Riot’s Power Strategy Boosts Q2 Earnings Amidst Bitcoin Price Fluctuations

Updated: 10 August 2023

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Bitcoin mining company Riot Platform has reported its second-quarter earnings reporting millions of dollars in revenue courtesy of its new power strategy. The company also reported a reduction in the cost of mining Bitcoin amidst rising costs of power and low asset prices.

Riot’s Q2 Report

In the report released on Wednesday, Riot, one of the most prominent publicly-traded Bitcoin miners, stated an overall revenue of $76.7 million over the three months. While this was a couple of million short of the $84.6 million analysts had predicted, the company still managed a lower loss per share of $0.17 compared to analysts’ estimates of $0.20.

Bitcoin mining generated $49.7 million of the total quarter revenue, whereas data center hosting produced $7.7 million. The remaining $19.3 million was earned from engineering. In the quarter, the company’s power curtailment credits increased to $13.5 million, up from the $5.5 million earned over the previous year’s three-month period.

This quarterly revenue increased by 5.2% from $72.9 million in the corresponding period a year prior, thanks to a 27% increase in bitcoin output, which was somewhat offset by a decline in bitcoin price.

Bitcoin’s prices, which averaged $28,024 per Bitcoin for the quarter, decreased by 15% compared to an average price of $33,083 per Bitcoin for the same quarter in 2022. Regardless of the price decrease, Riot reduced its average mining cost per Bitcoin to $8,389 compared to an average of $11,316 for the same quarter the previous year. In total, the firm mined 1775 Bitcoin.

Riot reduces the cost of BTC mining
-company reduced the average cost to mine Bitcoin to $8,389 in Q2 2023 from $11,316 in Q2 2022

Bitcoin prices averaging lower at $28,024 per Bitcoin in Q2 2023, compared to $33,083 in Q2 2022

— BTC (@btc1crypto) August 10, 2023

“Riot’s core business is Bitcoin mining, and the scale of our vertically integrated operations and financial strength allowed us to execute our power strategy at unmatched scale this quarter, driving our average cost to mine to $8,389 per Bitcoin in the second quarter, compared to an average Bitcoin price of $28,024,” Riot’s CEO, Jason Les, said.

The Winning Power Strategy

The power strategy referenced in this case entailed both power sales and demand response revenue earned from selling power back to the ERCOT grid at market-driven spot prices. This strategy has fueled Riot’s staggering reduction in operation costs this quarter.

In June, Riot produced 460 Bitcoin, marking a decrease from the 757 Bitcoin mined in May 2023. However, despite this reduction in mined Bitcoin and the subsequent drop in revenue, the power strategy earned the Bitcoin mining company about $10 million, equivalent to a “361 BTC” increase based on June’s average Bitcoin price.

In the same month, most American Bitcoin miners sold their coins to benefit from the rise in price and lock-in earnings. However, Riot only sold 400 Bitcoins, 33% less than the previous month.

This choice demonstrates Riot’s faith in the potential of its novel power strategy, which enables the business to generate significant income other than through selling Bitcoin.

Resilience Amidst Increasing Headwinds

Since last year, as the price of Bitcoin fell and power prices rose, the margins for Bitcoin miners have decreased. Riot is one of the miners who has succeeded in making money by stopping their energy-intensive operations and selling their power at a premium during shortages.

The miner, who runs one of the most significant Bitcoin mining operations in the entire world in Texas, made tens of millions of dollars during the state’s hottest months as electricity demand spiked due to the heat waves.

The company also had its share of losses after ending the quarter with a $27.7 million loss. This was. However, a small amount compared to the net loss of $353.6 million suffered in Q2 of 2022.

Riot continues to demonstrate resilience and dedication amidst the challenging economic times in the traditional and crypto financial economies. As such, the Bitcoin miner revealed its long-term purchase agreement with MicroBT to acquire 33,280 next-generation miners, which would increase production capacity for the company by mid-next year.

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