In the second quarter of 2024, Riot Platforms experienced a significant setback with a net loss of $84.4 million, a sharp increase from $27.4 million in the same period the previous year. This widened loss can be attributed to the lingering effects of the Bitcoin halving that occurred in April. Despite this, Riot still managed to report a total revenue of $70 million for the quarter, although this figure is down from $76.7 million in the second quarter of 2023.
One of the main reasons for the decline in revenue was a $9.7 million drop in Engineering revenues, partially offset by a $6 million increase in Bitcoin mining revenue. The company’s production of Bitcoin also took a hit, with only 844 BTC mined during the quarter, a 52% decrease from the previous year. This drop was largely due to the effects of the halving event and the increased network difficulty.
Rising Costs of Bitcoin Mining
The average direct cost to mine Bitcoin spiked to $25,327 per BTC, up significantly from $5,734 in the second quarter of 2023. This surge in costs was driven by the halving event and a 68% rise in the global network hash rate. Despite these challenges, Riot managed to increase its mining revenue to $55.8 million, compared to $49.7 million in the prior year, thanks to higher BTC prices and improved operational efficiency.
Riot emphasized that it maintained a solid financial position, with $646.5 million in working capital, including $481.2 million in cash. The company also held 9,334 unencumbered Bitcoin, valued at approximately $585 million, all mined through its operations. In a strategic move, Riot acquired Block Mining, a Kentucky-based firm, in a $92.5 million deal. This acquisition, funded by $18.5 million in cash and $74 million in Riot common stock, allowed the company to increase its hash rate, expand its geographical footprint, and enter new energy markets beyond the ERCOT region.
CEO’s Perspective
Despite the challenges faced, Riot CEO Jason Les remained optimistic about the company’s performance in the second quarter. He highlighted the impact of the Bitcoin halving event on the mining industry but also pointed out Riot’s ability to generate $70.0 million in revenue and maintain strong gross margins in its core Bitcoin mining business. Les’s comments reflect a sense of resilience and determination in the face of adversity.
The second quarter of 2024 presented several challenges for Riot Platforms, including financial losses, declining revenue, and rising costs of Bitcoin mining. However, the company’s strategic decisions, strong financial position, and CEO’s positive outlook signal a commitment to overcoming these obstacles and driving future growth in the competitive cryptocurrency market.