Stronghold Q4 2021 Earnings Report
Key Takeaways
Stronghold Digital Mining reported a significant increase in revenue for Q4 2021 compared to the previous year, driven by higher energy generation and crypto asset mining revenues. However, the company experienced a net loss due to increased operating expenses, primarily related to power asset operations and scaling the organizational structure. Operational challenges and delays in miner deliveries negatively impacted cash flow and growth plans.
Revenues increased 1,721% to $17.0 million compared to $0.9 million in the same quarter a year ago.
Net loss for the fourth quarter of 2021 was ($17.5) million compared to net income of $0.2 million for the same quarter a year ago.
As of December 31, 2021, Stronghold had received approximately 14,700 miners with total hash rate capacity of 1.3 EH/s.
The Scrubgrass Plant had downtime that was greater than anticipated and operated at a lower utilization than expected, driven largely by mechanical issues.
Stronghold
Stronghold
Stronghold Revenue by Segment
Forward Guidance
Stronghold is no longer targeting an 8.0 EH/s hash rate exiting 2022. The company plans to receive and install its existing miner deliveries at its two company-owned power assets and estimates achieving a hash rate capacity of up to 5.5 EH/s at year end, if the remaining MinerVa miners are delivered, and 4.3 EH/s if no additional MinerVa miners are delivered. The company is providing guidance of installing 4.1 EH/s of hash rate capacity by the end of the year.
Positive Outlook
- Focus on installing and optimizing performance of already ordered miners.
- Maximizing financial flexibility.
- Upgrades at the Scrubgrass Plant are expected to be completed in the second half of 2022.
- Expect Scrubgrass Plant to operate at expected utilization after upgrades.
- Expect hash rate, capital efficiency and cash flow to be further optimized for the Panther Creek Plant over the course of 2022.
Challenges Ahead
- No longer targeting 8.0 EH/s by the end of 2022.
- Delays in miner deliveries and datacenter buildout.
- Operational challenges at the Scrubgrass Plant.
- MinerVa deliveries have been well short of contract timelines.
- Company estimates these factors have negatively impacted its cash on hand by approximately $40 million to $45 million as of March 24, 2022 compared to its previous internal estimates.
Revenue & Expenses
Visualization of income flow from segment revenue to net income