Bitcoin Miner Riot Platforms Reports $84.4M Q2 Loss with 52% Drop in Bitcoin Production

Highlights:

• Riot Platforms reported a Q2 net loss of $84.4 million, up from $27.4 million last year.
• Bitcoin production fell 52% to 844 BTC, while mining costs surged 340% per BTC.
• Riot’s share price fell 1.08% post-Q2 report, while CleanSpark’s stock surged 47%.

Bitcoin miner Riot Platforms reported a second-quarter net loss of $84.4 million, compared to $27.4 million last year. Despite the setback, the company generated $70.0 million in revenue, down from $76.7 million the previous year. The results reflect challenges following Bitcoin’s recent ‘halving’ event. Riot Platforms reported a loss of $0.32 per share for the quarter ending June 30.

#Riot Platforms reported a Q2 net loss of $84.4 million, significantly missing estimates, due to a substantial increase in costs, including a 340% rise in the cost to mine #Bitcoin.

The company's Bitcoin mining production decreased by 52% to 844 #BTC, largely due to April's… pic.twitter.com/omkyTfdTRK

— TOBTC (@_TOBTC) August 1, 2024

The firm’s net loss was due to a $76.4 million decrease in Bitcoin’s fair value, a $32.1 million non-cash stock-based compensation expense, and $37.3 million in depreciation and amortization. Bitcoin production fell 52% to 844 Bitcoin from 1,775 in the second quarter of 2023. Despite this decline, Riot Platforms maintained strong gross margins and achieved revenue similar to the previous year.

Jason Les, CEO of Riot Platforms:

“The second quarter saw the Bitcoin network ‘halving’ in April of this year, a preprogrammed event whereby the Bitcoin block subsidy received by miners from the network is cut in half every four years.”

The reduction is mainly due to the April’ halving’ of the Bitcoin block subsidy. Bitcoin halving occurs roughly every four years and cuts the reward for mining new blocks in half. On April 19, the latest halving reduced miners’ rewards from 6.25 BTC to 3.125 BTC.

Average Cost to Mine Bitcoin Rises

Riot Platforms’ average cost to mine a single Bitcoin jumped 340% to $25,327, compared to $5,734 per BTC in the second quarter of 2023. This cost rise is mainly attributed to the block subsidy halving and a 68% increase in the global network hash rate, reflecting the total computational power used in mining activities worldwide. 

Riot Platforms reported generating $13.9 million in power credits during the second quarter, a slight increase from $13.5 million in the same period last year. Engineering revenue dropped to $9.6 million, down from $19.3 million in the same period last year, highlighting significant challenges in this segment.

At the end of the second quarter, Riot platforms had $646.5 million in working capital, including $481.2 million in cash. The firm also holds 9,334 Bitcoins, valued at approximately $585 million, all produced through its self-mining operations. Riot also expanded its mining capacity, increasing its total installed hash rate to 22 EH/s in Q2 and setting a goal of 36 EH/s by the end of 2024. 

Additionally, Riot recently intensified its acquisition strategy against competitor Bitfarms by purchasing approximately 10 million more shares this month, according to a July 31 filing with the United States securities regulator. Moreover, in mid-June, Riot made a $950 million buyout offer to acquire Bitfarms but ultimately conceded defeat.

Riot Shares Fall After Q2 Report

After the Q2 report, Riot’s share price dropped by 1.08% in after-hours trading, marking a nearly 33.87% decline in 2024. Meanwhile, rival CleanSpark’s stock has surged by 47%, making it the second-largest Bitcoin miner by market cap, surpassing Riot.

Riot Platforms’ unexpected Q2 loss underscores the significant effect of rising operating costs and the April Bitcoin halving on its financial performance.