Bitcoin Mining Company Returns Over 26,000 Rigs To Rescue Itself From Hot Air Balloon Debt

Bitcoin Mining Company Returns Over 26,000 Rigs To Rescue Itself From Hot Air Balloon Debt

Bitcoin Mining Company Returns Over 26,000 Rigs To Rescue Itself From Hot Air Balloon Debt

Bitcoin mining can bring promises of good fortune, but given the unpredictable nature of bitcoin and other cryptocurrencies, the business can go awry and force even the most well-funded company to resort to measures. desperate – like selling gear to stay afloat.

Stronghold Digital Mining announced on Wednesday that it would return more than 26,000 bitcoin mining machines to the New York Digital Investment Group in exchange for forgiving $67.4 million in debt.

Stronghold Digital, a publicly traded bitcoin mining company, said it had renegotiated its financing agreements with its lenders to more than halve its total debt and associated interest and principal payments.

Stronghold Digital has no other option but to let go of some hardware. Image: Blockworks

NYDIG is an industry-leading bitcoin company that helps miners finance machinery and energy infrastructure. SDIG’s move comes as crypto firms struggle to assess the debilitating effects of the current market meltdown.

Even though Bitcoin (BTC) momentarily rebounded to $25,000, it is still down 65% from its November 2021 all-time high of $69,045. Bitcoin is currently selling at $23,523, down 1.8% from last week, according to Coingecko statistics.

No choice for the stronghold of the Bitcoin mining company

According to Stronghold Digital, the restructuring and debt refinancing agreements were necessary to keep the company “in business for at least the next twelve months.”

Stronghold delayed the release of its second-quarter financial report for seven days before releasing it this week. The company said the delay was due to the negotiation process.

The second quarter earnings report revealed that Stronghold had more than $128 million in debt. Therefore, the deal with NYDIG reduces the company’s outstanding debt by more than 50%.

Since the market turmoil earlier this year, Bitcoin mining companies have started selling mined BTC or mining equipment to settle debt or cover operating expenses. In May, when the price of Bitcoin fell below $30,000, miners, for example, sold all their production.

A difficult month of June for Bitcoin miners

According to a survey by Arcane Research, bitcoin miners sold around 15,000 BTC in June, which is 400% of their bitcoin production. In July, this figure dropped to 6,200 BTC.

Instead of liquidating its Bitcoin reserves, however, Stronghold reduced its debt by selling its mining equipment. The company says this will have no long-term implications on its bitcoin production capacity.

Meanwhile, following the announcement of restructuring details, Stronghold Digital’s share price fell another 6% after the market closed.

The bitcoin bear market has hit publicly traded miners, sending their stocks down more than 60% on average this year.

BTC total market cap at $449 billion on the daily chart | Source: TradingView.com

Featured image from Outside Magazine, Chart from TradingView.com

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