Release Date: May 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Riot Platforms Inc achieved a significant increase in total revenue, reporting $79.3 million for Q1 2024, up 18% year over year.
- The company successfully energized its Corsicana facility, marking a key milestone in its infrastructure development and expansion plans.
- Riot Platforms Inc reported a substantial increase in its Bitcoin holdings, ending Q1 2024 with 8,490 bitcoins, significantly higher than the 7,094 bitcoins held at the end of Q1 2023.
- The company has a clear and fully funded growth plan, aiming to increase its self-mining hash rate capacity to 31 exahash by the end of 2024.
- Riot Platforms Inc's strategic focus on being a low-cost producer and its fixed price power contracts have positioned it well to manage operational costs effectively.
Negative Points
- Bitcoin production decreased by 36% year over year in Q1 2024, primarily due to a significant increase in the Bitcoin network difficulty.
- The company's engineering business segment experienced a decline, with revenue dropping to $4.7 million in Q1 2024 from $16.1 million in the same period last year, due to global supply chain constraints.
- Riot Platforms Inc reported an increase in direct costs of mining per Bitcoin, which rose to $23,034 in Q1 2024, driven by higher network difficulty and other operational costs.
- The termination of legacy data center hosting contracts led to a reduction in hosting revenue and necessitated the consolidation of this business segment into the Bitcoin mining segment.
- Legal and litigation expenses have increased due to ongoing legal proceedings related to the terminated hosting contracts, impacting the company's financials.
Q & A Highlights
Q: How is Riot Platforms managing its Bitcoin inventory, especially in terms of using Bitcoin for funding operations versus building inventory?
A: Jason Les, CEO of Riot Platforms, emphasized the company's strategy to maintain a strong balance sheet, which includes holding as much Bitcoin as possible. He noted that Riot stopped selling Bitcoin in early 2024 and is evaluating its balance sheet monthly to balance capital expenses and operational growth while trying to retain as much Bitcoin as possible.
Q: What impact have global supply chain issues had on Riot's engineering business, and how does the company plan to address these challenges?
A: Jason Les explained that supply chain constraints delayed significant orders, impacting revenue recognition. Riot anticipates resolving these issues by the third quarter of 2024, which should help clear backlogged projects and improve revenue from the engineering segment.
Q: With the current low cash prices and post-halving environment, how does Riot view its growth trajectory and the M&A landscape?
A: Jason Les and Jason Chung, EVP of Corporate Development & Strategy, discussed how Riot's position as a low-cost producer helps it navigate the challenging market. They also expect an increase in M&A activity post-halving, with a narrowing gap between buyer and seller valuation expectations.
Q: Can you provide insights into the operational and financial performance expected from the engineering segment once supply chain issues are resolved?
A: Colin Yee, CFO, suggested that once supply chain issues are resolved, the engineering segment's performance should align with historical levels, driven by increased capacity and demand for data center and AI infrastructure.
Q: What are Riot's plans regarding the hosting business, and how does it impact the company's strategy?
A: Jason Les stated that Riot has learned from its experience and decided not to expand its hosting business further. The focus will remain on maximizing the use of its infrastructure for self-mining operations to leverage its efficient production costs and enhance shareholder value.
Q: How confident is Riot in achieving its target of 31 exahash by the end of 2024, and what are the potential challenges?
A: Jason Les expressed high confidence in reaching the 31 exahash target, citing the company's incremental approach to infrastructure development and problem-solving capabilities. He acknowledged minor operational challenges typical of large-scale developments but nothing that would significantly impede progress.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
