Stronghold Digital Mining, Inc. (Nasdaq: SDIG) (“Stronghold,” or
the “Company”) today reported financial results for its third
quarter ended September 30, 2021 and provided an operational
update.
Third Quarter and Recent Operational and
Financial Highlights
- Removed
approximately 106,000 tons of coal refuse and returned
approximately 64,500 tons of beneficial use ash to waste coal piles
during the quarter, facilitating the remediation of these
sites
- Closed upsized
initial public offering (“IPO”) on October 22, 2021, generating net
proceeds of approximately $132.5 million
- Closed
acquisition of Panther Creek Plant on November 2, 2021, increasing
owned power generation capacity to approximately 165 megawatts
(“MW”)
- As of November
29, 2021, has received nearly 6,000 miners with total hash rate
capacity of approximately 470 petahash per second (“PH/s”) and
remains on track to achieve its hash rate capacity goal of 8,000+
PH/s by the end of 2022
- Pro forma cash
and cash equivalents as of September 30, 2021 was approximately
$104.2 million, as adjusted for net proceeds from the IPO, closing
of the Panther Creek Plant acquisition, and deposits paid in
relation to announced miner purchases
Management Commentary
“We are excited about our entry into the public
markets as a well-capitalized, vertically integrated Bitcoin miner
with an advantageous cost structure,” said Greg Beard, co-chairman
and chief executive officer of Stronghold. “We have structured
Stronghold to not only be a best-in-class Bitcoin miner, but also
to have a positive impact on the environment, which we accomplish
through the cleanup of toxic, legacy waste coal piles in
Pennsylvania. These piles are actively polluting the Commonwealth’s
air and water, and we are proud that our operations benefit the
local communities.”
“We are executing on our strategy of growing
owned power generation assets and rapidly deploying miners at these
facilities, as evidenced by the recent acquisition of our second
power generation asset and continued additions to our miner fleet.
We intend to continue acquiring low-cost power assets and miners to
reach our goal of at least 8,000 PH/s of hash rate capacity by the
end of 2022.”
Cryptocurrency Mining
Update
Stronghold remains on track to reach its hash
rate capacity goal of 8,000 PH/s by the end of 2022, with miners
from a diversified group of global manufacturers, including
MinerVa, Bitmain, and MicroBT. As of September 30, 2021, the
Company had approximately 3,000 miners deployed with total hash
rate capacity of approximately 185 PH/s. As of November 29, 2021,
the Company has purchased or installed approximately 45,000 miners
with total hash rate capacity of approximately 4,390 PH/s.
Since the end of the third quarter, Stronghold
has received nearly 3,000 miners, including the first 240 MV7
miners from MinerVa, and the Company expects to have over 500
MinerVa miners installed by the end of the week, with shipments
ramping up for the 15,000-miner order. Performance for these
machines has been in line with expectations. Since the end of the
quarter, Stronghold also entered into two agreements with Bitmain
to purchase 12,000 S19j Pro miners and 1,800 S19 XP miners, with
aggregate hash rate capacity of approximately 1,450 PH/s.
Additionally, the Company purchased over 2,500 miners on the open
market through multiple transactions, with aggregate hash rate
capacity exceeding 200 PH/s, which are expected to be installed
before the end of the year.
Stronghold also continues to expand datacenter
capacity to house its miners. Stronghold owns, develops, and
manages its datacenters, which increases operational control,
mitigates supply-chain risks, and improves economics. The Company
has manufactured 33 MW of StrongBoxes, its proprietary modular
datacenter containers, and expects to have completed approximately
125 MW by the end of the first quarter of 2022.
As of September 30, 2021, Stronghold held on its
balance sheet approximately 85 Bitcoin.
Power Assets Update
On November 2, 2021, Stronghold closed on the
acquisition of the Panther Creek Plant, an 80 MW coal refuse
reclamation-to-energy facility located in Pennsylvania, which
utilizes the same circulating fluidized bed technology as
Stronghold’s Scrubgrass Plant. Both the Scrubgrass Plant and
Panther Creek Plant generate power from coal refuse, which is a
waste byproduct of legacy coal mining operations. The Commonwealth
of Pennsylvania has designated coal refuse as a Tier II Alternative
Energy Source, making our facilities eligible to earn renewable
energy credits.
In conjunction with the acquisition, the Company
entered into an Operation, Maintenance and Ancillary Services
Agreement with the seller to provide operations and maintenance
services support to Stronghold for both the Scrubgrass Plant and
the Panther Creek Plant. The support services from an experienced
operating group are expected to facilitate durable uptime and
efficiency for Stronghold’s power assets.
With the acquisition of the Panther Creek Plant,
the Company’s owned power generation capacity expanded to
approximately 165 MW. Stronghold continues to evaluate
opportunities to acquire additional power generation assets,
including a third coal refuse reclamation facility that is under a
non-binding letter of intent to purchase.
Third Quarter 2021 Financial
Results
Revenues in the third quarter increased 527% to
$6.0 million compared to $1.0 million in the same quarter a year
ago. The increase is primarily attributable to higher energy
generation and crypto asset mining revenues.
Operating expenses in the third quarter
increased 492% to $10.0 million compared to $1.7 million in the
same quarter a year ago. The increase is primarily attributable to
higher operating costs at the Scrubgrass Plant to facilitate higher
and more consistent power generation capacity for energy operations
and cryptocurrency operations, in addition to higher general and
administrative costs as the Company scales its organizational
structure.
Net loss for the third quarter of ($6.3) million
compared to a net loss of ($0.7) million for the same quarter a
year ago.
Adjusted EBITDA for the third quarter increased
to $9,700 compared to ($0.5) million for the same quarter a year
ago (see reconciliation of Non-GAAP financial measures).
Net cash provided by operating activities in the
third quarter was $10.2 million compared to $0.5 million in the
same quarter a year ago.
Stronghold ended the quarter with approximately
$41.4 million in cash and approximately $53.7 million in debt.
Financial and Operational
Outlook
“Following our successful IPO and closing of the
Panther Creek acquisition, we are executing on our strategy of
being a low-cost, environmentally beneficial Bitcoin miner,” said
Greg Beard. “We expect a significant ramp-up in miner deliveries
over the coming months and are taking active steps to accelerate
miner deliveries. We remain on track to reach the 2022 operational
metrics that we communicated at the time of our IPO and continue to
make excellent progress in expanding our power generation capacity
to maintain our vertical integration as we grow our miner
fleet.”
Conference Call
Stronghold will host a conference call today,
November 30, 2021, at 5:00 p.m. Eastern Time (2:00 p.m. Pacific
Time) to discuss these results. A question-and-answer session will
follow management's presentation.
To participate, please dial the appropriate
number at least ten minutes prior to the start time and ask for the
Stronghold Digital Mining conference call.
U.S. dial-in number: 1-844-705-8583
International number: 1-270-215-9880Conference ID: 1385345
The conference call will broadcast live and be
available for replay here.
A replay of the call will be available after
8:00 p.m. Eastern Time through December 14, 2021 at 8:00 p.m.
Eastern Time.
Toll-free replay number: 1-855-859-2056
International replay number: 1-404-537-3406Conference ID:
1385345
About Stronghold Digital Mining,
Inc.Stronghold is a vertically integrated Bitcoin mining
company with an emphasis on environmentally beneficial operations.
Stronghold houses its miners at its wholly owned and operated
Scrubgrass Plant and Panther Creek Plant, both of which are
low-cost, environmentally beneficial coal refuse power generation
facilities in Pennsylvania.
Cautionary Statement Concerning
Forward-Looking StatementsCertain statements contained in
this press release constitute “forward-looking statements.” within
the meaning of the Private Securities Litigation Reform Act of
1995. You can identify forward-looking statements because they
contain words such as “believes,” “expects,” “may,” “will,”
“should,” “seeks,” “approximately,” “intends,” “plans,” “estimates”
or “anticipates” or the negative of these words and phrases or
similar words or phrases which are predictions of or indicate
future events or trends and which do not relate solely to
historical matters. Forward-looking statements and the business
prospects of Stronghold are subject to a number of risks and
uncertainties that may cause Stronghold’s actual results in future
periods to differ materially from the forward-looking statements.
These risks and uncertainties include, among other things: 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; our ability to raise
capital to fund business growth; our ability to enter into purchase
agreements and acquisitions; public health crises, epidemics, and
pandemics such as the coronavirus pandemic; our ability to procure
crypto asset mining equipment; our ability to respond to price
fluctuations and rapidly changing technology; our ability to
operate our coal refuse power generation facilities as planned; and
legislative or regulatory changes, and liability under, or any
future inability to comply with, existing or future energy
regulations or requirements. More information on these risks and
other potential factors that could affect our financial results is
included in our filings with the Securities and Exchange
Commission, including in the “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” sections of our Registration Statement on Form S-1
(File No. 333-258188), filed on October 19, 2021, and any
subsequently filed Quarterly Reports on Form 10-Q. Any
forward-looking statement 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, whether because of new information,
future events, or otherwise.
STRONGHOLD
DIGITAL MINING, INC. |
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
|
|
|
|
|
September 30, 2021
and December 31, 2020 |
|
|
|
|
|
|
|
|
Sept 30, 2021 |
Dec 31, 2020 |
|
|
|
(unaudited) |
|
|
CURRENT ASSETS |
|
|
|
|
Cash |
|
$ |
41,434,410 |
|
$ |
303,187 |
|
|
Digital currencies |
|
|
3,228,698 |
|
|
228,087 |
|
|
Accounts receivable |
|
|
308,387 |
|
|
65,900 |
|
|
Due from related party |
|
|
- |
|
|
302,973 |
|
|
Prepaid insurance |
|
|
278,538 |
|
|
|
Inventory |
|
|
367,601 |
|
|
396,892 |
|
|
Other current assets |
|
|
3,779,663 |
|
|
65,831 |
|
|
Total Current Assets |
|
|
49,397,297 |
|
|
1,362,870 |
|
|
EQUIPMENT DEPOSITS |
|
|
85,624,852 |
|
|
- |
|
|
PROPERTY, PLANT AND EQUIPMENT, NET |
|
|
40,114,787 |
|
|
7,814,199 |
|
|
LAND |
|
|
29,919 |
|
|
- |
|
|
ROAD
BOND |
|
|
185,245 |
|
|
185,245 |
|
|
TOTAL ASSETS |
|
$ |
175,352,100 |
|
$ |
9,362,314 |
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
Current portion of long-term debt- net of discounts/issuance
fees |
|
$ |
31,251,305 |
|
$ |
449,447 |
|
|
Related-party notes |
|
|
- |
|
|
2,024,250 |
|
|
Accounts payable |
|
|
29,620,242 |
|
|
8,479,187 |
|
|
Due to related parties |
|
|
735,618 |
|
|
698,338 |
|
|
Accrued liabilities |
|
|
3,833,191 |
|
|
828 |
|
|
Total Current Liabilities |
|
|
65,440,356 |
|
|
11,652,050 |
|
|
|
|
|
|
|
LONG-TERM LIABILITIES |
|
|
|
|
Asset retirement obligation |
|
|
474,933 |
|
|
446,128 |
|
|
Contract liabilities |
|
|
187,837 |
|
|
40,000 |
|
|
Economic Injury Disaster Loan |
|
|
- |
|
|
150,000 |
|
|
Paycheck Protection Program Loan |
|
|
841,670 |
|
|
638,800 |
|
|
Warrants issued with conversions to redeemable preferred stock |
|
|
878,970 |
|
|
- |
|
|
Long-term debt- net of discounts/issuance fees |
|
|
22,417,973 |
|
|
482,443 |
|
|
Total Long-Term Liabilities |
|
|
24,801,383 |
|
|
1,757,371 |
|
|
Total Liabilities |
|
|
90,241,739 |
|
|
13,409,421 |
|
|
|
|
|
|
|
MEZZANINE EQUITY |
|
|
|
|
Series A redeemable and convertible preferred stock, $.0001 par
value, aggregate liquidation value $85,000,000, 9,792,000 shares
issued and outstanding as of September 30, 2021 |
|
|
78,041,113 |
|
|
- |
|
|
Series B redeemable and convertible preferred stock, $.0001 par
value, aggregate liquidation value $20,000,006, 5,760,000 shares
authorized and 1,817,035 issued and outstanding as of September 30,
2021 |
|
|
18,242,733 |
|
|
- |
|
|
Common Stock - Class V, $.0001 par value; 34,560,000 shares
authorized and 27,057,600 shares issued and outstanding |
|
|
243,002,390 |
|
|
- |
|
|
Total mezzanine equity |
|
|
339,286,236 |
|
|
- |
|
|
|
|
|
|
|
STOCKHOLDERS' DEFICIENCY & PARTNERS'
DEFICIT |
|
|
|
|
General partners |
|
|
- |
|
|
(2,710,323 |
) |
|
Limited partners |
|
|
|
(1,336,784 |
) |
|
Series A redeemable and convertible preferred stock, $.0001 par
value, aggregate liquidation value $5,000,000, 576,000 issued and
outstanding as of September 30, 2021 |
|
|
58 |
|
|
- |
|
|
Common Stock - Class A, .0001 par value; 238,000,000 shares
authorized and 140,674 shares issued and outstanding |
|
|
14 |
|
|
- |
|
|
Accumulated deficits |
|
|
(263,811,490 |
) |
|
- |
|
|
Additional paid-in capital |
|
|
9,635,543 |
|
|
- |
|
|
Stockholders' deficiency or partners' deficit |
|
|
(254,175,875 |
) |
|
(4,047,107 |
) |
|
Total |
|
|
85,110,361 |
|
|
(4,047,107 |
) |
|
TOTAL LIABILITIES, MEZZANINE EQUITY AND
DEFICIENCY |
|
$ |
175,352,100 |
|
$ |
9,362,314 |
|
|
|
|
|
|
|
|
|
|
|
|
STRONGHOLD
DIGITAL MINING, INC. |
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|
|
|
|
|
|
|
|
|
|
Three and nine
months ended September 30, 2021 and 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended, |
|
Nine months
ended, |
|
|
|
Consolidated |
Consolidated |
|
Consolidated |
|
Consolidated |
|
|
|
Sept 30, 2021 |
Sept 30, 2020 |
|
Sept 30, 2021 |
|
Sept 30, 2020 |
|
|
|
(unaudited) |
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
OPERATING REVENUES |
|
|
|
|
|
|
|
|
Energy |
|
$ |
2,388,752 |
|
$ |
119,945 |
|
|
$ |
5,875,574 |
|
|
$ |
704,604 |
|
|
Capacity |
|
|
1,069,040 |
|
|
732,594 |
|
|
|
2,352,276 |
|
|
|
2,202,255 |
|
|
Cryptocurrency hosting |
|
|
499,724 |
|
|
- |
|
|
|
1,742,242 |
|
|
|
- |
|
|
Cryptocurrency mining |
|
|
2,060,523 |
|
|
141,226 |
|
|
|
3,901,426 |
|
|
|
221,455 |
|
|
Other |
|
|
1,674 |
|
|
(33,743 |
) |
|
|
34,797 |
|
|
|
- |
|
|
Total operating revenues |
|
|
6,019,713 |
|
|
960,022 |
|
|
|
13,906,315 |
|
|
|
3,128,313 |
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
Fuel |
|
|
2,411,186 |
|
|
181,041 |
|
|
|
6,511,706 |
|
|
|
483,977 |
|
|
Operations and maintenance |
|
|
2,835,315 |
|
|
997,169 |
|
|
|
6,040,173 |
|
|
|
2,660,536 |
|
|
General and administrative |
|
|
3,469,830 |
|
|
365,269 |
|
|
|
6,377,677 |
|
|
|
1,093,858 |
|
|
Impairments on digital currencies |
|
91,040 |
|
|
- |
|
|
|
466,286 |
|
|
|
- |
|
|
Depreciation and amortization |
|
|
1,158,374 |
|
|
139,150 |
|
|
|
2,463,549 |
|
|
|
422,603 |
|
|
Total operating expenses |
|
|
9,965,745 |
|
|
1,682,629 |
|
|
|
21,859,391 |
|
|
|
4,660,974 |
|
|
NET OPERATING INCOME/(LOSS) |
|
(3,946,032 |
) |
|
(722,607 |
) |
|
|
(7,953,076 |
) |
|
|
(1,532,661 |
) |
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
Interest expense |
|
|
(2,460,668 |
) |
|
(32,381 |
) |
|
|
(2,594,751 |
) |
|
|
(106,881 |
) |
|
Gain on extinguishment of PPP loan |
|
- |
|
|
- |
|
|
|
638,800 |
|
|
|
- |
|
|
Realized gain (loss) on sale of digital currencies |
|
- |
|
|
3,662 |
|
|
|
149,858 |
|
|
|
4,941 |
|
|
Changes in fair value of warrant liabilities |
|
92,979 |
|
|
- |
|
|
|
(98,498 |
) |
|
|
- |
|
|
Derivative contracts, net |
|
|
- |
|
|
- |
|
|
|
- |
|
|
|
1,207,131 |
|
|
Waste coal credit |
|
|
23,356 |
|
|
- |
|
|
|
47,152 |
|
|
|
7,500 |
|
|
Other |
|
|
10,336 |
|
|
68,952 |
|
|
|
48,521 |
|
|
|
96,210 |
|
|
Total other income |
|
|
(2,333,997 |
) |
|
40,233 |
|
|
|
(1,808,918 |
) |
|
|
1,208,901 |
|
|
NET
INCOME/(LOSS) |
|
$ |
(6,280,029 |
) |
$ |
(682,374 |
) |
|
$ |
(9,761,994 |
) |
|
$ |
(323,760 |
) |
|
NET INCOME/(LOSS) - attributable to non-controlling
interest |
$ |
(4,328,460 |
) |
|
|
$ |
(6,730,940 |
) |
|
|
|
NET INCOME/(LOSS) - Stronghold Digital Mining,
Inc |
$ |
(1,951,569 |
) |
|
|
$ |
(3,031,054 |
) |
|
|
|
NET LOSS attributable to Class A Common Shares
1 |
|
|
|
|
|
|
|
Basic |
|
$ |
(6.05 |
) |
|
|
$ |
(17.05 |
) |
|
|
|
Diluted |
|
$ |
(6.05 |
) |
|
|
$ |
(17.05 |
) |
|
|
|
Class A Common Shares Outstanding
1 |
|
|
|
|
|
|
|
Basic |
|
|
322,342 |
|
|
|
|
173,532 |
|
|
|
|
Diluted |
|
|
322,342 |
|
|
|
|
173,532 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Basic and diluted
loss per Class A common stock is presented only for the period
after the Company's Reorganization Transactions. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STRONGHOLD
DIGITAL MINING, INC. |
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
|
|
|
|
|
|
September 30, 2021
and 2020 |
|
|
|
|
|
|
|
|
|
Sept 30, 2021 |
|
Sept 30, 2020 |
|
|
|
(unaudited) |
|
(unaudited) |
|
CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
Net Income/(loss) |
|
$ |
(9,761,994 |
) |
|
$ |
(323,760 |
) |
|
Adjustments to reconcile net loss to net cash |
|
|
|
|
|
provided by operating activities: |
|
|
|
|
|
Depreciation and Amortization - PP&E |
|
|
2,463,549 |
|
|
|
422,603 |
|
|
Forgiveness of PPP loan |
|
|
(638,800 |
) |
|
|
- |
|
|
Realized (gain) loss on sale of derivatives |
|
|
- |
|
|
|
(1,207,131 |
) |
|
Realized (gain) loss on sale of digital currency |
|
|
(149,858 |
) |
|
|
(4,941 |
) |
|
Write-off of bad debts |
|
|
150,162 |
|
|
|
|
Amortized debt issuance costs |
|
|
643,025 |
|
|
|
|
Stock Compensation |
|
|
1,246,460 |
|
|
|
- |
|
|
Impairments on digital currencies |
|
|
466,286 |
|
|
|
- |
|
|
Changes in fair value of warrant liabilities |
|
|
98,498 |
|
|
|
- |
|
|
(Increase) decrease in assets: |
|
|
|
|
|
Digital currencies |
|
|
(3,901,426 |
) |
|
|
(237,107 |
) |
|
Accounts receivable |
|
|
(242,489 |
) |
|
|
42,037 |
|
|
Prepaid Insurance |
|
|
(278,538 |
) |
|
|
|
Due from related party |
|
|
302,973 |
|
|
|
- |
|
|
Inventory |
|
|
29,291 |
|
|
|
(87,867 |
) |
|
Other current assets |
|
|
(3,713,832 |
) |
|
|
(1,196 |
) |
|
Increase (decrease) in liabilities: |
|
|
|
|
|
Accounts payable |
|
|
21,141,055 |
|
|
|
1,380,198 |
|
|
Due to related parties |
|
|
37,280 |
|
|
|
(358,602 |
) |
|
Accrued liabilities |
|
|
3,832,362 |
|
|
|
(9,431 |
) |
|
Contract liabilities |
|
|
147,836 |
|
|
|
36,000 |
|
|
NET
CASH PROVIDED BY (USED) OPERATING ACTIVITIES |
|
|
11,871,840 |
|
|
|
(349,197 |
) |
|
CASH
FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
Proceeds from sale of digital currencies |
|
|
584,387 |
|
|
|
94,954 |
|
|
Proceeds from sale of derivatives |
|
|
- |
|
|
|
1,712,878 |
|
|
Purchase of land |
|
|
(29,919 |
) |
|
|
|
Purchase of property, plant and equipment |
|
|
(34,735,332 |
) |
|
|
(1,415,621 |
) |
|
Equipment purchase deposits- net of future commitments |
|
|
(85,624,852 |
) |
|
|
- |
|
|
NET
CASH PROVIDED BY (USED IN) |
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
(119,805,716 |
) |
|
|
392,211 |
|
|
|
|
|
|
|
|
CASH
FLOWS FROM (USED IN) FINANCING ACTIVITIES |
|
|
|
|
|
Payments on long-term debt |
|
|
(7,811,150 |
) |
|
|
(198,500 |
) |
|
Proceeds from promissory note |
|
|
38,987,333 |
|
|
|
- |
|
|
Proceeds from equipment financing agreement |
|
|
24,157,178 |
|
|
|
|
Proceeds from PPP loan |
|
|
841,670 |
|
|
|
638,000 |
|
|
Proceeds from private placements- mezzanine equity (net of
fees) |
|
|
97,064,318 |
|
|
|
|
Proceeds/(Payoff) of EIDL loan |
|
|
(150,000 |
) |
|
|
160,000 |
|
|
Payoff of related-party notes |
|
|
(2,024,250 |
) |
|
|
|
Buyout of Aspen Interest |
|
|
(2,000,000 |
) |
|
|
|
Distributions paid |
|
|
- |
|
|
|
(591,119 |
) |
|
NET
CASH PROVIDED BY (USED IN) |
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
149,065,099 |
|
|
|
8,381 |
|
|
NET
INCREASE (DECREASE) IN CASH |
|
|
41,131,223 |
|
|
|
51,395 |
|
|
CASH
- BEGINNING OF PERIOD |
|
|
303,187 |
|
|
|
134,143 |
|
|
|
|
|
|
|
|
CASH
- END OF PERIOD |
|
$ |
41,434,410 |
|
|
$ |
185,538 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Use and Reconciliation of Non-GAAP
Financial MeasuresThis press release and our related
earnings call contain certain non-GAAP financial measures,
including Adjusted EBITDA, as a measure of our operating
performance. Adjusted EBITDA is a non-GAAP financial measure. We
define Adjusted EBITDA as net income (loss) before interest, taxes,
depreciation and amortization, further adjusted by the removal of
one-time transaction costs, impairment of digital currencies,
realized gains and losses on the sale of long-term assets, expenses
related to stock-based compensation, gains or losses on derivative
contracts, gain on extinguishment of debt, realized gain or loss on
sale of digital currencies, waste coal credits, commission on sale
of ash, or changes in fair value of warrant liabilities in the
period presented. See reconciliation below.
Our board of directors and management team use
Adjusted EBITDA to assess our financial performance because they
believe it allows them to compare our operating performance on a
consistent basis across periods by removing the effects of our
capital structure (such as varying levels of interest expense and
income), asset base (such as depreciation, amortization,
impairment, and realized gains and losses on sale of long-term
assets) and other items (such as one-time transaction costs,
expenses related to stock-based compensation, and unrealized gains
and losses on derivative contracts) that impact the comparability
of financial results from period to period. We present Adjusted
EBITDA because we believe it provides useful information regarding
the factors and trends affecting our business in addition to
measures calculated under GAAP. Adjusted EBITDA is not a financial
measure presented in accordance with GAAP. We believe that the
presentation of this non-GAAP financial measure will provide useful
information to investors and analysts in assessing our financial
performance and results of operations across reporting periods by
excluding items we do not believe are indicative of our core
operating performance. Net income (loss) is the GAAP measure most
directly comparable to Adjusted EBITDA. Our non-GAAP financial
measure should not be considered as an alternative to the most
directly comparable GAAP financial measure. You are encouraged to
evaluate each of these adjustments and the reasons we consider them
appropriate for supplemental analysis. In evaluating Adjusted
EBITDA, you should be aware that in the future we may incur
expenses that are the same as or similar to some of the adjustments
in such presentation. Our presentation of Adjusted EBITDA should
not be construed as an inference that our future results will be
unaffected by unusual or non-recurring items. There can be no
assurance that we will not modify the presentation of Adjusted
EBITDA in the future, and any such modification may be material.
Adjusted EBITDA has important limitations as an analytical tool and
you should not consider Adjusted EBITDA in isolation or as a
substitute for analysis of our results as reported under GAAP and
should be read in conjunction with the financial statements
furnished in our Form 10-Q for the quarter ended September 30,
2021. 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 ADJUSTED EBITDA |
|
|
|
|
|
|
|
|
|
|
Three and nine
months ended September 30, 2021 and 2020 |
|
|
|
Three months
ended September 30, |
|
Nine months
ended September 30, |
|
|
|
2021 |
|
2020 |
|
|
2021 |
|
2020 |
|
|
|
|
(in thousands) |
|
(in thousands) |
|
|
Net
Income (loss) |
(6,280.0 |
) |
(682.4 |
) |
|
(9,762.0 |
) |
(323.8 |
) |
|
|
Interest,
net |
2,460.7 |
|
32.4 |
|
|
2,594.8 |
|
106.9 |
|
|
|
Income
Taxes |
- |
|
- |
|
|
- |
|
- |
|
|
|
Depreciation
and amortization |
1,158.4 |
|
139.1 |
|
|
2,463.5 |
|
422.6 |
|
|
|
Impairment
of digital currencies |
91.1 |
|
- |
|
|
466.3 |
|
- |
|
|
|
Realized
gains and losses on the sale of long-term assets.. |
- |
|
- |
|
|
- |
|
- |
|
|
|
One time
non-recurring expenses 1 |
1,719.4 |
|
- |
|
|
1,787.8 |
|
- |
|
|
|
Expenses
related to stock-based compensation |
976.5 |
|
- |
|
|
1,246.5 |
|
- |
|
|
|
(Gains)/Losses on derivative contracts |
- |
|
- |
|
|
- |
|
(1,207.1 |
) |
|
|
Waste coal
credits |
(23.4 |
) |
- |
|
|
(47.2 |
) |
(7.5 |
) |
|
|
Gain on
extinguishment of debt |
- |
|
- |
|
|
(638.8 |
) |
- |
|
|
|
Realized
(gain)/loss on sale of digital currencies |
- |
|
(3.7 |
) |
|
(149.9 |
) |
(4.9 |
) |
|
|
Changes in
fair value of warrant liabilities |
(93.0 |
) |
- |
|
|
98.5 |
|
- |
|
|
|
Adjusted EBITDA |
9.7 |
|
(514.6 |
) |
|
(1,940.4 |
) |
(1,013.8 |
) |
|
|
|
|
|
|
|
|
|
|
1 Includes the
following non-recurring expenses: legal fees related to the Panther
Creek Acquisition and the Northern Data |
|
|
Hosting Agreement, bad
debt write-off, startup costs related to initial crypto asset
stores inventories and other one-time items |
|
Investor Contact:
Matt Glover or Jeff Grampp, CFAGateway Group,
Inc. SDIG@GatewayIR.com1-949-574-3860
Media Contact:
contact@strongholddigitalmining.com
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