Stronghold, a Bitcoin miner, has restructured its debt to increase liquidity.

By CoinUnited.io Research Team

8 Feb 2023

1 min read

Stronghold Digital Mining, Inc., a Bitcoin miner, said that it has achieved a deferral of debt payments deal with its lender WhiteHawk Finance.

The Kennerdell, Pennsylvania-based business is the most recent crypto miner to be successful in negotiating new conditions with lenders to postpone debt payments in the face of a persistent climb in Bitcoin prices. Greenidge Generation Holdings Inc. and TeraWulf, Inc., two publicly traded cryptocurrency miners, have recently negotiated more favorable loan conditions.

WhiteHawk received $20 million in increased borrowing capacity as a result of an amendment to a credit arrangement between Stronghold and the miner on October 27. It was used to reorganize prior finance contracts for mining machinery and equipment and had 36 months to pay back.

The "amortization holiday" in the new arrangement lasts for five months, benefiting Stronghold. Through June of 2024, Stronghold was on the hook to make monthly principal amortization payments. This is no longer the case per the agreement's provisions.

After a five-month total amortization holiday starting on June 30, 2023, Stronghold will repay the principal amount of debt outstanding by a monthly cash sweep equal to 50% of the average daily cash balance for the month in excess of $7.5 million, the business stated.

In the event that Stronghold's monthly average cash balance is less than $5 million, the firm may "pay interest in kind," meaning that payments will be incorporated into principal. Beginning on September30, 2024, WhiteHawk has a number of liquidity restrictions for the miner, including maintaining a debt-to-earnings ratio below a specific threshold at the conclusion of each quarter.

According to the statement, the minimum permissible liquidity is $2.5 million until March 31, 2024, $5.0 million from April 1, 2024, through December 31, 2024, and $7.5 million afterwards. Liquidity is defined as unrestricted cash plus Bitcoin.

Stronghold's stock price dropped by 96% throughout the course of the previous year. Since December, they've risen around 17%, from 42 cents to 56 cents.

Stronghold stated in a statement on Tuesday that it has revised a loan arrangement with WhiteHawk from October 27 to increase the miner's borrowing capacity by $20 million. It was used to reorganize prior finance contracts for mining machinery and equipment and had 36 months to pay back.

The "amortization holiday" in the new arrangement lasts for five months, benefiting Stronghold. Through June of 2024, Stronghold was on the hook to make monthly principal amortization payments. This is no longer the case per the agreement's provisions.

After a five-month total amortization holiday starting on June 30, 2023, Stronghold will repay the principal amount of debt outstanding by a monthly cash sweep equal to 50% of the average daily cash balance for the month in excess of $7.5 million, the business stated.

In the event that Stronghold's monthly average cash balance is less than $5 million, the firm may "pay interest in kind," meaning that payments will be incorporated into principal. Beginning on September30, 2024, WhiteHawk has a number of liquidity restrictions for the miner, including maintaining a debt-to-earnings ratio below a specific threshold at the conclusion of each quarter.

According to the statement, the minimum permissible liquidity is $2.5 million until March 31, 2024, $5.0 million from April 1, 2024, through December 31, 2024, and $7.5 million afterwards. Liquidity is defined as unrestricted cash plus Bitcoin.

Stronghold's stock price dropped by 96% throughout the course of the previous year. Since December, they've risen around 17%, from 42 cents to 56 cents.

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