SecProbe.io

United States securities and exchange commission logo
April 23, 2024
Matthew J. Smith
Chief Financial Officer
Stronghold Digital Mining, Inc.
595 Madison Avenue, 28th Floor
New York, NY 10022
Re:Stronghold Digital Mining, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2022
Form 8-K, Furnished November 14, 2023
Form 10-K for the Fiscal Year Ended December 31, 2023
File No. 001-40931
Dear Matthew J. Smith:
            We have reviewed your April 5, 2024 response to our comment letter and have the
following comments.
            Please respond to this letter within ten business days by providing the requested
information or advise us as soon as possible when you will respond. If you do not believe a
comment applies to your facts and circumstances, please tell us why in your response.
            After reviewing your response to this letter, we may have additional comments. Unless
we note otherwise, any references to prior comments are to comments in our March 29,
2024 letter.
Form 8-K, Furnished November 14, 2023
Exhibit 99.1
Use and Reconciliation of Non-GAAP Financial Measures, page 13
1.We continue to evaluate your response to prior comment 5 of our February 21, 2024 letter.

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Stronghold Digital Mining, Inc.
April 23, 2024
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Form 10-K For the Fiscal Year Ended December 31, 2023
Notes to Consolidated Financial Statements
Note 1 - Basis of Presentation and Significant Accounting Policies
Crytocurrency Hosting Revenue, page 94
2.In your response to prior comment 4 in your letter dated March 6, 2024, you state that
your hosting agreements do not qualify as a lease of the mining machines by the
counterparty to you because the contracts do not convey to you the right to control the use
of the bitcoin miners.  Please provide a comprehensive accounting analysis with specific
citation to ASC 842 supporting your determination that the hosting agreements do not
convey to you the right to control the miners you host.  Your analysis should include a
discussion of how you applied the guidance in ASC Topic 842-10-15-4 through 15-8 as
well as ASC Topic 842-10-15-17 through 15-26. It should also include specific references
to, and your accounting analysis of, all sections of the hosting agreements that are relevant
to the lease determination.
3.Please also provide us with an analysis detailing whether your hosting agreements include
a lease by you to the hosting agreement counterparty of the rack space you use for the
mining machines covered by the agreement.  In your response, please tell us how you
applied the guidance in ASC Topic 842-10-15-4 through 15-8 as well as ASC Topic 842-
10-15-17 through 15-26. It should also include specific references to, and your accounting
analysis of, all sections of the hosting agreements that are relevant to the lease
determination.
4.Please provide a comprehensive accounting analysis of your hosting agreements that
addresses each of the five steps outlined in ASC 606-10-05-4.  Please ensure that analysis
addresses, but is not limited to, the following:
•If your hosting agreement contains a lease, provide your analysis of the separation
guidance in ASC 606-10-15-4.
•With regards to step one in ASC 606-10-05-4:oExpand your analysis to more fully address ASC 606-10-25-1 through 25-9.
oTell us your consideration of whether the hosting agreements and the mining
pool operator agreements should be combined under ASC 606-10-25-9. In your
response, clarify for us whether mining activities under the Cantaloupe hosting
agreement are directed towards a Cantaloupe operated mining pool.  In that
regard, we note that section 3.2 of the Cantaloupe hosting agreement indicates
that Cantaloupe,  through its mining pool, shall send earned rewards on a daily
basis to a pool subaccount as bitcoins are mined by the bitcoin miners.
oMore clearly articulate the termination rights of each party to the hosting
agreement, citing applicable agreement sections, including whether the
agreement can be terminated or modified by either party at any time and
whether the ASC 606 customer has the unilateral enforceable right to terminate
a wholly unperformed contract without compensating the other party (or

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 Comapany NameStronghold Digital Mining, Inc.
 April 23, 2024 Page 3
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April 23, 2024
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parties). See, e.g., ASC 606-10-25-3 and 25-4.
oIn your response to prior comment 4 in your letter dated March 6, 2024, you
state that the hosting customer has the right, in its sole discretion, to request that
you suspend the operation of all or any of the Bitcoin miners.  Please tell us
where this right is located in your hosting agreements.  Additionally, please tell
us whether you believe this right is the equivalent of a termination right.
oYou have told us the agreements may not be terminated by your customer
without penalty until the end of the 24-month term. Please describe the penalty
incurred by early termination and indicate the appropriate sections of the
contract that discuss the termination penalty.
oExplain how the termination rights in the agreement inform your determination
of the duration of the contract for purposes of ASC 606 and its inception.  See,
e.g., ASC 606-10-25-4.
•With regards to step two in ASC 606-10-05-4:oAnalyze whether you are the principal or the agent in the transactions under
ASC 606-10-55-36 through 55-40. In this regard, we note that sections 1.3 of
the Foundry hosting agreement and section 1.2 of the Cantaloupe hosting
agreement suggest that the hosting customer may control the hash computations
prior to delivery to the mining pool.
oYour response to our comment 4 states your determination that you are the
principal in the hash calculation service provided by the miners you host under
the hosting agreement. Please tell us how you are accounting for the
consideration received from the mining pool operators for the hash calculation
service provided by the miners you host.  For example, tell us if you record
100% of the bitcoin received from the mining pool operator for the hash
calculation service provided by the miners you host and a cost of revenues
for the portion of such mining revenues retained by your hosting agreement
customers.
•With regards to step three in ASC 606-10-05-4, explain how you determined the
transaction price, including whether any consideration is constrained. We note that
the hosting agreement specifies payment in cash, the amount of which varies
primarily based on electricity usage, and bitcoin, the amount of which varies based on
the mine pool operator agreement.
            Please contact Rolf Sundwall at 202-551-3105 or Bonnie Baynes at 202-551-4924 if you
have questions regarding comments on the financial statements and related matters.
Sincerely,
Division of Corporation Finance
Office of Crypto Assets