Stronghold ends Northern Data hosting deal in an effort improve 'operational control' and liquidity

Quick Take

  • Stronghold terminated a hosting deal with Northern Data, agreeing to pay $4.5 million and stating that the settlement should improve cash flow by around $7 to $20 million until Sept. 2024.
  • The company has been deleveraging its position, closing a deal in August to eliminate $67.4 million in outstanding debt with NYDIG.
  • Stronghold has also shifted its focus towards selling power from its two plants and away from bitcoin mining.

Bitcoin miner Stronghold has terminated a hosting deal with Northern Data and agreed to pay the firm a total of $4.5 million.

Stronghold believes that this settlement will save the company between $500,000 to $1.1 million in profit share payments per month through 2023 based on certain mining economics and that it will improve cash flow by around $7 to $20 million until Sept. 2024, it said in a document filed Friday with the U.S. Securities and Exchange Commission.

The deal eliminates the $2.6 million that Stronghold had to pay Northern Data and gives it the right to operate about 50 megawatts of power capacity from Northern Data's modular data center for two years at a cost of $1,000 per year. At the end of that period, Stronghold has the option to buy the containers for $2 million to $6 million, again based on mining economics at the time.

The deal will give Stronghold more "operational control" of its bitcoin business while improving cash flow generation over the next two years, according to co-chairman and CEO Greg Beard.

"Overall, we believe that we continue to make significant progress towards improving our balance sheet, liquidity and cost structure to deliver shareholder value," Beard said.

The company recently announced a deal to eliminate $67.4 million in outstanding debt with NYDIG by returning about 26,200 mining machines, while also restructuring a loan with WhiteHawk and adding up to $20 million of additional borrowing capacity. So far, it has paid down $65.3 million of the loan, with around $2 million remaining

Stronghold said in August that it would be shifting focus towards selling power from its two waste coal plants in Pennsylvania and away from mining bitcoin with it for the foreseeable future, citing the decline of bitcoin's value and rise in power prices as factors.

"These closings continue our meaningful transition towards a deleveraged company that can either sell power to the grid or use its low cost self-generated power to mine for Bitcoin,” said Beard.

Stronghold said that the 26,000 miners it returned to NYDIG would go for around $40 million or less in the current market — significantly below the $67 million in debt that they reduced.

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