US-based Bitcoin mining company Stronghold Digital Mining (SDIG) announced on Tuesday new moves to increase 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 facilities, 18,700 of which are currently in operation. The sell-off will create more liquidity and release $ 67.4 million of debt held by Stronghold. Prior to the deal, the company had $ 47 million in cash as of August 12.
After Stronghold returns 26,000 plants, with a total hash rate of 2.5 EH / s, their operational fleet will be around 16,000 miners. Overall the hash rate capacity will be over 1.4 EH / s and a total power draw of 50-55 megawatts.
The collapse of the cryptocurrency market has played a significant role in the current hardship for miners. In July, Bitcoin (BTC) mining revenue dropped to a one-year low to nearly $ 15 million. It was around this time that other mining operations, such as Compass Mining, were also forced to sell rigs while risking bankruptcy.
Over the past three months, Bitcoin miners have earned 27% less due to the need for big sales.
Insiders refer to the bear market as a cryptocurrency moment that will eliminate long-term unsustainable trades while allowing others to restructure.
Related: The best bear market plan? “Relentless optimism for the future,” says the fintech CEO
Stronghold’s restructuring and expansion also comes with a deal with WhiteHawk, which adds another $ 20 million available for the loan. According to the official statement, the company will “opportunistically” deploy capital to buy new miners.
Greg Beard, co-chairman and chief executive of Stronghold, said the restructuring will provide “vastly improved liquidity and flexibility to distribute capital opportunistically in a way that creates equity value across the Bitcoin and energy market cycles.”
Despite the sales, the restructuring could be a move in the right direction as experts say there is still long-term profitability in cryptocurrency mining. After hitting a low in July, mining revenues reversed their trajectory with a 68.6% increase in August.
Recently, a New York judge approved a request from the Celsius network to include BTC mining in its post-bankruptcy refinancing efforts.