Riot Platforms(US:RIOT)2023-03-01 16:00Bitcoin Assets and Impairment - As of December 31, 2022, the company held 6,974 Bitcoin with a carrying value of $109.4 million, reflecting cumulative impairment charges of $147.4 million during the fiscal year due to decreases in fair value [439]. - The company reported an impairment of Bitcoin amounting to $147,365 thousand in 2022, up from $43,973 thousand in 2021 [461]. - The company recognized an impairment charge of $55.5 million for its miners due to adverse market conditions as of December 31, 2022 [616]. - The company performed a goodwill impairment assessment resulting in a non-cash impairment charge of $335.6 million during the year ended December 31, 2022 [623][625]. Financial Performance - The company recognized approximately $156.9 million in revenue from Bitcoin mining for the year ended December 31, 2022 [451]. - Total revenue for 2022 was $259.171 million, an increase of 21.5% from $213.243 million in 2021 [456]. - Bitcoin mining revenue decreased to $156.870 million in 2022 from $184.422 million in 2021, a decline of 15% [456]. - Net loss for 2022 was $509.553 million, compared to a net loss of $15.437 million in 2021, representing a significant increase in losses [456]. - Operating income (loss) for 2022 was $(512.701) million, compared to $(29.870) million in 2021, indicating a worsening operational performance [456]. - Cash and cash equivalents decreased to $230.328 million in 2022 from $312.315 million in 2021, a decline of 26.2% [454]. - Total assets decreased to $1.320 billion in 2022 from $1.522 billion in 2021, a reduction of approximately 13.3% [454]. Strategic Plans and Investments - The company expects to continue making strategic acquisitions and investments, including the development of a second large-scale Bitcoin mining facility outside Corsicana, Texas [21]. - The company has plans for market expansion and new product development, focusing on enhancing its data center hosting and engineering services [456]. - The Company acquired a 265-acre site in Navarro County, Texas for $10.1 million to develop a one-gigawatt Bitcoin mining and data center facility, with operations expected to commence by Q4 2023 [557]. - The Company acquired ESS Metron for a total consideration of $56.9 million, which included a cash payment of approximately $30.1 million and 715,413 shares of common stock valued at approximately $26.7 million [560]. Risks and Challenges - The company faces significant risks related to the volatility of Bitcoin prices, which could adversely affect its ability to raise additional capital [21]. - The company may be negatively impacted by cybersecurity threats, which could disrupt its information technology networks [21]. - The company is subject to various risks, including geopolitical events and climate change regulations, which could materially affect its business operations [21]. - The company has identified a material weakness in its internal control over financial reporting as of December 31, 2022 [446]. Revenue Recognition and Accounting Practices - The company’s Bitcoin assets are accounted for as indefinite-lived intangible assets and are measured for impairment daily based on the quoted price of Bitcoin [440]. - The company’s management has exercised significant judgment in applying accounting principles to revenue recognized from Bitcoin mining, indicating complexities in financial reporting [451]. - Revenue from data center hosting is recognized monthly as power is provided, with variable fees based on actual power usage [508]. - The Company recognizes revenue from engineering and construction services upon completion of each phase of the project, utilizing a cost-to-cost method for revenue recognition [511][515]. Customer Concentration and Accounts Receivable - As of December 31, 2022, five customers accounted for over 80% of consolidated accounts receivable, indicating a high customer concentration risk [598]. Cash Flow and Capital Management - Net cash provided by operating activities was $530 thousand in 2022, a significant improvement from a cash used of $86,082 thousand in 2021 [461]. - The company raised $304,849 thousand from the issuance of common stock in 2022, compared to $684,817 thousand in 2021 [461]. - The company is focused on capital allocation to opportunities that generate the highest return on investment in the evolving cryptocurrency environment [467].