Stronghold Digital Mining, Inc. (NASDAQ:
SDIG) (“Stronghold”, or the “Company”) today announced
that it has entered into a new two-year hosting agreement with
Cantaloupe Digital LLC, a subsidiary of Canaan, Inc. (“Canaan”).
Canaan Bitcoin Mining
Agreement
On April 27, 2023, the Company signed a two-year
hosting agreement with Cantaloupe Digital LLC, a subsidiary of
Canaan, whereby Stronghold will operate 2,000 A1346 (110 TH/s per
miner) and 2,000 A1246 (90 TH/s per miner) Bitcoin miners supplied
by Canaan (the “Canaan Miners”), with total hash rate capacity of
400 PH/s (the “Canaan Bitcoin Mining Agreement”).
The Canaan Bitcoin Mining Agreement has the
following key terms:
- Two-year term, with
no unilateral early termination option.
- Stronghold will
receive 50% of the Bitcoin mined by the Canaan Miners and receive
payments from Canaan equal to 55% of the net cost of power at the
Company’s Panther Creek plant, in dollar-per-megawatt-hour terms,
calculated on a monthly basis.
- Stronghold will
retain all upside associated with selling power to the grid, and,
if Stronghold elects to curtail the Canaan Miners to sell power to
the grid, Canaan will receive a true-up payment that represent
estimates of the Bitcoin mining revenue would have been generated
had the miners not been curtailed.
- The A1246 Bitcoin
miners are to be installed by May 15, 2023, and the A1346 Bitcoin
miners are to be installed by June 15, 2023. All 2,000 A1246
Bitcoin miners are currently on site and ready to be deployed.
“While we have emphasized our necessary
deleveraging efforts over the last ten months, we think that the
most meaningful measure of our work is the capital efficiency of
our mining fleet today,” said Greg Beard, chairman and chief
executive officer of Stronghold. “Since August, we have received or
procured approximately 22,000 incremental miners, with hash rate
capacity of approximately 2.2 EH/s, while investing approximately
$15 million of incremental capital, which is approximately $7 per
TH/s. We achieved this through opportunistic purchases of Bitcoin
miners in a distressed market and through unique hosting agreements
where we retain exposure to Bitcoin mining economics and power
upside, consistent with our vertically integrated business
model.
“Our previously announced consensual return of
approximately 19,000 delivered and approximately 26,000 total
miners, with hash rate capacity of approximately 1.8 EH/s and 2.5
EH/s, respectively, to our lender in August, in exchange for the
extinguishment of $67 million of debt, understandably caused
investors to question our growth prospects. Our recent actions
should help to alleviate those concerns. We shed approximately 2.5
EH/s of hash rate capacity—that cost approximately $90 million and
was financed with approximately $67 million of debt—and nearly
replaced that capacity with more efficient miners, amounting to
hash rate capacity of 2.2 EH/s, with only $15 million of
incremental capital. Replacing $90 million of miners with $15
million of miners, while ending up with similar hash rate,
dramatically improves capital efficiency and return on equity, all
else equal. This Canaan agreement will bring us to approximately
3.6 EH/s of delivered hash rate capacity and leaves us with only a
few thousand unutilized miner slots at our wholly owned data
centers left to fill.”
William Spence Retirement
As previously disclosed, on March 29, 2023, the
Company’s co-founder and former co-chairman, William “Bill” Spence,
announced his retirement and resignation from the Company’s board.
Bill will continue to work with the Company in a reduced capacity
via a recently agreed to consulting arrangement focused primarily
on supporting the Company’s efforts related to reclamation,
beneficial use ash, and carbon sequestration. Bill intends to spend
his retirement with his family, including one grandchild and two
more on the way.
“A native of Pennsylvania who grew up surrounded
by the waste coal piles, Bill is a pioneer in the coal
refuse-to-power and beneficial use ash markets and has spent
decades trying to clean up one of the most environmentally
neglected regions in the United States,” commented Mr. Beard. “We
are extremely grateful for Bill’s vision, service, and leadership.
We wish Bill all the best in his deserved retirement as he focuses
on his family and health, but we are grateful that he will continue
to work with Stronghold in areas that are passions for Bill and
that represent significant opportunities for the Company.”
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.
Investor Contact:
Matt Glover or Alex KovtunGateway Group, Inc.
SDIG@GatewayIR.com1-949-574-3860
Media Contact:
contact@strongholddigitalmining.com
Forward Looking Statements:
The information, financial projections and other
estimates contained herein contain “forward-looking” statements as
that term is defined in Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended by the Private Securities Litigation Reform Act of 1995,
including, but not limited to statements regarding the anticipated
performance of the Company as a result of the restructuring of the
Company’s debt contemplated by the Amended Credit Agreement and
closing of the previously announced exchange agreement with certain
noteholders. Such projections and estimates are as to future events
and are not to be viewed as facts, and reflect various assumptions
of management of the Company concerning the future performance of
the Company and are subject to significant business, financial,
economic, operating, competitive and other risks and uncertainties
and contingencies (many of which are difficult to predict and
beyond the control of the Company) that could cause actual results
to differ materially from the statements and information included
herein. Forward-looking statements concern future circumstances and
results and other statements that are not historical facts and are
sometimes identified by the words “may,” “will,” “should,”
“potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,”
“estimate,” “overestimate,” “underestimate,” “believe,” “could,”
“project,” “predict,” “continue,” “target” or other similar words
or expressions. Forward-looking statements are based upon current
plans, estimates and expectations that are subject to risks,
uncertainties and assumptions. Forward-looking statements may
include statements about various risks and uncertainties, including
those described under the heading "Risk Factors" as detailed from
time to time in Stronghold’s reports filed with the SEC, including
Stronghold’s annual report on Form 10-K, periodic quarterly reports
on Form 10-Q, current reports on Form 8-K and other documents filed
with the SEC. Such risk and uncertainties are not exclusive. Any
forward-looking statements speak only as of the date of this
communication. The Company does not undertake any obligation to
update any forward-looking statements, whether as a result of new
information or development, future events or otherwise, except as
required by law. Readers are cautioned not to place undue reliance
on any of these forward-looking statements. Additionally,
descriptions herein of market conditions and opportunities are
presented for informational purposes only; there can be no
assurance that such conditions will actually occur or result in
positive returns. Recipients of this communication should make
their own investigations and evaluations of any information
referenced herein.
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