SDIG - Earnings call transcript Q2 2022 | Stronghold Digital Mining, Inc.

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Operator

Good afternoon and welcome to Stronghold Digital Mining's Conference Call for the Second Quarter Ended June 30 2022. My name is Mandeep and I will be your operator this afternoon.

Before this call, Stronghold issued its results for the second quarter 2022 in a press release, which is available in the Investors section of the company's website at www.strongholddigitalmining.com.

You can find a link to the Investors section at the top of the home page.

Joining us on today's call are Stronghold's Co-Chairman and CEO, Greg Beard; and CFO, Matt Smith.

will call we questions. remarks, their open for the Following

Group, Grampp a please Before Jeff Gateway proceed. will Grampp, we begin, Mr. from make statement. brief introductory

Jeff Grampp

Thank accessed were posted Today's our website and our you, and release website to afternoon, can at today along be earnings disclosures presentation, our with welcome. financial and earlier Mandeep. Good on slide everyone, strongholddigitalmining.com.

involve uncertainties. we’re forward-looking statements law and considered today, and under risks be a may making of Some statements number securities

there that which are number a results result, forward-looking you, As are from control, caution many statements. factors, our and materially, which the could a of described differ we of actual in those events beyond to cause

earnings Securities or undertaking relating We date our and by reflect the forward-looking For more obligation please uncertainties, as and disclaim law. detailed are events filings any except forward-looking update the forward-looking to circumstances risks, occur made required with and or Exchange release that public made, in Commission. the see to statements assumptions our to statements, the statements disclosures after

you We these non-GAAP our metrics, you financial earnings and measures reconciliation our carefully, applicable in read the release as to discuss disclosures tables in will metrics. to encourage also GAAP consider

filed and and our today, caption variable We expect XX, uncertainties Form sets on the under XX-K Factors filed reports identified XX-Q circumstances, to with and our report to file report the May Form Risk on including not XXXX. Exchange annual XX, on XXXX detailed risks and August uncertainties and XXXX other limited quarterly as descriptions XX-Q on March as in and business, Form XX, quarterly well on disclosures Securities but forth which Commission, of our

link website the for is be and that for Relations Investor ir.strongholddigitalmining.com. a Exchange call at website. everyone available this Stronghold's replay, get SEC I being of Relations Commission Investor a may visiting will made recorded filings You like available section at Stronghold's in remind would sec.gov the website to or by via Stronghold's free Securities and

stronghold's Now, I CEO, would like Beard. Greg to to please turn Sir, call Co-Chairman and over the proceed.

Greg Beard

everyone. Jeff. Thank afternoon, Good you,

So I call we hate not today. once again apologize a a are live recording. It that is to

I think we I'm been really table of on is are for transformative a better It's weeks working months hard my side the got by team. -- on much and hear on company. you'll the it. of transactions joined how about what we've the other series And for

this -- half a but out. dozen done hoped. But just it a with to call excited today. other took So about it apologies got signed, us co-contingent we're get be longer today it all counterparties through that through were quite But than little what we've an we to was to news longer this all you each it to -- achievement walk and get took and had upon happy that the

So us. thanks everyone for joining

we're through portion For to call is slide our and an reference of associated that corporate going the IR the today's website. webcast on presentation available

our discuss presentation our on strategy provides is are can vertical This we from foundational the for and an Stronghold. toggle which how and integration, lower pull when grid, So to mining a of to over power slide business has prices and pricing between power can sell power We record prices average continue the of to power explain the three near our cost This the selling asset $XXX we're variable that Bitcoin grid going for and source than six about start think ability to over at the pricing advantage value our is to on seen piece and our which ownership. for as that intrinsic how I'm per grid past significant we of a of grid of even over visibility with going our hours. materialized is recently, very on-peak $XXX power well. to when mining a grid next averaging Most are forward power have relates megawatt prices strong during least and expected with prices few more as than mining economics. economics Bitcoin the megawatt to latter over attractive months last months to we month the higher bitcoin slide

right, versa few prices So provide vintage about if as in tables miners. recent terms the how they're dollar to vice the on see per to Bitcoin for you to a insight think top megawatt intended and

$XXX $XX,XXX Bitcoin between expect would For to between megawatt a hour. prices and MXXS per and we $XX,XXX revenue $XX MacroBT generate

we'd JPro, S-XX to per Bitmain increase $XXX to efficient to more $XXX a expect this range hour. For megawatt

are we pricing $XX,XXX is at the over how average which across shown. types next to the six you'll $XXX chart, months in the with from minor ranges line a into bottom the prices megawatt that implied price inverse see translates $XX,XXX grid On bitcoin on-peak showing Bitcoin price the the

Bitcoin we months. the with next during power So several frequency to the mining expect grid over sell

us proprietary software allows to advantage turning of movements power power off allowing a center developed have that that divert within be we to Additionally, us to data minutes intraday by price take our sold.

when As higher public were last went Bitcoin year and prices grid they than are. prices lower substantially we a currently where substantially reminder,

to selling which brings be markets, agreements we more power Bitcoin couple business our So least there Consequently, attractive the value power allocated generation of to slide discuss to expect and business a We hash a of business recent me downside returns in the to current it's the power the market made At context rate to a superior mining oftentimes our irrespective pricing that Bitcoin a critical the driver our the protection. but high that the theoretical is economics capacity, of probability Power a are years, of next be and business. offers our levels grid dynamics. power have of now. at meaningful current meaningful of power to will of portion our for represented didn't

provided downside We took downturn. When business structure X. level loans to us in equipment Bitcoin even page has capitalized of non-recourse to drop could flexibility Bitcoin we with initially a case. it structured this turning significant in prolonged we now stronghold knowing further. pricing So out the $XX,XXX This operate

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believe have approximately outstanding exchange entered replacement $XX that We debt agreement a ASIC closer million to $XX has miners into X.X million. eliminate all NYDIG in an to with we for value nearly times

structural agreements to were we effectively to to Stora able Inc. and with We were value. negotiated of So, this as we nonrecourse current an achieve sale security LLCs view the market which at outcome were due premium the a meaningful asset to this

into financing Hawk is first executed than lien X a to warrants undrawn of letter credit we a White the more XX will million million and provide months note commitment today. Additionally double accordion White convert our Hawk tenure which line will a as financing. that with a equipment of $XX receive part

extinguished have from $XX the by of price notes we convertible million strike on reducing principal the warrants. the Lastly, approximately

We payments will interest next also and the total equitize of million. the $XX a remaining principal principal reduction with few by over cash quarters

six cash is debt advantageous principal and we This transferring So an Miner. million warrants. we in away Bitcoin mining immediate in almost selling allowing own $XXX to reduction XX,XXX million integrated vertically reduction will exchange million a and to move months. In a Bitcoin through is to toggle offset mining $XX Since instantly continue least can the issuing us approximately be divested we uniquely power revenue for XXXX. and from at miners as and generate capacity grid, this largely to power, our to Stronghold interest payments earning the X summarize,

So, has of toggle business turning a revenue selling Bitcoin has estimate the liner minimal fleet. generation ability impact integrated to as in To the between on Slide mining of given capabilities and that illustrate which uniquely Accordingly, our to reduction our continued model vertically X. our power. result further we revenue a our

mining grid. our to the our been returns currently discussed is power power generation the available can us. quite we revenue is fleet high no While earn future so that for to have winter in the step through more to reallocated sales XXXX into generation grid power to up continue sell that prices attractive are can power previously has since as there And fill gap reduced being

example previously discussed we only this $X exchange off trading of period in revenue So interest million a and this in period during cash are reduction on important. debt in slide, flow we for this extremely when the significant is

can discuss traditional that a see to have Now toggle Bitcoin you can financial compare a hand to to XX,XXX in slots. the of revenue we expect to not to generate opportunistically of our the position. miners. generate Matt to then only the does with ability sales detail Smith Bitcoin-only business the business XX% CFO, and grid to Overtime will our model course financial XX,XXX I the the XX,XXX that miners Stronghold over restructuring call model now that the impact with of more empty replace

Matt Smith

set and Through allow to This servicing revenue debt XXXX $XX these And and otherwise $XX before $XXX these by debt internal Thank to we in debt through base of from mining and vast you, agreements. to detail these have We million a energized. can from eliminated, generate servicing service in Good it the perspective. as cash these financial level have left-hand outflows our having provides estimated and quarterly liquidity time, our at $XX cash $XX and cash relative end cash estimate have and very more decrease no but we our -- cash cumulative to case from are to everyone. cash shows million it to graph Greg. collectively $XXX at by to impact. year-end service, illustrates reduced developed from debt value continued cash we six Quarterly are open projections through agreements million to to that million or be transactions. about impact peak about generation highly evening, restructured our are has attractive chart transactions converted with The reduced Slide outstanding majority the through XX,XXX slots servicing outflows XXXX, improve $XXX mining filling before the than will of Restructuring after we remains now debt were $X our million. fully million, by cumulative $XX debt. restructuring, of right-hand $XX year-end outstanding impact cash about million financial profile. million from around million, XXXX business flow into decreased flow outflows and would on fleet power manageable our cumulative is and additional along our this benefit and without us XXXX, outflows over potentially principal million will reduced assumes a debt the flow a $XXX million. our forecasted importantly. the XXXX create And from flow prudently The

Given somewhere overview to through create meaningful between believe a of business tight self-sufficiency provides the to looking and where to intelligent mining a miners, regrow a second seven in to fleet expect markets, we rush we opportunistic Bitcoin in are robust scale. self-sufficient being these to us to that Slide XXXX Accordingly, power be this quarter a our having shareholder we availability coming Bitcoin way. world with expect to high-level value fleet for patient add transactions over fill us and not low-cost opportunities miner can when to critical. accretive is provide our slots as nonexistent build In our a mining capital quarters, an we is results. expect you and with

As mining Bitcoin we of a Revenue increased in impairment half a the first quarter negative X% million In $X impairments pricing bitcoin a of stability XXXX. despite digital with Bitcoin $X.X pricing during Adjusted in noncash noncash holdings were was and with previously was our during decrease during impairment the in we mined during recorded by $X.X the year, Power of relative associated business. driven the our in due the would the nature. our and again associated we quarter sequential sequential gross compared EBITDA first quarter, to the that I we in $X production are second million million representing increase noncash the million, quarter, mined material quarter of our second and $XX.X increase to the significant a quarter Bitcoin. being announced, increase for Both decrease currency in second assets. the these note the with million XX%. XXX the bitcoin X,XXX quarter, Bitcoin

of quarter, tons environmental removing the During refuse impact tons returning we our positive these remediate toxic approximately coal from of XXX,XXX use continued piles piles. ash and beneficial to coal XXX,XXX approximately

be will models, quarter plants. downtime in planned want your that the everyone at properly remind of I to calibrate to Lastly, that there both will third our occur

now power Panther two of maintenance we downtime record resulting maintenance they at turnaround a reliability million without margins events and conduct forward will remain into we half our to the related during ensure us plant. expectations power turn in approximately around allows for prior our at Grass call still scheduled This than course the $X and XXXX. compared import the should which plant annual assets for mine the performance in back Creek, incremental We and closing quarter as power each operating of of both to into costs. Scrub very to relative in long-term have Bitcoin markets quarter September, over will and long generation September, lower the from import strategically Bitcoin plan to as which to the the look During to the will weeks power reduce which winter, I of turnaround. and winter normal unchanged the as tight are expenses Greg plants higher operations prices outage These is third we remarks. or summer baseload peak to power second

Greg Beard

Matt. Thanks Great.

to you give and So company. view of a to I'll the just now for our strengthened slide turn X, path

approximately to which power. First, allocating to power of power availability fleet, and our This largely we're exahash in of going to generate lifeblood expect of mine will the to with megawatts we after selling to power over XX sell business our consume megawatts X.X about on XX grid XXX focus the excess and focus near-term. capacity to power on our is

I to economics to Bitcoin power economics expect alluded we potentially they're As earlier, not in did compete with until XXXX. having

quickly. to think our them did plan base time so would invest to While as not over important be it bring in to load, always plants we back we

operations, are are have We go-forward making in and plant confident and issues experienced but progress reliability significant operations.

Scrubgrass progress Creek the be that million October, million another to about about the early nature work baseload work $X to to September, the taking continuing for us. anticipate in late we remaining complete and be at are objective upgrades. which to two-week expect is Scrubgrass at at outages To $X the spend We've will We a in remain less XXXX with in will spent significant run point consistency. September improvements to we Scrubgrass Panther one in plants both more expected and primary end,

opportunistic of side plan buyers oversupplied and mining on in to given America be in market. Bitcoin business, distress over buyers there -- the but an and We plug extremely On space. are in we miners far patient are the the between estimate North few X.X the million

shown creative our have motivated IPO an extremely we is As team. this and since

and power purchases, to M&A ownership addition and leverage JV opportunities that and infrastructure open in core market So are we capabilities including our operatorship. evaluating

We position. miners are the short opposite industry the generally long infrastructure exact and the is -- and in exact

leverage we key As the long we our to plan infrastructure to that have power your owning provide assets of and shareholders. said, own advantages benefit

in our annual profitability. for plan our to efficiency there to improved and estimate and million review cutting will savings $X our cash of structure costs $XX current cost between redundancies aggressively million begin improvements cost lower are quarters. identify over areas we coming potential the to structure Lastly, to in We

capabilities which and As out its came IPO scale on know the all operations. in of hyper mode, company to we pressure significant growth put you our

needs us As opportunities have has cost eliminate we redundancies reassess identified to our given in structure. have matured and time business this to our these accordingly

toggle to provide units and that stability operations possibility to ahead, mining provide both between ability Stronghold with to and and our be to the the grid. optimize to business an assets of Looking also expect the operator power grid optimized we power Bitcoin

enhance to We continue and delever our to capitalization. expect

of also capital and the will a capital. through full-cycle generate strong We prudent to returns attractive equipment efficiency have acquisition mining our assets related on

for Thank be will power your our to maintaining to cost we strong now Bitcoin ready high and time take with in. the mining operator, you Operator? Lastly, running questions. low We're utilization. uptime plants everyone fleet efficient and an dial a with taking

Operator

will Please [Operator come White Instructions] Compass first Now Research Trading. proceed. our Point question from & Chase from

Chase White

guys. evening Good Thanks.

few miners to question impact have Northern first questions, there's make the in to in just JV miners I -- no So the to correct? but reduction sure a the

Matt Smith

them gave we back an Yeah, No. to Isaac.

we we of term a yeah are have So -- expect that replacing that we the XX,XXX that replace to investment near put JV. already to we'll JV miners -- those have going going bunch need have betting we're we them we have -- miners in to and the into put to them

Chase White

at once start forward Got then work? should to you. capacity And guys think about ramp-up how you we the going completed Scrubgrass full

Matt Smith

Yeah.

replaced have like, of extinguished equitize We call scenario this already we I not our debt documents the us -- we our all note". refinanced and was convertible do hey couldn't "Hey so been would part but have of as these debt, our an to it. say to. have dig would we've able miners, White weren't said, would on docks didn't had dream circumvention that And been we also to couldn't. been It viewed and we That that. allow -- the So it do get we Hock

So the I that the like have churn think top. that been was would -- on

could the calls already miners frame about glut lot these very cost for we will I over you strong in to there. that any you call what's think but where And market, a in don't these all think -- time is miners, equipment. have mining a of the phone sense I So world. a with to about of buying miners And find recognize we get you broker prudently and in the need there replace out time the of

-- nearly so any prudently prices because I way. and filling more because JV really say I if of not Northern say without the are high, up losing issue than have Data power to don't slots that the have about quickly would the empty. them I XX,XXX do it, And are revenue no six months any refilling we've so along with I got we're But anxiety

So as much sure.

Chase White

I about get to nameplate Understood. about power the was was at to I talking sorry, -- talking actual more capacity like the Scrubgrass? more

Matt Smith

XX you -- the finally out to it days about fresh guess, we give December. capital it of on we're that's overstaffed ago at be of of the ordered I have We've would us that we that lot of to about equipment get talked will solid got $X this footing. late So way I million new so September, about in going. make And a going It us we October. going to equipment know we're that just all what year right plant sort early and sure get say end there's a of here give install to it now, year.

that give after as show where an be XX up to and is equipment on it reliable be. we date data but days reboot to the viable when all operating expect you plant So the that us XX-plus extremely to shows got it, how of could that's it's

say November. can scrub megawatts in a the – fair let's for nameplate capacity that would plan. sort up where I the test give That's end look of us probably of beginning on it's So but the

Chase White

reduced by generator of impacted this does future helpful. top I how the electricity the that if is revenues, the – all? you reduction on at that said exposure That's pricing capacity your the markets, impact it? in the you. that one Reg designation that as the could And a received And have you of B sales Got more, impact may

Matt Smith

Yes.

So payment. we getting were a capacity

like annualized help plants $X me, between payment it capacity guys a think was million both basis. on You an I about

next and going expected we what down number might been was have that that think year. I

lapping operator a no finding power that of And we'll at we were not called get that to effectively for then spot is issues the sell power market to opposed we price opted I out because with market out pricing selling capping. we longer rule declaring we them limiting the other reason payment. was So regulatory market, only cost would capacity power were plus electro there that the cost so was grid effectively grid come opted you a say can to system. the cream XX% that off and is able gave the The that for sell was peaks of That congestion physical reason or the say to your of pricing. like as

very And thankful so out. we're we opted that very,

the some a take to power And repaid capacity exchange summer So seen the we this say be ability of to pricing. that's the to payments prices given and the I kind that repaid up expect gave advantage in for of – manyfold. of we've can peaks that

Greg Beard

Yes.

just versus many are Just were home. were in ahead market. day to a selling if And at the the you – stuck markets, real-time reached that day-ahead recent in those the – days in sorry Panther nail days, market We for close of observer I whereas hundreds. a week stuck ago instance Creek, prices a find the low you'll megawatt, market think $XXXX we was

real-time so response just I find think markets weren't available that you'll dynamic and opportunities revenue And significant the previously. us in to

we to when where about revenue opportunity want think convexity, and you that's So be. the the

Chase White

Got it. guys. Very helpful. Thanks,

Matt Smith

Sure

Operator

Our next proceed. Please Riley from from Securities. Lucas question Pipes B. comes

Lucas Pipes

Thanks for afternoon. questions. my Hey, good taking

the The cost the cash one x what's are half the range that per about cost should for power rate year? much. the in terms second the a broadly, side the we for very what's Thank is you X.X cash remaining – And that thinking be good of megawatt first for on more utilization that of hour?

Greg Beard

modeling remediation think I So utilization we're for what rate.

that fleet out the we'll once question again. have just say tech should lot the we we out beat one sure that I'm have then, Lucas power think of we can it on fleet. minor smaller a And grow XX,XXX or XX% given moving until for was recover side? that two And I they a your manage we model for what miners, that to

Lucas Pipes

megawatt hour? Cash cost per

Greg Beard

think should have What and for declining quarter? costs, hopefully they be cash we high like quarter do fourth quarter third numbers pretty meaningfully, third for the relatively fourth post-downtime. the I assume I in

Matt Smith

related careful the diesel we plants. fuel markets locally. then we limestone is of of to as at with So an purposely obviously, for surcharges look power guidance ammonia the here you refuse the and because want in input avoided use And -- explicit our if cost in the be volatility variable coal transporting that to of transportation we getting and primary

We think recent I of months quite maintenance and a can perspective. depends of cost. It have between costs work it sales. before per certain call And of sort as find $XX we within from seen on we'll how we've of It's kind the you O&M. been that would you $XX megawatt through treat those be rec volatile

and where of about And considerably. one so we We've in we as low-utilization. coming variable period pressure seen relatively -- we're the virtually of beyond, this fourth up think The quarter amortization out period picks of a cost every costs upward fixed abate. our

And mitigation pretty mentioned I power plus pretty topping optimistic just meaningfully of cost getting they've come cost can you most We're look down cost optimistic those so that variable the that our XXXX. costs how at about kind and in fixed all we're of absorption and off. about, of

Lucas Pipes

sub-XX That that? growth even maybe lower be on would or

Greg Beard

more But look I the should impossible. you at probably that's definitely say margins. think would I

next So year, some if our again to variable power prices of be are the higher. expect also through roof costs

it's -- we a I a They're So so margin of important being than introduce power should cash to important. start a probably think our costs. more

Matt Smith

you you equivalent cost at selling on to as don't much on But days Yes. peak to margins. on Bitcoin focused just focus it universe the power -- $XXX,XXX of of when Bitcoin the focus a crypto And they cost $XXX,XXX in you're and electricity. during the summertime this People the cash compare price you in price.

to it's our we grid profitable optimistic deliver think your look to we're for winter and at So as reliability that happens curve. electricity, the the grid to is also vulnerable deliver most forward be opportunities just pretty the it. and it I case to And when the calling the power

we strong downtime a think I those be opportunity to down. of forward the but of are the margins to coming look well demonstrating these result planned revenue as as costs out costs going coming as And quite think -- lower events. I

Lucas Pipes

the Thank announced. level question to a very That's you. higher in And regards my is you bit helpful. transactions second

cash gotten be high I Bitcoin today. all off number you getting in You better transactions great done the transactions? XX,XXX specific if for having would no think the have I'm right? BTC think I at from just what these XXXX like and not how So, see end to about-- would flow living details off you're about we have How done have BTC these at in a perspective environment of of ballpark the to price to a having been a better be

Matt Smith

yes, to -- -- would tomorrow these a now coin. opens Bitcoin-rich that at we up we that that we the reps. have rather to them $XXX,XXX right just risk We machines, have the now is on expensive we would but and may more if do and probably rebuy if now Obviously, need it be price

of I is mining and quarters we So, quarters have to supply think view our a a lot work through.

just to big a outstanding. debt the don't fleet think our discount So to we I opportunity an replace really a -- we -- we on have from an capitalized But and perspective advantage there. view our

is price. that at So, Bitcoin going true any be to

equity. straight And that elimination debt the so we I think accrues -- have

by in enhancing optionality -- liquidity And capture transaction regard value so I one a to and this -- a think our really is addition a it's math,

Greg Beard

And XXXX every your that revenue and produces EBITDA and wake generation Biglin you the the capital go But miners. markets, don't when have. and lower Bitcoin April the our history power as much up for one focus Bitcoin I half function Bitcoin of obviously, opportunities in when we April efficiency miners into you on to there's would then having XXXX price offset XXXX response step in a would and suggest positive

over that think selling over ultimately power of do power are think cost seeing and or cost mining versus seriously It's how we'll able offense on for seasonal this chances certainly of And for And Bitcoin And Bitcoin opportunities depressed. stressed or and of to you when moving are years think of clear so look to it's sit from about meaningful importing electricity. needs which and I low-hanging how at for price then or all where this were being down where call our do our suggest I like beyond to myopic you view there amortization months. we we it of $XX,XXX-plus day that relieved And sort we fruit. back look? when now being be night optimize that's those things shorter are equipment And asphyxiating during think the multiple signs and to skies dynamically and does during $XX,XXX-plus or how was switching largely lots prices debt Bitcoin we about power ahead.

optimistic. really we're So,

Lucas Pipes

luck. I appreciate the of color, and best

Greg Beard

Thanks.

Operator

Davidson. comes Please question next proceed. D.A. from Brendler from Our Chris

Chris Brendler

I Hi. Thanks. of Good imagine afternoon, actually. and a congratulations. work, lot There's

think the operation, the – pressure on or are are expecting go have have I hesitation are bit lower, state we of in quite to see on that some here? slots. So something going there going capacity the higher? the there's to some you can and of if do you just What's power sales Maybe we fire not on Do side open seen rig you folks really minor out prices or We've the the have on. jumped plug current side obviously a XX,XXX on mining wait price Bitcoin mining at point? soon, prices this see, to

Matt Smith

have the or through on we're think blockchain may we we Bitcoin having, – I Yeah, is flexibility to XXXX of structurally think horizon. really over this may advantage four I five to technology But be as move – think volatility. be take I the want isolated, positive and and on we we XXXX ultimate

waiting with or the the to for multiple few the energized and built actual to plugs million are the we think a research going into just call out. of is given a with too mining find we're can't business a put a and of be as And The rush when – that our we many of themselves data timing in did power built last plugs ourselves last contrast plugs, rigs. on or That out plugs shows When material and power over equipment. thing decades. restructure are so plants lack investment potentially they Bitcoin And better has do that to plugs landed to the is X.X result market value fully exploded about miners in scarcity brand-new there two centers footing. plants what

we almost capital about create stand think from offense spending thinking frankly and for lessons about the to to and going seriously year dear how We're to pain back be opportunities. value. today our – we're buy a we're months the points prudently when to think look So to going about we're nine going since investor since reflect and to going on last on miners

Chris Brendler

color. the Appreciate

Greg Beard

negligible. The months, if to we opportunity a that, don't in these going cost is next in are the XX,XXX markets strong almost if the revenue. buy don't nothing see replace because you you're six – so It's big difference slots not power

to of sort any to more make not money. lever So, up

Chris Brendler

power not where year? price markets XXXX? And last would Bitcoin expertise Where would equivalent the the – be be where where crazy – but the before area all disruptions in were my Bitcoin went improvement with the power price

Greg Beard

had and think of XXs. year, per making kind had I were in megawatt, margins, prices low high We we last mining the So XXs, opposite. fantastic we're where power equivalents $XXX Bitcoin the like

plant averaging from data power power the decided where selling opposite power the now could and fleet, have the that we so is grid, use shut those portion a price in to to just in exactly position, are run power power a And sense of buy minor mine And now centers. and to of day. the and the with the that we down divesting $XXX large during we're cases, of

and data is data running mode data during sorry, are and are we at where selling expecting period probably center. during center the prices fleet we're of what day think the in significantly time running night a center I'm we're putting day. the power its cheaper, power the I when the

So tests we grid the a Reg have to We that data center for all satisfy and tie A our we software on. to -- do the pass. off have like

pricing for power it on take past the want you the just that quickly. to data weeks spikes, of ourselves advantage which power do also We kind shut levels for we've to amazing pricing of center seen few makes

Matt Smith

is XX and you heat gas the XX It's about in Yes. the want just where is which you I think in drive think call Not markets a or the rate. belabor heat discussion natural that a ERCOT, about rate at marginal it market -- gas but like about CCGT to I PJM a is we'll power a it, bit just modern natural plant. thing on to our fuel of -- lost look average one

of you a prior of prices as coming to so at prices. And XXXX of roost out that years, you speak. when of That we're underinvestment and US energy where generation think sort power to and about or generation a led lows look we back in production fossil in coming is home

in a think sort top And we're calling prices. of power so of for I dubious

net providing is markets convection the that's long really very, capture can our power with very exposure, I and about think in like exposure group the the something our we think positive. by we reliability

we're so are material do And everything going can of that. we exploit that. a to to And key these part transactions

Chris Brendler

or on total there I makes sense. think, cost power question I to price of Yes. follow-up, generating now. is It want you're what power a Lucas'

in lot not changed part risen just you today, like the today on prices, I and got given us you've story, sounds year my sit But natural really think IPO that sub -- going that Stronghold in like natural what whole the the possibility possibility? your was gas versus or has where gas. two of you've a can like not even best roughly the today, Is -- of what's world where or view in makes last in $X.XX. the on directly walk you're of inputs because you have that potentially through high a guidance It that a price. align

Matt Smith

up power of cost world, the input the Xx. generating Xx, at look in you are anywhere costs if So Xx, almost the

they've power If far, far risen you look costs, to at our less.

in talked about the the capped" on definition on plants But the provide us if that and -- uplift there. power from by about under so We're called the from that to the provider resource. "cost of were through you isolated starting prices get have and relative of cannot That's and when -- you being called we out views low-cost PJM to market capacity revenue when a called think of service not the grid. selling on real-time of We the June. exploded as just end PJM the -- as where because a power. earlier, to mentioned cost And energy. May provide opportunity look that -- now And by got be Greg to it our we in margins at to cost overall it's be recovery

think And -- have so I costs we're our risen.

about of of secret. you that's cost $XX can and you -- quarters If costs not of a into risen $XX go sort a have range O&M our fuel $XX think above through the the megawatt megawatt trailing three

track as in the -- -- should fixed downtime cost heavy off a input so that significant not that's perspective. plants mentioned But out back with have plants of number we these to a capitalized. started has these out But because we're they'd into to our we from business they and move been in our shorter meaningfully costs of be downtime We're typical into as variable cash to see we can significant planned not life seen months. pretty You of investment the and investments absorption. we've O&M be And a before come as due I periods then have cost cost the where our capitalized, math. of elongating O&M our they're handed. expensed

up $XX more being some cost provider as were so of cost quite wanted baseload into not be. that optimistic yet the sustainable think we onerous a as and - to the $XX about of we we input just power of to we're some level as structure exploded -- the And go parts we the set be of I costs

Chris Brendler

that nervous. It for you update appreciate some one like you made I saw Matt. I progress quick sounds us some give details? an on there. me. Last Thanks, Could

Greg Beard

Sure.

received And news -- what was instead disclosed receiving of I we think about of I is the half contract got we've we think value. good MinerVa.

the Bitmain in SXXj We of are Pros. form receiving replacement cash rate

been the model rate. in. And so bunch shift And to as replacement report say continue upside I'll it of on triples that putting to we in gladly sort again of we've MinerVa, MinerVa do from a hash but pressure stuff been it as not we've will

Chris Brendler

Okay. Best Great. Greg. luck. of Thanks,

Greg Beard

you. Thank

Operator

Roberts question next Our Please proceed. from TPH. comes Jacob from

Jacob Roberts

Hi. Good afternoon, guys.

Greg Beard

Hi.

Jacob Roberts

in of extent. to looking cost maybe the lock appreciate cost over Just I guys talk the can to ahead follow-up market forward months the on X elevated are power But willingness that the XX you're inputs the question. as an some kind next elevated to about looking months? variable to or a ability you

Matt Smith

fixed there aren't increase don't prices buy ammonia, for and investment. our forward really cost So we limestone trucks want and to liquid

think to of of the more so into waste we're as cost truck out happy -- coal about structure. really prices And as it making to because Pennsylvania we think about with we're refuse hills way comes takers up to plants. be it surcharges our power than price that for coal we when But or

I of it. given think focus the little what bit I'm on loss sensing just there's is there's we're perspective -- a

gone Our X.X costs times maybe year. times have over up X last

effectively of probably higher. XXX%. or Now $XX ammonia what about cost price, you megawatt. plus other is cost minus are variable think is those when And some diesel up Xx, Variable is up but coal then a is refuse flat drive the expenses variable

two of start cases our absorption where And fixed winter out serious when come of plants plant dramatically every about in picks cost come a we've equation, in almost time. couple And a of utilization decently. the off fairly straightforward cost and seen the absorption, drives the improving to so category, the mathematical fixed very talk variable I turnarounds as it's the off up or into cost has September,

about And to so power future, we're cost look in we as $XX the $XX – again, into of period. optimistic we're not-too-distant pretty our

they that And opportunity. inputs. it's in so would the to say, I for lock the we're liquid We're forwards margin hard because exuberant aren't cost about

Jacob Roberts

uplift And can should the miners. just period is we time available after curious And a -- Okay. landed appreciate sense million of, talked in on you over we give efficiency? maybe if minor that about material a $X.X replacing second given how really what I'm think of is question, then guys I'm you miner just a me market market, curious about transacting? you is, that fleet expect the I guys that. the brand-new

Matt Smith

Yes.

in So, we set people large -- pretty and who it's transact a miners size. small of

we so make And try we're of into to people. group that dialed sure

of there's ordered. because machines getting that machines plugged purchased ways to ASIC And the frozen, I bowls, ramp-up chip machines with after were think, Those less bid-asks expanding want scarce. are where all Bitcoin more we in happened machines. part recent high on months don't not in, are efficient is characterize the a were that would lot and plugs that equipment that market the with or

cap selling in I think to six over not what next Bitcoin the real and making and I high-grading centers and every our will of direction our both low-hanging bring day, four, that's fruit when utilization we've price making can selling frozen, being seen just kind improving are, data Bitcoin so we the heck we of fleet structure. time our data miners a where with sure power, see into think comes the and the plants buying were centers. it the we and are at machines a is and the take between back And move efficient But a careful taker market place to we we waiting now months. five, kind how is, very about, sustainable and

see is anytime oversupply, improve game we every that in our way. to soon. I think something looking miner we're And ending not

Jacob Roberts

All right. I Thanks, Great. time. appreciate the

Operator

next from Our Grondahl Securities. Northland from question proceed. Please comes Mike

Mike Grondahl

guys. Hey

important fair process Just out variables say in of those forward Is the curve, the just there? price open slots. it on to replacing that thought your two and the two on the miners XX,XXX most is continuing

Matt Smith

Yeah.

it says I in that we’re -- think right. rush. that's the right high is a Obviously, not still now power forward curve for run

to in So they're slots to rush then because and maybe maybe to be run buy make expensive. -- fill or go sense it not, doesn't those miners

financial power So of your the -- I if and you very curve and have mean gave obviously, would miners very we in way can't own think in a didn't it And, for positive never advantage make less lot the we're revenue. a impacted to place. liquidity own take because given our us up if -- But first you're plant that us, you it position. them don't the up going for

for us. easy an decision So it's really

in empty to you're if year? potentially the just we going high. that up they be ourselves going want sure And us make think again empty we unlikely. make in do I to don't a It ourselves put to to Bitcoin But -- position have tough understands stay -- potential I that see a are slots. relever highly not a prices not Will market so is to

buy miners, in just to ways it We but do going find hurry. a will opportunistically we're not to

we can't where these I X.X all this at actually have I deals fresh maybe where think this hour So is done. point really for

mine it But again money couple because I much going option to make Ask it. Bitcoin. us it's have they're is sense at going more for -- to answer in can think a right does slots better now of weeks, to we'll make how be filled But to probably have say, not it's a the filled. timing for to the and expect get these news to this I not point. good We did not

that do to extremely bar the So is high.

Mike Grondahl

Suer. Got it.

guys. Thanks Okay.

Matt Smith

Sure.

Operator

Our next question comes from Stephen Glagola from proceed. Cowen. Please

Stephen Glagola

wanted minor Hi, the the constituents of rig touch on the question. current to just thanks fleet. I for

And that Bitmain delivery that? or X.X I XmXXX in MinerVa they release Is you you rigs. from to the made get like are to rigs the said, you took able of rigs? MinerVa? you XX,XXX And MinerVa Thank -- those you. that makeup why some know it rigs. rigs Bitmain press I of around the MinerVa. believe exahash What's So XX,XXX comments said were

Matt Smith

Yes.

then most and terahash doing X,XXX MinerVa. of from about of machines per MinerVa that brand-new this of have brand at on call mentioned received results In receiving drive the the leading the we possession form are on, Just press are new. explicitly swaps states took that second. to from value hashing the something us we've of case, We cash, we Pros value release -- in their But received industry-leading here. MinerVa since SXXJ XXX

mistake, we've MinerVa the X,XXX so and have the number we're been brand-new make previously machines. really no sort rest that disclosed capped Bitmain good And -- are the of machines,

to the Minerva related that's Sorry, question.

Stephen Glagola

a of a this want than value another question a deployed value And in rate guess, I is That's arguably maybe hash hash I just mining helpful. from Okay. of today two more the then on than to year tackle Bitcoin, way rate scale the deployed now. getting of

on market Thanks. with to just to of how and now you're of balancing prior back focus so, selling strategically that new to grid. think that going power do And as the sort having this you the next

Matt Smith

We one anything. It's There's just don't answer. have do really patience. to

the And have eloquently just markets in open miner power generation up you ourselves single We to is to. that convexity a we XXXX incredible from in the half. revenue cut said,

thoughtful to going to how we're and approach and day. try flexibility so that be on And keep be about really we offense every

Stephen Glagola

right. Thank All you.

Operator

closing for time, session. this over like At his Mr. remarks. I'd back concludes to call turn our this to question-and-answer the now Beard

Greg Beard

the take let right. the those as our did. found for out, thanks for All of months and Talk we investor and get news for us forward of Thanks night. patience position base all guys, Thanks who our coming us new to strength. this questions. Hey -- and joining advantage Good we the to soon. look quarters for

Operator

us Stronghold's earnings joining today for for you call. Thank

You now disconnect. may

Stronghold Digital Mining (SDIG) 17 Aug 222022 Q2 Earnings call transcript