Publicly traded Bitcoin mining company Stronghold Digital Mining (SDIG) said it plans to return more than 26,000 mining rigs to New York Digital Investment Group (NYDIG) to significantly reduce its debt. NYDIG is a leading bitcoin company that helps miners finance mining equipment and energy infrastructure.
The mining company also intends to restructure a convertible note for cash after receiving a binding commitment letter from private credit investment manager WhiteHawk Capital to modify its financing arrangements.
Stronghold pays off $67 million debt to NYDIG
Stronghold will return around 26,200 bitcoin mining rigs to NYDIG to clear all of its $67.4 million outstanding debt to the lender, the company said Tuesday in a press release.
The bitcoin miner released its second-quarter earnings report this week after delaying it seven days earlier. The firm said the negotiation was the reason for the delay. The earnings report revealed that Stronghold was $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 expand its current financing arrangements to a 36-month note.
The deal will reduce short-term principal payments and provide $20 million in additional borrowing capacity, which Stronghold plans to use to purchase new mining equipment in a timely manner.
In addition, Stronghold said it restructured its convertible and certificate bonds to reduce the principal amount outstanding by $11.3 million in exchange for reducing the exercise price of the outstanding certificates from $2.50 to $0.01.
“By returning the miners to NYDIG that 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 principal amount of outstanding debt and associated interest. significant. and principal payments,” the company said.
Bitcoin miners are struggling
Since the market crash in the second quarter, bitcoin miners have been selling mined BTC or mining machines to pay off their debt or cover operating costs. For example, miners sold 100% of their output when Bitcoin dipped below $30,000 in May.
Speaking on the subject, CoinShares analyst Matthew Kimmell said:
“Liquidity is key for miners in a bear market. At current prices, miners are receiving 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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