Shares of Greenidge Generation Holdings Inc. closed below $2 for the first time on Friday. Indebted companies were embroiled in environmental debates and faced potential liquidity crises.
Recent securities filings show that the company’s debt has fallen due to a decline in the market price of Bitcoin, the company’s main source of revenue, and a rise in the price of natural gas used to fuel the Dresden power plant. The ability to meet repayment obligations is under pressure.
Greenidge issued the following warning to shareholders in its quarterly report last month. (10Q) To the U.S. Securities and Exchange Commission:
“While we believe that our efforts to implement options to improve liquidity will be successful so that we can meet our financial commitments for at least the next 12 months, we believe that these efforts will be successful. There is no guarantee that the may suffer significant losses.”
On the day of its SEC filing — August 15 — Greenidge common stock (NASDAQ: ticker symbol GREE) closed at $4.65. It has continued to fall since then, and on Friday he fell to $1.87 and closed at $1.94. In after-hours trading this morning, it recovered above $2. The stock is down 92% so far this year.
In its 10th quarter filing, the company said that in the second quarter (April 1 to June 30), the price of bitcoin fell 57%, while the price of natural gas rose 53%. .
Bitcoin has not recovered. It traded around $19,000 early this morning, down slightly from $19,608 on June 30th.
Greenidge derives most of its revenue from earning bitcoins through “proof of work” mining operations, where dedicated computers compete with other miners to solve complex problems. The company has borrowed heavily to buy the tens of thousands of advanced computing “rigs” it needs to compete in its energy-dependent business.
The power plants that power (and cool) these mining rigs are fueled by natural gas. The recent rise in the price of that commodity has eroded Greenidge’s profit margins.
Other Bitcoin miners suffer from the same combination of high energy costs and falling Bitcoin prices.
On Thursday, Midwestern cryptocurrency mining firm Compute North Holdings Inc. filed for bankruptcy protection after succumbing to a liquidity crisis. bloomberg.
and stock Terrawolf (NASDAQ: WULF), which mines bitcoin at a facility on the south shore of Lake Ontario near Somerset, is down more than 90% this year and more than 20% last month.
Greenidge’s financial challenges have received little attention in the widespread news coverage of its environmental controversy.
In June, the State Department of Environmental Conservation rejected The company’s bid to renew the state’s air emissions permit, which expired in September 2021, was made on the grounds that the factory’s operations violated the state’s 2019 climate law. The company disagreed and appealed within DEC. process According to Greenidge, that could take years.
Meanwhile, the company has never met a key condition of a 2017 state water permit that expires on September 30.That date is the federally mandated installation deadline fish screen Intake pipe of Lake Seneca. The company is not in a position to comply in time.
Judith Enck, a former Environmental Protection Agency official, has called for the Dresden plant to be shut down, citing regulatory violations. The Sierra Club and his Earthjustice law group recently report On the negative impact of proof-of-work cryptomining on climate, communities and public health.
DEC has allowed Greenidge to continue and expand its bitcoin mining operations despite permission issues.
The company says it continues to replace older mining machines with modern models, enhancing its technical capabilities to compete with other bitcoin miners. 301 Bitcoins in August287 in July, up from 621 in the three-month quarter ended June 30.
Greenwich has struggled to improve its financial liquidity while battling disputes over air and water permits.
Starting in late 2020, the company began borrowing heavily at relatively high interest rates to finance the purchase of its latest mining rigs in an arms race with other miners.
According to 10Q, the series of loans made from December 2020 to October last year totaled more than $30 million, with interest rates ranging from 15% to 17%. The company also raised his $72.2 million from his two 8.5% interest rate bond issuances in late 2021. Almost all of them maintain a substantial balance.
In March, Greenidge NYDIG ABL Up to $81 million at 13% interest. A few days ago, he had another loan of $26.5 million from 1 unit. B. Riley Financial On Aug. 10, that note’s due date was pushed back to June 2023, according to 10Q.
“Given current industry and economic conditions, our cash flow may not be sufficient to pay principal and interest on our debt and meet our other obligations.”
On September 19, Greenidge announced a proposal to sell up to $22.8 million of its common stock through another B. Riley unit and one underwriter.In a separate SEC filing explaining that “offering shelves” Greenidge warned that current investors could see their share of earnings “potentially diluted” as new shares are added, and the share price could fall. GREE’s stock has fallen 10% since his September 19th.
Because B. Riley Securities earns commissions from transaction proceeds intended to pay off the debt of B. Riley Principal Capital, Greenidge identified a “potential conflict of interest” in its SEC filings describing its public offering. Admitted. The filing also acknowledges that B. Reilly’s affiliates “may communicate independent investment recommendations, market color, or trading ideas” involving Greenwich shares.
In fact, the equity analyst and managing director of B. Riley Securities is the hottest marketer on Wall Street for Greenwich common stock.
Analyst Lucas Pipes began covering Gree stock last September. He issued a “buy” recommendation just days after B. Riley Principal Capital signed an agreement to sell his Greenidge common stock for up to $500 million.
When the stock was trading in the $25s for the month, Pipes told his clients that his price target was $78. When the stock fell to $20 a month later (last October), Pipes raised his price target to $82.
By April 25th, the stock had fallen to $6.40. The next day, Pipes lowered its target price to $42, but maintained the “buy” recommendation for clients.
On June 23rd, after the stock fell to nearly $3, Pipes lowered its target to $10, but maintained a Buy recommendation.
Pipes also advertises shares in Terawulf. In late March, when WULF stock was trading in his $9 range, he announced his price target at $24. On Friday he WULF closed at his $1.11.
Pipes did not return phone messages or respond to questions emailed Friday afternoon.
The common stock of Greenidge Generation Holdings is publicly traded on the NASDAQ market, but the company’s controlling shareholder is Atlas Holdings LLCa Connecticut-based private equity firm.
Atlas affiliates control approximately 90% of the voting power of the company’s share capital, according to Greenidge’s Sept. 15 SEC filing. As a result, Greenidge Generation Holdings qualifies as a “controlled company” which is exempt from certain NASDAQ corporate governance requirements.
Greenidge president Dale Irwin did not respond to an emailed request for comment Friday afternoon.
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