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 September 30, 2023. The unaudited
financial statements and accompanying presentation materials are
available on Riot’s website.
“I am excited to announce third quarter 2023
results for Riot, as this quarter demonstrated ongoing execution of
our long-term strategic plan to grow and thrive post-halving,” 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 our power strategy at scale during
this quarter. Riot mined a total of 1,106 Bitcoin during the
quarter, bringing our total production for 2023 year-to-date to
4,996. We are extremely pleased to report that our power strategy
successfully drove down our 2023 year-to-date average cost to mine
to $5,537 per Bitcoin, further solidifying our position as a
leading low-cost producer of Bitcoin. At the same time, we have
taken advantage of positive market conditions to raise significant
amounts of capital to fund our ongoing growth plans while also
further strengthening our financial liquidity. Riot finished the
quarter with $290 million in cash on hand and 7,327 Bitcoin,
representing a combined total of nearly $500 million in
liquidity.
“I am confident that the strategic steps we have
taken will position Riot as a leading low-cost producer, allow us
to continue to fund our growth plans, and enhance our balance sheet
strength ahead of the upcoming ‘halving.’ Combined, these steps
further solidify our position as a leader in driving the
cross-industry transformation of energy and money through Bitcoin
mining.”
Third Quarter 2023 Financial and
Operational Highlights
Key financial and operational highlights for the
third quarter include:
- Total revenue of $51.9 million, as
compared to $46.3 million for the same three-month period in 2022.
The increase was primarily driven by a 6% increase in Bitcoin
production as compared to the same three-month period in 2022,
coupled with higher Bitcoin prices which averaged $28,230 per
Bitcoin for the quarter, an increase of 33% as compared to an
average price of $21,184 per Bitcoin for the same three-month
period in 2022.
- Produced 1,106 Bitcoin during the
quarter, as compared to 1,042 Bitcoin during the same three-month
period in 2022. Higher Bitcoin production was driven by a
significant increase in miners deployed year over year, offset by
increased curtailment as a result of our power strategy and an
increase in the Bitcoin network difficulty.
- The average cost to mine Bitcoin
was negative ($6,141) in the third quarter, as compared to $8,227
per Bitcoin for the same three-month period in 2022.
- Earned $49.6 million in power
curtailment credits during the quarter, as compared to $13.1
million in power curtailment credits earned for the same
three-month period in 2022.
- Bitcoin Mining revenue of $31.2
million for the quarter, as compared to $22.1 million for the same
three-month period in 2022, primarily driven by higher Bitcoin
production and higher average Bitcoin prices.
- Data Center Hosting revenue of $5.1
million for the quarter, as compared to $8.4 million for the same
three-month period in 2022, driven by reduced hosting activity as
we continue to address legacy contracts.
- Engineering revenue of $15.5
million for the quarter, as compared to $15.8 million for the same
three-month period in 2022.
- Maintained industry-leading
financial position, with $442.3 million in working capital,
including $290.1 million in cash on hand, and 7,327 in unencumbered
Bitcoin (unaudited, equating to $197.6 million assuming a market
price for one Bitcoin on September 30, 2023 of approximately
$26,968), all of which were produced by the Company’s self-mining
operations, as of September 30, 2023.
Third Quarter 2023 Financial
Results
Total revenue for the three-month period ended
September 30, 2023 was $51.9 million, and consisted of $31.2
million in Bitcoin Mining revenue, $5.1 million in Data Center
Hosting revenue, and $15.5 million in Engineering revenue.
Bitcoin Mining revenue in excess of Bitcoin
Mining cost of revenue for the quarter was $6.8 million (22% of
mining revenue), as compared to $7.4 million (33% of mining
revenue) for the same three-month period in 2022, a decrease of
$0.6 million driven by higher labor costs due to the expansion of
the Rockdale facility. Bitcoin Mining cost of revenue consists
primarily of direct production costs of mining operations,
including electricity, labor, and insurance, but excludes
depreciation and amortization.
Data Center Hosting cost of revenue in excess of
Data Center Hosting revenue for the quarter was $(21.0) million.
Data Center Hosting cost of revenue consists 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 $2.3 million (15% of
Engineering revenue), as compared to $2.0 million (13% of
Engineering revenue) for the same three-month period in 2022.
Engineering cost of revenue consists primarily of direct materials
and labor, as well as indirect manufacturing costs.
Power curtailment credits received totaled
approximately $49.6 million for the quarter, as compared to $13.1
million during the same three-month period in 2022 and equates to
approximately 1,757 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 revenue and Data Center Hosting cost of
revenue based on proportional power consumption, Bitcoin Mining
cost of revenue would have decreased by $31.2 million, increasing
Bitcoin Mining revenue in excess of cost of revenue to $38.0
million (121.8% of mining revenue) on a non-GAAP basis, while Data
Center Hosting cost of revenue would have decreased by $18.4
million, reducing Data Center Hosting cost in excess of revenue to
$(2.7) million on a non-GAAP basis.
Selling, general and administrative expenses
during the quarter totaled $29.1 million, an increase of $13.1
million relative to the same period in 2022. The increase was
primarily due to an increase in stock-based compensation of $10.0
million due to our long-term incentive plan implemented during the
quarter, compensation expenses of $2.0 million as a result of
hiring additional employees to support our ongoing growth, and
increased professional fees of $2.3 million primarily related to
public company compliance and information technology projects.
Net loss for the quarter was $(45.3) million, or
$(0.25) per share, compared to a net loss of $(32.4) million, or
$(0.21) per share for the same period in 2022. The net loss for the
quarter included non-cash stock-based compensation expense of $13.5
million, depreciation and amortization of $64.6 million, and
charges of $4.0 million related to impairment of our Bitcoin.
Non-GAAP Adjusted EBITDA for the quarter was
$31.6 million, as compared to Non-GAAP Adjusted EBITDA of $4.3
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 been received and over half of the
replacement dry coolers have been installed. Hash rate in Building
G has begun to return and will continue to ramp back to its full
capacity of 2.4 EH/s by the end of the year.
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
33,280 Bitcoin miners for its Corsicana Facility. This initial
order has recently been updated to replace approximately 6,000
M56S++ miners with approximately 6,000 MicroBT M66 miners. Upon
full deployment of this initial order by mid-2024, Riot’s total
self-mining hash rate capacity is expected to reach 20.2 EH/s.
As part of this long-term purchase agreement,
Riot also secured an option to purchase up to 66,560 additional
miners from MicroBT consisting of the M56S++, M66, and M66S models
on terms not to exceed 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 16.1 EH/s of
incremental hash capacity to Riot’s self-mining capacity.
ATM Offering
In August 2023, the Company entered an
At-the-Market (“ATM”) Offering under which it could offer and sell
up to $750.0 million in shares of the Company’s common stock.
During the three months ended September 30,
2023, the Company received net proceeds of approximately $126.0
million ($129.4 million in gross proceeds, net of $3.4 million in
commissions and expenses) from the sale of 11,044,700 shares of its
common stock at a weighted average fair value of $11.72 per share
under its 2023 ATM Offering.
Subsequent to September 30, 2023, and through
November 6, 2023, the Company received net proceeds of
approximately $101.1 million from the sale of 10,196,000 shares of
its common stock at a weighted average fair value of $10.12 per
share under its 2023 ATM Offering.
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.Inc
303-794-2000 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 |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net income (loss) |
|
$ |
(45,325 |
) |
|
$ |
(32,435 |
) |
|
$ |
(128,700 |
) |
|
$ |
(349,416 |
) |
Interest (income) expense |
|
|
(2,318 |
) |
|
|
(348 |
) |
|
|
(3,331 |
) |
|
|
9 |
|
Income tax expense (benefit) |
|
|
(157 |
) |
|
|
(2,952 |
) |
|
|
(5,014 |
) |
|
|
(8,839 |
) |
Depreciation and amortization |
|
|
64,569 |
|
|
|
26,559 |
|
|
|
190,071 |
|
|
|
61,366 |
|
EBITDA |
|
|
16,769 |
|
|
|
(9,176 |
) |
|
|
53,026 |
|
|
|
(296,880 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
13,519 |
|
|
|
3,561 |
|
|
|
14,652 |
|
|
|
7,304 |
|
Acquisition-related costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
78 |
|
Change in fair value of derivative asset |
|
|
(3,943 |
) |
|
|
17,749 |
|
|
|
(11,274 |
) |
|
|
(86,865 |
) |
Change in fair value of contingent consideration |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
176 |
|
Realized loss on sale of marketable equity securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,624 |
|
Unrealized (gain) loss on marketable equity securities |
|
|
— |
|
|
|
(142 |
) |
|
|
— |
|
|
|
6,306 |
|
Loss (gain) on sale/exchange of equipment |
|
|
5,306 |
|
|
|
(7,667 |
) |
|
|
5,336 |
|
|
|
(16,281 |
) |
Casualty-related charges |
|
|
— |
|
|
|
— |
|
|
|
1,526 |
|
|
|
— |
|
Impairment of goodwill |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
335,648 |
|
Other (income) expense |
|
|
(31 |
) |
|
|
— |
|
|
|
(96 |
) |
|
|
59 |
|
License fees |
|
|
(25 |
) |
|
|
(25 |
) |
|
|
(73 |
) |
|
|
(73 |
) |
Adjusted EBITDA |
|
$ |
31,595 |
|
|
$ |
4,300 |
|
|
$ |
63,097 |
|
|
$ |
(48,904 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
In addition to Adjusted EBITDA, we believe
“Bitcoin Mining revenue in excess of cost of revenue, net of power
curtailment credits”, “Data Center Hosting revenue in excess of
cost of revenue, net of power curtailment credits”, “Cost of
revenue – Bitcoin Mining, net of power curtailment credits” and
“Cost of revenue – 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
revenue, net of power curtailment credits, Data Center Hosting
revenue in excess of cost of revenue, net of power curtailment
credits, Cost of revenue – Bitcoin Mining, net of power curtailment
credits and Cost of revenue – 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 revenue – Bitcoin
Mining or Cost of revenue – 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 |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Bitcoin Mining |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
31,222 |
|
|
$ |
22,070 |
|
|
$ |
128,987 |
|
|
$ |
126,166 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
|
24,449 |
|
|
|
14,677 |
|
|
|
69,995 |
|
|
|
51,766 |
|
Power curtailment credits allocated to Bitcoin Mining |
|
|
(31,249 |
) |
|
|
(6,104 |
) |
|
|
(42,333 |
) |
|
|
(8,175 |
) |
Cost of revenue, net of power curtailment credits |
|
|
(6,800 |
) |
|
|
8,573 |
|
|
|
27,662 |
|
|
|
43,591 |
|
Bitcoin mining revenue in excess of cost of revenue, net of power
curtailment credits |
|
$ |
38,022 |
|
|
$ |
13,497 |
|
|
$ |
101,325 |
|
|
$ |
82,575 |
|
Bitcoin mining revenue in excess of cost of revenue, net of power
curtailment credits as a percentage of revenue |
|
|
121.8 |
% |
|
|
61.2 |
% |
|
|
78.6 |
% |
|
|
65.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Data Center Hosting |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
5,108 |
|
|
$ |
8,371 |
|
|
$ |
21,811 |
|
|
$ |
27,899 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
|
26,135 |
|
|
$ |
14,223 |
|
|
$ |
73,929 |
|
|
$ |
44,392 |
|
Power curtailment credits allocated to Data Center Hosting |
|
|
(18,352 |
) |
|
|
(6,996 |
) |
|
|
(23,813 |
) |
|
|
(13,153 |
) |
Cost of revenue, net of power curtailment credits |
|
|
7,783 |
|
|
|
7,227 |
|
|
|
50,116 |
|
|
|
31,239 |
|
Data Center Hosting revenue in excess of cost of revenue, net of
power curtailment credits |
|
$ |
(2,675 |
) |
|
$ |
1,144 |
|
|
$ |
(28,305 |
) |
|
$ |
(3,340 |
) |
Data Center Hosting revenue in excess of cost of revenue, net of
power curtailment credits as a percentage of revenue |
|
|
(52.4 |
)% |
|
|
13.7 |
% |
|
|
(129.8 |
)% |
|
|
(12.0 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated power curtailment credits |
|
$ |
(49,601 |
) |
|
$ |
(13,070 |
) |
|
$ |
(66,146 |
) |
|
$ |
(21,328 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/565761da-559d-47f7-ab9a-5355a13a569a
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