United States-based Bitcoin mining company Stronghold Digital Mining (SDIG) announced new moves on Tuesday to reduce its outstanding debt and restructure its financial operations.
In a deal with lender New York Digital Investment Group (NYDIG), the company plans to release 26,000 of its mining rigs, 18,700 of which are currently operational.. The sale will create more liquidity and liquidate $67.4 million of debt held by Stronghold. Prior to the deal, the company had $47 million in liquidity as of August 12.
After Stronghold returns 26,000 rigs, with a total hash rate of 2.5 EH/s, its operating fleet will be approximately 16,000 miners. Total, the hash rate capacity will be more than 1.4 EH/s and a total power consumption of 50-55 megawatts.
The cryptocurrency market crash has played a major role in the current difficulties of miners. In July, Bitcoin (BTC) mining revenue fell to a one-year low of nearly $15 million. It was around this time that other mining operations, such as Compass Mining, were also forced to sell equipment as they faced bankruptcy.
In the last three months, Bitcoin miners hodl 27% less due to the need for large sales.
Industry insiders refer to the bear market as a cryptocurrency moment that will weed out operations that lack long-term sustainability and allow others to restructure.
Stronghold’s restructuring and expansion also comes with an agreement with WhiteHawk, which adds an additional $20 million available for loan. According to the official statement, the company will deploy capital “opportunistically” to buy new miners.
Greg Beard, Co-Chairman and CEO of Stronghold, said the restructuring will provide, “significantly enhanced liquidity and flexibility to opportunistically deploy capital in a way that creates equity value through cycles in the Bitcoin market and energy.”
Despite the sales restructuring could be a move in the right direction as experts say there is still long-term profitability in cryptocurrency mining. After reaching its minimum in July, mining revenues reversed their trajectory with a 68.6% increase in August.
Recently, a New York judge approved a request by Celsius Network to include BTC mining in its post-bankruptcy refinancing efforts.
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