American Bitcoin (ABTC) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01Bitcoin price volatility may affect our ability to effectively manage our growth plans and profitability
2. 02Gryphon’s success depends upon the value of Bitcoin; the value of Bitcoin may be subject to pricing risk and has historically been subject to wide swings
3. 03Regulatory, commercial and technical uncertainties may influence bitcoin prices
4. 04Failure to increase our hashrate may reduce our competitiveness and negatively impact our financial performance
5. 05The adoption and long-term viability of digital asset networks is uncertain, and a decline in their growth or acceptance could negatively impact our business and the value of our stock
6. 06Geopolitical and economic crises could lead to increased uncertainty, large-scale selloffs of digital assets and a decline in bitcoin’s value, negatively impacting our business and stock price
7. 07Bitcoin mining hardware experiences wear and tear over time, requiring periodic repairs or replacement to maintain efficiency. Additionally, as mining technology evolves, we must invest in newer, more efficient mining equipment to remain competitive, which requires significant capital expenditures
8. 08Bitcoin network forks, where the blockchain splits into two separate networks, could cause disruptions and negatively impact our business
9. 09A 51% attack on the Bitcoin network could undermine security and market confidence
10. 10If a 51% attack were successfully executed, it could lead to a loss of confidence in bitcoin’s security and reliability, causing its price to drop significantly. Such an event could also prompt regulatory restrictions on cryptocurrency mining and trading, further exacerbating the negative impact on our business
11. 11Noise generated by our mining operations poses regulatory, legal, operational and reputational risks
12. 12We may experience liquidity constraints and need additional capital, which may not be available to us on favorable terms, or at all
13. 13The lack of regulation of digital asset exchanges which Bitcoin, and other cryptocurrencies, are traded on, may expose Gryphon to the effects of negative publicity resulting from fraudulent actors in the cryptocurrency space, and can adversely affect an investment in Gryphon
14. 14We have engaged in, and may continue to engage in, strategic acquisitions and other transactions that could disrupt our business, dilute our stockholders, strain our financial resources and harm our operating results
15. 15The Bitcoin market is exposed to financially troubled cryptocurrency-based companies
16. 16The lack of legal recourse and insurance for our digital assets increases the risk of total loss in the event of theft or destruction
17. 17There is a lack of liquid markets for, and possible manipulation of, blockchain/cryptocurrency-based assets
18. 18Acceptance and/or widespread use of Bitcoin are uncertain
19. 19The bitcoin reward for successfully uncovering a block will halve several times in the future and Bitcoin value may not adjust to compensate Gryphon for the reduction in the rewards Gryphon receives from its mining efforts
20. 20Gryphon aims to mitigate the impacts of halving by maintaining a breakeven profitability floor far below the network average. To do so, Gryphon has developed and implemented a curtailment agreement with its hosting partners to maximize the marginal profitability of its machines
21. 21Cryptocurrencies, including Bitcoin, face significant scaling obstacles that can lead to high fees or slow transaction settlement times
22. 22Transaction fees may decrease demand for Bitcoin and prevent expansion that could adversely impact an investment in Gryphon
23. 23The price of Bitcoin may be affected by the sale of Bitcoin by other vehicles investing in Bitcoin or tracking Bitcoin markets
24. 24To the extent that other cryptocurrencies are introduced into the market, gain traction and are supported by the deployment of significant resources, the success of any such cryptocurrency could lead to a decrease in demand and the potential exclusion of existing cryptocurrencies, such as Bitcoin
25. 25If a malicious actor or botnet obtains control in excess of 50% of the processing power active on any digital asset network, including the Bitcoin network, it is possible that such actor or botnet could manipulate the blockchain in a manner that adversely affects an investment in Gryphon
26. 26The decentralized nature of cryptocurrency systems may lead to slow or inadequate responses to crises, which may negatively affect Gryphon’s business
27. 27The impact of geopolitical and economic events on the supply and demand for Bitcoin is uncertain
28. 28Gryphon faces risks of Internet disruptions, which could have an adverse effect on the price of Bitcoin
29. 29Fluctuations in the price of bitcoin may significantly influence the market price of our bitcoin holdings and therefore, the price of our common stock
30. 30If we fail to grow our hash rate, we may be unable to compete, and our results of operations could suffer

Risks Related to Operations

1. 31Gryphon is an early-stage company and has a limited history of generating profits
2. 32Gryphon may be unable to access sufficient additional capital to fund its operations or for future strategic growth initiatives
3. 33Since Gryphon began revenue generation in September 2021, management has financed Gryphon’s operations through equity and debt financing and the sale of the digital assets earned through mining operations
4. 34Gryphon’s loss of any of its management or advisory team, its inability to execute an effective succession plan, or its inability to attract and retain qualified personnel, could adversely affect Gryphon’s business
5. 35Gryphon’s bitcoin may be subject to loss, theft or restriction on access
6. 36Our ability to adopt technology in response to changing security needs or trends and reliance on third party, Bitgo Prime, for custody poses a challenge to the safekeeping of our digital assets
7. 37Incorrect or fraudulent cryptocurrency transactions may be irreversible
8. 38Gryphon may be affected by price fluctuations in the wholesale and retail power markets
9. 39If Gryphon is unable to secure and maintain its power supply at prices or on terms acceptable to it, a material adverse effect on Gryphon’s business, prospects, financial condition, and operating results would occur
10. 40Gryphon’s business is dependent on a small number of digital asset mining equipment suppliers
11. 41Mining machines rely on components and raw materials that may be subject to price fluctuations or shortages, including ASIC chips that have been subject to an ongoing significant shortage
12. 42Gryphon’s reliance primarily on a single model of miner may subject its operations to increased risk of design flaws
13. 43There are risks related to technological obsolescence, the vulnerability of the global supply chain to Bitcoin hardware disruption, and difficulty in obtaining new hardware, which may have a negative effect on Gryphon’s business
14. 44Gryphon’s use of third-party mining pools exposes it to additional risks
15. 45Gryphon relies on hosting arrangements to conduct its business, and the availability of such hosting arrangements is uncertain and competitive and may be affected by changes in regulation in one or more countries
16. 46The mining data centers at which Gryphon maintains its mining equipment may experience damages, including damages that are not covered by insurance
17. 47Gryphon may not be able to compete with other companies, some of whom have greater resources and experience
18. 48Gryphon’s operations, investment strategies and profitability may be adversely affected by competition from other methods of investing in Bitcoin
19. 49The development and acceptance of competing blockchain platforms or technologies may cause consumers to use alternative distributed ledgers or other alternatives
20. 50Gryphon may not adequately respond to price fluctuations and rapidly changing technology, which may negatively affect Gryphon’s business
21. 51There is a possibility of Bitcoin mining algorithms transitioning to proof of stake validation and other mining related risks, which could make Gryphon less competitive and ultimately adversely affect Gryphon’s business
22. 52Gryphon may not be able to realize the benefits of forks. Forks in a digital asset network may occur in the future which may affect the value of bitcoin held by Gryphon
23. 53The impacts of climate change may result in additional costs or risks
24. 54Terminations of agreements with hosting partners may materially our operations, financial condition, and results of operations
25. 55Restrictive covenants in the New Loan Agreement and Notes may limit our operating flexibility and ability to engage in certain transactions that may be in our long-term best interest

Risks Related to Governmental Regulation and Enforcement

1. 56As cryptocurrencies may be determined to be investment securities, Gryphon may inadvertently violate the Investment Company Act of 1940 and incur large losses as a result and potentially be required to register as an investment company or terminate operations and Gryphon may incur third-party liabilities
2. 57Banks and financial institutions may not provide banking services, or may cut off services, to businesses that engage in Bitcoin-related activities or that accept bitcoin as payment, including financial institutions of investors in Gryphon’s common stock
3. 58It may be illegal now, or in the future, to acquire, own, hold, sell or use bitcoin, ether, or other cryptocurrencies, participate in blockchains or utilize similar cryptocurrency assets in one or more countries, the ruling of which would adversely affect Gryphon
4. 59Gryphon’s interactions with a blockchain may expose Gryphon to specially designated nationals or blocked persons or cause Gryphon to violate provisions of law that did not contemplate distributed ledger technology
5. 60Increased scrutiny and changing expectations from stockholders with respect to our environmental, social and governance (“ESG”) practices and the impacts of climate change may result in additional costs or risks
6. 61Targeted energy regulations and taxes could increase our costs and adversely affect our business
7. 62Gryphon’s management and compliance personnel have limited experience handling a listed cryptocurrency mining-related services company

Risks Related to Pending Acquisitions

1. 63If completed, the Captus Acquisition may not achieve its intended results and may result in us assuming unanticipated liabilities
2. 64The transactions contemplated by the Captus Agreement are subject to conditions that may not be satisfied on a timely basis or at all. Failure to complete the transactions contemplated by the Captus Agreement could have material and adverse effects on us
3. 65We will be subject to business uncertainties while the Captus Acquisition is pending, which could adversely affect our business
4. 66We expect to incur significant transaction costs in connection with the Captus Acquisition

Risks Related to Gryphon’s Securities

1. 67Our stock price is volatile and subject to significant fluctuations
2. 68The stock price of the Company’s common stock may be volatile or may decline regardless of its operating performance and you may not be able to resell your shares at or above the purchase price
3. 69Gryphon’s operating results may fluctuate significantly or may fall below the expectations of investors or securities analysts, each of which may cause the Company’s stock price to fluctuate or decline
4. 70Gryphon’s executive officers, directors and principal stockholders, if they choose to act together, will continue to control or significantly influence all matters submitted to stockholders for approval
5. 71Current or future litigation may harm our financial condition or results of operations
6. 72The issuance of shares of our common stock pursuant to the New Loan Agreement, Notes and Advisory Agreement may result in significant dilution to our stockholders
7. 73Sales of a substantial number of shares of Gryphon’s common stock in the public market or the perception that these sales might occur could significantly reduce the market price of Gryphon’s common stock and impair Gryphon’s ability to raise adequate capital through the sale of additional equity securities
8. 74Future sales and issuances of Gryphon’s common stock or rights to purchase common stock, including in connection with pending acquisitions or pursuant to Gryphon’s equity incentive plan, could result in dilution of the percentage ownership of its stockholders and could cause Gryphon’s stock price to fall
9. 75Delaware law and provisions in Gryphon’s amended and restated certificate of incorporation and bylaws could make a merger, tender offer or proxy contest difficult, thereby depressing the trading price of Gryphon’s common stock
10. 76To the extent that any such claims may be based upon federal law claims, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder
11. 77Gryphon does not currently intend to pay dividends on its common stock, and, consequently, your ability to achieve a return on your investment will depend on appreciation, if any, in the price of Gryphon’s common stock
12. 78There can be no assurance that we will continue to be able to comply with the continued listing standards of Nasdaq
13. 79Uncertainty in accounting standards for bitcoin and other cryptocurrencies may lead to financial restatements and business disruptions
14. 80Gryphon’s management is required to devote a substantial amount of time to comply with public company regulations