Bitcoin Miner Stronghold Digital in Debt Restructuring Negotiations With Lenders

by Aaryamann Shrivastava
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Bitcoin Miner Stronghold Digital in Debt Restructuring Negotiations With Lenders

Danny is CoinDesk's deputy business editor. He owns BTC, ETH and SOL.

Stronghold Digital Mining (SDIG) said Tuesday it is negotiating with its lenders over a possible debt restructuring or refinancing agreement that would keep the bitcoin (BTC) miner afloat.

In a notice to the U.S. Securities and Exchange Commission, Stronghold pointed to these negotiations as the primary reason for the delay in releasing its second-quarter earnings, which it has postponed at least three times.

“This delay principally relates to the Company’s ongoing negotiations of potentially material transactions with its lenders to restructure or refinance certain financing agreements in order improve the Company’s financial position, and for the Company to be able to continue as a going concern for at least the next 12 months,” Stronghold wrote. “Management’s efforts related to negotiating the potential debt restructuring transactions and evaluating the Company’s financial position, including its liquidity position, have required a significant amount of management’s time and other Company resources that normally would be devoted to the preparation of the Quarterly Report and related matters.”

Shares in Stronghold Digital were down more than 11% following the news. Publicly traded miners have been battered by the bitcoin bear market, with their shares falling more than 60% on average this year. Stronghold has done even worse, its shares ropping more than 70%. And the group has done even worse than bitcoin itself, which has lost less than half of its value.

In its notice, Stronghold said it expected to report revenues of $29.2 million for the second quarter. That figure would be below the consensus analyst estimate of $30.3 million, according to FactSet. It also expects to report a net loss of $40.2 million for the quarter, compared to a net loss of $3.2 million in the second quarter of 2021, with the increase driven primarily by a rise in expenses and impairments on its bitcoin holdings.

UPDATE (Aug. 16, 2022 18:08 UTC): Added additional quote from Stronghold and information about miners’ stock declines.

UPDATE (Aug. 16, 18:19 UTC): Added information about Stronghold’s expected second-quarter results.

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