XML 23 R17.htm IDEA: XBRL DOCUMENT v3.25.3
Derivatives
 9 Months Ended
Sep. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives

Note 8. Derivatives

 

The following table presents the Company’s Unaudited Condensed and Combined Balance Sheets classification of derivatives carried at fair value:

 

(in USD thousands)

 

 

 

September 30, 2025

 

 

December 31, 2024

 

Derivative

 

Balance Sheet Line

 

Asset

 

 

Liability

 

 

Asset

 

 

Liability

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bitcoin redemption option

 

Derivative asset

 

$

63,723

 

 

$

—

 

 

$

18,076

 

 

$

—

 

Covered call options

 

Derivative liability

 

 

—

 

 

 

—

 

 

 

—

 

 

 

18,437

 

Warrant liability

 

Warrant liability

 

 

—

 

 

 

571

 

 

 

—

 

 

 

—

 

Total derivatives

 

 

 

$

63,723

 

 

$

571

 

 

$

18,076

 

 

$

18,437

 

 

The following table presents the effect of derivatives on the Company’s Unaudited Condensed and Combined Statements of Operations and Comprehensive Income (Loss):

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(in USD thousands)

 

Statement of

 

September 30,

 

 

September 30,

 

Derivative

 

Operations Line

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bitcoin redemption option

 

(Loss) gain on derivatives

 

$

(1,999

)

 

$

—

 

 

$

18,863

 

 

$

—

 

Covered call options

 

(Loss) gain on derivatives

 

 

—

 

 

 

2,704

 

 

 

—

 

 

 

19,923

 

Warrant liability

 

Gain on warrant liability

 

 

—

 

 

 

—

 

 

 

26

 

 

 

—

 

Total derivatives

 

 

 

$

(1,999

)

 

$

2,704

 

 

$

18,889

 

 

$

19,923

 

 

Bitcoin redemption option

 

During December 2024, pursuant to the Parent Bitmain Purchase Agreement, Parent pledged approximately 968 Bitcoin attributed to the Company at the time 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 price, during a redemption period that started on the shipment date of the purchased ASIC miners and originally ended three months thereafter. The Company 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, the Company no longer recorded the Bitcoin pledged by Parent.

 

As part of the ABTC Bitmain Purchase Agreement, in August and September 2025, the Company pledged Bitcoin with Bitmain in connection with a purchase of the Bitmain Miners. The total amount of Bitcoin pledged was approximately 2,385 Bitcoin. The Company pledged the Bitcoin in three tranches, two tranches in August 2025 and one tranche in September 2025. The Company has the option to redeem the pledged Bitcoin at a mutually agreed upon price starting from and for up to twenty-four months after the day immediately following each pledge date. The Company accounted for this Bitcoin redemption option as a Level 2 derivative asset as noted in Note 2. Basis of presentation, summary of significant accounting policies and recent accounting pronouncements – Derivatives. As part of the purchase of the Bitmain miners, the Company paid cash of approximately $46.0 million as a deposit and for certain expenses attributable to Parent. The Company had an option to replace the $46.0 million cash paid with a Bitcoin pledge on or before November 5, 2025. In October 2025, the Company exercised its option to replace the $46.0 million cash paid with a Bitcoin pledge by pledging an additional 391 Bitcoin at a mutually agreed upon fixed price, and Bitmain refunded the Company’s $46.0 million comprising of the deposit and certain expenses attributable to Parent.

 

The following table provides a summary of activity and change in fair value of the Bitcoin redemption option related to the Parent Bitmain Purchase Agreement (previously a Level 3 derivative asset):

 

 

Nine Months Ended

 

(in USD thousands)

 

September 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, which was attributed to the Company at the time, 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 pledged the Bitcoin attributed to the Company as collateral with one of its Bitcoin custodians in a quantity equal to the notional amount for these covered call options sold. The collateral continued to be pledged in the same manner after the roll. Following the effectiveness of the Transactions, Parent retained the pledged Bitcoin and the covered call options. The covered call options exchanged in the roll were only exercisable upon the date of expiry, automatically exercised if the underlying reference price was greater than the strike price of the call option, and settled with delivery of the underlying Bitcoin. The reference price of the original covered call options was the CME CF Bitcoin Reference Rate (BRR) at 4:00pm London time for a given date and the reference price for the new call options was 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 nine months ended September 30, 2025, covered call options on 1,500 Bitcoin notional expired with the underlying reference price below their strike price and the Company recorded an realized gain of $12.1 million. As of September 30, 2025, the Company had no outstanding covered call options.

 

Warrant liability

 

In connection with the Business Combination, the Company assumed 1,373,374 warrants to purchase Gryphon common stock (the “Gryphon Warrants”) outstanding immediately before the Business Combination. Following the completion of the Business Combination, the warrant holders are entitled to receive, upon exercise, in lieu of Gryphon common stock, shares of Class A common stock of the Company. The Gryphon Warrants have an exercise price of $1.50 per share, after giving effect of the Business Combination. These warrants expire in January 2035.

 

As of September 30, 2025, there were 108,587 Gryphon Warrants outstanding.

 

These warrants meet the definition of a derivative under ASC 815, and due to the terms of the warrants, are required to be liability classified. The warrant liabilities are carried at fair value, and are Level 3 liabilities as noted in Note 2. Basis of presentation, summary of significant accounting policies and recent accounting pronouncements.

 

As of September 30, 2025, the Company estimated the fair value of the warrant liability using the Black-Scholes pricing model with the following inputs:

 

 

 

September 30, 2025

 

Exercise price

 

$

1.50

 

Expected volatility

 

 

122.2

%

Risk-free interest rate

 

4.02% – 4.10%

 

Expected term

 

 

0.25

 

Dividend yield

 

 

0

%

 

The following table provides a summary of activity and change in fair value of the Company’s warrant liability (Level 3 derivative liability), and there was no activity during the three months and nine months ended September 30, 2024:

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

(in USD thousands)

 

2025

 

 

2025

 

Balance, beginning of period

 

$

—

 

 

$

—

 

Warrants assumed in Business Combination

 

 

9,011

 

 

 

9,011

 

Exercise of warrants

 

 

(8,414

)

 

 

(8,414

)

Change in fair value

 

 

(26

)

 

 

(26

)

Balance, end of period

 

$

571

 

 

$

571