Riot Reports a Record $79.8 Million in Total Revenue and 1,405 BTC Produced in Q1 2022
CASTLE ROCK, Colo., May 10, 2022 (GLOBE NEWSWIRE) -- Riot Blockchain, Inc. (NASDAQ: RIOT) (“Riot,” “Riot Blockchain” or “the Company”), an industry leader in Bitcoin (“BTC”) mining and hosting, reported financial results for the three-month period ended March 31, 2022. The unaudited financial statements are available on Riot’s website and here.
“We are extremely proud of the progress that Riot continues to make, having achieved record levels of net income, revenue, hash rate and Bitcoin mined in the first quarter,” said Jason Les, CEO of Riot. “Our vertically integrated business strategy of owning, operating and manufacturing has accelerated our growth while helping insulate us from continuing global supply chain issues. Over the remainder of 2022 and beyond, Riot plans to build upon the solid foundation set to date. We look forward to demonstrating continued operational excellence, execution in increasing our hash rate, and leading our industry in increasing the Company’s developed capacity.”
First Quarter 2022 and Recent Financial Highlights
Riot continues to attain significant milestones while positioning itself for future opportunities, driven by its focus on Bitcoin mining.
- Increased total revenue by 244% to a record $79.8 million for the three-month period ended March 31, 2022, as compared to $23.2 million for the same three-month period in 2021.
- Increased mining revenue by 150% to a record $57.9 million for the three-month period ended March 31, 2022, as compared to $23.2 million for the same three-month period in 2021.
- Produced record net income of $35.6 million for the three-month period ended March 31, 2022, as compared to net income of $7.5 million for the same three-month period in 2021.
- Mining revenue margin remained consistent at approximately 67% of mining revenues on a year-over-year basis, despite a 12% lower price of BTC in Q1 2022 of $41,241 as compared to $46,729 for the same period in 2021, demonstrating the Company’s increasing operating efficiencies in its mining segment. Mining revenue margin is computed as Bitcoin mining revenue net of cost of revenues of Bitcoin mining (exclusive of depreciation and amortization).
- Increased BTC production quantity by 186% to a record 1,405 BTC during the three-month period ended March 31, 2022, as compared to 491 BTC during the same three-month period in 2021.
- Increased BTC production quantity by 4% on a sequential quarter-over-quarter basis, with 1,405 BTC mined in the first quarter of 2022, as compared to 1,354 BTC mined in the fourth quarter of 2021. Increase in BTC production is attributable to Riot’s self-mining hash rate increasing at a rate faster than the global network hash rate, which drives Bitcoin’s mining difficulty index.
- Reported $11.7 million in Non-GAAP Adjusted EBITDA for the three-month period ended March 31, 2022, as compared to $11.1 in Non-GAAP Adjusted EBITDA for the same three-month period in 2021.
- A significant percentage of the current assets as of March 31, 2022, totaling $439.7 million, are highly liquid. As at quarter end, the cash balance of the Company stood at $113.6 million and as of April 30, 2022, the Company’s unaudited BTC quantity was 6,320 BTC, all of which were produced by its self-mining operations.
First Quarter 2022 Financial Results
Mining revenue margin was $38.9 million (67% of mining revenue), which compares to $15.6 million (68% of mining revenue) for the same three-month period in 2021. Mining revenue margin remained consistent on a year-over-year basis despite a 12% lower price of Bitcoin during the first quarter of 2022 compared to the first quarter of 2021. Despite the decrease in the price of BTC, the consistent mining revenue margin was primarily due to operating efficiencies driven by a greater number of new generation miners currently being deployed at Riot’s Whinstone US, Inc., (“Whinstone”) facility, net of increases in the difficulty index associated with solving BTC mining algorithms.
Selling, general, and administrative ("SG&A") expenses increased by $5.4 million to $10.9 million, as compared to $5.5 million for the same three-month period in 2021. $4.4 million of the year-over-year increase was due to increased stock-based compensation and personnel as a result of the Company’s rapid growth.
Taking into account the year-over-year $23.3 million increase in quarterly mining revenue margin relative to the year-over-year $5.4 million increase in SG&A expenses, the Company continues to demonstrate positive operating leverage and the benefits of its growing economies of scale.
Net income for the quarter ended March 31, 2022, was $35.6 million, or $0.30 per share, as compared to net income of $7.5 million, or $0.09 per share, in the same three-month period in 2021. Net income for the quarter was positively impacted by an increase in fair value of derivative asset of $46.2 million and a $9.2 million gain on sale of Bitcoin, partially off-set by a $26.4 impairment of held Bitcoin and an unrealized loss of $1.6 million on marketable equity securities.
Non-GAAP Adjusted EBITDA for the quarter ended March 31, 2022 was $11.7 million, as compared to Non-GAAP Adjusted EBITDA of $11.1 million for the same three-month period in 2021. $26.4 million in impairment of Bitcoin negatively impacted net income for the quarter, which impacted Non-GAAP Adjusted EBITDA. During Q1 2022 the Company determined to exclude impairments and gains or losses on sales or exchanges of cryptocurrencies from its calculation of Non-GAAP Adjusted EBITDA.
First Quarter 2022 and Recent Operational Highlights
- During the three-month period ended March 31, 2022, increased deployed hash rate capacity by 39%, from 3.1 EH/s to 4.3 EH/s.
- Subsequent to March 31, 2022, deployed approximately 3,456 S19J Pro Antminers at Whinstone and increased hash rate capacity to 4.7 EH/s as of April 30, 2022.
- As of April 30, 2022, the Company had 46,375 miners deployed with an additional 7,240 miners staged for deployment. Shipments of 1,702 S19j Pros have been initiated out of Bitmain and are expected to be received during May 2022. Upon deployment of the staged miners and those from the May 2022 delivery, the Company expects to have a total of 55,317 miners deployed with a hash rate capacity of approximately 5.6 EH/s.
- Made substantial progress on the Company’s 400 megawatt (“MW”) expansion at Whinstone, with four buildings totaling approximately 240,000 square feet nearing the end of the construction phase. The new buildings and their critical infrastructure are expected to be completed Q2 2022, with the final components of the buildout being completed in parallel with miner shipments.
- Made substantial progress on Buildings F and G, both employing the Company’s state-of-the-art immersion-cooling technology, with an increasing number of miners being deployed and operational in Building F and electrical installation ongoing in Building G, which upon completion are expected to host approximately 46,000 S19 Antminers from Riot’s already-purchased miner fleet.
- Announced the initiation of a 265 acre, 1 gigawatt (“GW”) expansion in Navarro County, Texas. The first phase of the expansion consists of 400 MW of immersion-cooled Bitcoin mining infrastructure. Construction is expected to begin in Q2 2022, and Bitcoin mining operations are the new facility are expected to commence July 2023.
Hash Rate Growth
By January 2023, Riot anticipates a total self-mining hash rate capacity of approximately 12.8 EH/s, assuming full deployment of approximately 120,150 Antminer ASICs, but excluding any potential expected incremental productivity gains from the Company’s utilization of 200 MW of immersion-cooling infrastructure.
Approximately 97% of the Company’s self-mining fleet will consist of the latest generation S19 series miner model. Upon full deployment of all currently contracted miners, the Company’s total self-mining fleet will consume approximately 370 MW of energy. In addition to the Company’s self-mining operations, Riot hosts approximately 200 MW of institutional Bitcoin mining clients.
About Riot Blockchain, Inc.
Riot Blockchain (NASDAQ: RIOT) focuses on mining Bitcoin, and through Whinstone, its subsidiary, hosting Bitcoin mining equipment for institutional clients. The Company is expanding and upgrading its mining operations through industrial-scale infrastructure development and latest-generation miner procurement. Through Riot’s subsidiary ESS Metron, the Company engineers and manufacturers electrical equipment solutions for Bitcoin mining and other industries. The Company’s headquarters is in Castle Rock, Colorado, the Whinstone Facility operates in Rockdale, Texas and the Expansion is in Corsicana, Texas. Riot also has mining equipment operating in upstate New York under a co-location hosting agreement with Coinmint, LLC. For more information, visit www.RiotBlockchain.com.
Safe Harbor
Statements in this press release that are not historical facts are forward-looking statements that reflect management’s current expectations, assumptions, and estimates of future performance and economic conditions. Such statements are made in reliance on the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Words such as “anticipates,” “believes,” “plans,” “expects,” “intends,” “will,” “potential,” “hope,” and similar expressions are intended to identify forward-looking statements. These forward-looking statements may include, but are not limited to, statements about the benefits of acquisitions, including financial and operating results, and the Company’s plans, objectives, expectations, and intentions. Among the risks and uncertainties that could cause actual results to differ from those expressed in forward-looking statements include, but are not limited to: unaudited estimates of Bitcoin production; our future hash rate growth (EH/s); the anticipated benefits, construction schedule and costs associated with the Navarro site expansion; our expected schedule of new miner deliveries; our ability to successfully deploy new miners; M.W. capacity under development; we may not be able to realize the anticipated benefits from immersion-cooling; the integration of acquired businesses may not be successful, or such integration may take longer or be more difficult, time-consuming or costly to accomplish than anticipated; failure to otherwise realize anticipated efficiencies and strategic and financial benefits from our acquisitions; and the impact of COVID-19 on us, our customers, or on our suppliers in connection with our estimated timelines. Detailed information regarding other factors that may cause actual results to differ materially from those expressed or implied by statements in this press release may be found in the Company’s filings with the U.S. Securities and Exchange Commission (the “SEC”), including in the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as amended, and our other filings with the SEC, copies of which may be obtained from the SEC’s website at www.sec.gov. All forward-looking statements included in this press release are made only as of the date of this press release, and the Company disclaims any intention or obligation to update or revise any forward-looking statements to reflect events or circumstances that subsequently occur, or of which the Company hereafter becomes aware, except as required by law. Persons reading this press release are cautioned not to rely on forward-looking statements. All forward-looking statements included in this press release are made only as of the date of this press release, and the Company disclaims any intention or obligation to update or revise any forward-looking statements to reflect events or circumstances that subsequently occur, or of which the Company hereafter becomes aware, except as required by law. Persons reading this press release are cautioned not to rely on forward-looking statements.
For further information, please contact:
Investor Contact:
Phil McPherson
IR@RiotBlockchain.com
303-794-2000 ext. 110
Media Contact:
Trystine Payfer
303-794-2000 ext. 118
PR@RiotBlockchain.com
SOURCE: Riot Blockchain, Inc.
Non-U.S. GAAP Measures of Financial Performance
In addition to consolidated U.S. GAAP financial measures, Riot reviews the non-GAAP financial measure, “Adjusted EBITDA.” Adjusted EBITDA is a financial measure defined as our EBITDA, adjusted to eliminate the effects of certain non-cash and / or non-recurring items, that do not reflect our ongoing strategic business operations. EBITDA is computed as net income before interest, taxes, depreciation, and amortization. Adjusted EBITDA is EBITDA further adjusted, for certain income and expenses, management believes results in a performance measurement that represents a key indicator of the Company’s core business operations of Bitcoin mining. The adjustments include fair value adjustments such as derivative power contract adjustments, equity securities value changes, and non-cash stock-based compensation expense, in addition to financing and legacy business income and expense items. During Q1 – 2022 we determined to exclude impairments and gains or losses on sales or exchanges of cryptocurrencies from our calculation of Non-GAAP Adjusted EBITDA for all periods presented.
We believe Adjusted EBITDA can be an important financial measure because it allows management, investors, and our board of directors to evaluate and compare our operating results, including our return on capital and operating efficiencies, from period-to-period by making such adjustments.
Adjusted EBITDA is provided in addition to, and should not be considered to be a substitute for, or superior to, the comparable measure under U.S. GAAP. Further, Adjusted EBITDA should not be considered as alternatives to revenue growth, net income, diluted earnings per share or any other performance measure derived in accordance with U.S. GAAP, or as alternatives to cash flow from operating activities as a measure of our liquidity. Adjusted EBITDA has limitations as analytical tools, and you should not consider such measures either in isolation or as substitutes for analyzing Riot’s results as reported under U.S. GAAP.
Reconciliations of Adjusted EBITDA to the most comparable U.S. GAAP financial metric for historical periods are presented in the table below.
| Riot Blockchain, Inc. and Subsidiaries | ||||||||
| Reconciliation of GAAP and Non-GAAP Financial Information | ||||||||
| (Unaudited; in thousands) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Net income (loss) | $ | 35,629 | $ | 7,530 | ||||
| Interest (income) expense | 220 | (175 | ) | |||||
| Income tax expense (benefit) | 312 | - | ||||||
| Depreciation and amortization | 14,245 | 2,846 | ||||||
| EBITDA | $ | 50,406 | $ | 10,201 | ||||
| Non-cash/non-recurring operating expense: | ||||||||
| Stock-based compensation expense | 3,042 | 936 | ||||||
| Acquisition related costs | 78 | - | ||||||
| Change in fair value of derivative asset (gain) loss | (43,683 | ) | - | |||||
| Change in fair value of contingent consideration (gain) loss | 176 | - | ||||||
| Unrealized loss (gain) on marketable equity securities | 1,611 | - | ||||||
| Other (income) expense | 137 | - | ||||||
| Other revenue, (income) expense items: | ||||||||
| License fees | (24 | ) | (24 | ) | ||||
| Non-GAAP Adjusted EBITDA | $ | 11,743 | $ | 11,113 | ||||
