ABTCAmerican Bitcoin

Gryphon’s business is subject to extensive laws, rules, regulations, policies, orders, determinations, directives, treaties, and legal and regulatory interpretations and guidance, as well as counterparty risk in the markets in which it operates, including regulatory aspects from financial services, federal energy and other regulators, the SEC, the CFTC, credit, crypto asset custody, exchange, and transfer, cross-border and domestic money and crypto asset transmission, consumer and commercial lending, usury, foreign currency exchange, privacy, data governance, data protection, cybersecurity, fraud detection, antitrust and competition, bankruptcy, tax, anti-bribery, economic and trade sanctions, anti-money laundering, and counter-terrorist financing, as well as the same regulatory risks applicable to counterparties, most notably hosting businesses, as well as the recent economic issues and bankruptcies befalling some in this industry. Many of these legal and regulatory regimes were adopted prior to the advent of the internet, mobile technologies, crypto digital assets, and 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, another and may conflict with one another. Moreover, For example, the complexity Clarity Act was passed by the U.S. House of Representatives in July 2025, which would, if enacted, regulate digital asset markets and evolving digital asset trading platforms 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 whether any new law will lead to Congress granting additional authorities to the SEC or other regulators, what the nature of Gryphon’s business such additional authorities might be, how additional legislation and/or regulatory oversight might impact the ability of digital asset markets to function, or how any new regulations or changes to existing regulations might impact the value of digital assets generally and the significant uncertainty surrounding the Bitcoin specifically. The consequences of increased federal regulation of the crypto economy requires Gryphon to exercise its judgment as to whether certain laws, rules, digital assets and regulations apply to us, digital asset activities could have a material adverse effect on our business, financial condition, and it is possible that governmental bodies and regulators may disagree with Gryphon’s conclusions. To the extent Gryphon has not complied with such laws, rules, and regulations, it could be subject to significant fines, revocation results of licenses, limitations on its products and services, reputational harm, and other regulatory consequences, each of which may be significant and could adversely affect its business, operating results, and financial condition. operations.

Mining revenues Loss on digital assets was $227.1 million for the year ended December 31, 2025 compared to gains on digital assets of $509.3 million for the year ended December 31, 2024. In connection with the Transactions on March 31, 2025, Hut 8's Bitcoin remained with Hut 8. As a result, immediately following the effectuation of the Transactions, we held no Bitcoin on our balance sheet. Starting April 1, 2025, we began to build our own strategic Bitcoin reserve. The loss on digital assets for the year ended December 31, 2025 was primarily attributable to the decline in the price of Bitcoin, which decreased from approximately $93,354 as of December 31, 2024 to $20,539,000 approximately $87,498 as of December 31, 2025. Additionally, the price of Bitcoin at the time of Transactions on March 31, 2025 was approximately $82,534 per Bitcoin, which represents a decrease from the price as of December 31, 2024, and resulted in a $112.4 million loss in digital assets recognized for the period of time up to the Transactions during the twelve months ended December 31, 2025. In contrast, gains on digital assets of $509.3 million for the year ended December 31, 2024 from $21,052,000 for the year ended December 31, 2023. The decrease in mining revenues of $513,000 is due to a combination of factors. The average value of bitcoin mined for the year ended December 31, 2024 was $66,000 compared to $29,000 for the year ended December 31, 2023, were driven by an increase in the price of $37,000, or 128%. As of December 31, 2024, the Company had Bitcoin from approximately 8,800 miners compared to approximately 8,300 $42,288 as of December 31, 2023. However, these increases in operational miners and revenue recognized per bitcoin earned were offset by the increase in global hashrate 2023 to approximately $93,354 as well as the 50% reduction in block rewards due to the halving event in April of December 31, 2024. .

In November 2024, January 2025, the FASB issued Update ASU 2024-03, “Income Statement - Reporting 2025-01, Income Statement—Reporting Comprehensive Income - Expense Income—Expense Disaggregation Disclosures (Subtopic 220-40)”. 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 amendments require the disclosure of specified information about certain costs and expenses including prescribed categories include purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depreciation, depletion, and amortization recognized as part of oil and gas related to oil-and-gas producing activities. It also requires ASU 2024-03 is effective for the disclosure of a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively as well as the total amount of selling expenses and, in first annual reporting periods, an entity’s definition of selling expenses. The standard will be effective for fiscal years period beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. We are Early adoption is permitted. The Company is currently evaluating assessing the impact that of adopting the adoption of the provisions of the ASU will have on our consolidated financial statements. We are currently evaluating the impact that the adoption of the provisions of the ASU will have on our consolidated financial statements. standard.

The Company is subject at times to various claims, lawsuits, and governmental proceedings relating to the Company’s business and transactions arising in the ordinary course of business. The Company cannot predict the final outcome of such proceedings. Where appropriate, the Company vigorously defends such claims, lawsuits, and proceedings. Some of these claims, lawsuits lawsuits, and proceedings seek damages, including, including consequential, exemplary, or punitive damages, in amounts that could, if awarded, be significant. Certain of the claims, lawsuits, and proceedings arising in the ordinary course of business are covered by the Company’s insurance program. The Company maintains the property and various types of liability insurance in an effort to protect the Company from such claims. In terms of any matters where there is no insurance coverage available to the Company, or where coverage is available and the Company maintains a retention or deductible associated with such insurance or elects not to purchase such insurance, the Company may establish an accrual for such loss, retention, or deductible based on currently 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, statements and the amount of loss is reasonably estimable, then an accrual for the cost to resolve or settle these claims is recorded by the Company in the accompanying balance sheets. Combined Balance Sheets. If it is reasonably possible that an asset may be impaired as of the date of the financial statement, then the Company discloses the range of possible loss. Expenses related to the defense of such claims are recorded by the Company as incurred and included in the accompanying statements Combined Statements of operations. Operations and Comprehensive Income (Loss). Management, with the assistance of outside counsel, may, may from time to time adjust such accruals according to new developments in the matter, court rulings, or changes in the strategy affecting the Company’s defense of such matters. On the basis The Company has established an accrued liability for certain legal and regulatory proceedings. The possible loss or range of current information, the Company does not believe there is a reasonable possibility that other than with regard to the Class Action described below, any material loss, loss resulting from such litigation and regulatory proceedings, if any, will result from in excess of the amounts accrued is inherently unpredictable and uncertain. Consequently, no reasonable estimate can be made of any claims, lawsuits, and proceedings to which possible loss or range of loss in excess of the Company is subject to either individually, or in the aggregate. accrual.