A Bitcoin mining company made millions of dollars during the heat wave
Riot, a Bitcoin mining company, made millions of dollars during the heat wave that hit several areas of the world.
According to Bloomberg, bitcoin mining company Riot Platforms Inc. earned millions of dollars selling power instead of producing tokens in the second quarter, as the cryptocurrency mining industry continued to struggle with the impact of low digital asset prices.
The Castle Rock, Colo.-based company had $13.5 million in electricity reduction credits during the quarter while generating $49.7 million in mining revenue. Riot recorded $27.3 million in electricity reduction credits last year and $6.5 million in 2021 from electricity sales to the Electric Reliability Council of Texas, which is the state’s grid operator.
Riot’s second-quarter net loss narrowed to $27.7 million, or 17 cents a share, from $353.6 million, or $2.71 when bitcoin prices collapsed last quarter a year. Overall, second-quarter revenue rose to $76.6 million, though it was less than the average forecast of analysts from Bloomberg.
The company had $18.3 million in power credits in June and July, based on its most recent monthly operating updates, including $14.8 million in power rebate credits received from the sale of electricity back into the ERCOT grid at market-determined spot prices under its long-term power contracts and $3.5 million in credits received from participation in ERCOT demand response programs.
It is not clear which other cryptocurrency companies have participated in demand response programs, as the inclusion of providers is “voluntary and does not necessarily mean that an entity is qualified to provide demand response services, nor does it distinguish between the active or inactive status of an entity”, according to the ERCOT website.
Margins for Bitcoin miners had shrunk since last year when its price crashed, and electricity costs skyrocketed. Riot is among the miners that have managed to generate income by shutting down their energy-intensive operations and reselling the energy at a higher price during the crisis.
The company, which operates one of the world’s largest bitcoin mining facilities in Texas, has earned tens of millions of dollars during the state’s hottest months as demand for electricity hit record highs amid heat waves.
While Riot is among the first companies in this field, along with Marathon Digital Holdings and Core Scientific, it stands out for its efforts to diversify its businesses in a prolonged crypto winter.
The company’s engineering business segment provides design, manufacture and installation services for power distribution products, primarily focused on large commercial and government customers. It serves customers in various markets, including data centres and power generation.
Bitcoin mining is an energy-intensive process where miners use specialized and expensive computers to validate blockchain transaction records and obtain token rewards.
Riot shares are up about 380% this year to about $16.34. Shares, which traded as high as $79 in February 2021, have tumbled 85% in the past year.