Greenidge Sounds New Alarms About Its Financial Condition in SEC Filing, Says Cash Expected to Run Out in March

DRESDEN, Nov. 15, 2022 — Greenidge Generation LLC reported a net loss of $23.1 million for the three months ended Sept. 30 and sounded new warnings about its bleak financial condition in a regulatory filing late Monday.

“We anticipate that existing cash resources will be depleted by (March 31),” the debt-laden company acknowledged in its latest 10Q report with the U.S. Securities and Exchange Commission.

“There is … substantial doubt about our ability to continue as a going concern for a reasonable period of time,” Greenidge added.

The company that operates a Bitcoin mining facility at its power plant on Seneca Lake also acknowledged a growing risk that the Nasdaq stock market will move to de-list its Class A common stock, which closed yesterday at 76 cents — down more than 95 percent for the year. 

The stock (Ticker symbol: GREE) was created last year after Greenidge completed a reverse merger with Support.com, a public company, in hopes of cashing in on market enthusiasm for Bitcoin. The cryptocurrency was valued at $48,000 when the merger closed in September. Six weeks later it was worth more than $64,000.

During that wave of excitement, Greenidge promised to expand dramatically its Bitcoin mining operation in Dresden. It borrowing heavily at high rates of interest to buy thousands of the latest computer “rigs” designed specifically to mine Bitcoin.

The company had counted on meeting its steep debt payments with surging revenues from Bitcoin mining. But those revenues have fallen far short of expectations for two reasons: Bitcoin’s market price tumbled below $17,000 this week, and the price of natural gas that fuels the Dresden power plant has soared. 

The company said its average cost of natural gas for the first nine months of the year was 121 percent higher than the same period last year.

Greenidge Bitcoin mining revenue for the third quarter (July-September) fell to $18.3 million, down from $31.1 million in the same period in 2021.

As of Sept. 30, the company had $176 million in long term debt, and $88.6 million in principal and interest payments due within the next 12 months. 

The company’s reported cash dropped from $82.6 million at the beginning of the year to $38.5 million Sept. 30. And it’s expected to run out entirely by March.

Greenidge’s common shares have fallen steadily from $4.65 on Aug. 15, the day the company filed its second quarter 10Q with the SEC, which provided the first hints about its ability to continue as a “going concern.” 

The shares closed below $2 for the first time on Sept. 23, the day Greenidge announced the abrupt resignation of Jeff Kirt as CEO. They hit an all-time low of 62 cents last Wednesday.

Kirt was immediately replaced as CEO by Dave Anderson, a former forest products executive from Canada.

Anderson emphasized the positive in Greenidge’s formal release yesterday:

“Our third quarter results demonstrated our consistently strong operational performance, as we increased our Bitcoin production by 39 percent over the second quarter’s production due to our focus on miner uptime, coupled with the reliability of controlling our own power afforded by our vertical integration,” Anderson said. “The prolonged crypto winter that has impacted our industry has caused us to reassess our expansion plans while we work to improve our liquidity.”

For the three months ended Sept. 30, Greenidge mined 866 Bitcoin, up 39 percent from the 621 mined in the previous quarter. But the rising cost of fuel needed to power the mining rigs has eroded net Bitcoin revenues. 

Other Bitcoin miners have been struggling. For example, Compute North Holdings Inc., Midwest miner, has filed bankruptcy, while Terawulf Inc., which operates a Bitcoin mining facility on Lake Ontario, has seen it stock fall to $1.25, down more than 90 percent this year.

Until recently, Greenidge’s financial struggles have been overshadowed by the environmental controversies it has stirred.

In June, the state Department of Environmental Conservation denied its bid to renew its Title V air emissions permit. Greenidge is allowed to continue operating while it appeals, a process the company expects to take years.

Meanwhile, the DEC renewed the company’s water discharge permit after the company failed to meet a key provision of its old permit. It had been required to install fish screens on its huge coolant water intake pipe. The DEC has extended the installation deadline until January. The company said in its latest filing that it expected to comply.

Meanwhile, several environmental groups pressed Gov. Kathy Hochul this week to promptly sign legislation that would place a moratorium on permits for new proof-of-work cryptocurrency facilities that are powered by fossil fuels. 

The bill’s intent is to prevent others from copying Greenidge’s business plan because its heavy energy use and greenhouse gas emissions clash with the state’s 2019 climate law.

The bill, sponsored by Assembly Member Anna Kelles (D-Ithaca) and Sen. Kevin Parker (D-Brooklyn) passed both chambers of the legislature months ago.

The Sierra Club, Seneca Lake Guardian, EarthJustice and New York City Public Advocate Jumaane Williams, among others, issued press releases calling on Hochul to act promptly. She won her first full term as governor in the election Nov. 8.

“Over the summer, Governor Hochul signed 600 bills, but most recently, when asked about whether she planned to sign the cryptomining moratorium bill, (she) hedged, saying “we have a couple weeks,” Williams said in a release Monday.

The bill also requires the DEC to conduct a generic environmental impact statement for cryptocurrency mining in the state. That would create a data base of mining operations, including the type of fuel they use and the amount of energy they require.

A recent report by NYFocus suggested that the cryptocurrency industry is far more concerned with the environmental impact statement than the mining moratorium.