Stronghold Loses 25% After Hours as Q4 Earnings, Revenue Miss Mark

key takeaways

Stronghold has received approximately 3,300 of a total 15,000 miners ordered, despite an initial delivery deadline of Dec. 31, 2021
Stronghold remains committed to environmentally friendly mining operations, executives insisted

Stronghold Digital Mining (ticker: SDIG) lost more than 25% in after hours trading after the crypto mining company that uses coal waste energy to mine bitcoin reported lower-than-expected fourth quarter earnings.

Stronghold’s 2021 fourth quarter adjusted earnings-per-share shows a loss of $0.52 a share, according to the company’s report. Analysts predicted a gain of $0.002.

Revenue rose from $900,000 in the fourth quarter of 2020 to $17 million in 2021, missing analysts’ estimated $21.9 million. The revenue increase in 2021 “is primarily attributable to higher energy generation and crypto asset mining revenues,” the report said.

The company posted a net loss for the fourth quarter of 2021 of $17.5 million, compared to net income of $200,000 for the same quarter in 2020. Stronghold’s net loss for the full year of 2021 came in at $27.3 million, compared to a net loss of $100,000 in the prior year period.

“[I] want to be clear to everyone, our recent results are not up to the expectations we have at Stronghold and are not representative of the potential we aim to deliver,” Gregory Beard, co-chairman and CEO of Stronghold, said during the company’s earnings conference call Tuesday afternoon. “I firmly believe Stronghold has the foundational pieces to be a successful and differentiated company.”

Stronghold executives said losses can be attributed to delivery delays. Hash rate has been negatively impacted by delays in miner deliveries, the report noted.

To date, Stronghold has received approximately 3,300 of the total 15,000 miners ordered from MinerVa, a Canada-based semiconductor corporation, despite an initial delivery deadline of Dec. 31, 2021. Stronghold is now expecting miners to be delivered by April 30, 2022, executives said.

“We are also revisiting our miner procurement strategy to put a greater emphasis on spot purchases over forward deliveries,” Beard said. “We believe deliveries have an elevated risk profile given potential delays to delivery timing and uncertainty related to bitcoin fundamentals at time of receipt.”

Stronghold made its Nasdaq debut in October 2021 at an opening price of $26.50 — 55.8% higher than the anticipated range between $16 and $18 price per share.

Executives remained positive, insisting that the company’s core mission remains intact.

“We are focused on improving the environment,” Beard said. “Our vertically integrated business model offers low costs, we have significant scale and our management team is highly aligned with over 50% ownership in the company.”

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