Stronghold Digital Mining, Inc. (NASDAQ:SDIG) Q4 2023 Earnings Call Transcript

Stronghold Digital Mining, Inc. (NASDAQ:SDIG) Q4 2023 Earnings Call Transcript March 6, 2024

Stronghold Digital Mining, Inc. misses on earnings expectations. Reported EPS is $-1.46 EPS, expectations were $-1.22. SDIG isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning, and welcome to Stronghold Digital Mining’s Conference Call for the Fourth Quarter and Full Year Ended December 31, 2023. My name is Towanda, and I’ll be your operator this morning. Before this call, Stronghold issued its results for the fourth quarter and full year of 2023 in a press release, which is available in the Investors section of the company’s website at www.strongholddigitalmining.com. You can find a link in the Investors section at the top of the home page. Joining us on today’s call are Stronghold’s Chairman and CEO, Greg Beard; and CFO, Matt Smith. Following their remarks, we will open the call for questions. Before we begin, Alex Kovtun from Gateway Group will make a brief introductory statement. Mr. Kovtun, please proceed.

Alex Kovtun: Great. Thank you, operator. Good morning, everyone, and welcome. Today’s slide presentation, along with our earnings release and financial disclosures were posted to our website earlier today and can be accessed on our website at www.strongholddigitalmining.com. Some statements we’re making today may be considered forward-looking statements under securities law and involve a number of risks and uncertainties. As a result, we caution you that there are a number of factors, many of which are beyond our control, which could cause actual results and events to differ materially from those described in the forward-looking statements. For more detailed risks, uncertainties and the assumptions related to our forward-looking statements, please see the disclosures in our earnings release and public filings made with the Securities and Exchange Commission.

We disclaim any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law. We will also discuss non-GAAP financial metrics and encourage you to read our disclosures and the reconciliation tables to applicable GAAP measures in our earnings release carefully as you consider these metrics. We expect to file our annual report on Form 10-K on or around March 8, 2024, with the Securities and Exchange Commission, which sets forth detailed disclosures and descriptions of our business, as well as uncertainties and other variable circumstances, including, but not limited to risks and uncertainties identified under the caption, Risk Factors.

You may access Stronghold’s Securities and Exchange Commission filings for free by visiting the SEC website at www.sec.gov or Stronghold’s Investor Relations website at ir.strongholddigitalmining.com. I would like to remind everyone this call is being recorded and will be made available for replay via a link available in the Investor Relations section of Stronghold’s website. Now, I would like to turn the call over to Stronghold’s, Chairman and CEO, Greg Beard. Greg?

Greg Beard: Good morning, everyone and thank you for joining us on our fourth quarter and full year 2023 earnings call. We will be referencing an associated slide presentation throughout the call that is available through the webcast and on the Investor Relations section of our corporate website. Let’s start on Slide 3. I will say this on every earnings call until it’s no longer true. Stronghold is the only environmentally beneficial and vertically integrated public Bitcoin miner. We own and operate two mining waste-to-power facilities in Pennsylvania, Scrubgrass and Panther Creek, with aggregate power capacity of 165 megawatts Through our process, Scrubgrass and Panther Creek have removed an estimated 30 million tonnes of toxic mining waste from the environment from nearly 100 different sites.

Today, we operate over 40,000 Bitcoin miners with 4.1 exahash of hash rate capacity, while we are thrilled to surpass 4 exahash. We believe that we have significant runway to continue hash rate growth within our existing infrastructure by high-grading our fleet. As a vertically integrated Bitcoin miner, we have a unique and substantial asset base with significant potential for complementary revenue streams. In November, we announced our Carbon Capture project, which is simply an extension of our reclamation process. We are excited about our progress we have made on this project over the last few months. We believe that we could capture up to 100,000 tonnes of CO2 annually at baseload capacity utilization of our plants, as discussed in our December presentation.

Moving to Slide 4. Over the past year and a half, Stronghold executed on its plan to grow hash rate to 4 exahash, with high capital efficiency. And we plan to continue adding hash rate in improving our fleet efficiency opportunistically. We have over 40,000 energized slots and these slots could support more than seven exahash of mining, with a high-graded fleet of latest generation miners. We are exploring various avenues and structures to grow into this capacity. Looking at our fleet, the average efficiency for our 2,500 these efficient miners exceeds 40 joules per terahash and our next 10,000 feet efficient miners are approximately, 37 joules per terahash. That’s low hanging fruit. And just replacing those miners, with latest generation miners could yield hash rate capacity of over 5.3 exahash.

So, we think that the Highgrade opportunity is very attractive. We also remain focused on improved uptime at our Data Centers. Matt’s been working closely with the Frontier mining team since, October to enhance our Data Center operations going into halving in April. This partnership has been a success, as evidenced by our recent achievement of approximately 3.9 exahash of operating hash rate. Moving to Slide 5. As the halving approaches, we continue to focus on liquidity and debt service obligations. As of February 29, we had over $10 million of liquidity. So current liquidity more than covers the $6.5 million in 2024, mandatory amortization associated, with our WhiteHawk notes from the $1 million of remaining committed minor CapEx. And importantly, our operations are generating cash flow with over $5 million of adjusted EBITDA projected for the first quarter, further enhancing our resiliency.

Moving on to Slide 6, to discuss Bitcoin market dynamics. Following the approval of Bitcoin ETFs from January, we have seen a significant rise in Bitcoin price and hash-price. Bitcoin has set a new all-time high and hash price is around $0.12 per terahash. There have been $8 billion of inflows into the ETFs, which averages nearly 6,000 Bitcoin per day, 6.5 more than what is mined daily. So we view the recent run-up in Bitcoin price as a result of the mismatch in supply in demand. Will the price run off continue?. While we won’t take a view on inflows representing potential demand, the halving will impact the supply side of the equation which all else equal, is quite constructive for future Bitcoin price. Moving on to Slide 7. Owning our own power assets gives us a lot of optionality, as electricity is the largest variable cost to mining Bitcoin.

A close-up of a person’s hands holding cryptocurrency coins.

It enhances our ability to be responsive to changing market conditions. When power prices are high, we turn off some miners and sell to the grid. When prices are lower than Bitcoin mining economics, but higher than variable fuel costs, we use the plants to power our miners and when power prices are lower than our variable plant costs, we turn off the plants and import electricity to power our miners. Power prices in our region are currently very low, with the forward curve for the remainder of 2024, averaging around $30 per megawatt hour. While low power pricing is a trend broadly, forward curves in PJM are generally the lowest in the country right now. This is great for us, because it gives us the flexibility to opportunistically import electricity from the grid to power our miners and you can expect to see us do just that.

Moving to Slide 8, on the other side of the equation, the PJM grid is extremely vulnerable over the medium to long term. Renewable energy sources like solar and wind are great, because they’re clean. But the unfortunate reality, is that they generate power intermittently, replacing stable baseload generation, with intermittent generation, severely threatens the stability of the grid. This is becoming very clear in PJM, by its own accounts. 40 gigawatts of baseload thermal generation is expected to be retired by 2030. This is over 20% of current PJM generating capacity. On top of this, nearly 95% of power generation projects in the PJM queue or renewable and it takes multiple megawatts of renewables to replace each megawatt of baseload generation.

As a result, at the current rate of development, PJM believes that the new projects will not be sufficient to keep up with demand growth, and the expected plant retirements by 2030. The implied outcome here is extreme volatility and market tightness in the medium to long-term making existing baseload assets like Scrubgrass and Panther Creek highly valued. Moving to Slide 9. Since announcing our carbon capture project in November our team has made significant progress improving our enhancing and validating our process. Recall that our initial third-party testing indicated that our Scrubgrass ash could capture carbon at a capacity of up to 12% by starting weight of the ash. Our recent tests from our first Karbolith have demonstrated that up to 14% is achievable.

We recently partnered with the Pittsburgh Mineral & Environmental Technology Lab, who is assisting with more enhanced lab analysis, further improving and reinforcing our process. In early February, we announced that we have begun constructing our second Karbolith with our partners Karbonetiq. This Karbolith is now up and running at Scrubgrass, inclusive of design enhancements that we expect will increase airflow and carbonation and reduce cost and construction time. The second Karbolith cost is about $33,000 in materials representing significant savings from the first Karbolith. And we expect to continue to reduce costs as we scale. As we mentioned on our last earnings call, our team has been working closely with Carbonomics since September to list our project on the Puro Registry, the world’s first registry for engineered carbon sequestration projects to monetize our carbon removals in the private market.

We are excited to announce that Puro Earth Registry registered the Scrubgrass facility in late February and the company will now undertake the audit process, which is the next step towards generating carbon capture related revenue. We are now embarking on the audit process for Puro and our goal is to have an accredited carbonated materials project as early as the end of the second quarter. We expect to have further updates on this project, including timelines for meaningful monetization and related milestones in the next few months. With that, I would like to pass it over to our CFO, Matt Smith.

Matt Smith : Thank you, Greg. Moving to Slide 10, we continue to believe that Stronghold is significantly undervalued on an absolute basis and acutely so relative to public Bitcoin mining peers. When looking at select valuation metrics, adjusted EBITDA hashrate capacity and adjusted EV to annualized January bitcoin production, Stronghold trades at an approximately 70% discount to peers. I have nothing else to add. Lastly on Slide 11, revenue for the fourth quarter was $21.7 million with $20.5 million from cryptocurrency operations, on 599 bitcoin mined and $1.2 million from energy operations. GAAP net loss was $21.2 million for the fourth quarter and adjusted EBITDA was $2.3 million. A reconciliation for those figures is included in the appendix. I will now turn the call back over to Greg for closing remarks.

Greg Beard : Thanks Matt. To summarize what we’ve discussed today, we are executing on the objectives we have communicated to the market. We remain confident in the strength of our business going into the halving and we believe that we have outstanding growth prospects through high-grading our fleet and developing carbon capture. With that, we’ll open up the call for Q&A. Operator?

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Q&A Session

Operator: Thank you. [Operator Instructions] Our first question comes from the line of Lucas Pipes with B. Riley. Your line is open.

Lucas Pipes : Thank you very much, operator. Good morning everyone.

Greg Beard : Hi, Lucas.

Lucas Pipes : I first wanted to do two ask a few questions on Slide 4. We show that column with additional opportunities and a few a few questions there. First, what type of machines should we be thinking about? What would a reasonable cost or CapEx range be for that? Or is that included in the guidance? I don’t think so. But I would appreciate your perspective. And then I have a few more follow-up questions from there. Thank you.

Greg Beard: Yes. So, I think we’re thinking about it in terms like the generic latest-generation miner that you can still buy. So, we’re not looking at the next generation to the current latest generation. So, something like a Bitmain S21. In terms of the market for these machines changes really weekly. And in the past, we’ve been very opportunistic about how we’ve managed to fill slots whether it’d be just buying machines out right JV-ing on machines, just to improve the capital efficiency and to get a very high ROE. And so, I think at current prices, market prices, you’d say, hey, to fill up all the slots would be around $20 million at current rates. We think obviously, the rates are going to be potentially materially different post having and as always, we’re trying to do better than the market in terms of what we spend and how we structure.

Lucas Pipes: Thank you, Greg. When would you make a decision on deploying additional capital there?

Greg Beard: What I think, we — once you give us say a quarter to present what we — what I want to do in the pace of that potential repowering of the data center or replacing all of these miners with more and more miners. So, I think we’re not ready to be specific with dates and times yet on those, not just really a function of making sure that we’re opportunistic to achieve the best pricing and rates of return on that equipment.

Lucas Pipes: Got it. Do you have a site in mind?

Greg Beard: Yes. I think we have — we’ve only got two sites Scrubgrass and Panther Creek. So I think you can expect it at all plants. And just to be clear at current pricing, it’s $20 million per exahash of machine just in case that was missed.

Lucas Pipes: Noted. Thank you. Thank you for that. So…

Matt Smith: Hey Lucas, I think…

Lucas Pipes: Yes.

Matt Smith: Lucas, I would just add. I think there is, as we’ve been carefully observing industry peers, announcing growth projects that are significant kind of greenfield builds for that require extraordinary time lines and future delivery schedules. What we’re trying to focus you on is the fact that we’ve looked at third sites and we’ve looked organically at our own existing 41,000 slots. And we have a number of at our Tier 1, Tier 2, Tier 3 miners in terms of stratifying by efficiency. And if you were to take the least efficient miners and high-grade does into what’s called an S21 type miner, which could utilize existing plugs that are energized, you can get to seven exahash plus. And so, identifying that that’s an opportunity is not a commitment to, I spend money to do that.

But we’ve demonstrated various actually very creative ways of filling slots in the past and we think there are a lot of opportunities to do that without stretching forward. So, the fact we have seven exahash capacity in the existing data centers is the message.

Lucas Pipes: Got it. I appreciate that. In kind of switching topics, obviously power price environment has been very soft and you noted your flexibility to toggle between your own generation and purchasing power. Could you speak a little bit to what your costs are when you produce in-house today at Panther and Scrubgrass, and kind of what the utilization rate of the plants is expected to be in this price environment? Thank you.

Greg Beard: Yes. So this is just a nice like reminder of the strength of the stronghold business model, which is, hey, if power prices are super high, we can quickly turn the data centers off and divert all of that power to the grid. Conversely, when power prices are low, and by low mean we have lowered our variable cost to make power, we can and we wouldn’t do it on a single day. But it’s expected to be low four weeks or a month. We can turn the power plant off. So, right now what we’re saying that we’re expecting costs to average between $40 or $45 per megawatt hour to make the power. And you looked at the forward curve for power expected power pricing in PJM, it’s one of the lowest power markets in the U.S. And so that’s that decision to come to buy power instead of make it becomes when we see power in the 20s or below, which is where we’re seeing it now seasonally.

So, I think you can expect us to just make the economic decision to buy the power at a cheaper cost than we can make it, which is there’s a — if there’s a spot in the middle where it makes sense to run the plants and supply all that power of the data centers, but now we’re looking like if the curve ends up playing out as its priced will run at least scrub brass seasonally rather than off time and then buy power for a lower price. You can make it which obviously will improve our margins.

Lucas Pipes: Thank you very much Greg. Really appreciate the color and best of luck. I’ll turn it over for now.

Greg Beard: Yes. Okay.

Operator: Thank you. Our next question comes from the line of Joe Flynn with Compass Point Research & Trading. Your line is open.

Joe Flynn: Hi guys. I wanted to dig a little bit more on your strategy going into halving. I guess with $30 megawatt hour, it’s produced strong prices from a marginal cost standpoint where you keep machines on. But I guess in the event that we don’t see correction of hedge prices and you kind of see it sub $0.05 level in the months, like how do you — how you’re going to manage the balance sheet and growth your ambitions to ultimately place yourself at a better position from a both cost and I guess cash position?

Greg Beard: Yes, so, I think we have the benefit of not halving to be making debt amortization payments and we have no or very, very small obligations on CapEx today. So, we — and right now, today we’re generating cash. And so — and if you looked at our — at the potential for the improvement in efficiency of our mining fleet, I think you’re going to have to — we need to outlay the market what the — what a realistic timeframe is to do that, which we will do. But I think the best response for halving in our view is to drive power costs as low as you can. That’s really the most important variable that we can control. And just happily — luckily, we have a power curve and it allows us to do that. So, we’re going to end up with lower power costs and what we would have modeled a quarter ago given where the curve it moved just and position related to natural gas pricing being so cheap.

But I think if you were to study our balance sheet and our obligations, there are purposely low due to halving to let us get to the point where we should be able to begin to spend to upgrade the fleet on time, which will give us a benefit on top of having an extremely low power price. I think also at some point they were making a lot of progress on carbon capture and that project is really designed as well to give us an even lower power price sort of on a net basis for that. So, that say that’s one of the reasons that we continue to focus on carbon capture as a as a benefit to the company.

Joe Flynn: Thanks. That’s helpful. And I also wanted to dig more into the hosting business, so far demonstrated strong results. But I guess just what do you think the outlook is there? I was wondering if you could pursue additional opportunities on that front and on maybe what’s the overall advantages to kind of your model versus your traditional hosting model have definitely struggled over the past two years. There’s a lot of industry talk. I talk about the holiday mile going away I guess, how are you guys positioned in that respect?

Greg Beard: Yes. So, I think we’re — we think we have a good relationship with our partners and I think you’re really unlikely to see us enter into what I would just kind of like a regular way of hosting, while we run somewhere else is minor and sell them power. We strongly prefer the model. We share a significant amount of the bitcoin mining revenue with our partners. So I think we’ll expect them to continue in some way. And if we are I think I would view that as one of the opportunistic ways to drive the efficiency to better play from the miners is through expanding our JVs with our existing and new partners, something it’s a thing that we don’t we don’t — we’re not expecting any immediate changes to the JV structures.

Joe Flynn: Got it. Thanks. That’s all for me.

Greg Beard: Thank you.

Operator: Thank you. [Operator Instructions] Our next question comes from the line of Kevin Dede with H.C. Wainwright. Your line is open.

Kevin Dede: Thanks. Hi Greg, Matt, thanks for having me on. Greg, kind of a I guess sort of a broad one. I was hoping you would take some time to walk me through anyone else. I was curious — on the carbon capture and the balance of now that you’re seeing 14% recovery a lower cost to deploy the carbon list and the balance of running the plants to generate the ash and the expected revenue off? It’s a big question. I know that you’re expecting accreditation are on Piro next quarter which means conceivably you could see revenue in the third quarter. At what point do you think you can just run both plants all out regardless of the PowerCurve?

Greg Beard: Yes, sort of I can’t. That’s what you’re describing is absolutely the goal. And I would say the last three months has been a bit better than confirmatory because it’s when you’re driving the rate of carbon absorption up. And not only is the — is the upper potential had moved up the rate that the Ashes carbonated has moved up. So the — not only is it going to require fewer cargo lifts to get the same job done, the cost of this cordless is coming down and labor is coming down. So, we’re really — I think we were very conservative in the early days and I sort of late last year describing the potential of the project, but it’s still in a while and we’ve made a ton of progress. And every — on every assumption has proven to be conservative so far, but it’s still too early.

It’s still too early to spike the football and say, hey we’re going to have extra more carbonless fully deployed and generating X amount of revenue related to that sequestration. I think that should happen. I would expect that we’ll be in a position to do that in the next quarter. But I think we’ve got it. We’re still testing just literally dozens of tests a week from now on. Now we’re testing this newly redesigned the cover live, number two that has an increased airflow. So I think it’s from our vantage point. I think when we see a plateau in the testing results and we’ve sort of iterated to the best cargo lift design that maximizes airflow and carbonation that also minimizes the CapEx build-out cost. That’s when they’ll say, hey now we’re ready to go ahead and do the build-out.

And at that point, we’ll describe what the CapEx costs are and what we think we can — can sequester. But you’re right, the reason to be excited is that, this is a revenue stream that when looked at on a — on a an offset for power costs, it’s going to meaningfully drive the — the revenue up and the sort of the average cost per megawatt down, which is that that was the which we’ve always said that that’s even more important than deficiency of the achieves a low power cost. So that’s what we’re driving toward. So, I think, if its standby give us some — give us a, a quarter to continue to refine our results, and designs and with those results and designs we can have accurate CapEx estimates, inaccurate timeframes on share. And I think on the — we also disclosed, we are now listed on the bureau registry, and I guess, they’ve now begun their quote auditing process, but I think make no mistake about it.

This will be a big year for carbon capture and at least at scrubbed graph this year. So that’s — that’s the — and hopefully in the next quarter have specifics to share as well. So I’m sorry we can’t tell you exactly per unit and everything, but that’s a — I can say, we did all that math in December on a hypothetical basis, and it is materially better than what we had initially thought in terms of CapEx, speed to carbonate and new rate of absorption. So let us keep it silent.

Kevin Dede: Okay. Yeah, no, appreciate the color. No need to apologize. Understand it’s a very dynamic situation. Appreciate all the effort there.

Greg Beard: We just don’t want to go backwards and say, hey, we promised X percent or whatever costs and have it be.

Kevin Dede: No, I completely understand there’s been enough of that. Maybe a little more insight on associated revenue timing. If you are registered by the end of the second quarter, is the press release intimated? Is it fair to assume you could see revenue in the third quarter? Maybe give us a little more insight on that. How are you looking at it?

Greg Beard: You know what, I would say, if we get on the registry, we could, what we’d hope to do is sell carbon credits in the private market and on a forward-looking basis. So, hey, you know, once we have our signed fund and we’re confident we can share that with potential buyers of carbon credits and we’re on the exchange and audited and, I guess, then transactable in this way that then opens up the ability for us to sell. We could sell out then the, a certain number of credits and deliver those as we build the project down. So I think it’s absolutely right. So I think if there’s a benefit to being on a registry, it’s that and have the process fully vetted out, and we can then sell credits before we generate them with an expected timeline to deliver them.

Kevin Dede: Love the forward market.

Greg Beard: And the forward market.

Kevin Dede: Okay. Okay. That sounds good. Another topic I think has to do with the mention of Champion. Could you just help me understand how Champion interfaces between you and PGM and how you see them helping to deliver those lower power prices to you before carbon captures, you know, fully up and running at both plants.

Matt Smith: Hey, Kevin, it’s Matt. So we — I would refer you back to our December press release and when we when we mentioned that we had been through, we’ve been through deep discussions constructive discussions with PGM around our data center load banks co-located at the plants. And, we have been, over the course of the last few months, purchasing retail electricity. And when you’re in that market, and this is when the plan is not on, which we were in December, Panther Creek had an outage that we’ve since come out of, and it’s been running well. But during that period of time, we were purchasing retail electricity. And at times the — the ad or the premium-to-wholesale can be onerous which I think you can see in the fourth quarter fuel and import power cost.

Fast Forward we wanted more visibility and more flexibility when you go into the shoulder it was a very warm February, natural gas prices are at $50, $75 versus a year ago when they were twice that. And it’s the marginal fuel on our marketing. So we expect single digit to $20 real-time prices in the shorter potentially, notwithstanding any we have Ukraine-Russia type of real structural items. And you want to be able to purchase power at as low of a cost in real-time markets as you can during that period. And so we have been working on competitive supply agreements for a while, to make sure we have ultimate flexibility. And we’re very grateful with so to have Calpine, Champion Energy for a Calpine stepped into that role. And we’re very excited about the reduced cost of power that will absolutely result from that during periods when we’re importing.

So that’s — it’s a pretty big, but it will result in a pretty big savings for us.

Kevin Dede: Okay. So — So looking out we should assume generally right, generally that you’re running both plants sort of — sort of peak times, excess past winter, but maybe through the summer and then off on the shoulder months. Is that a fair assumption at least for the next year or so?

Matt Smith: Yes. So we are going to run Scrubgrass. I would say more or less the base cases as a peaker or more than that, depending on carbon. I mean, as we start to monetize carbon potentially and perfect our design, carbon could be a step-change in the Scrubgrass cost of power. But right now as we’re looking at it the peak price for power, the rest of the years in July at 50 bucks-ish and so in that case, if you can buy power well below your marginal fuel cost. You will do it. This is Scrubgrass has probably runs as a peaker and Panther Creek is likely to run as a baseload — continue to run as a baseload plant throughout the year aside from some potential plant outage time that we’re not — is not yet in the calendar.

Kevin Dede: Okay. Any immediate plans to, drive the carbon lifts at Panther. Given that you’ll have continuous supply of ash?

Matt Smith: You would say we’re still — Scrubgrass is nearest term, due to the really high limestone, calcium element of the CFb process there. Once we perfect Scrubgrass where we started and where we’re starting it, we will move over to Panther. We don’t really see any reasons why — why Panther can’t scale as well. But we need to go over and further test the ash, the byproduct beneficial at this ash. And then ultimately we can potentially scale both plants. So that I would say Scrubgrass’s near-term focus because it’s already started and we have 600 plus acres and there are a lot of benefits including a very calcium rich nature of the ash. And so we’re going to scale as Scrubgrass first probably and then move over to Panther.

Kevin Dede: Yeah. I understand the Agri and grand demand on capital that’s the hinge. But have you considered other sites? Any change in your thinking on that? And if so, what type of timeline might you consider?

Greg Beard: Yeah. I think we’re on it. We’re always looking at other sites and comparing what we have today does it make sense to us to high-grade our fleet at our current sites or should we look at a — at new sites. We’re constantly sent opportunities review on new sites, but I think the cost of our power is lower than what most of us think that you’ll be seeing could achieve. So I think there we have no pending or announce on a new sites at this point. But we are constantly reviewing.

Kevin Dede: Okay. Fair enough. I’ll hop back in the queue Greg.

Greg Beard: Thanks Kevin.

Operator: Thank you. [Operator Instructions] We have a follow-up question from the line of Lucas Pipes with B. Riley. Your line is open.

Lucas Pipes: Thank you very much, operator, and thanks for taking my follow-up question. Greg, there’s a lot of talk about shortages of power, given demands not only from Bitcoin mining, but also AI applications. To what extent are you receiving inbound given your direct access to power and land package? Thank you very much.

Greg Beard: Yeah, I would say we do have interest from inbound enough, but I would say the recent run-up in Bitcoin price and hash price. It’s an attractive business to run right now. We’ll see what happens post having to hash price and Bitcoin price. But I think if Bitcoin were to be outlawed from the earth there is — there are multiple purposes for — you have 40,000 fully built-out plugs that have a computing capacity available given what’s happening in the world of AI as well. So that we’re confident that the all of the infrastructure that we’re running that we built with access to the power and that redundancy is a valuable infrastructure assets.

Lucas Pipes: Thank you Matt, a quick, quick question on the Whiskey, Tango slide. You’ve been in public markets for a long time, how do you explain these discrepancies? We’d be keen to get your take on this. Thanks.

Matt Smith: Yeah. So I want to avoid speculating, but I think what is — what’s interesting is that it’s a business where it’s an industry and the stock market where people can buy ourselves every day, and that can happen in any sort of way. And when you think about the reasons and past potential execution issues or our leverage, which we’re we’ve shipped some away some and are optimistic about really about escape velocity with cash flow related deleveraging against that debt. There are a lot of reasons to be optimistic and there’s hard asset value here that is absolutely in our view not recognized by the market in terms of our plants and the carbon opportunity. And so I can start to step through the different attributes of Stronghold compared to other peers and there’s some scale related things or some kind of daily trading volume and size related matters.

But in the end it’s a commodity industry where there should not be large disparities other than adjusting for operating and financial leverage and some other nuances between businesses, and so to trade at a 70% or 80% discount to peers who are in the same business, it doesn’t make any sense. And so what question is what’s going to close that, and I’ll just leave that to you all to ponder, but we’re working on it. So I’ll just leave it at that.

Lucas Pipes: I appreciate it, Matt. Again best of luck. Thank you.

Matt Smith: Thank you.

Operator: Thank you. I’m showing no further questions in the queue. That concludes the question-and-answer session. I would now like to turn the call back over to Mr. Beard for closing remarks.

Greg Beard: Okay. A stockholders, investors, Stronghold employees, thank you for all the effort. Thank you for the faith, we’re doing our best and we are optimistic about our prospects given the business model and we will see you next quarter. Thank you. Bye-bye.

Operator: Thank you for joining us today for Stronghold’s earnings call. You may now disconnect.