Stronghold Digital Mining Swaps Debt for Preferred Stock
The bitcoin miner has been reducing its debt since the summer.
Stronghold Digital Mining (SDIG) has agreed with noteholders to exchange $17.9 million of convertible debt for $23.1 million of convertible preferred stock, according to a press release Tuesday.
The deal is the bitcoin miner's latest effort to improve its balance sheet. In August, Stronghold announced a deal to return 26,200 mining rigs to lender NYDIG in exchange for extinguishing $67.4 million in debt. In September, the company cancelled a hosting agreement with Germany's Northern Data in an effort to improve its cash flow.
Under the agreement announced on Tuesday, 10% convertible notes will be extinguished in exchange for a new series of convertible preferred shares that can be converted into common shares for 40 cents per share.
If all the preferred stock is converted, about 57.8 million common shares would be issued, adding about 46% to the current common float, according to the company. Stronghold won't pay a dividend on the new preferred shares.
With the deal, which is set to close by Feb. 20, Stronghold will have less than $55 million in debt outstanding, CEO Greg Beard said in the statement.
At the end of 2022, Stronghold had about $12.4 million of unrestricted cash and about 6 bitcoins, which are worth about $100,000 at current prices.
UPDATE (Jan. 3, 15:00 UTC): Adds detail about closing date and outstanding debt in fifth paragraph.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.