Recent Operational and Financial Highlights
- Achieved ~3.8 EH/s of actual hash rate on installed hash rate capacity of 4.1 EH/s, following the installation of 5,000 recently purchased Bitcoin miners. The Company has less than $1mm of outstanding capital commitments for miners heading into the
April 2024 halving. - Current energized slots in existing Stronghold data centers have the capacity to support over 7 EH/s of hash rate. Stronghold believes it has the unique opportunity to significantly increase its hash rate capacity within its existing infrastructure and is evaluating options to accomplish this, including through its existing miner purchase option with
Canaan Inc. , additional Bitcoin miner replacements, expansion of Bitcoin mining agreements, and other strategic opportunities. - Executed electricity sales and purchase agreements with
Champion Energy Services, LLC , aCalpine company (the “ESPAs”). Stronghold expects the ESPAs to provide a flexible source of power to the Scrubgrass andPanther Creek data centers at a cost that the Company independently estimates will be approximately$10-12 /MWh, including all ancillary charges and taxes, plus the cost of wholesale power, assuming prices range from$10-40 /MWh. The Company believes that extended periods of low power pricing, especially in shoulder months, will yield the opportunity to import power to reduce overall cost of power. - Scrubgrass Plant carbon capture project is registered on the Puro Carbon Registry (“Puro”) in late February. The Company expects to begin the audit process with
Puro in the near future. - Second Karbolith™ is now operational at the Scrubgrass Plant.
- Fixed costs down
~$33 million for the full year 2023 versus the full year 2022, representing a ~37% reduction. Fixed costs include operations & maintenance expenses and general & administrative expenses, excluding stock-based compensation. - The Company generated revenues of
$21.7 million , net loss of$21.2 million , and non-GAAP Adjusted EBITDA of$2.3 million during the fourth quarter of 2023. Revenues comprised$15.1 million from cryptocurrency self-mining,$5.4 million from cryptocurrency hosting, and$1.1 million from the sale of energy.1
Bitcoin Mining Update
Stronghold generated 599 Bitcoin during the fourth quarter of 2023, which was down 3% versus the third quarter of 2023 and represented 34% growth compared to the fourth quarter of 2022, respectively. Bitcoin mining economics began to recover over the course of 2023. Bitcoin hash price, which is Stronghold’s preferred measure of conveying mining revenue per unit of hash rate due to its inclusion of Bitcoin price, transaction fees, and network hash rate/difficulty in the calculation, averaged
Stronghold mined 170 Bitcoin in
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%.
In partnership with
Liquidity and Capital Resources
As of
Conference Call
Stronghold will host a conference call today,
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 Fourth Quarter 2023 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 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. 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
UNAUDITED CONSOLIDATED BALANCE SHEETS | |||||||
ASSETS: | |||||||
Cash and cash equivalents | $ | 4,214,613 | $ | 13,296,703 | |||
Digital currencies | 3,175,595 | 109,827 | |||||
Accounts receivable | 507,029 | 10,837,126 | |||||
Inventory | 4,196,812 | 4,471,657 | |||||
Prepaid insurance | 3,787,048 | 4,877,935 | |||||
Due from related parties | 97,288 | 73,122 | |||||
Other current assets | 1,675,084 | 1,975,300 | |||||
Total current assets | 17,653,469 | 35,641,670 | |||||
Equipment deposits | 8,000,643 | 10,081,307 | |||||
Property, plant and equipment, net | 144,642,771 | 167,204,681 | |||||
Operating lease right-of-use assets | 1,472,747 | 1,719,037 | |||||
Land | 1,748,440 | 1,748,440 | |||||
Road bond | 299,738 | 211,958 | |||||
Security deposits | 348,888 | 348,888 | |||||
Other noncurrent assets | 170,488 | — | |||||
TOTAL ASSETS | $ | 174,337,184 | $ | 216,955,981 | |||
LIABILITIES: | |||||||
Accounts payable | 11,857,052 | 27,540,317 | |||||
Accrued liabilities | 10,787,895 | 8,893,248 | |||||
Financed insurance premiums | 2,927,508 | 4,587,935 | |||||
Current portion of long-term debt, net of discounts and issuance fees | 7,936,147 | 17,422,546 | |||||
Current portion of operating lease liabilities | 788,706 | 593,063 | |||||
Due to related parties | 718,838 | 1,375,049 | |||||
Total current liabilities | 35,016,146 | 60,412,158 | |||||
Asset retirement obligation | 1,075,728 | 1,023,524 | |||||
Warrant liabilities | 25,210,429 | 2,131,959 | |||||
Long-term debt, net of discounts and issuance fees | 48,203,762 | 57,027,118 | |||||
Long-term operating lease liabilities | 776,079 | 1,230,001 | |||||
Contract liabilities | 241,420 | 351,490 | |||||
Total liabilities | 110,523,564 | 122,176,250 | |||||
COMMITMENTS AND CONTINGENCIES | |||||||
REDEEMABLE COMMON STOCK: | |||||||
Common Stock – Class V; | 20,416,116 | 11,754,587 | |||||
Total redeemable common stock | 20,416,116 | 11,754,587 | |||||
STOCKHOLDERS’ EQUITY (DEFICIT): | |||||||
Common Stock – Class A; | 1,112 | 317 | |||||
Series C convertible preferred stock; | 1 | — | |||||
Series D convertible preferred stock; | 1 | — | |||||
Accumulated deficits | (331,647,755 | ) | (240,443,302 | ) | |||
Additional paid-in capital | 375,044,145 | 323,468,129 | |||||
Total stockholders' equity | 43,397,504 | 83,025,144 | |||||
Total redeemable common stock and stockholders' equity | 63,813,620 | 94,779,731 | |||||
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS' EQUITY | $ | 174,337,184 | $ | 216,955,981 |
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
Three months ended, | Twelve months ended, | |||||||||||||||
(unaudited) | ||||||||||||||||
OPERATING REVENUES: | ||||||||||||||||
Cryptocurrency mining | $ | 15,120,466 | $ | 8,048,141 | $ | 52,885,456 | $ | 58,763,565 | ||||||||
Cryptocurrency hosting | 5,419,517 | 177,545 | 14,614,589 | 459,872 | ||||||||||||
Energy | 1,131,661 | 15,577,441 | 5,814,251 | 45,384,953 | ||||||||||||
Capacity | — | 878,610 | 1,442,067 | 5,469,648 | ||||||||||||
Other | 67,743 | 53,839 | 209,937 | 145,780 | ||||||||||||
Total operating revenues | 21,739,387 | 24,735,576 | 74,966,300 | 110,223,818 | ||||||||||||
OPERATING EXPENSES: | ||||||||||||||||
Fuel | 6,328,207 | 3,678,210 | 28,590,348 | 32,970,826 | ||||||||||||
Operations and maintenance | 8,630,092 | 9,581,012 | 32,836,172 | 57,030,189 | ||||||||||||
General and administrative | 6,284,836 | 11,612,519 | 31,430,280 | 44,460,810 | ||||||||||||
Depreciation and amortization | 9,390,265 | 10,001,218 | 35,415,286 | 47,235,344 | ||||||||||||
Loss on disposal of fixed assets | 3,709,940 | 279,722 | 3,818,307 | 2,511,262 | ||||||||||||
Realized gain on sale of digital currencies | (242,856 | ) | (165,714 | ) | (967,995 | ) | (1,102,220 | ) | ||||||||
Realized (gain) loss on sale of miner assets | (52,000 | ) | — | (52,000 | ) | 8,012,248 | ||||||||||
Impairments on miner assets | — | 24,083,112 | — | 40,683,112 | ||||||||||||
Impairments on digital currencies | 226,788 | 162,792 | 910,029 | 8,339,660 | ||||||||||||
Impairments on equipment deposits | — | 5,120,000 | 5,422,338 | 17,348,742 | ||||||||||||
Total operating expenses | 34,275,272 | 64,352,871 | 137,402,765 | 257,489,973 | ||||||||||||
NET OPERATING LOSS | (12,535,885 | ) | (39,617,295 | ) | (62,436,465 | ) | (147,266,155 | ) | ||||||||
OTHER INCOME (EXPENSE): | ||||||||||||||||
Interest expense | (2,417,829 | ) | (3,097,706 | ) | (9,846,359 | ) | (13,911,008 | ) | ||||||||
Loss on debt extinguishment | — | (7,661,682 | ) | (28,960,947 | ) | (40,517,707 | ) | |||||||||
Gain on extinguishment of PPP loan | — | — | — | 841,670 | ||||||||||||
Changes in fair value of warrant liabilities | (6,227,175 | ) | 2,924,106 | (646,722 | ) | 4,226,171 | ||||||||||
Realized gain on sale of derivative contract | — | — | — | 90,953 | ||||||||||||
Changes in fair value of forward sale derivative | — | — | — | 3,435,639 | ||||||||||||
Changes in fair value of convertible note | — | — | — | (2,167,500 | ) | |||||||||||
Other | 20,000 | 45,970 | 65,000 | 95,970 | ||||||||||||
Total other income (expense) | (8,625,004 | ) | (7,789,312 | ) | (39,389,028 | ) | (47,905,812 | ) | ||||||||
NET LOSS | $ | (21,160,889 | ) | $ | (47,406,607 | ) | $ | (101,825,493 | ) | $ | (195,171,967 | ) | ||||
NET LOSS attributable to noncontrolling interest | (3,765,018 | ) | (19,475,390 | ) | (30,428,749 | ) | (105,910,737 | ) | ||||||||
Deemed contribution from exchange of Series C convertible preferred stock | 20,492,568 | — | 20,492,568 | — | ||||||||||||
NET LOSS attributable to | $ | 3,096,697 | $ | (27,931,217 | ) | $ | (50,904,176 | ) | $ | (89,261,230 | ) | |||||
NET LOSS attributable to Class A common shareholders: | ||||||||||||||||
Basic | $ | 0.34 | $ | (7.36 | ) | $ | (7.46 | ) | $ | (34.53 | ) | |||||
Diluted (1) | $ | (1.46 | ) | $ | (7.36 | ) | $ | (7.46 | ) | $ | (34.53 | ) | ||||
Weighted average number of Class A common shares outstanding: | ||||||||||||||||
Basic | 9,037,428 | 3,794,708 | 6,821,173 | 2,584,907 | ||||||||||||
Diluted | 11,933,089 | 3,794,708 | 6,821,173 | 2,584,907 |
(1) The diluted earnings per share for the three months ended
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
For the years ended | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net loss | $ | (101,825,493 | ) | $ | (195,171,967 | ) | |
Adjustments to reconcile net loss to cash flows from operating activities: | |||||||
Depreciation and amortization | 35,415,286 | 47,235,344 | |||||
Accretion of asset retirement obligation | 52,204 | 49,576 | |||||
Gain on extinguishment of PPP loan | — | (841,670 | ) | ||||
Loss on disposal of fixed assets | 3,818,307 | 2,511,262 | |||||
Realized (gain) loss on sale of miner assets | (52,000 | ) | 8,012,248 | ||||
Change in value of accounts receivable | 1,867,506 | — | |||||
Amortization of debt issuance costs | 212,566 | 2,935,795 | |||||
Stock-based compensation | 9,238,826 | 13,890,350 | |||||
Loss on debt extinguishment | 28,960,947 | 40,517,707 | |||||
Impairments on equipment deposits | 5,422,338 | 17,348,742 | |||||
Impairments on miner assets | — | 40,683,112 | |||||
Changes in fair value of warrant liabilities | 646,722 | (4,226,171 | ) | ||||
Changes in fair value of forward sale derivative | — | (3,435,639 | ) | ||||
Realized gain on sale of derivative contract | — | (90,953 | ) | ||||
Forward sale contract prepayment | — | 970,000 | |||||
Changes in fair value of convertible note | — | 2,167,500 | |||||
Other | 470,905 | 2,217,458 | |||||
(Increase) decrease in digital currencies: | |||||||
Mining revenue | (62,236,771 | ) | (58,763,565 | ) | |||
Net proceeds from sales of digital currencies | 58,260,974 | 56,172,048 | |||||
Impairments on digital currencies | 910,029 | 8,339,660 | |||||
(Increase) decrease in assets: | |||||||
Accounts receivable | 8,108,710 | (8,725,271 | ) | ||||
Prepaid insurance | 6,728,976 | 6,908,215 | |||||
Due from related parties | (91,617 | ) | (5,671 | ) | |||
Inventory | 274,845 | (1,099,402 | ) | ||||
Other assets | (234,858 | ) | (603,963 | ) | |||
Increase (decrease) in liabilities: | |||||||
Accounts payable | (4,250,888 | ) | (3,093,265 | ) | |||
Due to related parties | 28,241 | (55,611 | ) | ||||
Accrued liabilities | 1,704,321 | (180,943 | ) | ||||
Other liabilities, including contract liabilities | (577,189 | ) | (819,461 | ) | |||
NET CASH FLOWS USED IN OPERATING ACTIVITIES | (7,147,113 | ) | (27,154,535 | ) | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchases of property, plant and equipment | (15,915,398 | ) | (70,935,935 | ) | |||
Proceeds from sale of equipment deposits | — | 13,013,974 | |||||
Equipment purchase deposits – net of future commitments | (8,000,643 | ) | (13,656,428 | ) | |||
Purchase of reclamation bond | (87,780 | ) | — | ||||
NET CASH FLOWS USED IN INVESTING ACTIVITIES | (24,003,821 | ) | (71,578,389 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Repayments of debt | (7,147,771 | ) | (76,119,454 | ) | |||
Repayments of financed insurance premiums | (7,047,122 | ) | (4,598,592 | ) | |||
Proceeds from debt, net of issuance costs paid in cash | (170,135 | ) | 152,358,118 | ||||
Proceeds from private placements, net of issuance costs paid in cash | 25,257,567 | 8,599,440 | |||||
Proceeds from ATM, net of issuance costs paid in cash | 11,175,989 | — | |||||
Proceeds from exercise of warrants | 316 | — | |||||
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | 22,068,844 | 80,239,512 | |||||
(9,082,090 | ) | (18,493,412 | ) | ||||
CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD | 13,296,703 | 31,790,115 | |||||
CASH AND CASH EQUIVALENTS – END OF PERIOD | $ | 4,214,613 | $ | 13,296,703 | |||
Use and Reconciliation of Non-GAAP Financial Measures
This 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, impairments on 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, gains or losses on extinguishment of debt, realized gains or losses on sale of digital currencies, 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, impairments, realized gains on digital assets and 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-K for the fiscal year ended
RECONCILIATION OF UNAUDITED ADJUSTED EBITDA | |||||||||||||||
Three months ended, | Twelve months ended, | ||||||||||||||
(in thousands) | |||||||||||||||
Net (Loss) (GAAP) | $ | (21,161 | ) | $ | (47,407 | ) | $ | (101,825 | ) | $ | (195,172 | ) | |||
Plus: | |||||||||||||||
Interest expense | 2,418 | 3,098 | 9,846 | 13,911 | |||||||||||
Depreciation and amortization | 9,390 | 10,001 | 35,415 | 47,235 | |||||||||||
Loss on debt extinguishment | — | 7,662 | 28,961 | 40,518 | |||||||||||
Impairments on miner assets | — | 24,083 | — | 40,683 | |||||||||||
Impairments on equipment deposits | — | 5,120 | 5,422 | 17,349 | |||||||||||
Impairments on digital currencies | 227 | 163 | 910 | 8,340 | |||||||||||
One-time, non-recurring expenses (1) | 172 | 473 | 2,025 | 15,254 | |||||||||||
Realized (gain) loss on sale of miner assets | (52 | ) | — | (52 | ) | 8,012 | |||||||||
Changes in fair value of convertible note | — | — | — | 2,168 | |||||||||||
Stock-based compensation | 1,635 | 4,767 | 9,239 | 13,890 | |||||||||||
Loss on disposal of fixed assets | 3,710 | 280 | 3,818 | 2,511 | |||||||||||
Realized gain on sale of derivative contract | — | — | — | 91 | |||||||||||
Gain on extinguishment of debt | — | — | — | (842 | ) | ||||||||||
Realized gain on sale of digital currencies | (243 | ) | (166 | ) | (968 | ) | (1,102 | ) | |||||||
Changes in fair value of forward sale derivative | — | — | — | (3,436 | ) | ||||||||||
Changes in fair value of warrant liabilities | 6,227 | (2,924 | ) | 647 | (4,226 | ) | |||||||||
Accretion of asset retirement obligation | 13 | 31 | 52 | 31 | |||||||||||
Adjusted EBITDA (Non-GAAP) | $ | 2,336 | $ | 5,182 | $ | (6,510 | ) | $ | 5,216 |
(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.
Investor Contact:
SDIG@gateway-grp.com
1-949-574-3860
Media Contact:
contact@strongholddigitalmining.com
1 See Non-GAAP Reconciliation table.
Source:
2024 GlobeNewswire, Inc., source