Stronghold Reports Second Quarter 2024 Operating and Financial Results
Stronghold Digital Mining (NASDAQ: SDIG) reported Q2 2024 results with revenues of $19.1 million, down 30.6% sequentially but up 4.8% year-over-year. The company faced a GAAP Net Loss of $21.3 million and an Adjusted EBITDA loss of $0.3 million. Stronghold continues its strategic review process, exploring options including potential sale or strategic transactions. The company is pursuing significant site expansion, submitting load studies for additional 400 MW at Panther Creek and 390 MW at Scrubgrass. Stronghold cleared the PJM Base Residual Auction at $269.92/MW/day, up 833% from last year, potentially yielding $7 million in incremental revenue. The company mined 299 Bitcoin in Q2, down 46% from Q1, impacted by the Bitcoin halving event in April.
Stronghold Digital Mining (NASDAQ: SDIG) ha riportato i risultati del Q2 2024 con entrate di 19,1 milioni di dollari, in calo del 30,6% rispetto al trimestre precedente ma in aumento del 4,8% rispetto allo stesso periodo dell’anno scorso. L'azienda ha registrato una perdita netta GAAP di 21,3 milioni di dollari e una perdita di EBITDA rettificato di 0,3 milioni di dollari. Stronghold continua il suo processo di revisione strategica, esplorando opzioni che includono la vendita potenziale o transazioni strategiche. L'azienda sta perseguendo un'espansione significativa del sito, presentando studi di carico per ulteriori 400 MW a Panther Creek e 390 MW a Scrubgrass. Stronghold ha superato l'asta PJM Base Residual a 269,92 $/MW/giorno, in aumento dell'833% rispetto all'anno scorso, con la potenziale generazione di 7 milioni di dollari di entrate aggiuntive. Nel Q2, l'azienda ha estratto 299 Bitcoin, in calo del 46% rispetto al Q1, colpita dall'evento di halving di Bitcoin ad aprile.
Stronghold Digital Mining (NASDAQ: SDIG) reportó los resultados del Q2 2024 con ingresos de 19,1 millones de dólares, una disminución del 30,6% en comparación con el trimestre anterior, pero un aumento del 4,8% en comparación con el año anterior. La empresa enfrentó una pérdida neta GAAP de 21,3 millones de dólares y una pérdida de EBITDA ajustado de 0,3 millones de dólares. Stronghold continúa su proceso de revisión estratégica, explorando opciones que incluyen una posible venta o transacciones estratégicas. La compañía está persiguiendo una expansión significativa del sitio, presentando estudios de carga para 400 MW adicionales en Panther Creek y 390 MW en Scrubgrass. Stronghold superó la subasta PJM Base Residual a 269,92 $/MW/día, un aumento del 833% en comparación con el año pasado, lo que podría generar 7 millones de dólares en ingresos adicionales. La empresa extrajo 299 Bitcoin en el Q2, un 46% menos que en el Q1, impactada por el evento de halving de Bitcoin en abril.
Stronghold Digital Mining (NASDAQ: SDIG)는 2024년 2분기 결과를 발표하며 매출 1,910만 달러를 기록했습니다. 이는 전 분기 대비 30.6% 감소했지만, 지난해 같은 기간 대비 4.8% 증가한 수치입니다. 회사는 GAAP 기준 순손실 2,130만 달러와 조정된 EBITDA 손실 30만 달러를 겪었습니다. Stronghold는 잠재적 매각 또는 전략적 거래와 같은 옵션을 탐색하며 전략 검토 과정을 계속하고 있습니다. 이 회사는 Panther Creek에서 400MW, Scrubgrass에서 390MW의 추가 부하 연구를 제출하며 상당한 사이트 확장을 추구하고 있습니다. Stronghold는 PJM 기본 잔여 경매에서 MW당 269.92달러에 거래를 성사시켰으며, 이는 지난해와 비교해 833% 증가하여 700만 달러의 추가 수익으로 이어질 수 있습니다. 2분기 동안 이 회사는 299 비트코인을 채굴했으며, 이는 1분기 대비 46% 감소한 수치로, 4월 비트코인 반감기 이벤트의 영향을 받았습니다.
Stronghold Digital Mining (NASDAQ: SDIG) a rapporté les résultats du Q2 2024 avec des revenus de 19,1 millions de dollars, en baisse de 30,6 % par rapport au trimestre précédent, mais en hausse de 4,8 % par rapport à l'année précédente. L'entreprise a subi une perte nette GAAP de 21,3 millions de dollars et une perte d'EBITDA ajusté de 0,3 million de dollars. Stronghold poursuit son processus de révision stratégique, explorant des options incluant une vente potentielle ou des transactions stratégiques. L'entreprise cherche à réaliser une importante expansion de site, soumettant des études de charge pour 400 MW supplémentaires à Panther Creek et 390 MW à Scrubgrass. Stronghold a réussi l'enchère de résidus de base PJM à 269,92 $/MW/jour, en hausse de 833 % par rapport à l'année dernière, ce qui pourrait générer 7 millions de dollars de revenus supplémentaires. L'entreprise a extrait 299 Bitcoins au Q2, soit une baisse de 46 % par rapport au Q1, impactée par l'événement de halving de Bitcoin en avril.
Stronghold Digital Mining (NASDAQ: SDIG) berichtete über die Ergebnisse des Q2 2024 mit Einnahmen von 19,1 Millionen Dollar, was einem Rückgang von 30,6% im Vergleich zum Vorquartal entspricht, aber einem Anstieg von 4,8% im Jahresvergleich. Das Unternehmen verzeichnete einen GAAP-Nettoverlust von 21,3 Millionen Dollar und einen Verlust beim bereinigten EBITDA von 0,3 Millionen Dollar. Stronghold setzt seinen strategischen Überprüfungsprozess fort und prüft Optionen, einschließlich eines möglichen Verkaufs oder strategischer Transaktionen. Das Unternehmen verfolgt eine signifikante Standortexpansion und reicht Laststudien für zusätzliche 400 MW in Panther Creek und 390 MW in Scrubgrass ein. Stronghold hat die PJM Basis-Residual-Auktion mit 269,92 $/MW/Tag abgeschlossen, was einem Anstieg von 833% im Vergleich zum Vorjahr entspricht, und könnte 7 Millionen Dollar an zusätzlichen Einnahmen generieren. Im Q2 wurde 299 Bitcoin abgebaut, was einem Rückgang von 46% im Vergleich zum Q1 entspricht und durch das Bitcoin-Halving-Event im April beeinflusst wurde.
- Secured option to purchase 1,140 acres adjacent to Panther Creek site for potential data center expansion
- Cleared PJM Base Residual Auction at $269.92/MW/day, up 833% from previous year
- Increase in Coal Refuse Reclamation and Energy Tax Credit from $4 to $8 per ton, potentially adding $2-$4 million in annual net income
- Potential for ancillary revenue streams like demand response due to PJM's updated guidance on co-located load
- Revenues down 30.6% sequentially to $19.1 million
- GAAP Net Loss of $21.3 million and Adjusted EBITDA loss of $0.3 million
- Bitcoin mining production down 46% from Q1 2024
- Cash and equivalents decreased from $5.1 million on June 30 to $3.6 million on August 9
Insights
Stronghold Digital Mining's Q2 2024 results paint a mixed picture. Revenues of
- Potential site expansion at Panther Creek with additional 400 MW capacity
- Significant increase in PJM Base Residual Auction clearing prices, potentially yielding
$7 million in incremental revenue - Increased Coal Refuse Reclamation and Energy Tax Credit, estimated to add
$2-4 million per annum to net income
These factors could improve future financial performance, but the company's current liquidity of
Stronghold's strategic pivot towards data center expansion is noteworthy. The acquisition of a land option near Panther Creek and the engagement of Appleby Strategy Group suggest a potential shift from pure Bitcoin mining to broader data center services. This diversification could be important given the challenges in the crypto mining sector post-halving.
The company's exploration of GPU computing potential and qualification for PJM "In Network" load status open up new revenue streams, particularly in demand response programs. However, the
The ongoing carbon capture initiative, with improved carbonation results (up to
Stronghold's strategic review process, including potential sale or strategic transactions, signals a critical juncture for the company. The reception of numerous bids indicates market interest, but the lack of a definitive timeline creates uncertainty for investors.
The company's pivot towards data center expansion aligns with broader industry trends, potentially positioning Stronghold to capitalize on the growing demand for data processing capabilities beyond cryptocurrency mining. This move could diversify revenue streams and reduce exposure to Bitcoin price volatility.
The significant increase in PJM Base Residual Auction clearing prices (
Investors should closely monitor the outcome of the strategic review and the progress of site expansions, as these factors will likely be key drivers of Stronghold's future market position and valuation.
Continues Formal Review of Strategic Alternatives
Pursuing Significant Site Expansion and Evaluating GPU Computing Potential
NEW YORK, Aug. 14, 2024 (GLOBE NEWSWIRE) -- Stronghold Digital Mining, Inc. (NASDAQ: SDIG) (“Stronghold”, the “Company”, or “we”) today announced financial and operational results for the second quarter ended June 30, 2024, and provided additional strategic updates:
Second Quarter 2024 Financial Highlights
- Revenues of
$19.1 million , down30.6% sequentially and up4.8% year-over-year. Revenues comprised$18.8 million from cryptocurrency operations,$0.2 million from the sale of energy, and$0.1 million from other revenue. - GAAP Net Loss of
$21.3 million and non-GAAP Adjusted EBITDA loss of$0.3 million .1
Strategic Alternatives
The formal strategic review process being conducted by Stronghold and its Board of Directors (the “Board”) continues with the assistance of outside financial and legal advisors. To date, the Company has received numerous bids for all or parts of the Company. The Company and its Board continue to consider a wide range of alternatives to maximize shareholder value, including, but not limited to, the sale of all or parts of the Company, another strategic transaction involving some or all of the assets of the Company, and strategic financing. 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.
As one part of its strategic review process, Stronghold has assessed opportunities to expand and enhance its current sites. In May and June 2024, Stronghold submitted preliminary load studies to local utilities to import an additional 400 megawatts (“MW”) at Panther Creek. One of the preliminary load studies was for an additional 250 MW and found that such power may be able to be delivered in stages over the next one to five years. The Company has submitted a project feasibility report, which is the next step toward securing this 250 MW. The preliminary load studies associated with the remaining capacity are still in progress. In August 2024, Stronghold secured a one-year option with certain extension rights to purchase up to approximately 1,140 acres of land adjacent to the Company’s existing Panther Creek site. The Company believes that this option, along with the ability to expand the electricity and fiber available at the existing site and proximity to other data centers, provides Panther Creek with a significant opportunity for data center expansion. Stronghold’s Scrubgrass site is 636 acres, and the Company is pursuing various expansion opportunities including preliminary load studies submitted to import an additional 390 MW from the grid.
In July, Stronghold engaged Appleby Strategy Group LLC (“ASG”), an end-to-end data center solutions expert, to advise the Company in evaluating additional potential uses for the Scrubgrass and Panther Creek sites. Initial assessments from ASG support the view that expansive access to land, electricity, fiber, and water are key differentiating traits of the Stronghold sites that may make them attractive for large-scale data center development.
PJM Base Residual Auction
On July 31, 2024, PJM Interconnection LLC (“PJM”) held its annual Base Residual Auction2 for capacity reserve scheduling for the 12-month period from June 2025 through May 2026 delivery year. Stronghold’s Panther Creek and Scrubgrass Plants offered capacity into the auction, as required, and each cleared the auction at
Increased Coal Refuse Reclamation and Energy Tax Credit
On July 11, 2024, the Pennsylvania General Assembly completed its annual commonwealth budget process and passed PA Senate Bill 6543, which Governor Josh Shapiro subsequently signed into law. The law increases the Coal Refuse Reclamation and Energy Tax Credit from
PJM Guidance Regarding Co-Located Load
On April 14, 2024, PJM updated its “Guidance on Co-Located Load.” Based on this update, Stronghold believes that its data center loads qualify as PJM “In Network” load, which has the potential to enable ancillary revenue streams such as demand response. Stronghold is currently in the process of registering its Scrubgrass data center in the demand response program. Based on PJM guidance, for the Scrubgrass or Panther Creek data centers to participate fully in the demand response programs, the Company notes that the respective plant would need to exit most or all of its future capacity commitment. Stronghold is working with advisors to better understand its options while contributing positively to grid reliability and building long-term value for its shareholders.
Bitcoin Mining Update
Stronghold mined approximately 299 Bitcoin during the second quarter of 2024 and generated
Liquidity and Capital Resources
As of June 30, 2024, and August 9, 2024, the Company had approximately
Stronghold Carbon Capture Update
As previously announced, test results from the Scrubgrass Plant have demonstrated carbonation of up to
Conference Call
Stronghold will host a conference call today, August 14, 2024, at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time) with an accompanying presentation 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 Second 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 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 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 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; and 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 timely complete a strategic review process and our ability to consummate a transaction in connection with such process, in part or at all, 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 and our ability to expand the power capacity at our sites. More information on these risks and other potential factors that could affect our financial results are included in our filings with the SEC, 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 8, 2024, and in our subsequently filed Quarterly Reports on Form 10-Q. The Company expects to file its Quarterly Report on Form 10-Q for the second quarter of 2024 on August 14, 2024. 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. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||||||
June 30, 2024 | December 31, 2023 | ||||||
ASSETS: | |||||||
Cash and cash equivalents | $ | 4,876,152 | $ | 4,214,613 | |||
Digital currencies | 253,710 | 3,175,595 | |||||
Accounts receivable | 570,197 | 507,029 | |||||
Inventory | 4,470,089 | 4,196,812 | |||||
Prepaid insurance | 2,736,501 | 3,787,048 | |||||
Due from related parties | 97,288 | 97,288 | |||||
Other current assets | 2,109,205 | 1,675,084 | |||||
Total current assets | 15,113,142 | 17,653,469 | |||||
Equipment deposits | - | 8,000,643 | |||||
Property, plant and equipment, net | 134,083,470 | 144,642,771 | |||||
Operating lease right-of-use assets | 1,107,044 | 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 | 199,480 | 170,488 | |||||
TOTAL ASSETS | $ | 152,900,202 | $ | 174,337,184 | |||
LIABILITIES: | |||||||
Accounts payable | $ | 13,074,814 | $ | 11,857,052 | |||
Accrued liabilities | 11,558,654 | 10,787,895 | |||||
Financed insurance premiums | 1,425,592 | 2,927,508 | |||||
Current portion of long-term debt, net of discounts and issuance fees | 16,347,388 | 7,936,147 | |||||
Current portion of operating lease liabilities | 668,604 | 788,706 | |||||
Due to related parties | 1,106,704 | 718,838 | |||||
Total current liabilities | 44,181,756 | 35,016,146 | |||||
Asset retirement obligation | 1,103,215 | 1,075,728 | |||||
Warrant liabilities | 13,914,884 | 25,210,429 | |||||
Long-term debt, net of discounts and issuance fees | 38,470,192 | 48,203,762 | |||||
Long-term operating lease liabilities | 499,886 | 776,079 | |||||
Other noncurrent liabilities | 2,569,356 | 241,420 | |||||
Total liabilities | 100,739,289 | 110,523,564 | |||||
COMMITMENTS AND CONTINGENCIES | |||||||
REDEEMABLE COMMON STOCK: | |||||||
Common Stock — Class V; | 10,416,454 | 20,416,116 | |||||
Total redeemable common stock | 10,416,454 | 20,416,116 | |||||
STOCKHOLDERS' EQUITY: | |||||||
Common Stock — Class A; | 1,298 | 1,112 | |||||
Series C convertible preferred stock; | 1 | 1 | |||||
Series D convertible preferred stock; | - | 1 | |||||
Accumulated deficits | (336,973,510 | ) | (331,647,755 | ) | |||
Additional paid-in capital | 378,716,670 | 375,044,145 | |||||
Total stockholders' equity | 41,744,459 | 43,397,504 | |||||
Total redeemable common stock and stockholders' equity | 52,160,913 | 63,813,620 | |||||
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS' EQUITY | $ | 152,900,202 | $ | 174,337,184 | |||
STRONGHOLD DIGITAL MINING, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | ||||||||||||
OPERATING REVENUES: | |||||||||||||||
Cryptocurrency mining | $ | 14,988,526 | $ | 13,782,798 | $ | 36,279,584 | $ | 25,080,096 | |||||||
Cryptocurrency hosting | 3,824,299 | 3,079,701 | 9,281,828 | 5,405,697 | |||||||||||
Energy | 221,370 | 740,793 | 921,437 | 3,471,779 | |||||||||||
Capacity | - | 582,557 | - | 1,442,067 | |||||||||||
Other | 69,944 | 47,892 | 143,475 | 100,317 | |||||||||||
Total operating revenues | 19,104,139 | 18,233,741 | 46,626,324 | 35,499,956 | |||||||||||
OPERATING EXPENSES: | |||||||||||||||
Fuel | 5,798,304 | 6,291,501 | 13,209,132 | 13,705,515 | |||||||||||
Operations and maintenance | 9,081,647 | 8,804,097 | 17,323,372 | 17,245,020 | |||||||||||
General and administrative | 11,746,585 | 10,077,738 | 18,344,931 | 18,546,493 | |||||||||||
Depreciation and amortization | 9,290,563 | 8,634,967 | 18,805,217 | 16,357,808 | |||||||||||
Loss on disposal of fixed assets | 1,731,105 | 17,281 | 1,731,105 | 108,367 | |||||||||||
Realized loss (gain) on sale of digital currencies | 243,688 | (266,665 | ) | (380,419 | ) | (593,433 | ) | ||||||||
Unrealized gain on digital currencies | (145,994 | ) | - | (147,221 | ) | - | |||||||||
Realized gain on sale of miner assets | - | - | (36,012 | ) | - | ||||||||||
Impairments on digital currencies | - | 254,353 | - | 325,830 | |||||||||||
Total operating expenses | 37,745,898 | 33,813,272 | 68,850,105 | 65,695,600 | |||||||||||
NET OPERATING LOSS | (18,641,759 | ) | (15,579,531 | ) | (22,223,781 | ) | (30,195,644 | ) | |||||||
OTHER INCOME (EXPENSE): | |||||||||||||||
Interest expense | (2,248,063 | ) | (2,603,478 | ) | (4,511,472 | ) | (4,987,391 | ) | |||||||
Loss on debt extinguishment | - | - | - | (28,960,947 | ) | ||||||||||
Changes in fair value of warrant liabilities | (382,175 | ) | 6,475,880 | 11,295,545 | 5,761,291 | ||||||||||
Other | 5,000 | 15,000 | 15,000 | 30,000 | |||||||||||
Total other (expense) income | (2,625,238 | ) | 3,887,402 | 6,799,073 | (28,157,047 | ) | |||||||||
NET LOSS | (21,266,997 | ) | (11,692,129 | ) | (15,424,708 | ) | (58,352,691 | ) | |||||||
NET LOSS attributable to noncontrolling interest | (3,325,180 | ) | (3,355,873 | ) | (2,406,893 | ) | (21,475,004 | ) | |||||||
NET LOSS attributable to Stronghold Digital Mining, Inc. | $ | (17,941,817 | ) | $ | (8,336,256 | ) | $ | (13,017,815 | ) | $ | (36,877,687 | ) | |||
NET LOSS attributable to Class A common shareholders: | |||||||||||||||
Basic | $ | (1.25 | ) | $ | (1.35 | ) | $ | (0.92 | ) | $ | (6.99 | ) | |||
Diluted | $ | (1.25 | ) | $ | (1.35 | ) | $ | (0.92 | ) | $ | (6.99 | ) | |||
Weighted average number of Class A common shares outstanding | |||||||||||||||
Basic | 14,369,800 | 6,163,450 | 14,179,810 | 5,274,471 | |||||||||||
Diluted | 14,369,800 | 6,163,450 | 14,179,810 | 5,274,471 |
STRONGHOLD DIGITAL MINING, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||||||
Six Months Ended | |||||||
June 30, 2024 | June 30, 2023 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net loss | $ | (15,424,708 | ) | $ | (58,352,691 | ) | |
Adjustments to reconcile net loss to cash flows from operating activities: | |||||||
Depreciation and amortization | 18,805,217 | 16,357,808 | |||||
Accretion of asset retirement obligation | 27,484 | 26,102 | |||||
Loss on disposal of fixed assets | 1,731,105 | 108,367 | |||||
Realized gain on sale of miner assets | (36,012 | ) | - | ||||
Change in value of accounts receivable | 399,192 | 1,142,750 | |||||
Amortization of debt issuance costs | 102,946 | 109,620 | |||||
Stock-based compensation | 3,606,907 | 6,816,048 | |||||
Loss on debt extinguishment | - | 28,960,947 | |||||
Changes in fair value of warrant liabilities | (11,295,545 | ) | (5,761,291 | ) | |||
Non-cash adjustments for loss contingencies | 5,218,167 | - | |||||
Other | 408,303 | (532,880 | ) | ||||
(Increase) decrease in digital currencies: | |||||||
Mining revenue | (42,427,846 | ) | (28,709,950 | ) | |||
Net proceeds from sale of digital currencies | 45,596,244 | 27,064,294 | |||||
Unrealized gain on digital currencies | (147,221 | ) | - | ||||
Impairments on digital currencies | - | 325,830 | |||||
(Increase) decrease in assets: | |||||||
Accounts receivable | (462,359 | ) | 7,140,368 | ||||
Prepaid insurance | 2,727,056 | 3,093,404 | |||||
Due from related parties | - | (64,276 | ) | ||||
Inventory | (273,277 | ) | 303,468 | ||||
Other assets | (1,231,144 | ) | 306,998 | ||||
Increase (decrease) in liabilities: | |||||||
Accounts payable | 1,032,860 | (145,649 | ) | ||||
Due to related parties | 387,866 | 219,778 | |||||
Accrued liabilities | (2,413,906 | ) | 27,326 | ||||
Other liabilities, including contract liabilities | (291,811 | ) | (78,849 | ) | |||
NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES | 6,039,518 | (1,642,478 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchases of property, plant and equipment | (573,002 | ) | (10,581,332 | ) | |||
Proceeds from sale of property, plant and equipment, including CIP | 180,000 | - | |||||
NET CASH FLOWS USED IN INVESTING ACTIVITIES | (393,002 | ) | (10,581,332 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Repayments of debt | (1,806,551 | ) | (2,446,953 | ) | |||
Repayments of financed insurance premiums | (3,178,426 | ) | (3,202,071 | ) | |||
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 | - | 2,825 | |||||
Proceeds from exercise of warrants | - | 316 | |||||
NET CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES | (4,984,977 | ) | 4,031,299 | ||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 661,539 | (8,192,511 | ) | ||||
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 4,214,613 | 13,296,703 | |||||
CASH AND CASH EQUIVALENTS - END OF PERIOD | $ | 4,876,152 | $ | 5,104,192 | |||
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 extinguishment of debt, or changes in the fair value of warrant liabilities in the period presented. See reconciliation below.
Our Board 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 second quarter ended June 30, 2024, that the Company expects to file on August 14, 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 | Six Months Ended | ||||||||||||||
(in thousands) | June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||||||||
Net Income (Loss)—GAAP | $ | (21,267 | ) | $ | (11,692 | ) | $ | (15,425 | ) | $ | (58,353 | ) | |||
Plus: | |||||||||||||||
Interest expense | 2,248 | 2,603 | 4,511 | 4,987 | |||||||||||
Depreciation and amortization | 9,291 | 8,635 | 18,805 | 16,358 | |||||||||||
Loss on debt extinguishment | - | - | - | 28,961 | |||||||||||
Non-recurring expenses 1 | 5,619 | (46 | ) | 6,456 | 636 | ||||||||||
Stock-based compensation | 1,668 | 4,367 | 3,607 | 6,816 | |||||||||||
Loss on disposal of fixed assets | 1,731 | 17 | 1,731 | 108 | |||||||||||
Realized gain on sale of miner assets | - | - | (36 | ) | - | ||||||||||
Changes in fair value of warrant liabilities | 382 | (6,476 | ) | (11,296 | ) | (5,761 | ) | ||||||||
Accretion of asset retirement obligation | 14 | 13 | 27 | 26 | |||||||||||
Adjusted EBITDA—Non-GAAP 2 | $ | (314 | ) | $ | (2,579 | ) | $ | 8,380 | $ | (6,222 | ) | ||||
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
1 See Non-GAAP reconciliation table below.
2 PJM 2025-2026 BRA: https://pjm.com/-/media/markets-ops/rpm/rpm-auction-info/2025-2026/2025-2026-base-residual-auction-report.ashx
3 Pennsylvania State Tax Code Bill 654: Bill Information - Senate Bill 654; Regular Session 2023-2024 - PA General Assembly (state.pa.us)
FAQ
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