Riot Platforms (NASDAQ: RIOT), the third largest Bitcoin mining company on Wall Street, reported a significantly wider net loss in the third quarter despite higher revenue, as the cost of mining each BTC soared and power-related benefits diminished.
Riot Posts 93% Wider Loss
as Bitcoin Mining Costs Surge Post-Halving
The
company’s net loss expanded to $154.4 million, or $0.54 per share, compared to
an $80 million loss in the same period last year. The deterioration came even
as total revenue jumped 65% to $80 million, driven primarily by higher Bitcoin
prices and increased operational capacity.
The cost to
mine one Bitcoin skyrocketed to $35,376 in the quarter, a dramatic shift from
the negative cost of $22,741 in the same period last year. When including the
BTC miner depreciation, the cost is even higher, reaching $75,506 and rising 124%
from $27,484 reported in 2023.
This is
significantly higher than the
current market average, which, according to CoinShares, stood at $49,500
last quarter. Just a month ago, BTC mining difficulty reached
a record high of 92.67 trillion, further cutting into miners’ profit
margins.
The surge
reflects the impact of April’s Bitcoin halving event, which cut mining rewards
in half, combined with rising network difficulty and significantly reduced
power credits. However, Jason Les, the CEO of the Wall Street BTC miner, tried to stay positive and looked for a brighter side in the latest report.
“Riot
recorded $84.8 million in revenue this quarter, representing a 65% increase
over the same quarter in 2023, driven by a 159% year-over-year increase in
deployed hash rate to 28 EH/s,” said Les. “This significant increase in
deployed hash rate allowed us to produce 1,104 Bitcoin this quarter, in line
with our Bitcoin production in the third quarter of 2023.”
BTC Mining Margins
Continue to Fall
Power
credits, a crucial component of Riot’s business model, dropped to $12.4 million
from $49.6 million year-over-year, representing a 75% decrease. This decline
significantly impacted the company’s mining margins, which fell to 42% ($28.4
million) from 181% ($56.4 million) in the previous year.
“Bitcoin mining
cost of revenue consists primarily of direct production costs of mining
operations, including electricity, labor, and insurance, but excluding
depreciation and amortization,” the company added.
The company
also faced increased operational expenses, with selling, general, and
administrative costs rising by $37.9 million, driven by higher stock-based
compensation, advisory fees, and legal costs.
Riot Platforms Reports Third Quarter 2024 Financial Results, Current Operational and Financial Highlights. $84.8 million in Total Revenue and Deployed Hash Rate of 28 EH/s.“I’m pleased to announce Riot’s results for the third quarter 2024, the first full quarter past the… pic.twitter.com/bbEno5GOkz
— Riot Platforms, Inc. (@RiotPlatforms) October 30, 2024
Riot is not
the only publicly-listed
Bitcoin miner from Wall Street that experienced visibly higher
production costs. BitFuFu (NASDAQ: FUFU) announced a week ago that
it plans to acquire a majority stake in an Ethiopian mining facility in a
quest to find cheaper energy. For BitFuFu the production costs increased by
180% over the past year, shrinking the profit by 75%.
Despite
these challenges, Riot revised its hash rate growth projections, now targeting
34.9 EH/s by the end of 2024, down from previous guidance of 36.3 EH/s, citing
delays in Kentucky facility expansion.
As of
September 30, Riot held 10,427 Bitcoin worth approximately $660.3 million and
maintained a strong financial position with $355.7 million in cash and $190.1
million in marketable securities.
This article was written by Damian Chmiel at www.financemagnates.com.
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