The ongoing chip shortage and the need to increase hash rate could negatively impact the financial condition of Riot Platforms, according to the mining company’s annual report.
Riot Platforms Reports Full Year 2023 Financial Results, Current Operational and Financial Highlights.
$280.7 Million in Total Revenue, 6,626 Bitcoin Produced, and Record Hash Rate Capacity of 12.4 EH/s.
Read the full press release here: https://t.co/SeUytqm5ek. pic.twitter.com/Gr35dX8GmW
— Riot Platforms, Inc. (@RiotPlatforms) February 22, 2024
The firm listed over 40 risk factors affecting various aspects of its business.
“The ongoing global supply chain crisis, combined with increased demand for computer chips, has led to a semiconductor shortage, causing issues in miner production,” the document states.
As a result, manufacturers have passed on increased costs to buyers. Riot acknowledged that until the global semiconductor crisis is resolved, they will have to bear higher-than-usual costs for purchasing and deploying equipment.
In December, the company agreed to acquire 66,560 miners from MicroBT, which it plans to install at a facility in Corsicana, Texas.
Riot primarily relies on immersion cooling and admits that challenges may arise in applying this method on such a large scale.
One of the risk factors the company considers is high competition, which forces an increase in hash rate to maintain profitability. To this end, Riot must expand its equipment fleet through new purchases, including replacing outdated units.
In this process, the firm faces risks of potential design flaws in new devices, as well as potential financing difficulties if the price of Bitcoin falls.
Riot also noted that cryptocurrency faces “significant obstacles in scaling,” which could hinder its widespread adoption as a means of payment.
Malicious actions by industry participants, regulatory decisions, potential forks, and other factors could negatively impact the price of Bitcoin, the company noted.
Meanwhile, analyst Ben Werkman pointed out that the total cost of mining 1 BTC for the company in 2023 averaged $23,268. For most of the reporting period, cryptocurrency prices were above this level. The cost of mining alone for Riot was $7,539 per Bitcoin.
$RIOT True Cost of Mining: $23,268
Not going to do a full $RIOT write up tonight, but wanted to share what I’m seeing as their True Cost of Mining based on their 10-K results for the full 2023 year.
The only major nuance I will share right now from my adjustments shown below is… pic.twitter.com/gSWYO6AIUr
— Ben Werkman (@BenWerkman) February 24, 2024
In February, Riot and the industry group Texas Blockchain Council filed a lawsuit to halt the collection of information by authorities. The U.S. Department of Energy’s Energy Information Administration announced a survey to assess miners’ energy consumption at the end of January.