Stronghold Digital Mining, Inc. (Nasdaq:
SDIG) (“Stronghold,” or the “Company”) today reported
financial results for its third quarter ended September 30, 2022
and provided an operational update.
Third Quarter 2022 and Recent
Operational and Financial Highlights
- Current
liquidity of approximately $27 million comprising $27 million cash
plus 19 Bitcoin, current principal amount of debt outstanding of
approximately $82 million, and net debt of approximately $55
million (calculated as principal amount of debt outstanding less
cash and Bitcoin) as of November 7, 2022, which represents an
approximately 51% reduction since June 30, 2022
- Fully
extinguished $67.4 million in principal value of debt associated
with NYDIG ABL LLC (“NYDIG”) and The Provident Bank (“BankProv”)
equipment financings on October 26, 2022 by consensually returning
approximately 26,000 Bitcoin miners (fewer than 19,000 of which
were operating prior to being unplugged in mid-August and
returned)
- Closed Credit
Agreement with WhiteHawk Finance LLC (“WhiteHawk) on October 27,
2022 (the “WhiteHawk Credit Agreement”) to nearly triple
weighted-average maturity of existing debt from approximately 13 to
36 months, reduce monthly principal payments, and add over $21
million of cash to the Company’s balance sheet
- Entered into a
Settlement Agreement with Northern Data PA LLC (“NDPA”) and 1277963
B.C. Ltd. (“Bitfield”, and together with NDPA, “Northern Data”) on
September 30, 2022 (the “Northern Data Settlement Agreement”) to
mutually terminate the hosting agreement at what the Company
believes are attractive economics to Stronghold (estimated to
improve cash flow by a net $10-22 million over the next two years
based on certain bitcoin price, network hash rate, hash rate
capacity, miner efficiency, and uptime assumptions)
- Received and/or
agreed to procure approximately 10,000 additional Bitcoin miners
since August 16, 2022, of which approximately 6,000 have been
installed as of November 8, 2022
- Entered into a
definitive hosting agreement (the “Foundry Hosting Agreement”) with
Foundry Digital, LLC (“Foundry”), demonstrating the ability to
creatively increase hash rate without significant capital
investment
- Completed major
planned maintenance outages at each of the Panther Creek Power
Plant (the “Panther Creek Plant”) and Scrubgrass Power Plant (the
“Scrubgrass Plant”) and returned both plants to service as
expected, demonstrating the ability to generate baseload capacity
utilization above a minimum threshold of 80%
- Providing Initial FY 2023 guidance:
total revenue and other income estimated to be $108 to $114 million
and Adjusted EBITDA estimated to be $29 to $35 million based on a
range of key market assumptions and taking into account the
material cost reductions that have been implemented in recent
months at our power plants and in general and administrative
expenses
Management Commentary
“We have executed on the major strategic goals
we laid out in August during our second quarter earnings
announcement; we have reduced leverage, improved liquidity, cut
costs and opportunistically grown our mining fleet at attractive
prices,” said Greg Beard, co-chairman and chief executive officer
of Stronghold. “In late October we fully eliminated our NYDIG debt
and closed on the refinanced WhiteHawk debt. We have reduced our
net debt by 51% to $55 million since June 30, 2022, and our current
liquidity is approximately $27 million. We will remain patient and
diligent, and believe we are meaningfully better positioned to take
advantage of opportunities in the market.”
“Bitcoin mining equipment remains in acute
oversupply, and we believe that prices have yet to find a bottom.
As we seek to maintain flexibility and maximize capital efficiency,
we are excited about the Foundry Hosting Agreement which is a
creative—and capital light—way to utilize our energized data center
slots, 14,200 of which were made available after the previously
disclosed Northern Data Settlement Agreement. The Foundry deal
provides Bitcoin exposure to us with an esteemed partner, while
requiring minimal upfront investment and opportunity cost.”
“Lastly, we believe that we successfully
executed on our planned maintenance outages at the Panther Creek
Plant and Scrubgrass Plant in September and early October,
respectively. We used the downtime to perform a thorough review of
the cost structure of our plants, took aggressive steps to
accelerate cost reductions expected out of the outages, and believe
that we will be able to deliver on our target cost of power of $45
to $50 per MWh in the first quarter of 2023.”
“Vertical integration and power market
optionality remain as valuable as ever for our business. Even
following our recent miner purchases and forward-looking effort to
continue refilling our data centers, we plan to continue optimizing
between grid sales and Bitcoin mining, especially with seasonally
higher winter power prices nearly upon us. Our downside protection,
combined with our balance sheet and cost improvements, give us
confidence in our ability to emerge from this depressed Bitcoin
market in a stronger position than ever.”
Liquidity and Capital
Resources
On October 26, 2022, Stronghold transferred the
seventh and final tranche of Bitcoin miners that served as
collateral under previous financing agreements with NYDIG, in
exchange for the extinguishment of the final amount of
approximately $2.1 million of principal amount of debt. Stronghold
has now eliminated all outstanding debt, approximately $67.4
million of principal amount, under the legacy equipment financing
agreements and consensually returned approximately 26,000 Bitcoin
miners to NYDIG and BankProv.
On October 27, 2022, Stronghold closed the
WhiteHawk Credit Agreement, reflecting the previously announced
binding commitment letter to restructure and expand its current
equipment financing agreements into a secured, 36-month note. The
restructuring nearly tripled the weighted-average maturity from 13
to 36 months, reduced monthly principal payments, and added over
$21 million of cash to the Company’s balance sheet.
As of November 7, 2022, Stronghold’s liquidity
was approximately $27 million, including $27 million cash plus 19
Bitcoin, and the Company had approximately $82 million of principal
amount of debt outstanding.
Bitcoin Mining Update
During the third quarter of 2022, Stronghold
earned approximately 567 Bitcoin through its mining operations, a
decline of approximately 11% from the 637 awards received during
the second quarter 2022. Third quarter 2022 Bitcoin mining
operations were negatively impacted by the decrease in the mining
fleet associated with the NYDIG debt extinguishment and power plant
outages in September and October related to planned
maintenance.
Since Stronghold announced its second quarter
earnings on August 16, 2022, the Company has received or procured
approximately 10,000 additional Bitcoin miners with hash rate
capacity exceeding 0.9 exahash per second (“EH/s”). This includes
(i) approximately 1,500 purchased Bitmain S19 Pro and Bitmain S19j
Pro miners (all of which have been received), (ii) approximately
1,000 purchased MicroBT M30S miners (expected to be delivered in
the coming days), (iii) approximately 2,300 miners from MinerVa
Semiconductor Corp. (“MinerVa”) (nearly 1,200 of which have been
delivered to date, of which approximately 780 are Bitmain S19j Pro
or T19 miners), (iv) over 4,500 miners related to the Foundry
Hosting Agreement (of which over 3,000 have been received, with the
remaining miners expected to arrive by the end of November 2022),
and (v) additional miners associated with previously disclosed
miner purchases.
On November 7, 2022, Stronghold entered the
Foundry Hosting Agreement. Backed by Digital Currency Group,
Foundry is a financing and advisory company focused on digital
asset mining and staking and currently operates the largest Bitcoin
mining pool in the world. Pursuant to the Foundry Hosting
Agreement, Foundry will deliver over 4,500 Bitcoin miners with
associated hash rate capacity of approximately 420 PH/s to the
Panther Creek Plant, and Stronghold will provide power to the
Bitcoin miners and hosting services for a fee of $60 per
megawatt-hour (“MWh”), demonstrating Stronghold’s growing ability
to provide high-caliber Bitcoin mining services. Pursuant to the
Foundry Hosting Agreement, Stronghold will receive 50% of the
Bitcoin mined after deducting the $60/MWh, and Stronghold maintains
the ability to curtail mining in order to sell power to the PJM
grid without penalty. Simultaneously with the Foundry Hosting
Agreement, Stronghold and Foundry entered into a non-binding Letter
of Intent (the “Foundry LOI”), pursuant to which Stronghold would
purchase the 4,500 miners in exchange for giving Foundry a limited
amount of cash plus equity and a profit share that applies to the
Bitcoin miners as well as to power that is sold to the grid when
the miners are curtailed. The Company has already received
approximately 3,000 of the Bitcoin miners associated with the
Foundry Hosting Agreement and expects to install all remaining
miners by the end of November 2022.
After giving effect to the Foundry Hosting
Agreement, miners returned to NYDIG and BankProv in relation to the
debt extinguishment, and other recent miner deliveries and
purchases that have been previously disclosed, Stronghold’s Bitcoin
mining fleet is expected to total over 25,900 miners with hash rate
capacity exceeding 2.3 EH/s, assuming no deliveries from MinerVa
beyond the aforementioned 2,300 miners. Of these miners, over
21,500 with hash rate capacity exceeding 1.9 EH/s are associated
with self-mining operations and are not subject to a profit
share.
On September 30, 2022, Stronghold entered into
the Northern Data Settlement Agreement to mutually terminate the
data center hosting agreement at the Scrubgrass Plant. Pursuant to
the Northern Data Settlement Agreement, the profit share with
Northern Data has been eliminated and Stronghold will operate the
approximately 50 MW of modular miner pods capable of hosting over
14,200 Bitcoin miners, with hash rate capacity of 1.25 to 1.50 EH/s
for a de minimis $1,000 per year leasing expense. At the end of the
two-year lease term, Stronghold has the option, but not an
obligation, to purchase the Northern Data pods for between $2
million and $6 million, depending on prevailing hash price at time,
net of up to $1.5 million in expenditures that the Company has the
option, but not an obligation, to spend if it deems necessary in
order to upgrade or maintain the pods. In exchange, Stronghold will
pay Northern Data $4.5 million, of which $3.5 million has been paid
thus far in the fourth quarter of 2022, with the remaining $1
million due before November 30, 2022. Stronghold estimates the net
cash flow improvement to be between $7 million and $20 million over
the next two years based on certain hash rate capacity, miner
efficiency and uptime assumptions.
Power Assets Update
Stronghold owns and operates approximately 165
MW net of environmentally beneficial coal fluidized bed power
generation capacity at its Panther Creek Plant and Scrubgrass Plant
in Pennsylvania. These are coal refuse reclamation-to-energy plants
where waste coal, a byproduct of legacy coal mining operations, is
consumed to generate electricity. The Commonwealth of Pennsylvania
has designated coal refuse as a Tier II Alternative Energy Source,
making the facilities eligible to earn renewable energy credits.
During the third quarter of 2022, Stronghold removed approximately
241,000 tons of coal refuse and returned approximately 168,000 tons
of beneficial use ash to waste coal sites, facilitating the
remediation of these sites.
Stronghold generated $11.5 million of energy
revenue in the third quarter of 2022, which was up 61% sequentially
versus the $7.1 million generated during the second quarter of 2022
and up 379% year-over-year versus the $2.4 million from the third
quarter of 2021. Key drivers of the sequential and year-over-year
change were higher realized power prices as well as more power sold
to the grid versus the prior periods. Stronghold generated $0.9
million of capacity revenue during the third quarter of 2022, down
47% sequentially versus the $1.7 million generated during the
second quarter of 2022 and down 18% year-over-year versus the $1.1
million generated during the third quarter of 2021. As previously
reported, both plants transitioned from being capacity resources in
the PJM market to being energy resources in the PJM market starting
in June 2022, which allowed the Company to sell power into the
real-time market during the third quarter of 2022 versus being
required as a capacity resource to sell power in the day-ahead
market during prior periods.
The third quarter was impacted by material
planned outages at the Panther Creek Plant and the Scrubgrass Plant
that spanned the second half of September into early October,
during which time the Company generated no energy revenue but
incurred substantial maintenance costs and imported electricity
from the PJM grid. Planned maintenance events improve plant
efficiency and reliability and are a critical part of normal
long-term maintenance programs. The Panther Creek Plant took its
full outage in September, and the maintenance went as planned. The
Panther Creek Plant returned to service in early October and has
since performed well, in line with Company expectations for
baseload reliability.
The Scrubgrass Plant conducted its planned
maintenance outage that lasted from mid-September into early
October. During the outage, management undertook a thorough review
of plant-level profitability and identified opportunities for
immediate cost reductions including improved fuel purchasing,
headcount reductions, parts inventory procurement and management,
and enhanced maintenance planning. Given seasonally low power
prices in October, and some additional desired maintenance
objectives, management kept the plant offline while it implemented
the cost reduction program and improved the fuel mix through
accelerated deliveries of low-cost fuel. The plant returned to
service in late October following the conclusion of the outage, and
management is encouraged by the improved plant performance, which
has confirmed that the plant can run above the expected baseload
performance threshold of 80% utilization.
2023 Guidance
Market Assumptions:
Bitcoin mining revenue is based on a hash price
of $0.085 per Terahash per second (“TH/s”) per day. Hash price
represents global Bitcoin mining revenue per TH/s of network hash
rate, incorporates both Bitcoin price and network hash rate and it
is calculated as follows: [Bitcoin price] x [number of Bitcoins
mined per day (~900)] ÷ [network hash rate (TH/s)]. The table below
illustrates estimated combinations of Bitcoin price and network
hash rate that result in a hash price of $0.085 per TH/s per
day:
Bitcoin Price |
Network Hash Rate |
$15,000 |
~159 EH/s |
$20,000 |
~212 EH/s |
$25,000 |
~265 EH/s |
$30,000 |
~318 EH/s |
Revenue received for selling electricity to the
grid is based on forward prices for the Penelec and Pennsylvania
Power & Light zones in PJM Interconnection, LLC, per Priority
Power Management as of November 7, 2022. These forward prices imply
an average around-the-clock price of approximately $64/MWh for
2023. However, as a result of Stronghold’s ability to curtail
Bitcoin miners when grid prices are attractive, Stronghold believes
that it can realize a higher average price of $72/MWh.
Guidance:
Operational |
FY 2023 |
Avg. power output (MW) |
135 - 140 |
Avg. hash rate capacity (EH/s) |
~3.0 |
Avg. miner uptime, without miner curtailment (%) |
90% |
Avg. hash rate, with miners curtailed to sell power (EH/s) |
~2.4 |
Financial ($ in millions, unless noted) |
FY 2023 |
Total revenue and other income |
$108 - $114 |
Recurring fuel and operations and maintenance expenses |
$56 - $62 |
$/MWh |
$46 - $52 |
Recurring cash general and administrative expenses |
$18 - $21 |
Adjusted EBITDA |
$29 - $35 |
Third Quarter 2022 Financial
Results
Revenues in the third quarter of 2022 increased
311% to $24.7 million compared to $6.0 million in the same quarter
a year ago. This is primarily due to a $10.2 million increase
in cryptocurrency mining revenue from deploying additional miners,
and a $9.1 million increase in energy revenue driven by higher
prevailing power prices per MW and higher MW generation as a result
of the November 2021 Panther Creek Plant acquisition.
Operating expenses in the third quarter of 2022
increased 423% to $52.1 million compared to $10.0 million in the
same quarter a year ago due to several factors. Operations and
maintenance expense increased by $16.6 million as a result of the
November 2021 Panther Creek Plant acquisition, higher labor and
maintenance costs related to the previously disclosed planned
maintenance, and the ramp up of cryptocurrency mining operations.
Depreciation and amortization increased by $11.1 million primarily
from deploying additional miners and transformers. General and
administrative costs increased by $8.2 million due to legal and
professional fees, insurance costs, and compensation as the Company
continues to organize and scale operations. Fuel expenses increased
by $6.1 million driven by higher MW generation, primarily due to
the November 2021 Panther Creek Plant acquisition, and increased
fuel delivery costs from higher diesel prices.
Net loss for the third quarter of 2022 was
($49.6) million compared to a net loss of ($6.3) million for the
same quarter a year ago.
Adjusted EBITDA for the third quarter of 2022
was a loss of ($3.0) million, compared to $0.0 million for the same
quarter a year ago (see reconciliation of Non-GAAP financial
measures).
Conference Call
Stronghold will host a conference call today,
November 9, 2022 at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time)
with an accompanying presentation to discuss these results. A
question-and-answer session will follow management's
presentation.
To participate, a live webcast of the call will
be available on the Investor Relations page of the Company’s
website at ir.strongholddigitalmining.com. To access the call by
phone, please use the following link Stronghold Digital Mining
Third Quarter 2022 Earnings Call. After registering, an email will
be sent, including dial-in details and a unique conference call
access code required to join the live call. To ensure you are
connected prior to the beginning of the call, please register a
minimum of 15 minutes before the start of the call.
A replay will be available on the Company's
Investor Relations website shortly after the event at
ir.strongholddigitalmining.com.
About Stronghold Digital Mining,
Inc.Stronghold is a vertically integrated Bitcoin mining
company with an emphasis on environmentally beneficial operations.
Stronghold houses its miners at its wholly owned and operated
Scrubgrass Plant and Panther Creek Plant, both of which are
low-cost, environmentally beneficial coal refuse power generation
facilities in Pennsylvania.
Cautionary Statement Concerning
Forward-Looking StatementsCertain statements contained in
this press release, including guidance, constitute “forward-looking
statements.” within the meaning of the Private Securities
Litigation Reform Act of 1995. You can identify forward-looking
statements because they contain words such as “believes,”
“expects,” “may,” “will,” “should,” “seeks,” “approximately,”
“intends,” “plans,” “estimates” or “anticipates” or the negative of
these words and phrases or similar words or phrases which are
predictions of or indicate future events or trends and which do not
relate solely to historical matters. Forward-looking statements and
the business prospects of Stronghold are subject to a number of
risks and uncertainties that may cause Stronghold’s actual results
in future periods to differ materially from the forward-looking
statements. These risks and uncertainties include, among other
things: the hybrid nature of our business model, which is highly
dependent on the price of Bitcoin; our dependence on the level of
demand and financial performance of the crypto asset industry; our
ability to manage growth, business, financial results and results
of operations; uncertainty regarding our evolving business model;
our ability to retain management and key personnel and the
integration of new management; our ability to raise capital to fund
business growth; our ability to maintain sufficient liquidity to
fund operations, growth and acquisitions;; uncertainty regarding
the outcomes of any investigations or proceedings; our ability to
enter into purchase agreements, acquisitions and financing
transactions; public health crises, epidemics, and pandemics such
as the coronavirus pandemic; our ability to procure crypto asset
mining equipment from foreign-based suppliers; our ability to
maintain our relationships with our third party brokers and our
dependence on their performance; our ability to procure crypto
asset mining equipment; developments and changes in laws and
regulations, including increased regulation of the crypto asset
industry through legislative action and revised rules and standards
applied by The Financial Crimes Enforcement Network under the
authority of the U.S. Bank Secrecy Act and the Investment Company
Act; the future acceptance and/or widespread use of, and demand
for, Bitcoin and other crypto assets; our ability to respond to
price fluctuations and rapidly changing technology; our ability to
operate our coal refuse power generation facilities as planned; our
ability to avail ourselves of tax credits for the clean-up of coal
refuse piles; and legislative or regulatory changes, and liability
under, or any future inability to comply with, existing or future
energy regulations or requirements. More information on these risks
and other potential factors that could affect our financial results
is included in our filings with the Securities and Exchange
Commission, including in the “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” sections of our Annual Report on Form 10-K filed on
March 29, 2022 and our Quarterly Reports on Form 10-Q filed on May
16, 2022, August 18, 2022 and November 9, 2022. Any forward-looking
statement or guidance speaks only as of the date as of which such
statement is made, and, except as required by law, we undertake no
obligation to update or revise publicly any forward-looking
statements or guidance, whether because of new information, future
events, or otherwise.
STRONGHOLD DIGITAL MINING, INC. |
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
|
|
|
|
September 30, 2022 |
|
December 31, 2021 |
|
(unaudited) |
|
|
ASSETS: |
|
|
|
Cash and cash equivalents |
$ |
16,723,511 |
|
|
$ |
31,790,115 |
|
Digital currencies |
|
2,186,704 |
|
|
|
7,718,221 |
|
Digital currencies, restricted |
|
- |
|
|
|
2,699,644 |
|
Accounts receivable |
|
775,038 |
|
|
|
2,111,855 |
|
Due from related parties |
|
58,735 |
|
|
|
- |
|
Prepaid insurance |
|
980,180 |
|
|
|
6,301,701 |
|
Inventory |
|
3,316,716 |
|
|
|
3,372,254 |
|
Assets held for sale |
|
39,008,651 |
|
|
|
- |
|
Other current assets |
|
1,527,938 |
|
|
|
661,640 |
|
Total current assets |
|
64,577,473 |
|
|
|
54,655,430 |
|
Equipment deposits |
|
24,385,876 |
|
|
|
130,999,398 |
|
Property, plant and equipment, net |
|
182,869,685 |
|
|
|
166,657,155 |
|
Land |
|
1,748,439 |
|
|
|
1,748,440 |
|
Road bond |
|
211,958 |
|
|
|
211,958 |
|
Security deposits |
|
348,888 |
|
|
|
348,888 |
|
TOTAL ASSETS |
$ |
274,142,319 |
|
|
$ |
354,621,269 |
|
LIABILITIES: |
|
|
|
Current portion of long-term debt, net of discounts and issuance
fees |
$ |
90,298,367 |
|
|
$ |
45,799,651 |
|
Financed insurance premiums |
|
307,385 |
|
|
|
4,299,721 |
|
Forward sale contract |
|
- |
|
|
|
7,116,488 |
|
Accounts payable |
|
28,491,137 |
|
|
|
28,650,659 |
|
Due to related parties |
|
2,212,145 |
|
|
|
1,430,660 |
|
Accrued liabilities |
|
7,385,258 |
|
|
|
5,053,957 |
|
Total current liabilities |
|
128,694,292 |
|
|
|
92,351,136 |
|
Asset retirement obligation |
|
992,201 |
|
|
|
973,948 |
|
Contract liabilities |
|
132,093 |
|
|
|
187,835 |
|
Paycheck Protection Program Loan |
|
- |
|
|
|
841,670 |
|
Warrant liabilities |
|
5,056,065 |
|
|
|
- |
|
Long-term debt, net of discounts and issuance fees |
|
7,607,240 |
|
|
|
18,378,841 |
|
Total long-term liabilities |
|
13,787,599 |
|
|
|
20,382,294 |
|
Total liabilities |
|
142,481,891 |
|
|
|
112,733,430 |
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
REDEEMABLE COMMON STOCK: |
|
|
|
Common Stock — Class V; $0.0001 par value; 34,560,000 shares
authorized; 27,057,600 and 27,057,600 shares issued and outstanding
as of September 30, 2022, and December 31, 2021, respectively. |
|
29,433,528 |
|
|
|
301,052,617 |
|
Total redeemable common stock |
|
29,433,528 |
|
|
|
301,052,617 |
|
STOCKHOLDERS' EQUITY (DEFICIT): |
|
|
|
Noncontrolling Series A redeemable and convertible preferred stock;
$0.0001 par value; $5,000,000 aggregate liquidation value;
1,152,000 and 1,152,000 shares issued and outstanding as of
September 30, 2022, and December 31, 2021, respectively. |
|
34,140,047 |
|
|
|
37,670,161 |
|
Common Stock — Class A; $0.0001 par value; 685,440,000 shares
authorized; 23,063,813 and 20,016,067 shares issued and outstanding
as of September 30, 2022, and December 31, 2021, respectively. |
|
2,307 |
|
|
|
2,002 |
|
Accumulated deficits |
|
(211,325,844 |
) |
|
|
(338,709,688 |
) |
Additional paid-in capital |
|
279,410,390 |
|
|
|
241,872,747 |
|
Total stockholders' equity (deficit) |
|
102,226,900 |
|
|
|
(59,164,778 |
) |
Total redeemable common stock and stockholders' equity
(deficit) |
|
131,660,428 |
|
|
|
241,887,839 |
|
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND
STOCKHOLDERS' EQUITY (DEFICIT) |
$ |
274,142,319 |
|
|
$ |
354,621,269 |
|
|
|
|
|
STRONGHOLD DIGITAL MINING, INC. |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
|
|
|
|
|
|
|
|
Three months ended, |
|
Nine months ended, |
|
September 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
OPERATING REVENUES: |
|
|
|
|
|
|
|
Cryptocurrency mining |
$ |
12,283,695 |
|
|
$ |
2,060,523 |
|
|
$ |
50,715,424 |
|
|
$ |
3,901,426 |
|
Energy |
|
11,454,016 |
|
|
|
2,388,752 |
|
|
|
26,946,549 |
|
|
|
5,875,574 |
|
Capacity |
|
878,610 |
|
|
|
1,069,040 |
|
|
|
4,591,038 |
|
|
|
2,352,276 |
|
Cryptocurrency hosting |
|
93,279 |
|
|
|
499,724 |
|
|
|
282,327 |
|
|
|
1,742,242 |
|
Other |
|
39,171 |
|
|
|
1,674 |
|
|
|
91,941 |
|
|
|
34,797 |
|
Total operating revenues |
|
24,748,771 |
|
|
|
6,019,713 |
|
|
|
82,627,279 |
|
|
|
13,906,315 |
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
Fuel |
|
8,466,588 |
|
|
|
2,411,186 |
|
|
|
26,485,096 |
|
|
|
6,511,706 |
|
Operations and maintenance |
|
19,528,088 |
|
|
|
2,835,315 |
|
|
|
47,449,177 |
|
|
|
6,040,173 |
|
General and administrative |
|
11,334,212 |
|
|
|
3,469,830 |
|
|
|
32,848,291 |
|
|
|
6,377,677 |
|
Impairments on digital currencies |
|
465,651 |
|
|
|
91,040 |
|
|
|
8,176,868 |
|
|
|
466,286 |
|
Impairments on equipment deposits |
|
- |
|
|
|
- |
|
|
|
12,228,742 |
|
|
|
- |
|
Impairments on miner assets |
|
11,610,000 |
|
|
|
- |
|
|
|
16,600,000 |
|
|
|
- |
|
Realized gain on sale of digital currencies |
|
(185,396 |
) |
|
|
- |
|
|
|
(936,506 |
) |
|
|
(149,858 |
) |
Loss on disposal of fixed assets |
|
461,940 |
|
|
|
- |
|
|
|
2,231,540 |
|
|
|
- |
|
Realized loss on sale of miner assets |
|
- |
|
|
|
- |
|
|
|
8,012,248 |
|
|
|
- |
|
Depreciation and amortization |
|
12,247,245 |
|
|
|
1,158,374 |
|
|
|
37,234,126 |
|
|
|
2,463,549 |
|
Total operating expenses |
|
63,928,328 |
|
|
|
9,965,745 |
|
|
|
190,329,582 |
|
|
|
21,709,533 |
|
NET OPERATING LOSS |
|
(39,179,557 |
) |
|
|
(3,946,032 |
) |
|
|
(107,702,303 |
) |
|
|
(7,803,218 |
) |
OTHER INCOME (EXPENSE): |
|
|
|
|
|
|
|
Interest expense |
|
(3,393,067 |
) |
|
|
(2,460,668 |
) |
|
|
(10,813,302 |
) |
|
|
(2,594,751 |
) |
Loss on debt extinguishment |
|
(28,697,021 |
) |
|
|
- |
|
|
|
(28,697,021 |
) |
|
|
- |
|
Impairment on assets held for sale |
|
(4,159,004 |
) |
|
|
- |
|
|
|
(4,159,004 |
) |
|
|
- |
|
Gain on extinguishment of PPP loan |
|
- |
|
|
|
- |
|
|
|
841,670 |
|
|
|
638,800 |
|
Changes in fair value of warrant liabilities |
|
1,302,065 |
|
|
|
92,979 |
|
|
|
1,302,065 |
|
|
|
(98,498 |
) |
Realized gain on sale of derivative contract |
|
90,953 |
|
|
|
- |
|
|
|
90,953 |
|
|
|
- |
|
Changes in fair value of forward sale derivative |
|
- |
|
|
|
- |
|
|
|
3,435,639 |
|
|
|
- |
|
Changes in fair value of convertible note |
|
(1,204,739 |
) |
|
|
- |
|
|
|
(2,167,500 |
) |
|
|
- |
|
Waste coal tax credits |
|
- |
|
|
|
23,356 |
|
|
|
53,443 |
|
|
|
47,152 |
|
Other |
|
20,000 |
|
|
|
10,336 |
|
|
|
50,000 |
|
|
|
48,521 |
|
Total other income (expense) |
|
(36,040,813 |
) |
|
|
(2,333,997 |
) |
|
|
(40,063,057 |
) |
|
|
(1,958,776 |
) |
NET LOSS |
|
(75,220,370 |
) |
|
|
(6,280,029 |
) |
|
|
(147,765,360 |
) |
|
|
(9,761,994 |
) |
NET LOSS attributable to noncontrolling
interest |
|
(44,000,155 |
) |
|
|
(4,328,460 |
) |
|
|
(86,435,347 |
) |
|
|
(6,730,940 |
) |
NET LOSS attributable to Stronghold Digital Mining,
Inc |
$ |
(31,220,215 |
) |
|
$ |
(1,951,569 |
) |
|
$ |
(61,330,013 |
) |
|
$ |
(3,031,054 |
) |
NET LOSS per share attributable to Class A common
shareholders |
|
|
|
|
|
|
|
Basic |
$ |
(1.27 |
) |
|
$ |
(6.05 |
) |
|
$ |
(2.82 |
) |
|
$ |
(17.05 |
) |
Diluted |
$ |
(1.27 |
) |
|
$ |
(6.05 |
) |
|
$ |
(2.82 |
) |
|
$ |
(17.05 |
) |
Weighted average number of Class A common shares
outstanding |
|
|
|
|
|
|
|
Basic |
|
24,631,626 |
|
|
|
322,342 |
|
|
|
21,772,057 |
|
|
|
173,532 |
|
Diluted |
|
24,631,626 |
|
|
|
322,342 |
|
|
|
21,772,057 |
|
|
|
173,532 |
|
|
|
|
|
|
|
|
|
STRONGHOLD DIGITAL MINING, INC. |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
|
|
|
|
Nine months ended, |
|
September 30, 2022 |
|
September 30, 2021 |
|
(unaudited) |
|
(unaudited) |
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
Net loss |
$ |
(147,765,360 |
) |
|
$ |
(9,761,994 |
) |
Adjustments to reconcile net loss to net cash flows from operating
activities: |
|
|
|
Depreciation and amortization |
|
37,234,126 |
|
|
|
2,463,549 |
|
Gain on extinguishment of PPP loan |
|
(841,670 |
) |
|
|
(638,800 |
) |
Realized gain on sale of derivative contract |
|
(90,953 |
) |
|
|
- |
|
Loss on disposal of fixed assets |
|
2,231,540 |
|
|
|
- |
|
Write-off of bad debts |
|
- |
|
|
|
150,162 |
|
Realized loss on sale of miner assets |
|
8,012,248 |
|
|
|
- |
|
Amortization of debt issuance costs |
|
2,681,039 |
|
|
|
643,025 |
|
Stock-based compensation |
|
9,123,124 |
|
|
|
1,246,460 |
|
Loss on debt extinguishment |
|
28,697,021 |
|
|
|
- |
|
Impairment on assets held for sale |
|
4,159,004 |
|
|
|
- |
|
Impairments on equipment deposits |
|
12,228,742 |
|
|
|
- |
|
Impairments on miner assets |
|
16,600,000 |
|
|
|
- |
|
Changes in fair value of warrant liabilities |
|
(1,302,065 |
) |
|
|
98,498 |
|
Changes in fair value of forward sale derivative |
|
(3,435,639 |
) |
|
|
- |
|
Forward sale contract prepayment |
|
970,000 |
|
|
|
- |
|
Changes in fair value of convertible note |
|
2,167,500 |
|
|
|
- |
|
Accretion of asset retirement obligation |
|
18,253 |
|
|
|
- |
|
(Increase) decrease in digital currencies: |
|
|
|
Mining revenue |
|
(50,715,424 |
) |
|
|
(3,901,426 |
) |
Net proceeds from sale of digital currencies |
|
46,209,822 |
|
|
|
434,529 |
|
Impairments on digital currencies |
|
8,176,868 |
|
|
|
466,286 |
|
(Increase) decrease in assets: |
|
|
|
Accounts receivable |
|
1,336,817 |
|
|
|
(242,489 |
) |
Prepaid insurance |
|
5,321,521 |
|
|
|
(278,538 |
) |
Due from related parties |
|
(58,735 |
) |
|
|
302,973 |
|
Inventory |
|
55,538 |
|
|
|
29,291 |
|
Other current assets |
|
(866,298 |
) |
|
|
(3,713,832 |
) |
Increase (decrease) in liabilities: |
|
|
|
Accounts payable |
|
4,878,600 |
|
|
|
21,141,055 |
|
Due to related parties |
|
781,485 |
|
|
|
37,280 |
|
Accrued liabilities, excluding sales tax liabilities |
|
(407,909 |
) |
|
|
3,832,362 |
|
Contract liabilities |
|
(55,742 |
) |
|
|
147,836 |
|
NET CASH FLOWS (USED IN) PROVIDED BY OPERATING
ACTIVITIES |
|
(14,656,547 |
) |
|
|
12,456,227 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
Purchase of land |
|
- |
|
|
|
(29,919 |
) |
Purchases of property, plant and equipment |
|
(68,052,422 |
) |
|
|
(34,735,332 |
) |
Proceeds from sale of equipment deposits |
|
13,844,780 |
|
|
|
- |
|
Equipment purchase deposits - net of future commitments |
|
(13,656,428 |
) |
|
|
(85,624,852 |
) |
NET CASH FLOWS USED IN INVESTING ACTIVITIES |
|
(67,864,070 |
) |
|
|
(120,390,103 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
Repayments of debt |
|
(34,490,545 |
) |
|
|
(7,811,150 |
) |
Repayments of financed insurance premiums |
|
(3,992,336 |
) |
|
|
- |
|
Proceeds from debt, net of debt issuance costs paid in cash |
|
97,337,454 |
|
|
|
- |
|
Proceeds from promissory note |
|
- |
|
|
|
38,987,333 |
|
Proceeds from equipment financing agreement |
|
- |
|
|
|
24,157,178 |
|
Proceeds from PPP loan |
|
- |
|
|
|
841,670 |
|
Proceeds from private placements, net of issuance costs paid in
cash |
|
8,599,440 |
|
|
|
97,064,318 |
|
Repayments of EIDL loan |
|
- |
|
|
|
(150,000 |
) |
Repayments of related-party debt |
|
- |
|
|
|
(2,024,250 |
) |
Buyout of Aspen Interest |
|
- |
|
|
|
(2,000,000 |
) |
NET CASH FLOWS PROVIDED BY FINANCING
ACTIVITIES |
|
67,454,013 |
|
|
|
149,065,099 |
|
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS |
|
(15,066,604 |
) |
|
|
41,131,223 |
|
CASH AND CASH EQUIVALENTS - BEGINNING OF
PERIOD |
|
31,790,115 |
|
|
|
303,187 |
|
CASH AND CASH EQUIVALENTS - END OF PERIOD |
$ |
16,723,511 |
|
|
$ |
41,434,410 |
|
|
|
|
|
Use and Reconciliation of Non-GAAP
Financial MeasuresThis press release and our related
earnings call contain certain non-GAAP financial measures,
including Adjusted EBITDA, as a measure of our operating
performance. Adjusted EBITDA is a non-GAAP financial measure. We
define Adjusted EBITDA as net income (loss) before interest, taxes,
depreciation and amortization, further adjusted by the removal of
one-time transaction costs, impairment of digital currencies,
realized gains and losses on the sale of long-term assets, expenses
related to stock-based compensation, gains or losses on derivative
contracts, gain on extinguishment of debt, realized gain or loss on
sale of digital currencies, waste coal credits, commission on sale
of ash, or changes in fair value of warrant liabilities in the
period presented. See reconciliation below.
Our board of directors and management team use
Adjusted EBITDA to assess our financial performance because they
believe it allows them to compare our operating performance on a
consistent basis across periods by removing the effects of our
capital structure (such as varying levels of interest expense and
income), asset base (such as depreciation, amortization,
impairment, and realized gains and losses on sale of long-term
assets) and other items (such as one-time transaction costs,
expenses related to stock-based compensation, and unrealized gains
and losses on derivative contracts) that impact the comparability
of financial results from period to period. We present Adjusted
EBITDA because we believe it provides useful information regarding
the factors and trends affecting our business in addition to
measures calculated under GAAP. Adjusted EBITDA is not a financial
measure presented in accordance with GAAP. We believe that the
presentation of this non-GAAP financial measure will provide useful
information to investors and analysts in assessing our financial
performance and results of operations across reporting periods by
excluding items we do not believe are indicative of our core
operating performance. Net income (loss) is the GAAP measure most
directly comparable to Adjusted EBITDA. Our non-GAAP financial
measure should not be considered as an alternative to the most
directly comparable GAAP financial measure. You are encouraged to
evaluate each of these adjustments and the reasons we consider them
appropriate for supplemental analysis. In evaluating Adjusted
EBITDA, you should be aware that in the future we may incur
expenses that are the same as or similar to some of the adjustments
in such presentation. Our presentation of Adjusted EBITDA should
not be construed as an inference that our future results will be
unaffected by unusual or non-recurring items. There can be no
assurance that we will not modify the presentation of Adjusted
EBITDA in the future, and any such modification may be material.
Adjusted EBITDA has important limitations as an analytical tool and
you should not consider Adjusted EBITDA in isolation or as a
substitute for analysis of our results as reported under GAAP and
should be read in conjunction with the financial statements
furnished in our Form 10-Q for the quarter ended September 30,
2022. Because Adjusted EBITDA may be defined differently by other
companies in our industry, our definition of this non-GAAP
financial measure may not be comparable to similarly titled
measures of other companies, thereby diminishing its utility.
STRONGHOLD DIGITAL MINING, INC. |
RECONCILATION OF ADJUSTED EBITDA |
|
|
|
|
|
|
|
|
|
Three months ended, |
|
Nine months ended, |
|
September 30, 2022 |
|
September 30, 2021 |
|
September 30, 2022 |
|
September 30, 2021 |
|
(in thousands) |
|
(in thousands) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
Net Income (loss) |
$ |
(75,220 |
) |
|
$ |
(6,280 |
) |
|
$ |
(147,765 |
) |
|
$ |
(9,762 |
) |
Interest expense |
|
3,393 |
|
|
|
2,461 |
|
|
|
10,813 |
|
|
|
2,595 |
|
Depreciation and amortization |
|
12,247 |
|
|
|
1,158 |
|
|
|
37,234 |
|
|
|
2,464 |
|
Impairments on digital currencies |
|
466 |
|
|
|
91 |
|
|
|
8,177 |
|
|
|
466 |
|
Impairments on equipment deposits |
|
- |
|
|
|
- |
|
|
|
12,229 |
|
|
|
- |
|
Impairments on miner assets |
|
11,610 |
|
|
|
- |
|
|
|
16,600 |
|
|
|
- |
|
One time non-recurring expenses 1 |
|
8,218 |
|
|
|
1,719 |
|
|
|
14,781 |
|
|
|
1,788 |
|
Stock-based compensation |
|
3,377 |
|
|
|
977 |
|
|
|
9,123 |
|
|
|
1,246 |
|
Loss on disposal of fixed assets |
|
462 |
|
|
|
- |
|
|
|
2,232 |
|
|
|
- |
|
Realized loss on sale of miner assets |
|
- |
|
|
|
- |
|
|
|
8,012 |
|
|
|
- |
|
Loss on debt extinguishment |
|
28,697 |
|
|
|
|
|
28,697 |
|
|
|
Impairment on assets held for sale |
|
4,159 |
|
|
|
|
|
4,159 |
|
|
|
Changes in fair value of forward sale derivative |
|
- |
|
|
|
- |
|
|
|
(3,436 |
) |
|
|
- |
|
Gain on extinguishment of PPP loan |
|
- |
|
|
|
- |
|
|
|
(842 |
) |
|
|
(639 |
) |
Realized gain on sale of digital currencies |
|
(185 |
) |
|
|
- |
|
|
|
(937 |
) |
|
|
(150 |
) |
Changes in fair value of convertible note |
|
1,205 |
|
|
|
- |
|
|
|
2,168 |
|
|
|
- |
|
Changes in fair value of warrant liabilities |
|
(1,302 |
) |
|
|
(93 |
) |
|
|
(1,302 |
) |
|
|
98 |
|
Realized gain on sale of derivative contract |
|
(91 |
) |
|
|
|
|
(91 |
) |
|
|
Adjusted EBITDA2 |
$ |
(2,965 |
) |
|
$ |
33 |
|
|
$ |
(148 |
) |
|
$ |
(1,893 |
) |
|
|
|
|
|
|
|
|
1 Includes the following non-recurring expenses:
out-of-the-ordinary major repairs and upgrades to the power plant,
settlement expenses from terminating the Northern Data hosting
agreement, legal fees related to the extinguishment of the NYDIG
debt, and other one-time items. |
2 Adjusted EBITDA has been retrospectively changed to conform with
our current methodology of no longer excluding waste coal tax
credits as these are a recurring benefit received relating to
running the power plants. |
|
|
|
|
|
|
|
|
Investor Contact:
Matt Glover or Jeff Grampp, CFAGateway Group,
Inc. SDIG@GatewayIR.com1-949-574-3860
Media Contact:
contact@strongholddigitalmining.com
Stronghold Digital Mining (NASDAQ:SDIG)
Gráfico Histórico do Ativo
De Mar 2024 até Abr 2024
Stronghold Digital Mining (NASDAQ:SDIG)
Gráfico Histórico do Ativo
De Abr 2023 até Abr 2024