Riot Platforms, Inc. Q3 FY2024 earnings call

• Vertical Integration Strategy: Focus on developing large-scale Bitcoin mining operations, being a low-cost producer, and building a strong balance sheet.
• Hash Rate Growth: Deployed hash rate increased to 28 exahash in Q3 2024, on track for 35 exahash by year-end. Corsicana Facility initiated full second phase development, adding 600 MW capacity.
• Production: Mined 1,104 Bitcoins in Q3 2024. Average operating hash rate improved, with October production at ~469 Bitcoins and 80%+ company-wide utilization.
• Power Strategy: Generated $12.4 million in power credits, achieving an all-in power cost of $0.031 per kWh.
• ESSMetron: Government contract delayed, but capacity freed up for higher-margin contracts, with plans to focus on such contracts in 2025.

Bitcoin Mining: Total revenue in Q3 2024 was $67.5 million, a 116% increase from Q3 2023 ($31.2 million). Mined 1,104 Bitcoins in Q3 2024. Cost to mine per Bitcoin was $35,376, with power costs accounting for $26,673 (75%) of that. ESSMetron: Reported revenue of $12.6 million in Q3 2024, down from $15.5 million in Q3 2023 due to a delayed government contract, resulting in an engineering gross loss of $0.9 million vs. gross profit of $2.3 million in Q3 2023.

• Hash Rate Forecast: Revised 2024 year-end installed hash rate to 35 exahash (down from prior 36 exahash) due to Kentucky growth pushback. 2025 year-end exit hash rate revised to 46.7 exahash (down from prior 56 exahash) due to substation equipment delays and Kentucky expansion pushouts.
• CapEx: Anticipated CapEx of $663 million over next five quarters, reduced from prior guidance, with spending to set foundation for future growth.

• Litigation Expenses: Elevated litigation costs in Q4 2024 related to legacy hosting customers inherited from Whinstone acquisition.
• Market Uncertainties: Volatility in Bitcoin prices, challenges in achieving hash rate growth targets, and potential delays in equipment deployment for facility expansions.

Q: Mike Colonnese asked about Riot's utilization rate.

A: Jason Les stated focus on operational excellence with target to reach >95% average utilization, noting improvements from 60%-70% range to over 80% in recent months.

Q: Darren Aftahi inquired about logistical best practices improving utilization.

A: Jason Les mentioned improvements in electrical infrastructure, cooling, analytics, and on-the-ground organization for miner repair/support.

Q: Paul Golding asked about substation maintenance and ESSMetron utilization.

A: Jason Les said substation maintenance was internal, not demand response; ESSMetron freed capacity for higher-margin contracts in 2025.

Q: Joe Flynn asked about SG&A and litigation.

A: Jason Les noted run rate cash SG&A at $26.5 million (in line with guidance) but litigation costs elevated in Q4, temporary in nature.

Q: Brett Knoblauch asked about HPC optionality and power sites.

A: Jason Les said receiving unsolicited interest for large power capacity, with focus on blue-chip counterparties for HPC deals.

Q: Lucas Pipes asked about M&A and AI HPC competition.

A: Jason Chung said active in exploring M&A, competing with AI HPC companies for assets but advantage in Bitcoin mining asset universe.

Q: Reggie Smith asked about capital allocation and HPC time differential.

A: Jason Les explained Bitcoin mining allows averaging in over time, derisking exposure vs. buying Bitcoin directly, and leveraging cost efficiencies.