Stronghold Announces Third Quarter 2024 Operating and Financial Results
Stronghold Digital Mining (NASDAQ: SDIG) reported Q3 2024 financial results with revenues of $11.2 million, down 42% sequentially and 37% year-over-year. The company posted a GAAP Net Loss of $22.7 million and Adjusted EBITDA Loss of $5.5 million. The company has entered into a merger agreement with Bitfarms, where shareholders will receive 2.52 Bitfarms shares for each Stronghold share. Additionally, Stronghold signed two hosting agreements with Bitfarms for 20,000 Bitcoin miners total, with each agreement including a $7.8 million power cost deposit. The company generated 188 Bitcoin in Q3 2024, a 35% decrease from Q2 due to the April Bitcoin halving.
Stronghold Digital Mining (NASDAQ: SDIG) ha riportato i risultati finanziari del terzo trimestre 2024 con ricavi di 11,2 milioni di dollari, in calo del 42% rispetto al trimestre precedente e del 37% rispetto allo stesso trimestre dell'anno precedente. L'azienda ha registrato una perdita netta GAAP di 22,7 milioni di dollari e una perdita di EBITDA rettificato di 5,5 milioni di dollari. L'azienda ha stipulato un accordo di fusione con Bitfarms, dove gli azionisti riceveranno 2,52 azioni Bitfarms per ogni azione Stronghold. Inoltre, Stronghold ha firmato due contratti di hosting con Bitfarms per un totale di 20.000 miner Bitcoin, con ogni contratto che include un deposito per i costi energetici di 7,8 milioni di dollari. L'azienda ha generato 188 Bitcoin nel terzo trimestre del 2024, con una diminuzione del 35% rispetto al secondo trimestre a causa del dimezzamento del Bitcoin di aprile.
Stronghold Digital Mining (NASDAQ: SDIG) reportó resultados financieros del tercer trimestre de 2024 con ingresos de 11,2 millones de dólares, una disminución del 42% secuencialmente y del 37% en comparación interanual. La compañía registró una pérdida neta GAAP de 22,7 millones de dólares y una pérdida de EBITDA ajustado de 5,5 millones de dólares. La empresa ha entrado en un acuerdo de fusión con Bitfarms, donde los accionistas recibirán 2,52 acciones de Bitfarms por cada acción de Stronghold. Además, Stronghold firmó dos acuerdos de alojamiento con Bitfarms para un total de 20,000 mineros de Bitcoin, con cada acuerdo incluyendo un depósito de costo de energía de 7,8 millones de dólares. La compañía generó 188 Bitcoin en el tercer trimestre de 2024, lo que representa una disminución del 35% en comparación con el segundo trimestre debido al halving de Bitcoin en abril.
스트롱홀드 디지털 마이닝 (NASDAQ: SDIG)은 2024년 3분기 재무 결과를 발표했으며, 총 수익은 1,120만 달러로 42% 감소했으며 전년 동기 대비 37% 감소했습니다. 이 회사는 GAAP 기준으로 2,270만 달러의 순손실을 기록했으며 조정 EBITDA 손실은 550만 달러입니다. 이 회사는 비트팜스와 합병 계약에 들어갔으며, 주주들은 각 스트롱홀드 주식에 대해 2.52 비트팜스 주식을 받게 됩니다. 또한 스트롱홀드는 비트팜스와 20,000개의 비트코인 채굴기에 대해 두 개의 호스팅 계약을 체결했으며, 각 계약에는 780만 달러의 전력 비용 보증금이 포함되어 있습니다. 이 회사는 2024년 3분기에 188 비트코인을 생성했으며, 이는 2분기보다 35% 감소한 수치로, 4월 비트코인 반감기에 기인합니다.
Stronghold Digital Mining (NASDAQ: SDIG) a annoncé ses résultats financiers pour le troisième trimestre 2024 avec des revenus de 11,2 millions de dollars, en baisse de 42 % par rapport au trimestre précédent et de 37 % par rapport à l'année précédente. L'entreprise a affiché une perte nette GAAP de 22,7 millions de dollars et une perte d'EBITDA ajusté de 5,5 millions de dollars. L'entreprise a signé un accord de fusion avec Bitfarms, où les actionnaires recevront 2,52 actions Bitfarms pour chaque action Stronghold. De plus, Stronghold a conclu deux contrats d'hébergement avec Bitfarms pour un total de 20 000 mineurs de Bitcoin, chaque contrat incluant un dépôt de coût énergétique de 7,8 millions de dollars. L'entreprise a généré 188 Bitcoin au troisième trimestre 2024, soit une diminution de 35 % par rapport au deuxième trimestre en raison de la réduction de moitié de Bitcoin en avril.
Stronghold Digital Mining (NASDAQ: SDIG) hat die Finanzzahlen für das dritte Quartal 2024 veröffentlicht, mit Einnahmen von 11,2 Millionen US-Dollar, was einem Rückgang von 42% im Vergleich zum vorherigen Quartal und 37% im Vergleich zum Vorjahr entspricht. Das Unternehmen verzeichnete einen GAAP-Nettoverlust von 22,7 Millionen US-Dollar und einen bereinigten EBITDA-Verlust von 5,5 Millionen US-Dollar. Das Unternehmen hat eine Fusionsvereinbarung mit Bitfarms getroffen, bei der die Aktionäre 2,52 Bitfarms-Aktien für jede Stronghold-Aktie erhalten. Darüber hinaus zeichnete sich Stronghold durch zwei Hosting-Vereinbarungen mit Bitfarms für insgesamt 20.000 Bitcoin-Miner aus, wobei jede Vereinbarung eine Anzahlung von 7,8 Millionen US-Dollar für Stromkosten umfasst. Im dritten Quartal 2024 generierte das Unternehmen 188 Bitcoin, was einem Rückgang von 35% im Vergleich zum zweiten Quartal aufgrund der Bitcoin-Halbierung im April entspricht.
- Secured hosting agreements with Bitfarms for 20,000 Bitcoin miners
- Received $15.6 million in deposits from Bitfarms for power costs
- Has $2.6 million in receivables from waste coal tax credits
- Revenue declined 42% sequentially to $11.2 million
- GAAP Net Loss of $22.7 million
- Bitcoin production decreased 35% quarter-over-quarter
- Outstanding debt of $53.7 million as of September 30, 2024
Insights
The Q3 2024 results reveal significant challenges for Stronghold Digital Mining.
The hosting agreements with Bitfarms for 20,000 Bitmain T21 miners, backed by
NEW YORK, Nov. 13, 2024 (GLOBE NEWSWIRE) -- Stronghold Digital Mining, Inc. (NASDAQ: SDIG) (“Stronghold”, the “Company”, or “we”) today announced the following:
Recent Financial Highlights
- Revenues of
$11.2 million , down42% sequentially and37% year-over-year. Revenues comprised$10.6 million from cryptocurrency operations and$0.5 million from the sale of energy. - GAAP Net Loss of
$22.7 million and non-GAAP Adjusted EBITDA Loss of$5.5 million .
Merger Agreement with Bitfarms
On August 21, 2024, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Bitfarms Ltd., a corporation incorporated under the Canada Business Corporations Act and continued under the Business Corporations Act (Ontario) (“Bitfarms”) and certain affiliates of Bitfarms. Under the terms of the Merger Agreement, Stronghold shareholders will receive 2.52 common shares of Bitfarms for each share of Stronghold common stock that they own. The Merger Agreement has been unanimously approved by the Boards of Directors of both companies and is expected to close in the first quarter of 2025, subject to the receipt of Stronghold shareholder approval, applicable regulatory approvals, certain third-party consents and other customary closing conditions.
Bitfarms Hosting Agreements
On September 12, 2024, Stronghold Digital Mining Hosting, LLC (“Stronghold Hosting”), an indirect subsidiary of the Company entered into a Hosting Agreement (the “First Hosting Agreement”) with Bitfarms, pursuant to which Stronghold Hosting will host 10,000 Bitmain T21 Bitcoin miners owned by Bitfarms (the “Bitfarms Miners”) at the Company’s Panther Creek site. The Company has received a portion of the Bitfarms Miners to date and expects to receive the remaining Bitfarms Miners during November and December 2024. The First Hosting Agreement has an initial term expiring on December 31, 2025, after which it will automatically renew for additional one-year periods unless either party provides written notice of non-renewal. Pursuant to the First Hosting Agreement, Bitfarms will pay Stronghold fifty percent of the profit generated by the Bitfarms miners, subject to certain monthly adjustments. In connection with the execution of the First Hosting Agreement, Bitfarms also deposited with Stronghold
On October 29, 2024, Stronghold Hosting entered into another Hosting Agreement (the “Second Hosting Agreement”) with Bitfarms, pursuant to which Stronghold Hosting will host 10,000 Bitmain T21 miners owned by Bitfarms (the “Second Bitfarms Miners”) at the Company’s Scrubgrass site. The Company expects to begin receiving the Second Bitfarms Miners in late December 2024, or early January 2025. The initial term of the Second Hosting Agreement will expire on December 31, 2025, after which it will automatically renew for additional one-year periods unless either party provides written notice of non-renewal. Pursuant to the Second Hosting Agreement, Bitfarms will pay Stronghold fifty percent of the profit generated by the Second Bitfarms Miners, subject to certain monthly adjustments. In connection with the execution of the Second Hosting Agreement, Bitfarms also deposited with Stronghold
Bitcoin Mining Update
During the third quarter of 2024, Stronghold generated 188 Bitcoin, and approximately
Liquidity and Capital Resources
As of September 30, 2024, and November 8, 2024, the Company had approximately
Conference Call
Stronghold will host a conference call today, November 13, 2024, at 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time) to discuss these results. 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 2024 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 and Panther Creek plants, both of which are low-cost, environmentally beneficial coal refuse power generation facilities in Pennsylvania.
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; 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 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 remain listed on a stock exchange and maintain an active trading market; our ability to avail ourselves of tax credits for the clean-up of coal refuse piles; legislative or regulatory changes, and liability under, or any future inability to comply with, existing or future energy regulations or requirements; our ability to replicate and scale the carbon capture project; our ability to manage costs related to the carbon capture project; our ability to monetize our carbon capture project, including through the private market; our ability to qualify for, obtain, monetize or otherwise benefit from the Puro registry and Section 45Q tax credits; our ability to qualify for demand response programs; our ability to qualify as PJM “In Network” load; our ability to prepare our sites for and execute on GPU computing initiatives; our ability to expand the power capacity at our sites; the risk that the merger may not be completed on the anticipated terms in a timely manner or at all, which may adversely affect our business and the price of Class A common stock; the failure to satisfy any of the conditions to the consummation of the merger, including obtaining required stockholder and regulatory approvals; potential litigation relating to the merger that could be instituted against us, Bitfarms or their respective directors or officers, including the effects of any outcomes related thereto; the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement, including in circumstances requiring us to pay a termination fee; the effect of the announcement or pendency of the merger on our business relationships, operating results and business generally; the risk that the merger disrupts our current plans and operations; our ability to retain and hire key personnel and maintain relationships with key business partners and customers, and others with whom it does business, in light of the merger; potential adverse reactions or changes to business relationships resulting from the announcement or completion of the merger; risks related to diverting management’s attention from our ongoing business operations; certain restrictions during the pendency of the merger that may impact our ability to pursue certain business opportunities or strategic transactions; the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; those risks described in Section 4.19 of Bitfarms’ Annual Information Form for the year ended December 31, 2023, filed with the SEC on March 7, 2024, as Exhibit 99.1 to Bitfarms’ Annual Report on Form 40-F, Section 19 of Bitfarms’ Management’s Discussion and Analysis for the year ended December 31, 2023, filed with the SEC on March 7, 2024, as Exhibit 99.3 to Bitfarms’ Annual Report on Form 40-F, Section 19 of Bitfarms’ Management’s Discussion and Analysis for the three and six months ended June 30, 2024, filed with the SEC on August 8, 2024, as Exhibit 99.2 to Bitfarms’ Current Report on Form 6-K, and subsequent reports on Form 6-K; those risks described in Item 1A of the Company’s Annual Report on Form 10-K, filed with the SEC on March 8, 2024, Item 1A of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2024, filed with the SEC on May 8, 2024, Item 1A of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2024, filed with the SEC on August 14, 2024, and subsequent reports on Form 10-Q, including the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2024, which the Company expects to file on or around November 13, 2024, and Form 8-K; and those risks that are described in the registration statement on Form F-4 (File No. 333-282657) filed by Bitfarms with the SEC (the “registration statement”), which includes a proxy statement of Stronghold that also constitutes a prospectus of Bitfarms (the “proxy statement/prospectus”).
These risks, as well as other risks associated with the proposed transaction, are more fully discussed in the proxy statement/prospectus. While the list of factors presented here, and the list of factors presented in the registration statement, are each considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. We caution you not to place undue reliance on any of these forward-looking statements as they are not guarantees of future performance or outcomes and that actual performance and outcomes, including, without limitation, our actual results of operations, financial condition and liquidity, and the development of new markets or market segments in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this communication. Neither Bitfarms nor the Company assumes any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. Neither future distribution of this communication nor the continued availability of this communication in archive form on Bitfarms’ or the Company’s website should be deemed to constitute an update or re-affirmation of these statements as of any future date.
Additional Information about the Merger and Where to Find It
In connection with the proposed merger, Bitfarms has filed the registration statement with the SEC. After the registration statement is declared effective, Stronghold will mail the proxy statement/prospectus to its shareholders. This communication is not a substitute for the registration statement, the proxy statement/prospectus or any other relevant documents Bitfarms and the Company has filed or will file with the SEC. Investors are urged to read the proxy statement/prospectus (including all amendments and supplements thereto) and other relevant documents filed with the SEC carefully and in their entirety, if and when they become available, because they will contain important information about the proposed merger and related matters.
Investors may obtain free copies of the registration statement, the proxy statement/prospectus and other relevant documents filed by Bitfarms and the Company with the SEC, when they become available, through the website maintained by the SEC at www.sec.gov. Copies of the documents may also be obtained for free from Bitfarms by contacting Bitfarms’ Investor Relations Department at investors@bitfarms.com and from Stronghold by contacting Stronghold’s Investor Relations Department at SDIG@gateway-grp.com.
Participants in Solicitation Relating to the Merger
Bitfarms, the Company, their respective directors and certain of their respective executive officers may be deemed to be participants in the solicitation of proxies from the Company’s shareholders in respect of the proposed merger. Information regarding Bitfarms’ directors and executive officers can be found in Bitfarms’ annual information form for the year ended December 31, 2023, filed on March 7, 2024, as well as its other filings with the SEC. Information regarding the Company’s directors and executive officers can be found in the Company’s proxy statement for its 2024 annual meeting of stockholders, filed with the SEC on April 29, 2024, and supplemented on June 7, 2024, and in its Form 10-K for the year ended December 31, 2023, filed with the SEC on March 8, 2024. This communication may be deemed to be solicitation material in respect of the proposed merger. Additional information regarding the interests of such potential participants, including their respective interests by security holdings or otherwise, is set forth in the proxy statement/prospectus and other relevant documents filed with the SEC in connection with the proposed merger if and when they become available. These documents are available free of charge on the SEC’s website and from Bitfarms and the Company using the sources indicated above.
No Offer or Solicitation
This communication is not intended to and does not constitute an offer to sell or the solicitation of an offer to buy, sell or solicit any securities or any proxy, vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be deemed to be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
| STRONGHOLD DIGITAL MINING, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||||||
| September 30, 2024 | December 31, 2023 | ||||||
| ASSETS: | |||||||
| Cash and cash equivalents | $ | 4,491,447 | $ | 4,214,613 | |||
| Digital currencies | 613,949 | 3,175,595 | |||||
| Accounts receivable | 1,240,900 | 507,029 | |||||
| Inventory | 2,815,178 | 4,196,812 | |||||
| Prepaid insurance | 1,668,837 | 3,787,048 | |||||
| Due from related parties | 90,538 | 97,288 | |||||
| Other current assets | 1,898,404 | 1,675,084 | |||||
| Total current assets | 12,819,253 | 17,653,469 | |||||
| Equipment deposits | — | 8,000,643 | |||||
| Property, plant and equipment, net | 124,971,766 | 144,642,771 | |||||
| Operating lease right-of-use assets | 904,988 | 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 | 271,960 | 170,488 | |||||
| TOTAL ASSETS | $ | 141,365,033 | $ | 174,337,184 | |||
| LIABILITIES: | |||||||
| Accounts payable | $ | 11,259,291 | $ | 11,857,052 | |||
| Accrued liabilities | 13,846,663 | 10,787,895 | |||||
| Financed insurance premiums | 952,369 | 2,927,508 | |||||
| Current portion of long-term debt, net of discounts and issuance fees | 19,566,519 | 7,936,147 | |||||
| Current portion of operating lease liabilities | 605,324 | 788,706 | |||||
| Due to related parties | 1,449,195 | 718,838 | |||||
| Total current liabilities | 47,679,361 | 35,016,146 | |||||
| Asset retirement obligation | 1,116,958 | 1,075,728 | |||||
| Warrant liabilities | 16,765,182 | 25,210,429 | |||||
| Long-term debt, net of discounts and issuance fees | 33,879,516 | 48,203,762 | |||||
| Long-term operating lease liabilities | 356,542 | 776,079 | |||||
| Other noncurrent liabilities | 10,500,864 | 241,420 | |||||
| Total liabilities | 110,298,423 | 110,523,564 | |||||
| COMMITMENTS AND CONTINGENCIES | |||||||
| REDEEMABLE COMMON STOCK: | |||||||
| Common Stock – Class V; outstanding as of September 30, 2024, and December 31, 2023. | 11,536,161 | 20,416,116 | |||||
| Total redeemable common stock | 11,536,161 | 20,416,116 | |||||
| STOCKHOLDERS’ EQUITY: | |||||||
| Common Stock – Class A; shares issued and outstanding as of September 30, 2024, and December 31, 2023, respectively. | 1,474 | 1,112 | |||||
| Series C convertible preferred stock; issued and outstanding as of September 30, 2024, and December 31, 2023, respectively. | 1 | 1 | |||||
| Series D convertible preferred stock; issued and outstanding as of September 30, 2024, and December 31, 2023, respectively. | — | 1 | |||||
| Accumulated deficits | (360,763,808 | ) | (331,647,755 | ) | |||
| Additional paid-in capital | 380,292,782 | 375,044,145 | |||||
| Total stockholders' equity | 19,530,449 | 43,397,504 | |||||
| Total redeemable common stock and stockholders' equity | 31,066,610 | 63,813,620 | |||||
| TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS' EQUITY | $ | 141,365,033 | $ | 174,337,184 | |||
| STRONGHOLD DIGITAL MINING, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | ||||||||||||
| OPERATING REVENUES: | |||||||||||||||
| Cryptocurrency mining | $ | 8,709,777 | $ | 12,684,894 | $ | 44,989,361 | $ | 37,764,990 | |||||||
| Cryptocurrency hosting | 1,911,610 | 3,789,375 | 11,193,438 | 9,195,072 | |||||||||||
| Energy | 502,640 | 1,210,811 | 1,424,077 | 4,682,590 | |||||||||||
| Capacity | — | — | — | 1,442,067 | |||||||||||
| Other | 44,046 | 41,877 | 187,521 | 142,194 | |||||||||||
| Total operating revenues | 11,168,073 | 17,726,957 | 57,794,397 | 53,226,913 | |||||||||||
| OPERATING EXPENSES: | |||||||||||||||
| Fuel | 6,500,292 | 8,556,626 | 19,709,424 | 22,262,141 | |||||||||||
| Operations and maintenance | 4,998,609 | 6,961,060 | 22,321,981 | 24,206,080 | |||||||||||
| General and administrative | 8,326,999 | 6,598,951 | 26,671,930 | 25,145,444 | |||||||||||
| Depreciation and amortization | 8,623,646 | 9,667,213 | 27,428,863 | 26,025,021 | |||||||||||
| Loss on disposal of fixed assets | 458,147 | — | 2,189,252 | 108,367 | |||||||||||
| Realized loss (gain) on sale of digital currencies | (719,795 | ) | (131,706 | ) | (1,100,214 | ) | (725,139 | ) | |||||||
| Unrealized loss (gain) on digital currencies | 33,783 | — | (113,438 | ) | — | ||||||||||
| Realized loss on sale of miner assets | 530,099 | — | 494,087 | — | |||||||||||
| Impairments on digital currencies | — | 357,411 | — | 683,241 | |||||||||||
| Impairments on equipment deposits | — | 5,422,338 | — | 5,422,338 | |||||||||||
| Total operating expenses | 28,751,780 | 37,431,893 | 97,601,885 | 103,127,493 | |||||||||||
| NET OPERATING LOSS | (17,583,707 | ) | (19,704,936 | ) | (39,807,488 | ) | (49,900,580 | ) | |||||||
| OTHER INCOME (EXPENSE): | |||||||||||||||
| Interest expense | (2,236,587 | ) | (2,441,139 | ) | (6,748,059 | ) | (7,428,530 | ) | |||||||
| Loss on debt extinguishment | — | — | — | (28,960,947 | ) | ||||||||||
| Changes in fair value of warrant liabilities | (2,850,298 | ) | (180,838 | ) | 8,445,247 | 5,580,453 | |||||||||
| Other | — | 15,000 | 15,000 | 45,000 | |||||||||||
| Total other (expense) income | (5,086,885 | ) | (2,606,977 | ) | 1,712,188 | (30,764,024 | ) | ||||||||
| NET LOSS | $ | (22,670,592 | ) | $ | (22,311,913 | ) | $ | (38,095,300 | ) | $ | (80,664,604 | ) | |||
| NET LOSS attributable to noncontrolling interest | (3,181,407 | ) | (5,188,727 | ) | (5,588,300 | ) | (26,663,731 | ) | |||||||
| NET LOSS attributable to Stronghold Digital Mining, Inc. | $ | (19,489,185 | ) | $ | (17,123,186 | ) | $ | (32,507,000 | ) | $ | (54,000,873 | ) | |||
| NET LOSS attributable to Class A common shareholders: | |||||||||||||||
| Basic | $ | (1.34 | ) | $ | (2.26 | ) | $ | (2.27 | ) | $ | (8.93 | ) | |||
| Diluted | $ | (1.34 | ) | $ | (2.26 | ) | $ | (2.27 | ) | $ | (8.93 | ) | |||
| Weighted average number of Class A common shares outstanding: | |||||||||||||||
| Basic | 14,594,955 | 7,569,511 | 14,319,202 | 6,047,891 | |||||||||||
| Diluted | 14,594,955 | 7,569,511 | 14,319,202 | 6,047,891 | |||||||||||
| STRONGHOLD DIGITAL MINING, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||||||
| Nine Months Ended | |||||||
| September 30, 2024 | September 30, 2023 | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
| Net loss | $ | (38,095,300 | ) | $ | (80,664,604 | ) | |
| Adjustments to reconcile net loss to cash flows from operating activities: | |||||||
| Depreciation and amortization | 27,428,863 | 26,025,021 | |||||
| Accretion of asset retirement obligation | 41,230 | 39,153 | |||||
| Loss on disposal of fixed assets | 2,189,252 | 108,367 | |||||
| Realized loss on sale of miner assets | 494,087 | — | |||||
| Change in value of accounts receivable | 399,192 | 1,867,506 | |||||
| Amortization of debt issuance costs | 154,419 | 161,093 | |||||
| Stock-based compensation | 5,093,193 | 7,603,859 | |||||
| Loss on debt extinguishment | — | 28,960,947 | |||||
| Impairments on equipment deposits | — | 5,422,338 | |||||
| Changes in fair value of warrant liabilities | (8,445,247 | ) | (5,580,453 | ) | |||
| Non-cash adjustments for loss contingencies | 5,253,238 | — | |||||
| Other | 584,510 | (229,485 | ) | ||||
| (Increase) decrease in digital currencies: | |||||||
| Mining revenue | (51,963,137 | ) | (43,778,958 | ) | |||
| Net proceeds from sale of digital currencies | 54,737,513 | 42,563,545 | |||||
| Unrealized gain on digital currencies | (113,438 | ) | — | ||||
| Impairments on digital currencies | — | 683,241 | |||||
| (Increase) decrease in assets: | |||||||
| Accounts receivable | (1,133,062 | ) | 8,129,033 | ||||
| Prepaid insurance | 4,218,459 | 5,174,903 | |||||
| Due from related parties | (211,870 | ) | (91,617 | ) | |||
| Inventory | 1,381,634 | 1,328,373 | |||||
| Other assets | (896,572 | ) | 9,666 | ||||
| Increase (decrease) in liabilities: | |||||||
| Accounts payable | (643,132 | ) | (1,445,109 | ) | |||
| Due to related parties | 730,357 | (239,230 | ) | ||||
| Accrued liabilities | (543,442 | ) | 875,203 | ||||
| Other liabilities, including contract liabilities | 7,888,095 | (211,225 | ) | ||||
| NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES | 8,548,842 | (3,288,433 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
| Purchases of property, plant and equipment | (749,528 | ) | (14,743,269 | ) | |||
| Proceeds from sale of property, plant and equipment, including CIP | 221,212 | — | |||||
| NET CASH FLOWS USED IN INVESTING ACTIVITIES | (528,316 | ) | (14,743,269 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
| Repayments of debt | (3,668,304 | ) | (3,196,644 | ) | |||
| Repayments of financed insurance premiums | (4,075,388 | ) | (5,250,538 | ) | |||
| Proceeds from debt, net of issuance costs paid in cash | — | (147,385 | ) | ||||
| Proceeds from private placements, net of issuance costs paid in cash | — | 9,824,567 | |||||
| Proceeds from ATM, net of issuance costs paid in cash | — | 8,483,982 | |||||
| Proceeds from exercise of warrants | — | 316 | |||||
| NET CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES | (7,743,692 | ) | 9,714,298 | ||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 276,834 | (8,317,404 | ) | ||||
| CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 4,214,613 | 13,296,703 | |||||
| CASH AND CASH EQUIVALENTS - END OF PERIOD | $ | 4,491,447 | $ | 4,979,299 | |||
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, non-recurring expenses, realized gains and losses on the sale of long-term assets, expenses related to stock-based compensation, gains or losses on extinguishment of debt, 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, 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-Q for the third quarter ended September 30, 2024, expected to be filed on or around November 13, 2024. 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. RECONCILIATION OF NON-GAAP ADJUSTED EBITDA | |||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| (in thousands) | September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||||
| Net Loss—GAAP | $ | (22,671 | ) | $ | (22,312 | ) | $ | (38,095 | ) | $ | (80,665 | ) | |||
| Plus: | |||||||||||||||
| Interest expense | 2,237 | 2,441 | 6,748 | 7,429 | |||||||||||
| Depreciation and amortization | 8,624 | 9,667 | 27,429 | 26,025 | |||||||||||
| Loss on debt extinguishment | — | — | — | 28,961 | |||||||||||
| Impairments on equipment deposits | — | 5,422 | — | 5,422 | |||||||||||
| Non-recurring expenses 1 | 928 | 1,216 | 7,384 | 1,853 | |||||||||||
| Stock-based compensation | 1,486 | 788 | 5,093 | 7,604 | |||||||||||
| Loss on disposal of fixed assets | 458 | — | 2,189 | 108 | |||||||||||
| Realized loss on sale of miner assets | 530 | — | 494 | — | |||||||||||
| Changes in fair value of warrant liabilities | 2,850 | 181 | (8,445 | ) | (5,580 | ) | |||||||||
| Accretion of asset retirement obligation | 14 | 13 | 41 | 39 | |||||||||||
| Adjusted EBITDA—Non-GAAP 2 | $ | (5,544 | ) | $ | (2,583 | ) | $ | 2,838 | $ | (8,804 | ) | ||||
1 Includes the following non-recurring expenses: estimated accrual for two loss contingencies, one-time legal fees, and other one-time items.
2 As previously disclosed, the Company adopted ASU 2023-08 effective January 1, 2024, using a modified retrospective transition method, with a cumulative-effect adjustment of approximately
Investor Contact:
Matt Glover
Gateway Group, Inc.
SDIG@gateway-grp.com
1-949-574-3860
Media Contact:
contact@strongholddigitalmining.com
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