<--- Back
In the 12 years from August 2011 and June 2024, Bitcoin produced a compound annual growth rate of 102%. It’s been the standard deviation of 156% that’s proven to be a challenge for a number of operators in the Bitcoin mining industry.
One of the more promising years for the industry was 2021. It took less than a month for Bitcoin to smash its 2020 price record, surpassing $40,000 by January 7th. By mid-April, Bitcoin reached new all-time highs of over $60,000 as Coinbase went public.
By the summer of 2021, prices were down by 50%, but the Fall ushered in another bull run. On November 10th, Bitcoin again reached an all-time high of $69,000. The largest publicly traded miner, Marathon Digital Holdings rallied from $11 to $76 during that period.
Against this volatile backdrop, Greenidge Generation Holdings reverse merged with NASDAQ-listed IT support solutions provider Support.com. Greenidge successfully raised $50 mm in a baby bond offering with a 8.50% coupon and an October 2026 maturity. The company grew to 4 EH/s in 2022, before the crypto winter brought the company to its knees. Both B. Riley and NYDIG agreed to restructure their debt with the company. Greenidge managed to pay down 50%+of its debt load in 2023, but in the process, was forced to sell its 44 MW South Carolina facility to NYDIG.
As a result, Greenidge hosts more miners today (1.8 EH/s) than it owns (1.2 EH/s). The company is desperately trying to develop AI compute capability and is guiding shareholders to near term expandable power capacity of 84 MWs. Longer term, Greenidge has indicated their ability to grow by an additional 250 MW. The GreenidgeAI initiative was announced in December of 2023. Greenidge executed a stock swap with Infinite Reality, a AI powered immersive visual experience platform. While the swap valued Greenidge at $82 mm, Infinite Reality was value at $2.5 billion. The company’s new playbook for value creation is predicated upon site acquisition and development. All eyes will be on their project in Spartanburg, SC. The public market market has yet to buy in. Greenidge stock is down 54% year-to-date. Long terms debt and environmental liabilities are weighing on the stock which commands a market capitalization of just $30 mm.
Another Bitcoin miner to brave the public markets in late 2021 was Stronghold Digital Mining. Cowen and B. Riley Securities priced a successful IPO for Stronghold in late October 2021. The stock briefly flirted with a $2 billion market capitalization when the Bitcoin correction began. Much like Greenidge, Stronghold is a vertically integrated power producer and Bitcoin miner. Stronghold never managed to execute on its vision. Stuck at 4.1 EH/s, Stronghold is using just 130 MW of its 165 MW capacity. The company reportedly has the ability to expand to 7+ EH/s. Stronghold boasts 750 acres of land and access to a 160 MW substation. Unfortunately the public market isn’t buying it. The $55 mm debt due in October of 2025 is weighing heavily on the stock price. Stronghold’s stock is down 46% year-to-date. The market capitalization has melted down to just $51 mm.
Originally listed on the London Stock Exchange in 2018, Argo Blockchain hired Jeffries and Barclays to list on NASDAQ in September 2021. Argo starved off bankruptcy in December 2022 by selling its largest facility and to Galaxy Digital for $65 mm and borrowing an additional $35 mm to pay of debt owed to NYDIG. At 2.7 EH/s, Argo today is the smallest of the three ugly ducklings profiled here. Despite suffering a 68% drawdown year-to-date, Argo still commands a $69 mm market capitalization. The company’s 8.75% baby bond, issued in November 2021, trades at a yield of 24%. The bond is down 20% year-to-date.
Where do we go from here ? TeraWulf was successful at restructuring its term debt. While the company raised dilute equity, shareholders have been supportive and the company’s stock is up 132% year-to-date. As it turns out, the market principally cares about EH/s growth potential and more recently, AI compute. Both Greenidge and Stronghold have laid out their growth plans. The question remains as to who will fund this growth. Both stocks offer significant upside, should Bitcoin rally and/or equity investors can be found to alleviate the burden of the debt overhang.
In the absence of a growth strategy, Argo’s baby bond appears to be the best risk-adjusted return opportunity in the capital stack.