Bitcoin miner Stronghold to convert $17.9 million of debt into equity

Bitcoin miner Stronghold reached an agreement with noteholders that will see $17.9 million of debt be turned into equity.

The notes will be extinguished in exchange for a new series of convertible preferred stock with a face value of about $23.1 million, the company said in a filing with the U.S. Securities and Exchange Commission.

The move follows other measures the miner has taken to improve cash flow, such as ending a hosting deal with Northern Data and eliminating $67.4 million in debt with NYDIG.

“We are pleased to announce another deleveraging transaction that is expected to materially reduce our debt, strengthen our balance sheet, and improve our liquidity position,” said Greg Beard, co-chairman and chief executive officer.

The company expects the deal to close in February and reduce its debt to less than $55 million. The new shares will be convertible into common stock at a price of $0.40 per share.

‘Preserve cash’

“We acknowledge the significant number of shares of common stock that could be issued as a result of the Exchange Agreement, but we believe this is necessary to preserve cash, reduce our financial obligations, and better position the Company to survive a potentially prolonged crypto market downturn,” Beard said.

Stronghold shifted focus away from mining and into selling power during the summer. The company owns and operates two waste coal plants in Pennsylvania.

Like others in the industry, it has seen mining economics worsen with a fall in bitcoin prices falling and a rise in energy prices.

Mining giant Core Scientific, which filed for bankruptcy this month, also plans to turn most of its debt into equity.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.