Stronghold Reveals Reason Behind Its Loss Of Over 25% After Hours As Q4 Earnings

After a crypto mining firm that utilizes coal waste energy for mining bitcoin revealed lower-than-expected fourth-quarter earnings, Stronghold Digital Mining lost over 25% in after-hours trading.

As per the company’s report, Stronghold’s 2021 fourth-quarter adjusted earnings-per-share is showing a loss of $0.52 a share while analysts forecasted a profit of $0.002.

In 2021, the revenue generated in the fourth quarter is $17 million, a significant increase from the revenue in 2020, which was $900,000. However, it missed the mark of $21.9 million as estimated by the analysts. The report further states that the reason behind the revenue increase in 2021 is “higher energy generation and crypto asset mining revenues.”

In comparison to a net income of $200,000 for the fourth quarter in 2020, the company revealed its net loss for the same quarter of 2021 is $17.5 million. The net loss for the whole year of 2021 amounted to $27.3 million, while the previous year had a net loss of $100,000.

On Tuesday, Gregory Beard, co-chairman and CEO of Stronghold, during the company’s earnings conference call, said that the latest results do not match our expectations the team Stronghold has with itself and is definitely not the representation of the potential that they are aiming for. Beard adds that Stronghold does possess foundational pieces that are needed for being a successful and differentiated company

Stronghold then says that the delivery delays could have triggered the losses. The report points out the negative impact the hash rate has due to delays in miner deliveries.

Stronghold has received around 3,300 of the total 15,000 miners ordered from a Canada-based semiconductor corporation dubbed MinerVa, to date, even after an initial delivery deadline of Dec. 31, 2021. The executives revealed that Stronghold is now expecting miners to be delivered by April 30, 2022.

Beard said that they are revisiting the miner procurement strategy in order to emphasize spot purchases over forwarding deliveries. Deliveries possess a high-risk profile considering potential delays to delivering timing and uncertainty regarding the bitcoin fundamentals at the time of receipt, adds Beard.

In October 2021, Stronghold made its debut on Nasdaq with an opening price of $26.50, 55.8% more than the expected range between $16 and $18 price per share.

Executives are still optimistic, emphasizing that the main mission of the company still stands.

Beard shares that they are focusing on improving the environment. Moreover, Bear informs that its vertically integrated business model has low costs, significant scale and its management team is in alignment with more than 50% ownership in the company

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing