Riot Blockchain, Inc. (NASDAQ: RIOT) (“Riot,” “Riot
Blockchain” or “the Company”), an industry leader in
Bitcoin (“BTC”) mining and hosting, reported financial results for
the three month period ended September 30, 2021. The unaudited
financial statements are available on Riot’s website and here.
“We are extremely pleased to report another
quarter of record financial results,” said Jason Les, CEO of Riot.
“These results demonstrate the continuous financial and operational
improvements that management is focused on delivering for
shareholders. Riot’s technology-focused, vertically integrated
strategy significantly de-risks the Company’s future growth plans.
Additionally, it enhances future capital efficiencies as
technological improvements, such as industrial-scale immersion
technologies, are systematically incorporated into future hash rate
deployments. With these strengths of Riot at play, the future
financial opportunities for the Company are exciting.”
Third Quarter 2021 and Recent Financial
Highlights
Riot continues to attain significant milestones
and position itself for future opportunities, driven by its focus
on Bitcoin mining.
- Increased total
revenue by 2,532% to a record $64.8 million for the three-month
period ended September 30, 2021, as compared to $2.5 million for
the same three-month period in 2020.
- Increased mining
revenue by 2,099% to a record $53.6 million for the three-month
period ended September 30, 2021, as compared to $2.4 million for
the same three-month period in 2020.
- Increased mining
revenue margin, computed as cryptocurrency mining net of cost of
revenues of cryptocurrency mining (exclusive of depreciation and
amortization), to 76% for the three-month period ended September
30, 2021, as compared to 47% for the same three-month period in
2020.
- Increased mining
revenue margin by 6% on a sequential quarter-over-quarter basis to
76% for the third quarter of 2021, as compared to 70% in the second
quarter of 2021.
- Increased BTC
production by 482% to a record 1,292 Bitcoin during the three-month
period ended September 30, 2021, as compared to 222 Bitcoin during
the same three-month period in 2020.
- Increased BTC
production by 91% on a sequential quarter-over-quarter basis, with
1,292 BTC mined in the third quarter of 2021, as compared to 675
BTC mined in the second quarter of 2021.
- Produced a net
loss of $15.3 million for the three-month period ended September
30, 2021, as compared to a net loss of $1.7 million for the same
three-month period in 2020. Net loss for the quarter was
significantly impacted by non-cash stock-based compensation expense
of $36.0 million and a non-cash, unrealized loss of $11.2 million
on marketable equity securities.
- Reported $37.6
million in Adjusted EBITDA for the three-month period ended
September 30, 2021, as compared to a net loss of $0.4 in Adjusted
EBITDA for the same three-month period in 2020.
- Substantially
all of the current assets as of September 30, 2021, totaling $179.0
million, are highly liquid. As of October 31, 2021, the Company’s
unaudited BTC balance stood at 3,995 BTC, all of which were
produced by its mining operations.
- The average BTC
price used to calculate Riot’s third-quarter 2021 mining revenues
was approximately $41,837.
- Subsequent to
September 30, 2021, the Company successfully completed its
previously announced $600 million ATM equity offering (“ATM
Offering”).
Third Quarter 2021 Financial
Results
Mining revenue margin was $40.6 million (76% of
mining revenue), which compares to $1.1 million (47% of mining
revenue) for the same three-month period in 2020. The improvements
in revenue and mining revenue margin were primarily due to
increases in the price of Bitcoin, combined with the greater number
and higher efficiencies of the new generation miners currently
being deployed, net of increases in the difficulty index associated
with solving Bitcoin mining algorithms.
Selling, general, and administrative
("SG&A") expenses increased to $40.3 million, as compared to
$2.0 million for the same three-month period in 2020. $36.0 million
was attributable to non-cash stock-based compensation, primarily
from the Company’s performance RSU program, introduced during the
quarter. Net of stock-based compensation, SG&A expenses
increased to $4.3 million compared to $1.5 million for the same
three-month period in 2020, which was primarily due to increased
personnel as a result of the Company’s rapid growth.
Taking into account the year-over-year $40.6
million increase in quarterly mining revenue margin relative to the
year-over-year $2.8 million increase in SG&A expenses net of
stock-based compensation, the Company is demonstrating increasing
positive operating leverage and growing economies of scale.
Net loss for the quarter ended September 30,
2021, was $15.3 million, or ($0.16) per share, as compared to a net
loss of $1.7 million, or $(0.04) per share, in the same three-month
period in 2020. Net loss for the quarter was significantly impacted
by non-cash stock-based compensation expense of $36.0 million and a
non-cash, unrealized loss of $11.2 million on marketable equity
securities.
Adjusted EBITDA for the quarter ended September
30, 2021, was $37.6 million, as compared to an Adjusted EBITDA loss
of $0.4 million for the same three-month period in 2020.
Third Quarter 2021 and Recent
Operational Highlights
- Increased
deployed hash rate capacity by 63%, from 1.6 EH/s to 2.6 EH/s.
- Subsequent to
September 30, 2021, deployed approximately 1,600 S19J Pro Antminers
at Whinstone and increased hash rate capacity to 2.8 EH/s.
- Deployed
approximately 9,500 S19 Pro Antminers (110 TH) at Whinstone.
- As of October
31, 2021, the Company had 27,270 miners deployed and 11,500 S19J
Pro Antminers in the process of being shipped.
- Initiated and
made substantial progress on a 400 megawatt (“MW”) expansion at
Whinstone, with four buildings totaling approximately 240,000
square feet currently under construction.
- Announced 200 MW
of the 400 MW infrastructure expansion is committed to utilizing
immersion-cooling technology in Bitcoin mining, which is expected
to host approximately 46,000 S19 Antminers from Riot’s
already-purchased miner fleet.
- Subsequent to
September 30, 2021, completed a $54 million purchase order with
Bitmain Technologies Limited (“Bitmain”) for 9,000 S19j Pro (100
TH/s) miners, with an anticipated delivery and deployment schedule
set for May 2022 through October 2022.
Hash Rate Growth
By Q4 2022, Riot anticipates a total self-mining
hash rate capacity of 8.6 EH/s, not including any expected
incremental productivity gains from the Company’s utilization of
200 MW of immersion-cooling infrastructure and assuming full
deployment of approximately 90,150 Antminer ASICs. Approximately
95% of Riot’s self-mining fleet will consist of the latest
generation S19 series miner model. Upon full deployment, the
Company’s total self-mining fleet is expected to consume
approximately 284 MW of energy. In addition to the Company’s
self-mining operations, Riot’s Whinstone Facility hosts
approximately 200 MW of institutional Bitcoin mining clients.
ATM Offering
As previously disclosed on August 31, 2021, the
Company filed a prospectus supplement with the U.S. Securities and
Exchange Commission to offer and sell up to $600 million of the
Company’s common stock from time to time through the ATM Offering.
Subsequent to September 30, 2021, the Company completed the ATM
Offering and received the total $600 million in gross proceeds less
commissions and offering expenses from the sale of approximately
19.9 million shares of common stock. Net proceeds will
be used to continue accelerating Riot’s growth as well as for
general corporate purposes and further strengthening the Company’s
balance sheet.
About Riot Blockchain, Inc.
Riot Blockchain (NASDAQ: RIOT) focuses on mining
Bitcoin, and through Whinstone, its subsidiary, hosting Bitcoin
mining equipment for institutional clients. The Company is
expanding and upgrading its mining operations through
industrial-scale infrastructure development and latest-generation
miner procurement. Riot’s headquarter is located in Castle Rock,
Colorado, and the Whinstone Facility operates out of Rockdale,
Texas. The Company also has mining equipment operating in upstate
New York under a co-location hosting agreement with Coinmint, LLC.
For more information, visit www.RiotBlockchain.com.
Safe Harbor
Statements in this press release that are not
historical facts are forward-looking statements that reflect
management’s current expectations, assumptions, and estimates of
future performance and economic conditions. Such statements are
made in reliance on the safe harbor provisions of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. 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.
Forward-looking statements 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 due to various risks and uncertainties. These
forward-looking statements may include, but are not limited to,
statements about the benefits of the 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 forward-looking statements include, but are not
limited to: unaudited estimates of BTC production; our future hash
rate growth (EH/s); our expected schedule of new miner deliveries;
our ability to successfully deploy new miners; MW capacity under
development; the integration of the businesses of the Company
and Whinstone may not be successful, or such integration may take
longer or be more difficult, time-consuming or costly to accomplish
than anticipated; failure to otherwise realize anticipated
efficiencies and strategic and financial benefits from the
acquisition of Whinstone; and the impact of COVID-19 on us, our
customers, or on our suppliers in connection with our estimated
timelines. Detailed information regarding other factors that
may cause actual results to differ materially from those expressed
or implied by statements in this press release 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, and our other filings with the SEC, including,
but not limited to the additional risk factors set forth in the
Company’s Current Report on Form 8-K filed with the SEC on May 26,
2021, copies of which may be obtained from the SEC’s website
at www.sec.gov. All forward-looking statements included
in this press release are made only as of the date of this press
release, and the Company disclaims any intention or obligation to
update or revise any forward-looking statements to reflect events
or circumstances that subsequently occur, or of which the Company
hereafter becomes aware, except as required by law. Persons reading
this press release are cautioned not to place undue reliance on
forward-looking statements.
For further information, please
contact:
Riot Blockchain, Inc.Media Contact:Trystine
PayferPR@RiotBlockchain.com
Investor Contact:Phil
McPhersonIR@RiotBlockchain.com303-794-2000 ext. 110SOURCE: Riot
Blockchain, Inc.
Non-U.S. GAAP Measures of Financial
Performance
In addition to consolidated U.S. GAAP financial
measures, Riot reviews the non-GAAP financial measure, “Adjusted
EBITDA.” Adjusted EBITDA is a financial measure defined as our
EBITDA, adjusted to eliminate the effects of certain non-cash and /
or non-recurring items, that do not reflect our ongoing strategic
business operations. EBITDA is computed as net income before
interest, taxes, depreciation, and amortization. Adjusted EBITDA is
EBITDA further adjusted, for certain income and expenses,
management believes results in a performance measurement that
represents a key indicator of the Company’s core business
operations of Bitcoin mining. The adjustments include fair value
adjustments such as impairments of cryptocurrencies, gain or losses
on sales of cryptocurrencies, derivative power contract
adjustments, equity securities value changes, and non-cash
stock-based compensation expense, in addition to financing and
legacy business income and expense items.
We believe Adjusted EBITDA can be an important
financial measure because it allows management, investors, and our
board of directors to evaluate and compare our operating results,
including our return on capital and operating efficiencies,
from period-to-period by making such adjustments.
Adjusted EBITDA is provided in addition to, and
should not be considered to be a substitute for, or superior to,
the comparable measure under U.S. GAAP. Further, Adjusted
EBITDA should not be considered as alternatives to revenue growth,
net income, diluted earnings per share or any other performance
measure derived in accordance with U.S. GAAP, or as alternatives to
cash flow from operating activities as a measure of our liquidity.
Adjusted EBITDA has limitations as analytical tools, and you should
not consider such measures either in isolation or as substitutes
for analyzing Riot’s results as reported under U.S. GAAP.
Reconciliations of Adjusted EBITDA to the most
comparable U.S. GAAP financial metric for historical periods are
presented in the table below.
Riot Blockchain, Inc. and
Subsidiaries
Reconciliation of GAAP and Non-GAAP
Financial Information
(Unaudited; in thousands)
|
For the Three Months Ended September 30, |
|
|
2021 |
|
|
|
2020 |
|
Net income
(loss) |
$ |
(15,343 |
) |
|
$ |
(1,717 |
) |
Interest (income) expense |
|
(40 |
) |
|
|
(12 |
) |
Depreciation and amortization |
|
12,207 |
|
|
|
1,267 |
|
EBITDA |
$ |
(3,176 |
) |
|
$ |
(462 |
) |
Non-cash/non-recurring
operating expense: |
|
|
|
Stock-based compensation expense |
|
36,023 |
|
|
|
467 |
|
Acquisition-related costs |
|
552 |
|
|
|
- |
|
Change in fair value of derivative asset (gain) loss |
|
(7,228 |
) |
|
|
- |
|
Change in fair value of contingent consideration (gain) loss |
|
259 |
|
|
|
- |
|
Realized (gain) on sale/exchange of cryptocurrencies |
|
(65 |
) |
|
|
(385 |
) |
Unrealized loss on marketable equity securities |
|
11,151 |
|
|
|
- |
|
(Gain) loss on sale of equipment |
|
- |
|
|
|
5 |
|
Other (income) expense |
|
85 |
|
|
|
2 |
|
Other revenue, (income)
expense items: |
|
|
|
License fees |
|
(25 |
) |
|
|
(25 |
) |
Adjusted
EBITDA |
$ |
37,576 |
|
|
$ |
(398 |
) |
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