Stronghold Mining Posts Q1 Results Amid Growing Scrutiny of Coal-Fired Mining

Pennsylvania-based Stronghold Digital Mining has reported first-quarter revenues of $28.7 million amid increased scrutiny on resurrecting fossil fuel plants for mining operations.

Stronghold, which uses coal refuse to power bitcoin mining, announced its financial results for the first quarter of 2022. 

The company surpassed the consensus estimate of $26.2 million with an adjusted net loss per share of $0.66, exceeding the consensus estimate of $0.08.

Stronghold also has $27 million in cash proceeds from issuing principal notes. Investors are guaranteed a minimum return equal to the initial investment. 

Greg Beard, co-chairman and CEO of the company said of the results: “Earlier in the year, Stronghold chose to de-emphasize growth to focus on capital discipline and financial flexibility, and recent operational and financial initiatives, including our recent issuance of the Notes, have helped de-risk our funding needs, despite recent volatility in cryptocurrency markets.” 

The company boasted “$47 million of cash and equivalents plus unrestricted BTC holdings and more than $60 million of liquidity.”

Stronghold furor over ‘dirty energy’

Stronghold burns coal remains from centuries of mining in Pennsylvania, preventing the sometimes 200-feet deep piles of waste from poisoning the soil and emitting harmful chemicals into the atmosphere. 

The earnings report indicated that the company had removed 279,000 tons of coal refuse. 

However, waste coal is more toxic to the environment than “new” coal, containing mercury, sulfur, and lead, to name a few. 

It is also burned in what is known as a fluidized bed, where combustion takes place to convert the waste coal to energy, a process requiring more energy than burning traditional coal.

Since the Chinese exodus last year following the government’s bitcoin mining ban, many miners flocked to the U.S., some to Texas, where stranded natural gas is a resource, and some to New York, where the resurrection of fossil-fuel plants has been the energy source, drawing concern from environmental lobby groups and specific sectors of the government. 

Atlas Holdings purchased a defunct coal plant in 2014 in the Finger Lakes Region of New York. They turned it into a natural gas plant before setting up a mining facility, raising water and air pollution concerns. 

In Montana, Marathon Digital Holdings partnered with a struggling coal-fired plant operator to access a large amount of power at an attractive price, said Fred Thiel, the chief executive of Marathon noted, in a statement reported by the Wall Street Journal.

A different narrative

The co-chairman of Stronghold, William B. Spence, sees it as taking part primarily in a land reclamation process before bitcoin mining is considered. “Sometimes the perfect is the enemy of good,” he says. 

“I feel like what I do is very good. It’s not perfect, but right now, it’s the best thing that we can do,” he said in a report. 

In Feb, Mike Novogratz, CEO of Galaxy Digital, announced an initiative to clean up the image of cryptocurrency mining as a dirty industry, as investors put pressure on mining companies to reconcile their activities with broader environmental, social, and governance reforms.