Stronghold Digital Agrees To Pay Over $1.4 Million In Penalties For Energy Market Violations

According to Odaily, Stronghold Digital Mining has agreed to pay more than $1.4 million in penalties and refunds following an investigation by U.S. federal agencies. The investigation revealed that the company violated energy market regulations while prioritizing its Bitcoin mining operations. Stronghold Digital, along with its subsidiary Scrubgrass Reclamation Company, operates the 85-megawatt Scrubgrass power plant in northwest Pennsylvania. This plant has been functioning as a capacity resource for the PJM Interconnection energy market from 2018 to 2022. The settlement agreement, released by the Federal Energy Regulatory Commission (FERC) on January 30, outlines Stronghold's contractual obligation to supply available power to the PJM grid to ensure grid reliability. However, the FERC enforcement office found that between June 2021 and May 2022, Stronghold failed to meet this obligation, diverting power to its Bitcoin mining operations instead. FERC's investigation revealed that Scrubgrass underreported its available power capacity in the market, accounting for 67% of day-ahead and 69% of real-time power. Instead of supplying this power to PJM, it was redirected to Bitcoin mining, comprising 57% of day-ahead and 59% of real-time power. Additionally, the settlement order noted that Stronghold purchased power from PJM at wholesale prices 24% of the time, with some of this power being misclassified as "station power" rather than being used for essential plant operations. As part of the settlement, Stronghold and Scrubgrass will repay $678,635 in improper earnings to PJM and pay a civil penalty of $741,365 to the U.S. Treasury. The company is also required to submit compliance reports for at least two years and provide market rules training for its employees.