Gryphon Digital Mining, Inc. (KERN)·Q1 2024 Earnings Summary

Executive Summary

• Q1 2024 revenue rose 47.5% year over year to $7.49M, driven entirely by self-mining; GAAP net loss was $(11.74)M, or $(0.36) per share, with the loss driven largely by non‑cash items (notably a $(9.64)M change in fair value of notes payable and $3.25M depreciation) while Adjusted EBITDA was positive at $1.90M .
• Operational KPIs were mixed: bitcoin mined declined to 142 (from 212 in Q1 2023), but fleet efficiency improved to 28.5 J/T and self-mining hashrate reached ~0.94 EH/s following upgrades; breakeven cost per BTC rose to ~$34,063 (from ~$12,910) reflecting higher all‑in operating costs per coin in the quarter .
• 2024 outlook maintained: management reiterated a 2024 gross profit projection of ~$16.6M based on $70k BTC price and 550 EH network hashrate assumptions; additionally, the Board authorized a stock repurchase program of up to $5M, a potential support for shares amid expansion toward 10 EH/s .
• Estimate context: S&P Global (Capital IQ) consensus revenue/EPS for Q1 2024 was not available for this newly public structure; we cannot assess a beat/miss vs Street at this time (S&P Global data unavailable).

What Went Well and What Went Wrong

What Went Well

• Efficiency and scale: Completed miner upgrades ahead of schedule, lifting self-mining capacity to ~0.94 EH/s and improving fleet efficiency to 28.5 J/T, supporting longer‑term scale objectives toward 10 EH/s .
• Positive non‑GAAP profitability: Adjusted EBITDA of $1.90M demonstrated underlying operating leverage despite GAAP losses driven by non‑cash items .
• Capital allocation signaling: Announced a $5M stock repurchase program; CEO emphasized confidence in strategy and “accretive growth path towards 10 exahash” in a post‑halving landscape .

Quote: “Gryphon’s industry‑leading operational efficiency resulted in a Q1 breakeven cost per bitcoin of approximately $34,063… [and] improved our average fleet efficiency to 28.5 J/T… a first step on our accretive growth path towards 10 exahash.” — CEO Rob Chang .

What Went Wrong

• Lower BTC production and higher per‑coin cost: Bitcoin mined fell to 142 (from 212), and breakeven cost per BTC rose to ~$34,063 (from ~$12,910), pressuring unit economics despite higher BTC prices .
• GAAP loss driven by non‑cash volatility: A $(9.64)M change in the fair value of notes payable and $3.25M depreciation materially widened the GAAP net loss to $(11.74)M .
• Balance sheet leverage in BTC terms: Current liabilities totaled $30.2M and the company disclosed 303.13 BTC in bitcoin‑denominated debt outstanding as of May 13, 2024, underscoring sensitivity to BTC price moves and operating cash generation .

Financial Results

Headline P&L vs Prior Year and Estimates

Notes: Adjusted EBITDA margin = Adjusted EBITDA / Revenue, derived from cited values . EPS comparison reflects basic and diluted presented equivalently due to losses .

Segment/Revenue Mix

KPIs and Operating Metrics

Driver detail (GAAP to loss): Other expense included a $(9.64)M change in fair value of notes payable and $(0.33)M interest expense; depreciation was $3.25M; collectively these non‑cash/cost items were primary loss drivers .

Guidance Changes

Management also posted a sensitivity matrix for 2024 gross profit on the investor deck; reference for self‑mining sensitivity on BTC price and global hashrate is available in the April 2024 investor presentation .

Earnings Call Themes & Trends

Note: A Q1 2024 webcast was held on May 14, 2024; a transcript was not available in our document set. Replay/webcast link: https://www.webcaster4.com/Webcast/Page/3030/50554 .

Management Commentary

• “Q1/24 marked another quarter of strong execution… [We] expanded our self‑mining hash rate capacity to approximately 0.94 exahash… and improved our average fleet efficiency to 28.5 J/T… Our focus remains on growing our hash rate in a highly accretive manner by leveraging opportunities presented by the post‑halving landscape.” — CEO Rob Chang .
• On capital return: “$5 million share buyback program underscores our commitment to enhancing shareholder value and demonstrates the Board and management team’s confidence in Gryphon’s strategy.” — CEO Rob Chang .
• 2024 outlook: Based on $70k BTC and 550 EH network hashrate, management projects gross profit of approximately $16.6M from current mining operations .

Q&A Highlights

• A transcript was not available in our sources. The company hosted a webcast on May 14, 2024 (replay link above), but no full transcript was filed in our document set for Q1 2024 .

Estimates Context

• We attempted to retrieve S&P Global (Capital IQ) consensus revenue and EPS for Q1 2024 but data was unavailable for this newly public structure; therefore, we cannot assess beat/miss vs Street this quarter. S&P Global consensus unavailable (tool mapping missing).

Prior Two Quarters’ Earnings (for Trend)

• Q4 2023/FY 2023: Company provided FY 2023 results and an investor call on April 1–2, 2024, highlighting $21.1M 2023 mining revenue, FY23 breakeven cost $18,217/BTC, and positive FY23 Adjusted EBITDA of $4.80M; no standalone Q4 2023 SEC 8‑K 2.02 with quarter‑only figures was furnished .
• Q3 2023: Gryphon was private pre‑merger; no SEC Q3 2023 earnings documents were available in our set; merger with Akerna closed February 9, 2024 and public reporting commenced thereafter .

Key Takeaways for Investors

• Underlying operations profitable on an adjusted basis ($1.90M Adj. EBITDA) despite GAAP loss dominated by non‑cash fair‑value changes and depreciation; operational leverage remains tied to BTC price, network hashrate, and fleet efficiency .
• Unit economics tightened: higher breakeven cost per BTC (~$34k) and fewer BTC mined (142) warrant close monitoring post‑halving; continued efficiency and scale upgrades are key to restoring margin per coin .
• Balance sheet sensitivity: 303.13 BTC of BTC‑denominated debt and $30.2M current liabilities highlight the importance of operating cash flow generation and BTC price support; risk management around collateral and volatility is critical .
• Strategy intact: hashrate rose to ~0.94 EH/s and management reiterated the pathway toward 10 EH/s; execution on accretive capacity adds is the primary medium‑term value driver .
• Capital return adds a support: a $5M buyback can provide near‑term technical support and signals confidence; deployment cadence and liquidity will matter in volatile crypto cycles .
• 2024 outlook maintained (~$16.6M gross profit assumption) with published sensitivity; investors should frame near‑term results within BTC price and network difficulty scenarios .

Citations

• Q1 2024 8‑K 2.02 and press release, financial statements, non‑GAAP reconciliations, outlook and call details: .
• FY 2023 press release, investor presentation, outlook reiteration, sensitivity, background and merger context: .