Q4 2023 Stronghold Digital Mining Inc Earnings Call
Participants
Alex Kovtun; IR; Gateway Group Inc
Greg Beard; Chairman & CEO; Stronghold Digital Mining Inc
Matt Smith; CFO; Stronghold Digital Mining Inc
Lucas Pipes; Analyst; B. Riley Securities Inc
Joe Flynn; Analyst; Compass Point Research & Trading LLC
Kevin Dede; Analyst; H.C. Wainwright & Co LLC
Presentation
Operator
Good morning, and welcome to Stronghold digital mines conference call for the fourth quarter and full year ended December 31, 2023. My name is Towanda, and I will be your operator this morning before this call, Stronghold issued its results for the fourth quarter and full year of 2023. Any press release, which is available in the Investors section of the Company's website at w. w. w. dot Stronghold digital money.com. You can find an link in the Investors section at the top of the homepage joining us on today's call are strong host, Chairman and CEO, great beer and CFO, Matt Smith. Following their remarks, we will open the call for questions.
Before we begin, Alex Compton from Gateway group will make a brief introductory statement. Mr. Copeland, please proceed.
Alex Kovtun
Great.
Thank you, operator. Good morning, everyone, and welcome. Today's slide presentation along with our earnings release and financial disclosures were posted to our website earlier today and can be accessed on our website at w. w. w. dot Stronghold digital mining.com. Some statements we're making today may be considered forward-looking statements under securities law and involve a number of risks and uncertainties. As a result, we caution you that there are number of factors, many of which are beyond our control, which could cause actual results and events to differ materially from those described in forward-looking statements. For more detailed risks, uncertainties and assumptions relating to our forward-looking statements, please see the disclosures in our earnings release and public filings made with the Securities and Exchange Commission. We disclaim any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law, we will also discuss non-GAAP financial metrics and encourage you to read our disclosures and the reconciliation tables to applicable GAAP measures in our earnings release carefully. As you consider these metrics, we expect to file our annual report on Form 10-K on or around March eighth, 2024, with the Securities and Exchange Commission, which sets forth detailed disclosures and descriptions of our business as well as uncertainties and other variable circumstances, including but not limited to risks and uncertainties identified under the caption Risk Factors. You may access Stronghold Securities and Exchange Commission filings for free by visiting the SEC website at www.SEC.gov for Stronghold Investor Relations website.
At ir dot Stronghold digital mining.com.
I would like to remind everyone this call is being recorded and will be made available for replay via a link available in the Investor Relations section of strongholds website.
Now I would like to turn the call over to Stronghold Chairman and CEO, Greg Peters.
Greg Beard
Greg.
Good morning, everyone, and thank you for joining us on our fourth quarter and full year 2023 earnings call. We will be referencing an associated slide presentation throughout the call that is available through the webcast and on the Investor Relations section of our corporate website.
Let's start on Slide 3. I will say this on every earnings call until it's no longer true Stronghold is the only environmentally beneficial and vertically integrated public bitcoin miner can own and operate two mining waste to power facilities in Pennsylvania, scrap brass and Panther Creek, with aggregate capacity of 165 megawatts through our process scrubbed grass and Panther Creek and removed an estimated 30 million tons of toxic mining waste from the environment from nearly 100 different sites. Today, we operate over 40,000 bitcoin miners with 4.1 extra hash of hatchery capacity. While we are thrilled to surpass for excess cash, we believe that we have significant runway to continue cash rate growth within our existing infrastructure by high-grading our fleet as a vertically integrated bitcoin miner, we have a unique and substantial asset base with significant potential for complementary revenue streams in November we announced our carbon capture project, which is simply an extension of our reclamation process. We are excited about the progress we have made on this project over the last few months. We believe that we can capture up to 100,000 tons of CO2 annually at baseload capacity utilization of our plants as discussed in our December presentation.
Moving to slide 4, over the past year and a half Stronghold executed on its plan to grow hash rate to four extra hash with high capital efficiency. And we plan to continue adding hash rate in improving our fleet efficiency opportunistically, we have over 40,000 energized slots, and these slots could support more than seven extra ash of mining with a high-graded fleet of latest generation miners, we are exploring various avenues and structures to grow into this capacity.
Looking at our fleet, the average efficiency for our 2,500 for these efficient miners exceeds 40 joules per Terra and our next 10,000 feet deficient miners are approximately 37 jewels per Terrace. That's low hanging fruit and just replacing those miners with latest generation miners could yield hash rate capacity of over 5.3 extra ash. So we think that the hydrogen opportunity is very attractive.
We also remain focused on improved uptime at our data centers have been working closely with the Frontier mining team since October two and a half enhance our data center operations going into having in April, this partnership has been a success as evidenced by our recent achievement of approximately 3.9 extra hash operating hash rate.
Moving to Slide 5. As the having approaches, we continue to focus on liquidity and debt service obligations. As of February 29, we had over $10 million of liquidity. So current liquidity more than covers the $6.5 million in 2024 mandatory amortization associated with our white hot notes from the $1 million of remaining committed minor CapEx. And importantly, our operations are generating cash flow with over $5 million of adjusted EBITDA projected for the first quarter, further enhancing our resiliency.
Moving on to Slide 6 to discuss bitcoin market dynamics. Following the approval of bitcoin ETFs from January, we have seen a significant rise in bitcoin price and half-price bitcoin has set a new all-time high in ash prices, around $0.12 per ash. There had been $8 billion of inflows into the ETFs, which averages nearly 6,000 bitcoin per day, 6.5 more and what is mined daily. So we view the recent run-up in bitcoin price as a result of the mismatch in supply with the price run-up continue. While we won't take a view on inflows representing potential demand, the halving will impact the supply side of the equation, which all else equal is quite constructive.
For future bitcoin price.
Moving on to Slide 7. Owning our own power assets gives us a lot of optionality as electricity is the largest variable cost to mine because it enhances our ability to be responsive to changing market conditions. When power prices are high, we turn off our miners and sell to the grid when prices are lower than bitcoin mining economics were higher than variable fuel costs. We use the plants to power our miners and when power prices are lower than our variable plant costs, we turn off the plants and import electricity to power our miners power prices in our region are currently very low with the forward curve for the remainder of 2024, averaging around $30 per megawatt hour while low power pricing is a trend broadly forward. Curves in PJM are generally the lowest in the country right now. This is great for us because it gives us the flexibility to opportunistically import electricity from the grid to power our miners and unit, you can expect to see us do just that.
Moving to slide 8, on the other side of the equation. The PJM grid is extremely vulnerable over the medium to long term. Renewable energy sources like solar and wind are great because they're clean. But the unfortunate reality is that they generate power intermittently, replacing stable baseload generation with intermittent generation, severely threatens the stability of the grid. This is becoming very clear in PJM by its own accounts, 40 gigawatts of baseload thermal generation is expected to be retired by 2030. This is over 20% of current PJM generating capacity. On top of this, nearly 95% of power generation projects in the PJM queue already renewable, and it takes multiple megawatts of renewables to replace each megawatt of baseload generation. As a result, at the current rate of development, PJM believes that the new projects will not be sufficient to keep up with demand growth and the expected plant retirements by 2030. The implied outcome here is extreme volatility and market tightness in the medium to long term, making existing baseload assets like scrap grass and Panther Creek highly valued.
Moving to Slide 9. Since announcing our carbon capture project in November, our team has made significant progress, improving our enhancing and validating our process. Recall that our initial third party testing indicated that our scrub grass ash could capture carbon at a capacity of up to 12% by starting weight of the ash. Our recent tests from our first couple that have demonstrated that up to 14% is achievable. We recently partnered with the Pittsburgh Mineral & Environmental Technology Lab was assisting with more enhanced lab analysis, further improving and reinforcing our process. In early February, we announced that we have begun constructing our second cover of this with our partners Cabometyx. This carbonless is now up and running and scrubbed press inclusive of design enhancements and we expect will increase airflow and carbonation and reduce cost and construction time his second cover that cost is about $33,000 in materials, representing significant savings from the first couple of years. And we expect to continue to reduce costs as we scale.
As we mentioned on our last earnings call, our team has been working closely with carbon dynamics since September to list our project on the pure registry, the world's first registry for engineered carbon sequestration projects to monetize our carbon renewables in the private market. We are excited to announce that pure earth registry registered the scrub rest facility in late February and the Company will now undertake the REO process, which is the next step towards generating carbon capture related revenue. We are now embarking on the audit process in Piura and our goal is to have an accredited carbonated materials project as early as the end of the second quarter. We expect to have further updates on this project, including timeline for meaningful monetization and related milestones in the next few months.
With that, I would like to pass it over to our CFO Matchmind.
Matt Smith
Thank you, Greg. Moving to slide 10, we continue to believe that Stronghold is significantly undervalued on an absolute basis and acutely So relative to public bitcoin mining peers when looking at select valuation metrics, adjusted EBITDA, hash rate capacity and adjusted EV to annualize January pigment production, strong oil trades at an approximately 70% discount to peers. I have nothing else to add. Lastly, on Slide 11, revenue for the fourth quarter was $21.7 million with $20.5 million from cryptocurrency operations on 599 bitcoin mined at $1.2 million from energy operations. GAAP net loss was $21.2 million for the fourth quarter and adjusted EBITDA was $2.3 million. A reconciliation for those figures is included in the appendix.
I will now turn the call back over to Greg for closing remarks.
Greg Beard
Thanks, Matt. To summarize what we've discussed today, we are executing on the objectives we have communicated to the market. We remain confident in the strength of our business going into happening, and we believe that we have outstanding growth prospects through high-grading our fleet and developing carbon capture. With that, we'll open up the call for Q&A. Operator?
Question and Answer Session
Operator
Thank you. Ladies and gentlemen, as a reminder, to ask a question, please press star one one on your telephone and then wait to hear your name announced To withdraw your question, please press star one one. Again, Please standby while we compile the Q&A roster. Our first question comes from the line of Lucas Pipes with B. Riley. Your line is open.
Lucas Pipes
Thank you very much, operator. Good morning, everyone. I have really wanted to do two ask a few questions on Slide 4. We show that on column with additional opportunities a few a few questions there. First off, what type of machine should we be thinking about what would a reasonable cost or CapEx range be for that? Or is that included in the guidance, I don't think so. But I would appreciate your perspective. And then I have a few more follow-up question.
Greg Beard
Yes. So I think we're thinking about it in terms like the generic latest-generation minor that you can still buy. So we're not looking at the next generation to the current latest generation. So something like a bit main that's 21 in terms of the market for these machines changes really weekly. And in the past, we've been very opportunistic about how we've managed to fill slots, whether it be just buying machines out, right, JV-ing on machines just to just to improve the capital efficiency and to get a very high ROE. And so I think at the at current prices, market prices you'd say, hey, to fill up all the slots would be around $20 million at current rates. We think obviously the rates are going to be potentially materially different post having some And as always, we're trying to do better than than down the market in terms of what we spend and how we structure.
Lucas Pipes
Thank you, Greg, what When would you make a decision on deploying additional capital there?
Greg Beard
You know what I think we would once you give us say a quarter to present what we what I want to do in the pace of that on potential repowering of the data center or E, are we replacing all of these our miners with more and more miners. So I think we're not ready to be specific with dates and times yet on those not just really a function of them, making sure that we're opportunistic to achieve the best pricing and rates of return on that equipment.
Lucas Pipes
Got it. Do you have a site in mind?
Greg Beard
Yes, I think we have we've only got two sites scrub resin, Panda Creek. So I think you can expect it at all plants.
And just to be clear, at current current pricing, it's $20 million per accident hash machine, just in case that was missed.
Lucas Pipes
No to Thank you. Thank you for that.
So look, I think.
Matt Smith
Yes, Lukas, I would just add, I think I think there is some as we've been carefully observing industry peers, announcing growth projects that are significant kind of greenfield builds for that require extraordinary time lines and future delivery schedules. What we're what we're trying to focus you on is the fact that we've looked at third sites and we've looked organically at our own existing 41,000 slots. And we have a number of at our Tier one Tier two Tier three miners in terms of stratifying by efficiency and if you were to take the least efficient miners and high-grade does into what's called an S. 21 type miner, which could utilize existing plugs that are energized, you can get to seven X ash plus. And so and identifying that that's an opportunity is not a commitment to I spend money to do that. But we've demonstrated various actually very creative ways filling slots in the past, and we think there are a lot of opportunities to build. But to do that without I'm stretching forward. So the fact we have seven exact capacity in the existing data centers is the message.
Lucas Pipes
Got it.
I appreciate that in kind of switching topics. If obviously, power price environment has been very soft and you noted your flexibility to toggle between your own generation and purchasing power. Could you speak a little bit to what your costs are when you produce in house today at Pentair and scrub grass and And Tom, what kind of what the utilization rate of the plants is expected to be at this in this price environment?
Greg Beard
Yes.
So this is just a nice like reminder of the strength of the stronghold business model, which is, hey, if power prices are super high, we can quickly turn the data centers off and divert all of that power to the grid. And conversely, when power prices are low and by low, we have lowered our variable cost to make power we can and we wouldn't do it on a single day. But it's expected to be low four weeks or a month. We can turn the power plant off. So right now we're saying that we're expecting costs to average between $40 or $45 per megawatt hour to make the power. And you looked at the forward curve for power expected power pricing in PJM, it's one of the lowest power markets in the US. And so that's that decision to come to buy power instead of make it becomes when we see power in the 20s or below, which is where we're seeing it now seasonally. So I think, Tom, you can expect us to just make the economic decision to buy the power at a cheaper cost than we can make it, which is there's a if there is a spot in the middle where it makes sense to run the plants and supply all that power of the data centers. But now we're looking like if the curve ends up playing out as it as it's priced, will run at least scrub brass seasonally rather than off time and then buy power for a lower price. You can make it, which obviously will end improve our margins.
Lucas Pipes
Thank you very much, Greg. Really appreciate the color and best of luck. I'll turn it over for now.
Greg Beard
Yes.
Okay.
Operator
Thank you. Please standby for our next question.
Our next question comes from the line of Joe Flynn with Compass Point Research & Trading, your line is open.
Joe Flynn
I guess I wanted to dig a little bit more on on your strategy going into H2, I guess I'm $30 megawatt hour. It's produced strong prices from a marginal cost standpoint, machines on. But I guess in the event, we don't see correction of hedge prices and you kind of see it sub $0.05 level in the months, like how do you how you're going to manage the balance sheet and growth, your ambitions to ultimately place?
Yes.
Yes, yes.
Greg Beard
Yes, I hey, I think we have the benefit of not having to be making debt amortization payments, and we have no or very, very small obligations on CapEx today. So we are in right now today, we're generating cash. And so and if you looked at our at the potential for the improvement in efficiency of our mining fleet. And you're going to have to we need to outlay the market, what the what a realistic time frame to do that, which we will do. But I think the best response they're having in our view is to drive power costs as low as you can. That's really the most important variable that we can control. And just happily, luckily, we have a power curve and it allows us to do that. So we're going to end up with with lower power costs and what we would have modeled a quarter ago, given where the curve it moved just related to natural gas pricing being so cheap. But I think if you if you were to study our balance sheet and our obligations there purposely low due to having to let us get to the point where we should be able to begin to spend to upgrade the fleet on time.
Which will give us a benefit on top of having a extremely low power price. I think also at some point, they were making a lot of progress on carbon capture and that project is really designed as well to give us an even lower power price sort of on a net basis for that. So that say, that's one of the reasons that we continue to focus on on carbon capture as a as a benefit to the Company.
Joe Flynn
Thanks that that's helpful. And I wanted to dig more into the Houston business. Have our demonstrated strong results. But I guess just what do you think the outlook is there? I was wondering if you could pursue additional opportunities on that front and on maybe the overall advantages to kind of your model versus your traditional hosting model?
Definitely struggled over the past two years. There's a lot of industry talk. I talk about the holiday mile going away I guess, how are you guys positioned in that?
Greg Beard
Yes. So I think we're we think we have a good relationship with our partners, and I think you're really unlikely to see us enter into what I would just kind of like a regular way of hosting while we run somewhere else is minor and sell them power, we strongly prefer the model we share a significant amount of the the bitcoin mining revenue with our partners. So I think I think we'll expect them to continue in some way. And if we are, I think I would view that as one of the opportunistic ways to drive the efficiency to better play from the miners is through expanding our JVs with our existing and new partners, something it's a thing that we don't we don't we're not expecting any immediate changes to the the JV structures.
Joe Flynn
Dave has often said that you.
Greg Beard
Thank you.
Operator
Thank you. As a reminder, ladies and gentlemen, that's star one to ask the question. Please standby for our next question.
Our next question comes from the line of Kevin Dede with H.C. Wainwright. Your line is open.
Kevin Dede
Thanks, hi, Greg, Matt, thanks for having me on. Greg, kind of a I guess, sort of a broad one. I was hoping you would take some time to walk walk me through anyone else. I was curious on on on the carbon capture and the balance of now that you're seeing 14% recovery, a lower cost to deploy the carbon list and the balance of running the plants to generate the ash and the expected revenue off? It's a big question. I know that you're expecting accreditation are on Piro next quarter, which means conceivably you could see revenue in the third quarter. At what point do you think you can just run both plants all out regardless of the PowerCurve?
Greg Beard
Yes, sort of I can't. That's that's what you're describing is absolutely the goal. And I would say the last three months has been a bit better than confirmatory because it's when you're driving the rate of carbon absorption up. And not only is the is the is the upper potential had moved up and the rate that the Ashes carbonated has moved up. So the not only is it going to require fewer cargo lifts to get the same job done on the cost of this cordless is coming down and labor is coming down. So we're really I think we were very conservative in the early days and I sort of late last year describing the potential of the project, but it's still in a while, and we've made a ton of progress. And every on every assumption has proven to be conservative on so far, but it's still too early. It's still too early to spike the football and say, hey, we're going to have extra more carbonless fully deployed and generating some X amount of revenue related to that sequestration. I think that should happen. I would expect that we'll be in a position to do that in the next quarter. But I think we've got it. We're still testing some just literally dozens of tests a week from now on. Now we're testing this newly redesigned the cover live, never to that as a increased airflow. So I think it's from our vantage point, I think when when we see a plateau in the testing results and we've sort of iterated to the best cargo lift design that maximizes airflow and carbonation. And that also minimizes the CapEx build-out cost. That's when they'll say, hey, now we're ready to do to go ahead and do the build-out. And at that point, we'll describe what the CapEx costs are and what we think we can can sequester. But you're right, the reason to be excited is that this is a revenue stream that when looked at on a on a an offset for power costs, it's going to meaningfully drive the the revenue up and the sort of the average cost per megawatt down, which is that that was the which we've always said that that's even more important than deficiency of the achieves a low power cost. So that's what we're driving toward. So I think it fits standby, give us some give us a, you know, a quarter to continue to refine our results and designs and with those results and designs, we can have accurate CapEx estimates, inaccurate timeframes on share. And I think on the we also disclosed, we are now listed on the bureau registry and I guess they've now begun their quote auditing process, but I think make no mistake about it. This will be a big year for carbon capture and at least at scrubbed graph this year. So that's that's the sum and hopefully will in the next quarter have specifics to share as well. So I'm sorry, we can't tell you exactly per unit and everything. But that's a I can say. We did all that math in December on a hypothetical basis, and it is materially better than what we had initially thought in terms of CapEx speed to carbonate and a new rate of absorption. So let us.
Kevin Dede
Okay.
And finally, you know, I appreciate the color. No need to apologize. Understand. It's a very dynamic situation appreciate all the effort there understand.
Greg Beard
We didn't know that it would we just we just don't want to we don't want to go backward and say, hey, we promised X percent or whatever costs and have it be --
Kevin Dede
No, I completely completely understand. There's been enough of that. Maybe maybe a little more insight on associated revenue timing if you are registered by the end of the second quarter as the press release intimated, would that is it fair to assume you could see revenue in the third quarter? Maybe give us a little more insight on that? How are you looking at it?
Greg Beard
Yes, I would say if we get on the registry we could what we'd hope to do is so our carbon credits in the private market and on a forward looking basis. So I'd say once we have our science and we're confident we can share that with potential buyers of carbon credits and are on the exchange and audited. And I guess then transactable in this way, that then opens up the ability for us to sell if we could sell out then the a certain number of credits and deliver those as we build the project down. So I think it's absolutely right. I think I think if there is a benefit to being on a registry it's fit on and have the process fully vetted out and we can then sell credits before we generate them with an expected time line to deliver them well before we aggregate it in the forward market.
Kevin Dede
Okay.
Okay.
That sounds good. Another topic I think has to do with the mention of Champion. Could you just help me understand how champion interfaces between you and PGM. and how you see them helping to deliver those lower power power prices to you before carbon capture, as you know, fully up and running at both plants?
Matt Smith
Hey, Kevin, it's Matt. So we I would refer you back to our just our December on the press release. And when we when we mentioned that we have been through we've been through deep discussions, constructive discussions with PJM around our data center load banks, co-located the plants. And we have been over the course of the last few months purchasing retail electricity. And when you are in that market from this is when the when the plant is not on which we're working on December, Panther Creek had an outage that we've since come out of and it's been running well. But during that period of time, we were purchasing retail electricity. And at times the the ad or the premium to wholesale can be onerous, which I think you can see in the fourth quarter and fuel and important, our cost Fast Forward, we wanted more visibility and more flexibility when you go into the shoulder here on what was a very warm February natural gas prices are at [$50, $75] versus a year ago when they were twice that. And it's the marginal fuel market. And so we expect single digit to $20 real-time prices in the shorter, potentially, notwithstanding any we have Ukraine, Russia type of real structural items, and you want to be able to purchase power at as low of a cost in real-time markets as you can during that period. And so we have been working on competitive supply agreements for a while to make sure we have ultimate flexibility. And we're very grateful with so to have Calpine Champion Energy Park, Alpine stepped into that role, and we're very excited about the reduced cost of power that will absolutely result from that during periods when we're importing. So that's it's a pretty big, but it will result in a pretty big savings for us.
Kevin Dede
Okay.
So So looking out, we should assume generally, right generally that you're running both plants sort of sort of peak times excess past winter, but maybe through the summer and then off on the shoulder months. Is that a fair assumption, at least for the next year or so?
Matt Smith
If so we are going to run scrubbers, I would say more or less the base cases as a peaker or more than that, depending on carbon mean as we start to monetize carbon potentially and perfect, our design carbon, could it be a step-change in the scrub rest cost of power. But right now, as we're looking at it, the peak price for power the rest of the years in July at 50 bucks ish. And so in that case, you can buy power well below your marginal fuel cost. You do it on this discovery has probably runs as a peaker and Fanta Creek is likely to run as a baseload continue to run as a baseload plant for throughout the year, aside from some potential plant outage time that we're not is not yet in the calendar.
Kevin Dede
Okay.
Any immediate plans to drive the carbo lifts at Panther. Given that you'll have continuous supply of ash.
Matt Smith
You would say we're still switchgrass is nearest term on due to the really high limestone calcium element of the CFV. process there. Once we perfect scrubber asked where we started and we start, we're starting, it will move over to Panther. We don't really see any reasons why why Pandora can't scale as well. But we need to go over and further test the ash, the byproduct beneficial at SaaS. And then ultimately, we can potentially scale both plants so that I would just describe Ross's near term focus because it's it's already started and we have 600 plus acres and there are a lot of benefits, including a very calcium rich nature of the ash. And so we're going to scale as Congress first probably and then move over to standard.
Kevin Dede
Yes, I understand the agri and Grand demand on capital, that's the hinge. But have you considered other sites? Any change in your thinking on that? And if so, what type of time line might you consider?
Greg Beard
Yes.
I think we're on it. We're always looking at other sites and comparing what we have today, does it make sense to us to high-grade our fleet at our current sites? Or should we look at a at new sites, we're constantly sent opportunities review on new sites, but I think the cost of our power is lower than what most of us think that you'll be seeing could achieve. So I think there we have we have no pending or announceable new sites at this point. But we are we are constantly reviewing.
Kevin Dede
Okay.
Fair enough.
I'll hop back in the queue, Greg, Becca.
Operator
Thank you. As a reminder, ladies and gentlemen, that's star one. Wanted to ask a question. Please standby for our next question. We have a follow-up question from the line of Lucas Pipes with B. Riley. Your line is open.
Lucas Pipes
Thank you very much, operator, and thanks for taking my follow-up question, Greg, there's a lot of talk about shortages of power and given demands not only from bitcoin mining but also AI applications. To what extent are you receiving inbound given your direct access to power and land package.
Thank you very much.
Greg Beard
Yes, I would say we do have interest from inbound enough, but I would say the from the recent run-up in bitcoin price and hash price. It's an attractive business to run right now. We'll see what happens post others having dash price and Bitcoin price. But I think if Bitcoin or to be now outlawed from the earth there is there are multiple purposes for you have 40,000 fully built-out plugs that have a computing capacity available given what's happening in the world of AI as well so that we are we're confident that the all of the infrastructure that we were running that we built with access to the power and that, that redundancy is a valuable infrastructure assets.
Lucas Pipes
Thank you, Matt. A quick quick question on the whiskey, the Tango slide. If you've been in public markets for a long time, how do you explain these discrepancies? What would be keen to get your take on.
Thanks.
Matt Smith
Yes. So I want to avoid speculating, but I think what is what's interesting is that it's a business where it's an industry and the stock market where people can buy ourselves every day and that that can happen in any sort of way. And when you think about the reasons and past potential execution issues or even in our leverage, which we're we've shipped some of that away at some and are optimistic about some really about escape velocity with cash flow related deleveraging against that debt that there are a lot of reasons to be optimistic and there's hard asset value here that is on is absolutely in our view, not recognized by the market in terms of our plants and the carbon opportunity. And so I can start to step through the different on attributes of Stronghold compared to other peers on there's some scale related things or some kind of take daily trading volume and size size related matters. But in the end, it's a commodity industry where there should not be large disparities other than adjusting for operating and financial leverage and some other nuances between businesses and so to trade at a 70% or 80% discount to peers who are in the same business, it doesn't make any sense on. And so what question is what's going to close that, and I'll just leave that to you all to ponder, but we're working on it. So I'll just leave it at that.
Lucas Pipes
I appreciate it. But again, best of luck. Thank you.
Matt Smith
Thank you.
Operator
Thank you. I'm showing no further questions in the queue. That concludes the question and answer session. I would now like to turn the call back over to Mr. Bennett for closing remarks.
Greg Beard
Okay.
A. stockholders, investors, strong employees. Thank you for all the effort. Thank you for the faith where we're doing our best and we are optimistic about our prospects given the business model and we will see you next quarter. Thank you.
Operator
Thank you for joining us today for Stronghold earnings call.
You may now disconnect.
