Stronghold Digital, Miner That Turns Waste Coal Into Crypto, Prepares for IPO

A Pennsylvania-based company is seeking to go public in its efforts to expand its crypto mining operations. Stronghold Digital Mining has the unique goal of transforming waste coal into cryptocurrency, calling itself an "environmentally beneficial and vertically integrated Bitcoin miner."

The Stronghold Digital Mining IPO is expected to finalize sometime next week, and its initial price range is $16–$18. The company operates digital miners, which are computers that earn Bitcoin by performing operations needed to record Bitcoin transactions on a public ledger.

The company, whose chairmen are based in New York, operates at a power plant in Venango, Pa., with plans for two additional Bitcoin mining hubs at other power plants. The first, the Scrubgrass power plant in Venango, already has 3,000 miners in place. In the near future, Stronghold plans to open a second plant, in Carbon County, and a third plant, whose location has not been determined.

The company’s registration statement said, “Simply put, we employ 21st-century crypto mining techniques to remediate the impacts of 19th and 20th-century coal mining in some of the most environmentally neglected regions of the United States.” Since parts of Pennsylvania have stores of waste coal that require disposal, Stronghold Digital Mining hopes to burn that waste coal in its Bitcoin mining operations.

Mining is traditionally the extraction of valuable minerals from the ground, such as gold and coal. Similarly, Bitcoin mining is extracting something of value, but in the digital world—not from literally digging.

Bitcoin mining refers to a digital process that creates new Bitcoin through computers solving complex math problems and puzzles. Bitcoin miners must verify transactions of Bitcoin before adding them to the permanent blockchain. Some parts of the Bitcoin mining process include preventiing double spending, where a Bitcoin holder might attempt to retain their cryptocurrency while sending it to another party.

Miners earn Bitcoin in exchange for their work in verification and addition of transactions to the blockchain. Therefore, Stronghold Digital Mining’s success as a company depends on the value of Bitcoin, which is now worth over $50,000 but prone to volatility.

The company plans to use the ticker symbol “SDIG” when it begins trading on the Nasdaq the week of Oct. 18. CoinTelegraph reported that the company will list nearly 6 million shares of Class A common stock priced between $16 and $18 per share. The SDIG IPO could raise nearly $100 million at the midpoint of the proposed range.

Stronghold Digital Mining intends to purchase more than 55,000 additional machines by the end of 2022 with the proceeds of its IPO, according to the information provided to the SEC.

In the first half of 2021, the company reported $3.5 million in net losses. The company also warned potential investors in its filing paperwork that it will likely need more capital to facilitate growth. It expects to operate at a loss for some time to come. Nasdaq.com also reported that Stronghold will be the first North American crypto mining company to go public through a traditional IPO instead of a SPAC or direct listing.