The American mining company Stronghold Digital Mining will save between $10 million and $25 million by September 2024 as a result of terminating the deal with infrastructure provider Northern Data. This is reported by Coindesk.
The exact amount will depend on the price of Bitcoin.
The termination of the deal gave Stronghold “improved operational control to generate cash flows over the next two years and flexibility,” according to co-chairman and CEO Greg Beard.
“We are continuing to make significant progress in strengthening the balance sheet, liquidity and cost structure to deliver shareholder value,” he added.
Under the terms, Stronghold Digital Mining would have paid the partner about 35% of revenue, net of electricity costs of $0.027 per kWh.
The mining company was also released from the obligation to pay $2.6 million to Northern Data.
Stronghold will gain the right to operate Northern Data’s bitcoin farms with a capacity of about 50 MW for $1,000 a year for two years, with an option to buy them later for a price ranging from $2 million to $6 million.
In exchange for terminating the deal, the company pledged to pay the partner $2 million in addition to the $2.5 million already transferred. Previously, Stronghold handed over 2,675 ASIC devices to Northern Data, eliminating obligations of about $8.8 million.
The company extinguished the outstanding debt on a loan for equipment purchases from NYDIG, returning about 26,200 ASIC miners with a total hash rate of roughly 2.6 EH/s. Another $2 million will be written off after customs clearance of the devices. As a result since May the firm has reduced its debt load by 60%, to $59.1 million.
In August, Stronghold announced steps to restructure its debt, reducing bitcoin mining capacity.
In September, Compute North, a provider of infrastructure solutions for cloud-based cryptocurrency mining, filed for bankruptcy.
In September, Bitdeer created a $250 million fund to buy assets from ‘troubled’ companies in the industry.
Subsequently, Binance and Grayscale also pursued similar initiatives.
According to Arcane Research, the vast majority of publicly listed industry players reported retained losses on their balance sheets, despite a strong 2021.
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