|
|
|
(State or other jurisdiction of incorporation)
|
(Commission File Number)
|
(IRS Employer Identification No.)
|
|
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
|
|
|
Item 2.02 |
Results of Operations and Financial Condition.
|
Item 8.01 |
Other Events.
|
Item 9.01 |
Financial Statements and Exhibits.
|
(d)
|
Exhibits.
|
Exhibit
Number
|
Description
|
Press Release issued by Stronghold Digital Mining, Inc., dated as of November 14, 2023
|
|
Third Quarter 2023 Earnings Presentation
|
|
104
|
Cover Page Interactive Data File (embedded within the Inline XBRL document).
|
* |
Furnished herewith.
|
STRONGHOLD DIGITAL MINING, INC.
|
|||
By:
|
/s/ Gregory A. Beard
|
||
Name:
|
Gregory A. Beard
|
||
Title:
|
Chief Executive Officer and Chairman
|
||
Date: November 14, 2023
|
• |
Stronghold’s Beneficial Use Ash Can Capture Carbon Dioxide (CO2). Following four months of extensive testing, third-party lab results indicate that Stronghold’s beneficial use ash, a natural byproduct of its mining-waste-to-power process, can
capture CO2 from ambient air at a capacity of up to 12% by weight of starting ash. The process results in permanent and stable storage of the CO2.
|
• |
Initial Phase of Carbon Capture Project Underway at the Scrubgrass Plant. Stronghold and third-party engineering, design, and construction partners have developed direct air capture (“DAC”) technology to utilize the beneficial use ash to capture CO2. Field testing is in progress with
initial results expected by December of 2023.
|
• |
Reiterating Q4 2023 Hash Rate Guidance. The Company is
committed to Bitcoin mining and expects at least 20% sequential growth in hash rate going into the fourth quarter of 2023.
|
• |
Procured 3,135 High-Spec Bitcoin Miners (358 PH/s, >114 TH/s per miner, 28.7 J/T) Since the End
of Q2 2023. The Company is taking a disciplined approach to the Bitcoin event in April of 2024, with no incremental capital
currently committed to purchase additional miners.
|
• |
Signed Managed Services Agreement with Frontier Outpost 8, LLC (“Frontier Mining”) to optimize Bitcoin mining operations and profitability of Stronghold’s data centers.
|
• |
Fixed Costs Were Down ~$31 Million for the First Three Quarters of 2023 Versus the First Three
Quarters of 2022, Representing a ~56% Reduction. Fixed costs include operations & maintenance expense and general & administrative expense, excluding stock-based compensation and a one-time
accounts receivable adjustment.
|
• |
Generated 620 Bitcoin during the third quarter of 2023, which was nearly flat versus the second quarter of 2023 and represented approximately 9% and 41% growth compared to the third and fourth
quarters of 2022, respectively.
|
• |
The Company generated revenues of $17.7 million, net loss of $22.3 million, and non-GAAP Adjusted EBITDA loss of $2.4 million during the third quarter of 2023. Excluding the adjustment to accounts receivable,
the non-GAAP Adjusted EBITDA loss would have been $1.6 million. Revenues comprised $12.7 million
from cryptocurrency self-mining, $3.8 million from cryptocurrency hosting, and $1.2 million
from the sale of energy.1
|
September 30, 2023
|
December 31, 2022
|
|||||||
ASSETS:
|
||||||||
Cash and cash equivalents
|
$
|
4,979,299
|
$
|
13,296,703
|
||||
Digital currencies
|
641,999
|
109,827
|
||||||
Accounts receivable
|
486,706
|
10,837,126
|
||||||
Inventory
|
3,143,284
|
4,471,657
|
||||||
Prepaid insurance
|
1,842,250
|
5,471,498
|
||||||
Due from related parties
|
97,288
|
73,122
|
||||||
Other current assets
|
1,137,834
|
1,381,737
|
||||||
Total current assets
|
12,328,660
|
35,641,670
|
||||||
Equipment deposits
|
—
|
10,081,307
|
||||||
Property, plant and equipment, net
|
156,481,678
|
167,204,681
|
||||||
Operating lease right-of-use assets
|
1,552,735
|
1,719,037
|
||||||
Land
|
1,748,440
|
1,748,440
|
||||||
Road bond
|
211,958
|
211,958
|
||||||
Security deposits
|
348,888
|
348,888
|
||||||
Other noncurrent assets
|
155,992
|
—
|
||||||
TOTAL ASSETS
|
$
|
172,828,351
|
$
|
216,955,981
|
||||
LIABILITIES:
|
||||||||
Accounts payable
|
$
|
14,666,753
|
$
|
27,540,317
|
||||
Accrued liabilities
|
9,638,819
|
8,893,248
|
||||||
Financed insurance premiums
|
1,112,558
|
4,587,935
|
||||||
Current portion of long-term debt, net of discounts and issuance fees
|
1,654,634
|
17,422,546
|
||||||
Current portion of operating lease liabilities
|
748,369
|
593,063
|
||||||
Due to related parties
|
451,367
|
1,375,049
|
||||||
Total current liabilities
|
28,272,500
|
60,412,158
|
||||||
Asset retirement obligation
|
1,062,677
|
1,023,524
|
||||||
Warrant liabilities
|
5,434,420
|
2,131,959
|
||||||
Long-term debt, net of discounts and issuance fees
|
57,653,823
|
57,027,118
|
||||||
Long-term operating lease liabilities
|
899,576
|
1,230,001
|
||||||
Contract liabilities
|
560,510
|
351,490
|
||||||
Total liabilities
|
93,883,506
|
122,176,250
|
||||||
COMMITMENTS AND CONTINGENCIES (NOTE 10)
|
||||||||
REDEEMABLE COMMON STOCK:
|
||||||||
Common Stock – Class V; $0.0001 par value; 34,560,000 shares authorized; 2,405,760 and 2,605,760
shares issued and outstanding as of September 30, 2023, and December 31, 2022, respectively.
|
10,563,277
|
11,754,587
|
||||||
Total redeemable common stock
|
10,563,277
|
11,754,587
|
||||||
STOCKHOLDERS’ EQUITY (DEFICIT):
|
||||||||
Common Stock – Class A; $0.0001 par value; 685,440,000 shares authorized; 7,876,688 and 3,171,022
shares issued and outstanding as of September 30, 2023, and December 31, 2022, respectively.
|
788
|
317
|
||||||
Series C convertible preferred stock; $0.0001 par value; 23,102 shares authorized; 21,572 and 0 shares
issued and outstanding as of September 30, 2023, and December 31, 2022, respectively.
|
2
|
—
|
||||||
Accumulated deficits
|
(321,126,596
|
)
|
(240,443,302
|
)
|
||||
Additional paid-in capital
|
389,507,374
|
323,468,129
|
||||||
Total stockholders' equity
|
68,381,568
|
83,025,144
|
||||||
Total redeemable common stock and stockholders' equity
|
78,944,845
|
94,779,731
|
||||||
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS' EQUITY
|
$
|
172,828,351
|
$
|
216,955,981
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30, 2023
|
September 30, 2022
|
September 30, 2023
|
September 30, 2022
|
|||||||||||||
OPERATING REVENUES:
|
||||||||||||||||
Cryptocurrency mining
|
$
|
12,684,894
|
$
|
12,283,695
|
$
|
37,764,990
|
$
|
50,715,424
|
||||||||
Energy
|
1,210,811
|
13,071,894
|
4,682,590
|
29,807,512
|
||||||||||||
Cryptocurrency hosting
|
3,789,375
|
93,279
|
9,195,072
|
282,327
|
||||||||||||
Capacity
|
—
|
878,610
|
1,442,067
|
4,591,038
|
||||||||||||
Other
|
41,877
|
39,171
|
142,194
|
91,941
|
||||||||||||
Total operating revenues
|
17,726,957
|
26,366,649
|
53,226,913
|
85,488,242
|
||||||||||||
OPERATING EXPENSES:
|
||||||||||||||||
Fuel
|
8,556,626
|
10,084,466
|
22,262,141
|
29,292,616
|
||||||||||||
Operations and maintenance
|
6,961,060
|
19,528,088
|
24,206,080
|
47,449,177
|
||||||||||||
General and administrative
|
6,598,951
|
11,334,212
|
25,145,444
|
32,848,291
|
||||||||||||
Depreciation and amortization
|
9,667,213
|
12,247,245
|
26,025,021
|
37,234,126
|
||||||||||||
Loss on disposal of fixed assets
|
—
|
461,940
|
108,367
|
2,231,540
|
||||||||||||
Realized gain on sale of digital currencies
|
(131,706
|
)
|
(185,396
|
)
|
(725,139
|
)
|
(936,506
|
)
|
||||||||
Realized loss on sale of miner assets
|
—
|
—
|
—
|
8,012,248
|
||||||||||||
Impairments on miner assets
|
—
|
11,610,000
|
—
|
16,600,000
|
||||||||||||
Impairments on digital currencies
|
357,411
|
465,651
|
683,241
|
8,176,868
|
||||||||||||
Impairments on equipment deposits
|
5,422,338
|
—
|
5,422,338
|
12,228,742
|
||||||||||||
Total operating expenses
|
37,431,893
|
65,546,206
|
103,127,493
|
193,137,102
|
||||||||||||
NET OPERATING LOSS
|
(19,704,936
|
)
|
(39,179,557
|
)
|
(49,900,580
|
)
|
(107,648,860
|
)
|
||||||||
OTHER INCOME (EXPENSE):
|
||||||||||||||||
Interest expense
|
(2,441,139
|
)
|
(3,393,067
|
)
|
(7,428,530
|
)
|
(10,813,302
|
)
|
||||||||
Loss on debt extinguishment
|
—
|
(28,697,021
|
)
|
(28,960,947
|
)
|
(28,697,021
|
)
|
|||||||||
Impairment on assets held for sale
|
—
|
(4,159,004
|
)
|
—
|
(4,159,004
|
)
|
||||||||||
Gain on extinguishment of PPP loan
|
—
|
—
|
—
|
841,670
|
||||||||||||
Changes in fair value of warrant liabilities
|
(180,838
|
)
|
1,302,065
|
5,580,453
|
1,302,065
|
|||||||||||
Realized gain on sale of derivative contract
|
—
|
90,953
|
—
|
90,953
|
||||||||||||
Changes in fair value of forward sale derivative
|
—
|
—
|
—
|
3,435,639
|
||||||||||||
Changes in fair value of convertible note
|
—
|
(1,204,739
|
)
|
—
|
(2,167,500
|
)
|
||||||||||
Other
|
15,000
|
20,000
|
45,000
|
50,000
|
||||||||||||
Total other income (expense)
|
(2,606,977
|
)
|
(36,040,813
|
)
|
(30,764,024
|
)
|
(40,116,500
|
)
|
||||||||
NET LOSS
|
$
|
(22,311,913
|
)
|
$
|
(75,220,370
|
)
|
$
|
(80,664,604
|
)
|
$
|
(147,765,360
|
)
|
||||
NET LOSS attributable to noncontrolling interest
|
(5,188,727
|
)
|
(44,000,155
|
)
|
(26,663,731
|
)
|
(86,435,347
|
)
|
||||||||
NET LOSS attributable to Stronghold Digital Mining, Inc.
|
$
|
(17,123,186
|
)
|
$
|
(31,220,215
|
)
|
$
|
(54,000,873
|
)
|
$
|
(61,330,013
|
)
|
||||
NET LOSS attributable to Class A common shareholders:
|
||||||||||||||||
Basic
|
$
|
(2.26
|
)
|
$
|
(12.67
|
)
|
$
|
(8.93
|
)
|
$
|
(28.17
|
)
|
||||
Diluted
|
$
|
(2.26
|
)
|
$
|
(12.67
|
)
|
$
|
(8.93
|
)
|
$
|
(28.17
|
)
|
||||
Weighted average number of Class A common shares outstanding:
|
||||||||||||||||
Basic
|
7,569,511
|
2,463,163
|
6,047,891
|
2,177,206
|
||||||||||||
Diluted
|
7,569,511
|
2,463,163
|
6,047,891
|
2,177,206
|
Nine Months Ended
|
||||||||
September 30, 2023
|
September 30, 2022
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net loss
|
$
|
(80,664,604
|
)
|
$
|
(147,765,360
|
)
|
||
Adjustments to reconcile net loss to cash flows from operating activities:
|
||||||||
Depreciation and amortization
|
26,025,021
|
37,234,126
|
||||||
Accretion of asset retirement obligation
|
39,153
|
18,253
|
||||||
Gain on extinguishment of PPP loan
|
—
|
(841,670
|
)
|
|||||
Loss on disposal of fixed assets
|
108,367
|
2,231,540
|
||||||
Realized loss on sale of miner assets
|
—
|
8,012,248
|
||||||
Change in value of accounts receivable
|
1,867,506
|
—
|
||||||
Amortization of debt issuance costs
|
161,093
|
2,681,039
|
||||||
Stock-based compensation
|
7,603,859
|
9,123,124
|
||||||
Loss on debt extinguishment
|
28,960,947
|
28,697,021
|
||||||
Impairment on assets held for sale
|
—
|
4,159,004
|
||||||
Impairments on equipment deposits
|
5,422,338
|
12,228,742
|
||||||
Impairments on miner assets
|
—
|
16,600,000
|
||||||
Changes in fair value of warrant liabilities
|
(5,580,453
|
)
|
(1,302,065
|
)
|
||||
Changes in fair value of forward sale derivative
|
—
|
(3,435,639
|
)
|
|||||
Realized gain on sale of derivative contract
|
—
|
(90,953
|
)
|
|||||
Forward sale contract prepayment
|
—
|
970,000
|
||||||
Changes in fair value of convertible note
|
—
|
2,167,500
|
||||||
Other
|
(229,485
|
)
|
—
|
|||||
(Increase) decrease in digital currencies:
|
||||||||
Mining revenue
|
(43,778,958
|
)
|
(50,715,424
|
)
|
||||
Net proceeds from sale of digital currencies
|
42,563,545
|
46,209,822
|
||||||
Impairments on digital currencies
|
683,241
|
8,176,868
|
||||||
(Increase) decrease in assets:
|
||||||||
Accounts receivable
|
8,129,033
|
1,336,817
|
||||||
Prepaid insurance
|
1,399,254
|
5,321,521
|
||||||
Due from related parties
|
(91,617
|
)
|
(58,735
|
)
|
||||
Inventory
|
1,328,373
|
55,538
|
||||||
Other assets
|
9,666
|
(866,298
|
)
|
|||||
Increase (decrease) in liabilities:
|
||||||||
Accounts payable
|
(1,445,109
|
)
|
4,878,600
|
|||||
Due to related parties
|
(239,230
|
)
|
781,485
|
|||||
Accrued liabilities
|
875,203
|
(407,909
|
)
|
|||||
Other liabilities, including contract liabilities
|
(211,225
|
)
|
(55,742
|
)
|
||||
NET CASH FLOWS USED IN OPERATING ACTIVITIES
|
(7,064,082
|
)
|
(14,656,547
|
)
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchases of property, plant and equipment
|
(14,743,269
|
)
|
(68,052,422
|
)
|
||||
Proceeds from sale of equipment deposits
|
—
|
13,844,780
|
||||||
Equipment purchase deposits - net of future commitments
|
—
|
(13,656,428
|
)
|
|||||
NET CASH FLOWS USED IN INVESTING ACTIVITIES
|
(14,743,269
|
)
|
(67,864,070
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Repayments of debt
|
(3,196,644
|
)
|
(34,490,545
|
)
|
||||
Repayments of financed insurance premiums
|
(1,474,889
|
)
|
(3,992,336
|
)
|
||||
Proceeds from debt, net of issuance costs paid in cash
|
(147,385
|
)
|
97,337,454
|
|||||
Proceeds from private placements, net of issuance costs paid in cash
|
9,824,567
|
8,599,440
|
||||||
Proceeds from ATM, net of issuance costs paid in cash
|
8,483,982
|
—
|
||||||
Proceeds from exercise of warrants
|
316
|
—
|
||||||
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
|
13,489,947
|
67,454,013
|
||||||
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
(8,317,404
|
)
|
(15,066,604
|
)
|
||||
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD
|
13,296,703
|
31,790,115
|
||||||
CASH AND CASH EQUIVALENTS - END OF PERIOD
|
$
|
4,979,299
|
$
|
16,723,511
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
(in thousands)
|
September 30, 2023
|
September 30, 2022
|
September 30, 2023
|
September 30, 2022
|
||||||||||||
Net Loss (GAAP)
|
$
|
(22,312
|
)
|
$
|
(75,220
|
)
|
$
|
(80,665
|
)
|
$
|
(147,765
|
)
|
||||
Plus:
|
||||||||||||||||
Interest expense
|
2,441
|
3,393
|
7,429
|
10,813
|
||||||||||||
Depreciation and amortization
|
9,667
|
12,247
|
26,025
|
37,234
|
||||||||||||
Loss on debt extinguishment
|
—
|
28,697
|
28,961
|
28,697
|
||||||||||||
Impairment on assets held for sale
|
—
|
4,159
|
—
|
4,159
|
||||||||||||
Impairments on equipment deposits
|
5,422
|
—
|
5,422
|
12,229
|
||||||||||||
Impairments on miner assets
|
—
|
11,610
|
—
|
16,600
|
||||||||||||
Impairments on digital currencies
|
357
|
466
|
683
|
8,177
|
||||||||||||
Non-recurring expenses1
|
1,216
|
8,218
|
1,853
|
14,781
|
||||||||||||
Stock-based compensation
|
788
|
3,377
|
7,604
|
9,123
|
||||||||||||
Loss on disposal of fixed assets
|
—
|
462
|
108
|
2,232
|
||||||||||||
Realized loss on sale of miner assets
|
—
|
—
|
—
|
8,012
|
||||||||||||
Realized gain on sale of digital currencies
|
(132
|
)
|
(185
|
)
|
(725
|
)
|
(937
|
)
|
||||||||
Changes in fair value of forward sale derivative
|
—
|
—
|
—
|
(3,436
|
)
|
|||||||||||
Gain on extinguishment of PPP loan
|
—
|
—
|
—
|
(842
|
)
|
|||||||||||
Changes in fair value of convertible note
|
—
|
1,205
|
—
|
2,168
|
||||||||||||
Changes in fair value of warrant liabilities
|
181
|
(1,302
|
)
|
(5,580
|
)
|
(1,302
|
)
|
|||||||||
Realized gain (loss) on sale of derivative contract
|
—
|
(91
|
)
|
—
|
(91
|
)
|
||||||||||
Accretion of asset retirement obligation
|
13
|
—
|
39
|
—
|
||||||||||||
Adjusted EBITDA (Non-GAAP)
|
$
|
(2,357
|
)
|
$
|
(2,965
|
)
|
$
|
(8,846
|
)
|
$
|
(148
|
)
|