Recent Financial Highlights
- The Company generated revenues of
$27.5 million during the first quarter of 2024, up 27% sequentially and 59% year-over-year. Revenues comprised$26.7 million from cryptocurrency operations,$0.7 million from the sale of energy, and$0.1 million from other activities. - First quarter 2024 fixed costs were down 3% sequentially and 11% year-over-year, demonstrating Stronghold’s operating leverage and cost controls. Fixed costs include operations & maintenance expenses and general & administrative expenses, excluding stock-based compensation.
- The Company earned GAAP Net Income of
$5.8 million and non-GAAP Adjusted EBITDA of$8.7 million during the first quarter of 2024. 1
Strategic Alternatives
Stronghold and its Board of Directors (“Board”) have initiated a formal strategic review process with the assistance of outside financial and legal advisors. The Company is considering a wide range of alternatives to maximize shareholder value, including, but not limited to, the sale of all or part of the Company, or another strategic transaction involving some, or all of, the assets of the Company. There is no deadline or definitive timetable set for the completion of the strategic alternatives process, and there can be no assurance any proposal will be made or accepted, any agreement will be executed, or any transaction will be consummated in connection with this review. Stronghold does not intend to make further announcements regarding the review process unless and until the Board approves a specific transaction or otherwise determines that further disclosure is appropriate. The Company has retained
“Stronghold’s Board and management team are committed to maximizing value for our shareholders and, to that end, have commenced a comprehensive and thorough review of strategic alternatives,” said
“Unlike most other Bitcoin miners, we own over 750 acres of land with expansive access to water and fiber; we own the transmission lines that connect our assets to the attractive PJM grid; and our two wholly owned merchant power plants have over 160 megawatts (“MW”) of net output capacity and significant carbon capture potential. We believe that our 130 MW of existing Bitcoin mining capacity could potentially be expanded to over 400 MW for either Bitcoin mining or advanced computing, such as that which is used for artificial intelligence and machine learning.”
____________
1 See Non-GAAP reconciliation table below.
Bitcoin Mining Update and Voltus Agreement
Stronghold generated 546 Bitcoin during the first quarter of 2024,
During
On
Stronghold Carbon Capture Update
Stronghold has continued to progress the development of its carbon capture project. As previously announced, recent test results from the Scrubgrass Plant have demonstrated carbonation of up to 14% by starting weight of ash, up from prior estimates of up to 12%. Puro.earth Carbon Registry (“Puro”) registered the Company’s carbon capture project at the Scrubgrass Plant in late February. The Company is now in the audit process with
Liquidity and Capital Resources
As of
Conference Call
Stronghold will host a conference call today,
A replay will be available on the Company's Investor Relations website shortly after the event at ir.strongholddigitalmining.com.
About
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
Cautionary Statement Concerning Forward-Looking Statements
Certain 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, including with respect to its potential carbon capture initiative and with respect to completing a strategic review process or entering into a transaction. 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; our substantial indebtedness and its effect on our results of operations and our financial condition; 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 including to upgrade our current fleet; 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
In
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||||||
2024 | 2023 | ||||||
ASSETS: | |||||||
Cash and cash equivalents | $ | 7,537,607 | $ | 4,214,613 | |||
Digital currencies | 2,704 | 3,175,595 | |||||
Accounts receivable | 1,739,187 | 507,029 | |||||
Inventory | 4,085,923 | 4,196,812 | |||||
Prepaid insurance | 2,391,206 | 3,787,048 | |||||
Due from related parties | 97,288 | 97,288 | |||||
Other current assets | 2,215,805 | 1,675,084 | |||||
Total current assets | 18,069,720 | 17,653,469 | |||||
Equipment deposits | — | 8,000,643 | |||||
Property, plant and equipment, net | 144,269,680 | 144,642,771 | |||||
Operating lease right-of-use assets | 1,283,338 | 1,472,747 | |||||
Land | 1,748,440 | 1,748,440 | |||||
Road bond | 299,738 | 299,738 | |||||
Security deposits | 348,888 | 348,888 | |||||
Other noncurrent assets | 170,488 | 170,488 | |||||
TOTAL ASSETS | $ | 166,190,292 | $ | 174,337,184 | |||
LIABILITIES: | |||||||
Accounts payable | $ | 11,510,296 | $ | 11,857,052 | |||
Accrued liabilities | 9,599,950 | 10,787,895 | |||||
Financed insurance premiums | 1,513,704 | 2,927,508 | |||||
Current portion of long-term debt, net of discounts and issuance fees | 12,058,049 | 7,936,147 | |||||
Current portion of operating lease liabilities | 729,821 | 788,706 | |||||
Due to related parties | 619,947 | 718,838 | |||||
Total current liabilities | 36,031,767 | 35,016,146 | |||||
Asset retirement obligation | 1,089,471 | 1,075,728 | |||||
Warrant liabilities | 13,532,709 | 25,210,429 | |||||
Long-term debt, net of discounts and issuance fees | 43,153,392 | 48,203,762 | |||||
Long-term operating lease liabilities | 639,586 | 776,079 | |||||
Contract liabilities | 67,244 | 241,420 | |||||
Total liabilities | 94,514,169 | 110,523,564 | |||||
COMMITMENTS AND CONTINGENCIES | |||||||
REDEEMABLE COMMON STOCK: | |||||||
Common Stock – Class V; outstanding as of | 9,704,926 | 20,416,116 | |||||
Total redeemable common stock | 9,704,926 | 20,416,116 | |||||
STOCKHOLDERS’ EQUITY: | |||||||
Common Stock – Class A; shares issued and outstanding as of | 1,290 | 1,112 | |||||
Series C convertible preferred stock; issued and outstanding as of | 1 | 1 | |||||
Series D convertible preferred stock; | — | 1 | |||||
Accumulated deficits | (314,994,985 | ) | (331,647,755 | ) | |||
Additional paid-in capital | 376,964,891 | 375,044,145 | |||||
Total stockholders' equity | 61,971,197 | 43,397,504 | |||||
Total redeemable common stock and stockholders' equity | 71,676,123 | 63,813,620 | |||||
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS' EQUITY | $ | 166,190,292 | $ | 174,337,184 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||
Three Months Ended | |||||||
2024 | 2023 | ||||||
OPERATING REVENUES: | |||||||
Cryptocurrency mining | $ | 21,291,058 | $ | 11,297,298 | |||
Cryptocurrency hosting | 5,457,529 | 2,325,996 | |||||
Energy | 700,067 | 2,730,986 | |||||
Capacity | — | 859,510 | |||||
Other | 73,531 | 52,425 | |||||
Total operating revenues | 27,522,185 | 17,266,215 | |||||
OPERATING EXPENSES: | |||||||
Fuel | 7,410,828 | 7,414,014 | |||||
Operations and maintenance | 8,241,725 | 8,440,923 | |||||
General and administrative | 6,598,346 | 8,468,755 | |||||
Depreciation and amortization | 9,514,654 | 7,722,841 | |||||
Loss on disposal of fixed assets | — | 91,086 | |||||
Realized gain on sale of digital currencies | (624,107 | ) | (326,768 | ) | |||
Unrealized gain on digital currencies | (1,227 | ) | — | ||||
Realized gain on sale of miner assets | (36,012 | ) | — | ||||
Impairments on digital currencies | — | 71,477 | |||||
Total operating expenses | 31,104,207 | 31,882,328 | |||||
NET OPERATING LOSS | (3,582,022 | ) | (14,616,113 | ) | |||
OTHER INCOME (EXPENSE): | |||||||
Interest expense | (2,263,409 | ) | (2,383,913 | ) | |||
Loss on debt extinguishment | — | (28,960,947 | ) | ||||
Changes in fair value of warrant liabilities | 11,677,720 | (714,589 | ) | ||||
Other | 10,000 | 15,000 | |||||
Total other income (expense) | 9,424,311 | (32,044,449 | ) | ||||
NET INCOME (LOSS) | $ | 5,842,289 | $ | (46,660,562 | ) | ||
NET INCOME (LOSS) attributable to noncontrolling interest | 918,287 | (18,119,131 | ) | ||||
NET INCOME (LOSS) attributable to | $ | 4,924,002 | $ | (28,541,431 | ) | ||
NET INCOME (LOSS) attributable to Class A common shareholders: | |||||||
Basic | $ | 0.35 | $ | (6.52 | ) | ||
Diluted | $ | 0.35 | $ | (6.52 | ) | ||
Weighted average number of Class A common shares outstanding: | |||||||
Basic | 13,989,820 | 4,375,614 | |||||
Diluted | 13,989,820 | 4,375,614 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||||||
Three Months Ended | |||||||
2024 | 2023 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income (loss) | $ | 5,842,289 | $ | (46,660,562 | ) | ||
Adjustments to reconcile net income (loss) to cash flows from operating activities: | |||||||
Depreciation and amortization | 9,514,654 | 7,722,841 | |||||
Accretion of asset retirement obligation | 13,743 | 13,051 | |||||
Loss on disposal of fixed assets | — | 91,086 | |||||
Realized gain on sale of miner assets | (36,012 | ) | — | ||||
Change in value of accounts receivable | 213,040 | 1,002,750 | |||||
Amortization of debt issuance costs | 51,473 | 34,517 | |||||
Stock-based compensation | 1,939,120 | 2,449,324 | |||||
Loss on debt extinguishment | — | 28,960,947 | |||||
Changes in fair value of warrant liabilities | (11,677,720 | ) | 714,589 | ||||
Other | 199,844 | (12,139 | ) | ||||
(Increase) decrease in digital currencies: | |||||||
Mining revenue | (25,114,221 | ) | (12,921,075 | ) | |||
Net proceeds from sale of digital currencies | 28,387,631 | 12,286,573 | |||||
Unrealized gain on digital currencies | (1,227 | ) | — | ||||
Impairments on digital currencies | — | 71,477 | |||||
(Increase) decrease in assets: | |||||||
Accounts receivable | (1,445,198 | ) | 4,959,865 | ||||
Prepaid insurance | 1,395,842 | 1,336,037 | |||||
Due from related parties | — | (68,436 | ) | ||||
Inventory | 110,889 | (229,175 | ) | ||||
Other assets | (1,092,745 | ) | (296,265 | ) | |||
Increase (decrease) in liabilities: | |||||||
Accounts payable | (400,907 | ) | (1,390,895 | ) | |||
Due to related parties | (98,891 | ) | 237,466 | ||||
Accrued liabilities | (1,637,806 | ) | (1,518,296 | ) | |||
Other liabilities, including contract liabilities | (302,388 | ) | (125,146 | ) | |||
NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES | 5,861,410 | (3,341,466 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchases of property, plant and equipment | (244,605 | ) | (13,738 | ) | |||
Proceeds from sale of property, plant and equipment, including CIP | 180,000 | — | |||||
NET CASH FLOWS USED IN INVESTING ACTIVITIES | (64,605 | ) | (13,738 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Repayments of debt | (1,060,008 | ) | (1,836,925 | ) | |||
Repayments of financed insurance premiums | (1,413,803 | ) | (1,750,874 | ) | |||
Proceeds from exercise of warrants | — | 273 | |||||
NET CASH FLOWS USED IN FINANCING ACTIVITIES | (2,473,811 | ) | (3,587,526 | ) | |||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 3,322,994 | (6,942,730 | ) | ||||
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 4,214,613 | 13,296,703 | |||||
CASH AND CASH EQUIVALENTS - END OF PERIOD | $ | 7,537,607 | $ | 6,353,973 |
Use and Reconciliation of Non-GAAP Financial Measures
This press release contains 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, non-recurring expenses, realized gains and losses on the sale of long-term assets, expenses related to stock-based compensation, gains or losses on derivative contracts, gain or losses on extinguishment of debt, commissions on the sale of ash, or changes in the 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, impairments, realized gains and losses on the sale of long-term assets) and other items (such as one-time transaction costs, expenses related to stock-based compensation, and 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. Our presentation of Adjusted EBITDA should be read in conjunction with the financial statements furnished in our Form 10-Q for the first quarter ended
RECONCILIATION OF ADJUSTED EBITDA | |||||||
Three Months Ended | |||||||
(in thousands) | 2024 | 2023 | |||||
Net Income (Loss)—GAAP | $ | 5,842 | $ | (46,661 | ) | ||
Plus: | |||||||
Interest expense | 2,263 | 2,384 | |||||
Depreciation and amortization | 9,515 | 7,723 | |||||
Loss on debt extinguishment | — | 28,961 | |||||
Impairments on digital currencies | — | 71 | |||||
Non-recurring expenses1 | 837 | 682 | |||||
Stock-based compensation | 1,939 | 2,449 | |||||
Loss on disposal of fixed assets | — | 91 | |||||
Realized gain on sale of miner assets | (36 | ) | — | ||||
Realized gain on sale of digital currencies2 | — | (327 | ) | ||||
Changes in fair value of warrant liabilities | (11,678 | ) | 715 | ||||
Accretion of asset retirement obligation | 14 | 13 | |||||
Adjusted EBITDA—Non-GAAP | $ | 8,696 | $ | (3,898 | ) |
1 Includes the following non-recurring expenses: One-time legal fees, out-of-the-ordinary major repairs and upgrades to the power plant, and other one-time items.
2 As previously disclosed, the Company adopted ASU 2023-08 effective
Investor Contact:
SDIG@gateway-grp.com
1-949-574-3860
Media Contact:
contact@strongholddigitalmining.com
Source:
2024 GlobeNewswire, Inc., source