If the bitcoin miner Core Scientific is taken by the throat, its competitor Riot shows insolent results.
Riot pulls out of the game
The Texas miner made more than $46 million in the third quarter as a whole. Enough to make many competitors green with envy in the grip of their gargantuan debts.
riot generated 1042 BTC, with its 55,728 machines delivering 5.6 PE/s as of September 30. This is, however, less than the 1292 BTC mined during the same period in 2021.
As a result, mining revenues after costs amounted to $7.4 million (a margin of 33%). This is more than four times less than the 40.6 million in 2021 (margin of 76%).
This slowdown is related to “a 49% drop in BTC”, but not only. This less prolific harvest is also linked to “erasure clauses”. That is, Riot must “cease operations to relieve the network when its electricity supplier asks for it. Riot, for example, only mined 52% of the time in July.
Certainly, these unmined BTCs will be bitterly missed once bitcoin regains altitude. But it is better to secure your back to survive lean times.
Indeed, the electricity supply contract signed with ERCOT yielded 13.1 million dollars in electricity credits. This is a compensation for having cut the juice during consumption peaks. That’s more than Riot would have earned by leaving its machines running 100% of the time. That said, the firm’s few debts will not be reimbursed in electricity credits…
The rest of Riot’s revenue comes from a share of its gaming machine hosting business. mining (~8 million). And on the other hand from its electrical engineering activity (~16 million) which provides technical solutions to the bitcoin mining industry.
Will the little miners gobble up the big ones?
While some miners find themselves forced to sell brand new machines, Riot continues to build its power of mining. It is up 10% year-on-year. His objective is to reach 12.6 PE/s by January 2023.
“Our results this quarter are a strong testament to the benefits of Riot’s vertically integrated and diversified business model, which is further complemented by our conservative financial approach.”said Jason Les, CEO of Riot.
Indeed, Riot is one of the patient miners like Hut 8, Cipher, the French BigBlock or CleanSpark. One of the secrets is to maintain “conservative” levels of debt relative to equity.
The other miners who bet on growth on credit find themselves very deprived when the bear market came. See below the debt-to-equity ratios of miners who fished on optimism:
Getting the big picture starts with looking at the vulnerability of their balance sheets. Here are the ten bitcoin mining companies with the highest debt to equity ratio. »
As we reported here, CleanSpark has just offered 3,843 Antminer S19 Pro. These machines were sold off by its competitor Argo for 5.9 million dollars. Or $15.50 per TH/s, compared to more than $100 in November 2021.
As Jean de la Fontaine said, “There is no point in running, you have to start on time”. Unlike the Core Scientific hare.
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