Riot Platforms(RIOT) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents Riot Platforms' unaudited condensed consolidated financial statements for Q2 and H1 2025, including balance sheets, operations, and cash flows Condensed Consolidated Balance Sheets Total assets increased to $4.29 billion by June 30, 2025, driven by Bitcoin holdings and new debt facilities Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $516,103 | $599,476 | | Bitcoin | $1,711,908 | $1,654,468 | | Total Assets | $4,285,401 | $3,935,307 | | Total Current Liabilities | $374,907 | $160,385 | | Total Liabilities | $989,485 | $791,622 | | Total Stockholders' Equity | $3,295,916 | $3,143,685 | - Key changes from Dec 31, 2024 include a decrease in cash and cash equivalents from $277.9 million to $255.4 million, and an increase in total debt (current and long-term) from $584.6 million to $838.4 million[13] Condensed Consolidated Statements of Operations Q2 2025 saw $219.5 million net income due to Bitcoin fair value gains, while H1 2025 recorded a net loss Q2 2025 vs Q2 2024 Performance (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Revenue | $152,988 | $70,018 | | Bitcoin Mining Revenue | $140,889 | $55,764 | | Change in fair value of bitcoin | $470,812 | $(76,403) | | Loss on contract settlement | $(158,137) | $0 | | Operating Income (Loss) | $216,146 | $(117,041) | | Net Income (Loss) | $219,454 | $(84,449) | | Diluted EPS | $0.58 | $(0.32) | H1 2025 vs H1 2024 Performance (in thousands, except per share data) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Total Revenue | $314,375 | $149,314 | | Bitcoin Mining Revenue | $283,748 | $127,160 | | Operating Income (Loss) | $(17,728) | $86,901 | | Net Income (Loss) | $(76,913) | $127,328 | | Diluted EPS | $(0.23) | $0.51 | Condensed Consolidated Statements of Cash Flows H1 2025 cash used in operations increased to $353.4 million, with financing activities providing $372.4 million Six Months Ended June 30, Cash Flow Summary (in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(353,385) | $(100,365) | | Net cash provided by (used in) investing activities | $(40,019) | $(520,689) | | Net cash provided by (used in) financing activities | $372,351 | $505,053 | | Net (decrease) in cash | $(21,053) | $(116,001) | - Investing activities in H1 2025 included $93.2 million for property and equipment and $86.4 million in deposits, offset by $131.8 million in proceeds from bitcoin sales, a significant reduction from H1 2024's $520.7 million use of cash[24] - Financing activities in H1 2025 were driven by $123.9 million from ATM offerings and $261 million in net proceeds from new debt facilities[24] Note 3. Acquisitions The company completed key acquisitions, including Rhodium assets for $185.0 million and Block Mining for $113.6 million - Settled all litigation with Rhodium, acquired its assets at the Rockdale Facility, and terminated legacy hosting agreements for $185.0 million, resulting in a recognized loss on contract settlement of $158.1 million[47][50] - Acquired E4A Solutions, an electrical engineering company, for approximately $54.4 million to support its vertically integrated strategy[51][52] - Acquired Block Mining, a Kentucky-based bitcoin miner, for approximately $113.6 million, adding 60 MW of operational capacity and access to the MISO electrical grid[60][63] Note 5. Bitcoin As of June 30, 2025, the company held 19,273 bitcoin with a fair value of $2.07 billion Bitcoin Holdings as of June 30, 2025 | Category | Quantity | Fair Value (in thousands) | | :--- | :--- | :--- | | Bitcoin | 15,973 | $1,711,908 | | Restricted bitcoin | 3,300 | $353,672 | | Total | 19,273 | $2,065,580 | - For the six months ended June 30, 2025, the company recognized $283.7 million in revenue from mining 2,956 bitcoin[82] Note 12. Debt Total outstanding debt reached approximately $840 million by June 30, 2025, including $594.4 million in convertible notes - Outstanding 0.75% Convertible Senior Notes due 2030 have a principal amount of $594.4 million[132] - Entered into and fully drew down a $200 million credit facility with Coinbase, secured by 3,300 of the company's bitcoin[145][147] - As of June 30, 2025, borrowings outstanding under the $50 million and $20 million revolving credit facilities were $34.3 million and $20.0 million, respectively[139][143] Note 17. Commitments and Contingencies The company faces $83.5 million in miner commitments and significant legal claims exceeding $1 billion from former customers - Remaining commitment of $83.5 million for the purchase of miners from MicroBT, expected to be paid during the remainder of 2025[186] - Legacy hosting customer SBI Crypto is claiming over $350 million in lost profits and $50 million in equipment replacement costs[201] - Legacy hosting customer GMO is seeking damages in excess of $150 million plus an additional $496 million for alleged wrongful termination of their agreement[202][204] Note 19. Segment Information Riot operates in Bitcoin Mining and Engineering segments, with Q2 2025 Bitcoin Mining revenue at $140.9 million Segment Performance for Three Months Ended June 30, 2025 (in thousands) | Segment | Revenue from External Customers | Segment Gross Profit (Loss) | | :--- | :--- | :--- | | Bitcoin Mining | $140,889 | $62,714 | | Engineering | $10,576 | $5,728 | Segment Performance for Six Months Ended June 30, 2025 (in thousands) | Segment | Revenue from External Customers | Segment Gross Profit (Loss) | | :--- | :--- | :--- | | Bitcoin Mining | $283,748 | $130,755 | | Engineering | $24,496 | $14,166 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Riot's vertically integrated strategy, Bitcoin mining, AI/HPC expansion, and financial performance Business Overview and Trends Riot's deployed hash rate reached 35.4 EH/s by June 30, 2025, with a dual strategy in Bitcoin mining and AI/HPC - The company is pursuing a dual-pronged strategy focusing on Bitcoin mining and developing a scalable data center platform for AI/HPC workloads[226] Key Bitcoin Mining Metrics | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Combined Deployed Hash Rate (EH/s) | 35.4 | 31.5 | | Total Developed Power Capacity (MW) | 1,165 | 900 | - Cost to mine one bitcoin for Q2 2025 was $48,992 excluding depreciation, and $91,244 including depreciation[239] - The power strategy, including manual curtailment and demand response programs, generated $8.3 million in power credits in Q2 2025[253] Results of Operations Q2 2025 revenue increased 118% to $153.0 million due to higher Bitcoin prices and production, leading to net income - Q2 2025 Bitcoin Mining revenue increased by $85.1 million YoY, due to higher average bitcoin prices ($98,800 vs $66,004) and a 68.9% increase in bitcoin production[271] - Q2 2025 costs increased significantly, with Bitcoin Mining cost of revenue up $42.9 million, SG&A up $14.7 million, and Depreciation & Amortization up $45.9 million YoY[274][276][277] Adjusted EBITDA Reconciliation (in thousands) | Period | Net Income (Loss) | Adjusted EBITDA | | :--- | :--- | :--- | | Q2 2025 | $219,454 | $495,268 | | Q2 2024 | $(84,449) | $(75,207) | | H1 2025 | $(76,913) | $318,931 | | H1 2024 | $127,328 | $170,522 | Liquidity and Capital Resources Riot had $141.2 million in net working capital as of June 30, 2025, funding operations via debt and equity offerings - As of June 30, 2025, the company had net working capital of $141.2 million, with cash and cash equivalents of $255.4 million[308] - In H1 2025, the company raised $121.1 million in net proceeds from its ATM equity program by selling 10.8 million shares[307][317] - Financing activities in H1 2025 provided $372.4 million, primarily from ATM proceeds and $254.3 million in net proceeds from new debt arrangements[323] Quantitative and Qualitative Disclosures About Market Risk Primary market risks are Bitcoin price and power costs, with a 10% Bitcoin change impacting H1 2025 net income by $338.4 million - The company's main market risk exposures are the volatile price of bitcoin and the price of power for its mining operations[338][341] Market Risk Sensitivity Analysis for H1 2025 (in thousands) | Risk Factor | 10% Increase Impact on Net Income | 10% Decrease Impact on Net Income | | :--- | :--- | :--- | | Price of Bitcoin | $338,388 | $(338,388) | | Future Power Prices | $41,537 | $(41,537) | Controls and Procedures Disclosure controls were effective as of June 30, 2025, with ongoing integration of acquired entities' internal controls - Management concluded that disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[343] - The company is integrating internal controls of Block Mining and E4A Solutions acquisitions, with full inclusion expected by year-end 2025[344] PART II - OTHER INFORMATION Legal Proceedings The company is involved in significant legal proceedings, including patent disputes and large breach of contract claims - This section incorporates by reference the disclosures in Note 17, which details ongoing litigation[345] Risk Factors New risks relate to AI/HPC expansion, including execution challenges, third-party reliance, and resource diversion - New risks are identified related to the early-stage development of AI/HPC infrastructure, including potential for unforeseen challenges and budget overruns[347][348] - The success of the AI/HPC initiative is dependent on attracting and retaining qualified third-party partners and customers[351] - Expansion into AI/HPC may divert capital, personnel, and power capacity from the core Bitcoin mining business, potentially diminishing its competitive position[352] Unregistered Sales of Equity Securities and Use of Proceeds In Q2 2025, the company repurchased 9,134 shares to satisfy tax obligations on employee restricted stock awards - In Q2 2025, employees surrendered 9,134 shares to the company to cover tax obligations on vested restricted stock awards[353][356] Other Information No directors or officers adopted, modified, or terminated Rule 10b5-1 trading plans during Q2 2025 - No directors or officers adopted or terminated a Rule 10b5-1 plan during the three months ended June 30, 2025[354] Exhibits This section lists all exhibits filed, including key agreements and required officer certifications - Lists key agreements filed as exhibits, such as the Credit Agreement with Coinbase and the Purchase and Sale Agreement with Rhodium[357] - Includes required certifications from the CEO and CFO under Sarbanes-Oxley Sections 302 and 906[357]