8-K: Riot Platforms Reports Record 2023 Revenue and Hash Rate, Eyes Aggressive Expansion

Riot Platforms achieved record financial and operational results in 2023, including $280.7 million in total revenue and a hash rate capacity of 12.4 EH/s, while also making significant progress on strategic development targets.

Summary

• Riot Platforms reported a record total revenue of $280.7 million for the year ended December 31, 2023, compared to $259.2 million in 2022.
• The company produced 6,626 Bitcoin in 2023, a 19% increase from 5,554 in 2022.
• Riot earned $71.2 million in power credits by supporting the ERCOT grid, equivalent to approximately 2,497 Bitcoin.
• The cost to mine Bitcoin averaged $7,539 per Bitcoin in 2023, a 33% decrease from $11,225 in 2022.
• The company's hash rate capacity increased by 28% to 12.4 EH/s by the end of 2023.
• Riot reported a net loss of $49.5 million for 2023, significantly improved from a net loss of $509.6 million in 2022, which was impacted by non-cash impairment charges.
• Adjusted EBITDA for 2023 was $214.0 million, including a $184.7 million gain on Bitcoin held on the balance sheet.
• Riot ended 2023 with approximately $597 million in cash and 7,362 Bitcoin, valued at approximately $311 million based on year-end prices.

Sentiment

Score: 8

Explanation: The document presents a very positive outlook with record results, significant improvements in key metrics, and aggressive expansion plans. The company's strong financial position and strategic partnerships further enhance the positive sentiment.

Positives

• Riot achieved record revenue, Bitcoin production, and hash rate capacity in 2023.
• The company significantly reduced its cost to mine Bitcoin, improving profitability.
• Riot's power strategy generated substantial power credits, enhancing revenue and reducing costs.
• The company has a strong cash position and a significant amount of Bitcoin holdings.
• Riot is making significant progress on its expansion plans, including the Corsicana Facility.
• The company has secured a long-term, fixed-price supply of miners from MicroBT.
• Riot's net loss significantly decreased compared to the previous year.

Negatives

• Data Center Hosting revenue decreased due to the termination of certain hosting agreements.
• The company reported a net loss of $49.5 million for 2023, although this was a significant improvement from the previous year.
• Selling, general, and administrative expenses increased due to additional hiring, stock-based compensation, and legal fees.

Risks

• The company's future results may be materially different from historical results and forward-looking statements due to various risks and uncertainties.
• The company's ability to achieve its hash rate growth targets depends on the successful deployment of new miners and the completion of the Corsicana Facility.
• The company's financial performance is subject to fluctuations in Bitcoin prices and the overall network hash rate.
• The company faces risks related to the integration of acquired businesses and the realization of anticipated benefits from immersion-cooling.
• The company is subject to risks related to the impact of COVID-19 and other global events on its operations and supply chain.

Future Outlook

Riot aims to reach 28 EH/s in total hash rate capacity by the end of 2024, 38 EH/s by the end of 2025, and ultimately 100 EH/s and beyond, driven by the development of the Corsicana Facility and a secured supply of miners.

Management Comments

• Jason Les, CEO of Riot, stated that 2023 was another milestone year in Riot's development as a leading vertically integrated Bitcoin miner.
• Management believes that the combination of the Corsicana Facility, a secured supply of miners, and a strong balance sheet gives Riot the most secure path to achieving its growth plans.

Industry Context

Riot's focus on vertical integration, power management, and large-scale facility development positions it as a significant player in the Bitcoin mining industry, particularly as the industry matures and competition intensifies. The company's power strategy and long-term miner supply agreements are notable differentiators.

Comparison to Industry Standards

• Riot's cost to mine Bitcoin at $7,539 per Bitcoin is significantly lower than many competitors, indicating strong operational efficiency.
• The company's hash rate growth and expansion plans are aggressive compared to other miners, suggesting a focus on market leadership.
• Riot's power strategy, which includes selling power back to the grid, is a unique approach that provides a competitive advantage.
• The company's partnership with MicroBT for a long-term, fixed-price supply of miners is a strategic move to secure its future growth.
• Riot's balance sheet strength, with a large cash balance and minimal debt, is a positive indicator compared to other companies in the sector.

Stakeholder Impact

• Shareholders will benefit from the company's improved financial performance and growth prospects.
• Employees will benefit from the company's expansion and increased hiring.
• Customers of the data center hosting business may be impacted by the termination of certain hosting agreements.
• Suppliers will benefit from the company's increased demand for miners and other equipment.
• Creditors will benefit from the company's strong financial position and minimal debt.

Next Steps

• Riot plans to energize the first building at its Corsicana Facility at the end of Q1 2024.
• Miners will be brought online in batches over the first several weeks of April 2024.
• The company expects to complete and bring online additional buildings at the Corsicana Facility throughout 2024 and 2025.
• Riot will continue to execute its power strategy and expand its hash rate capacity.

Key Dates

Keywords

Bitcoin mining, hash rate, power credits, EBITDA, cryptocurrency, data center, mining revenue, adjusted EBITDA, MicroBT, Corsicana Facility