Education
About Us
Working with TipRanks
Follow Us
Stronghold Digital Mining, Inc. Class A (SDIG)
NASDAQ:SDIG
Top Page
Stronghold Digital Mining
(NASDAQ:SDIG)
34Underperform
Positive Factors
Acquisition
Stronghold Digital Mining announced a binding all-stock agreement to be acquired by Canadian-based Bitfarms for $175M, including covering roughly $50M in Stronghold debt, at $6.02 per share, a 71% premium to the 90-day average Stronghold share price.
Financial Performance
Stronghold generated $8.7M in March EBITDA, versus a $3.9M loss in the year-ago quarter.
Partnerships
Another cash generation avenue should open through Stronghold's newly crafted agreement with Voltus, Inc. authorizing ERCOT-like demand response compensation on the PJM grid.
Negative Factors
Asset Valuation
Assets remain poorly valued.
Investment Rating
Downgrading investment rating to Neutral and discontinuing a price target.
Operational Constraints
Stronghold's progression is tranquilized, voiding any hash rate increase thinking.
Stronghold Digital Mining (SDIG) vs. S&P 500 (SPY)
Market Cap
$48.79M
Dividend YieldN/A
Average Volume (3M)194.50K
Price to Earnings (P/E)―
Beta (1Y)2.44
Revenue Growth-0.32%
EPS Growth89.20%
CountryUS
Employees115
SectorFinancial
Sector Strength83
IndustryCapital Markets
Share Statistics
EPS (TTM)-1.97
Shares Outstanding14,957,000
10 Day Avg. Volume242,519
30 Day Avg. Volume194,503
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.61
Price to Cash Flow (P/CF)4.80
P/FCF Ratio5.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
Stronghold Digital Mining Business Overview & Revenue Model
Company DescriptionStronghold Digital Mining (SDIG) is a digital currency mining company that operates in the cryptocurrency sector, primarily focusing on Bitcoin mining. The company is dedicated to using innovative technology to mine digital assets while simultaneously addressing environmental concerns. Stronghold Digital Mining seeks to convert waste coal, an environmentally harmful byproduct of coal mining, into electricity, which is then used to power its cryptocurrency mining operations. This approach not only aids in cleaning up waste coal but also provides a sustainable solution for powering the company's mining facilities.
How the Company Makes MoneyStronghold Digital Mining makes money primarily through the mining of Bitcoin and other cryptocurrencies. The company generates revenue by validating blockchain transactions, for which it is rewarded with newly minted cryptocurrencies and transaction fees. A significant aspect of its revenue model is its ability to turn waste coal into energy, which provides a low-cost power source for its mining operations. This environmentally driven approach helps reduce energy costs and improves overall profitability. Additionally, Stronghold may engage in strategic partnerships or agreements to optimize its operations and potentially sell excess energy back to the grid, contributing further to its revenue streams.
Stronghold Digital Mining Financial Statement Overview
Summary
Stronghold Digital Mining is facing considerable financial challenges, with declining revenues, persistent losses, and high leverage. The cash flow situation is concerning with negative operating and free cash flows. Overall, the financial health is weak, with significant risks due to high debt levels and ongoing operational losses.Income Statement
The company has seen a decline in total revenue over the past few years, with a negative revenue growth rate from 2022 to 2023. The gross profit margin has decreased significantly from 2020 to TTM 2024, indicating pressure on profitability. Net profit margins remain negative, reflecting ongoing losses. Despite some marginal improvement in EBITDA margin in TTM 2024, the overall trend shows financial strain.25
Negative
Balance Sheet
The balance sheet shows a high debt-to-equity ratio due to significant liabilities relative to equity, which decreased dramatically between 2022 and TTM 2024. The equity ratio has also decreased, showcasing higher leverage and financial risk. Return on equity is negative, suggesting that the company is not generating positive returns on shareholder investments.30
Negative
Cash Flow
The cash flow statement reveals negative operating cash flow and free cash flow, indicating cash burn. The free cash flow growth rate is negative, reflecting worsening cash generation. The operating cash flow to net income ratio is negative, further highlighting inefficiencies in converting income into cash.20
Very Negative
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 79.53M | 74.97M | 106.03M | 30.92M | 4.12M | 11.05M | Gross Profit |
| 8.64M | 46.38M | 77.25M | 17.72M | 3.69M | 2.61M | EBIT |
| -49.36M | -62.44M | -71.47M | -20.33M | -2.44M | -6.58M | EBITDA |
| -13.22M | -56.51M | -133.98M | -15.02M | 619.11K | -1.17M | Net Income Common Stockholders |
| -49.90M | -71.40M | -137.17M | -16.12M | -1.60M | -4.72M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 149.58K | 4.21M | 13.30M | 31.79M | 303.19K | 134.14K | Total Assets |
| 0.00 | 174.34M | 216.96M | 354.62M | 9.36M | 7.95M | Total Debt |
| 0.00 | 57.70M | 76.27M | 69.32M | 3.74M | 1.22M | Net Debt |
| 149.58K | 53.49M | 62.98M | 37.53M | 3.44M | 1.09M | Total Liabilities |
| 0.00 | 110.52M | 122.18M | 112.73M | 13.41M | 10.73M | Stockholders Equity |
| -2.78M | 63.81M | 94.78M | 204.22M | -4.05M | -2.78M |
| Cash Flow | Free Cash Flow | ||||
| -149.09M | -31.06M | -111.75M | -259.33M | -1.40M | 755.18K | Operating Cash Flow |
| -68.46M | -7.15M | -27.15M | -5.66M | 587.22K | 755.18K | Investing Cash Flow |
| -9.79M | -24.00M | -71.58M | -257.02M | -1.83M | 17.98K | Financing Cash Flow |
| 835.21K | 22.07M | 80.24M | 294.17M | 1.41M | -826.24K |
Stronghold Digital Mining Technical Analysis
Negative
2.81
Price Trends
3.33
Negative
4.08
Negative
4.04
Negative
Market Momentum
-0.16
Negative
42.80
Neutral
34.09
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SDIG, the sentiment is Negative. The current price of 2.81 is below the 20-day moving average (MA) of 2.86, below the 50-day MA of 3.33, and below the 200-day MA of 4.04, indicating a bearish trend. The MACD of -0.16 indicates Negative momentum. The RSI at 42.80 is Neutral, neither overbought nor oversold. The STOCH value of 34.09 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SDIG.
Stronghold Digital Mining Risk Analysis
Stronghold Digital Mining disclosed 113 risk factors in its most recent earnings report. Stronghold Digital Mining reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Stronghold Digital Mining Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
64 Neutral | $14.60B | 10.27 | 8.71% | 4.21% | 16.53% | -11.93% | |
63 Neutral | $3.05B | 25.32 | 4.35% | ― | 34.20% | ― | |
55 Neutral | $4.93B | 10.39 | 18.84% | ― | 69.38% | 30.30% | |
49 Neutral | C$2.03B | 4.18 | 2.56% | ― | 199.41% | ― | |
44 Neutral | C$683.97M | ― | -31.62% | ― | 45.19% | -33.48% | |
37 Underperform | $27.11M | ― | 242.25% | ― | ― | ― | |
34 Underperform | $48.79M | ― | -90.72% | ― | -0.32% | 89.20% |
* Financial Sector Average
Performance Comparison
SDIG
Stronghold Digital Mining
2.81
-0.93
-24.87%
RIOT
Riot Platforms
8.51
-3.54
-29.38%
MARA
Marathon Digital Holdings
14.25
-6.13
-30.08%
TSE:BITF
Bitfarms
1.53
-1.41
-47.96%
TSE:HUT
Hut 8
19.52
6.08
45.24%
ARBK
Argo Blockchain
0.40
-1.17
-74.52%
Stronghold Digital Mining Earnings Call Summary
Earnings Call Date: Nov 13, 2024 | % Change Since: -57.23% | Next Earnings Date: Mar 26, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strategic advancements through the merger with Bitfarms and hosting agreements, but also detailed significant financial challenges, including a decline in Bitcoin production and revenue, resulting in substantial losses. The leadership transition adds to the uncertainty.Highlights
Merger with Bitfarms
Stronghold announced a definitive merger agreement with Bitfarms, expected to create a pro forma company with an energy portfolio exceeding 950 megawatts by year-end 2025.
Hosting Agreement Enhancements
Entered into two hosting agreements with Bitfarms to host 20,000 Bitcoin miners at Panther Creek and Scrubgrass facilities, enhancing Bitcoin mining operations.
Sustainability Commitment
Focus on converting mining waste into energy at Scrubgrass and Panther Creek facilities to support local grid and improve the environment.
Lowlights
Decline in Bitcoin Production
Produced 196 Bitcoin in Q3 2024, a decrease of 35% compared to Q2 2024, primarily due to the Bitcoin halving event on April 19.
Significant Revenue Decline
Revenue for Q3 2024 totaled $11.2 million, down 42% sequentially and 37% year-over-year.
Net Loss and EBITDA
Reported a GAAP net loss of $22.7 million and a non-GAAP adjusted EBITDA loss of $5.5 million for Q3 2024.
Leadership Transition
CFO Matt Smith stepping down effective November 15, 2024, after contributing significantly to capital raising and operational enhancements.
Company Guidance
During the third quarter 2024 earnings call, Stronghold Digital Mining provided guidance on multiple key metrics, reflecting their current strategic initiatives and financial performance. The company reported generating 196 Bitcoin, including 188 from mining operations and an additional $0.5 million in energy revenue, equivalent to approximately 8 Bitcoin at the average price, marking a 35% decrease from the previous quarter due to the Bitcoin halving event. Stronghold's total revenue for the quarter was $11.2 million, a decline of 42% sequentially and 37% year-over-year, with $10.6 million from cryptocurrency operations and $0.5 million from energy sales. The GAAP net loss was $22.7 million, with a non-GAAP adjusted EBITDA loss of $5.5 million. As of September 30, 2024, the company had $5.1 million in cash and cash equivalents, including 10 Bitcoin, and outstanding indebtedness of $53.7 million. The guidance also highlighted an anticipated merger with Bitfarms, expected to expand the company's energy portfolio to over 950 megawatts by the end of 2025, with shareholders receiving 2.52 Bitfarms shares for each Stronghold share, valuing Stronghold’s equity at approximately $125 million plus $50 million in debt to be paid at closing.Stronghold Digital Mining Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Stronghold Digital Mining Sees CFO Departure Amid Challenges
Neutral
Oct 25, 2024
Stronghold Digital Mining, a company focused on environmentally friendly Bitcoin mining, announced the resignation of its CFO, Matthew Smith, effective November 15, 2024. His departure is amicable, and he will assist in transitioning his duties. This change comes as Stronghold navigates various challenges, including the volatile crypto market and regulatory shifts, while maintaining its commitment to innovative and sustainable operations.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.