Stronghold Digital Mining(US:SDIG)2023-11-14 21:53Financial Data and Key Metrics Changes - The company reported a potential to capture up to 100,000 tons of carbon dioxide annually, which could drive up to $30 million of incremental annual EBITDA if 45Q tax credits are received [37][49][60] - The current net cost of power is guided to be between $40 to $45 per megawatt hour, with potential reductions to under $25 per megawatt hour if 45Q tax credits are received [77] Business Line Data and Key Metrics Changes - The company operates two mining waste-to-power facilities with an aggregate power capacity of 165 megawatts, producing 800,000 to 900,000 metric tons of ash per year [34][43] - The ash produced can capture carbon at a capacity of up to 12% by starting weight of the ash, equating to approximately 100,000 tons of carbon captured annually [41][43] Market Data and Key Metrics Changes - The average index price for Puro Carbon removal credits in 2023 has ranged from approximately $130 to $190 per ton of carbon, implying potential annual proceeds of $13 million to $19 million assuming 100,000 tons of carbon captured [29][49] - The company is pursuing a listing on the Puro Registry, which is owned by NASDAQ, to monetize carbon removals in the private markets [45] Company Strategy and Development Direction - The company is forming a complementary business, Stronghold carbon capture, around the discovery that its ash can capture carbon dioxide directly from the atmosphere [35] - The company aims to leverage its existing facilities and technology to create a significant carbon capture project, potentially one of the largest in the U.S. by 2024 [28][62] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the carbon capture initiative, highlighting its potential to transform the cash flow profile of the business exponentially [59][81] - The company is focused on creating value through reclamation, power generation, Bitcoin mining, and carbon capture, all of which are seen as complementary [62] Other Important Information - The company has removed nearly 1.7 million tons of toxic mining waste from the environment since the beginning of 2022 [15] - The first direct air capture unit has been deployed at Scrubgrass, with testing currently underway [23][24] Q&A Session Summary Question: What is the project IRR for the capture initiative? - Management indicated that the project IRR would depend on the pace at which the ash is carbonated, with faster carbonation leading to lower capital expenditures [51][85] Question: What is the timeline for full deployment at both plants? - Management expects a full rollout at Scrubgrass over the course of 2024, assuming supportive data from initial tests [88][90] Question: What are the risks associated with the IRA and tax credits? - Management acknowledged political risks but emphasized that the IRA is currently law and has a long tail, making significant changes unlikely [106][129] Question: How will the Frontier agreement impact operations? - The Frontier agreement is expected to improve uptime and revenue generation significantly, with a projected revenue increase of $5 million to $10 million over the next 12 months [70][71] Question: What are the expected costs associated with carbon capture? - The capital costs for carbon capture are estimated to be between $50 to $125 per ton of CO2 captured, with the pace of carbonation being a key factor in determining costs [85][104]