Shares of Bitcoin miner Stronghold Digital Mining Inc. plunged more than 25% in U.S. trading on Wednesday after the company said losses in the second quarter widened from a year earlier despite a restructuring plan that included the return of about 26,200 Bitcoin mining machines to slash debt in half.
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The Nasdaq-listed mining firm’s net loss widened to US$40.2 million in the second quarter of this year, compared to a US$3.2 million loss a year earlier, Stronghold’s latest earnings report showed.
Stronghold Tuesday said it has reached agreements with New York Digital Investment Group and another lender to return Bitcoin mining rigs to reduce US$67.4 million in debt, in a move the company expects to “significantly improve the financial condition of Stronghold and position it for increased financial flexibility going forward.”
The company also received a commitment letter from WhiteHawk Finance LLC to restructure and expand its current equipment financing agreements to add up to US$20 million in borrowing capacity.
With these agreements and another convertible note restructuring in its plan, Stronghold is seeking to slash its outstanding dues by US$79 million, or about 55% of total principal outstanding as of June 30, the company said.
“Stronghold has been consistently toggling between selling power to the grid and mining Bitcoin,” amid lower margins on the crypto and higher costs for power, the company said.
Stronghold’s power generation capacity remains unchanged. “[While] our Bitcoin mining fleet has been reduced in the short run, we have significantly more open exposure to strong power markets, which remain tight,” Greg Beard, cochairman and chief executive officer of Stronghold, said in the statement.