Stronghold Digital Mining, Inc. Price & Performance (SDIG)

As a result, it is important to note that there are a number of factors which many of which are beyond the company's control, which could cause actual results and events to differ materially from those described in forward looking statements. For more detailed risks, uncertainties and assumptions related to these forward looking statements, please see the disclosures in the company's earnings release and public filings made with the Securities and Exchange Commission. There is no obligation or undertaking to update update forward looking statements to reflect circumstances or events that could occur after the date the forward looking statements are made. Except as required by law. The company will also discuss non GAAP financial metrics and encourage you to read the company's disclosures and the reconciliation tables to the Aplip applicable GAAP measures in the earnings release carefully as you consider these metrics. Stronghold expects to file its quarterly report on Form 10 Q on or prior to November 14, 2020 4 with the Securities and Exchange Commission, which sets Detailed disclosures and descriptions of our businesses as well as uncertainties and other variable circumstances including but not limited to risks and uncertainties identified under the caption Risk Factors.

You may access Stronghold Securities and Exchange Commission filings for free by visiting the SEC website at www.sec.gov or Stronghold Investor Relations website at ir irstrongholdigitalmining.com. In addition, we may make statements on this call concerning our pending merger with Bitfarms. These statements are not an offer to sell or the solicitation of an offer to buy, sell or solicit any securities or any proxy vote or approval by or on behalf of the company or Bitfarms or the respective directors and executive officers and are not a substitute for the registration statement on Form F4 file number [indiscernible] 7, filed by Bitfarms with the SEC, the proxy statement prospectus included in the registration statement on Form F4 or any other relevant documents that Bit Farm or Stronghold has filed or will file with the SEC. Investors should carefully read these documents, which contain important information concerning the merger and can be obtained for free by visiting the SEC website or by contacting Stronghold Investor Relations at I would like to remind everyone that this call is being recorded section. Now, I would like to turn the call over to Stronghold's Chairman and CEO, Greg Beard, Mr. Burt, Beard, you may proceed.

Good morning, everyone, and thank you for joining our Q3 2024 Call. Given our pending merger with Bitfarms, which we announced on August 21, today's update will be relatively brief. To recap, we're thrilled about this transformative next step for Stronghold. A definitive merger agreement with Bitfarms. A global leader in Bitcoin Mining. After a thorough strategic alternatives review process, we are confident that partnering with Bitfarms offers the optimal platform to realize the full potential of our assets, accelerate growth and build value for the company and its shareholders. Transaction could result in a pro form a company with an energy portfolio exceeding 950 Megawatts by year end 2025. And there are multiple studies underway related to the Stronghold assets that have the potential to add significant capacity incrementally. We believe this growth pipeline combined with the opportunity to leverage Bitfarms' proven expertise to successfully enhance operational efficiency and merge HPCAI with Bitcoin Mining Operations is a recipe for success. The transaction is structured as a stock for stock merger. Whereby Stronghold shareholders will receive 2.52 Bitfarms shares for each Stronghold share. Which at the time of the announcement valued Stronghold equity at a pro $125,000,000 plus $50,000,000 in debt to be paid at close.

Upon closing, Stronghold shareholders will hold around 10% of the combined company. Positioning them to benefit directly from the growth potential of this expanded platform. Together, we'll leverage the unique capabilities of this Scrub Grass and Panther Creek facilities in Pennsylvania to deliver low cost power support the global grid and improve the environment through the conversion of mining waste into energy. Advancing our commitment Additionally, we believe that the platform will better position the facilities to integrate high performance computing diversifying the business beyond Bitcoin Mining. In addition to the merger, we recently strengthened our Bitcoin mining operations through 2 hosting agreements with Bitfarms. Which will high grade the fleet at our facilities. On September 12, we entered into an agreement to host 10,000 Bitmain T21 Bitcoin Miners at Panther Creek. We received some of these miners with the remainder at expected in November December of this year. Bid Farms will pass a monthly fee of 50% of profit generated by the miners subject to certain adjustments to account for upfront payments made by Bitfarms taxes and the net cost of power associated with the operation of the miners. Building on this, on October 29, we entered a second hosting agreement to host an additional 10,000 liners at Scrub Grass at the same economic terms.

Minor deliveries are expected to begin in late December or early January. Before I hand over the call, I want to address a recent leadership transition Our CFO, Matt Smith, will be stepping down effective November 15th. Following the filing of our 3rd quarter report. Matt was instrumental in navigating through a difficult time for the business and ultimately to an attractive merger with Big Farms. His efforts and success in raising capital, establishing operational procedures and enhancing how the company tracks and uses data have been critical. We're grateful for Matt's contributions to Stronghold over the past 3 years and we look forward to working with him in a consulting role to ensure a smooth transition. With that, I'll turn it over to Matt. Thank you, Greg. It's truly been a pleasure working with you and the rest of Stronghold team. For our Bitcoin mining operations, during the Q3 of 2024, we generated 188 Bitcoin and an additional $500,000 in energy revenue. Equivalent to approximately 8 Bitcoin at the average price. This brought our total production to the equivalent of 196 bitcoin for the quarter, representing a decrease of about 35% when compared to the Q2 of 2024. This decline was primarily driven by the Bitcoin halving on April 19, which reduced the block reward from 6.25 to 3.125 Bitcoin.

While this having impacted production, we continue adapting our strategy to optimize mining and energy revenue in this evolving environment. Revenue for the Q3 of 2024 totaled 11,200,000 dollars down 42% sequentially and 37% year over year. Revenue included $10,600,000 of cryptocurrency operations and $500,000 from energy sales. On the profitability side, our GAAP net loss for the 3rd quarter was $22,700,000 with a non GAAP adjusted EBITDA loss of 5,500,000 You'll find a detailed reconciliation of these figures in our earnings release. Turning to our balance sheet. As of September 30, 2024, and November 8, 2024, we held approximately 5,100,000 $6,700,000 respectively in cash and cash equivalents. Including 10 bitcoin as of September 30th and 4 bitcoin as of November 8th. Stronghold also has 2,600,000 in contracted receivables expected within the next 30 days from the sale of our 2023 Wasteful Tax Credits. Our principal outstanding indebtedness was 53,700,000 as of the end of the 3rd quarter And we also have approximately $3,400,000 remaining under our ATM as of November 8, 2024 with no shares sold under the ATM during this year. That concludes my remarks.

Thank you again, Greg and team. [indiscernible] I'd greatly appreciate it. Back to you, Greg.

All right. Thank you, Matt, and thank you all for joining us today. As we look ahead, we are excited about the opportunities our merger with underway to expand our capacity enhance operational efficiency and strengthen our commitment to sustainability. We remain focused on creating long term value for our shareholders and positioning Stronghold as a leader in the evolving digital infrastructure space. We appreciate your continued support and look forward to updating you on our progress. You again for joining. Have a great day. Operator?

Thank you for joining us today for Stronghold conference call. You may now disconnect.