UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): April 25, 2024
(Exact Name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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(Address of principal executive offices)
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(Zip Code)
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(845 ) 579-5992
Registrant’s telephone number, including area code
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following
provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this
chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 |
Results of Operations and Financial Condition.
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The preliminary information set forth in Item 7.01 of this Form 8-K regarding the estimated results of Stronghold Digital Mining, Inc. (the “Company,”
“we” or “our”) for the first quarter of 2024 is hereby incorporated by reference into this Item 2.02.
The information furnished in this Item 2.02 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended,
or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, regardless of any general incorporation language in such filing,
except as shall be expressly set forth by specific reference in such filing.
| Item 7.01 |
Regulation FD Disclosure.
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On April 25, 2024, the Company issued a press release regarding certain operations and financial performance updates. A copy of the
press release is attached as Exhibit 99.1 hereto.
The information furnished in this Item 7.01, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject
to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, regardless of any general incorporation language in such filing, except as shall be
expressly set forth by specific reference in such filing.
| Item 8.01 |
Other Events.
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First Quarter 2024 Operational and Financial Update
The Company generated estimated revenue of $27.5 million and an estimated $5.8 million of GAAP Net Income. Revenue comprised an estimated $26.7 million from cryptocurrency mining, an estimated
$0.7 million from the sale of energy, and estimated $0.1 million from other revenue during the quarter. The estimated results are unaudited and subject to completion.
The estimated results set forth herein are based on preliminary information as of the date of this Form 8-K and are subject to change following
completion of the quarter-end review process for the quarter ended March 31, 2024, and the potential impact of other developments arising between the date of this Form 8-K and the time such financial results are finalized. These estimates should
not be relied upon as fact or as an accurate representation of future results, and their presentation is not intended to represent actual results. Actual results remain subject to the completion of management’s final reviews and our other
financial closing procedures.
Cautionary Statement Concerning Forward-Looking Statements
Certain statements contained in this current report on Form 8-K 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 the Company are subject to a number of risks and uncertainties that may cause the Company’s actual results in future periods to differ materially from the forward-looking statements. These risks and uncertainties include, among other
things: the restructuring of the Company’s debt and the performance and satisfaction of various obligations under the agreements entered into in order to effect such restructuring of debt; 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 and install crypto asset mining equipment, including from foreign-based suppliers; our ability to
maintain our relationships with our third party brokers and our dependence on their performance; 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 develop and monetize our carbon capture project to generate
meaningful revenue, on a timely basis or at all; our ability to avail ourselves of tax credits for the clean-up of coal refuse piles; 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 the Company’s 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 its Annual Report on Form 10-K filed on March 8, 2024, its Quarterly Reports on Form 10-Q filed from time to time, and in its
Current Reports on Form 8-K filed from time to time. Any forward-looking statement speaks only as of the date as of which such statement is made, and, except as required by law, the Company undertakes no obligation to update or revise publicly
any forward-looking statements, whether because of new information, future events, or otherwise.
| Item 9.01 |
Financial Statements and Exhibits.
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(d) Exhibits.
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Exhibit
Number
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Description
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99.1*
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Press release dated April 25, 2024
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104
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Cover Page Interactive Data File (embedded within the Inline XBRL document).
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* Furnished herewith
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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STRONGHOLD DIGITAL MINING, INC.
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Date: April 25, 2024
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By:
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/s/ Gregory A. Beard
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Name:
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Gregory A. Beard
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Title:
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Chief Executive Officer and Chairman
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Exhibit 99.1
Stronghold Announces Preliminary First Quarter 2024 Results
NEW YORK, April 25, 2024 – Stronghold Digital Mining, Inc. (NASDAQ: SDIG) (“Stronghold”, or the “Company”) today reported preliminary unaudited financial results for the first quarter ended March 31, 2024:
First Quarter 2024 Financial Performance
Stronghold generated an estimated $27.5 million of revenue, an estimated $5.8 million of GAAP Net Income, and an estimated $8.7 million of adjusted EBITDA1
during the first quarter of 2024. Revenue comprised an estimated $26.7 million from cryptocurrency mining, an estimated $0.7 million from the sale of energy, and an estimated $0.1 million of other revenue during the quarter. The period featured
two extremes: improving Bitcoin mining economics from January through March and depressed PJM power prices to end the winter in January and February. In addition to the improved Bitcoin mining economics experienced during the first quarter,
Stronghold’s improved operational execution in the first quarter led to improved hash rate utilization compared to prior quarters.
Conference Call
Stronghold has scheduled its first quarter 2024 earnings conference call on Thursday, May 2nd at 11:00 a.m. Eastern Time to discuss its operations and financial results from the
first quarter ended March 31, 2024. A press release detailing these results will be issued before the market opens on the same day.
Stronghold management will provide prepared remarks, followed by a question-and-answer period.
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 First 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.
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 derivative contracts, gain or losses on extinguishment of debt, commissions on the sale of ash, or changes in the fair value of warrant liabilities in the period
presented. See reconciliation below.
1 See preliminary non-GAAP reconciliations.
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 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 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 modifications may be material. Adjusted EBITDA has important limitations as an analytical tool. You should not
consider Adjusted EBITDA in isolation or as a substitute for analysis of our results as reported under GAAP, and it should be read in conjunction with the financial statements contained in our filings with the Securities and Exchange Commission.
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.
Preliminary Non-GAAP Reconciliations:
A reconciliation of the Company’s net income (loss), the closest GAAP measure, to Adjusted EBITDA is presented in the following table:
STRONGHOLD DIGITAL MINING, INC.
RECONCILIATION OF ADJUSTED EBITDA
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Three Months Ended
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(in thousands)
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March 31, 2024
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March 31, 2023
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Net Income (Loss)—GAAP
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$
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5,842
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$
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(46,661
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Plus:
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Interest expense
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2,263
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2,384
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Depreciation and amortization
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9,515
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7,723
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Loss on debt extinguishment
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28,961
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Impairments on digital currencies
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71
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Non-recurring expenses1
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837
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682
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Stock-based compensation
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1,939
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2,449
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Loss on disposal of fixed assets
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-
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91
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Realized gain on sale of miner assets
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(36
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-
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Realized gain on sale of digital currencies2
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-
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(327
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Changes in fair value of warrant liabilities
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(11,678
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715
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Accretion of asset retirement obligation
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14
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13
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Adjusted EBITDA—Non-GAAP
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$
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8,696
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$
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(3,898
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1 Includes the following non-recurring expenses: One-time legal fees, out-of-the-ordinary major repairs and upgrades to the
power plant, 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 $0.1 million recorded to the opening balance of retained earnings. For 2024 and beyond, in conjunction with this accounting change, realized gains and losses on the sale of
digital currencies will no longer be excluded from Adjusted EBITDA. Following the adoption of ASU 2023-08, realized gains (net of realized losses) on the sale of digital currencies were approximately $0.6 million and unrealized gains (net of
unrealized losses) on digital currencies were insignificant for the three months ended March 31, 2024.
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 Kovtun
Gateway Group, Inc.
SDIG@gateway-grp.com
1-949-574-3860
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 and its assets. 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 filed on March 8, 2024, 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.