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 March 31, 2022. The unaudited
financial statements are available on Riot’s website and here.
“We are extremely proud of the progress that
Riot continues to make, having achieved record levels of net
income, revenue, hash rate and Bitcoin mined in the first quarter,”
said Jason Les, CEO of Riot. “Our vertically integrated business
strategy of owning, operating and manufacturing has accelerated our
growth while helping insulate us from continuing global supply
chain issues. Over the remainder of 2022 and beyond, Riot plans to
build upon the solid foundation set to date. We look forward to
demonstrating continued operational excellence, execution in
increasing our hash rate, and leading our industry in increasing
the Company’s developed capacity.”
First Quarter 2022 and Recent Financial
Highlights
Riot continues to attain significant milestones
while positioning itself for future opportunities, driven by its
focus on Bitcoin mining.
- Increased total revenue by 244% to
a record $79.8 million for the three-month period ended March 31,
2022, as compared to $23.2 million for the same three-month period
in 2021.
- Increased mining revenue by 150% to
a record $57.9 million for the three-month period ended March 31,
2022, as compared to $23.2 million for the same three-month period
in 2021.
- Produced record net income of $35.6
million for the three-month period ended March 31, 2022, as
compared to net income of $7.5 million for the same three-month
period in 2021.
- Mining revenue margin remained
consistent at approximately 67% of mining revenues on a
year-over-year basis, despite a 12% lower price of BTC in Q1 2022
of $41,241 as compared to $46,729 for the same period in 2021,
demonstrating the Company’s increasing operating efficiencies in
its mining segment. Mining revenue margin is computed as Bitcoin
mining revenue net of cost of revenues of Bitcoin mining (exclusive
of depreciation and amortization).
- Increased BTC production quantity
by 186% to a record 1,405 BTC during the three-month period ended
March 31, 2022, as compared to 491 BTC during the same three-month
period in 2021.
- Increased BTC production quantity
by 4% on a sequential quarter-over-quarter basis, with 1,405 BTC
mined in the first quarter of 2022, as compared to 1,354 BTC mined
in the fourth quarter of 2021. Increase in BTC production is
attributable to Riot’s self-mining hash rate increasing at a rate
faster than the global network hash rate, which drives Bitcoin’s
mining difficulty index.
- Reported $11.7 million in Non-GAAP
Adjusted EBITDA for the three-month period ended March 31, 2022, as
compared to $11.1 in Non-GAAP Adjusted EBITDA for the same
three-month period in 2021.
- A significant percentage of the
current assets as of March 31, 2022, totaling $439.7 million, are
highly liquid. As at quarter end, the cash balance of the Company
stood at $113.6 million and as of April 30, 2022, the Company’s
unaudited BTC quantity was 6,320 BTC, all of which were produced by
its self-mining operations.
First Quarter 2022 Financial
Results
Mining revenue margin was $38.9 million (67% of
mining revenue), which compares to $15.6 million (68% of mining
revenue) for the same three-month period in 2021. Mining revenue
margin remained consistent on a year-over-year basis despite a 12%
lower price of Bitcoin during the first quarter of 2022 compared to
the first quarter of 2021. Despite the decrease in the price of
BTC, the consistent mining revenue margin was primarily due to
operating efficiencies driven by a greater number of new generation
miners currently being deployed at Riot’s Whinstone US, Inc.,
(“Whinstone”) facility, net of increases in the difficulty index
associated with solving BTC mining algorithms.
Selling, general, and administrative
("SG&A") expenses increased by $5.4 million to $10.9 million,
as compared to $5.5 million for the same three-month period in
2021. $4.4 million of the year-over-year increase was due to
increased stock-based compensation and personnel as a result of the
Company’s rapid growth.
Taking into account the year-over-year $23.3
million increase in quarterly mining revenue margin relative to the
year-over-year $5.4 million increase in SG&A expenses, the
Company continues to demonstrate positive operating leverage and
the benefits of its growing economies of scale.
Net income for the quarter ended March 31, 2022,
was $35.6 million, or $0.30 per share, as compared to net income of
$7.5 million, or $0.09 per share, in the same three-month period in
2021. Net income for the quarter was positively impacted by an
increase in fair value of derivative asset of $46.2 million and a
$9.2 million gain on sale of Bitcoin, partially off-set by a $26.4
impairment of held Bitcoin and an unrealized loss of $1.6 million
on marketable equity securities.
Non-GAAP Adjusted EBITDA for the quarter ended
March 31, 2022 was $11.7 million, as compared to Non-GAAP Adjusted
EBITDA of $11.1 million for the same three-month period in 2021.
$26.4 million in impairment of Bitcoin negatively impacted net
income for the quarter, which impacted Non-GAAP Adjusted EBITDA.
During Q1 2022 the Company determined to exclude impairments and
gains or losses on sales or exchanges of cryptocurrencies from its
calculation of Non-GAAP Adjusted EBITDA.
First Quarter 2022 and Recent
Operational Highlights
- During the three-month period ended
March 31, 2022, increased deployed hash rate capacity by 39%, from
3.1 EH/s to 4.3 EH/s.
- Subsequent to March 31, 2022,
deployed approximately 3,456 S19J Pro Antminers at Whinstone and
increased hash rate capacity to 4.7 EH/s as of April 30, 2022.
- As of April 30, 2022, the Company
had 46,375 miners deployed with an additional 7,240 miners staged
for deployment. Shipments of 1,702 S19j Pros have been initiated
out of Bitmain and are expected to be received during May 2022.
Upon deployment of the staged miners and those from the May 2022
delivery, the Company expects to have a total of 55,317 miners
deployed with a hash rate capacity of approximately 5.6 EH/s.
- Made substantial progress on the
Company’s 400 megawatt (“MW”) expansion at Whinstone, with four
buildings totaling approximately 240,000 square feet nearing the
end of the construction phase. The new buildings and their critical
infrastructure are expected to be completed Q2 2022, with the final
components of the buildout being completed in parallel with miner
shipments.
- Made substantial progress on
Buildings F and G, both employing the Company’s state-of-the-art
immersion-cooling technology, with an increasing number of miners
being deployed and operational in Building F and electrical
installation ongoing in Building G, which upon completion are
expected to host approximately 46,000 S19 Antminers from Riot’s
already-purchased miner fleet.
- Announced the initiation of a 265
acre, 1 gigawatt (“GW”) expansion in Navarro County, Texas. The
first phase of the expansion consists of 400 MW of immersion-cooled
Bitcoin mining infrastructure. Construction is expected to begin in
Q2 2022, and Bitcoin mining operations are the new facility are
expected to commence July 2023.
Hash Rate Growth
By January 2023, Riot anticipates a total
self-mining hash rate capacity of approximately 12.8 EH/s, assuming
full deployment of approximately 120,150 Antminer ASICs, but
excluding any potential expected incremental productivity gains
from the Company’s utilization of 200 MW of immersion-cooling
infrastructure.
Approximately 97% of the Company’s self-mining
fleet will consist of the latest generation S19 series miner model.
Upon full deployment of all currently contracted miners, the
Company’s total self-mining fleet will consume approximately 370 MW
of energy. In addition to the Company’s self-mining operations,
Riot hosts approximately 200 MW of institutional Bitcoin mining
clients.
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. Through Riot’s subsidiary ESS Metron, the
Company engineers and manufacturers electrical equipment solutions
for Bitcoin mining and other industries. The Company’s headquarters
is in Castle Rock, Colorado, the Whinstone Facility operates in
Rockdale, Texas and the Expansion is in Corsicana, Texas. Riot 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. These forward-looking
statements may include, but are not limited to, statements about
the benefits of acquisitions, 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
Bitcoin production; our future hash rate growth (EH/s); the
anticipated benefits, construction schedule and costs associated
with the Navarro site expansion; our expected schedule of new miner
deliveries; our ability to successfully deploy new miners; M.W.
capacity under development; we may not be able to realize the
anticipated benefits from immersion-cooling; the integration of
acquired businesses 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
our acquisitions; 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, 2021, as amended, and our other filings with the SEC,
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 rely on forward-looking statements.
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 rely on forward-looking
statements.
For further information, please contact:
Investor Contact:
Phil McPhersonIR@RiotBlockchain.com 303-794-2000 ext.
110
Media Contact:
Trystine Payfer303-794-2000 ext.
118PR@RiotBlockchain.com
SOURCE: 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 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. During Q1 – 2022 we determined to exclude
impairments and gains or losses on sales or exchanges of
cryptocurrencies from our calculation of Non-GAAP Adjusted EBITDA
for all periods presented.
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) |
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
|
2021 |
|
Net income
(loss) |
$ |
35,629 |
|
|
$ |
7,530 |
|
|
Interest (income) expense |
|
220 |
|
|
|
(175 |
) |
|
Income tax expense (benefit) |
|
312 |
|
|
|
- |
|
|
Depreciation and amortization |
|
14,245 |
|
|
|
2,846 |
|
EBITDA |
$ |
50,406 |
|
|
$ |
10,201 |
|
Non-cash/non-recurring operating expense: |
|
|
|
|
Stock-based compensation
expense |
|
3,042 |
|
|
|
936 |
|
|
Acquisition related costs |
|
78 |
|
|
|
- |
|
|
Change in fair value of
derivative asset (gain) loss |
|
(43,683 |
) |
|
|
- |
|
|
Change in fair value of
contingent consideration (gain) loss |
|
176 |
|
|
|
- |
|
|
Unrealized loss (gain) on
marketable equity securities |
|
1,611 |
|
|
|
- |
|
|
Other (income) expense |
|
137 |
|
|
|
- |
|
Other revenue,
(income) expense items: |
|
|
|
|
License fees |
|
(24 |
) |
|
|
(24 |
) |
Non-GAAP
Adjusted EBITDA |
$ |
11,743 |
|
|
$ |
11,113 |
|
|
|
|
|
|
|
|
|
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