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United States securities and exchange commission logo
December 13, 2022
Gregory A. Beard
Chief Executive Officer and Co-Chairman
Stronghold Digital Mining, Inc.
595 Madison Avenue, 28th Floor
New York, New York 10022
Re: Stronghold Digital
Mining, Inc.
Amendment No. 1 to
Form S-1 Registration Statement on
Form S-3
Registration Statement
Filed November 23,
2022
File No. 333-267869
Dear Gregory A. Beard:
We have reviewed your amended registration statement and have the
following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Unless we note
otherwise, our references to prior comments are to comments in our
October 27, 2022 letter.
Amendment No. 1 to Form S-1 on Form S-3 Registration Statement Filed
November 23, 2022
General
1. With a view towards
revised disclosure, advise whether you are dependent on any
platform to liquidate
your bitcoin or convert it into fiat currency. Address the company's
reliance on any such
platform. Additionally, please discuss how recent market events,
including the
bankruptcies of certain crypto market participants, and the downstream
effects of those events
have impacted or may impact your business, service providers,
counterparties and
market in which you operate, either directly or indirectly. For
example, discuss the
potential impact of the platform limiting its services as a result of
these events.
Gregory A. Beard
FirstName
StrongholdLastNameGregory A. Beard
Digital Mining, Inc.
Comapany13,
December NameStronghold
2022 Digital Mining, Inc.
December
Page 2 13, 2022 Page 2
FirstName LastName
2. We note your response to prior comment 2. In light of the "depressed
Bitcoin mining
economics" you describe in your most recent quarterly report, please
provide the data that
supports your statement that you are able to "produce Bitcoin at a
cost that we believe is
attractive versus the price of Bitcoin, and generally below the
prevailing market price of
power that many of our peers must pay." In this regard, revise your
disclosure to include
a breakeven analysis comparing the value of one mined Bitcoin to
your cost to mine the
one Bitcoin. Your analysis should identify and explain the inputs used
in your
calculation.
3. Describe any material risks to your business from the possibility of
regulatory
developments related to crypto assets and crypto asset markets.
Identify material pending
crypto legislation or regulation and describe any material effects it
may have on your
business, financial condition, and results of operations.
Additionally, with a view towards
revised disclosure, advise whether there are any material risks to the
Company s business
in connection with the recent enactment of legislation in New York
establishing a two-
year moratorium on issuing permits for certain cryptocurrency mining
operations that use
carbon-based power sources or the possibility of similar laws being
enacted in the United
States.
4. We note that on November 30, 2022, you were notified by Nasdaq that
the Company is
not in compliance with the minimum bid price requirements for
continued listing on The
Nasdaq Global Market. Please include a recent development section in
your prospectus
summary to disclose the Nasdaq notification letter and the impact on
your Company if
you are unable to regain compliance. Additionally, to the extent
material, describe any of
the following risks due to disruptions in the crypto asset markets:
Risk from depreciation in your stock price.
Risk of loss of customer demand for your products and services.
Financing risk, including equity and debt financing.
Risk of increased losses or impairments in your investments or
other assets.
Risks of legal proceedings and government investigations,
pending or known to be
threatened, in the United States or in other jurisdictions
against you or your affiliates.
Risks from price declines or price volatility of crypto assets.
5. You disclose certain risks associated with the potential compromise of
the private keys
used to store crypto assets held for your own account or for that of
your customers on
page 34 of your annual report on Form 10-K. With a view towards
revised disclosure,
please clarify whether, with respect to your hosting services or other
activities, you hold
or otherwise store crypto assets for your customers. If material to an
understanding of
your business, discuss any steps you take to safeguard your customers
crypto assets and
Gregory A. Beard
Stronghold Digital Mining, Inc.
December 13, 2022
Page 3
describe any policies and procedures that are in place to prevent
self-dealing and other
potential conflicts of interest. Describe any policies and procedures
you have regarding
the commingling of assets, including customer assets, your assets, and
those of affiliates
or others. Identify what material changes, if any, have been made to
your processes in
light of the current crypto asset market disruption. Describe any
material risks related to
safeguarding your, your affiliates , or your customers crypto
assets. Describe any
material risks to your business and financial condition if your policies
and procedures
surrounding the safeguarding of crypto assets, conflicts of interest, or
comingling of assets
are not effective.
Exhibits
6. Please have counsel revise its legal opinion to address the securities
being registered on
your Form S-3 registration statement.
Please contact Patrick Faller, Staff Attorney at (202) 551-4438 or
Larry Spirgel, Office
Chief, at (202) 551-3815 with any questions.
Sincerely,
FirstName LastNameGregory A. Beard
Division of
Corporation Finance
Comapany NameStronghold Digital Mining, Inc.
Office of
Technology
December 13, 2022 Page 3
cc: Daniel LeBey
FirstName LastName