Stronghold Digital Mining (SDIG) Announces 2.3M Share Private Placement at $6.71/sh

Stronghold Digital Mining, Inc. (NASDAQ: SDIG) (“Stronghold”, or the “Company”) today announced that it entered into a securities purchase agreement with an existing institutional investor (the “Purchaser”) to sell 2,300,000 shares of Class A Common Stock and share equivalents, in each case at a price of $6.71 per share equivalent (the “Private Placement”). The Company also issued to the Purchaser warrants to purchase an aggregate of 2,300,000 shares of Class A Common Stock, with an initial exercise price of $7.00 per share (subject to adjustments), and such warrants are not exercisable until six months after issuance.

The non-brokered Private Placement was executed on December 21, 2023, and is expected to close on December 22, 2023. Gross proceeds from the Private Placement will be $15.4 million, before deducting offering expenses. Proceeds will be used to enhance growth and efficiency of the Company’s miner fleet, accelerate its carbon capture initiative, and improve its working capital position and for general corporate purposes.

Additionally, the exercise price for 1,400,000 warrants previously issued on April 21, 2023, and September 19, 2022, will be adjusted from $10.10 per share and $11.00 per share, respectively, to $7.00 per share.

Panther Creek Operational Update

On November 20, 2023, the Company’s wholly owned Panther Creek Plant experienced unexpected ash silo flow issues. As a result, the Company operated the plant at a lower output while the plant worked to remedy the issue. From November 20, 2023, through December 7, 2023, the Panther Creek Plant operated at approximately 60% net capacity factor while importing the remaining electricity necessary to fulfill its data center needs. The Company’s data center operations were unaffected during that period.

While progress was made, on December 8, the Company elected to shut off the plant for what was expected to be a short-term, unplanned outage to fully fix the ash silo. The Company took these steps to ensure maximum uptime and availability during the coming winter months. The repairs were not completed until December 21, resulting in the Panther Creek Plant importing electricity between December 8 and December 21. Between December 12 and December 20, the Panther Creek data center was unexpectedly required to curtail load to between 10 MW and 50 MW due to PJM system reliability issues and a transmission line outage.

In total, the Company estimates that it incurred fuel costs and operations and maintenance expenses of approximately $1.5 million beyond the scope of normal and expected operations. The Panther Creek Plant has resumed operations, and the Panther Creek data center is operating without limitations. The Panther Creek data center recently achieved a site-record hash rate of over 2 EH/s on December 3, 2023, with 100% hash rate utilization, and the Company expects that it will reach that level again in the near future.

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