Gryphon; The start of an Ecominting Empire or just a starter
DISCLAIMER
This is in no way, shape or form, fluid and function, an analytical, qualitative or intelligent compte rendu. There is absolutely no financial advice here because the only financial advice I can give is to research, research, and research. The purpose of this analysis is to serve as an example of an investigation into a company's background, fundamentals, and assets through various lenses to determine if it is a good potential investment for you. The function of this write up is to serve as an educational resource for investors looking to understand how to find good investments. So read and learn some things about a company that might just be the first of many, or the first and last before the next wave of entries.
Pre-Thesis
The holding company, 3D Sphere is a zombie company. There is no way this company has been doing anything other than filing necessary SEC documents. The company website hasn't been updated in years, and the prospectus sentence on what 3D Sphere bring to the table starts with gibberish and ends with NASDAQ listing. Eventually someone is going to come to the realization that ANY was garbage and this was some cheap way for Gryphon to get listed.
Thesis
ANY is a cheap ticket to the big boy table for Gryphon to get some money quickly and to capitalize on their own personal wealth. For something that cant cost as much as $50 million dollars, to be brought down to something as low as $3 million dollars, and then get a huge payoff on the initial investment anyways? Yeah, the system is broken and NASDAQ, NYSE and every other old exchange need to go. Trust that I have deleted 3 paragraphs of that tangent at this point.
Gryphon is an idea resting on the laurels on a guy our age or younger with about as much legitimate business experience as we do. But I think that is a cheap version of the real picture. Rob Chang is definitely unqualified on paper to be at this scope, and certainly has a lot of learning to do, and there are a lot of stumbles he and the rest of the team at Gryphon will face; but I think he is the better equipped to lead this business than his peers. The truth is that Crypto Minting is not a sexy business, and that someone keeping a level head and a real business plan is exactly what the field needs. A vast majority of the Crypto Minting field is privately held server farms, small groups ranging from your toaster to mega-clusters of warehouses in China.
As much as it pains my ideals to say this, having a public hand around a companies throat, especially in a field as important in the future as Crypto Minting, is a good way to control them on both ends. With the invention and adoption of staking, allowing individual holders to give their representative power to specific mining groups, this is allows players inside and outside a level of control; control by ESG-minded investors is a good thing.
My personal assessment of Gryphon Mining is that Rob Chang will be the CEO and major leader of the entire operation, with co-founder Dan Tolhurst playing a more quiet role, and Brittany Kaiser, independent Chair of the board (meaning she doesn't do anything), will be the vocal and outspoken voice for getting ESG investors on both ends. Everything coming out of Gryphon is going to be on message and all about a greener and more ethically diverse and inclusive world. Even if they aren't and even if they don't.
The business plan is well laid out, extremely simple and the team are hungry. Anyone interested in investing in Gryphon, one way or the other, should real their investor presentation. It is clean, extremely thorough, written by an accountant with an eye for breaking down every single step, meaning they have done it before. The real question becomes, can they succeed at scale, and what do they do with all that money? Even at modest projected rates of a $60k USD/Bitcoin by 2025, they will have ~$117 million dollars of pre-tax cash flow. They have a clear interest in expanding and taking over the market in their investor presentation, language likely mimicked in their private funding meetings. While Rob Chang is the Captain, it is on Dan Tolhurst's ship. Gryphon is going to be a mix of how Chang and Tolhurst dance together through the steps of getting off the ground and through the next 6 months, and how they find a sustainable rhythm to grow together in.
While elements of Gryphon are concrete, such as their profitability, their position in the field is what remains to be seen. Gryphon is poised to be the first of a large rise of Eco-minters. If they can manage their position in growing with, or ahead, of the rest, then Gryphon has an extremely bright future. Personally, there is too much money in geriatric financial businesses that is going to realize they need to be a part of the future, not the past. Even the big banks need to entertain the idea that becoming major Cryptominters themselves could be their best chance at a future. I believe Gryphon can get themselves together and off the ground, anything past that is something that every interested investor needs to keep an eye on.
The ~History of Gryphon Digital Mining
Gryphon Digital Mining is a brand new entity with $14M in Series A funding from Alpha Sigma with private backing from the Founder along with the personal wealth of the CEO, and a big ol' loan. Anything else is speculation and a rough sketch of a statue with a sheet over it. So here's my picture:
Rob Chang comes on as CFO of Riot Blockchain, which blows up for obvious reasons. That stock goes on a whirlwind and its run by a megalomaniac, but Rob Chang turns out to be really good at this. This is basic college accounting, squeeze as much out of as little and fine tune the excel workbook to figure out how much money they can turn around given a bitcoin price at any given time.
Then comes Dan Tolhurst, a man looking for the next step in his young capitalist life. Having had some success at Disney and Netflix, having amassed a personal fortune and a little business know how thru various life avenues, decides to throw together a bitcoin mining business, make it look ESG and pretty, build it up. While we are arguing over how much Bitcoin should be worth, whether $100k by decades end, or by years end, the guy wants to mine the bitcoin and laugh about the argument all together.
Throwing this whole operation as cleanly and quickly as they did impresses me: The quick reverse take over, the business plan from theoretical to actual, setting up temporary mining before the August delivery and lengthy start-up. From birth to here, ~$300 million market capitalization, all in under 6 months. Now we have to decide if this historical run stops here, or continues on. Just kidding, now we have to speculate, we have to guess, analyze every little move, every little word, every tweet to figure one thing out: Is Gryphon real or fake?
Gryphon Business Plan
gryphondigitalmining...ne-2021-Deck-v10.pdf
Simple, ~10 minute investor presentation, and is all the information we have currently. Following the tweets of the Trio, it looks like they are extremely busy getting through the hoops and putting everything together. I would expect a significant amount of information to come out in the coming weeks, not just about the M&A, but about the full extent of the business plan.
The basic premise is to build a crypto-mining platform, primarily focusing on bitcoin, with direct renewable energy supply lines, that they also hope to own. They break down the cost of business for crypto-mining and show it is overwhelmingly energy. By combining renewable energy sources with cryptominting, they hope to become the largest bitcoin minter with a completely carbon neutral/negative footprint. While Gryphon's investor deck is all we get so far, what we do know is that 8,727 Bitcoinminters are in production and on their way due ~August 2021.
Gryphon has thrown together a backup plan of renting computational space on privately held bitcoin minting farms, that way investor funds are secured by a secondary source of income. Also, Rob Chang probably isn't giving Bitmain their money until machine delivery, so this is an easy way to actively invest your previously invested money. This is really smart, but really dangerous. If bitcoin goes dead, this goes deader, so if you don't believe in bitcoin, and aren't comfortable with the thought of that risk, this might not be the company for you, right now, but it might be worth checking back in a few months. If Chang and Tolhurst can work, and grow together, Gryphon is going to succeed by nature. Not to say they won't be outshined by competitors that can throw a lot more money around than anything Gryphon could scrounge together, and hurt exposure for growth; but Gryphon's profitability is cemented.
There are only two reasons Chang and Tolhurst are going public with Gryphon like this:
1) Tolhurst and Chang have realized that the stock market can be genuinely utilized as a method for getting seed investment funding if the investor base is properly treated. Rather than take a large loan from a private bank or VC funding, just for them to take a massive share of the profits for no work done, head straight to the market for the funding, no interest rate, make money on every step of the process.
2) This is a pump and dump and there is no sustainable plan behind it.
Given the almost arrogant naivete tone of Dan Tolhurst, and a very easy self-image for taking a few million dollars and turning it into a few billion dollars within ~10 years, my guess is he is on board all the way. And while Chang has no real history or reason to garner so much faith or trust from a public eye, the presentations coming from him feel more like excel sheet data than exciting marketing verbal assaultage. At this point, the more nitty gritty the better. If all Gryphon did was offer a dividend as a derivative of bitcoin, they would deserve something a bit higher than what they have now. If Bitcoin calms down to a 15% YOY return starting with 30k now like Gryphon suggests, which is extremely conservative, although right now it feels harder and harder to agree with that, they stand to make $117 million in cash (slide 25). That is the kind of free money that allows someone to build empires. I don't have a reason to believe Tolhurst & Chang are capable of building empires, but I don't have a reason why they can't learn how to.
To summarize the plan:
1) Start renting space on existing bitcoinminters to begin cash stream
2) Setup currently owned minters and begin in house production
3) Research alternative revenue streams with profit from minting
4) Develop plan for expansion of minting and energy production, fulfill total vertical integration
Hopefully we get more in the coming weeks, so definitely keep an eye on EDGAR for that.
Bear Theory
The only real bear theory a reasonable investor should entertain is that the company will get off the ground and spend the next few years making failed launches to something bigger. At the current price channel, and ranging from a ~200M to ~500M is extremely safe as the business is stupidly easy and Minters don't really compete against each other the way the market is used to. Furthermore, the head and shoulders collapse or crypto and bitcoin is extremely risky given the international adoption of Bitcoin and embrace of the growing global economy for a global synonymous cryptocurrency.
If you are looking for a stock to short, I would avoid (any) this one, just sit back and watch elliot waves present themselves. I would not be willing to bet money on that first peak being the highest (especially as I bet a little bit that it is not).
Bull Theory
It is here that I will disclose a position in ANY (as of 6/21/2021) of 1,000 shares at $3.00 (no one gets it right always y'all, talking about failures is as important as talking about successes, as is learning from them). I don't see ANY going to "the moon" anytime soon, but I definitely can see a return to the ~$4-5/share range given a reasonable cup and handle upon more news. Tied with the unresolved OBV from the major trading day, and overall non-sensical behaviours of the market right now in general, I see ANY for the short term potential. I like the idea of Gryphon, and the team seems like a fun bunch of keep an eye on, but there are too many risks and unknowns for me to make a major claim or stake in them as of now, unless I had the ability to directly mold/work with them. I am a hands-on person, and I aim to become an active investor; Gryphon presents the perfect opportunity for a guided hand. Tolhurst & Chang could use more help than they realize. Furthermore, I believe that right now is the perfect time to go bigger than smaller. China's crackdown presents the greatest opportunity to become the perfect vehicle for crypto-minting. Additionally, what Gryphon is building isn't just a bitcoin company, even they admit that. Gryphon should be looking for billions to directly compete against Riot and Mara right now, not in 5 years. And that right there is the bull theory, the business is backed by too many favourable outcomes, the business is relatively risk adverse in that the revenue for bitcoin price is relatively great compared to alternative ventures. Furthermore, with the start of staking, any company giving itself the right name is going to become a giant. That is about as much of a bull theory I can write, because it is at this point that any reader should recognize an obvious skew in narrative tone and lead. I am clearly invested in Gryphon, not just financially, but intellectually. I want Gryphon to succeed because I want what is best for Mother Earth. I can't give you a good bear and bull theory, or rather I could, but I genuinely don't believe in it, and this is one of those points where I can make arguments for both sides of the climate crisis, but one is fake.
So, instead, here is a list of things that I am going to keep an eye on:
This is in no way, shape or form, fluid and function, an analytical, qualitative or intelligent compte rendu. There is absolutely no financial advice here because the only financial advice I can give is to research, research, and research. The purpose of this analysis is to serve as an example of an investigation into a company's background, fundamentals, and assets through various lenses to determine if it is a good potential investment for you. The function of this write up is to serve as an educational resource for investors looking to understand how to find good investments. So read and learn some things about a company that might just be the first of many, or the first and last before the next wave of entries.
Pre-Thesis
The holding company, 3D Sphere is a zombie company. There is no way this company has been doing anything other than filing necessary SEC documents. The company website hasn't been updated in years, and the prospectus sentence on what 3D Sphere bring to the table starts with gibberish and ends with NASDAQ listing. Eventually someone is going to come to the realization that ANY was garbage and this was some cheap way for Gryphon to get listed.
Thesis
ANY is a cheap ticket to the big boy table for Gryphon to get some money quickly and to capitalize on their own personal wealth. For something that cant cost as much as $50 million dollars, to be brought down to something as low as $3 million dollars, and then get a huge payoff on the initial investment anyways? Yeah, the system is broken and NASDAQ, NYSE and every other old exchange need to go. Trust that I have deleted 3 paragraphs of that tangent at this point.
Gryphon is an idea resting on the laurels on a guy our age or younger with about as much legitimate business experience as we do. But I think that is a cheap version of the real picture. Rob Chang is definitely unqualified on paper to be at this scope, and certainly has a lot of learning to do, and there are a lot of stumbles he and the rest of the team at Gryphon will face; but I think he is the better equipped to lead this business than his peers. The truth is that Crypto Minting is not a sexy business, and that someone keeping a level head and a real business plan is exactly what the field needs. A vast majority of the Crypto Minting field is privately held server farms, small groups ranging from your toaster to mega-clusters of warehouses in China.
As much as it pains my ideals to say this, having a public hand around a companies throat, especially in a field as important in the future as Crypto Minting, is a good way to control them on both ends. With the invention and adoption of staking, allowing individual holders to give their representative power to specific mining groups, this is allows players inside and outside a level of control; control by ESG-minded investors is a good thing.
My personal assessment of Gryphon Mining is that Rob Chang will be the CEO and major leader of the entire operation, with co-founder Dan Tolhurst playing a more quiet role, and Brittany Kaiser, independent Chair of the board (meaning she doesn't do anything), will be the vocal and outspoken voice for getting ESG investors on both ends. Everything coming out of Gryphon is going to be on message and all about a greener and more ethically diverse and inclusive world. Even if they aren't and even if they don't.
The business plan is well laid out, extremely simple and the team are hungry. Anyone interested in investing in Gryphon, one way or the other, should real their investor presentation. It is clean, extremely thorough, written by an accountant with an eye for breaking down every single step, meaning they have done it before. The real question becomes, can they succeed at scale, and what do they do with all that money? Even at modest projected rates of a $60k USD/Bitcoin by 2025, they will have ~$117 million dollars of pre-tax cash flow. They have a clear interest in expanding and taking over the market in their investor presentation, language likely mimicked in their private funding meetings. While Rob Chang is the Captain, it is on Dan Tolhurst's ship. Gryphon is going to be a mix of how Chang and Tolhurst dance together through the steps of getting off the ground and through the next 6 months, and how they find a sustainable rhythm to grow together in.
While elements of Gryphon are concrete, such as their profitability, their position in the field is what remains to be seen. Gryphon is poised to be the first of a large rise of Eco-minters. If they can manage their position in growing with, or ahead, of the rest, then Gryphon has an extremely bright future. Personally, there is too much money in geriatric financial businesses that is going to realize they need to be a part of the future, not the past. Even the big banks need to entertain the idea that becoming major Cryptominters themselves could be their best chance at a future. I believe Gryphon can get themselves together and off the ground, anything past that is something that every interested investor needs to keep an eye on.
The ~History of Gryphon Digital Mining
Gryphon Digital Mining is a brand new entity with $14M in Series A funding from Alpha Sigma with private backing from the Founder along with the personal wealth of the CEO, and a big ol' loan. Anything else is speculation and a rough sketch of a statue with a sheet over it. So here's my picture:
Rob Chang comes on as CFO of Riot Blockchain, which blows up for obvious reasons. That stock goes on a whirlwind and its run by a megalomaniac, but Rob Chang turns out to be really good at this. This is basic college accounting, squeeze as much out of as little and fine tune the excel workbook to figure out how much money they can turn around given a bitcoin price at any given time.
Then comes Dan Tolhurst, a man looking for the next step in his young capitalist life. Having had some success at Disney and Netflix, having amassed a personal fortune and a little business know how thru various life avenues, decides to throw together a bitcoin mining business, make it look ESG and pretty, build it up. While we are arguing over how much Bitcoin should be worth, whether $100k by decades end, or by years end, the guy wants to mine the bitcoin and laugh about the argument all together.
Throwing this whole operation as cleanly and quickly as they did impresses me: The quick reverse take over, the business plan from theoretical to actual, setting up temporary mining before the August delivery and lengthy start-up. From birth to here, ~$300 million market capitalization, all in under 6 months. Now we have to decide if this historical run stops here, or continues on. Just kidding, now we have to speculate, we have to guess, analyze every little move, every little word, every tweet to figure one thing out: Is Gryphon real or fake?
Gryphon Business Plan
gryphondigitalmining...ne-2021-Deck-v10.pdf
Simple, ~10 minute investor presentation, and is all the information we have currently. Following the tweets of the Trio, it looks like they are extremely busy getting through the hoops and putting everything together. I would expect a significant amount of information to come out in the coming weeks, not just about the M&A, but about the full extent of the business plan.
The basic premise is to build a crypto-mining platform, primarily focusing on bitcoin, with direct renewable energy supply lines, that they also hope to own. They break down the cost of business for crypto-mining and show it is overwhelmingly energy. By combining renewable energy sources with cryptominting, they hope to become the largest bitcoin minter with a completely carbon neutral/negative footprint. While Gryphon's investor deck is all we get so far, what we do know is that 8,727 Bitcoinminters are in production and on their way due ~August 2021.
Gryphon has thrown together a backup plan of renting computational space on privately held bitcoin minting farms, that way investor funds are secured by a secondary source of income. Also, Rob Chang probably isn't giving Bitmain their money until machine delivery, so this is an easy way to actively invest your previously invested money. This is really smart, but really dangerous. If bitcoin goes dead, this goes deader, so if you don't believe in bitcoin, and aren't comfortable with the thought of that risk, this might not be the company for you, right now, but it might be worth checking back in a few months. If Chang and Tolhurst can work, and grow together, Gryphon is going to succeed by nature. Not to say they won't be outshined by competitors that can throw a lot more money around than anything Gryphon could scrounge together, and hurt exposure for growth; but Gryphon's profitability is cemented.
There are only two reasons Chang and Tolhurst are going public with Gryphon like this:
1) Tolhurst and Chang have realized that the stock market can be genuinely utilized as a method for getting seed investment funding if the investor base is properly treated. Rather than take a large loan from a private bank or VC funding, just for them to take a massive share of the profits for no work done, head straight to the market for the funding, no interest rate, make money on every step of the process.
2) This is a pump and dump and there is no sustainable plan behind it.
Given the almost arrogant naivete tone of Dan Tolhurst, and a very easy self-image for taking a few million dollars and turning it into a few billion dollars within ~10 years, my guess is he is on board all the way. And while Chang has no real history or reason to garner so much faith or trust from a public eye, the presentations coming from him feel more like excel sheet data than exciting marketing verbal assaultage. At this point, the more nitty gritty the better. If all Gryphon did was offer a dividend as a derivative of bitcoin, they would deserve something a bit higher than what they have now. If Bitcoin calms down to a 15% YOY return starting with 30k now like Gryphon suggests, which is extremely conservative, although right now it feels harder and harder to agree with that, they stand to make $117 million in cash (slide 25). That is the kind of free money that allows someone to build empires. I don't have a reason to believe Tolhurst & Chang are capable of building empires, but I don't have a reason why they can't learn how to.
To summarize the plan:
1) Start renting space on existing bitcoinminters to begin cash stream
2) Setup currently owned minters and begin in house production
3) Research alternative revenue streams with profit from minting
4) Develop plan for expansion of minting and energy production, fulfill total vertical integration
Hopefully we get more in the coming weeks, so definitely keep an eye on EDGAR for that.
Bear Theory
The only real bear theory a reasonable investor should entertain is that the company will get off the ground and spend the next few years making failed launches to something bigger. At the current price channel, and ranging from a ~200M to ~500M is extremely safe as the business is stupidly easy and Minters don't really compete against each other the way the market is used to. Furthermore, the head and shoulders collapse or crypto and bitcoin is extremely risky given the international adoption of Bitcoin and embrace of the growing global economy for a global synonymous cryptocurrency.
If you are looking for a stock to short, I would avoid (any) this one, just sit back and watch elliot waves present themselves. I would not be willing to bet money on that first peak being the highest (especially as I bet a little bit that it is not).
Bull Theory
It is here that I will disclose a position in ANY (as of 6/21/2021) of 1,000 shares at $3.00 (no one gets it right always y'all, talking about failures is as important as talking about successes, as is learning from them). I don't see ANY going to "the moon" anytime soon, but I definitely can see a return to the ~$4-5/share range given a reasonable cup and handle upon more news. Tied with the unresolved OBV from the major trading day, and overall non-sensical behaviours of the market right now in general, I see ANY for the short term potential. I like the idea of Gryphon, and the team seems like a fun bunch of keep an eye on, but there are too many risks and unknowns for me to make a major claim or stake in them as of now, unless I had the ability to directly mold/work with them. I am a hands-on person, and I aim to become an active investor; Gryphon presents the perfect opportunity for a guided hand. Tolhurst & Chang could use more help than they realize. Furthermore, I believe that right now is the perfect time to go bigger than smaller. China's crackdown presents the greatest opportunity to become the perfect vehicle for crypto-minting. Additionally, what Gryphon is building isn't just a bitcoin company, even they admit that. Gryphon should be looking for billions to directly compete against Riot and Mara right now, not in 5 years. And that right there is the bull theory, the business is backed by too many favourable outcomes, the business is relatively risk adverse in that the revenue for bitcoin price is relatively great compared to alternative ventures. Furthermore, with the start of staking, any company giving itself the right name is going to become a giant. That is about as much of a bull theory I can write, because it is at this point that any reader should recognize an obvious skew in narrative tone and lead. I am clearly invested in Gryphon, not just financially, but intellectually. I want Gryphon to succeed because I want what is best for Mother Earth. I can't give you a good bear and bull theory, or rather I could, but I genuinely don't believe in it, and this is one of those points where I can make arguments for both sides of the climate crisis, but one is fake.
So, instead, here is a list of things that I am going to keep an eye on:
- What happens when Bitcoin stops going 100% YOY? I.E. What is the operating cost margin versus buffer built-in to the company?
- Long term goal for minting centers? Going full Eco-green or on-paper green? (Building sustainable energy vs buying carbon credits)
- Ability for CEO to think outside the box? Can Rob Chang plot the future of the company and field or is he just along for the ride, struggling to get on the board?
- Financial institutions around the world pushing for their own digital currency vs accepting a common one. Bitcoin for all vs China digital yen + US digidollar + etc etc.
- Future investors. The company will change with its major investors, if anyone gets a huge hold, the company will bend the knee to them. Definitely keep an eye on who amasses shares.
- Competition. Not necessarily in existing companies, but definitely in what is coming out of China. Look at who or what takes over the eco-minting field space.
- Location. Spreading out versus isolating themselves in a region will be very interesting. It will affect the localization of the investor base and potential competitors. Furthermore, where they hub themselves will be big. Miami is making a big push right now for themselves, but Elon's Starbase seems to be where the CEO is located via Twitter.
- Big partnerships. Given that last little bit, I am definitely curious to see if there is something brewing for Gryphon in Starbase, Texas.
Disclaimer
Thank you for reading this analysis. The sole purpose of these are to serve as an educational resource for any one to gain an understanding of what to research when deciding to make an investment. If there is any material in this analysis that you feel could be explained better, or in more detail, or even if you have just a little question, let me know! As I develop this skill, my aim is to expand the reach of these articles to cover more topics to a wider audience. Feedback helps me grow, so I am happy to read the comments.
For legal reasons, this is not financial advice, I really really really cannot stress that enough. Furthermore, I do own 1000 shares at a price of $3 per share. This information is given due to European financial regulations, not as financial guidance. This information is only accurate as of the date of publication, June 21st, 2021. The original, and only version published by me is on Tradingview.com.