What happened
Shares of the Bitcoin miner Stronghold Digital Mining (SDIG -0.55%) had dropped nearly 34% as of 10:13 a.m. ET after reporting disappointing earnings results for the fourth quarter of 2021.
So what
Stronghold reported a net loss of $0.52 earnings per share on total revenue of more than $17 million for the three months ending Dec. 31, 2021. Earnings significantly missed analyst estimates for the quarter of $0.04 earnings per share, although revenue came in slightly below estimates.
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"Over the past few months, we have faced significant headwinds in our operations which have materially impacted recent financial performance and have led us to reassess our near-term growth plans," Stronghold's CEO Greg Beard said in a statement.
Specifically, Stronghold had been targeting a hash rate of 8 exahash per second in 2022. Now, the company is only targeting 4.1 exahash per second. Bitcoin mining is all about computational power because to successfully mine a bitcoin, a company has to solve a cryptographic puzzle incredibly quickly. The exahash-per-second rate plays a big role in determining how many Bitcoin per day Stronghold can mine.
Now what
As Stronghold wrote in its earnings report, "delays in miner deliveries and datacenter buildout, along with operational challenges at the Scrubgrass Plant, have negatively impacted the Company's 2022 cash flow and capital expenditure expectations."
The stock is crashing even as the broader crypto market has been on a nice run as of late and it looks like Stronghold has all sorts of issues to work out, so I'm certainly staying away from this stock right now.