Troubled miner returns 26,000 rigs to eliminate debt
The mining operator entered into a deal with NYDIG to sell rigs to alleviate $64.7 million in outstanding debt.
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The United States-based Bitcoin mining company, Stronghold Digital Mining (SDIG), announced on Tuesday new moves to elevate outstanding debt and restructure its financial operations.
In an agreement with lender New York Digital Investment Group (NYDIG), the company plans to release 26,000 of its mining rigs, 18,700 of which are currently running. The sell-off will create more liquidity and clear $67.4 million in debt held by Stronghold. Before the agreement, the company had $47 million in liquidity as of Aug. 12.
After Stronghold returns 26,000 rigs, with a total hash rate of 2.5 EH/s, their operational fleet will be approximately 16,000 miners. Overall the hash rate capacity will be over 1.4 EH/s and a total power draw of 50-55 megawatts.
The crypto market crash has played a significant role in the current difficulties for miners. In July, Bitcoin (BTC) mining revenue dropped to a one-year low at nearly $15 million. It was around this time other mining operations, such as Compass Mining, were also forced to sell rigs while facing bankruptcy.
For the past three months, Bitcoin miners hodl-ed 27% less due to the need for major sell offs.
Industry insiders refer to the bear market as a moment in crypto that will weed out operations that lack long-term sustainability while allowing others to restructure.
Stronghold’s restructuring and expansion also come with an agreement with WhiteHawk, which adds an additional $20 million available for borrowing. According to the official statement, the company will “ opportunistically” deploy the capital to purchase new miners.
Greg Beard, co-chairman and chief executive officer of Stronghold, said the restructuring will provide, “significantly improved liquidity and flexibility to deploy capital opportunistically in a way that creates equity value through cycles in the Bitcoin and power market.”
Despite the sell-offs, restructuring could be a move in the right direction as experts say there is still long-term profitability in crypto mining. After reaching its low in July, mining revenue reversed its trajectory with a 68.6% increase in August.
Recently, a New York judge approved a request from the Celsius Network to include BTC mining in its refinancing efforts post-bankruptcy.