Stronghold Sells 26,000 Bitcoin Miners To Eliminate Debt

Stronghold Digital Mining (SDIG), a Bitcoin mining company based in the U.S., revealed plans to reduce outstanding debt and restructure its financial operations on August 16th, 2022.

The company intends to release approximately 26,200 of its mining rigs, where 18,700 are currently running, under an agreement with lender New York Digital Investment Group (NYDIG). The sale will increase liquidity and pay off Stronghold's debt of $67.4 million. As of August 12th, Stronghold had $47 million in liquidity prior to the arrangement.

Once Stronghold sells the agreed upon 26,200 rigs (with a total hash rate of 2.5 EH/s), its operating fleet will then consist of roughly 16,000 miners. The company’s total power demand will then be 50–55 megawatts (MW) in order to achieve a hash rate capacity over 1.4 EH/s.

The current challenges for Stronghold and other miners are largely a result of the Bitcoin and cryptocurrency market crash. Bitcoin (BTC) mining revenue fell to a one-year low in July, coming in at just under $15 million. Compass Mining, Core Scientific, Bitfarms and other companies within the mining industry are also experiencing pressures to sell their rigs or Bitcoin holdings in order to keep operations afloat.

Due to the necessity of significant sell offs for affected companies, Bitcoin miners held 27% less Bitcoin during the last three months. Many in the industry believe that bear markets allow certain companies to restructure while eliminating those without long-term sustainability.

The restructuring and expansion of Stronghold includes an agreement with WhiteHawk where $20 million is available for borrowing under necessary circumstances. With these new developments, Stronghold plans to strategically deploy capital to acquire new miners.

Co-chairman and CEO of Stronghold Greg Beard stated that taking steps to restructure the company will provide, “significantly improved liquidity and flexibility to deploy capital opportunistically in a way that creates equity value through cycles in the Bitcoin and power market.”

Restructuring could benefit Stronghold in the long-term despite recent sell-offs in the market. The company recognizes that Bitcoin mining has generally been profitable when given enough time for the market volatility to settle. Mining revenue has recently reversed course with a 68.6% increase in August so far after hitting a low in July.