Riot App Loses Big Due to Decline in Bitcoin Production

Bittime - Riot Platforms, a Bitcoin mining company, reported a net loss of $84.4 million for the second quarter, compared with a net loss of $27.4 million in the same period last year. The decline in Bitcoin production and challenges after the Bitcoin 'halving' are the main factors affecting the company's financial performance.

Second Quarter Financial Report

Despite the financial loss, Riot Platforms reported revenue of $70.0 million for the quarter, down slightly from $76.7 million a year earlier. The company's net loss was driven by a decline in the fair value of Bitcoin of $76.4 million, non-cash stock-based compensation expense of $32.1 million, and depreciation and amortization of $37.3 million.

Riot Platforms' loss per share for the three months ended June 30 was $0.32. Additionally, the company's Bitcoin production decreased 52%, from 1,775 Bitcoins in the second quarter of 2023 to 844 Bitcoins this quarter.

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Post-Bitcoin Halving Challenges

Bitcoin's 'halving' event and increased network difficulty contributed to a higher average direct cost of mining Bitcoin, which increased to $25,327 from $5,734 per Bitcoin in the second quarter of 2023. Despite this, Riot Platforms managed to maintain strong gross margins with strong revenues almost the same as the previous year.

The company also reported $13.9 million in power credits for the quarter, including $4.4 million from demand response programs, which helped reduce average energy costs.

Future Prospects

Riot Platforms ended the second quarter with working capital of $646.5 million, including $481.2 million in cash, and holding 9,334 unencumbered Bitcoins, valued at approximately $585.0 million. The company anticipates reaching a total self-mining hash rate capacity of 36 EH/s by the end of 2024 and is increasing its deployed hash rate guidance for 2025 from 40 EH/s to 56 EH/s.

Expansion and Capacity Improvement

Riot CEO Jason Les highlighted the company's accomplishments, including the successful energization of its second large facility in Corsicana, Texas. This facility adds two buildings with a total capacity of 200 megawatts (MW), with the other two buildings expected to be operational by the end of 2024.

Additionally, Riot expanded operations at the Rockdale Facility and nearly doubled the installed hash rate to 22 exahashes per second (EH/s) by the end of the quarter. In July, Riot Platforms strengthened its growth trajectory by acquiring Block Mining Inc., a vertically integrated Bitcoin miner in Kentucky. This acquisition adds 60 MW of power capacity across two facilities, with potential expansion to more than 300 MW by the end of 2025.

The company plans to leverage its strong balance sheet and experienced development team to continue building best-in-class Bitcoin mining facilities.

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Conclusion

The decline in Bitcoin production and technical challenges after the Bitcoin 'halving' were the main factors that caused huge losses for Riot Platforms. However, with ambitious expansion plans and efforts to increase hash rate capacity, Riot Platforms remains optimistic about the future. Investments in new facilities and strategic acquisitions are expected to help the company overcome current challenges and capitalize on future growth opportunities.

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