Listed bitcoin mining company Stronghold Digital Mining (SDIG) said it plans to return more than 26,000 mining rigs to the New York Digital Investment Group (NYDIG) to significantly reduce its debt. NYDIG is a leading bitcoin company that helps miners finance mining equipment and power infrastructure.
The mining company also intends to restructure a convertible note into cash after receiving a binding letter of commitment from private credit investment manager WhiteHawk Capital to modify its financing agreements.
Stronghold repays $67 million debt to NYDIG
Stronghold will return approximately 26,200 Bitcoin mining rigs to NYDIG to eliminate all of its $67.4 million outstanding debt to the lender, the company announced in a press release on Tuesday.
The bitcoin miner released its second-quarter earnings report this week after delaying it seven days earlier. The firm said negotiation was the reason for the delay. The earnings report revealed that Stronghold had $127.9 million in debt at the end of the second quarter. Thus, the agreement with NYDIG eliminates more than half of the company’s debt.
Stronghold restructures its financing
The mining company said in the statement that it would work with WhiteHawk to restructure and extend its current financing arrangements into a 36-month note.
The agreement will reduce short-term principal payments while providing additional borrowing capacity of $20 million, which Stronghold plans to use to purchase new mining equipment on an opportunistic basis.
In addition, Stronghold said it restructured its convertible notes and warrants to reduce the outstanding principal amount by $11.3 million in exchange for lowering the exercise price of the outstanding warrants by 2 $.50 to $0.01.
“By returning the miners to NYDIG who served as collateral for the non-recourse financing agreements and restructuring the WhiteHawk financing agreements and convertible notes, we will be able to eliminate more than half of our total amount of debt by significant associated price and interest and principal payments,” the company said.
Bitcoin miners are struggling
Ever since the Q2 stock market crash, bitcoin miners have been selling mined BTC or mining machines to pay off debt or cover operating costs. For example, miners sold 100% of their production when bitcoin fell below $30,000 in May.
Speaking on this, CoinShares analyst Matthew Kimmell said:
“Liquidity is essential for miners in a bear market. At current prices, miners receive less cash flow per bitcoin sold compared to last year and Q1 2022, while potentially facing the same infrastructure, machine, and energy costs.
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