Riot Platforms Reports $154 Million Loss Amidst Declining Bitcoin Mining Profitability
Riot Platforms reported a net loss of $154.4 million for Q3, equating to $0.54 per share. Bitcoin production matched the previous year at 1,104 BTC, with total revenue at $84.8 million. Mining gross profit margins collapsed to 42% due to rising costs. CEO Jason Les highlighted the company’s strong balance sheet but announced reduced hash rate targets for 2024 and 2025, prompting a drop in stock prices following the earnings release.
Riot Platforms recently announced a substantial net loss of $154.4 million, amounting to $0.54 per share for the third quarter, contrasting with a smaller loss of $0.44 per share during the same quarter last year. Despite producing 1,104 bitcoins, a marginal decrease from the previous year’s output of 1,106 bitcoins, the company’s revenue for the quarter was reported at $84.8 million, of which $67.5 million was derived from Bitcoin mining activities. The gross profit from Bitcoin mining, excluding depreciation, stood at $28.4 million, reflecting a significant margin decline to 42% from the astonishing 181% margin recorded a year earlier, attributed to soaring costs in electricity, labor, and insurance. The reported losses are starkly contrasted with consensus estimates that predicted a loss of $0.18 per share. The broader loss can be partially accounted for by $38 million associated with unrealized losses on marketable securities, $30.6 million in non-cash stock-based compensation, and $60 million in depreciation and amortization expenses. Additionally, non-GAAP adjusted EBITDA for this quarter revealed a loss of $3.6 million, worsening relative to the $3.1 million loss in the same quarter of the prior year. CEO Jason Les underscored the company’s resilience, stating that Riot maintained a robust balance sheet with approximately $1.3 billion in cash and assets, including 10,427 bitcoins. Looking forward, Riot aims to enhance its self-mining capacity to 100 EH/s, albeit lowering its year-end target for its hash rate from 36.3 EH/s to 34.9 EH/s due to delays in operationalization of its Kentucky facilities, now expected to be finished by 2025. Furthermore, the 2025 target has been revised down from 56.6 EH/s to 46.7 EH/s, resulting from postponed expansion plans and substation construction delays at the Corsicana facility, which anticipates full completion by 2026 at an estimated hash rate of 65.7 EH/s. Following the earnings report, Riot’s stock experienced a decline of approximately 4% in after-hours trading, compounding a 3.6% drop during regular trading hours. Year-to-date, shares have decreased by around 32%.
Riot Platforms, a prominent player in the cryptocurrency mining sector, has recently faced challenges consistent with broader industry trends, including rising operational costs and market volatility. The company’s recent earnings report reveals significant financial losses amidst ongoing difficulties attributed to increased expenses in labor and electricity, coupled with a decrease in profit margins. Bitcoin mining has historically been a volatile business affected heavily by external factors such as cryptocurrency market prices, regulatory factors, and the energy market, all of which play a crucial role in the economic viability of mining operations.
In conclusion, Riot Platforms has reported disappointing financial results, marked by a substantial net loss and decreased profit margins during the third quarter, despite mining a consistent number of bitcoins year-over-year. The revisions to future operational targets indicate challenges ahead, primarily related to expansions and rising costs. The company’s management remains optimistic about future growth potential, noting their strong balance sheet, but recent stock performance suggests investor concern regarding the outlook.
Original Source: www.theblock.co
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