Q3 2024 Stronghold Digital Mining Inc Earnings Call

Recording of the presentation of the 2014春劧禮行".

Eric Reedus, Unknown Attendee, Mike Caprucio, Gregory Beard

That strong whole digital mining dot com you can find the link in the Investor section at the top of the homepage.

Joining us today on the call, our strongholds, chairman and CEO, Greg Beard, and CFO, Matt Smith.

<unk>, we begin I would like to provide strong whole safe Harbor statement that includes cautions regarding forward looking statements made during this call.

During this presentation management may discuss financial projections information or expectations about the company's products and services or markets or otherwise make statements about the future, including but not limited to the company's previously announced merger with bit farms, which.

Our forward looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made.

The company does not undertake any obligation to update them as required by law.

Some statements made today may be considered forward looking statements under securities law and involve a number of risks and uncertainties. As a result, it is important to note that there are a number of factors, which many of which are beyond the company's control, which could cause actual results and events to differ materially from those described in forward looking statements for more detailed.

Risks uncertainties and assumptions related to these forward looking statements. Please see the disclosures in the company's earnings release and public filings made with the Securities and Exchange Commission.

There is no obligation or undertaking to update update forward looking statements to reflect circumstances or events that could occur. After the date. The forward looking statements are made except as required by law.

The company will also discuss non-GAAP financial metrics and encourage you to read the company's disclosures and the reconciliation tables to the uplift applicable GAAP measures in the earnings release carefully as you consider these metrics.

<unk> expects to file its quarterly report on Form 10-Q on or prior to November 14th 2024, with the Securities and Exchange Commission, which that sports detailed disclosures and descriptions of our businesses as well as uncertainties and other viable circumstances, including but not limited to risks and uncertainties.

Identified under the caption risk factors.

You May access stronghold Securities and Exchange Commission filings for free by visiting the S. E. C website at Www Dot FCC dot Gov or strongholds Investor Relations website at IR stronghold digital mining dotcom.

In addition, we may make statements on this call concerning our pending merger with bit farms. These statements are not an offer to sell or the solicitation of an offer to buy sell or solicit any securities or any proxy vote or approval by or on behalf of the company or bit farms or the respective directors.

And executive officers.

And are not a substitute for the registration statement on form F. Four file number 333 dash 282657 filed by bit farmers with the SEC the proxy statement.

This included in the registration statement on form F four or any other relevant documents that bit farm, where strong whole has filed or will file with the SEC.

Investors should carefully read these documents, which contain important information concerning the merger.

And can be obtained for free by visiting the FCC website or by contacting strongholds Investor relations at S. P. I G. A gateway Ash G. R. P dot com.

Speaker Change: I'd like to remind everyone that this call is being recorded and will be available for replay via a link on <unk> website Investor Relations section now I would like to turn the call over to strong host chairman and CEO, Greg Bier. Mr. Byrd Baird you May proceed.

Greg Bier: Good morning, everyone and thank you for joining our third quarter 2024 call.

Greg Bier: Given our pending merger with great firms, which we announced on August 21st today's update will be relatively brief recap. We're thrilled about this transformative step for stronghold.

Speaker Change: Connecticut merger agreement with good cars, a global leader Bitcoin mining.

Speaker Change: After a thorough strategic alternatives review process, we are confident that partnering with big firms offer the optimal platform to realize the full potential of our assets accelerate growth and build value for the company and its shareholders.

Speaker Change: The transaction can result in a pro forma company within the energy portfolio exceed.

Speaker Change: Exceeding 950 megawatts by year end 2025.

Speaker Change: And there are multiple studies underway related to the strong hold assets.

Speaker Change: Have the potential to add significant capacity incrementally.

Speaker Change: We believe this growth pipeline.

Speaker Change: Combined with the opportunity to leverage big farms proven expertise to successfully enhance operational efficiency.

Speaker Change: Emerge HBC AI with Bitcoin mining operations is a recipe for success.

Speaker Change: The transaction is structured as a stock for stock merger, whereby stronghold shareholders overseeing 2.5 to bid farm shares for each stronghold sure which.

Speaker Change: At the time of the announcement.

Speaker Change: Valued stronghold equity at approximately $125 million plus.

Speaker Change: Plus $50 million of debt to be paid at close upon closing strongholds shareholders will hold around 10% of the combined company positioning them to benefit directly from the growth potential of this expanded platform.

Speaker Change: Gather will leverage the unique capabilities of the scrub grass and Panther Creek facilities in Pennsylvania to deliver low cost power.

Speaker Change: Pork, the local grid and improve the environment through the conversion of mining waste into energy advancing our commitment to sustainability.

Speaker Change: Additionally, we believe that the platform will better position facilities to integrate high performance computing diversifying the business beyond the current mining.

Speaker Change: In addition to the merger we have recently strengthened our bitcoin mining operations due to hosting agreements with bad parts.

Speaker Change: Which will high grade the fleet at our facilities on September 12, we entered into an agreement to host 10000, <unk> <unk> 'twenty, one bitcoin ladders Panther Creek when you.

Speaker Change: Received some of these miners with the remainder expected in November and December of this year.

Speaker Change: Bonds will pay us a monthly fee of 50% of profit generated by the miners subject to certain adjustments to account for upfront payments made by the foreign taxes and the net cost of power associated with the operation of the miners.

Speaker Change: Building on this on October 29th we entered a second hosting agreement dose an additional 10000 liners that scrub grass.

Speaker Change: At the same economic terms.

Speaker Change: Deliveries are expected to begin in late December or early January.

Speaker Change: Before I hand over the call I want to address a recent leadership transition.

Speaker Change: Our CFO, Matt Smith will be stepping down effective November 15th following the filing of our third quarter report, Matt was instrumental in navigating through a difficult time for the business and ultimately to an attractive merger with that Fox is effort and success rate capital, establishing operational procedures and enhancing.

Speaker Change: The company tracking as the data have been critical we're grateful for Max contribution with the stronghold over the past three years.

Speaker Change: We look forward to working with him in a consulting role to ensure a smooth transition.

Speaker Change: I'll turn it over to Matt.

Matt Smith: Thank you, Greg it's truly been a pleasure working with you and the rest of the stronghold team.

Matt Smith: For our bitcoin mining operations during the third quarter of 2024, we generated 188, bitcoin and an additional.

Matt Smith: $5 million in energy revenue equivalent to approximately eight bit coin at the average price.

This brought our total production to the equivalent of 196 bitcoin for the quarter, representing a decrease of about 35% when compared to the second quarter of 'twenty 'twenty. Four this decline was primarily driven by the big four and having on April 19th which reduced the block reward from 625 to $3 125 bitcoin.

Matt Smith: While this having impacted production, we continue adapting our strategy to optimize mining and energy revenue in this evolving environment.

Matt Smith: Revenue for the third quarter of 2024 totaled $11 2 million down 42% sequentially and 37% year over year. This revenue included a $10 6 million of cryptocurrency operations <unk> 5 million from energy sales on.

Matt Smith: On the profitability side, our GAAP net loss for the third quarter was $22 $7 million with a non-GAAP adjusted EBITDA loss of $5 5 million.

Matt Smith: You'll find a detailed reconciliation of these figures in our earnings release.

Matt Smith: Turning to our balance sheet as of September 32024, and November eight the 'twenty 'twenty four we had approximately $5 1 million and $6 7 million, respectively in cash and cash equivalents, including 10 Bitcoin as of September 34, Bitcoin as of November eight.

Speaker Change: John who also has $2 6 million and contracted receivables is expected within the next 30 days and the sale of our 2023 wistful tax credits.

Speaker Change: Our principal outstanding indebtedness was approximately $53 7 million as of the end of the third quarter.

Speaker Change: And we also have approximately $3 4 million remaining under our ATM as of November eight 2024 with no shares sold under the ATM during this year.

Speaker Change: That concludes my remarks, thank you again, Greg and team.

Speaker Change: I would greatly appreciate it back to you Greg.

Greg Bier: Alright, Thank you, Matt and thank you all for joining US today as we look ahead. We are excited about the opportunities our merger with bid farms will bring and the strategic initiatives, we have underway to expand our capacity enhanced operational efficiency and strengthen our commitment to sustainability.

Greg Bier: Remain focused on creating long term value for our shareholders and positioning stronghold as a leader in the evolving digital infrastructure space. We appreciate your continued support and look forward to updating you on our progress. Thank you again for joining have a great day.

Greg Bier: Operator.

Speaker Change: Thank you for joining us today for stronghold conference call you may now disconnect.

[music].

Speaker Change: Okay.