Riot Blockchain, Inc. (NASDAQ: RIOT) ("Riot”, “Riot Blockchain”
or the “Company") announced today that it has signed a
definitive agreement pursuant to which Riot will acquire Whinstone
US, Inc. (“Whinstone”), including all of its assets and operations,
for consideration of $80 million cash plus a fixed 11.8 million
shares of Riot common stock, equal to an implied total transaction
value of approximately $651 million based on Riot’s last closing
price of $48.37.
- Whinstone is the owner and operator of North America’s largest
Bitcoin hosting facility, with 300 MW in developed capacity and an
attractive long-term power purchase agreement
- Diversifies Riot’s revenues and catapults Riot into a
market-leading position in the Bitcoin mining and hosting
business
- Creates significant financial and operational synergies for
Riot
- Provides a clear, and significantly de-risked, path to growth
for Riot, as Whinstone’s facility can be rapidly expanded by an
additional 450 MW
- Transaction valued at $651 million, $80 million payable in cash
and remainder in shares of Riot common stock
The acquisition of Whinstone is a transformative event for Riot
and its shareholders. Riot views Whinstone as a foundational
element in its strategy to become an industry-leading Bitcoin
mining platform, on a global scale. Upon the closing of this
acquisition, Riot is expected to be the largest publicly-traded
Bitcoin mining and hosting company in North America, as measured by
total developed capacity.
“The acquisition of Whinstone is the most significant
achievement in Riot’s growth to-date and positions Riot as an
industry leader in Bitcoin mining,” said Jason Les, CEO of Riot.
“After the consummation of this transaction, we will have created a
very clear path for the Company’s future growth. Riot will wholly
own the largest Bitcoin mining facility in North America, with very
low power costs, and one of the most talented development teams in
the industry. Whinstone will serve as the foundation of Riot’s
Bitcoin mining operations, upon which we will drive our goal of
increasing the American footprint in the global Bitcoin mining
landscape.”
Riot will be able to continue rapidly scaling its self-mining
business with Whinstone’s industry-leading team. Led by Chad
Harris, the Whinstone team has become an industry-leading developer
and operator of Bitcoin hosting facilities over the past two years,
as Bitcoin mining has reached institutional scale. The Whinstone
team is comprised of approximately 100 employees who have built
Whinstone’s Texas operations from greenfield to commercialization
in less than twelve months. The talented Whinstone team,
combined with the facility’s substantial expansion capacity
significantly de-risks Riot’s future operational and financial
growth.
Whinstone is based in Rockdale, Texas and its facility is
located on an 100-acre site, hosting Bitcoin mining customers in
three buildings totaling 190,000 square feet. An additional 60,000
square foot building is also under development. The site is subject
to a long-term lease agreement, with electricity provided via a
long-term power supply contract.
Whinstone’s site has a total power capacity of 750 MW, with 300
MW currently developed. Whinstone’s facility is believed to
be the largest single facility, as measured by developed capacity,
in North America for Bitcoin mining. In pursuit of achieving the
most efficient power strategy, Whinstone combines fixed low-cost
power agreements, real-time spot power procurement and income from
ancillary power services revenue. Bitcoin miners benefit from
low-cost energy to maximize production margins, benefiting from an
electricity supply with the flexibility to respond rapidly to
supply and demand events in the power market.
Whinstone currently hosts Bitcoin mining operations for three
institutional clients who, by the end of 2021, are expected to
utilize up to 300 MW of aggregate power capacity. In addition to
hosting revenue, Whinstone generates engineering and construction
services revenue from hosting clients on site, including revenue
derived from the fabrication and deployment of immersion cooling
technology for Bitcoin mining.
“We are excited to be joining Riot, as both Riot and Whinstone
share a vision for the future of Bitcoin mining in America,” said
Chad Harris, co-founder of Whinstone. “Riot’s strategic vision and
resources combined with Whinstone’s infrastructure strength will
allow our combined teams to achieve our shared growth plans.”
Northern Data AG, a leading developer and operator of
High-Performance-Computing (“HPC”) infrastructure solutions,
acquired Whinstone in 2020 and has successfully demonstrated its
set of capabilities in establishing one of the world’s largest HPC
centers.
“With Whinstone we have built and established one of the largest
HPC centers in the world with significant potential and scale to
further ramp up capacity. The transaction will provide Riot with
the opportunity to not only utilize Whinstone’s existing
operational capacity for their own mining operations but also to
scale capacity and establish themselves as the leading bitcoin
miner in the US. By becoming a minority shareholder in Riot going
forward, through its equity stake in Riot, Northern Data will be
able to benefit from the synergies generated by the transaction and
continues to directly participate in the growth of Bitcoin value
potential. Simultaneously, Northern Data will be able to use the
cash proceeds from the transaction to focus on, and further
implement, its decentralized, multi-site, scalable and ESG-focused
strategy. The transaction will allow both companies to further
strengthen their respective core businesses and to substantially
accelerate their strategies,” said Aroosh Thillainathan, CEO of
Northern Data.
Upon closing of the transaction, Northern Data will own
approximately 12% percent of the total outstanding common stock of
Riot.
The transaction is expected to close in the second quarter of
2021, subject to the satisfaction or waiver of customary closing
conditions, including receipt of required regulatory
clearances.
XMS Capital Partners, LLC is serving as exclusive financial
advisor and Sidley Austin LLP is serving as legal advisor to
Riot.
Riot will host a live conference call at 8:30 am ET on April 8,
2021 to discuss the transaction. Further details may be found at
www.tinyurl.com/RiotIR. The presentation will also be available on
the Riot website.
About Riot Blockchain, Inc.
Riot Blockchain (NASDAQ: RIOT) focuses on cryptocurrency mining
of bitcoin. The Company is expanding and upgrading its mining
operations by securing the most energy efficient miners currently
available. Riot is headquartered in Castle Rock, Colorado, and the
Company’s mining facility operates out of upstate New York, under a
co-location hosting agreement with Coinmint. For more information,
visit www.RiotBlockchain.com.
Safe Harbor
The information provided in this press release may include
forward-looking statements within the meaning of the federal
securities laws, including as to the completion and effects of the
contemplated acquisition by the Company of Whinstone and the future
financial performance and operations of the Company. Because such
statements are subject to risks and uncertainties, actual results
may differ materially from those expressed or implied by such
forward-looking statements. Words such as "anticipates,"
“believes,” "plans," "expects," "intends," "will," "potential,"
"hope" and similar expressions are intended to identify
forward-looking statements. These forward-looking statements are
based upon current expectations of the Company and involve
assumptions that may never materialize or may prove to be
incorrect. Actual results and the timing of events could differ
materially from those anticipated in such forward-looking
statements as a result of various risks and uncertainties. These
forward-looking statements include, but are not limited to,
statements about the benefits of the contemplated acquisition of
Whinstone, including financial and operating results, and the
Company’s plans, objectives, expectations and intentions. Among the
risks and uncertainties that could cause actual results to differ
from those expressed in the forward-looking statements are: (1) the
satisfaction or waiver of the conditions precedent to the
consummation of the contemplated acquisition, including receipt of
required regulatory clearances; (2) the occurrence of any event,
change or other circumstance that could give rise to the
termination of the definitive purchase agreement; (3) unanticipated
difficulties or expenditures relating to, of the failure to realize
the benefits of, the contemplated acquisition; (4) legal
proceedings, judgments or settlements in connection with the
contemplated acquisition; (5) disruptions of current plans and
operations caused by the announcement and pendency of the
contemplated acquisition; and (6) the response of employees,
customers, suppliers, business partners and regulators to the
announcement of the contemplated acquisition. Detailed information
regarding other factors that may cause actual results to differ
materially from those expressed or implied by statements in this
press release relating to the Company may be found in the Company's
filings with the U.S. Securities and Exchange Commission (the
“SEC”), including in the sections entitled "Risk Factors" and
“Cautionary Note Regarding Forward-Looking Statements” of the
Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2020, which was filed with the SEC on March 31, 2021,
copies of which may be obtained from the SEC's website at
www.sec.gov. The Company does not undertake any obligation to
update forward-looking statements contained in this press
release.
PR Contact
Riot Blockchain, Inc.
PR@riotblockchain.com
Investor Contact - Phil McPherson
Riot Blockchain, Inc.
303-794-2000 ext. 110
IR@riotblockchain.com
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