8-K: Riot Platforms Reports 65% Revenue Increase in Q3 2024, Despite Bitcoin Halving

Riot Platforms saw a significant 65% year-over-year revenue increase in the third quarter of 2024, reaching $84.8 million, driven by a substantial rise in deployed hash rate.

Summary

• Riot Platforms reported a total revenue of $84.8 million for the third quarter of 2024, a 65% increase compared to the same period in 2023.
• The company's Bitcoin mining revenue reached $67.5 million, up from $31.2 million in Q3 2023, primarily due to higher average Bitcoin prices and increased hash rate.
• Riot produced 1,104 Bitcoin in Q3 2024, consistent with the 1,106 Bitcoin mined in Q3 2023, despite the Bitcoin halving event in April 2024.
• The average cost to mine one Bitcoin, excluding depreciation, was $35,376 in Q3 2024, compared to a negative $22,741 in Q3 2023, due to reduced power credits and the halving event.
• Power curtailment credits decreased significantly to $12.4 million in Q3 2024 from $49.6 million in Q3 2023.
• The company's deployed hash rate increased by 159% year-over-year to 28 EH/s by the end of the quarter.
• Riot ended the quarter with approximately $1.3 billion in cash, restricted cash, marketable equity securities, and 10,427 Bitcoin held.
• The company experienced a net loss of $154.4 million, or $0.54 per share, compared to a net loss of $80.0 million, or $0.44 per share, in the same period of 2023.
• Adjusted EBITDA for the quarter was a loss of $3.6 million, compared to a loss of $3.1 million in Q3 2023.
• Riot anticipates achieving a total self-mining hash rate capacity of 34.9 EH/s by the end of 2024, a decrease from prior guidance of 36.3 EH/s.

Sentiment

Score: 5

Explanation: The document presents mixed results. While revenue increased significantly, the company experienced a substantial net loss and increased costs. The reduction in hash rate guidance and delays in expansion projects are also concerning. The company's strong cash position and low power costs are positives, but the overall sentiment is neutral to slightly negative.

Positives

• Riot experienced a significant increase in revenue, driven by higher Bitcoin prices and increased hash rate.
• The company maintained consistent Bitcoin production despite the halving event.
• Riot has a strong financial position with substantial cash and Bitcoin holdings.
• The company continues to achieve industry-leading low power costs.
• Riot's power strategy continues to yield strong results while also supporting power grids.
• The company's deployed hash rate increased significantly year-over-year.

Negatives

• The company experienced a net loss of $154.4 million for the quarter.
• The cost to mine Bitcoin increased significantly due to reduced power credits and the halving event.
• Power curtailment credits decreased substantially compared to the previous year.
• The company's hash rate growth guidance for the end of 2024 and 2025 has been reduced.
• Selling, general, and administrative expenses increased significantly due to stock-based compensation, M&A activity, and litigation costs.
• Engineering gross loss was $(0.9) million, compared to a profit of $2.3 million in the same period in 2023.

Risks

• The company's future hash rate growth is subject to delays in expansion projects, particularly in Kentucky.
• The company's financial results are sensitive to fluctuations in Bitcoin prices and network difficulty.
• The company faces risks related to the integration of acquired businesses.
• The company's operations are subject to weather events and potential negative impacts on Bitcoin production.
• The company's ability to access sufficient additional capital for future strategic growth initiatives is a risk.
• The company is subject to ongoing litigation which is increasing costs.

Future Outlook

Riot anticipates achieving a total self-mining hash rate capacity of 34.9 EH/s by the end of 2024 and 46.7 EH/s by the end of 2025, with a long-term goal of 100 EH/s. The company expects to complete the full development of the Corsicana Facility in 2026 and, alongside expansion plans in the Kentucky Facilities, to achieve a hash rate capacity of 65.7 EH/s by the end of 2026.

Management Comments

• Jason Les, CEO of Riot, stated that the company continued to achieve significant growth while maintaining industry-leading low power costs.
• Jason Les expressed excitement about the company's future path, as teams work to develop and deploy more power capacity and hash rate across Texas and Kentucky.

Industry Context

The report highlights Riot's performance in the context of the Bitcoin halving event, which reduced mining rewards, and increased network difficulty. The company's ability to maintain production levels and achieve revenue growth despite these challenges demonstrates its competitive position in the Bitcoin mining industry. The focus on low power costs and strategic power management is a key differentiator in a competitive market.

Comparison to Industry Standards

• Riot's reported power cost of 3.1 cents/kWh is a key differentiator, as many competitors face higher energy costs, impacting their profitability.
• While Riot maintained Bitcoin production levels, some competitors may have seen a more significant drop in production post-halving, highlighting Riot's operational efficiency.
• Riot's hash rate growth, while revised downwards, still positions it as a major player in the industry, with a clear path to 100 EH/s.
• Companies like Marathon Digital Holdings and CleanSpark are also major players in the Bitcoin mining space, and their financial results and hash rate growth would be key comparables to assess Riot's relative performance.
• Riot's focus on vertically integrated operations, including power infrastructure, is a strategy that some competitors are also pursuing to control costs and improve efficiency.

Legal Proceedings

• The company's selling, general and administrative expenses increased due to increased legal costs primarily related to ongoing litigation.

Stakeholder Impact

• Shareholders may be concerned about the net loss and reduced hash rate guidance.
• Employees may be impacted by the company's expansion plans and operational changes.
• Customers may benefit from the company's increased hash rate and Bitcoin production.
• Suppliers may be impacted by the company's expansion plans and miner purchases.
• Creditors may be impacted by the company's financial performance and capital raising activities.

Next Steps

• The company will continue to develop and deploy more power capacity and hash rate across Texas and Kentucky.
• Riot plans to complete the full development of the Corsicana Facility in 2026.
• The company will continue to receive and deploy miners from its MicroBT purchase order through the end of 2024.

Key Dates

Keywords

Bitcoin mining, hash rate, revenue, power costs, cryptocurrency, financial results, EBITDA, mining operations, digital infrastructure, Bitcoin