US-listed mining company Riot announces full-year financial results

Riot’s financial base is solid

Riot Blockchain (RIOT), a NASDAQ-listed US crypto asset (virtual currency) mining company, announced its financial results for the full year 2022 (January to December) on the 2nd.

Ended with no long-term debt as of the end of December 2022, $321.8 million in working capital including $230.3 million in cash on hand, and 6,974 BTC (15.8 billion yen at the end of the year). While the financial conditions of crypto-asset (virtual currency)-related companies have deteriorated across the board, he emphasized that they are maintaining a strong financial base.

Riot’s hash rate will more than triple throughout 2022, reaching a record high of 9.7 EH/s. Mined 5,554 bitcoins (BTC), up 46% year-on-year.

The company’s total revenue was about 35.5 billion yen ($259.2 million), surpassing 2021’s $213.2 million. Bitcoin mining revenue fell to $156.9 million from $184.4 million a year earlier, but was affected by the average BTC price dropping from $45,744 to $28,245.

Riot managed to curb bitcoin production through long-term, fixed-price power contracts, while generating over $27 million in power credits when severe winter storms hit North America. It profited from electricity credits while reducing production costs to the lowest level in the industry.

As a result, the company’s mining costs averaged $11,225 per BTC in 2022, down 6% year-over-year from $11,939 in 2021.

The increase in production is due to the successful expansion of three facilities in Rockdale, Georgia. With a new facility scheduled to open in Corsicana, Texas, in the fourth quarter of 2023, the company stresses that it is “in a strong position to continue executing on its aggressive growth plans well into 2023 and beyond.”

Riot will also post a net loss of approximately ¥70 billion ($509.6 million) in 2022. This is well above the 2.1 billion yen ($15.4 million) loss in 2021, but includes $335.6 million in goodwill from the 2021 acquisition of mining company Whinstone US and electrical equipment provider ESS Metron. Impairment loss of $147.4 million in cryptocurrencies held, impairment loss of $55.5 million in mining equipment, etc.

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Postpone Annual Reporting to SEC

Riot also announced today that it will postpone its 10-K filing with the SEC (U.S. Securities and Exchange Commission).

He said he realized that the current calculation method for bitcoin impairment charges did not meet the requirements of accounting rules. So far, the company has calculated the impairment based on daily spot prices, but argues that it should be recalculated using Bitcoin’s intraday low. Riot has given up on filing its annual report by the deadline and reports it is expected to be filed within the 15-day extension.

On the 1st, rival mining company Marathon Digital (MARA) announced it would delay the filing of its 10-K quarterly report for 2022. The company is under investigation by the SEC regarding the impairment of digital assets, and the audited financial report for 2021 will also be subject to revision. It said it would have no impact on gross margin, operating profit or net profit.

Silvergate Bank (SI), which provides banking services to cryptocurrency exchanges, is also delaying its 10-K filing due to regulatory investigations and audits, and its SI share price fell 57% on the 1st. In filings with the U.S. Securities and Exchange Commission (SEC), it said it may be “not well capitalized” and that it is “reviewing its business.”

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