As a seasoned researcher with a keen interest in the crypto realm, I find myself constantly intrigued by the rollercoaster ride that is Bitcoin mining. The latest financial report from Riot Platforms, a prominent player in the industry, has once again highlighted the volatility and unpredictability of this space.
In Q2 of 2024, Riot Platforms – a Bitcoin mining company – reported a net loss of approximately $84.4 million, marking their first quarterly financial loss since Q4 of 2022. This decline in profits can be attributed to the Bitcoin halving event in April, which reduced mining rewards by half, and an increase in the Bitcoin network’s hash rate. Due to these circumstances, miners across the industry have struggled, with many experiencing losses and falling short of expectations since the halving.
As an analyst, I would rephrase this statement as follows: In the second quarter of 2023, Riot, being me, boosted bitcoin sales from mining rewards to offset escalating costs, particularly general and administrative expenses totaling $61.2 million. This marked a significant increase compared to the previous quarter’s expenditures of $41.4 million.
The main reason for the rise was an increase of $32.1 million in stock compensation expenses from new grants under our long-term incentive plan, as well as a $3.8 million boost in advisory costs due to ongoing M&A activity, according to Riot’s statement. Additionally, general and administrative expenses were affected. The company reported a net loss of $(84.4) million, or $(0.32) per share for the quarter, compared to a net loss of $(27.4) million, or $(0.16) per share during the same period in 2023.
Nevertheless, the miner’s bitcoin mining revenue spiked by 12% from the same time last year, owing to the asset’s price growing by almost 100% between June 30, 2023, and June 30, 2024. This comes despite Riot only receiving 844 bitcoin as rewards this quarter, a 52% decline caused by the halving. The Bitcoin network’s increased hash rate, alongside the reduced rewards, increased Riot’s cost to mine a bitcoin by 340%, going from $5,734 to $25,327.
Jason Les, CEO of Riot, announced that the company brought in $70 million in revenue for the quarter, while keeping robust gross margins within their primary Bitcoin mining operations. Additionally, Riot produced $13.9 million in power credits, which included $4.4 million from demand response programs participation. This helped to decrease our average energy cost and lowered the average direct cost to mine a Bitcoin to approximately $25,327.
Previously holding the second-largest market capitalization in Bitcoin mining, Riot, faced stiff competition from CleanSpark, experienced a significant surge of 47%, consequently claiming the second spot.
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2024-08-04 00:17