Yesterday’s quarterly earnings report revealed that the company had announced a plan to reduce its debt. Stronghold stock plunged almost 18% upon the announcement. Still being considered are the wide-ranging consequences of May’s catastrophic crypto crash.
Yesterday’s quarterly earnings report by Bitcoin mining company Stronghold stated that it had reached an agreement to repay 26,200 mining machines in return for $67.4m in debt cancellation.
Stronghold also received yesterday a commitment from WhiteHawk Capital for restructured and expanded its existing equipment financing agreements. This will give the Bitcoin miner an additional borrowing capacity of up to $20,000,000.
These agreements, when combined with a restructuring of convertible notes, will reduce Stronghold’s debt to $79 million.
This is 55% of the company’s current debt. $64 million will still be outstanding.
This move is being made as crypto companies continue taking stock of the devastating impact of June and May’s crashes, which in many ways still persists.
Although Bitcoin has temporarily recovered to $25,000, the top cryptocurrency is still at 65% below its peak of $69 044.77 in November 2021. According to data from CoinMarketCap , Bitcoin is currently at $23,821.80.
This massive downturn has devastated Bitcoin miners such as Stronghold who pay enormous overhead costs and high energy costs to create the blue-chip cryptocurrency.
Other Bitcoin miners took to selling their Bitcoin reserves in an attempt to survive the crash. This surprising move surprised many industry HODLers.
A report by Arcane Research shows that Bitcoin miners sold almost 15,000 BTC in June. This represents 400% of their total Bitcoin production. This number dropped to 6,200 BTC in July.
This is still 158% of Bitcoin produced by these miners. It’s a sign of dire financial circumstances.
Stronghold, instead of selling its Bitcoin supplies, reduced its debt by buying mining equipment. This will not affect its long-term BTC production capabilities, insists Stronghold.
Greg Beard, Stronghold’s CEO and co-chairman, stated in a statement, “provides additional availability for our company to patiently, opportunistically obtain Bitcoin miners at current depressed prices.”
He also mentioned other income streams that could continue to generate revenue for the company.
Beard stated that “our power generation capacity has not changed” and that, although our Bitcoin mining fleet was reduced in the short-term, we are now much more exposed to power markets. “Forward prices indicate that selling power is an attractive option to Bitcoin mining regardless of its size.
Yesterday’s disclosure of the sale of mining equipment caused Stronghold’s stock to fall 17.55%. The stock is currently trading at $3.19 and has dropped 75.76% over the past year.