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SD

Stronghold Digital Mining, Inc. (SDIG)·Q1 2024 Earnings Summary

Executive Summary

  • Stronghold delivered preliminary Q1 2024 revenue of $27.5 million, GAAP net income of $5.8 million, and adjusted EBITDA of $8.7 million, materially beating prior guidance of “over $5 million” EBITDA; cryptocurrency mining revenue was $26.7 million on 546 Bitcoin mined, with $0.7 million energy revenue and $0.1 million other revenue .
  • Management initiated a formal review of strategic alternatives (including a potential sale of all or part of the company) citing a >70% valuation discount vs peers on EV-to-hash-rate and EV-to-Bitcoin production bases .
  • Operations pivoted to import-grid power at Scrubgrass amid depressed PJM prices, while Panther Creek achieved net cost of power under $40/MWh; Stronghold also entered a demand response agreement with Voltus to monetize PJM programs (price response and sync reserve) .
  • Carbon capture project advanced: a full audit package was submitted to Puro, with management hopeful of accreditation at Scrubgrass for two installed “Karbolith” units by quarter-end, positioning a potential new revenue stream that could lower net power costs over time .

What Went Well and What Went Wrong

What Went Well

  • Adjusted EBITDA beat: “On our last earnings call, we guided to over $5 million of EBITDA… we beat that by over 70% with adjusted EBITDA of nearly $9 million” ; preliminary non-GAAP reconciliation shows Q1 adjusted EBITDA of $8.7 million .
  • Cost of power progress and flexibility: Panther Creek net cost of power under $40/MWh; Scrubgrass seasonally importing grid power via Champion agreement to benefit from low prices .
  • Strategic optionality and undervaluation: Initiated strategic review; highlights unique asset base (165 MW generation, 130 MW data center capacity, 750 acres, transmission lines), and potential expansion to >400 MW for Bitcoin or advanced computing (AI/ML) .

What Went Wrong

  • Headwinds from depressed PJM power prices in January–February; management explicitly cited “depressed PJM power prices to end the winter” impacting the quarter’s backdrop .
  • Reliance on favorable Bitcoin economics: Quarter benefited from “improving Bitcoin mining economics” (hash price and BTC price) — a variable outside operational control, underscoring sensitivity to BTC and network dynamics .
  • Estimates context limited: S&P Global consensus estimates were unavailable for SDIG in our system mapping, constraining direct beat/miss benchmarking to Street estimates (see Estimates Context) [SpgiEstimatesError].

Financial Results

Consolidated Performance vs Prior Quarters

MetricQ3 2023Q4 2023Q1 2024
Revenue ($USD Millions)$17.7 $21.7 $27.5
GAAP Net Income (Loss) ($USD Millions)$(22.3) $(21.2) $5.8
Adjusted EBITDA ($USD Millions)$(2.4) $2.3 $8.7
Bitcoin Mined (Units)620 599 546

Notes: All Q1 2024 figures are preliminary; reconciliation provided in EX-99.1. Q3 2023 adjusted EBITDA reconciled in press materials .

Q1 2024 Revenue Breakdown

SegmentQ1 2024 ($USD Millions)
Cryptocurrency Mining$26.7
Energy$0.7
Other$0.1
Total$27.5

Operational KPIs

KPIQ3 2023Q4 2023Q1 2024
Bitcoin Mined (Units)620 599 546
March 2024 Revenue ($USD Millions)——~$11.1
March 2024 Avg Hash Rate (EH/s)——3.6

Guidance Changes

MetricPeriodPrevious GuidanceCurrent/ActualChange
Adjusted EBITDAQ1 2024“Over $5 million” (guided on prior call) $8.7 million (prelim) Beat
Net Cost of Power (Panther Creek)YTD/Run-rateNot quantified previouslyUnder $40/MWh achieved YTD Improved (operational)
Scrubgrass Operating Mode2024 shoulder monthsNot specifiedSeasonal run; import grid power via Champion to capitalize on low prices Strategy updated
Carbon Capture AccreditationQ2 2024 targetEarly-stage program in prior quarters Submitted full audit package to Puro; hopeful of accreditation at Scrubgrass by end of this quarter Timeline clarified

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2023, Q4 2023)Current Period (Q1 2024)Trend
Carbon Capture (Karbolith/DAC)Launch and lab results; potential 60–100k tons CO2 capture; Puro listing targeted Q1’24; EBITDA uplift scenarios Full audit package submitted to Puro; hopeful for accreditation by end of Q2; lifecycle assessment supports observed carbon reduction Advancing toward accreditation and monetization
Power Price Strategy (PJM)Expect low PJM prices; flex between self-generation and imports; base case Scrubgrass as peaker; Champion retail power structure to reduce costs Panther under $40/MWh net cost; Scrubgrass importing power seasonally via Champion; Voltus demand response for PJM price response/sync reserve Continued cost optimization; added DR revenue streams
Hash Rate & Fleet High-GradingUptime improvements via Frontier; potential to high-grade to >7 EH/s within existing slots; capex discipline ahead of halving 4.1 EH/s installed capacity; believes expansion to >7 EH/s feasible via high-grading Focus on execution and optional growth
Strategic Alternatives / UndervaluationValuation discount cited; liquidity and debt service plans; deleveraging ambitions Formal strategic review initiated with advisors; >70% discount vs peers on EV metrics emphasized Escalated to formal process
AI/Data Center Power DemandNoted interest and optionality of sites; infrastructure value Sees strong demand for baseload assets; potential expansion to >400 MW for Bitcoin or AI/ML compute Growing emphasis on power-linked compute demand

Management Commentary

  • “We guided to over $5 million of EBITDA for the quarter, and I’m pleased to report that we beat that by over 70% with adjusted EBITDA of nearly $9 million.” — Gregory Beard, CEO .
  • “Revenue for the first quarter was $27.5 million… GAAP net income was $5.8 million… adjusted EBITDA was $8.7 million.” — Matthew Smith, CFO .
  • “We have commenced a comprehensive and thorough review of strategic alternatives… including… the sale of all or part of the company.” — Gregory Beard, CEO .
  • “Our Panther Creek plant has performed exceptionally well year-to-date… net cost of power under $40 a megawatt… due to low power prices, Scrubgrass has been importing power… We are planning to continue to run Scrubgrass seasonally.” — Gregory Beard, CEO .
  • “We submitted our fulsome audit package to Puro… The life cycle assessment supported the carbon reduction figures… hopeful to have the project accredited… as early as the end of this quarter.” — Gregory Beard, CEO .

Q&A Highlights

  • The Q1 2024 transcript materials available emphasize prepared remarks; key clarifications included the formal strategic review scope/timing (“no timetable”), operational cost discipline, and carbon capture accreditation timeline .

Estimates Context

  • S&P Global consensus estimates for Q1 2024 (EPS, Revenue, EBITDA) were unavailable for SDIG in our system due to missing company mapping; therefore, a formal beat/miss versus Wall Street consensus cannot be asserted. Values would typically be retrieved from S&P Global; in this case consensus was not accessible [SpgiEstimatesError].
  • Given the EBITDA guidance context (> $5 million) and actual adjusted EBITDA ($8.7 million), Stronghold delivered a significant internal guidance beat, which may prompt upward estimate revisions on near-term profitability assumptions .

Key Takeaways for Investors

  • Guidance beat and improving unit economics: Adjusted EBITDA of $8.7 million vs “> $5 million” guidance signals improved execution and margin capture under favorable BTC mining economics and disciplined power sourcing .
  • Strategic review introduces optionality/catalyst: Formal process (including potential sale) leverages unique hard-asset base and data center/power footprint; highlight >70% peer discount commentary .
  • Cost-of-power flexibility is a differentiator: Seasonal import at Scrubgrass and Panther’s sub-$40/MWh net cost underpin margin resilience vis-à-vis volatile BTC/network dynamics; demand response monetization adds incremental revenue streams .
  • Carbon capture nearing accreditation: Submission to Puro and expected accreditation by quarter-end supports a pathway to new revenue, potential net power cost reduction, and a differentiated ESG angle .
  • Sequential operational momentum: Revenue and adjusted EBITDA improved sequentially vs Q4 2023; mined 546 BTC in Q1 alongside March rev strength (~$11.1 million) and higher average hash rate (3.6 EH/s) .
  • Near-term trading lens: Watch for updates on strategic alternatives, Puro accreditation, PJM DR program monetization, and any additional fleet high-grading announcements; these are potential stock-movers .
  • Risk checks: Exposure to BTC price/network hash rate; low PJM prices can reduce power arbitrage gains; Street consensus was unavailable for formal beat/miss benchmarking this quarter [SpgiEstimatesError].
All financial data are preliminary where noted and sourced from company filings and transcripts as cited; no external estimates could be retrieved from S&P Global due to system mapping limitations.