Executive Summary

Q3 revenue fell to $11.2M, down 42% q/q and 37% y/y as BTC production dropped post‑halving; GAAP net loss was $22.7M and non‑GAAP Adjusted EBITDA loss was $5.5M, driven by lower mining economics and ongoing fixed cost load .
Strategic pivot/catalyst: Stronghold agreed to merge with Bitfarms (2.52 Bitfarms shares per SDIG share), targeting close in Q1 2025; management framed the deal as a route to scale, operational efficiency, and potential HPC/AI adjacency .
Near‑term operating bridge: two Bitfarms hosting deals (10k T21 miners per site at Panther Creek and Scrubgrass, 50% profit share) plus $7.8M deposits for each site to cover ~3 months of power costs (refundable at term end), improving liquidity optics into miner deliveries late 2024/early 2025 .
Liquidity and leverage: $5.1M cash/Bitcoin at 9/30 and $6.7M at 11/8; principal debt ~$53.7M; $3.4M ATM capacity unused YTD; $2.6M tax credit receivable expected near‑term cash inflow .
Estimates context: S&P Global consensus for Q3 2024 was unavailable for SDIG; beat/miss vs Street cannot be assessed (S&P Global estimates not available).

What Went Well and What Went Wrong

What Went Well
- Strategic path clarity: stock‑for‑stock merger with Bitfarms, expected to close in Q1 2025, positioning SDIG holders at ~10% of the combined entity; management highlighted scale (>950 MW potential by YE25) and efficiency synergies, plus the ability to integrate HPC/AI workloads with BTC mining .
- Hosting economics and cash pre‑funding: 20,000 Bitmain T21 units to be hosted for Bitfarms across both plants with a 50% profit share; Bitfarms posted $7.8M deposits per site to cover ~3 months power costs, which aids near‑term working capital (refundable at end of initial term) .
- Operational flexibility reaffirmed: Q3 included ~$0.5M energy sales (equivalent ~8 BTC) amid lower BTC output; August ops update indicated stable BTC‑equivalent production (67 BTC equivalents) and ~$4M revenue for that month, demonstrating grid sales/demand‑response optionality and revenue mix .
What Went Wrong
- Revenue compression: total revenue declined to $11.2M (‑42% q/q; ‑37% y/y) as BTC production fell to 188 BTC in the quarter post‑halving (196 BTC equivalents including energy), overwhelming cost offsets and pressuring profitability .
- Persistent losses and fixed‑cost drag: GAAP net loss of $22.7M; operations and maintenance plus D&A remained heavy relative to reduced revenues, with net operating loss of $17.6M and Adjusted EBITDA loss of $5.5M .
- Leverage and limited liquidity: $53.7M principal debt outstanding vs $5.1M cash/BTC at quarter‑end; although the ATM remained unused, the balance sheet leaves little cushion if BTC prices weaken before merger close or hosting ramps .

Financial Results

Metric	Q1 2024	Q2 2024	Q3 2024
Revenue ($USD Millions)	$27.522	$19.104	$11.168
GAAP Diluted EPS ($)	$0.35	$(1.25)	$(1.34)
Net Income (Loss) Attributable to SDIG ($USD Millions)	$4.924	$(17.942)	$(19.489)
Net Operating Income (Loss) ($USD Millions)	$(3.582)	$(18.642)	$(17.584)
Adjusted EBITDA ($USD Millions)	—	—	$(5.544)

Notes: Company disclosed Q3 non‑GAAP Adjusted EBITDA and provided a reconciliation; the company updated its Adjusted EBITDA treatment for digital assets gains/losses consistent with ASU 2023‑08 and SEC consultation (see Non‑GAAP section) .

Revenue detail – Q3 2024 segment mix:

Revenue Detail ($USD Millions)	Q3 2024
Cryptocurrency Mining	$8.710
Cryptocurrency Hosting	$1.912
Energy	$0.503
Other	$0.044
Total	$11.168

KPIs and Balance Sheet Snapshot

KPI / Balance Sheet	Q1 2024	Q2 2024	Q3 2024
Bitcoin Mined (units)	546	—	188
BTC Equivalents (incl. energy) (units)	—	—	196
Energy Revenue ($USD Millions)	$0.700	$0.221	$0.503
Cash and Cash Equivalents ($USD Millions)	$7.538	$4.876	$4.491
Digital Currencies ($USD)	$2,704	$253,710	$613,949
Current Portion of LT Debt ($USD Millions)	$12.058	$16.347	$19.567
LT Debt, net ($USD Millions)	$43.153	$38.470	$33.880
Principal Debt Outstanding (Company Disclosure)	—	—	~$53.7M

Trend notes:

Company also disclosed cash/BTC and debt post‑quarter: $6.7M cash/BTC as of 11/8; ~$3.4M remaining ATM capacity and ~$2.6M tax credit receivable expected within 30 days .
August 2024 ops: 63 BTC mined, ~4 BTC equivalents from energy, ~67 BTC equivalents, and ~$4M estimated revenue .

Non‑GAAP adjustments and accounting change:

Adjusted EBITDA definition excludes interest, taxes, D&A, one‑time transaction costs, stock‑based comp, asset sale gains/losses, debt extinguishment, and changes in fair value of warrant liabilities; following adoption of ASU 2023‑08, realized/unrealized digital asset gains/losses are no longer excluded; prior‑period Adjusted EBITDA was revised accordingly .

Guidance Changes

Metric / Item	Period	Previous Guidance	Current Guidance	Change
Financial Guidance (Revenue, Margins, EPS)	Q4 2024/FY	None provided	None provided	—
Merger Close Timeline (Bitfarms)	Close	—	Expected Q1 2025	New in Q3
Hosting Program – Bitfarms T21 (Panther Creek)	Initial term	—	10,000 units; 50% profit share; $7.8M deposit covering ~3 months power; term to 12/31/25	New
Hosting Program – Bitfarms T21 (Scrubgrass)	Initial term	—	10,000 units; 50% profit share; $7.8M deposit; deliveries start late Dec’24/Jan’25; term to 12/31/25	New
Capacity Auction Uplift (PJM)	Jun’25–May’26	~+$7M at 100% margin (Panther Creek), per Q2 commentary	Not updated in Q3	Maintained view from Q2

Management did not issue formal quantitative guidance; outlook items reflect merger timing and commercial arrangements disclosed.

Earnings Call Themes & Trends

Topic	Q1 2024 (Prior)	Q2 2024 (Prior)	Q3 2024 (Current)	Trend
Strategic Alternatives / M&A	Launched formal strategic review; highlighted undervaluation and data center/HPC optionality	Continued evaluation of alternatives	Definitive merger with Bitfarms (2.52:1 exchange), target close Q1’25; SDIG holders ~10% of combined entity	Evolved from review to signed deal
Power Market / Capacity	Importing grid power at Scrubgrass to lower cost; demand response/sync reserve registration progress	PJM BRAs cleared $270/MW‑day; Panther Creek ~+$7M capacity revenue (FY25/26) at 100% margin; evaluating exit of some Scrubgrass capacity for DR eligibility	No update to capacity numbers in Q3; continued emphasis on operational efficiency with Bitfarms	Stable to positive
Carbon Capture	Submitted audit package to Puro; aiming accreditation at Scrubgrass	Ongoing, lab results support ~14% by weight CO2 capture potential; monetization targeted 2025+	Mentioned sustainability ethos; no new Q3 quantification	Incremental, awaiting accreditation
AI/HPC Optionality	Articulated HPC/AI demand center thesis for assets	Utility load studies; 250 MW potential at Panther; exploring data center expansion	Combined platform seen as better positioned to integrate HPC/AI	Building narrative
Fleet/Hosting Mix	—	Hosting relationships amended/managed; operational curtailment flexibility	Two Bitfarms hosting agreements to high‑grade fleet utilization	Shift toward hosted profit‑share
Leadership	—	—	CFO Matt Smith stepping down (effective Nov 15), continuing as consultant for transition	Transition underway

Management Commentary

“We’re thrilled about this transformative next step… a definitive merger agreement with Bitfarms… can result in a pro forma company with an energy portfolio exceeding 950 megawatts by year‑end 2025… leverage Bitfarms’ proven expertise to successfully enhance operational efficiency and merge HPC/AI with Bitcoin mining operations.” — CEO Greg Beard .
“During the third quarter 2024, we generated 188 Bitcoin and approximately $0.5 million of energy revenues… total of 196 Bitcoin equivalents… Revenue totaled $11.2 million… GAAP net loss… $22.7 million… Adjusted EBITDA loss… $5.5 million.” — CFO Matt Smith .
“Bitfarms will pay Stronghold fifty percent of the profit generated by the [hosted] miners… Bitfarms also deposited with Stronghold $7.8 million, equal to the estimated cost of power for three months of operations…” — Q3 press release .

Q&A Highlights

The call was intentionally brief due to the pending Bitfarms merger; management focused on merger rationale, hosting ramp, and liquidity positioning rather than detailed Q&A .
Liquidity/disclosure clarifications were provided in the press release: $5.1M cash/BTC at 9/30 and $6.7M at 11/8; $53.7M principal debt; $3.4M ATM remaining; $2.6M tax credit receivable expected near‑term .
No formal financial guidance was provided; merger timing guided to Q1 2025 .

Estimates Context

S&P Global (Capital IQ) consensus estimates for SDIG’s Q3 2024 revenue, EPS, and EBITDA were unavailable; therefore, a beat/miss vs Street cannot be determined (S&P Global estimates not available).

Key Takeaways for Investors

Execution shifted from standalone optimization to combination: the Bitfarms merger offers scale, cost, and fleet utilization benefits, with potential HPC/AI upside; shareholder pro forma stake ~10%, close targeted Q1 2025 .
Hosting pivot is an important bridge: 20,000 Bitmain T21 units under 50% profit‑share and two $7.8M deposits provide near‑term liquidity support ahead of deliveries late 2024/early 2025 .
Core fundamentals pressured by halving: Q3 revenue down 42% q/q, with 188 BTC produced and net loss of $22.7M; sustaining fixed costs vs reduced block rewards underscores need for utilization and cost discipline .
Liquidity tight but improving with deposits and tax credit receipts: $5.1M cash/BTC at 9/30 and $6.7M at 11/8; ~$2.6M tax credit receivable expected; principal debt ~$53.7M remains a key watch item into merger close .
Optionality persists in power markets and carbon capture: capacity revenues (per Q2 commentary) and grid sales/demand response can offset some BTC cyclicality; carbon capture could add monetizable credits post‑audit/accreditation in 2025+ .
Non‑GAAP policy updated for digital assets: Adjusted EBITDA now includes realized/unrealized crypto gains/losses per ASU 2023‑08/SEC consultation; compare Adjusted EBITDA trends with care across periods .
Near‑term trading lens: stock likely keyed to merger milestones, hosting deployment cadence, and BTC price; any slip in miner deliveries/deposits or merger timing could be catalysts in either direction .

Citations

Q3 2024 8‑K earnings press release and financials:
Q3 2024 earnings call transcript:
August 2024 operations update 8‑K:
Q2 2024 10‑Q and call:
Q1 2024 10‑Q and call:

Stronghold Digital Mining, Inc. (SDIG)·Q3 2024 Earnings Summary