Riot Platforms, Inc. (NASDAQ: RIOT) (“Riot” or “the
Company”), an industry leader in Bitcoin (“BTC”) mining
and data center hosting, reported financial results for the
three-month period ended June 30, 2023. The unaudited financial
statements and accompanying presentation materials are available on
Riot’s website.
“I am excited to announce second quarter 2023
results for Riot, as this quarter showcased ongoing execution of
our long-term strategy and included a number of landmark
announcements solidifying our future growth path,” said Jason Les,
CEO of Riot. “Riot’s core business is Bitcoin mining, and the scale
of our vertically integrated operations and financial strength
allowed us to execute on our power strategy at unmatched scale this
quarter, driving our average cost to mine to $8,389 per Bitcoin in
the second quarter, compared to an average Bitcoin price of
$28,024.
“As part of the next phase of our growth, Riot
signed a long-term purchase agreement with MicroBT to acquire
33,280 next generation miners, with an option to purchase an
additional 66,560 miners on the same price and terms. These miners
are designed from the ground up for immersion cooling, will be
manufactured in the United States, and will add an additional 7.6
EH/s in capacity for Riot by mid-2024. We also announced an
agreement with Midas Immersion to purchase 200 megawatts of
immersion cooling systems, with an option to purchase an additional
400 megawatts. Midas Immersion is an industry leading designer and
manufacturer of immersion cooling systems, and this order will
ensure that our Corsicana Facility will represent the largest and
most advanced deployment of immersion cooling for Bitcoin mining in
the world.
“As Riot continues to execute on our growth
plans for the rest of this year and beyond, I remain extremely
excited about Riot’s leading role in driving the cross-industry
transformation of energy and money through Bitcoin mining.”
Second Quarter 2023 Financial and
Operational Highlights
Key financial and operational highlights for the
second quarter include:
- Total revenue of $76.7 million, as
compared to $72.9 million for the same three-month period in 2022.
The increase was primarily driven by a 27% increase in Bitcoin
production as compared to the same three-month period in 2022,
offset by lower Bitcoin prices which averaged $28,024 per Bitcoin
for the quarter, a decrease of 15% as compared to an average price
of $33,083 per Bitcoin for the same three-month period in
2022.
- Produced 1,775 Bitcoin during the
quarter, as compared to 1,395 Bitcoin during the same three-month
period in 2022. Higher Bitcoin production was driven by a
significant increase in miners deployed year over year.
- The average cost to mine Bitcoin
was $8,389 in the second quarter, as compared to $11,316 per
Bitcoin for the same three-month period in 2022.
- Earned $13.5 million in power
curtailment credits during the quarter, as compared to $5.7 million
in power curtailment credits earned for the same three-month period
in 2022.
- Mining revenue of $49.7 million for
the quarter, as compared to $46.2 million for the same three-month
period in 2022, primarily driven by higher Bitcoin production,
offset by lower average Bitcoin prices.
- Data center hosting revenue of $7.7
million for the quarter, as compared to $9.8 million for the same
three-month period in 2022, driven by fewer hosting customers and
lower Bitcoin values during the 2023 period, partially offset by
increased revenue share from hosting customers.
- Engineering revenue of $19.3
million for the quarter, as compared to $16.9 million for the same
three-month period in 2022, primarily driven by increased demand
from third-party data center and engineering customers and
delivering on backlog of projects.
- Maintained industry-leading
financial position, with $408.4 million in working capital,
including $289.2 million in cash on hand and $221.4 million in
unencumbered Bitcoin (unaudited, assuming a market price for one
Bitcoin on June 30, 2023 of approximately $30,477), all of which
were produced by the Company’s self-mining operations, as of June
30, 2023.
Second Quarter 2023 Financial
Results
Total revenue for the three-month period ended
June 30, 2023 was $76.7 million, and consisted of $49.7 million in
Bitcoin Mining revenue, $7.7 million in Data Center Hosting
revenue, and $19.3 million in Engineering revenue.
Bitcoin Mining revenue in excess of mining cost
of revenues for the quarter was $26.1 million (47.5% of mining
revenue), as compared to $28.2 million (39% of mining revenue) for
the same three-month period in 2022, a decrease of $2.1 million
driven by lower Bitcoin prices during the quarter, and an increase
in Bitcoin Mining cost of revenues, relative to the same
three-month period in 2022. Bitcoin Mining cost of revenues consist
primarily of direct production costs of mining operations,
including electricity, labor, and insurance, but excluding
depreciation and amortization. The increase in Bitcoin Mining cost
of revenues for the quarter was primarily due to the increase in
mining capacity at the Rockdale Facility, which required more
headcount and direct costs necessary to maintain and support the
mining operations, and an increase in the average mining difficulty
of 67% in the quarter relative to the same three-month period in
2022.
Data Center Hosting cost in excess of revenues
for the quarter was $14.5 million. Data Center Hosting costs
consist primarily of direct power costs, with the balance primarily
incurred for compensation and rent costs.
Engineering revenue in excess of engineering
cost of revenue for the quarter was $1.2 million. Engineering cost
of revenue consists primarily of direct materials and labor, as
well as indirect manufacturing costs, and the increase in costs was
primarily tied to the increase in materials purchased, as well as
additional labor required to support increased demand for our
custom electric products from data center developers.
Power curtailment credits received, based on
ancillary services fees earned from our participation in ERCOT’s
demand response programs and our ability under long-term power
agreements to sell power back to the ERCOT grid at market-driven
spot prices and thereby reduce our operating costs, totaled
approximately $13.5 million for the quarter, as compared to $5.7
million during the same three-month period in 2022, and equates to
approximately 481 Bitcoin as computed by using average daily
closing Bitcoin prices on a monthly basis.
If power credits were directly allocated between
Bitcoin Mining cost of revenues and Data Center Hosting cost of
revenues based on proportional power consumption, Bitcoin Mining
cost of revenues would have decreased by $8.8 million, increasing
Bitcoin Mining revenue in excess of cost of revenues to $34.9
million (70.1% of mining revenue) on a non-GAAP basis, while Data
Center Hosting cost of revenues would have decreased by $4.7
million, reducing Data Center Hosting cost in excess of revenues to
$(9.8) million on a non-GAAP basis.
Selling, general and administrative expenses
during the quarter totaled $19.8 million, an increase of $9.1
million relative to the same period in 2022. The increase was
primarily due to an increase in compensation expenses as a result
of hiring additional employees to support the Company’s ongoing
growth, professional fees related to public company compliance, and
other general operating costs.
Net loss for the quarter was $(27.7) million, or
$(0.17) per share, compared to a net loss of $(353.6) million, or
$(2.71) per share for the same period in 2022. The net loss for the
quarter included non-cash stock-based compensation of $3.4 million,
depreciation and amortization of $66.2 million, and non-cash
charges of $5.6 million related to impairment of our Bitcoin.
Non-GAAP Adjusted EBITDA for the quarter was
$24.0 million, as compared to Non-GAAP Adjusted EBITDA of $(65.9)
million for the same three-month period in 2022.
Hash Rate Growth
Due to the impact of damage incurred to Building
G during the severe winter storm in Texas in December 2022, Riot
expects to achieve a total self-mining hash rate capacity of 12.5
exahash per second (“EH/s”) in the fourth quarter of 2023, as
Building G is brought back online. Replacement dry coolers for
repairing Building G have begun shipping and are due to arrive in
August. Installation of the replacement dry coolers represents the
final step to finishing the repairs and once installed, hash rate
is expected to come back online starting in September until it
reaches its full capacity of 2.4 EH/s over the coming months.
On June 26, 2023, the Company announced the
signing of a long-term purchase agreement with MicroBT Electronics
Technology Co., LTD (“MicroBT”) which included an initial order of
7.6 EH/s of next-generation Bitcoin miners for its Corsicana
Facility. Upon full deployment of this initial order by mid-2024,
Riot’s total self-mining hash rate capacity is expected to reach
20.1 EH/s.
As part of this long-term purchase agreement,
Riot also secured an option to purchase up to 66,560 additional
M56S++ miners from MicroBT on the same terms as the initial order.
Assuming full exercise of Riot’s additional purchase option, which
is solely at our election, the additional 66,560 miners would add
approximately 15.3 EH/s of incremental hash capacity to Riot’s
self-mining capacity.
ATM Offering
In March 2022, the Company entered an
At-the-Market (“ATM”) Offering under which it could offer and sell
up to $500.0 million in shares of the Company’s common stock.
During the six months ended June 30, 2023, the
Company received net proceeds of approximately $184.7 million
($188.4 million of gross proceeds, net of $3.7 million in
commissions and expenses) from the sale of 15,877,000 shares of its
common stock at a weighted average fair value of $11.87 per share
under its 2022 ATM Offering.
In July 2023, the Company received net proceeds
of approximately $6.6 million ($6.7 million of gross proceeds, net
of $0.1 million in commissions and expenses) from the sale of
570,645 shares of its common stock at a weighted average fair value
of $11.78 per share under its 2022 ATM sales agreement. With the
sale and issuance of these shares, all $500.0 million in shares of
the Company’s common stock available for sale under its 2022 ATM
Offering had been issued.
About Riot Platforms, Inc.
Riot’s (NASDAQ: RIOT) vision is to be the
world’s leading Bitcoin-driven infrastructure platform.
Our mission is to positively impact the sectors,
networks and communities that we touch. We believe that the
combination of an innovative spirit and strong community
partnership allows the Company to achieve best-in-class execution
and create successful outcomes.
Riot is a Bitcoin mining and digital
infrastructure company focused on a vertically integrated strategy.
The Company has Bitcoin mining data center operations in central
Texas, Bitcoin mining operations in central Texas, and electrical
switchgear engineering and fabrication operations in Denver,
Colorado.
For more information, visit
www.riotplatforms.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 rely 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 the factors identified by the
Company’s management which they believe may cause actual results to
differ materially from those expressed or implied by such
forward-looking statements in this press release may be found in
the Company’s filings with the U.S. Securities and Exchange
Commission (the “SEC”), including the risks, uncertainties and
other factors discussed under 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, 2022, as amended, and the other filings the Company
makes with the SEC, copies of which may be obtained from the SEC’s
website, 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 such 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 such forward-looking statements.
For further information, please
contact:
Investor Contact:Phil McPhersonIR@Riot.Inc303-794-2000 ext.
110
Media Contact:Alexis Brock303-794-2000 ext. 118PR@Riot.Inc
Non-U.S. GAAP Measures of Financial
Performance
In addition to financial measures presented
under generally accepted accounting principles in the United States
of America (“GAAP”), we consistently evaluate our use of and
calculation of non-GAAP financial measures such as “Adjusted
EBITDA”. EBITDA is computed as net income before interest, taxes,
depreciation, and amortization. Adjusted EBITDA is a financial
measure defined as EBITDA, adjusted to eliminate the effects of
certain non-cash and/or non-recurring items that do not reflect our
ongoing strategic business operations, which 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. We
exclude impairments and gains or losses on sales or exchanges of
Bitcoin from our calculation of 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 efficiency 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,
net income, the most comparable measure under GAAP for Adjusted
EBITDA. Further, Adjusted EBITDA should not be considered as an
alternative to revenue growth, net income, diluted earnings per
share or any other performance measure derived in accordance with
GAAP, or as an alternative to cash flow from operating activities
as a measure of our liquidity. Adjusted EBITDA has limitations as
an analytical tool, and you should not consider such measures
either in isolation or as substitutes for analyzing our results as
reported under GAAP.
The following table reconciles Adjusted EBITDA
to Net income (loss), the most comparable GAAP financial
metric:
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 30, |
|
June 30, |
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Net income (loss) |
|
$ |
(27,687 |
) |
|
$ |
(353,559 |
) |
|
$ |
(83,375 |
) |
|
$ |
(316,981 |
) |
|
Interest (income) expense |
|
|
(4,843 |
) |
|
|
— |
|
|
|
(1,013 |
) |
|
|
357 |
|
|
Income tax expense (benefit) |
|
|
112 |
|
|
|
(6,199 |
) |
|
|
(4,857 |
) |
|
|
(5,887 |
) |
|
Depreciation and amortization |
|
|
66,162 |
|
|
|
20,562 |
|
|
|
125,502 |
|
|
|
34,807 |
|
|
EBITDA |
|
|
33,744 |
|
|
|
(339,196 |
) |
|
|
36,257 |
|
|
|
(287,704 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
3,429 |
|
|
|
701 |
|
|
|
1,133 |
|
|
|
3,743 |
|
|
Acquisition-related costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
78 |
|
|
Change in fair value of derivative asset |
|
|
(13,109 |
) |
|
|
(60,931 |
) |
|
|
(7,331 |
) |
|
|
(104,614 |
) |
|
Change in fair value of contingent consideration |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
176 |
|
|
Realized loss on sale of marketable equity securities |
|
|
— |
|
|
|
1,624 |
|
|
|
— |
|
|
|
1,624 |
|
|
Unrealized (gain) loss on marketable equity securities |
|
|
— |
|
|
|
4,837 |
|
|
|
— |
|
|
|
6,448 |
|
|
Gain (loss) on sale/exchange of equipment |
|
|
30 |
|
|
|
(8,614 |
) |
|
|
30 |
|
|
|
(8,614 |
) |
|
Casualty-related charges (recoveries), net |
|
|
— |
|
|
|
— |
|
|
|
1,526 |
|
|
|
— |
|
|
Impairment of goodwill |
|
|
— |
|
|
|
335,648 |
|
|
|
— |
|
|
|
335,648 |
|
|
Other (income) expense |
|
|
(65 |
) |
|
|
59 |
|
|
|
(65 |
) |
|
|
59 |
|
|
License fees |
|
|
(24 |
) |
|
|
(24 |
) |
|
|
(48 |
) |
|
|
(48 |
) |
|
Adjusted EBITDA |
|
$ |
24,005 |
|
|
$ |
(65,896 |
) |
|
$ |
31,502 |
|
|
$ |
(53,204 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
In addition to Adjusted EBITDA, we believe
“Bitcoin Mining revenue in excess of cost of revenues, net of power
curtailment credits”, “Data Center Hosting revenue in excess of
cost of revenues, net of power curtailment credits”, “Cost of
revenues – Bitcoin Mining, net of power curtailment credits” and
“Cost of revenues – Data Center Hosting, net of power curtailment
credits” are additional performance measurements that represent a
key indicator of the Company’s core business operations of both
Bitcoin mining and Data Center Hosting.
We believe our ability to offer power back to
the grid at market-driven spot prices, thereby reducing our
operating costs, is integral to our overall strategy, specifically
our power management strategy and our commitment to supporting the
ERCOT grid. While participation in various grid demand response
programs may impact our Bitcoin production, we view this as an
important part of our partnership-driven approach with ERCOT and
our commitment to being a good corporate citizen in our
communities.
We also believe netting the power sales against
our costs 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 operating
efficiencies, from period-to-period by making such adjustments. We
have allocated the benefit of the power sales to our Data Center
Hosting and Bitcoin Mining segments based on their proportional
power consumption during the periods presented.
Bitcoin Mining revenue in excess of cost of
revenues, net of power curtailment credits, Data Center Hosting
revenue in excess of cost of revenues, net of power curtailment
credits, Cost of revenues – Bitcoin Mining, net of power
curtailment credits and Cost of revenues – Data Center Hosting, net
of power curtailment credits are provided in addition to and should
not be considered to be a substitute for, or superior to Revenue –
Bitcoin Mining, Revenue – Data Center Hosting, Cost of revenues –
Bitcoin Mining or Cost of revenues – Data Center Hosting as
presented in our consolidated statements of operations.
The following table presents reconciliations of
these measurements to the most comparable U.S. GAAP financial
metrics:
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 30, |
|
June 30, |
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Bitcoin Mining |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
49,742 |
|
|
$ |
46,151 |
|
|
$ |
97,765 |
|
|
$ |
104,096 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
23,647 |
|
|
|
17,995 |
|
|
|
45,546 |
|
|
|
37,089 |
|
|
Power curtailment credits |
|
|
(8,755 |
) |
|
|
(2,209 |
) |
|
|
(10,589 |
) |
|
|
(2,820 |
) |
|
Cost of revenues, net of power curtailment credits |
|
|
14,892 |
|
|
|
15,786 |
|
|
|
34,957 |
|
|
|
34,269 |
|
|
Bitcoin mining revenue in excess of cost of revenues, net of power
curtailment credits |
|
$ |
34,850 |
|
|
$ |
30,365 |
|
|
$ |
62,808 |
|
|
$ |
69,827 |
|
|
Bitcoin mining revenue in excess of cost of revenues, net of power
curtailment credits as a percentage of revenue |
|
|
70.1 |
% |
|
|
65.8 |
% |
|
|
64.2 |
% |
|
|
67.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data Center Hosting |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
7,661 |
|
|
$ |
9,834 |
|
|
$ |
16,703 |
|
|
$ |
19,528 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
22,134 |
|
|
$ |
15,184 |
|
|
$ |
47,794 |
|
|
$ |
30,169 |
|
|
Power curtailment credits |
|
|
(4,715 |
) |
|
|
(3,497 |
) |
|
|
(5,956 |
) |
|
|
(5,438 |
) |
|
Cost of revenues, net of power curtailment credits |
|
|
17,419 |
|
|
|
11,687 |
|
|
|
41,838 |
|
|
|
24,731 |
|
|
Data Center Hosting revenue in excess of cost of revenues, net of
power curtailment credits |
|
$ |
(9,758 |
) |
|
$ |
(1,853 |
) |
|
$ |
(25,135 |
) |
|
$ |
(5,203 |
) |
|
Data Center Hosting revenue in excess of cost of revenues, net of
power curtailment credits as a percentage of revenue |
|
|
(127.4 |
)% |
|
|
(18.8 |
)% |
|
|
(150.5 |
)% |
|
|
(26.6 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total power curtailment credits |
|
$ |
(13,470 |
) |
|
$ |
(5,706 |
) |
|
$ |
(16,545 |
) |
|
$ |
(8,258 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A chart accompanying this announcement is available at
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