Stronghold Digital Mining Restates Financial Statements Due to Revenue Recognition Error

On December 10, 2024, Stronghold Digital Mining, Inc. (NASDAQ: SDIG) announced in an 8-K filing with the Securities and Exchange Commission that the company will be restating its unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2024. This decision comes following a 14-month review process by the SEC.

The restatement is necessary due to an error in the company’s revenue recognition policy concerning Bitcoin miner hosting contracts with two customers during the aforementioned periods. Although the error was previously corrected in the original Form 10-Q, it was noted that the cumulative impact of this correction for the first and second quarters of 2024 was not recorded at that time.

The impact of this error on the company’s financials includes a decrease of $3,145,003 in cryptocurrency hosting revenues and equal but offsetting changes in realized gain on the sale of digital currencies (increase of $3,257,827) and unrealized gain/loss on digital currencies (decrease of $112,824) for the three and nine months ended September 30, 2024.

Due to the disagreement by the SEC regarding the materiality assessment and correction of the error, Stronghold Digital Mining, in consultation with advisors, has determined that the original Form 10-Q should no longer be relied upon. Consequently, the company will be correcting the error by filing an amended Quarterly Report on Form 10-Q/A concurrently with the 8-K filing.

As a result of the restatement, Stronghold Digital Mining identified a material weakness in its internal control over financial reporting and concluded that its disclosure controls and procedures were ineffective as of September 30, 2024. The corrective actions and future plans to address this material weakness will be detailed in the amended Form 10-Q.

Investors are advised to monitor further developments closely, as the company addresses the implications of the restatement and takes steps to enhance its financial reporting controls.

The 8-K filing also contained cautionary statements regarding forward-looking information, including potential risks associated with the proposed merger between Stronghold and Bitfarms, directing investors to review all relevant documents filed with the SEC for a comprehensive understanding of the merger and its potential impacts on both companies.

It is critical for shareholders and stakeholders to follow updates on the restatement and any subsequent disclosures to ensure a clear understanding of Stronghold Digital Mining’s financial standing and future prospects.

This article was generated by an automated content engine and was reviewed by a human editor prior to publication. For additional information, read Stronghold Digital Mining’s 8K filing here.

About Stronghold Digital Mining

Stronghold Digital Mining, Inc, a crypto asset mining company, focuses on Bitcoin mining in the United States. It operates in two segments, Energy Operations and Cryptocurrency Operations. It also owns and operates coal refuse power generation facilities; and provides environmental remediation and reclamation services.