Bitcoin Miner Riot Platforms Reports Huge Q2 Loss

August 01, 2024 12:00 AM AEST | By Team Kalkine Media

Bitcoin Miner Riot Platforms Reports Huge Q2 Loss — Image source: shutterstock.com

Impact of Rising Costs and Falling Production

The substantial loss experienced by Riot Platforms was largely attributed to a dramatic 340% increase in the cost to mine a Bitcoin, rising from $5,734 to $25,327. This surge in costs can be linked to the April halving event, which reduced the block reward for miners and intensified competition within the Bitcoin network. Additionally, the Bitcoin network hash rate surged by 68% during this period, further increasing the cost of mining operations.

Riot Platforms also faced a 52% decline in Bitcoin mining production, with the company mining 844 BTC in Q2. This drop in production was directly related to the reduced block rewards following the halving event, which has posed significant challenges for miners across the industry.

Revenue and Expense Trends

Despite the increased costs and decreased production, Riot Platforms managed to report a 12% increase in Bitcoin mining revenue. This growth was driven by a near-100% rise in Bitcoin’s price between June 30, 2023, and June 30, 2024. However, the company’s overall revenue fell 8.75% year-on-year to $70 million, falling short of Zacks’ estimates. The decline in revenue was partly due to a decrease in engineering revenues, which was only partially offset by the boost in Bitcoin mining revenue.

The firm’s selling, general, and administrative expenses also saw a significant increase, totaling $61.2 million in Q2, a $41.4 million rise from the same period in 2023. This substantial increase in expenses contributed to the widened net loss and reflects the ongoing operational challenges faced by the company.

Also read: BTC Price May Face Liquidations if it Drops Below $64K

Expansion and Strategic Moves

In response to the current market conditions, Riot Platforms has been actively expanding its mining capabilities. The company nearly doubled its installed hash rate to 22 exahashes per second (EH/s) during Q2. Riot aims to further increase its total self-mining hash rate capacity to 36 EH/s by the end of 2024, positioning itself for future growth despite the current challenges.

Additionally, Riot has intensified its acquisition strategy, including a notable purchase of approximately 10 million additional shares in rival Bitfarms. This move is part of a broader strategy to strengthen its market position. However, Riot’s attempt to acquire Bitfarms with a $950 million buyout offer in mid-June was ultimately unsuccessful. Riot conceded that engaging with Bitfarms’ Board on a potential merger was not feasible, as stated in a June 24 announcement.

Market Performance and Competition

Following the release of its Q2 report, Riot Platforms’ share price experienced a 1.18% decline in after-hours trading, according to Google Finance data. The company’s stock has dropped nearly 33.8% year-to-date in 2024, contrasting with the performance of some of its rivals. Notably, CleanSpark, another major Bitcoin miner, has seen a 47% increase in its share price and has surpassed Riot as the second-largest Bitcoin miner by market capitalization.

Riot Platforms’ recent financial results highlight the significant challenges faced by Bitcoin miners in a rapidly evolving market. The substantial increase in mining costs, coupled with decreased production and rising operational expenses, has led to a notable quarterly loss. Despite these challenges, Riot’s expansion efforts and strategic moves reflect its commitment to navigating the current market conditions and positioning itself for future growth.

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