Analyst Still Positive on Stronghold Digital Despite Miss, Citing Miner’s Low Costs

Bitcoin miner Stronghold Digital (SDIG), which uses waste coal for energy, remains one of the lowest-cost miners and is expected to get over its short-term setbacks, said an analyst for investment bank Compass Point.

• “While the near-term issues certainly impact our estimates for SDIG, the company remains one of the lowest cost BTC miners in the U.S., and we believe the management team's experience operating power assets will allow it to get over the hump with the Scrubgrass facility,” analyst Chase White wrote in a research note.
• The miner’s stock tumbled more than 30% on Monday post-market and was down a similar amount on Tuesday morning to $6.92 after the company reported fourth-quarter revenue and earnings that both came in well short of the analysts' consensus estimate. Stronghold also said that it will miss its original target of reaching 8.0 exahash per second of capacity by the end of the year.
• Compass Point’s White said the miss was largely driven by a substantially lower capacity utilization and higher cost at its Scrubgrass power plant in Pennsylvania. uncertainty around receiving new miners from MinerVa.
• White lowered his 12-month price target on Stronghold to $30 from $41 but maintained his buy rating on the stock.
• Ahead of the release of earnings results on March 29, an analyst for Wall Street investment bank DA Davidson lowered his price target for Stronghold by 40%, citing slower-than expected operational progress to date and supply chain challenges.