Riot Platforms Inc (RIOT) Q3 2024 Earnings Call Highlights: Surging Revenue Amidst Rising Losses

Riot Platforms Inc (RIOT) reports a 65% revenue increase driven by Bitcoin mining, despite a significant net loss and operational challenges.

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Oct 31, 2024
Summary
  • Total Revenue: $84.8 million, a 65% increase year over year from $51.9 million in Q3 2023.
  • Gross Profit: $24.3 million, compared to $37.7 million in Q3 2023.
  • Net Loss: $154.4 million or $0.54 per share, compared to $80 million or $0.44 per share in Q3 2023.
  • Bitcoin Mining Revenue: $67.5 million, a 116% increase from $31.2 million in Q3 2023.
  • Bitcoin Mined: 1,104 Bitcoin, similar to 1,106 Bitcoin in Q3 2023.
  • Bitcoin Held: 10,427 Bitcoin, a 42% increase from 7,327 Bitcoin at the end of Q3 2023.
  • Installed Hash Rate: 28 X hash, a 159% increase from Q3 2023.
  • Cost of Mining Bitcoin: $35,376 per Bitcoin, with power costs at $26,673 per Bitcoin.
  • Non-GAAP Adjusted EBITDA: Loss of $3.6 million, compared to a loss of $3.1 million in Q3 2023.
  • Engineering Revenue: $12.6 million, down from $15.5 million in Q3 2023.
  • Cash SG&A Expense: $36.4 million, including one-time expenses.
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Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Riot Platforms Inc (RIOT, Financial) increased its total deployed hash rate by 27% quarter over quarter, reaching 28X hash, and is on track to achieve 35X hash by the end of the year.
  • The company reported a 65% year-over-year increase in total revenue for the third quarter of 2024, reaching $84.8 million, primarily driven by higher Bitcoin prices.
  • Riot Platforms Inc (RIOT) maintained one of the industry's lowest power costs at $0.031 per kilowatt hour, aided by $12.4 million in power credits during the quarter.
  • The company successfully completed the redeployment of underperforming miners at its Rockdale facility, improving operational efficiency and achieving an 80% company-wide average utilization rate.
  • Riot Platforms Inc (RIOT) ended the third quarter with 10,427 Bitcoin, a 42% increase compared to the end of the third quarter of 2023, and retained 100% of all Bitcoin produced during the quarter.

Negative Points

  • Riot Platforms Inc (RIOT) reported a net loss of $154.4 million for the third quarter of 2024, compared to a net loss of $80 million in the same period in 2023.
  • The company's gross profit decreased to $24.3 million from $37.7 million in the third quarter of 2023, despite the increase in revenue.
  • Non-GAAP adjusted EBITDA for the quarter was a loss of $3.6 million, slightly worse than the $3.1 million loss in the third quarter of 2023.
  • Riot Platforms Inc (RIOT) faced increased litigation expenses related to legacy hosting customers, which are expected to remain elevated in the fourth quarter.
  • The company revised its hash rate growth forecast for 2025 down from 56X hash to 46.7X hash, citing longer lead times on substation equipment and adjustments in Kentucky expansion plans.

Q & A Highlights

Q: How should investors think about Riot's utilization rate going forward?
A: Jason Les, CEO, explained that Riot is focused on achieving operational excellence with a target of greater than 95% average utilization of deployed hash rate, excluding periods of curtailment related to power strategy. Recent improvements have seen utilization rates rise from 60-70% to over 80%, with expectations to continue improving through the end of the year.

Q: What is Riot's appetite for additional M&A, and what are you seeing in the market?
A: Jason Chung, EVP and Head of Corporate Development & Strategy, noted that Riot is actively exploring opportunities, particularly on the private side, due to challenging conditions for private miners. Riot remains disciplined in evaluating opportunities and is open to pursuing additional deals.

Q: Are there any logistical or best practices improving utilization outside of new machines?
A: Jason Les, CEO, highlighted numerous projects underway to improve utilization, including enhancements to electrical infrastructure, cooling systems, and on-ground organization. Riot has also ramped up analytics and software capabilities to monitor operations more effectively.

Q: Regarding the additional 600 megawatts at Corsicana, is it all intended for Bitcoin mining, or are there other plans?
A: Jason Les, CEO, stated that while the current plan is to use the capacity for Bitcoin mining, Riot is open to opportunities that offer better economics for shareholders. Preliminary discussions with interested parties are ongoing.

Q: Can you provide more details on the SG&A increases and the status of litigation with hosting counterparties?
A: Jason Les, CEO, explained that SG&A increases are due to one-time M&A and litigation expenses. Litigation with legacy hosting customers is ongoing, and while costs are expected to be elevated in the fourth quarter, they are temporary and not reflective of the business's ongoing operational run rate.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.