Riot Platforms Expands Bitcoin Holdings Despite Production Decline

Riot Platforms, a leading Bitcoin mining company, has recently made headlines with its announcement that it now holds over 10,000 Bitcoin, marking a 37% increase from the previous year. Here’s a detailed look at the company’s recent performance, operational challenges, and expansion plans.

As of August 2024, Riot Platforms holds a substantial portfolio of over 10,000 Bitcoin. This represents a notable increase from the same period last year. However, the company’s Bitcoin production has faced challenges, showing a 13% decrease in August compared to July. Specifically, Riot mined 322 Bitcoin in August, down from 370 in July, and also a 3% decline from 333 Bitcoin produced in August 2023.

In a departure from the previous year, when Riot sold 300 Bitcoin in August for $8.6 million in net proceeds, the company did not sell any Bitcoin in August 2024. This shift may reflect a strategic decision to hold onto Bitcoin amid current market conditions.

Operational Challenges and Energy Costs

The decrease in production comes amidst rising energy costs and adjustments to the Bitcoin network’s halving event in April 2024, which reduced mining rewards from 6.25 BTC to 3.125 BTC per 210,000 blocks. To address these challenges, Riot Platforms is focusing on optimizing energy costs.

Jason Les, CEO of Riot, highlighted that August is typically the hottest month in Texas, leading to peak demand on the ERCOT grid. Riot managed to optimize its energy use during these high-demand periods, generating power credits that reduced its all-in power cost at the Rockdale facility to $20 per megawatt hour (MWh). Meanwhile, the Corsicana facility, which purchases energy at real-time spot prices, achieved an all-in power cost of $39/MWh.

Riot’s average operating hashrate in August was 14.5 exahashes per second (EH/s), reflecting a 7% decrease from July’s 15.5 EH/s. However, this figure represents a substantial 224% increase compared to August 2023, indicating significant growth in the company’s computational power.

The company is also advancing its expansion efforts, particularly with its Corsicana facility. Riot is developing Phase 1 (400 MW) of this facility, which is expected to eventually total 1 gigawatt (1,000 MW) in mining capacity. The third 100 MW building, Building B1, is on track to be completed and fully operational by the end of September. Riot aims to achieve a third-quarter hashrate target of 28 EH/s and a year-end target of 36 EH/s with the addition of its newly acquired Kentucky facilities.

Corporate Governance and Shareholder Disputes

Riot Platforms holds a 19.9% stake in Bitcoin mining firm Bitfarms, making it the largest shareholder. Riot has recently sent an open letter to Bitfarms’ shareholders advocating for changes to the company’s board of directors. The shareholder meeting on October 29 is expected to address these proposed reforms aimed at improving governance and enhancing shareholder value.

Bitfarms has responded to Riot’s letter by clarifying that the upcoming special shareholder meeting is not focused on governance issues. Bitfarms argues that Riot’s proposed board changes are driven by its own interests and emphasized that recent board and management modifications were made independently of Riot Platforms.

Riot Platforms’ significant Bitcoin holdings and its ongoing expansion efforts reflect a strategic response to the evolving cryptocurrency landscape. Despite facing production declines and increased energy costs, the company remains focused on growth and operational efficiency. The ongoing corporate governance disputes with Bitfarms and the broader industry challenges underscore the complexities facing Bitcoin miners in today’s market.