Stronghold Digital Mining (SDIG) Q2 2024 earnings summary

Executive summary

• Strategic review process is ongoing, with multiple bids received for all or parts of the company; alternatives include potential sales, mergers, financings, and expansion into new data center and GPU computing use cases.

• Expansion of Panther Creek and Scrubgrass data centers is under evaluation, with potential for large-scale GPU computing and nearly 1 GW of total power availability.

• The company operates two coal refuse power plants and vertically integrated Bitcoin mining, focusing on low-cost, environmentally beneficial energy and crypto asset production.

• As of August 2024, nearly 42,000 Bitcoin miners with over 4.1 EH/s hash rate capacity are owned or hosted, with significant data center expansion being explored.

• Recent regulatory and market developments, including increased coal refuse tax credits and higher PJM capacity auction prices, are expected to benefit future results.

Financial highlights

• Q2 2024 revenue totaled $19.1 million, with $18.8 million from cryptocurrency operations and $0.3 million from energy operations; year-to-date revenue was $46.6 million.

• 299 Bitcoin mined during Q2 2024, totaling 845 year-to-date; total Bitcoin-equivalent production was 302, down 46% from Q1 2024.

• GAAP net loss was $21.3 million for Q2 2024; year-to-date net loss was $15.4 million.

• Non-GAAP adjusted EBITDA was negative $0.3 million for Q2 2024; year-to-date Adjusted EBITDA was $8.4 million.

• As of June 30, 2024, cash and equivalents were $4.9–$5.1 million, with $55.1 million in outstanding debt principal.

Outlook and guidance

• Strategic review process continues with no set deadline; options include sale, asset transactions, or financing.

• Expansion at Panther Creek and Scrubgrass sites under review, with potential for significant data center and GPU computing growth.

• Anticipated $7 million incremental revenue from Panther Creek capacity payments between June 2025 and May 2026 at 100% margin.

• Waste Coal Tax Credit increase expected to add $2–$4 million in annual cash flow or net income starting in 2025.

• Carbon capture monetization is targeted for 2025, with potential Section 45Q tax credit eligibility in 2025 or 2026.