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Despite the miss, the analyst remains bullish on Stronghold Digital, citing Miner’s low costs

The bitcoin miner’s shares fell more than 30% after the company failed profit projections and announced it will miss its 2022 hashrate target.

Stronghold Digital (SDIG), a bitcoin miner that runs on waste coal, is one of the lowest-cost miners and is anticipated to overcome its short-term difficulties, according to an analyst at investment bank Compass Point.
“While the near-term issues have impacted our estimates for SDIG, the company remains one of the most cost-effective BTC miners in the United States, and we believe the management team’s experience operating power assets will enable it to overcome the Scrubgrass facility’s challenges,” analyst Chase White wrote in a research note.

The miner’s stock fell more than 30% post-market on Monday and was down a similar percentage on Tuesday morning, to $6.92, after the business disclosed fourth-quarter sales and earnings that fell far short of analysts’ consensus estimates. Additionally, Stronghold stated that it will fall short of its initial objective of achieving 8.0 exahash per second capacity by the end of the year.

According to Compass Point’s White, the shortfall was mostly due to significantly lower capacity utilisation and increased costs at its Scrubgrass power facility in Pennsylvania. Uncertainty surrounding the acquisition of new miners by MinerVa.

White reduced his 12-month price objective for Stronghold to $30 from $41, but maintained a buy rating.

Ahead of the company’s March 29 earnings release, an analyst with Wall Street investment bank DA Davidson cut his price objective for Stronghold by 40%, citing slower-than-expected operational success to far and supply chain problems.


Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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