Wall Street Bitcoin Miner’s Net Loss Surges over 90% in Q3 2024

Riot Platforms (NASDAQ: RIOT), the third largest Bitcoin mining company on Wall Street, reported a significantly wider net loss in the third quarter despite higher revenue, as the cost of mining each BTC soared and power-related benefits diminished.

Riot Posts 93% Wider Loss as Bitcoin Mining Costs Surge Post-Halving

The company's net loss expanded to $154.4 million, or $0.54 per share, compared to an $80 million loss in the same period last year. The deterioration came even as total revenue jumped 65% to $80 million, driven primarily by higher Bitcoin prices and increased operational capacity.

The cost to mine one Bitcoin skyrocketed to $35,376 in the quarter, a dramatic shift from the negative cost of $22,741 in the same period last year. When including the BTC miner depreciation, the cost is even higher, reaching $75,506 and rising 124% from $27,484 reported in 2023.

This is significantly higher than the current market average, which, according to CoinShares, stood at $49,500 last quarter. Just a month ago, BTC mining difficulty reached a record high of 92.67 trillion, further cutting into miners' profit margins.

The surge reflects the impact of April's Bitcoin halving event, which cut mining rewards in half, combined with rising network difficulty and significantly reduced power credits. However, Jason Les, the CEO of the Wall Street BTC miner, tried to stay positive and looked for a brighter side in the latest report.

“Riot recorded $84.8 million in revenue this quarter, representing a 65% increase over the same quarter in 2023, driven by a 159% year-over-year increase in deployed hash rate to 28 EH/s,” said Les. “This significant increase in deployed hash rate allowed us to produce 1,104 Bitcoin this quarter, in line with our Bitcoin production in the third quarter of 2023.”

BTC Mining Margins Continue to Fall

Power credits, a crucial component of Riot's business model, dropped to $12.4 million from $49.6 million year-over-year, representing a 75% decrease. This decline significantly impacted the company's mining margins, which fell to 42% ($28.4 million) from 181% ($56.4 million) in the previous year.

“Bitcoin mining cost of revenue consists primarily of direct production costs of mining operations, including electricity, labor, and insurance, but excluding depreciation and amortization,” the company added.

The company also faced increased operational expenses, with selling, general, and administrative costs rising by $37.9 million, driven by higher stock-based compensation, advisory fees, and legal costs.

Riot Platforms Reports Third Quarter 2024 Financial Results, Current Operational and Financial Highlights. $84.8 million in Total Revenue and Deployed Hash Rate of 28 EH/s.“I’m pleased to announce Riot’s results for the third quarter 2024, the first full quarter past the… pic.twitter.com/bbEno5GOkz

Riot is not the only publicly-listed Bitcoin miner from Wall Street that experienced visibly higher production costs. BitFuFu (NASDAQ: FUFU) announced a week ago that it plans to acquire a majority stake in an Ethiopian mining facility in a quest to find cheaper energy. For BitFuFu the production costs increased by 180% over the past year, shrinking the profit by 75%.

Despite these challenges, Riot revised its hash rate growth projections, now targeting 34.9 EH/s by the end of 2024, down from previous guidance of 36.3 EH/s, citing delays in Kentucky facility expansion.

As of September 30, Riot held 10,427 Bitcoin worth approximately $660.3 million and maintained a strong financial position with $355.7 million in cash and $190.1 million in marketable securities.