilities that differ from those that otherwise would have been previously recorded for ABTC’s operations in the prior year’s tax provision. This disparity is because of tax return true-ups that, within the carve-out setting, will be recorded in the appropriate periods. ABTC has analyzed the differences and adjusted for true-ups that result from information that existed as of the date of the financial statements and not adjusted for new information or developments related to the subsequent period.
F-25
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 13. Income taxes (cont.)
ABTC did not maintain its own stand-alone tax filings, and its operations were included in the tax returns filed by Parent; as such, no formal tax sharing agreement existed. The income taxes recorded in these Combined Financial Statements do not reflect any liabilities to or receivables from Parent for taxes paid or received.
For financial reporting purposes, income (loss) before income taxes includes the following components:
| Twelve Months Ended | ||||||||||||
| (in USD thousands) | December 31, 2024 | December 31, 2023 | December 31, 2022 | |||||||||
| United States | $ | (22,142 | ) | $ | (10,626 | ) | $ | (104,600 | ) | |||
| Foreign | 515,500 | 31,435 | — | |||||||||
| Discontinued operations | (6,404 | ) | — | — | ||||||||
| Total | $ | 486,954 | $ | 20,809 | $ | (104,600 | ) | |||||
Current and Deferred Taxes
The components of the (provision) benefit for income taxes consists of:
| Year Ended December 31, | ||||||||||||
| (in USD thousands) | 2024 | 2023 | 2022 | |||||||||
| Current | ||||||||||||
| U.S. Federal | $ | (626 | ) | $ | (412 | ) | $ | — | ||||
| U.S. State | (263 | ) | (355 | ) | — | |||||||
| Foreign | — | — | — | |||||||||
| Total current | (889 | ) | (767 | ) | — | |||||||
| Deferred | ||||||||||||
| U.S. Federal | 207 | 165 | 392 | |||||||||
| U.S. State | — | — | — | |||||||||
| Foreign | (58,925 | ) | 19,406 | — | ||||||||
| Total deferred | (58,718 | ) | 19,571 | 392 | ||||||||
| Discontinued operations | ||||||||||||
| U.S. Federal | — | — | — | |||||||||
| U.S. State | — | — | — | |||||||||
| Foreign | 1,588 | — | — | |||||||||
| Total discontinued operations | 1,588 | — | — | |||||||||
| Total | $ | (58,019 | ) | $ | 18,804 | $ | 392 | |||||
F-26
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 13. Income taxes (cont.)
A reconciliation of the U.S. federal statutory income tax rates to ABTC’s effective tax rate is as follows:
Continuing Operations
| Year Ended | ||||||||||||||||||||||||
| (in USD thousands) | December 31, 2024 | December 31, 2023 | December 31, 2022 | |||||||||||||||||||||
| Tax benefit (provision) computed at the federal statutory rate | $ | (103,607 | ) | 21.00 | % | $ | (4,370 | ) | 21.00 | % | $ | 21,966 | 21.00 | % | ||||||||||
| State taxes, net of federal tax benefit | 3,263 | (0.66 | )% | 723 | (3.47 | )% | (158 | ) | (0.15 | )% | ||||||||||||||
| Permanent differences | 3,317 | (0.67 | )% | 2,600 | (12.49 | )% | (199 | ) | (0.19 | )% | ||||||||||||||
| Stock based compensation | 364 | (0.07 | )% | (677 | ) | 3.25 | % | (848 | ) | (0.81 | )% | |||||||||||||
| Foreign earnings taxed at a higher rate | 49,214 | (9.98 | )% | 2,744 | (13.19 | )% | — | — | % | |||||||||||||||
| Return to provision adjustments | (3,276 | ) | 0.66 | % | 2,077 | (9.98 | )% | 158 | 0.15 | % | ||||||||||||||
| Subpart F Income | (69,779 | ) | 14.14 | % | (27,069 | ) | 130.07 | % | — | — | % | |||||||||||||
| Change in valuation allowance | 60,871 | (12.35 | )% | 42,818 | (205.75 | )% | (20,260 | ) | (19.36 | )% | ||||||||||||||
| Other items | 26 | (0.01 | )% | (42 | ) | 0.20 | % | (267 | ) | (0.26 | )% | |||||||||||||
| Effective tax rate | $ | (59,607 | ) | 12.08 | % | $ | 18,804 | (90.36 | )% | $ | 392 | 0.38 | % | |||||||||||
Discontinued Operations
| Year Ended | ||||||||||||||||||||||||
| (in USD thousands) | December 31, 2024 | December 31, 2023 | December 31, 2022 | |||||||||||||||||||||
| Tax benefit (provision) computed at the federal statutory rate | $ | 1,347 | 21.00 | % | $ | — | — | % | $ | — | — | % | ||||||||||||
| Foreign earnings taxed at a higher rate | 241 | 3.75 | % | — | — | % | — | — | % | |||||||||||||||
| Effective tax rate | $ | 1,588 | 24.75 | % | $ | — | — | % | $ | — | — | % | ||||||||||||
F-27
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 13. Income taxes (cont.)
Deferred tax assets and liabilities are recognized for temporary differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates expected to be in effect when such differences reverse.
The following table summarizes the components of deferred tax assets and deferred tax liabilities:
Continued Operations
| Year Ended December 31, | ||||||||||||
| (in USD thousands) | 2024 | 2023 | 2022 | |||||||||
| Deferred tax assets | ||||||||||||
| Capital tax losses carried forward | $ | 5,341 | $ | 5,800 | $ | 5,926 | ||||||
| Interest | 6,305 | 6,603 | 5,487 | |||||||||
| Stock based compensation | 2,014 | 177 | 65 | |||||||||
| Accrued expenses | 3,215 | 2,624 | — | |||||||||
| Operating tax losses carried forward | 23,485 | 27,546 | 17,739 | |||||||||
| Impairment Loss | 12,972 | 9,904 | 2,841 | |||||||||
| Property and equipment, net | 18,091 | 15,927 | — | |||||||||
| Total deferred tax assets | 71,423 | 68,581 | 32,058 | |||||||||
| Deferred tax liabilities | ||||||||||||
| Goodwill | — | — | — | |||||||||
| Property and equipment, net | — | — | (5,157 | ) | ||||||||
| Digital assets | (73,873 | ) | (15,481 | ) | — | |||||||
| Subpart F Income | (91,195 | ) | (26,603 | ) | — | |||||||
| Derivatives | (1,598 | ) | — | — | ||||||||
| Total deferred tax liabilities | (166,666 | ) | (42,084 | ) | (5,157 | ) | ||||||
| Valuation allowance | 52,663 | (8,208 | ) | (27,879 | ) | |||||||
| Total net deferred tax asset/(liability) | (42,580 | ) | 18,289 | (978 | ) | |||||||
Discontinued Operations
| Twelve Months Ended December 31, | ||||||||||||
| (in USD thousands) | 2024 | 2023 | 2022 | |||||||||
| Deferred tax assets | ||||||||||||
| Capital tax losses carried forward | $ | — | $ | — | $ | — | ||||||
| Operating tax losses carried forward | 819 | — | — | |||||||||
| Property and equipment, net | 769 | — | — | |||||||||
| Total deferred tax assets | $ | 1,588 | $ | — | $ | — | ||||||
| Deferred tax liabilities | ||||||||||||
| Goodwill | $ | — | $ | — | $ | — | ||||||
| Total deferred tax liabilities | $ | — | $ | — | $ | — | ||||||
| Valuation allowance | — | — | — | |||||||||
| Total net deferred tax asset/(liability) | $ | 1,588 | $ | — | $ | — | ||||||
F-28
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 13. Income taxes (cont.)
Valuation Allowance
3 Year Cumulative Income/(Loss) Position – United States
| (in USD thousands) | Year Ended December 31, 2024 | Year Ended December 31, 2023 | Year Ended December 31, 2022 | Cumulative 3 Year Income/(Loss) | ||||||||||||
| Profit before tax | $ | (22,142 | ) | $ | (10,626 | ) | $ | (104,600 | ) | $ | (137,368 | ) | ||||
| Permanent difference | 23,333 | 9,210 | 540 | 33,083 | ||||||||||||
| Total | $ | 1,191 | $ | (1,416 | ) | $ | (104,060 | ) | $ | (104,285 | ) | |||||
3 Year Cumulative Income/(Loss) Position – Canada
| (in USD thousands) | Year Ended December 31, 2024 | Year Ended December 31, 2023 | Year Ended December 31, 2022 | Cumulative 3 Year Income/(Loss) | ||||||||||||
| Profit before tax | $ | 509,096 | $ | 31,436 | $ | — | $ | 540,531 | ||||||||
| Permanent difference | (258,281 | ) | (16,152 | ) | — | (274,433 | ) | |||||||||
| Total | $ | 250,815 | $ | 15,283 | $ | — | $ | 266,098 | ||||||||
ABTC has evaluated the need for a valuation allowance for its U.S. operations in accordance with the prescriptive guidance in ASC 740. ABTC has a history of losses, including a cumulative loss position for all periods covered in these Combined Financial Statements. As such, management has determined that it is more likely than not that ABTC will not realize its deferred tax assets in the upcoming years and has concluded that an allowance is appropriate.
ABTC’s Canadian operations are profitable without a history of cumulative losses for all periods covered in these Combined Financial Statements. The Canadian operations have significant positive evidence to support the position that a valuation allowance is not needed for its deferred tax assets given the profitability and the overall net deferred tax liability position.
Uncertain Tax Positions
ABTC adheres to the provisions of ASC 740-10 (formerly FIN 48). ASC 740-10 requires financial statement recognition of the impact of a tax position if a position is more likely than not of being sustained on audit, based on the technical merits of the position. As of the dates presented, ABTC’s management has determined that there are no uncertain tax positions that need to be recorded.
Net Operating Losses and Tax Credits
U.S. Federal and State
Parent had historical U.S. Federal and Florida net operating loss (“NOLs”) carryforwards of $8.9 million (tax effected) and $107 thousand (tax effected, post apportionment), respectively, generated solely from activities during the year ended December 31, 2021. ABTC has performed an analysis of the income tax calculation for the year ended December 31, 2021, and recalculated taxable income to only include activities specifically related to ABTC. As such, ABTC has determined it has historical U.S. Federal NOLs of $6.6 million (tax effected) and Florida historical NOLs of $45 thousand (tax effected, post apportionment), which are recognized as carryforwards in these Combined Financial Statements.
F-29
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 13. Income taxes (cont.)
ABTC had Federal NOLs (tax effected) of $17.3 million as of December 31, 2022, $15.7 million as of December 31, 2023, and $13.2 million as of December 31, 2024. For State NOLs, ABTC had $409 thousand as of December 31, 2022, $0 as of December 31, 2023, and $913 thousand as of December 31, 2024.
ABTC had Federal Capital Loss Carryforwards of $5.4 million for the year ended December 31, 2022, $5.3 million for the year ended December 31, 2023, and $4.9 million for the year ended December 31, 2024. For State Capital Loss Carryforwards, ABTC had $531 thousand for the year ended December 31, 2022, $501 thousand for the year ended December 31, 2023, and $490 thousand for the year ended December 31, 2024.
Foreign
Parent had acquired Canadian NOLs of $84.8 million because of the Business Combination in November 2023. ABTC reviewed historical NOLs by Canadian entity and by year to determine which NOLs were attributable to ABTC for purposes of these Combined Financial Statements. As a result, ABTC has determined historical NOLs of $12.2 million (tax effected) were related to ABTC and are recognized as carryforwards in these Combined Financial Statements. As of the date of these financial statements, Parent had acquired capital loss carryforwards, but upon review, it was determined that none of the capital losses were attributable to ABTC in these Combined Financial Statements.
ABTC had Canadian NOLs of $0 as of December 31, 2022, $11.9 million as of December 31, 2023, and $10.2 million as of December 31, 2024. The $10.2 million for the year ended December 31, 2024 consists of $9.4 million from continued operations and $819 thousand from discontinued operations.
Note 14. Concentrations
The only digital asset mined during the years ended December 31, 2024, 2023, and 2022 has been Bitcoin. Therefore, 100% of ABTC’s revenue is related to one digital asset. Parent used two mining pool operators during the year ended December 31, 2024, and three mining pool operators during the years ended December 31, 2023 and 2022.
Note 15. Related party transactions
Parties are considered related to ABTC if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with ABTC. This includes equity method investment entities. Related parties also include principal owners of ABTC, its management, members of the immediate families of principal owners of ABTC and its management and other parties with which ABTC may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. ABTC discloses all known related party transactions.
Cost Allocations from Parent
Parent provides significant support functions to ABTC. The Combined Financial Statements reflect an allocation of these costs. Allocated costs included in cost of revenue relate to support primarily consisting of electricity, facilities, repairs and maintenance, and labor which are predominantly allocated based on revenue. Allocated costs included in Selling, general, and administrative expenses primarily relate to finance, human resources, benefits administration, information technology, legal, corporate strategy, corporate governance, other professional services and general commercial support functions and are predominantly allocated based on a percentage of revenue. See Note 1 for a discussion of these costs and the methodology used to allocate them.
F-30
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 15. Related party transactions (cont.)
Net Parent Investment
The net transfers to and from Parent discussed above were as follows:
| Year Ended December 31, | ||||||||||||
| (in USD thousands) | 2024 | 2023 | 2022 | |||||||||
| Cash pooling and general financing activities | $ | 97,129 | $ | (29,577 | ) | $ | (8,943 | ) | ||||
| Corporate allocations | 34,970 | 34,186 | 18,361 | |||||||||
| Net transfers from parent per Combined Statements of Cash Flows | 132,099 | 4,609 | 9,418 | |||||||||
| Shares issued in the Business Combination | — | 420,658 | — | |||||||||
| Parent common stock issued in debt modification | — | 791 | — | |||||||||
| Contribution by parent related to debt extinguishment | 30,420 | 10,721 | — | |||||||||
| Stock based compensation funded by parent | 9,173 | 9,107 | 4,933 | |||||||||
| Net transfers from parent per Combined Statements of Equity | $ | 171,692 | $ | 445,886 | $ | 14,351 | ||||||
Note 16. Commitments and contingencies
BITMAIN Purchase Agreement
The BITMAIN Purchase Agreement includes the following financial commitments: a Bitcoin redemption option, recognized as a derivative asset under ASC 815, measured at fair value at each reporting period, a Miner purchase liability representing a commitment to settle the obligation in cash if the redemption right is exercised before expiration, and a derecognition of Digital assets — pledged for miner purchase if the redemption right is not exercised.
Legal and regulatory matters
ABTC is subject at times to various claims, lawsuits and governmental proceedings relating to the ABTC’s business and transactions arising in the ordinary course of business. ABTC cannot predict the final outcome of such proceedings. Where appropriate, ABTC vigorously defends such claims, lawsuits and proceedings. Some of these claims, lawsuits and proceedings seek damages, including, consequential, exemplary or punitive damages, in amounts that could, if awarded, be significant. Certain of the claims, lawsuits and proceedings that may arise in ordinary course of business are covered by ABTC’s insurance program. ABTC maintains property and various types of liability insurance in an effort to protect ABTC from such claims. In terms of any matters where there is no insurance coverage available to ABTC, or where coverage is available and ABTC maintains a retention or deductible associated with such insurance, ABTC may establish an accrual for such loss, retention or deductible based on current available information. In accordance with accounting guidance, if it is probable that an asset has been impaired or a liability has been incurred as of the date of the Combined Financial Statements, and the amount of loss is reasonably estimable, then an accrual for the cost to resolve or settle these claims is recorded by ABTC in the accompanying Combined Balance Sheets. If it is reasonably possible that an asset may be impaired as of the date of the Combined Financial Statements, then ABTC discloses the range of possible loss. Expenses related to the defense of such claims are recorded by ABTC as incurred and included in the accompanying Combined Statements of Operations and Comprehensive Income (Loss). Management, with the assistance of outside counsel, may from time to time adjust such accruals according to new developments in the matter, court rulings, or changes in the strategy affecting ABTC’s defense of such matters. On the basis of current information, ABTC 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.
F-31
American Bitcoin Corp.
Notes to the Audited Combined Financial Statements
Note 17. Subsequent events
ABTC has completed an evaluation of all subsequent events after the balance sheet date up to the date that the Combined Financial Statements were available to be issued. Except as described below, ABTC has concluded no other subsequent events have occurred that require disclosure.
The Transactions
As described in Note 1, on March 31, 2025, Parent, ADC, and the stockholders of ADC entered into the Agreement, pursuant to which Parent contributed to ADC substantially all of Parent’s wholly-owned ASIC miners, representing the business of ABTC, 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. In connection with the Transactions, ADC was renamed American Bitcoin Corp. and became a majority-owned subsidiary of Parent. The Transactions did not meet the business combination criteria under FASB ASC Topic 805, Business Combinations. The net book value of the assets contributed by ABTC was $115.8 million.
The Gryphon Merger
As described in Note 1, on May 9, 2025, Gryphon, Merger Sub Inc., Merger Sub LLC, and ABTC, entered into the Merger Agreement. Following the Mergers, Gryphon will be renamed American Bitcoin Corp. and ABTC’s business is expected to be the business of the Combined Company.
Following the closing of the transactions contemplated by the Merger Agreement, including the Mergers, (i) the aggregate number of shares of ABTC Class A common stock and Class B common stock issued to ABTC equity holders as consideration for the Merger is expected to represent approximately 98% of the outstanding equity interests of the Combined Company, on a fully diluted basis, and (ii) Gryphon equity holders are expected to own 2.0% of the outstanding equity interests of the Combined Company, on a fully diluted basis, after their shares of Gryphon common stock are reclassified into shares of Combined Company Class A common stock.
F-32
Exhibit 99.7
American Bitcoin Corp.
Condensed Balance Sheets
(in USD thousands, except share and per share data)
| Condensed Unaudited March 31, 2025 | Condensed Combined Audited December 31, 2024 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Deposits and prepaid expenses | $ | — | $ | 42,650 | ||||
| Derivative asset | — | 18,076 | ||||||
| Digital assets – pledged for miner purchase | — | 92,389 | ||||||
| Total current assets | — | 153,115 | ||||||
| Non-current assets | ||||||||
| Digital assets – held in custody | — | 525,236 | ||||||
| Digital assets – pledged as collateral | — | 331,876 | ||||||
| Property and equipment, net | 121,112 | 43,089 | ||||||
| Goodwill | — | 53,082 | ||||||
| Total non-current assets | 121,112 | 953,283 | ||||||
| Total assets | $ | 121,112 | $ | 1,106,398 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | — | $ | 31,012 | ||||
| Derivative liability | — | 18,437 | ||||||
| Income tax payable | — | 889 | ||||||
| Total current liabilities | — | 50,338 | ||||||
| Non-current liabilities | ||||||||
| Deferred tax liabilities | 5,355 | 40,993 | ||||||
| Total non-current liabilities | 5,355 | 40,993 | ||||||
| Total liabilities | $ | 5,355 | $ | 91,331 | ||||
| Commitments and contingencies (Note 11) | ||||||||
| Stockholders’ equity | ||||||||
| Common stock, $0.0001 par value; 1,100,000,000 shares authorized; 50,500,000 shares issued and outstanding as of March 31, 2025 | 5 | — | ||||||
| Additional paid-in capital | 115,752 | — | ||||||
| Accumulated other comprehensive (loss) income | — | (48,347 | ) | |||||
| Former net parent investment | — | 1,063,414 | ||||||
| Total stockholders’ equity | 115,757 | 1,015,067 | ||||||
| Total liabilities and stockholders’ equity | $ | 121,112 | $ | 1,106,398 | ||||
See accompanying Notes to Unaudited Condensed and Combined Financial Statements.
1
American Bitcoin Corp.
Condensed and Combined Statements of Operations and Comprehensive (Loss) Income
(in USD thousands, except share and per share data)
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenue | $ | 12,338 | $ | 30,357 | ||||
| Cost of revenue (exclusive of depreciation and amortization shown below) | 11,651 | 16,810 | ||||||
| Operating expenses (income): | ||||||||
| Depreciation and amortization | 6,424 | 7,125 | ||||||
| General and administrative expenses | 14,368 | 11,806 | ||||||
| Loss on sale of property and equipment | 2,454 | — | ||||||
| Losses (gains) on digital assets | 112,394 | (274,540 | ) | |||||
| Total operating expenses (income) | 135,640 | (255,609 | ) | |||||
| Operating (loss) income | (134,953 | ) | 269,156 | |||||
| Other income (expense): | ||||||||
| Interest expense | — | (1,296 | ) | |||||
| Gain on derivatives | 20,862 | — | ||||||
| Total other income (expense) | 20,862 | (1,296 | ) | |||||
| (Loss) income from continuing operations before taxes | (114,091 | ) | 267,860 | |||||
| Income tax benefit (provision) | 13,468 | (33,896 | ) | |||||
| Net (loss) income from continuing operations | (100,623 | ) | 233,964 | |||||
| Loss from discontinued operations (net of income tax benefit of nil, and $1.1 million respectively) | — | (3,554 | ) | |||||
| Net (loss) income | $ | (100,623 | ) | $ | 230,410 | |||
| Other comprehensive (loss) income: | ||||||||
| Foreign currency translation adjustments | 4,467 | (15,137 | ) | |||||
| Total comprehensive (loss) income | $ | (96,156 | ) | $ | 215,273 | |||
See accompanying Notes to Unaudited Condensed and Combined Financial Statements.
2
American Bitcoin Corp.
Condensed and Combined Statements of Stockholders’ Equity
(in USD thousands, except share and per share data)
| Common Stock | Additional Paid-in | Accumulated Other Comprehensive | Former Parent Net | Total Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Income (Loss) | Investment | Equity | |||||||||||||||||||
| Balance, December 31, 2023 | — | $ | — | $ | — | $ | 10,997 | $ | 462,787 | $ | 473,784 | |||||||||||||
| Net income | — | — | — | — | 230,410 | 230,410 | ||||||||||||||||||
| Net transfers from parent | — | — | — | — | 7,735 | 7,735 | ||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | (15,137 | ) | — | (15,137 | ) | ||||||||||||||||
| Balance, March 31, 2024 | — | $ | — | $ | — | $ | (4,140 | ) | $ | 700,932 | $ | 696,792 | ||||||||||||
| Balance, December 31, 2024 | — | $ | — | $ | — | $ | (48,347 | ) | $ | 1,063,414 | $ | 1,015,067 | ||||||||||||
| Net loss(a) | — | — | — | — | (100,623 | ) | (100,623 | ) | ||||||||||||||||
| Net transfers from parent | — | — | — | — | (798,687 | ) | (798,687 | ) | ||||||||||||||||
| Foreign currency translation adjustments | — | — | — | 4,467 | 4,467 | |||||||||||||||||||
| Disposition of cumulative translation adjustment | — | — | — | 43,880 | (48,347 | ) | (4,467 | ) | ||||||||||||||||
| Issuance of shares at separation | 50,500,000 | 5 | 115,752 | — | (115,757 | ) | — | |||||||||||||||||
| Balance, March 31, 2025 | 50,500,000 | $ | 5 | $ | 115,752 | $ | — | $ | — | $ | 115,757 | |||||||||||||
| (a) | Net loss from January 1, 2025 through March 31, 2025 is attributed to the former parent as it was the sole shareholder prior to March 31, 2025. |
See accompanying Notes to Unaudited Condensed and Combined Financial Statements.
3
American Bitcoin Corp.
Condensed and Combined Statements of Cash Flows
(in USD thousands)
| Unaudited Condensed Three Months Ended March 31, 2025 | Unaudited Condensed Combined Three Months Ended March 31, 2024 | |||||||
| Operating activities | ||||||||
| Net (loss) income | $ | (100,623 | ) | $ | 230,410 | |||
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||
| Depreciation and amortization | 6,424 | 7,125 | ||||||
| Stock-based compensation | 2,145 | 2,639 | ||||||
| Bitcoin mining revenue | (12,338 | ) | (30,357 | ) | ||||
| Losses (gains) on digital assets | 112,394 | (274,540 | ) | |||||
| Deferred tax assets and liabilities | (19,890 | ) | 33,064 | |||||
| Gain on derivatives | (20,862 | ) | — | |||||
| Loss on sale of property and equipment | 2,454 | — | ||||||
| Amortization of debt discount | — | 1,304 | ||||||
| Loss on discontinued operations | — | 3,554 | ||||||
| Changes in assets and liabilities: | ||||||||
| Deposits and prepaid expenses | — | 6,924 | ||||||
| Income taxes payable | (889 | ) | (318 | ) | ||||
| Accounts payable and accrued expenses | (13,468 | ) | (14,150 | ) | ||||
| Net cash used in operating activities | (44,653 | ) | (34,345 | ) | ||||
| Investing activities | ||||||||
| Proceeds from sale of digital assets | 3,429 | 36,109 | ||||||
| Proceeds from sale of property and equipment | 2,563 | — | ||||||
| Net cash (used in) provided by investing activities | 5,992 | 36,109 | ||||||
| Financing activities | ||||||||
| Repayment from loans payable | — | (6,860 | ) | |||||
| Legal contribution of mining operations to ABTC | 955,245 | — | ||||||
| Distribution to parent | (115,752 | ) | — | |||||
| Net parent investment | (800,832 | ) | 5,096 | |||||
| Net cash provided by (used in) financing activities | 38,661 | (1,764 | ) | |||||
| Net increase (decrease) in cash | — | — | ||||||
| Cash, beginning of period | — | — | ||||||
| Cash, and restricted cash, end of period | $ | — | $ | — | ||||
See accompanying Notes to Unaudited Condensed and Combined Financial Statements.
4
American Bitcoin Corp.
Notes to the Combined Financial Statements
Note 1. Description of business, the transactions and basis of presentation
Description of business
American Bitcoin Corp. (“ABTC”), formerly known as American Data Centers Inc., is a Bitcoin mining company that was incorporated in the state of Delaware in November 2024. On March 31, 2025, through the Transactions (as defined below), ABTC became a majority-owned subsidiary of Hut 8 Corp. (including its consolidated subsidiaries, “Parent”). ABTC did not historically operate as a standalone company. Unless otherwise indicated, ABTC’s results of operations reflected herein refer to Parent’s Bitcoin mining operations, represented by the “Bitcoin mining” sub-segment of Parent’s “Compute” segment. See “Basis of presentation” below. The business of ABTC is (i) the operation of application-specific integrated circuit (“ASIC”) miners for the purpose of mining Bitcoin and (ii) the strategic accumulation of Bitcoin.
The Transactions
Transaction with American Data Centers Inc.
On March 31, 2025, Parent, American Data Centers Inc. (“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, representing the business of ABTC, 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.
The Transactions were effectuated as follows:
On March 14, 2025, Parent created American Bitcoin Holdings LLC (“ABH”), a wholly-owned subsidiary, and on March 30, 2025, transferred substantially all of Parent’s wholly-owned ASIC miners to ABH as a transfer under common control.
On March 31, 2025, under the Agreement, ABH acquired shares of 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 in exchange for ABH’s ASIC miners, representing the business of ABTC. In connection with the Transactions, ADC was renamed American Bitcoin Corp.
In connection with the Transactions, Parent and ABTC entered into a Master Services Agreement and a Master Colocation Services Agreement providing for Parent and its personnel to perform day-to-day commercial and operational management services and ASIC colocation services to ABTC, respectively, in each case on an exclusive basis for so long as such agreements remain in effect. Parent and ABTC also entered into a Shared Services Agreement, pursuant to which Parent and its personnel would provide back-office support services to ABTC.
5
American Bitcoin Corp.
Notes to the Combined Financial Statements
Note 1. Description of business, the transactions and basis of presentation (cont.)
The following table presents a reconciliation of the unaudited condensed combined balance sheet of ABTC as of March 31, 2025, prior to the effectiveness of the Transactions, and the unaudited condensed balance sheet of ABTC as of March 31, 2025, following the effectiveness Transactions:
| ABTC’s Combined Balance Sheet | Legal Contribution | ABTC’s Balance Sheet | ||||||||||
| Assets | ||||||||||||
| Current assets | ||||||||||||
| Cash | $ | — | $ | — | $ | — | ||||||
| Deposits and prepaid expenses | 36,920 | (36,920 | ) | — | ||||||||
| Derivative assets | 21,397 | (21,397 | ) | — | ||||||||
| Digital assets – pledged for miner purchase | 79,893 | (79,893 | ) | — | ||||||||
| Total current assets | 138,210 | (138,210 | ) | — | ||||||||
| Non-current assets | ||||||||||||
| Digital assets – held in custody | 597,743 | (597,743 | ) | — | ||||||||
| Digital assets – pledged as collateral | 169,608 | (169,608 | ) | — | ||||||||
| Property and equipment, net | 123,079 | (1,967 | ) | 121,112 | ||||||||
| Goodwill | 53,169 | (53,169 | ) | — | ||||||||
| Total non-current assets | 943,599 | (822,487 | ) | 121,112 | ||||||||
| Total assets | $ | 1,081,809 | $ | (960,697 | ) | $ | 121,112 | |||||
| Liabilities and equity | ||||||||||||
| Current liabilities | ||||||||||||
| Accounts payable and accrued expenses | $ | 108,235 | $ | (108,235 | ) | $ | — | |||||
| Derivative liability | 896 | (896 | ) | — | ||||||||
| Income tax payable | 19 | (19 | ) | — | ||||||||
| Total current liabilities | 109,150 | (109,150 | ) | — | ||||||||
| Non-current liabilities | ||||||||||||
| Deferred tax liability | 21,103 | (15,748 | ) | 5,355 | ||||||||
| Total liabilities | 130,253 | (124,898 | ) | 5,355 | ||||||||
| Stockholders’ equity | ||||||||||||
| Parent net investment | 995,436 | (995,436 | ) | — | ||||||||
| Common Stock | — | 5 | 5 | |||||||||
| Additional paid-in capital | — | 115,752 | 115,752 | |||||||||
| Accumulated other comprehensive income | (43,880 | ) | 43,880 | — | ||||||||
| Total stockholders’ equity | 951,556 | (835,799 | ) | 115,757 | ||||||||
| Total liabilities and stockholders’ equity | $ | 1,081,809 | $ | (960,697 | ) | $ | 121,112 | |||||
6
American Bitcoin Corp.
Notes to the Combined Financial Statements
Note 1. Description of business, the transactions and basis of presentation (cont.)
Transaction with Gryphon Digital Mining, Inc.
On May 9, 2025, Gryphon Digital Mining, Inc., a Delaware corporation (“Gryphon”), GDM Merger Sub I Inc., a Delaware corporation and wholly owned direct subsidiary of Gryphon (“Merger Sub Inc.”), GDM Merger Sub II LLC, a Delaware limited liability company and wholly owned direct subsidiary of Gryphon (“Merger Sub LLC”), and ABTC entered into an Agreement and Plan of Merger (the “Merger Agreement” and such transactions, the “Mergers”). Following the Mergers, Gryphon will be renamed American Bitcoin Corp. (the “Combined Company”) and ABTC’s business is expected to be the business of the Combined Company.
Following the closing of the transactions contemplated by the Merger Agreement, including the Mergers, (i) the aggregate number of shares of ABTC Class A common stock and Class B common stock issued to ABTC equity holders as consideration for the Merger is expected to represent approximately 98% of the outstanding equity interests of the Combined Company, on a fully diluted basis, and (ii) Gryphon equity holders are expected to own 2.0% of the outstanding equity interests of the Combined Company, on a fully diluted basis, after their shares of Gryphon common stock are reclassified into shares of Combined Company Class A common stock.
Basis of presentation
Until the effectiveness of the Transactions on March 31, 2025, ABTC’s operations were historically operated as the “Bitcoin mining” sub-segment of Parent’s “Compute” segment and not as a standalone company. ABTC’s Condensed Combined Financial Statements, representing the historical assets, liabilities, operations and cash flows directly attributable to ABTC have been prepared on a carve-out basis through the use of a management approach from Parent’s consolidated financial statements and accounting records and are presented on a stand-alone basis as if the operations had been conducted independently from Parent. Historically, separate financial statements have not been prepared for ABTC and it has not operated as a standalone business from Parent.
Following the effectiveness of the Transactions on March 31, 2025, ABTC began operating as a standalone entity with its own accounting and financial records. ABTC’s condensed balance sheet as of March 31, 2025 reflects the assets and liabilities that ABTC directly owns or is legally obligated to satisfy, respectively, post-Transactions. Starting March 31, 2025, following the effectiveness of the Transactions, ABTC’s results of operations are the results directly attributed to its standalone operations rather than the Bitcoin mining operations of Parent. Note that the post-Transactions operational activity for March 31, 2025 was deemed immaterial to ABTC’s Statements of Operations and Comprehensive Income (Loss).
Prior to the effectiveness of the Transactions on March 31, 2025, all revenues and costs, as well as assets and liabilities directly associated with what was historically Parent’s Bitcoin mining activities are included in ABTC’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 ABTC include corporate general and administrative expenses which consist of various categories, including but not limited to: employee compensation and benefits, professional services, facilities and corporate office expenses, information technology, interest expenses, and share-based compensation. The corporate and general administrative expenses allocated are primarily based on a percentage of revenue basis that is 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 ABTC’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 ABTC 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 ABTC been a standalone company would depend on a number of factors, including the organizational structure, what corporate functions ABTC might have performed directly or outsourced, and strategic decisions ABTC 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 ABTC will incur in the future or would have incurred if ABTC had obtained these services from a third party.
7
American Bitcoin Corp.
Notes to the Combined Financial Statements
Note 1. Description of business, the transactions and basis of presentation (cont.)
Prior to the effectiveness of the Transactions on March 31, 2025, all intracompany transactions within ABTC have been eliminated. All intercompany transactions between ABTC and Parent are considered to be effectively settled in ABTC’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 is reflected in the unaudited combined statement of cash flows within financing activities and in the unaudited condensed balance sheets as net parent investment. As of 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, ABTC’s equity balance in its unaudited condensed combined financial statements represents the excess of total liabilities over assets. Net parent investment is primarily impacted by contributions from Parent which 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. ABTC does not have legal ownership of any bank accounts containing cash balances. As such, cash held in commingled accounts with Parent is presented within net parent investment on the unaudited condensed balance sheets. Subsequent to March 31, 2025, ABTC has set up its own bank accounts to appropriately settle its liabilities.
Prior to the effectiveness of the Transactions on March 31, 2025, ABTC was not a co-obligor on Parent’s third-party, long-term debt obligations nor is ABTC 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 ABTC’s purchase of ASICs or directly used for Bitcoin mining-related activities and were included in ABTC’s unaudited condensed combined financial statements. While ABTC is not a legal obligor, certain Bitcoin mining assets of ABTC were pledged as collateral as disclosed in Note 4. As of March 31, 2025, following the effectiveness of the Transactions, ABTC is no longer connected to any Parent debt.
The accompanying unaudited condensed and combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting. While these statements reflect all normal recurring adjustments which are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all the information and footnotes required by GAAP for complete financial statements. As such, the information included in these unaudited condensed and combined financial statements should be read in conjunction with the ABTC’s combined annual financial statements for the year-ended December 31, 2024 and 2023 and related notes.
Interim results are not necessarily indicative of results for a full year.
The U.S. Dollar is the functional and presentation currency of ABTC.
Significant accounting policies followed by ABTC in the preparation of the accompanying Unaudited Condensed Combined Financial Statements are summarized below.
8
American Bitcoin Corp.
Notes to the Combined Financial Statements
Note 2. Significant accounting policies and recent accounting pronouncements
Recent accounting pronouncements
ABTC continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects ABTC’s financial reporting, ABTC undertakes a study to determine the consequences of the change to its unaudited condensed and combined financial statements and ensures that there are proper controls in place to ascertain that ABTC’s unaudited condensed and combined financial statements properly reflect the change.
In January 2025, the Financial Accounting Standards Board (“FASB”) issued Update ASU 2025-01, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2025-01 was issued to clarify the effective date for Update ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 requires public business entities to provide additional disclosures in the notes to financial statements, disaggregating specific expense categories within relevant income statement captions. The prescribed categories include purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depreciation, depletion, and amortization related to oil-and-gas producing activities. ASU 2024-03 is effective for the first annual reporting period beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. ABTC is currently assessing the impact of adopting the standard.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”) to enhance transparency in income tax reporting. ASU 2023-09 requires public business entities to disclose more detailed information about the nature and composition of deferred tax assets and liabilities, including the impact of tax law changes on current taxes payable. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The adoption had no material impact to ABTC. See Note 8 for disclosures related to income taxes.
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 ABTC’s unaudited condensed and combined financial statements include estimates associated with revenue recognition, determining the useful lives and recoverability of long-lived assets, goodwill, digital assets, the allocation of costs to ABTC for certain corporate and shared service functions in preparing ABTC’s unaudited condensed and combined financial statements on a carve-out basis, and current and deferred income tax assets (including the associated valuation allowance) and liabilities.
9
American Bitcoin Corp.
Notes to the Combined Financial Statements
Note 2. Significant accounting policies and recent accounting pronouncements (cont.)
Fair value measurement
ABTC’s financial assets and liabilities are accounted for in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”) which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy requires an entity to maximize the use of observable inputs when measuring fair value and classifies those inputs into three levels:
| Level 1 — | Quoted prices (unadjusted) in active markets for identical assets or liabilities. | |
| Level 2 — | Observable, market-based inputs, other than quoted prices included in Level 1, for the assets or liabilities either directly or indirectly. | |
| Level 3 — | Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. |
Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on ABTC’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or a liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment.
Assets and liabilities measured at fair value on a recurring basis
The following table presents information about ABTC’s assets and liabilities measured at fair value on a recurring basis and ABTC’s estimated level within the fair value hierarchy of those assets and liabilities as of and December 31, 2024. There were no assets and liabilities measured at fair value on a recurring basis as of March 31, 2025, as Parent retained its strategic Bitcoin reserve following the effectiveness of the Transactions.
| Fair value measured at December 31, 2024 | ||||||||||||||||
| (in USD thousands) | Total carrying value at December 31, 2024 | Quoted prices in active markets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||
| Digital assets | $ | 949,501 | $ | 949,501 | $ | — | $ | — | ||||||||
| Covered call options | (18,437 | ) | — | (18,437 | ) | — | ||||||||||
| Bitcoin redemption option | 18,076 | — | — | 18,076 | ||||||||||||
Digital assets are made up of $424.3 million of Bitcoin pledged as collateral for debt and for miner purchases and $525.2 million held in custody.
In determining the fair value of its digital assets, ABTC uses quoted prices as determined by ABTC’s principal market, which is Coinbase Prime. As such, ABTC’s Digital assets were determined to be Level 1 assets. See Digital assets below for a description of ABTC’s digital asset accounting policy. In estimating the fair value of its covered call options (as defined below), ABTC uses the Black-Scholes pricing model, which includes several inputs and assumptions including the market price of the underlying asset (Bitcoin), the underlying asset’s implied volatility, the risk-free interest rate, and the expected term of the options. The expected term of the options is the contractual term of the options given the options can only be exercised on the expiry date. ABTC determined that the covered call options are Level 2 liabilities given all inputs are observable, but the options themselves are not traded in an active market. ABTC estimates the fair value of its Bitcoin redemption option using the Black-Scholes pricing model, which includes several inputs and assumptions including the market price of the underlying asset (Bitcoin), the underlying asset’s implied volatility, the risk-free interest rate, and the expected term of the redemption option. In addition, management’s assumption of the start of the redemption period, triggered by a shipment date of purchased property and equipment, is a significant unobservable input. For quantitative disclosure on the inputs used to fair value ABTC’s Bitcoin redemption option, see Note 10. Derivatives. ABTC determined that the Bitcoin redemption option is a Level 3 liability given a significant unobservable input, delivery date of the miners became observable, is included in its valuation.
10
American Bitcoin Corp.
Notes to the Combined Financial Statements
Note 2. Significant accounting policies and recent accounting pronouncements (cont.)
See the Derivatives below for a description of ABTC’s derivative instrument accounting policy.
Assets and liabilities measured at fair value on a non-recurring basis
In addition to assets and liabilities that are measured at fair value on a recurring basis, ABTC also measures certain assets and liabilities at fair value on a non-recurring basis. ABTC’s non-financial assets, including goodwill and property and equipment, are measured at fair value when there is an indication of impairment and the carrying amount exceeds the asset’s projected undiscounted cash flows. These assets are recorded at fair value only when an impairment charge is recognized. ABTC had no impairment from its continuing operations related to its non-financial assets and liabilities measured on a non-recurring basis during the three months ended March 31, 2025 and 2024. ABTC recognized approximately $3.1 million of impairment losses from its discontinued operations related to the Drumheller site’s non-financial assets and liabilities measured on a non-recurring basis during the three months ended March 31, 2024. There were no discontinued operations in the three months ended March 31, 2025. See the Impairment of long-lived assets and Goodwill accounting policies below, as well as Note 3 for further discussion.
The carrying amounts of ABTC’s financial assets and liabilities, such as accounts payable and accrued expenses, approximate fair value due to the short-term nature of these instruments.
Digital assets
Bitcoin, representing ABTC’s digital assets, is measured at fair value as of each reporting period. The fair value of digital assets is measured using the period-end closing price from ABTC’s principal market, which is Coinbase Prime, in accordance with ASC 820. Since the digital assets are traded on a 24-hour period, ABTC utilizes the price as of midnight UTC time, which aligns with ABTC’s Bitcoin mining revenue recognition cut-off. Changes in fair value are recognized in Gains on digital assets, in Operating (income) expenses on ABTC’s unaudited condensed and combined statement of operations and comprehensive income (loss). When ABTC sells digital assets, gains or losses from such transactions are measured as the difference between the cash proceeds and the carrying basis of the digital assets as determined on a First In-First Out basis and are also recorded within the same line-item Gains on digital assets.
Digital assets received by ABTC through its revenue activities are accounted for in connection with ABTC’s revenue recognition policy disclosed below.
During the fourth quarter of 2024, Parent made the decision to change its strategic treasury policy, retaining all Bitcoin mined in its operations to increase its Bitcoin holdings. As a result of its intent to hold its Bitcoin, Parent began classifying its digital assets held as a non-current asset on its unaudited condensed balance sheet, except for certain specific use cases. Decisions to utilize the Bitcoin will be made on a case-by-case basis. ABTC has classified certain digital assets as current on its unaudited condensed balance sheet in connection with the Bitcoin purchased and subsequently pledged to Bitmain Technologies Delaware Limited (“BITMAIN”) in connection with a Future Sales and Purchase Agreement, as amended (the “BITMAIN Purchase Agreement”) to acquire ASIC miners. ABTC has retained Parent’s accounting position, but not Bitcoin assets, post-Transactions and expects to retain its Bitcoin held as a non-current assets on its balance sheet, except for certain specific use cases.
Impairment of long-lived assets
ABTC continually monitors events and changes in circumstances that could indicate that the carrying amounts of its long-lived assets, including property and equipment, may not be recoverable. When such events or changes in circumstances occur, ABTC assesses recoverability by determining whether the carrying value of such assets will be recovered through the undiscounted expected future cash flows from it. If the expected future undiscounted cash flows from the assets are less than the carrying amount of these assets, ABTC recognizes an impairment loss based on any excess of the carrying amount over the fair value of the assets.
When recognized, impairment losses related to long-lived assets to be held and used in operations are recorded as cost and expenses in ABTC’s unaudited condensed and combined statements of operations and comprehensive income (loss).
11
American Bitcoin Corp.
Notes to the Combined Financial Statements
Note 2. Significant accounting policies and recent accounting pronouncements (cont.)
Impairment of goodwill
ABTC reviews goodwill for impairment at the reporting unit level on an annual basis during the fourth quarter of each fiscal year and in between annual tests whenever events or changes in circumstances indicate that it is more likely than not that the carrying value of a reporting unit exceeds its fair value. In performing the goodwill impairment test, ABTC first performs a qualitative assessment, which requires ABTC to consider events or circumstances, including significant changes in the manner of ABTC’s use of the acquired assets or the strategy for ABTC’s overall business, significant underperformance relative to expected historical or projected development milestones, significant negative regulatory or economic trends, and significant technological changes that could render the asset (or asset group) obsolete. If, after assessing the totality of events or circumstances, ABTC determines that it is more likely than not that the fair value of its reporting unit is greater than the carrying amounts, then the quantitative goodwill impairment test is not performed.
If the qualitative assessment indicates that the quantitative analysis should be performed, ABTC next evaluates goodwill for impairment by comparing the fair value of its reporting unit to its carrying value, including the associated goodwill. To determine the fair value, ABTC uses the equal weighting of the market approach based on comparable publicly traded companies in similar lines of businesses and the income approach based on estimated discounted future cash flows. Cash flow assumptions consider historical and forecasted revenue, operating costs and other relevant factors.
ABTC has not recorded an impairment to goodwill as of March 31, 2025.
Derivatives
ABTC accounts for the derivative contracts it enters into as follows:
Bitcoin redemption option
Parent has entered into an agreement to purchase ASIC miners that includes a pledge of Bitcoin and a right to redeem the pledged Bitcoin for a certain period after the redemption period starts. The redemption period starts when the purchased ASIC miners are shipped. The amount of Bitcoin that can be redeemed is pro-rata of the percentage of ASIC miners shipped. This Bitcoin redemption option does not qualify as an accounting hedge under FASB ASC Topic 815, Derivatives and Hedging (“ASC 815”). Accordingly, ABTC carries the Bitcoin redemption option at fair value and any gains or losses are recognized in profit or loss, respectively. See Note 7 for further discussion.
Covered call options
From time to time, Parent has sold call options on Bitcoin that it owns (the “covered call options”) to generate cash flows on a portion of its Bitcoin held. These options do not qualify as accounting hedges under ASC 815. Accordingly, ABTC carries the covered call options at fair value and any gains or losses are recognized in profit or loss, respectively.
Note 3. Discontinued Operations
On March 4, 2024, Parent announced the closure of its Drumheller, Alberta mining site after analysis of ABTC’s operations. It was determined that the profitability of the Drumheller site had been impacted significantly by various factors, including elevated energy costs and underlying voltage issues. ABTC further assessed the profitability of the site which indicated that an impairment triggering event had occurred. Accordingly, with the planned closure of the Drumheller site, the long-lived assets of the site were fully written down. This resulted in a write down of $3.1 million, which is reflected in the Loss from discontinued operations in ABTC’s unaudited condensed and combined statements of operations and comprehensive income (loss) for the three months ended March 31, 2024.
There is considerable management judgment necessary to determine the estimated future cash flows and fair values of ABTC’s long-lived assets, and, accordingly, actual results could vary significantly from such estimates, which fall under Level 3 within the Fair value measurement hierarchy (see Note 2 for further discussion).
12
American Bitcoin Corp.
Notes to the Combined Financial Statements
Note 3. Discontinued Operations (cont.)
The closure was completed as of December 31, 2024, and there were no discontinued operations for the three months ended March 31, 2025.
| Three Months End March 31 | ||||||||
| (in USD thousands) | 2025 | 2024 | ||||||
| Revenue | $ | — | $ | 979 | ||||
| Cost of revenue (exclusive of depreciation and amortization shown below) | — | 2,349 | ||||||
| Operating expenses: | ||||||||
| Depreciation and amortization | — | 169 | ||||||
| General and administrative expenses | — | 22 | ||||||
| Impairment of long-lived assets | — | 3,104 | ||||||
| Total operating expenses | — | 3,295 | ||||||
| Loss from discontinued operations before taxes | — | (4,665 | ) | |||||
| Income tax benefit (provision) | — | 1,111 | ||||||
| Net loss | $ | — | $ | (3,554 | ) | |||
| Cash flows from Discontinued Operations | Three Month End March 31, | |||||||
| (in USD thousands) | 2025 | 2024 | ||||||
| Operating cash flows (used in) provided by discontinued operations | $ | — | $ | (1,504 | ) | |||
| Assets and Liabilities of Discontinued Operations | March 31, | |||||||
| (in USD thousands) | 2025 | 2024 | ||||||
| Assets | $ | — | $ | — | ||||
| Liabilities | — | — | ||||||
ABTC recorded impairment related to the mining equipment and mining infrastructure at the Drumheller site after the decision to cease operations at the site in March 2024. Refer to Note 5 for further discussion.
13
American Bitcoin Corp.
Notes to the Combined Financial Statements
Note 4. Digital assets
The following table presents the changes in carrying amount of digital assets as of March 31, 2024, and March 31, 2025:
| (in USD thousands) | Amount | |||
| Balance as of December 31, 2023 | $ | 388,131 | ||
| Revenue recognized from Bitcoin mined | 30,357 | |||
| Revenue recognized from discontinued operations | 979 | |||
| Mining revenue earned in prior period received in current period | 292 | |||
| Carrying value of Bitcoin sold | (36,109 | ) | ||
| Change in fair value of Bitcoin | 274,540 | |||
| Foreign currency translation adjustments | (9,295 | ) | ||
| Balance as of March 31, 2024 | $ | 648,895 | ||
| Number of Bitcoin held as of March 31, 2024 | 9,102 | |||
| Cost basis of Bitcoin held as of March 31, 2024 | $ | 348,549 | ||
| Realized gains on the sale of Bitcoin for the 3 months ended March 31, 2024 | $ | 4,431 | ||
| Balance as of December 31, 2024 | $ | 949,501 | ||
| Revenue recognized from Bitcoin mined | 12,338 | |||
| Carrying value of Bitcoin sold | (3,429 | ) | ||
| Change in fair value of Bitcoin | (112,394 | ) | ||
| Legal contribution of mining operations to ABTC | (847,244 | ) | ||
| Foreign currency translation adjustments | 1,228 | |||
| Balance as of March 31, 2025 | $ | — | ||
| Number of Bitcoin held as of March 31, 2025 | — | |||
| Number of Bitcoin pledged to BITMAIN as of March 31, 2025 | — | |||
| Cost basis of Bitcoin held as of March 31, 2025 | $ | — | ||
| Realized gains on the sale of Bitcoin for the three months ended March 31, 2025 | $ | 828 | ||
Digital assets are either held in segregated custody accounts for the benefit of Parent, held in segregated custody accounts under Parent’s ownership and pledged as collateral under a borrowing arrangement or in connection with covered call options sold, or held by BITMAIN for the Bitcoin pledged in connection with the BITMAIN Purchase Agreement, as amended, for ASIC miner purchases from them. As discussed in Note 1, Parent contributed only ASIC miners as part of the Transactions. As a result, the entire strategic Bitcoin reserve remained with Parent following the effectiveness of the Transactions. The details of the digital assets are as follows:
| Amount | Number of digital assets | |||||||||||||||
| (in USD thousands) | March 31, 2025 | December 31, 2024 | March 31, 2025 | December 31, 2024 | ||||||||||||
| Current | ||||||||||||||||
| Bitcoin held in custody | $ | — | $ | — | ||||||||||||
| Other digital assets held in custody | ||||||||||||||||
| Total current digital assets held in custody | — | — | ||||||||||||||
| Bitcoin pledged for miner purchase | — | 92,389 | — | 968 | ||||||||||||
| Total current digital assets pledged for miner purchase | — | 92,389 | — | 968 | ||||||||||||
| Non-current | ||||||||||||||||
| Bitcoin held in custody | — | 525,236 | — | 5,648 | ||||||||||||
| Total non-current digital assets – held in custody | — | 525,236 | — | 5,648 | ||||||||||||
| Bitcoin pledged as collateral | — | 331,876 | — | 3,555 | ||||||||||||
| Total non-current digital assets – pledged as collateral | — | 331,876 | — | 3,555 | ||||||||||||
| Total digital assets | $ | — | $ | 949,501 | — | 10,171 | ||||||||||
In November 2024, Parent entered into the BITMAIN Purchase Agreement to purchase approximately 30,000 BITMAIN Antminer S21+ ASIC miners. In December 2024, in connection with the BITMAIN Purchase Agreement, Parent completed its Bitcoin pledge by depositing 968 Bitcoin into a segregated wallet with BITMAIN, which remains subject to a three-month redemption right from the shipment date of the purchased ASIC miners, whereby Parent has the option to repurchase, with cash, the pledged Bitcoin at a mutually agreed upon fixed price. If Parent does not exercise this right within the redemption period, BITMAIN will retain full ownership of the pledged Bitcoin as consideration for the purchased ASIC miners.
14
American Bitcoin Corp.
Notes to the Combined Financial Statements
Note 4. Digital assets (cont.)
As of March 31, 2025, Parent had pledged 968 Bitcoin with a fair value of $79.9 million, classified as Digital assets — pledged for miner purchase under current assets on its unaudited condensed consolidated balance sheet. A corresponding liability of $100.9 million was recorded under Miner purchase liability under current liabilities on ABTC’s unaudited condensed balance sheet prior to the effectiveness of the Transactions, reflecting Parent’s obligation to either redeem the pledged Bitcoin for cash or put it towards the purchase of ASIC miners by not redeeming the pledged Bitcoin at the end of the redemption period.
In accordance with FASB ASC Topic 610-20, Other Income — Gains and Losses from the Derecognition of Nonfinancial Assets, ABTC assessed the transfer of nonfinancial assets, Bitcoin, under FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Specifically, ABTC noted that the Bitcoin pledged to BITMAIN under the BITMAIN Purchase Agreement constitutes a repurchase agreement under ASC 606. As a result, the Bitcoin was not derecognized upon transfer as Parent retains a repurchase option.
Due to the redemption right and ABTC’s continued economic exposure to the Bitcoin, the pledged Bitcoin is separately classified as Digital assets — pledged for miner purchase on the audited condensed combined balance sheet, which represents restricted Bitcoin as of December 31, 2024. Because the pledge Bitcoin remains with Parent and was not part of the assets transferred to ABTC on March 31, 2025, it is not included on the unaudited combined balance sheet of ABTC as of March 31, 2025.
ABTC recorded a Bitcoin redemption right derivative asset with an initial fair value of $15.1 million. See Note 7 for further information on this derivative asset.
Note 5. Property and equipment, net
The components of property and equipment were as follows:
| (in USD thousands) | March 31, 2025 | December 31, 2024 | ||||||
| Miners and mining equipment | $ | 158,280 | $ | 74,230 | ||||
| Less: Accumulated depreciation | (37,168 | ) | (31,141 | ) | ||||
| Total property and equipment, net | $ | 121,112 | $ | 43,089 | ||||
Depreciation and amortization expense related to property and equipment was $6.4 million and $7.1 million for the three months ended March 31, 2025, and March 31, 2024, respectively.
Note 6. Deposits and prepaid expenses
The components of deposits and prepaid expenses are as follows:
| (in USD thousands) | March 31, 2025 | December 31, 2024 | ||||||
| Deposits for miners | $ | — | $ | 31,951 | ||||
| Prepaid insurance | — | 135 | ||||||
| Prepaid electricity | — | 10,564 | ||||||
| Total deposits and prepaid expenses | $ | — | $ | 42,650 | ||||
Note 7. Derivatives
The following table presents the ABTC’s unaudited condensed balance sheets classification of derivatives carried at fair value:
| (in USD thousands) | March 31, 2025 | December 31, 2024 | ||||||||||||||||
| Derivative | Balance Sheet Line | Asset | Liability | Asset | Liability | |||||||||||||
| Derivatives not designated as hedging instruments: | ||||||||||||||||||
| Bitcoin redemption option | Derivative asset | $ | — | $ | — | $ | 18,076 | $ | — | |||||||||
| Covered call options | Derivative liability | — | — | — | 18,437 | |||||||||||||
| Total derivatives | $ | — | $ | — | $ | 18,076 | $ | 18,437 | ||||||||||
15
American Bitcoin Corp.
Notes to the Combined Financial Statements
Note 7. Derivatives (cont.)
The following table presents the effect of derivatives on ABTC’s unaudited condensed and combined statements of operations and comprehensive (loss) income:
| Three Months Ended | ||||||||||
(in
USD thousands) | Statement of Operations Line | March 31, 2025 | March 31, 2024 | |||||||
| Derivatives not designated as hedging instruments: | ||||||||||
| Bitcoin redemption option | Gain on derivatives | $ | 3,321 | $ | — | |||||
| Covered call options | Gain on derivatives | 17,541 | — | |||||||
| Total derivatives | $ | 20,862 | $ | — | ||||||
Bitcoin redemption option
During December 2024, Parent pledged approximately 968 Bitcoin with BITMAIN in connection with a purchase of approximately 30,000 BITMAIN Antminer S21+ ASIC miners pursuant to the BITMAIN Purchase Agreement. Parent has the option to redeem the pledged Bitcoin at a mutually agreed upon price starting from and for up to three months after the shipment date of the purchased ASIC miners. The amount of Bitcoin that can be redeemed is pro-rata of the percentage of miners shipped. ABTC accounted for this Bitcoin redemption option as a Level 2 derivative asset as noted in Note 2. ABTC accounted for this Bitcoin redemption option as a Level 3 derivative asset as of December 31, 2024 due to a significant unobservable input included in the fair value estimate of the Bitcoin redemption option, which was the estimated shipment date of the purchased ASIC miners. During the three months ended March 31, 2025, the shipment date was finalized and therefore was no longer an unobservable input.
The following table provides a summary of activity and change in fair value of the Bitcoin redemption option (previously a Level 3 derivative asset):
| (in USD thousands) | Three Months Ended March 31, 2025 | |||
| Balance, beginning of period | $ | 18,076 | ||
| Transfer out of Level 3(1) | (18,076 | ) | ||
| Balance, end of period | $ | — | ||
| (1) | The Bitcoin redemption option was transferred out of Level 3 due to changes in the observability of inputs used in the valuation and retained by the Parent after the effectiveness of Transactions. |
Covered call options
During October 2024, Parent sold covered call options on 2,000 Bitcoin notional for proceeds of $2.9 million to generate cash flow on a portion of its digital assets. During November 2024, Parent rolled these call options into new call options with the same Bitcoin notional. Parent achieved this roll by exchanging its previous call options sold for new call options. Parent has pledged Bitcoin as collateral with one of its Bitcoin custodians in a quantity equal to the notional amount for these covered call options sold. The collateral continues to be pledged in the same manner after the roll. The covered call options exchanged in the roll are only exercisable upon the date of expiry, are automatically exercised if the underlying reference price was greater than the strike price of the call option, and are settled with delivery of the underlying Bitcoin. The reference price of the original covered call options was the BRR at 4:00 pm London time for a given date and the reference price for the new call options is the Coinbase Prime Bitcoin price quoted in U.S. Dollars at 4:00 pm London time for a given date. The covered call options were carried at fair value and were Level 2 liabilities as noted in Note 2. During the three months ended March 31, 2025, covered call options on 1,500 Bitcoin notional expired with the underlying reference price below their strike price and ABTC recorded a realized gain of $12.1 million. The remaining covered call options on 500 Bitcoin national were unexpired and retained by the Parent upon effectiveness of the Transactions.
16
American Bitcoin Corp.
Notes to the Combined Financial Statements
Note 8. Income taxes
In general, ABTC determines its quarterly provision for income taxes by applying an estimated annual effective tax rate, which is based on expected annual income or loss and statutory tax rates in the various jurisdictions in which ABTC operates. Certain discrete items are separately recognized in the quarter in which they occur and can be a source of variability on the effective tax rates from quarter to quarter. ABTC’s effective tax rate may change based on recurring and non-recurring factors, including the geographical mix of earnings or losses, enacted tax legislation, and state and local income taxes. Each quarter, a cumulative adjustment is recorded for any fluctuations in the estimated annual effective tax rate as compared to the prior quarter.
For the three months ended March 31, 2025, ABTC’s income tax benefit and effective tax rate were $13.5 million and 11.8%, respectively. This rate differed from the statutory federal income tax rate of 21.0% primarily due to a non-taxable portion of gains on digital assets, Subpart F income, state income taxes, and a change in valuation allowance.
For the three months ended March 31, 2024, ABTC’s income tax expense and effective tax rate were $33.9 million and 12.7%, respectively. This rate differed from the statutory federal income tax rate of 21.0% primarily due to non-taxable portion of gains on digital assets, Subpart F income, state income taxes, and a change in valuation allowance.
ABTC is subject to U.S. federal income taxes as well as income taxes in various state jurisdictions and in Canada, including provincial taxes.
Note 9. Concentrations
The only digital asset mined during the three months ended March 31, 2025 and 2024 has been Bitcoin. Therefore, 100% of ABTC’s revenue is related to one digital asset. Parent used two mining pool operators during the three months ended March 31, 2025 and 2024.
Note 10. Related party transactions
Parties are considered related to ABTC if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with ABTC. This includes equity method investment entities. Related parties also include principal owners of ABTC, its management, members of the immediate families of principal owners of ABTC and its management and other parties with which ABTC may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. ABTC discloses all known related party transactions.
Cost Allocations from Parent
Prior to the effectiveness of the Transactions on March 31, 2025, Parent provided significant support functions to ABTC, which did not operate as a standalone business. ABTC unaudited condensed combined financial statements. The unaudited combined and condensed financial statements reflect an allocation of these costs. Allocated costs included in cost of revenue relate to support primarily consisting of electricity, facilities, repairs and maintenance, and labor which are predominantly allocated based on revenue. Allocated costs included in general and administrative expenses primarily relate to finance, human resources, benefits administration, information technology, legal, corporate strategy, corporate governance, other professional services and general commercial support functions and are predominantly allocated based on a percentage of revenue. See Note 1 for a discussion of these costs and the methodology used to allocate them.
Master Colocation Services Agreement
On March 31, 2025, in connection with the Transactions, ABTC entered into a Master Colocation Services Agreement with Parent (the “MCSA”). The MCSA and the service orders under the MCSA provide for Parent to provide ABTC with colocation and hosting services for ABTC-owned Bitcoin miners at Parent-owned or leased facilities, on specific terms set forth in service orders to the MCSA.
Under the terms of the MCSA, ABTC pays to Parent fees consisting of a monthly recurring charge, as set forth in each service order, plus 100% of the costs, fees, disbursements and expenses paid or incurred by Parent in connection with the use, operation, maintenance and of the relevant facility (including costs related to the delivery of contracted power) and any installation charges, non-recurring costs or amounts for additional services incurred during the term of the applicable service order.
17
American Bitcoin Corp.
Notes to the Combined Financial Statements
Note 10. Related party transactions (cont.)
Master Management Services Agreement
On March 31, 2025, in connection with the Transactions, ABTC entered into a Master Management Services Agreement with Parent (the “MMSA”). The MMSA and the service orders under the MMSA provide for Parent to provide ABTC with management, oversight, strategy, compliance, operational and other services for its Bitcoin mining operations hosted at Parent’s facilities under the MCSA.
Under the terms of the MMSA, ABTC pays to Parent service fees consisting of a fixed fee, payable monthly, for general management, operational, compliance and other services, plus a monthly fee equal to 100% of specified “pass-through costs” incurred during the term of the applicable service order, including costs and expenses incurred by or on behalf of Parent for labor, maintenance, repairs and infrastructure expenses and the provision of services by third parties.
Shared Services Agreement
On March 31, 2025, in connection with the Transactions, ABTC entered into a Services Agreement with Parent (the “Shared Services Agreement”), pursuant to which Parent provide back-office support services to ABTC, including accounting and financial reporting, HR support, payroll, benefits, IT support and management, legal and compliance and vendor management services. Under the terms of the Shared Services Agreement, ABTC pays to Parent a monthly fee equal to the fully allocated cost, determined on a “pass through” basis, to Parent for providing services under the Shared Services Agreement to ABTC.
Put Option Agreement
On March 31, 2025, in connection with the Transactions, ABTC entered into the Put Option Agreement with Parent (the “Put Option Agreement”), pursuant to which Parent has the right to sell to ABTC any ASIC Bitcoin miners purchased by Parent under an agreement between BITMAIN and Parent. Parent’s agreement with BITMAIN, in turn, provides for Parent’s right to purchase from BITMAIN up to approximately 17,280 Bitmain U3S21EXPH Bitcoin miners for a maximum aggregate purchase price of approximately $320 million, not including any applicable tariffs, duties or similar charges.
Under the terms of the Put Option Agreement, Parent has the right to cause ABTC, at any time and from time to time ending on the 30th day following the termination of the purchase option period under Parent’s agreement with BITMAIN and the delivery of all Bitcoin miners purchased by Parent thereunder, to purchase all or any amount of the Bitcoin miners, at the same per-unit price as is paid to BITMAIN and without any additional markup, premium or administrative charge thereon, subject to specified exceptions in the event that ABTC does not (at any time Parent’s put right is exercised) have sufficient legally available funds to pay the applicable purchase price.
Net parent investment
The net transfers to and from the parent discussed above were as follows:
| Three Months Ended March 31, | ||||||||
| (in USD thousands) | 2025 | 2024 | ||||||
| Cash pooling and general financing activities | $ | 24,889 | $ | (1,967 | ) | |||
| Corporate allocations | 14,368 | 12,341 | ||||||
| Legal contribution of mining operations to ABTC | (951,556 | ) | — | |||||
| Distribution to parent | 115,757 | — | ||||||
| Net transfers from parent per Condensed Combined Statements of Cash Flows | (796,542 | ) | 10,374 | |||||
| Stock based compensation funded by parent | 2,145 | 2,639 | ||||||
| Net transfers from parent per Condensed Combined Statements of Equity | $ | (798,687 | ) | $ | 7,735 | |||
18
American Bitcoin Corp.
Notes to the Combined Financial Statements
Note 11. Commitments and contingencies
BITMAIN Purchase Agreement
The BITMAIN Purchase Agreement includes the following financial commitments: a Bitcoin redemption option, recognized as a derivative asset under ASC 815, measured at fair value at each reporting period, a Miner purchase liability representing a commitment to settle the obligation in cash if the redemption right is exercised before expiration, and a derecognition of Digital assets — pledged for miner purchase if the redemption right is not exercised. See Note 6. Digital assets for further information on the BITMAIN Purchase Agreement.
Legal and regulatory matters
ABTC is subject at times to various claims, lawsuits, and governmental proceedings relating to ABTC’s business and transactions arising in the ordinary course of business. ABTC cannot predict the final outcome of such proceedings. Where appropriate, ABTC vigorously defends such claims, lawsuits, and proceedings. Some of these claims, lawsuits, and proceedings seek damages, including consequential, exemplary, or punitive damages, in amounts that could, if awarded, be significant. Certain of the claims, lawsuits, and proceedings arising in ordinary course of business are covered by ABTC’s insurance program. ABTC maintains property and various types of liability insurance in an effort to protect ABTC from such claims. In terms of any matters where there is no insurance coverage available to ABTC, or where coverage is available and ABTC maintains a retention or deductible associated with such insurance or elects not to purchase such insurance, ABTC may establish an accrual for such loss, retention, or deductible based on current available information. In accordance with accounting guidance, if it is probable that an asset has been impaired or a liability has been incurred due to such claims as of the date of the financial statements and the amount of loss is reasonably estimable, then an accrual for the cost to resolve or settle these claims is recorded by ABTC in the accompanying unaudited condensed balance sheet. If it is reasonably possible that an asset may be impaired as of the date of the financial statement, then ABTC discloses the range of possible loss. Expenses related to the defense of such claims are recorded by ABTC as incurred and included in the accompanying Condensed Combined Statements of Operations and Comprehensive (Loss) Income. Management, with the assistance of outside counsel, may from time to time adjust such accruals according to new developments in the matter, court rulings, or changes in the strategy affecting ABTC’s defense of such matters. On the basis of current information, ABTC 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.
Note 12. Subsequent events
ABTC has completed an evaluation of all subsequent events after the balance sheet date up to the date that the unaudited condensed and combined financial statements were available to be issued. Except as described below, ABTC has concluded no other subsequent events have occurred that requires disclosure.
The ABTC Transaction
As described in Note 1, on March 31, 2025, ABH, a wholly owned subsidiary of Parent, contributed ABTC’s ASIC miners to American Data Centers Inc. in exchange for an 80% interest in American Data Centers Inc. In connection with the Transactions, American Data Centers Inc. was subsequently renamed as American Bitcoin Corp. The Transactions did not meet the business combination criteria under FASB ASC Topic 805, Business Combinations. The net book value of the assets contributed by ABTC was $121.1 million. Parent recorded a non-cash asset contribution expense of $22.8 million related to the non-controlling interest portion of the ASIC miners that were contributed. Parent incurred $1.3 million in transaction costs related to the transaction.
The Gryphon Merger
On May 9, 2025, Gryphon, Merger Sub Inc., Merger Sub LLC, and ABTC, entered into the Merger Agreement. Following the closing of the transactions contemplated by the Merger Agreement, including the Mergers, (i) the aggregate number of shares of ABTC Class A common stock and Class B common stock issued to ABTC equity holders as consideration for the Merger is expected to represent approximately 98% of the outstanding equity interests of the Combined Company, on a fully diluted basis, and (ii) Gryphon equity holders are expected to own 2.0% of the outstanding equity interests of the Combined Company, on a fully diluted basis, after their shares of Gryphon common stock are reclassified into shares of Combined Company Class A common stock.
19
American Bitcoin Corp.
Condensed and Combined Balance Sheets
(in USD thousands, except share and per share data)
| Unaudited Condensed | Audited Condensed Combined | |||||||
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | 205,925 | $ | - | ||||
| Deposits and prepaid expenses | - | 42,650 | ||||||
| Derivative asset | - | 18,076 | ||||||
| Digital assets – pledged for miner purchase, current portion | - | 92,389 | ||||||
| Total current assets | 205,925 | 153,115 | ||||||
| Non-current assets | ||||||||
| Digital assets – held in custody | 43,322 | 525,236 | ||||||
| Digital assets – pledged as collateral, less current portion | - | 331,876 | ||||||
| Property and equipment, net | 116,423 | 43,089 | ||||||
| Operating lease right-of-use-asset | 46,475 | - | ||||||
| Goodwill | - | 53,082 | ||||||
| Total non-current assets | 206,220 | 953,283 | ||||||
| Total assets | $ | 412,145 | $ | 1,106,398 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | - | $ | 31,012 | ||||
| Due to Parent | 16,774 | - | ||||||
| Derivative liability | - | 18,437 | ||||||
| Income tax payable | - | 889 | ||||||
| Operating lease liability, current portion | 10,923 | - | ||||||
| Total current liabilities | 27,697 | 50,338 | ||||||
| Non-current liabilities | ||||||||
| Deferred tax liabilities | 6,317 | 40,993 | ||||||
| Operating lease liability, less current portion | 38,406 | - | ||||||
| Total non-current liabilities | 44,723 | 40,993 | ||||||
| Total liabilities | $ | 72,420 | $ | 91,331 | ||||
| Commitments and contingencies (Note 13) | ||||||||
| Stockholders’ equity | ||||||||
| Common stock, $0.0001 par value; 1,100,000,000 shares authorized as of June 30, 2025; 11,002,954 shares of Class A common stock and 50,500,000 shares of Class B common stock issued and outstanding as of June 30, 2025 | 6 | - | ||||||
| Additional paid-in capital | 336,288 | - | ||||||
| Retained earnings | 3,431 | - | ||||||
| Accumulated other comprehensive loss | - | (48,347 | ) | |||||
| Former net Parent investment | - | 1,063,414 | ||||||
| Total stockholders’ equity | 339,725 | 1,015,067 | ||||||
| Total liabilities and stockholders’ equity | $ | 412,145 | $ | 1,106,398 | ||||
See accompanying Notes to Unaudited Condensed and Combined Financial Statements.
20
American Bitcoin Corp.
Condensed and Combined Statements of Operations and Comprehensive Income (Loss)
(in USD thousands, except share and per share data)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue | $ | 30,285 | $ | 13,913 | $ | 42,623 | $ | 44,270 | ||||||||
| Cost of revenue (exclusive of depreciation and amortization shown below) | 15,337 | 11,638 | 26,988 | 28,448 | ||||||||||||
| Operating expenses (income): | ||||||||||||||||
| Depreciation and amortization | 9,951 | 6,353 | 16,375 | 13,478 | ||||||||||||
| General and administrative expenses | 3,642 | 7,023 | 18,010 | 18,829 | ||||||||||||
| Loss on sale of property and equipment | - | - | 2,454 | - | ||||||||||||
| (Gains) losses on digital assets | (3,037 | ) | 71,842 | 109,357 | (202,698 | ) | ||||||||||
| Total operating expenses (income) | 10,556 | 85,218 | 146,196 | (170,391 | ) | |||||||||||
| Operating income (loss) | 4,392 | (82,943 | ) | (130,561 | ) | 186,213 | ||||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | - | (2,565 | ) | - | (3,861 | ) | ||||||||||
| Gain on derivatives | - | 17,219 | 20,862 | 17,219 | ||||||||||||
| Total other income | - | 14,654 | 20,862 | 13,358 | ||||||||||||
| Net income (loss) from continuing operations before taxes | 4,392 | (68,289 | ) | (109,699 | ) | 199,571 | ||||||||||
| Income tax (provision) benefit | (961 | ) | 8,490 | 12,507 | (25,406 | ) | ||||||||||
| Net income (loss) from continuing operations | 3,431 | (59,799 | ) | (97,192 | ) | 174,165 | ||||||||||
| Loss from discontinued operations (net of income tax benefit of nil, nil, nil and $1.6 million, respectively) | - | (1,262 | ) | - | (4,816 | ) | ||||||||||
| Net income (loss) | $ | 3,431 | $ | (61,061 | ) | $ | (97,192 | ) | $ | 169,349 | ||||||
| Other comprehensive (loss) income: | ||||||||||||||||
| Foreign currency translation adjustments | - | (8,204 | ) | 4,467 | (23,341 | ) | ||||||||||
| Total comprehensive income (loss) | $ | 3,431 | $ | (69,265 | ) | $ | (92,725 | ) | $ | 146,008 | ||||||
See accompanying Notes to Unaudited Condensed and Combined Financial Statements.
21
American Bitcoin Corp.
Condensed and Combined Statements of Stockholders’ Equity
(in USD thousands, except share and per share data)
Six Months Ended June 30, 2024
| Additional | Retained Earnings | Accumulated Other | Total | |||||||||||||||||||||||||
| Common Stock | Paid-in | (Accumulated | Comprehensive | Former Parent | Stockholders’ | |||||||||||||||||||||||
| Shares | Amount | Capital | Deficit) | Income (Loss) | Net Investment | Equity | ||||||||||||||||||||||
| Balance, December 31, 2023 | - | $ | - | $ | - | - | $ | 10,997 | $ | 462,787 | $ | 473,784 | ||||||||||||||||
| Net income | - | - | - | - | - | 230,410 | 230,410 | |||||||||||||||||||||
| Net transfers from Parent | - | - | - | - | - | 7,735 | 7,735 | |||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | (15,137 | ) | - | (15,137 | ) | |||||||||||||||||||
| Balance, March 31, 2024 | - | $ | - | $ | - | $ | - | $ | (4,140 | ) | $ | 700,932 | $ | 696,792 | ||||||||||||||
| Net loss | - | - | - | - | (61,061 | ) | (61,061 | ) | ||||||||||||||||||||
| Net transfers from Parent | - | - | - | - | - | (13,236 | ) | (13,236 | ) | |||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | (8,204 | ) | - | (8,204 | ) | |||||||||||||||||||
| Balance, June 30 2024 | - | $ | - | $ | - | $ | - | $ | (12,345 | ) | $ | 626,635 | $ | 614,290 | ||||||||||||||
| Six Months Ended June 30, 2025 | ||||||||||||||||||||||||||||
| Balance, December 31, 2024 | - | $ | - | $ | - | $ | - | $ | (48,347 | ) | $ | 1,063,414 | $ | 1,015,067 | ||||||||||||||
| Net loss(a) | - | - | - | - | - | (100,623 | ) | (100,623 | ) | |||||||||||||||||||
| Net transfers from Parent | - | - | - | - | - | (798,687 | ) | (798,687 | ) | |||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | 4,467 | - | 4,467 | |||||||||||||||||||||
| Disposition of cumulative translation adjustment | - | - | - | - | 43,880 | (48,347 | ) | (4,467 | ) | |||||||||||||||||||
| Issuance of shares at separation | 50,500,000 | 5 | 115,752 | - | - | (115,757 | ) | - | ||||||||||||||||||||
| Balance, March 31, 2025 | 50,500,000 | $ | 5 | $ | 115,752 | $ | - | $ | - | $ | - | $ | 115,757 | |||||||||||||||
| Net income | - | - | - | 3,431 | - | - | 3,431 | |||||||||||||||||||||
| Contribution from Parent | - | - | 5,262 | - | - | - | 5,262 | |||||||||||||||||||||
| Issuance of shares | 11,002,954 | 1 | 215,274 | - | - | - | 215,275 | |||||||||||||||||||||
| Balance, June 30, 2025 | 61,502,954 | $ | 6 | $ | 336,288 | $ | 3,431 | $ | - | $ | - | $ | 339,725 | |||||||||||||||
| (a) | Net loss from January 1, 2025 through March 31, 2025 is attributed to Parent as it was the sole shareholder prior to March 31, 2025. |
See accompanying Notes to Unaudited Condensed and Combined Financial Statements.
22
American Bitcoin Corp.
Condensed and Combined Statements of Cash Flows
(in USD thousands)
| Unaudited Condensed | Unaudited Condensed Combined | |||||||
| Six Months Ended | Six Months Ended | |||||||
| June 30, | June 30, | |||||||
| 2025 | 2024 | |||||||
| Operating activities | ||||||||
| Net (loss) income | $ | (97,192 | ) | $ | 169,349 | |||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 16,375 | 13,478 | ||||||
| Non-cash lease expense | 140 | - | ||||||
| Stock-based compensation | 2,145 | 5,092 | ||||||
| Bitcoin mining revenue | (42,623 | ) | (44,270 | ) | ||||
| Losses (gains) on digital assets | 109,357 | (202,698 | ) | |||||
| Deferred tax assets and liabilities | (18,928 | ) | 25,662 | |||||
| Gain on derivatives | (20,862 | ) | - | |||||
| Loss on sale of property and equipment | 2,454 | - | ||||||
| Amortization of debt discount | - | 2,403 | ||||||
| Loss on discontinued operations | - | 4,816 | ||||||
| Changes in assets and liabilities: | ||||||||
| Due to Parent | 19,488 | - | ||||||
| Deposits and prepaid expenses | - | 4,845 | ||||||
| Income taxes payable - current | (889 | ) | (18 | ) | ||||
| Accounts payable and accrued expenses | (13,468 | ) | (7,251 | ) | ||||
| Net cash used in operating activities | (44,003 | ) | (28,592 | ) | ||||
| Investing activities | ||||||||
| Proceeds from sale of digital assets | 3,429 | 51,318 | ||||||
| Proceeds from sale of property and equipment | 2,563 | - | ||||||
| Purchases of property and equipment | - | (2,345 | ) | |||||
| Net cash provided by investing activities | 5,992 | 48,973 | ||||||
| Financing activities | ||||||||
| Repayment from loans payable | - | (9,788 | ) | |||||
| Legal contribution of mining operations to ABTC | 955,246 | - | ||||||
| Distribution to Parent | (115,752 | ) | - | |||||
| Proceeds from issuance of shares, net of fees | 205,274 | - | ||||||
| Net Parent investment | (800,832 | ) | (10,593 | ) | ||||
| Net cash provided by (used in) financing activities | 243,936 | (20,381 | ) | |||||
| Net increase in cash | 205,925 | - | ||||||
| Cash, beginning of period | - | - | ||||||
| Cash and restricted cash, end of period | $ | 205,925 | $ | - | ||||
See accompanying Notes to Unaudited Condensed and Combined Financial Statements.
23
Note 1. Description of business, the transactions and basis of presentation
Description of business
American Bitcoin Corp. (“ABTC”), formerly known as American Data Centers Inc., is a Bitcoin mining company that was incorporated in the state of Delaware in November 2024. On March 31, 2025, through the Transactions (as defined below), ABTC became a majority-owned subsidiary of Hut 8 Corp. (including its consolidated subsidiaries, “Parent”). ABTC did not historically operate as a standalone company. Unless otherwise indicated, ABTC’s results of operations prior to April 1, 2025, reflected herein refer to Parent’s Bitcoin mining operations, represented by the “Bitcoin mining” sub-segment of Parent’s “Compute” segment. See “Basis of presentation” below. The business of ABTC is (i) the operation of application-specific integrated circuit (“ASIC”) miners for the purpose of mining Bitcoin and (ii) the strategic accumulation of a Bitcoin reserve.
The Transactions
Transaction with American Data Centers Inc.
On March 31, 2025, Parent, American Data Centers Inc. (“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, representing the business of ABTC, 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. The Transactions did not meet the business combination criteria under FASB ASC Topic 805, Business Combinations. The net book value of the assets contributed by ABTC was $121.1 million. Parent recorded a non-cash asset contribution expense of $22.8 million related to the non-controlling interest portion of the ASIC miners that were contributed. Parent incurred $1.6 million in transaction costs related to the Transactions.
The Transactions were effectuated as follows:
On March 14, 2025, Parent created American Bitcoin Holdings LLC (“ABH”), a wholly-owned subsidiary, and on March 30, 2025, transferred substantially all of Parent’s wholly-owned ASIC miners to ABH as a transfer under common control. On March 31, 2025, under the Agreement, ABH acquired shares of 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 in exchange for ABH’s ASIC miners, representing the business of ABTC. In connection with the Transactions, ADC was renamed American Bitcoin Corp.
In connection with the Transactions, Parent and ABTC entered into a Master Services Agreement and a Master Colocation Services Agreement providing for Parent and its personnel to perform day-to-day commercial and operational management services and ASIC colocation services to ABTC, respectively, in each case on an exclusive basis for so long as such agreements remain in effect. Parent and ABTC also entered into a Shared Services Agreement, pursuant to which Parent and its personnel would provide back-office support services to ABTC.
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The following table presents a reconciliation of the unaudited condensed combined balance sheet of ABTC as of March 31, 2025, prior to the effectiveness of the Transactions, and the unaudited condensed balance sheet of ABTC as of March 31, 2025, following the effectiveness Transactions:
| ABTC’s Combined Balance Sheet as of March 31, 2025 | Legal Contribution | ABTC’s Balance Sheet as of March 31, 2025 | ||||||||||
| Assets | ||||||||||||
| Current assets | ||||||||||||
| Deposits and prepaid expenses | $ | 36,920 | $ | (36,920 | ) | $ | - | |||||
| Derivative assets | 21,397 | (21,397 | ) | - | ||||||||
| Digital assets - pledged for miner purchase | 79,893 | (79,893 | ) | - | ||||||||
| Total current assets | 138,210 | (138,210 | ) | - | ||||||||
| Non-current assets | ||||||||||||
| Digital assets - held in custody | 597,743 | (597,743 | ) | - | ||||||||
| Digital assets – pledged as collateral | 169,608 | (169,608 | ) | - | ||||||||
| Property and equipment, net | 123,079 | (1,967 | ) | 121,112 | ||||||||
| Goodwill | 53,169 | (53,169 | ) | - | ||||||||
| Total non-current assets | 943,599 | (822,487 | ) | 121,112 | ||||||||
| Total assets | $ | 1,081,809 | $ | (960,697 | ) | $ | 121,112 | |||||
| Liabilities and equity | ||||||||||||
| Current liabilities | ||||||||||||
| Accounts payable and accrued expenses | $ | 108,235 | $ | (108,235 | ) | $ | - | |||||
| Derivative liability | 896 | (896 | ) | - | ||||||||
| Income tax payable | 19 | (19 | ) | - | ||||||||
| Total current liabilities | 109,150 | (109,150 | ) | - | ||||||||
| Non-current liabilities | ||||||||||||
| Deferred tax liability | 21,103 | (15,748 | ) | 5,355 | ||||||||
| Total liabilities | 130,253 | (124,898 | ) | 5,355 | ||||||||
| Stockholders’ equity | ||||||||||||
| Parent net investment | 995,436 | (995,436 | ) | - | ||||||||
| Common Stock | - | 5 | 5 | |||||||||
| Additional paid-in capital | - | 115,752 | 115,752 | |||||||||
| Accumulated other comprehensive income | (43,880 | ) | 43,880 | - | ||||||||
| Total stockholders’ equity | 951,556 | (835,799 | ) | 115,757 | ||||||||
| Total liabilities and stockholders’ equity | $ | 1,081,809 | $ | (960,697 | ) | $ | 121,112 | |||||
Transaction with Gryphon Digital Mining, Inc.
On May 9, 2025, Gryphon Digital Mining, Inc., a Delaware corporation (“Gryphon”), GDM Merger Sub I Inc., a Delaware corporation and wholly owned direct subsidiary of Gryphon (“Merger Sub Inc.”), GDM Merger Sub II LLC, a Delaware limited liability company and wholly owned direct subsidiary of Gryphon (“Merger Sub LLC”), and ABTC entered into an Agreement and Plan of Merger (the “Merger Agreement” and such transactions, the “Mergers”). Following the Mergers, Gryphon will be renamed American Bitcoin Corp. (the “Combined Company”) and ABTC’s business is expected to be the business of the Combined Company.
Following the closing of the transactions contemplated by the Merger Agreement, including the Mergers, (i) the aggregate number of shares of ABTC Class A common stock and Class B common stock issued to ABTC equity holders as consideration for the Merger is expected to represent approximately 98% of the outstanding equity interests of the Combined Company, on a fully diluted basis, and (ii) Gryphon equity holders are expected to own approximately 2.0% of the outstanding equity interests of the Combined Company, on a fully diluted basis, after their shares of Gryphon common stock are reclassified into shares of Combined Company Class A common stock.
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Basis of presentation
Until the effectiveness of the Transactions on March 31, 2025, ABTC’s operations were historically operated as the “Bitcoin mining” sub-segment of Parent’s “Compute” segment and not as a standalone company. ABTC’s Condensed Combined Financial Statements, representing the historical assets, liabilities, operations and cash flows directly attributable to ABTC have been prepared on a carve-out basis through the use of a management approach from Parent’s consolidated financial statements and accounting records and are presented on a stand-alone basis as if the operations have been conducted independently from Parent. Historically, separate financial statements have not been prepared for ABTC and it has not operated as a standalone business from Parent.
Following the effectiveness of the Transactions on March 31, 2025, ABTC began operating as a standalone entity with its own accounting and financial records. ABTC’s condensed balance sheet as of June 30, 2025, reflects the assets and liabilities that ABTC directly owns or is legally obligated to satisfy post-Transactions. Following the effectiveness of the Transactions on March 31, 2025, starting April 1, 2025, ABTC’s results of operations are the results directly attributed to its standalone operations rather than the Bitcoin mining operations of Parent.
Prior to the effectiveness of the Transactions on March 31, 2025, all revenues and costs, as well as assets and liabilities directly associated with what was historically Parent’s Bitcoin mining activities were included in ABTC’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 ABTC 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 share-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 ABTC’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 ABTC 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 ABTC been a standalone company would depend on a number of factors, including its organizational structure, what corporate functions ABTC might have performed directly or outsourced, and strategic decisions ABTC 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 ABTC will incur in the future or would have incurred if ABTC had obtained these services from a third party.
Prior to the effectiveness of the Transactions on March 31, 2025, all intracompany transactions within ABTC have been eliminated. All intercompany transactions between ABTC and Parent are considered to be effectively settled in ABTC’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 is reflected in the unaudited condensed and combined statement of cash flows within financing activities and in the unaudited condensed 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, ABTC’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 which 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. ABTC 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 unaudited condensed balance sheets. Subsequent to March 31, 2025, ABTC has set up its own legally separate bank accounts to directly settle its liabilities and to manage its own cash.
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Prior to the effectiveness of the Transactions on March 31, 2025, ABTC was not a co-obligor on Parent’s third-party, long-term debt obligations nor was ABTC 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 ABTC’s purchase of ASICs or directly used for Bitcoin mining-related activities and were included in ABTC’s unaudited condensed and combined financial statements. While ABTC is not a legal obligor, certain Bitcoin mining assets of ABTC were pledged as collateral as disclosed in Note 4. Following the effectiveness of the Transactions on March 31, 2025, ABTC is no longer connected to any of Parent’s third-part debt obligations.
The accompanying unaudited condensed and combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting. While these statements reflect all normal recurring adjustments which are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all the information and footnotes required by GAAP for complete financial statements. As such, the information included in these unaudited condensed and combined financial statements should be read in conjunction with the ABTC’s combined annual financial statements for the year-ended December 31, 2024 and 2023, and related notes included therewith.
Interim results are not necessarily indicative of results for a full year.
The U.S. Dollar is the functional and presentation currency of ABTC.
Significant accounting policies followed by ABTC in the preparation of the accompanying Unaudited Condensed and Combined Financial Statements are summarized below.
Note 2. Significant accounting policies and recent accounting pronouncements
Recent accounting pronouncements
ABTC continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects ABTC’s financial reporting, ABTC undertakes a study to determine the consequences of the change to its unaudited condensed and combined financial statements and ensures that there are proper controls in place to ascertain that ABTC’s unaudited condensed and combined financial statements properly reflect the change.
In January 2025, the Financial Accounting Standards Board (“FASB”) issued Update ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2025-01 was issued to clarify the effective date for Update ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 requires public business entities to provide additional disclosures in the notes to financial statements, disaggregating specific expense categories within relevant income statement captions. The prescribed categories include purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depreciation, depletion, and amortization related to oil-and-gas producing activities. ASU 2024-03 is effective for the first annual reporting period beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. ABTC is currently assessing the impact of adopting the standard.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”) to enhance transparency in income tax reporting. ASU 2023-09 requires public business entities to disclose more detailed information about the nature and composition of deferred tax assets and liabilities, including the impact of tax law changes on current taxes payable. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. ABTC is currently assessing the impact of adopting the standard. The adoption had no material impact to ABTC. See Note 9 for disclosures related to income taxes.
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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 ABTC’s unaudited condensed and combined financial statements include estimates associated with revenue recognition, determining the useful lives and recoverability of long-lived assets, goodwill and digital assets, the allocation of costs to ABTC for certain corporate and shared service functions in preparing ABTC’s unaudited condensed and combined financial statements on a carve-out basis, and current and deferred income tax assets (including the associated valuation allowance) and liabilities.
Fair value measurement
ABTC’s financial assets and liabilities are accounted for in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”) which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy requires an entity to maximize the use of observable inputs when measuring fair value and classifies those inputs into three levels:
Level 1— Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2— Observable, market-based inputs, other than quoted prices included in Level 1, for the assets or liabilities either directly or indirectly.
Level 3— Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on ABTC’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or a liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment.
Assets and liabilities measured at fair value on a recurring basis
The following table presents information about ABTC’s assets and liabilities measured at fair value on a recurring basis and ABTC’s estimated level within the fair value hierarchy of those assets and liabilities as of June 30, 2025 and December 31, 2024.
| Fair value measured at June 30, 2025 | ||||||||||||||||
| (in USD thousands) | Total carrying value at June 30, 2025 | Quoted prices in active markets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||
| Digital assets | $ | 43,322 | $ | 43,322 | $ | - | $ | - | ||||||||
| Fair value measured at December 31, 2024 | ||||||||||||||||
| (in USD thousands) | Total carrying value at December 31, 2024 | Quoted prices in active markets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||
| Digital assets | $ | 949,501 | $ | 949,501 | $ | - | $ | - | ||||||||
| Covered call options | (18,437 | ) | - | (18,437 | ) | - | ||||||||||
| Bitcoin redemption option | 18,076 | - | - | 18,076 | ||||||||||||
Digital assets are made up of $43.3 million of Bitcoin held in custody as of June 30, 2025 and $424.3 million of Bitcoin pledged as collateral for debt and for miner purchases and $525.2 million held in custody as of December 31, 2024.
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In determining the fair value of its digital assets, ABTC uses quoted prices as determined by ABTC’s principal market, which is Coinbase Prime. As such, ABTC’s Digital assets were determined to be Level 1 assets. See Digital assets below for a description of ABTC’s digital asset accounting policy. In estimating the fair value of its covered call options (as defined below), ABTC uses the Black-Scholes pricing model, which includes several inputs and assumptions including the market price of the underlying asset (Bitcoin), the underlying asset’s implied volatility, the risk-free interest rate, and the expected term of the options. The expected term of the options is the contractual term of the options given the options can only be exercised on the expiry date. ABTC determined that the covered call options are Level 2 liabilities given all inputs are observable, but the options themselves are not traded in an active market. ABTC estimates the fair value of its Bitcoin redemption option using the Black-Scholes pricing model, which includes several inputs and assumptions including the market price of the underlying asset (Bitcoin), the underlying asset’s implied volatility, the risk-free interest rate, and the expected term of the redemption option. In addition, management’s assumption of the start of the redemption period, triggered by a shipment date of purchased property and equipment, is a significant unobservable input. For quantitative disclosure on the inputs used to fair value ABTC’s Bitcoin redemption option, see Note 7. Derivatives. ABTC determined that the Bitcoin redemption option is a Level 3 liability given a significant unobservable input is included in its valuation.
See the Derivatives section below for a description of ABTC’s derivative instrument accounting policy.
Assets and liabilities measured at fair value on a non-recurring basis
In addition to assets and liabilities that are measured at fair value on a recurring basis, ABTC also measures certain assets and liabilities at fair value on a non-recurring basis. ABTC’s non-financial assets, including goodwill and property and equipment, are measured at fair value when there is an indication of impairment and the carrying amount exceeds the asset’s projected undiscounted cash flows. These assets are recorded at estimated fair value only when an impairment charge is recognized. ABTC had no impairment from its continuing operations related to its non-financial assets and liabilities measured on a non-recurring basis during the six months ended June 30, 2025 and 2024. ABTC recognized approximately $3.1 million of impairment losses from its discontinued operations related to the Drumheller site’s non-financial assets and liabilities measured on a non-recurring basis during the six months ended June 30, 2024. There were no discontinued operations in the six months ended June 30, 2025. See the Impairment of long-lived assets and Goodwill accounting policies below, as well as Note 3 for further discussion.
The carrying amounts of ABTC’s financial assets and liabilities, such as accounts payable and accrued expenses, approximate fair value due to the short-term nature of these instruments. The carrying value of long-term liabilities, such as lease liabilities, approximate fair value as the related interest rates approximate rates currently available to ABTC.
Digital assets
Bitcoin, representing ABTC’s digital assets, are measured at fair value as of each reporting period. The fair value of digital assets is measured using the period-end closing price from ABTC’s principal market, which is Coinbase Prime, in accordance with ASC 820. Since the digital assets are traded on a 24-hour period, ABTC utilizes the price as of midnight UTC time, which aligns with ABTC’s Bitcoin mining revenue recognition cut-off. Changes in fair value are recognized in (Gains) losses on digital assets, in Operating expenses (income) on ABTC’s unaudited condensed and combined statement of operations and comprehensive income (loss). When ABTC sells digital assets, gains or losses from such transactions are measured as the difference between the cash proceeds and the carrying basis of the digital assets as determined on a First In-First Out basis and are also recorded within the same line item (Gains) losses on digital assets.
Digital assets received by ABTC through its revenue activities are accounted for in connection with ABTC’s revenue recognition policy disclosed below.
During the fourth quarter of 2024, Parent made the decision to change its strategic treasury policy, retaining all Bitcoin mined in its operations to increase its Bitcoin holdings. As a result of its intent to hold its Bitcoin, Parent began classifying its digital assets held as a non-current asset on its unaudited condensed balance sheet, except for certain specific use cases. Decisions to utilize the Bitcoin will be made on a case-by-case basis. Prior to the effectiveness of the Transactions on March 31, 2025, ABTC had classified certain digital assets as current on its unaudited condensed balance sheet in connection with the Bitcoin purchased and subsequently pledged to Bitmain Technologies Delaware Limited (“BITMAIN”) in connection with a Future Sales and Purchase Agreement, as amended (the “BITMAIN Purchase Agreement”), for the purchase of ASIC miners. Following the effectiveness of the Transactions on March 31, 2025, the pledged Bitcoin remains with Parent and was not part of the assets transferred to ABTC on March 31, 2025, and therefore it is not included on the unaudited combined balance sheet of ABTC as of June 30, 2025.
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Leases
ABTC accounts for its leases under ASC Topic 842, Leases (“ASC 842”). Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the unaudited condensed and combined balance sheets as both a right-of-use (“ROU”) asset and a lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or ABTC’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the ROU asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the ROU asset result in straight-line rent expense over the lease term.
Upon adoption of ASC 842, for purposes of calculating the ROU asset and lease liability, ABTC elected to combine lease and related non-lease components as permitted under ASC 842. ABTC also elected the short-term lease exception for leases having an initial term of 12 months or less. Consequently, such leases are not recorded in the unaudited condensed and combined balance sheets. ABTC recognizes rent expense from its operating leases on a straight-line basis over the lease term.
Impairment of long-lived assets
ABTC continually monitors events and changes in circumstances that could indicate that the carrying amounts of its long-lived assets, including property and equipment, may not be recoverable. When such events or changes in circumstances occur, ABTC assesses recoverability by determining whether the carrying value of such assets will be recovered through the undiscounted expected future cash flows from it. If the expected future undiscounted cash flows from the assets are less than the carrying amount of these assets, ABTC recognizes an impairment loss based on any excess of the carrying amount over the fair value of the assets.
When recognized, impairment losses related to long-lived assets to be held and used in operations are recorded as cost and expenses in ABTC’s unaudited condensed and combined statements of operations and comprehensive income (loss).
Impairment of goodwill
ABTC reviews goodwill for impairment at the reporting unit level on an annual basis during the fourth quarter of each fiscal year and in between annual tests whenever events or changes in circumstances indicate that it is more likely than not that the carrying value of a reporting unit exceeds its fair value. In performing the goodwill impairment test, ABTC first performs a qualitative assessment, which requires ABTC to consider events or circumstances, including significant changes in the manner of ABTC’s use of the acquired assets or the strategy for ABTC’s overall business, significant underperformance relative to expected historical or projected development milestones, significant negative regulatory or economic trends, and significant technological changes that could render the asset (or asset group) obsolete. If, after assessing the totality of events or circumstances, ABTC determines that it is more likely than not that the fair value of its reporting unit is greater than the carrying amounts, then the quantitative goodwill impairment test is not performed.
If the qualitative assessment indicates that the quantitative analysis should be performed, ABTC next evaluates goodwill for impairment by comparing the fair value of its reporting unit to its carrying value, including the associated goodwill. To determine the fair value, ABTC uses the equal weighting of the market approach based on comparable publicly traded companies in similar lines of businesses and the income approach based on estimated discounted future cash flows. Cash flow assumptions consider historical and forecasted revenue, operating costs and other relevant factors.
ABTC has not recorded an impairment to goodwill as of June 30, 2025.
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Derivatives
ABTC accounts for the derivative contracts it enters into as follows:
Bitcoin redemption option
Parent entered into an agreement to purchase ASIC miners that includes a pledge of Bitcoin and a right to redeem the pledged Bitcoin for a certain period after the redemption period starts. The redemption period starts when the purchased ASIC miners are shipped. The amount of Bitcoin that can be redeemed is pro-rata of the percentage of ASIC miners shipped. This Bitcoin redemption option does not qualify as an accounting hedge under FASB ASC Topic 815, Derivatives and Hedging (“ASC 815”). Accordingly, ABTC carries the Bitcoin redemption option at fair value and any gains or losses are recognized in profit or loss, respectively. Because the Bitcoin redemption option remains with Parent and was not part of the assets transferred to ABTC on March 31, 2025, it is not included on the unaudited combined balance sheet of ABTC as of June 30, 2025. See Note 7 for further discussion.
Covered call options
From time to time, Parent has sold call options on Bitcoin that it owns (the “covered call options”) to generate cash flows on a portion of its Bitcoin held. These options do not qualify as accounting hedges under ASC 815. Accordingly, ABTC carries the covered call options at fair value and any gains or losses are recognized in profit or loss, respectively.
As of June 30, 2025, ABTC had not entered into a covered call options transaction.
Note 3. Discontinued Operations
On March 4, 2024, Parent announced the closure of its Drumheller, Alberta mining site after analysis of ABTC’s operations. It was determined that the profitability of the Drumheller site had been impacted significantly by various factors, including elevated energy costs and underlying voltage issues. ABTC further assessed the profitability of the site which indicated that an impairment triggering event had occurred. Accordingly, with the planned closure of the Drumheller site, the long-lived assets of the site were fully written down. This resulted in a write down of $3.1 million, which is reflected in the Loss from discontinued operations in ABTC’s unaudited condensed and consolidated statements of operations and comprehensive income (loss) for the six months ended June 30, 2024.
There is considerable management judgment necessary to determine the estimated future cash flows and fair values of ABTC’s long-lived assets, and, accordingly, actual results could vary significantly from such estimates, which fall under Level 3 within the Fair value measurement hierarchy (see Note 2 for further discussion).
The closure was completed as of December 31, 2024, and there were no discontinued operations for the six months ended June 30, 2025.
| Six Months End | ||||||||
| June 30 | ||||||||
| (in USD thousands) | 2025 | 2024 | ||||||
| Revenue | $ | - | $ | 981 | ||||
| Cost of revenue (exclusive of depreciation and amortization shown below) | - | 3,895 | ||||||
| Operating expenses: | ||||||||
| Depreciation and amortization | - | 169 | ||||||
| General and administrative expenses | - | 217 | ||||||
| Impairment of long-lived assets | - | 3,104 | ||||||
| Total operating expenses | - | 3,490 | ||||||
| Loss from discontinued operations before taxes | - | (6,404 | ) | |||||
| Income tax benefit (provision) | - | 1,588 | ||||||
| Net loss | $ | - | $ | (4,816 | ) | |||
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| Cash flows from Discontinued Operations | Six Months End June 30, | |||||||
| (in USD thousands) | 2025 | 2024 | ||||||
| Operating cash flows (used in) provided by discontinued operations | $ | - | $ | (3,243 | ) | |||
| Assets and Liabilities of Discontinued Operations | June 30, | ||||||||
| (in USD thousands) | 2025 | 2024 | |||||||
| Assets | $ | - | $ | - | |||||
| Liabilities | - | - | |||||||
ABTC recorded impairment related to the mining equipment and mining infrastructure at the Drumheller site after the decision to cease operations at the site in March 2024.
Note 4. Digital assets
The following table presents the changes in carrying amount of digital assets as of March 31, 2024, and March 31, 2025:
| (in USD thousands) | Amount | |||
| Balance as of December 31, 2023 | $ | 388,131 | ||
| Revenue recognized from Bitcoin mined | 30,357 | |||
| Revenue recognized from discontinued operations | 979 | |||
| Mining revenue earned in prior period received in current period | 292 | |||
| Carrying value of Bitcoin sold | (36,109 | ) | ||
| Change in fair value of Bitcoin | 274,540 | |||
| Foreign currency translation adjustments | (9,295 | ) | ||
| Balance as of March 31, 2024 | $ | 648,895 | ||
| Revenue recognized from Bitcoin mined | 13,914 | |||
| Carrying value of Bitcoin sold | (15,209 | ) | ||
| Change in fair value of Bitcoin | (71,842 | ) | ||
| Foreign currency translation adjustments | (6,347 | ) | ||
| Balance as of June 30, 2024 | $ | 569,411 | ||
| Number of Bitcoin held as of June 30, 2024 | 9,102 | |||
| Cost basis of Bitcoin held as of June 30, 2024 | $ | 348,213 | ||
| Realized gains on the sale of Bitcoin for the six months ended June 30, 2024 | $ | 7,458 | ||
| Balance as of December 31, 2024 | $ | 949,501 | ||
| Revenue recognized from Bitcoin mined | 12,338 | |||
| Carrying value of Bitcoin sold | (3,429 | ) | ||
| Change in fair value of Bitcoin | (112,394 | ) | ||
| Legal contribution of mining operations to ABTC | (847,244 | ) | ||
| Foreign currency translation adjustments | 1,228 | |||
| Balance as of March 31, 2025 | $ | - | ||
| Revenue recognized from Bitcoin mined | 30,285 | |||
| Bitcoin contributed | 10,000 | |||
| Change in fair value of Bitcoin | 3,037 | |||
| Balance as of June 30, 2025 | $ | 43,322 | ||
| Number of Bitcoin held as of June 30, 2025 | 404 | |||
| Cost basis of Bitcoin held as of June 30, 2025 | $ | 40,285 | ||
| Realized gains on the sale of Bitcoin for the six months ended June 30, 2025 | $ | 828 | ||
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Digital assets are either held in segregated custody accounts for the benefit of Parent, held in segregated custody accounts under Parent’s ownership and pledged as collateral under a borrowing arrangement or in connection with covered call options sold, or held by BITMAIN for the Bitcoin pledged in connection with the BITMAIN Purchase Agreement, as amended, for ASIC miner purchases from them. As discussed in Note 1, Parent contributed only ASIC miners as part of the Transactions. As a result, the entire strategic Bitcoin reserve remained with Parent following the effectiveness of the Transactions. During the three months ended June 30, 2025, ABTC mined its own Bitcoin. The details of the digital assets are as follows:
| Amount | Number of digital assets | |||||||||||||||
| (in USD thousands) | June 30, 2025 | December 31, 2024 | June 30, 2025 | December 31, 2024 | ||||||||||||
| Current | ||||||||||||||||
| Bitcoin held in custody | $ | - | $ | - | - | - | ||||||||||
| Other digital assets held in custody | - | - | - | - | ||||||||||||
| Total current digital assets held in custody | - | - | ||||||||||||||
| Bitcoin pledged for miner purchase | - | 92,389 | - | 968 | ||||||||||||
| Total current digital assets pledged for miner purchase | - | 92,389 | - | 968 | ||||||||||||
| Non-current | ||||||||||||||||
| Bitcoin held in custody | 43,322 | 525,236 | 404 | 5,648 | ||||||||||||
| Total non-current digital assets – held in custody | $ | 43,322 | $ | 525,236 | 404 | 5,648 | ||||||||||
| Bitcoin pledged as collateral | - | 331,876 | - | 3,555 | ||||||||||||
| Total non-current digital assets – pledged as collateral | - | 331,876 | - | 3,555 | ||||||||||||
| Total digital assets | $ | 43,322 | $ | 949,501 | 404 | 10,171 | ||||||||||
In November 2024, Parent entered into the BITMAIN Purchase Agreement to purchase approximately 30,000 BITMAIN Antminer S21+ ASIC miners. In December 2024, in connection with the BITMAIN Purchase Agreement, Parent completed its Bitcoin pledge by depositing 968 Bitcoin into a segregated wallet with BITMAIN, which was originally subject to a three-month redemption right from the shipment date of the purchased ASIC miners, whereby Parent has the option to repurchase, with cash, the pledged Bitcoin at a mutually agreed upon fixed price. If Parent does not exercise this right within the redemption period, BITMAIN will retain full ownership of the pledged Bitcoin as consideration for the purchased ASIC miners.
As of March 31, 2025, Parent had pledged 968 Bitcoin with a fair value of $79.9 million, classified as Digital assets – pledged for miner purchase under current assets on its unaudited condensed consolidated balance sheet. A corresponding liability of $100.9 million was recorded under Miner purchase liability under current liabilities on ABTC’s unaudited condensed balance sheet prior to the effectiveness of the Transactions, reflecting Parent’s obligation to either redeem the pledged Bitcoin for cash or put it towards the purchase of ASIC miners by not redeeming the pledged Bitcoin at the end of the redemption period.
In accordance with FASB ASC Topic 610-20, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets, ABTC assessed the transfer of nonfinancial assets, Bitcoin, under FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Specifically, ABTC noted that the Bitcoin pledged to BITMAIN under the BITMAIN Purchase Agreement constitutes a repurchase agreement under ASC 606. As a result, the Bitcoin was not derecognized upon transfer as Parent retains a repurchase option. ABTC recorded a Bitcoin redemption right derivative asset with an initial fair value of $15.1 million. See Note 7 for further information on this derivative asset.
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Due to the redemption right and ABTC’s continued economic exposure to the Bitcoin, the pledged Bitcoin is separately classified as Digital assets – pledged for miner purchase on the unaudited condensed consolidated balance sheet, which represents restricted Bitcoin as of December 31, 2024. Because the pledged Bitcoin remains with Parent and was not part of the assets transferred to ABTC on March 31, 2025, it is not included on the unaudited combined balance sheet of ABTC as of June 30, 2025.
Starting April 1, 2025, following the effectiveness of the Transactions, ABTC began to accumulate its own strategic Bitcoin reserve. ABTC mined its own Bitcoin, totaling 404 Bitcoin as of June 30, 2025.
During the period from July 1, 2025 to August 6, 2025, ABTC purchased approximately 1,726 Bitcoin for $205.6 million, at a weighted average price of approximately $119,120 per Bitcoin, to further expand its strategic Bitcoin reserve.
On August 5, 2025, ABTC entered into the ABTC BITMAIN Purchase Agreement (as defined below) with Bitmain Technologies Georgia Limited (“BITMAIN Georgia”) and concurrently purchased 16,299 of the BITMAIN Miners, representing a total of approximately 14.02 EH/s, for a total purchase price of approximately $314.0 million, paid through the pledge of approximately 2,234 Bitcoin. ABTC must purchase approximately 981 additional BITMAIN Miners on or before October 5, 2025, which may be purchased with cash and/or by pledging additional Bitcoin. The Bitcoin pledged under the ABTC BITMAIN Purchase Agreement has a redemption period of 24 months from each pledge date. See Note 11 below for further detail.
Note 5. Property and equipment, net
The components of property and equipment were as follows:
| (in USD thousands) | June 30, 2025 | December 31, 2024 | ||||||
| Miners and mining equipment | $ | 163,623 | $ | 74,230 | ||||
| Less: Accumulated depreciation | (47,200 | ) | (31,141 | ) | ||||
| Total property and equipment, net | $ | 116,423 | $ | 43,089 | ||||
Depreciation and amortization expense related to property and equipment was $10.0 million and $6.4 million for the three months ended June 30, 2025 and June 30, 2024, respectively.
Depreciation and amortization expense related to property and equipment was $16.3 million and $13.4 million for the six months ended June 30, 2025 and June 30, 2024, respectively.
Note 6. Deposits and prepaid expenses
The components of deposits and prepaid expenses are as follows:
| (in USD thousands) | June 30, 2025 | December 31, 2024 | ||||||
| Deposits for miners | $ | - | $ | 31,951 | ||||
| Prepaid insurance | - | 135 | ||||||
| Prepaid electricity | - | 10,564 | ||||||
| Total deposits and prepaid expenses | $ | - | $ | 42,650 | ||||
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Note 7. Derivatives
The following table presents the ABTC’s unaudited condensed balance sheets classification of derivatives carried at fair value:
| (in USD thousands) | Balance | June 30, 2025 | December 31, 2024 | |||||||||||||||
| Derivative | Sheet Line | Asset | Liability | Asset | Liability | |||||||||||||
| Derivatives not designated as hedging instruments: | ||||||||||||||||||
| Bitcoin redemption option | Derivative asset | $ | - | $ | - | $ | 18,076 | $ | - | |||||||||
| Covered call options | Derivative liability | - | - | - | 18,437 | |||||||||||||
| Total derivatives | $ | - | $ | - | $ | 18,076 | $ | 18,437 |
The following table presents the effect of derivatives on ABTC’s unaudited condensed and combined statements of operations and comprehensive (loss) income:
| (in USD thousands) | Statement of | Six Months Ended | Three Months Ended | |||||||||||||||
| Derivative | Operations | June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||||||||||
| Derivatives not designated as hedging instruments: | ||||||||||||||||||
| Bitcoin redemption option | Gain on derivatives | $ | - | $ | - | $ | - | $ | - | |||||||||
| Covered call options | Gain on derivatives | - | 17,219 | - | 17,219 | |||||||||||||
| Total derivatives | $ | - | $ | 17,219 | $ | - | $ | 17,219 | ||||||||||
Bitcoin redemption option
During December 2024, Parent pledged approximately 968 Bitcoin to BITMAIN in connection with a purchase of approximately 30,000 BITMAIN Antminer S21+ ASIC miners pursuant to the BITMAIN Purchase Agreement. Parent has the option to redeem the pledged Bitcoin at a mutually agreed upon price, during a redemption period that started on the shipment date of the purchased ASIC miners and originally ended three months thereafter. During the six months ended June 30, 2025, Parent amended the redemption period to end during the quarter ending September 30, 2025. In August 2025, Parent amended the redemption period to end during the quarter ending December 31, 2025. ABTC accounted for this Bitcoin redemption option as a Level 3 derivative asset as of December 31, 2024, due to a significant unobservable input included in the fair value estimate of the Bitcoin redemption option, which was the estimated shipment date of the purchased ASIC miners. After the Transactions were effectuated on March 31, 2025, ABTC no longer recorded the Bitcoin pledged by Parent.
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The following table provides a summary of activity and change in fair value of the Bitcoin redemption option (previously a Level 3 derivative asset):
| Six Months Ended | ||||
| (in USD thousands) | June 30, 2025 | |||
| Balance, beginning of period | $ | 18,076 | ||
| Transfer out of Level 3 (1) | (18,076 | ) | ||
| Balance, end of period | $ | - | ||
| (1) | The Bitcoin redemption option was transferred out of Level 3 due to changes in the observability of inputs used in the valuation and retained by the Parent after the effectiveness of Transactions. |
Covered call options
During October 2024, Parent sold covered call options on 2,000 Bitcoin notional for proceeds of $2.9 million to generate cash flow on a portion of its digital assets. During November 2024, Parent rolled these call options into new call options with the same Bitcoin notional. Parent achieved this roll by exchanging its previous call options sold for new call options. Parent has pledged Bitcoin as collateral with one of its Bitcoin custodians in a quantity equal to the notional amount for these covered call options sold. The collateral continues to be pledged in the same manner after the roll. The covered call options exchanged in the roll are only exercisable upon the date of expiry, are automatically exercised if the underlying reference price was greater than the strike price of the call option, and are settled with delivery of the underlying Bitcoin. The reference price of the original covered call options was the BRR at 4:00pm London time for a given date and the reference price for the new call options is the Coinbase Prime Bitcoin price quoted in U.S. Dollars at 4:00pm London time for a given date. The covered call options were carried at fair value and were Level 2 liabilities as noted in Note 2. During the six months ended June 30, 2025, covered call options on 1,500 Bitcoin notional expired with the underlying reference price below their strike price and ABTC recorded a realized gain of $12.1 million. As of June 30, 2025, ABTC had no outstanding covered call options.
Note 8. Leases
As further discussed in Note 11, on March 31, 2025, in connection with the Transactions, ABTC entered into a Master Colocation Services Agreement and Master Managed Services Agreement with Parent. Under the two agreements, Parent provides ABTC with colocation, hosting, management, oversight, strategy, compliance, operational and other services for its Bitcoin mining operations located at Parent’s facilities. All of ABTC’s Bitcoin miners are located at Parent’s facilities. ABTC has determined that it has embedded operating leases at two of the facilities governed by this arrangement and has elected to combine lease and non-lease components as permitted under ASC 842. A third facility governed by this arrangement includes payments that are variable and therefore expensed as incurred.
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The following table shows the ROU assets and lease liabilities as of June 30, 2025 and December 31, 2024:
| (in USD thousands) | June 30, 2025 | December 31, 2024 | ||||||
| ROU assets | ||||||||
| Operating leases | $ | 46,475 | $ | - | ||||
| Total ROU assets | $ | 46,475 | $ | - | ||||
| Lease liabilities | ||||||||
| Operating leases | $ | 49,329 | $ | - | ||||
| Total lease liabilities | $ | 49,329 | $ | - | ||||
ABTC’s lease costs are comprised of the following:
| Three Months Ended | Six Months Ended | |||||||||||||||
| (in USD thousands) | June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | ||||||||||||
| Operating lease cost | $ | 2,714 | $ | - | $ | 2,714 | $ | - | ||||||||
| Variable lease cost | 11,694 | - | 11,694 | - | ||||||||||||
| Total lease expense | $ | 14,408 | $ | - | $ | 14,408 | $ | - | ||||||||
The following table presents supplemental lease information:
| Six Months Ended | ||||||||
| (in USD thousands) | June 30, 2025 | June 30, 2024 | ||||||
| Operating cash outflows - operating leases | $ | - | $ | - | ||||
| Six Months Ended | ||||||||
| June 30, 2025 | June 30, 2024 | |||||||
| Weighted-average remaining lease term - operating leases (in years) | 4.75 | - | ||||||
| Weighted-average discount rate(1) – operating leases | 6.42 | % | - | % | ||||
| (1) | ABTC’s operating leases do not provide an implicit rate, therefore ABTC uses the incremental borrowing rate at the lease commencement date in determining the present value of lease payments. The incremental borrowing rate represents an estimate of the interest rate ABTC would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis for similar assets over the term of the lease. |
The following table presents ABTC’s future minimum operating lease payments as of June 30, 2025:
| Operating | ||||
| (in USD thousands) | Leases | |||
| Remainder of 2025 | $ | 8,142 | ||
| 2026 | 11,059 | |||
| 2027 | 11,338 | |||
| 2028 | 11,624 | |||
| 2029 | 11,919 | |||
| Thereafter | 2,998 | |||
| Total undiscounted lease payments | 57,080 | |||
| Less present value discount | (7,751 | ) | ||
| Present value of operating lease liabilities | $ | 49,329 | ||
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Note 9. Income taxes
In general, ABTC determines its quarterly provision for income taxes by applying an estimated annual effective tax rate, which is based on expected annual income or loss and statutory tax rates in the various jurisdictions in which ABTC operates. Certain discrete items are separately recognized in the quarter in which they occur and can be a source of variability on the effective tax rates from quarter to quarter. ABTC’s effective tax rate may change based on recurring and non-recurring factors, including the geographical mix of earnings or losses, enacted tax legislation, and state and local income taxes. Each quarter, a cumulative adjustment is recorded for any fluctuations in the estimated annual effective tax rate as compared to the prior quarter.
For the three months ended June 30, 2025, ABTC’s income tax expense and effective tax rate were $1.0 million and 21.9%, respectively. This rate differed from the statutory federal income tax rate of 21.0% primarily due to a non-taxable portion of gains on digital assets, subpart F income, and a change in valuation allowance. For the three months ended June 30, 2024, ABTC’s income tax benefit and effective tax rate were $8.5 million and 12.4%, respectively. This rate differed from the statutory federal income tax rate of 21.0% primarily due to a non-taxable portion of gains on digital assets, subpart F income, state income taxes, and a change in valuation allowance.
For the six months ended June 30, 2025, ABTC’s income tax benefit and effective tax rate were $12.5 million and 11.4%, respectively. This rate differed from the statutory federal income tax rate of 21.0% primarily due to a non-taxable portion of gains on digital assets, subpart F income, and a change in valuation allowance. For the six months ended June 30, 2024, ABTC’s income tax expense and effective tax rate were $25.4 million and 12.8%, respectively. This rate differed from the statutory federal income tax rate of 21.0% primarily due to subpart F income, non-taxable portion of gains on digital assets, and a change in valuation allowance.
ABTC is subject to U.S. federal income taxes as well as income taxes in various state jurisdictions and in Canada.
Note 10. Concentrations
The only digital asset mined during the six months ended June 30, 2025 and 2024, has been Bitcoin. Therefore, 100% of ABTC’s revenue is related to one digital asset. Parent used two mining pool operators during the three and six months ended June 30, 2025 and June 30, 2024.
Note 11. Related party transactions
Parties are considered related to ABTC if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with ABTC. This includes equity method investment entities. Related parties also include principal owners of ABTC, its management, members of the immediate families of principal owners of ABTC and its management and other parties with which ABTC may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. ABTC discloses all known related party transactions.
Cost Allocations from Parent
Prior to the effectiveness of the Transactions on March 31, 2025, Parent provided significant support functions to ABTC, which did not operate as a standalone business. The unaudited combined and condensed financial statements reflect an allocation of these costs. Allocated costs included in cost of revenue relate to support primarily consisting of electricity, facilities, repairs and maintenance, and labor and are predominantly allocated based on revenue. Allocated costs included in general and administrative expenses primarily relate to finance, human resources, benefits administration, information technology, legal, corporate strategy, corporate governance, other professional services and general commercial support functions and are predominantly allocated based on a percentage of revenue. See Note 1 for a discussion of these costs and the methodology used to allocate them.
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Master Colocation Services Agreement
On March 31, 2025, in connection with the Transactions, ABTC entered into a Master Colocation Services Agreement with Parent (the “MCSA”). The MCSA and the service orders under the MCSA provide for Parent to provide ABTC with colocation and hosting services for ABTC-owned Bitcoin miners at Parent-owned or leased facilities, on specific terms set forth in service orders to the MCSA.
Under the terms of the MCSA, ABTC pays to Parent fees generally consisting of a monthly recurring charge, as set forth in each service order, plus 100% of the costs, fees, disbursements and expenses paid or incurred by Parent in connection with the use, operation, maintenance and of the relevant facility (including costs related to the delivery of contracted power) and any installation charges, non-recurring costs or amounts for additional services incurred during the term of the applicable service order. For the three months ended June 30, 2025 and 2024, fees and expenses billed by Parent related to the MCSA were $14.4 million and nil, respectively. For the six months ended June 30, 2025 and 2024, fees expenses billed by Parent related to the MCSA were $14.4 million and nil, respectively.
Master Management Services Agreement
On March 31, 2025, in connection with the Transactions, ABTC entered into a Master Management Services Agreement with Parent (the “MMSA”). The MMSA and the service orders under the MMSA provide for Parent to provide ABTC with management, oversight, strategy, compliance, operational and other services for its Bitcoin mining operations hosted at Parent’s facilities under the MCSA.
Under the terms of the MMSA, ABTC pays to Parent service fees generally consisting of a fixed fee, payable monthly, for general management, operational, compliance and other services, plus a monthly fee equal to 100% of specified “pass-through costs” incurred during the term of the applicable service order, including costs and expenses incurred by or on behalf of Parent for labor, maintenance, repairs and infrastructure expenses and the provision of services by third parties. For the three months ended June 30, 2025 and 2024, fees and expenses billed by Parent related to the MMSA were $1.5 million and nil, respectively. For the six months ended June 30, 2025 and 2024, fees and expenses billed by Parent related to the MMSA were $1.5 million and nil, respectively.
Shared Services Agreement
On March 31, 2025, in connection with the Transactions, ABTC entered into a Services Agreement with Parent (the “Shared Services Agreement”), pursuant to which Parent agreed to provide back-office support services to ABTC, including accounting and financial reporting, HR support, payroll, benefits, IT support and management, legal and compliance and vendor management services. Under the terms of the Shared Services Agreement, ABTC pays Parent a monthly fee equal to the fully allocated cost, determined on a “pass through” basis, to Parent for providing services under the Shared Services Agreement. For the three months ended June 30, 2025 and 2024, fees and expenses billed by Parent related to the Shared Services Agreement were $1.8 million and nil, respectively. For the six months ended June 30, 2025 and 2024, fees and expenses billed by Parent related to the Shared Services Agreement were $1.8 million and nil, respectively.
Put Option Agreement
On March 31, 2025, in connection with the Transactions, ABTC entered into the Put Option Agreement with Parent (the “Put Option Agreement”), pursuant to which Parent has the right to sell to ABTC any ASIC Bitcoin miners purchased by Parent under an agreement between BITMAIN Georgia and Parent. Parent’s agreement with BITMAIN Georgia, in turn, provides for Parent’s right to purchase from BITMAIN Georgia up to approximately 17,280 Bitmain U3S21EXPH Bitcoin miners for a maximum aggregate purchase price of approximately $320.0 million, not including any applicable tariffs, duties or similar charges.
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Under the terms of the Put Option Agreement, Parent has the right to cause ABTC, at any time and from time to time ending on the 30th day following the termination of the purchase option period under Parent’s agreement with BITMAIN Georgia and the delivery of all Bitcoin miners purchased by Parent thereunder, to purchase all or any amount of the Bitcoin miners, at the same per-unit price as is paid to BITMAIN Georgia and without any additional markup, premium or administrative charge thereon, subject to specified exceptions in the event that ABTC does not (at any time Parent’s put right is exercised) have sufficient legally available funds to pay the applicable purchase price.
On August 5, 2025, pursuant to the Put Option Agreement, Parent assigned its option to purchase the Bitmain Miners to ABTC. 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 to purchase up to approximately 17,280 BITMAIN Antminer U3S21EXPH ASIC miners (collectively, the “BITMAIN Miners”) in one or more tranches, representing a total of approximately 14.86 exahash per second (“EH/s”), for a total purchase price of up to approximately $319.5 million (subject to adjustments, offsets and costs as set forth in the ABTC BITMAIN Purchase Agreement). Concurrently with the signing of the ABTC BITMAIN Purchase Agreement, 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, paid through the pledge of approximately 2,234 Bitcoin at a mutually agreed upon fixed price. Such purchase price was reduced by the application of a deposit and certain expenses of approximately $46.0 million previously paid to BITMAIN Georgia by Parent and which ABTC must repay to Parent on or prior to December 31, 2025. The remaining BITMAIN Miners must be purchased by ABTC within two months of entering into the ABTC BITMAIN Purchase Agreement by paying cash and/or pledging additional Bitcoin. The Bitcoin pledged under the ABTC BITMAIN Purchase Agreement has a redemption period of 24 months from each pledge date.
Note 12. Stockholders’ equity
Net Parent Investment
The net transfers to and from the Parent, as discussed above in Note 1, were as follows:
Six Months Ended June 30, | ||||||||
| (in USD thousands) | 2025 | 2024 | ||||||
| Cash pooling and general financing activities | $ | 20,599 | $ | (30,822 | ) | |||
| Corporate allocations | 14,368 | 20,229 | ||||||
| Legal contribution of mining operations to ABTC | (951,556 | ) | - | |||||
| Distribution to Parent | 115,757 | - | ||||||
| Net transfers from Parent per Condensed and Combined Statements of Cash Flows | (800,832 | ) | (10,593 | ) | ||||
| Stock based compensation funded by Parent | 2,145 | 5,092 | ||||||
| Net transfers from Parent per Condensed and Combined Statements of Stockholders’ Equity | $ | (798,687 | ) | $ | (5,501 | ) | ||
Authorized shares
As of June 30, 2025, ABTC has 1,100,000,000 shares of common stock authorized, par value $0.0001 per share.
Common Stock Purchase Agreement
During the six months ended June 30, 2025, ABTC entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) for a private placement (the “Private Placement”) with certain accredited investors (collectively, the “Purchasers”). Pursuant to the Purchase Agreement, ABTC agreed to sell and issue to the Purchasers shares of its Class A common stock, par value $0.0001 per share (the “Class A Shares”), for gross proceeds of $200.0 million (up to maximum gross proceeds of $250.0 million to satisfy oversubscriptions). The closing of the Private Placement occurred on June 27, 2025. At the closing, ABTC sold and issued 11,002,954 Class A Shares for aggregate gross proceeds in cash and Bitcoin (as described below) of $220.1 million, and aggregate net proceeds of approximately $215.3 million after deducting certain fees and expenses incurred in connection with the Private Placement, including aggregate commissions of $4.8 million.
$10.0 million worth of Class A Shares were sold for consideration of Bitcoin in lieu of cash at an exchange rate of one Bitcoin to $104,000. ABTC recorded the net proceeds of $215.3 million to additional paid-in capital.
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Contribution from Parent
During the period ended June 30, 2025, in connection with the Transactions, ABTC received $5.3 million of Bitcoin miners from Parent subsequent to March 31, 2025. The transaction was accounted for as a contribution from Parent and reflected within additional paid-in capital at the carrying value as a transfer under common control within the unaudited condensed balance sheets.
Accumulated other comprehensive loss
The changes in accumulated other comprehensive loss, net of tax, for the six months ended June 30, 2025, were as follows:
| (in USD thousands) | Amount | |||
| Cumulative foreign currency translation adjustment loss as of December 31, 2024 | $ | (48,347 | ) | |
| Foreign currency translation adjustment | 4,467 | |||
| Disposition of cumulative translation adjustment | 43,880 | |||
| Cumulative foreign currency translation adjustment loss as of June 30, 2025 | $ | - | ||
Note 13. Commitments and contingencies
ABTC BITMAIN Purchase Agreement
In August 2025, ABTC entered into the ABTC BITMAIN Purchase Agreement which includes the following financial commitments: a Bitcoin redemption option, recognized as a derivative asset under ASC 815, measured at fair value at each reporting period, a Miner purchase liability representing a commitment to settle the obligation in cash if the redemption right is exercised before expiration, and a derecognition of Digital assets – pledged for miner purchase if the redemption right is not exercised. See Note 4. Digital assets for further information on the ABTC BITMAIN Purchase Agreement.
Legal and regulatory matters
ABTC is subject at times to various claims, lawsuits, and governmental proceedings relating to ABTC’s business and transactions arising in the ordinary course of business. ABTC cannot predict the final outcome of such proceedings. Where appropriate, ABTC vigorously defends such claims, lawsuits, and proceedings. Some of these claims, lawsuits, and proceedings seek damages, including consequential, exemplary, or punitive damages, in amounts that could, if awarded, be significant. Certain of the claims, lawsuits, and proceedings arising in ordinary course of business are covered by ABTC’s insurance program. ABTC maintains property and various types of liability insurance in an effort to protect ABTC from such claims. In terms of any matters where there is no insurance coverage available to ABTC, or where coverage is available and ABTC maintains a retention or deductible associated with such insurance or elects not to purchase such insurance, ABTC may establish an accrual for such loss, retention, or deductible based on current available information. In accordance with accounting guidance, if it is probable that an asset has been impaired or a liability has been incurred as of the date of the financial statements and the amount of loss is reasonably estimable, then an accrual for the cost to resolve or settle these claims is recorded by ABTC in the accompanying unaudited condensed balance sheet. If it is reasonably possible that an asset may be impaired as of the date of the financial statement, then ABTC discloses the range of possible loss. Expenses related to the defense of such claims are recorded by ABTC as incurred and included in the accompanying Condensed Combined Statements of Operations and Comprehensive (Loss) Income. Management, with the assistance of outside counsel, may from time to time adjust such accruals according to new developments in the matter, court rulings, or changes in the strategy affecting ABTC’s defense of such matters. On the basis of current information, ABTC 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.
Note 14. Subsequent events
ABTC has completed an evaluation of all subsequent events after the balance sheet date up to the date that the unaudited condensed and combined financial statements were available to be issued. Except for the events that occurred after June 30, 2025, disclosed above, ABTC has concluded no other subsequent events have occurred that require disclosure.
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Exhibit 99.8
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
INFORMATION OF
GRYPHON DIGITAL MINING, INC.
Description of the ABTC Transaction
On May 9, 2025, Gryphon Digital Mining, Inc., a Delaware corporation (“Gryphon”), GDM Merger Sub I Inc., a Delaware corporation and wholly owned direct subsidiary of Gryphon (“Merger Sub Inc.”), GDM Merger Sub II LLC, a Delaware limited liability company and wholly owned direct subsidiary of Gryphon (“Merger Sub LLC”), and American Bitcoin Corp., a Delaware corporation (“ABTC”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which, subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement:
| ● | Merger Sub Inc. will merge with and into ABTC, with ABTC surviving the merger (the “First Merger”) as a direct, wholly owned subsidiary of Gryphon (the corporation surviving the First Merger, the “First Merger Surviving Corporation”); and |
| ● | immediately after the First Merger, the First Merger Surviving Corporation will merge with and into Merger Sub LLC, with Merger Sub LLC surviving the merger (the “Second Merger” and, taken together with the First Merger, the “Mergers”) as a direct, wholly owned subsidiary of Gryphon (the company surviving the Second Merger, the “Surviving Company”). Gryphon following the Mergers is referred to herein as the “Combined Company.” |
The Merger Agreement provides that, prior to the effective time of the First Merger (the “First Effective Time”), the certificate of incorporation of Gryphon will be amended and restated to, among other things, (i) reclassify the issued and outstanding shares of Gryphon’s common stock, par value $0.0001 per share (the “Gryphon Common Stock”), into one fully paid and non-assessable share of Class A common stock, par value $0.0001 per share (“Class A Common Stock”) and (ii) create two new series of common stock designated as Class B common stock, par value $0.0001 per share (the “Class B Common Stock”) and Class C common stock, par value $0.0001 per share (the “Class C Common Stock”). Each share of Class A Common Stock will be entitled to one vote per share, each share of Class B Common Stock will be entitled to 10,000 votes per share and each share of Class C Common Stock will be entitled to 10 votes per share.
Following the closing of the transactions contemplated by the Merger Agreement, including the Mergers (the “Closing”), (i) the aggregate number of shares of Class A Common Stock and Class B Common Stock issued to the equity holders of ABTC as merger consideration is expected to represent approximately 98.0% of the outstanding Combined Company common stock, on a fully diluted basis, and (ii) Gryphon equity holders as of immediately prior to the First Merger are expected to own 2.0% of the outstanding Combined Company common stock, on a fully diluted basis, after their shares of Gryphon Common Stock are reclassified into shares of Class A Common Stock. Following the Mergers, ABTC’s business will be the business of the Combined Company.
The transactions contemplated by the Merger Agreement, including the Mergers, are collectively referred to as the “Transactions.” ABTC has been deemed the accounting acquiror of Gryphon in connection with the Transactions.
The following unaudited pro forma condensed combined financial statements should be read in conjunction with (i) the historical financial statements and accompanying notes of Gryphon included in the Quarterly Report on Form 10-Q for the six months ended June 30, 2025, filed with the SEC on August 14, 2025, and the Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 31, 2025, (ii) the combined financial statements of ABTC for the year ended December 31, 2024 and the six months ended June 30, 2025, included as Exhibits to the Current Report on Form 8-K to which this Exhibit is attached (the “Current Report”), respectively, and (iii) the accompanying notes to the unaudited pro forma condensed combined financial statements included below.
The Unaudited Pro Forma Condensed Combined Financial Statements
The unaudited pro forma condensed combined balance sheet combines the historical balance sheets of Gryphon and ABTC as of June 30, 2025, and depicts the accounting of the Transactions under U.S. generally accepted accounting principles (“GAAP”) (such accounting adjustments, the “pro forma balance sheet transaction accounting adjustments”). The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2024, and the six months ended June 30, 2025, combines the historical results of Gryphon and ABTC for these periods and depicts the pro forma balance sheet transaction accounting adjustments assuming that those adjustments were made as of January 1, 2024 (the “pro forma statement of operations transaction accounting adjustments”). Collectively, the pro forma balance sheet transaction accounting adjustments and the pro forma statement of operations transaction accounting adjustments are referred to as the “pro forma adjustments.” In addition to the pro forma adjustments, the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2024, and the six months ended June 30, 2025, have been adjusted to reflect certain adjustments identified by management as necessary to fairly present the pro forma information included herein (the “management pro forma adjustments”).
The following unaudited pro forma condensed combined financial statements are provided for illustrative and informational purposes only and do not purport to represent or be indicative of the actual results of operations or financial condition and should not be construed as representative of the future results of operations or financial condition of the Combined Company.
The unaudited pro forma condensed combined financial information is based on the assumptions and pro forma adjustments that are described in the accompanying notes. The pro forma adjustments do not necessarily reflect what the Combined Company’s financial condition or results of operations would have been had the Transactions occurred on the dates indicated. Differences between these preliminary estimates and the final accounting, including the final purchase consideration for accounting purposes, expected to be completed after the Closing, may occur and these differences could have a material impact on the accompanying unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed combined financial information does not give effect to the potential impact of current financial conditions, regulatory matters, operating efficiencies or other savings or expenses that may be associated with the integration of the two companies. The unaudited pro forma condensed combined financial information is not necessarily indicative of the financial position or results of operations in the future periods or the result that actually would have been realized had Gryphon and ABTC been a combined organization during the specified periods. The actual results reported in periods following the Closing may differ significantly from those reflected in the unaudited condensed combined pro forma financial information presented herein for a number of reasons, including, but not limited to, differences in the assumptions used to prepare this unaudited pro forma condensed combined financial information.
Basis of Pro Forma Presentation
The unaudited pro forma condensed combined financial information has been prepared by management of Gryphon and management of ABTC in accordance with Regulation S-X Article 11, “Pro Forma Financial Information,” as amended by the final rule, “Amendments to Financial Disclosures About Acquired and Disposed Businesses,” as adopted by the U.S. Securities and Exchange Commission (the “SEC”) on May 21, 2020 (“Article 11”), and is presented in U.S. dollars. The historical financial statements of Gryphon and ABTC have been prepared in accordance with generally accepted accounting principles in the United States. Management of Gryphon and management of ABTC have made significant estimates and assumptions in their determination of the pro forma adjustments based on information available as of September 2, 2025 that the respective management teams of Gryphon and ABTC believe are reasonable under the circumstances. The unaudited pro forma condensed combined financial information does not necessarily reflect what the Combined Company’s financial condition or results of operations would have been had the Transactions occurred on the dates indicated. The unaudited pro forma condensed combined financial information also may not be useful in predicting the future financial condition and results of operations of the Combined Company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.
2
Pro Forma Adjustments
The pro forma adjustments are based on the management of Gryphon’s and the management of ABTC’s preliminary estimates and assumptions that are subject to change including with respect to final purchase consideration and allocation thereof. Accordingly, the purchase consideration allocation is considered preliminary and may materially change before final determination. The changes would affect the values assigned to tangible or intangible assets and the amount of depreciation and amortization expense recorded in the combined financial statements.
Management Pro Forma Adjustments
The management pro forma adjustments are based on the management of Gryphon’s and the management of ABTC’s assessment that, in order to fairly present the pro forma information included herein, historical unrealized gains and losses related to Bitcoin should be adjusted to only reflect the mark-to-market impact of Bitcoin accumulated during the historical periods presented, rather than for all Bitcoin accumulated by ABTC since inception of Hut 8 Corp., a Delaware corporation (“Hut 8”), as all Bitcoin accumulated by ABTC until March 31, 2025 was retained by Hut 8 upon the consummation of the Contributions (as described in ABTC’s management’s discussion and analysis of its financial condition and results of operations and ABTC’s unaudited condensed and combined financial statements for the three and six months ended June 30, 2025, included in the Exhibits to the Current Report). Starting April 1, 2025, following the consummation of the Contributions, ABTC began accumulating its own Bitcoin through mining and open-market purchases. Management of Gryphon and the management of ABTC believe that adjusting these gains and losses in the unaudited pro forma condensed combined statements of operations better reflects the current Combined Company’s financial results as (i) the Combined Company intends to accumulate Bitcoin, which would result in mark-to-market impacts on the Combined Company’s 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.
3
Pro Forma Condensed Consolidated Balance Sheet
as of June 30, 2025
(Unaudited)
| Historical | Pro Forma | Pro Forma | ||||||||||||||||
| (in USD thousands) | Gryphon | ABTC | Adjustments | Note | Combined | |||||||||||||
| Assets | ||||||||||||||||||
| Cash and cash equivalents | $ | 678 | $ | 205,925 | $ | - | $ | 206,603 | ||||||||||
| Prepaid expenses | 1,288 | - | - | 1,288 | ||||||||||||||
| Marketable securities | 72 | - | - | 72 | ||||||||||||||
| Digital assets | 917 | - | - | 917 | ||||||||||||||
| Total current assets | 2,955 | 205,925 | - | 208,880 | ||||||||||||||
| Digital assets | - | 43,322 | - | 43,322 | ||||||||||||||
| Property and equipment, net | 2,011 | 116,423 | 114 | (a) | 118,548 | |||||||||||||
| Operating lease right-of-use assets | - | 46,475 | - | 46,475 | ||||||||||||||
| Intangible asset | 100 | - | (100 | ) | (b) | - | ||||||||||||
| Goodwill | - | - | 145,620 | (c) | 145,620 | |||||||||||||
| Deposits | 1,131 | - | - | 1,131 | ||||||||||||||
| Total assets | $ | 6,197 | $ | 412,145 | $ | 145,634 | $ | 563,976 | ||||||||||
| Liabilities and stockholders’ equity | ||||||||||||||||||
| Accounts payable and accrued liabilities | $ | 11,697 | $ | - | $ | (2,509 | ) | (d), (e) | $ | 9,188 | ||||||||
| Due to Parent, net | - | 16,774 | - | 16,774 | ||||||||||||||
| Operating lease liability –current portion | - | 10,923 | - | 10,923 | ||||||||||||||
| Note payable - current portion | 213 | - | (213 | ) | (f) | - | ||||||||||||
| Current liabilities | 11,910 | 27,697 | (2,722 | ) | 36,885 | |||||||||||||
| Deferred tax liability | - | 6,317 | - | 6,317 | ||||||||||||||
| Operating lease liability – less current portion | - | 38,406 | - | 38,406 | ||||||||||||||
| Notes payable – less current portion | 5,278 | - | (5,278 | ) | (f) | - | ||||||||||||
| Total liabilities | $ | 17,188 | $ | 72,420 | $ | (8,000 | ) | $ | 81,608 | |||||||||
| Stockholders’ (deficit) equity | ||||||||||||||||||
| Share capital | 6 | 6 | 441 | (g) | 453 | |||||||||||||
| Additional paid-in capital | 68,309 | 336,288 | 155,200 | (a), (b), (c), (e), (f), (g), (h) | 559,797 | |||||||||||||
| Subscription receivable | (34 | ) | - | 34 | (h) | - | ||||||||||||
| Accumulated deficit | (79,272 | ) | 3,431 | (2,041 | ) | (d) | (77,822 | ) | ||||||||||
| Total stockholders’ (deficit) equity | (10,991 | ) | 339,725 | 153,634 | 482,368 | |||||||||||||
| Total liabilities and stockholders’ (deficit) equity | $ | 6,197 | $ | 412,145 | $ | 145,634 | $ | 563,976 | ||||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.
4
Pro Forma Condensed Combined Statement of Operations
for the six months ended June 30, 2025
(Unaudited)
| Historical | Pro Forma | Management Pro Forma | Pro Forma | |||||||||||||||||||
| (in USD thousands) | Gryphon | ABTC | Adjustments | Adjustments | Note | Combined | ||||||||||||||||
| Revenues | $ | 2,935 | $ | 42,623 | $ | - | $ | - | $ | 45,558 | ||||||||||||
| Cost and expenses | ||||||||||||||||||||||
| Cost of revenues | 3,662 | 26,988 | - | - | 30,650 | |||||||||||||||||
| General and administrative expenses | 4,648 | 18,008 | 5,575 | - | (i), (j), (k) | 28,231 | ||||||||||||||||
| Stock-based compensation expense | 811 | - | (811 | ) | - | (i) | - | |||||||||||||||
| Depreciation expense | 1,586 | 16,375 | 20 | - | (l) | 17,981 | ||||||||||||||||
| Loss on sale of equipment | - | 2,454 | - | - | 2,454 | |||||||||||||||||
| Unrealized (gain) loss on digital assets | (74 | ) | 109,357 | - | (98,168 | ) | (v) | 11,115 | ||||||||||||||
| Total operating expenses | 10,633 | 173,182 | 4,784 | (98,168 | ) | 90,431 | ||||||||||||||||
| Loss from operations | (7,698 | ) | (130,559 | ) | (4,784 | ) | 98,168 | (44,873 | ) | |||||||||||||
| Other income (expense) | ||||||||||||||||||||||
| Unrealized loss on marketable securities | (43 | ) | - | - | - | (43 | ) | |||||||||||||||
| Gain on settlement of accounts payable | 449 | - | - | - | 449 | |||||||||||||||||
| Gain on derivatives | - | 20,862 | (20,862 | ) | (w) | - | ||||||||||||||||
| Merger and acquisition costs | (3,164 | ) | - | 3,164 | - | (k) | - | |||||||||||||||
| Loss on disposal of miners | (83 | ) | - | - | - | (83 | ) | |||||||||||||||
| ABTC merger costs | (989 | ) | - | - | - | (989 | ) | |||||||||||||||
| Interest expense | (9 | ) | - | 9 | - | (m) | - | |||||||||||||||
| Total other income (expense) | (3,839 | ) | 20,862 | 3,173 | (20,862 | ) | (666 | ) | ||||||||||||||
| Loss before provision for income taxes | (11,537 | ) | (109,697 | ) | (1,611 | ) | 77,306 | (45,539 | ) | |||||||||||||
| Provision for income taxes | - | 12,507 | - | - | 12,507 | |||||||||||||||||
| Net loss | $ | (11,537 | ) | $ | (97,190 | ) | $ | (1,611 | ) | $ | 77,306 | $ | (33,032 | ) | ||||||||
| Net loss per share - basic and diluted | $ | (0.16 | ) | $ | $ | - | $ | (n) | $ | (0.01 | ) | |||||||||||
| Weighted average shares outstanding - basic and diluted | 72,517,950 | 4,477,289,500 | - | (n) | 4,549,807,450 | |||||||||||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.
5
Pro Forma Condensed Combined Statement of Operations
for the year ended December 31, 2024
(Unaudited)
| Historical | Pro Forma | Management Pro Forma | Pro Forma | |||||||||||||||||||
| Gryphon | ABTC | Adjustments | Adjustments | Note | Combined | |||||||||||||||||
| Revenue | $ | 20,539 | $ | 71,537 | $ | - | $ | - | $ | 92,076 | ||||||||||||
| Costs and expenses | ||||||||||||||||||||||
| Cost of revenues (excluding depreciation) | 15,818 | 39,509 | 55,327 | |||||||||||||||||||
| General and administrative expenses | 11,267 | 34,486 | 1,885 | - | (o), (p) | 47,638 | ||||||||||||||||
| Stock-based compensation expense | 1,588 | - | (1,588 | ) | - | (o) | - | |||||||||||||||
| Depreciation expense | 11,179 | 22,744 | 38 | - | (q) | 33,961 | ||||||||||||||||
| Unrealized gain on digital assets | (1,566 | ) | (509,303 | ) | 469,308 | (x) | (41,561 | ) | ||||||||||||||
| Total operating expenses | 38,286 | (412,564 | ) | 335 | 469,308 | 95,365 | ||||||||||||||||
| (Loss) income from operations | (17,747 | ) | 484,101 | (335 | ) | (469,308 | ) | (3,289 | ) | |||||||||||||
| Other income (expense) | ||||||||||||||||||||||
| Unrealized loss on marketable securities | (288 | ) | - | (288 | ) | |||||||||||||||||
| Change in fair value of notes payable | (8,058 | ) | - | 8,058 | - | (r) | - | |||||||||||||||
| Interest expense | (915 | ) | (3,489 | ) | 915 | - | (s) | (3,489 | ) | |||||||||||||
| Gain on debt extinguishment | - | 5,966 | - | 5,966 | ||||||||||||||||||
| Gain on derivatives | - | 6,780 | (6,780 | ) | (y) | - | ||||||||||||||||
| Loss on disposal of asset | (146 | ) | - | - | (146 | ) | ||||||||||||||||
| Merger and acquisition cost | (394 | ) | - | (2,009 | ) | - | (t) | (2,403 | ) | |||||||||||||
| Gain on settlement of BTC Note | 6,248 | - | - | 6,248 | ||||||||||||||||||
| Total other income (expense) | (3,553 | ) | 9,257 | 6,964 | (6,780 | ) | 5,888 | |||||||||||||||
| Income (loss) before provision for income taxes | (21,300 | ) | 493,358 | 6,629 | (476,088 | ) | 2,599 | |||||||||||||||
| Provision for income taxes | - | (59,607 | ) | (59,607 | ) | |||||||||||||||||
| Net income (loss) from continuing operations | $ | (21,300 | ) | $ | 433,751 | $ | 6,629 | $ | (476,088 | ) | $ | (57,008 | ) | |||||||||
| Loss from discontinued operations | (4,816 | ) | (4,816 | ) | ||||||||||||||||||
| Net income (loss) | (21,300 | ) | 428,935 | 6,629 | (476,088 | ) | (61,824 | ) | ||||||||||||||
| Net loss per share - basic and diluted | $ | (0.51 | ) | (u) | (0.01 | ) | ||||||||||||||||
| Weighted average shares outstanding - basic and diluted | 41,911,711 | 4,477,289,500 | (u) | 4,519,201,211 | ||||||||||||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.
6
| 1. | Basis of Presentation |
The unaudited pro forma condensed combined financial statements are based on the historical consolidated financial statements of Gryphon and the historical combined financial statements of ABTC, after giving effect to the Transactions using the acquisition method of accounting in accordance with Accounting Standards Codification Topic 805, Business Combinations, (“ASC 805”) and applying the assumptions and adjustments described in the accompanying notes.
| 2. | Accounting Policies |
ABTC’s and Gryphon’s revenue recognition accounting policies are different, as described below. Other than the revenue recognition accounting policy, no other material differences were noted between ABTC’s and Gryphon’s accounting policies. Following the Closing, a more detailed review and comparison of the two companies’ accounting policies will be performed. As a result, additional differences between the accounting policies of the two companies may be identified that, when conformed, could have had a material impact on the accompanying unaudited pro forma condensed combined financial information.
Revenue Recognition
Gryphon and ABTC consider Coinbase Custody Trust Company, LLC (“Coinbase”) to be the primary market for Bitcoin and, thus, use Coinbase to determine the market value of Bitcoin mined in a given day for the purposes of revenue recognition. However, ABTC uses the quoted market price of Bitcoin as of the beginning of a 24-hour period whereas Gryphon uses the average quoted market price of Bitcoin in a 24-hour period. Upon the Closing, ABTC’s policy will be the accounting policy going forward. The impact on Gryphon’s historical consolidated financial statements of this difference is deemed to be immaterial.
| 3. | Preliminary Purchase Consideration Allocation |
Because ABTC is treated as the acquiring company for accounting purposes, ABTC’s assets and liabilities are recorded at their carrying amounts prior to the Closing and the historical operations that are reflected in the unaudited pro forma condensed combined financial information are those of ABTC. Gryphon’s assets and liabilities are measured and recognized at their fair values as of the date of the Closing and combined with the assets, liabilities and results of operations of ABTC following the Closing. The purchase consideration has been determined using the share price of Gryphon Common Stock on August 29, 2025, of $1.54 and the number of shares of Combined Company common stock that would be issued to Gryphon shareholders to achieve the same ownership ratio of the Combined Company. If the transaction had occurred on May 9, 2025, the date of the Merger Agreement, the estimated preliminary fair values of the identifiable assets and liabilities (and related tax impacts) of the Combined Company and the purchase consideration would be as follows (in thousands):
| Assets acquired: | ||||
| Cash and cash equivalents | $ | 678 | ||
| Prepaid expenses | 1,288 | |||
| Marketable securities | 72 | |||
| Digital assets | 917 | |||
| Mining equipment, net | 2,125 | |||
| Deposits | 1,131 | |||
| Total assets | 6,211 | |||
| Total liabilities assumed: | $ | (11,697 | ) | |
| Net assets acquired | $ | (5,486 | ) | |
| Estimated purchase consideration | $ | 140,134 | ||
| Goodwill | $ | 145,620 | ||
7
The consideration for the Transactions is summarized below (in thousands, except share data), assuming the Transactions occurred on August 29, 2025:
| Shares of Combined Company Class A Common Stock issued to ABTC shareholders at an exchange ratio resulting in ABTC shareholders owning 98% of the Combined Company Common Stock | 797,686,817 | |||
| Shares of Combined Company Class B Common Stock issued to ABTC shareholders at an exchange ratio resulting in ABTC shareholders owning 98% of the Combined Company Common Stock | 3,661,124,484 | |||
| Shares of Combined Company Common Stock held by Gryphon shareholders | 90,996,149 | |||
| Total shares of Combined Company Common Stock | 4,549,807,450 | |||
| Gryphon stock price on August 29, 2025 | $ | 1.54 | ||
| Total Combined Company market cap | $ | 7,006,703 | ||
| Purchase consideration to Gryphon shareholders (2% of Combined Company market cap) | $ | 140,134 |
The purchase consideration, for the purposes of presenting the accompanying pro forma condensed combined financial statements, will depend on the market price of Gryphon Common Stock on the date of Closing. The following table illustrates the effects of change in the price of Gryphon Common Stock and the resulting impact on the purchase consideration:
Price
per Common | Purchase Consideration (in thousands) | |||||||
| As presented | $ | 1.54 | $ | 140,134 | ||||
| 20% increase | $ | 1.85 | $ | 168,161 | ||||
| 20% decrease | $ | 1.23 | $ | 112,107 | ||||
| 40% increase | $ | 2.16 | $ | 196,188 | ||||
| 40% decrease | $ | 0.92 | $ | 84,080 | ||||
| 4. | Pro Forma Adjustments |
The pro forma adjustments are based on the management of Gryphon’s and the management of ABTC’s preliminary estimates and assumptions. Actual results, including the final purchase consideration for accounting purposes, may differ significantly from such preliminary estimates and assumptions. Accordingly, the purchase consideration is considered preliminary and may materially change before final determination at the Closing. The changes would affect the values assigned to tangible or intangible assets and the amount of depreciation and amortization expense recorded in the Combined Company’s financial statements.
The pro forma adjustments included in the unaudited pro forma condensed combined balance sheet as of June 30, 2025 are as follows:
| (a) | To reflect the fair value adjustments of Gryphon’s fixed assets acquired by ABTC in the Transactions, offset by accumulated depreciation. |
| (b) | To reflect fair value adjustment of Gryphon’s carrying intangibles, plus the preliminary estimate of intangible assets acquired by ABTC in the Transactions. |
| (c) | To reflect the preliminary estimate of goodwill arising from the excess of the purchase consideration over the fair value of tangible and intangible assets acquired and liabilities assumed by ABTC in the Transactions. |
| (d) | To reflect the accrual of $1.6 million in severance payments in connection with the Transactions. |
| (e) | To reflect the pay down of Gryphon accounts payable and accrued liabilities using funds raised from the sale of shares through at-the-market offerings. |
| (f) | To reflect the cash repayment of Gryphon debt. |
| (g) | Adjustment to reflect the exchange of ABTC Class A Common Stock and ABTC Class B Common Stock for Class A and Class B Common Stock. |
| (h) | To reflect the settlement of subscription receivables with Gryphon investors. |
8
The pro forma adjustments included in the unaudited pro forma condensed combined statement of operation for the six months ended June 30, 2025 are as follows:
| (i) | Reclassification of stock-based compensation expense to be in conformity of ABTC’s presentation. |
| (j) | To record the expense related to $1.6 million in severance payments in connection with the Transactions. |
| (k) | To reclass merger and transaction expenses related to previous merger attempts by Gryphon that were not consummated. |
| (l) | To reflect the impact to depreciation as a result of fair value adjustment to Gryphon property and equipment. |
| (m) | Elimination of interest expense related to Gryphon debt eliminated upon the Closing. |
| (n) | Adjustment to net loss per share - basic and diluted from (1) the issuance of 18,464,164 shares of Gryphon Common Stock underlying certain Gryphon warrants, RSUs, options, and at-the-market issuances and (2) the exchange of 11,002,954 of ABTC Class A Common Stock and 50,500,000 shares of ABTC Class B Common Stock for Class A Common Stock and Class B Common Stock at the exchange ratio resulting in holders of ABTC Common Stock owning approximately 98% of the outstanding equity interests of the Combined Company, on a fully diluted basis. |
The pro forma adjustments included in the unaudited pro forma condensed combined statement of operation for the year ended December 31, 2024 are as follows:
| (o) | Reclassification of stock-based compensation expense to be in conformity of ABTC’s presentation. |
| (p) | To reflect the $0.3 million loss on deposit related to Captus. |
| (q) | To reflect the impact to depreciation as a result of fair value adjustment to Gryphon property and equipment. |
| (r) | To reflect a change in accounting policy related to fair value of Gryphon debt. |
| (s) | Elimination of interest expense related to Gryphon debt eliminated upon the Closing. |
| (t) | To record transaction-related costs related to the Transactions. |
| (u) | Adjustment to net loss per share - basic and diluted from (1) the issuance of 18,464,164 shares of Gryphon Common Stock underlying certain Gryphon warrants, RSUs, options, and at-the-market issuances and (2) the exchange of 11,002,954 of ABTC Class A Common Stock and 50,500,000 shares of ABTC Class B Common Stock for Class A Common Stock and Class B Common Stock at the exchange ratio resulting in holders of ABTC Common Stock owning approximately 98% of the outstanding equity interests of the Combined Company, on a fully diluted basis. |
| 5. | Management Pro Forma Adjustments |
The management pro forma adjustments are based on the management of Gryphon’s and the management of ABTC’s assessment that, in order to fairly present the pro forma information included herein, historical unrealized gains and losses related to Bitcoin should be adjusted to only reflect the mark-to-market impact of Bitcoin accumulated during the historical periods presented, rather than for all Bitcoin accumulated by ABTC since inception of Hut 8, as all Bitcoin accumulated by ABTC until March 31, 2025, was retained by Hut 8 upon the consummation of the Contributions (as described in ABTC’s management’s discussion and analysis of its financial condition and results of operations and ABTC’s unaudited condensed and combined financial statements for the three and six months ended June 30, 2025, included in the Exhibits to the Current Report). Starting April 1, 2025, following the consummation of the Contributions, ABTC began accumulating its own Bitcoin through mining and open-market purchases. Management of Gryphon and the management of ABTC believe that adjusting these gains and losses in the unaudited pro forma condensed combined statements of operations better reflects the current Combined Company’s financial results as (i) the Combined Company intends to accumulate Bitcoin, which would result in mark-to-market impacts on the Combined Company’s balance sheet for each reporting period and (ii) following the Closing, the Combined Company will only retain the Bitcoin accumulated by ABTC following the Transactions.
9
The management pro forma adjustments included in the unaudited pro forma condensed combined balance sheet as of June 30, 2025 are as follows:
None.
The management pro forma adjustments included in the unaudited pro forma condensed combined statement of operation for the six months ended June 30, 2025 are as follows:
| (v) | To normalize the impact from changes in unrealized gains and losses from Bitcoin accumulated by ABTC during the period presented. |
| (w) | To remove the gain on derivatives related to covered call options collateralized by Bitcoin that were legally retained by Hut 8 on March 31, 2025. |
The management pro forma adjustments included in the unaudited pro forma condensed combined statement of operation for the year ended December 31, 2024 are as follows:
| (x) | To normalize the impact from changes in unrealized gains and losses from Bitcoin accumulated by ABTC during the period presented. |
| (y) | To remove the gain on derivatives related to covered call options collateralized by Bitcoin that were legally retained by Hut 8 on March 31, 2025. |
10