Stronghold Digital Mining (SDIG) Q3 2024 earnings summary

Executive summary

• Announced a definitive stock-for-stock merger agreement with Bitfarms, expected to close in Q1 2025, with Stronghold shareholders receiving 2.52 Bitfarms shares per Stronghold share and holding about 10% of the combined entity.

• Q3 2024 revenue was $11.2 million, down 42% sequentially and 37% year-over-year, with $10.6 million from crypto operations and $0.5 million from energy sales.

• GAAP net loss for Q3 2024 was $22.7 million; non-GAAP adjusted EBITDA loss was $5.5 million.

• CFO Matt Smith resigned effective November 15, 2024, with Ryan Weber appointed as Principal Financial Officer.

• Entered new hosting agreements with Bitfarms for 20,000 miners and sold 6,000 M50 miners to Sunnyside Digital to optimize fleet.

Financial highlights

• Q3 2024 total operating revenues were $11.2 million, down from $17.7 million in Q3 2023, mainly due to lower Bitcoin mining economics and hosting revenues.

• Net loss for Q3 2024 was $22.7 million, compared to $22.3 million in Q3 2023; net loss for the nine months ended September 30, 2024 was $38.1 million, improved from $80.7 million in the prior year period.

• Produced 188 Bitcoin and $0.5 million in energy revenue (equivalent to 196 Bitcoin total), a 35% decrease from Q2 2024 due to the April Bitcoin halving.

• Adjusted EBITDA for Q3 2024 was a loss of $5.5 million, compared to a loss of $2.6 million in Q3 2023.

• Net loss per share for Q3 2024 was $(1.34) on 14.6 million shares, compared to $(2.26) on 7.6 million shares in Q3 2023.

Outlook and guidance

• Merger with Bitfarms expected to close in Q1 2025, subject to regulatory and shareholder approvals.

• Hosting agreements with Bitfarms to host 20,000 miners at Panther Creek and Scrubgrass, with profit-sharing and $15.6 million in refundable power cost deposits.

• Anticipates $13 million incremental revenue in 2025-2026 from PJM capacity auction and increased Pennsylvania waste coal tax credits.

• Ongoing efforts to high-grade mining fleet, expand hosting operations, and monetize carbon capture credits in 2025 or 2026.

• Liquidity expected to be sufficient for the next 12 months, assuming merger completion and continued operational improvements.