Riot Platforms Q4 2024 Earnings Report

Riot Platforms EPS Results

• Actual EPS: N/A
• Consensus EPS: -$0.27
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Riot Platforms Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $139.11 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Riot Platforms Announcement Details

• Quarter: Q4 2024
• Date: 2/24/2025
• Time: After Market Closes
• Conference Call Date: Monday, February 24, 2025
• Conference Call Time: 4:30PM ET

Riot Platforms (NASDAQ:RIOT) is a US-based blockchain technology company that aims to become North America's leading provider of Bitcoin mining services. The company's mission is to support the Bitcoin network's security, integrity, and scalability by operating one of the largest Bitcoin mining fleets in the world. Riot's products and services include Bitcoin mining hardware, hosting services, and proprietary mining software.

Riot Platforms' target market includes institutional and individual investors interested in Bitcoin mining and other companies in the blockchain and cryptocurrency industries. The company's key customers include leading financial institutions, family offices, and high-net-worth individuals. Riot is headquartered in Castle Rock, Colorado and operates its mining facilities in Texas.

Recently, Riot Platforms achieved a significant milestone by surpassing one exahash per second in Bitcoin mining hash rate. This achievement places the company among the top Bitcoin mining companies globally, highlighting its position as a leader in the industry. Riot Platforms has also announced the acquisition of a 5,000 Bitcoin mining machine order from Bitmain, one of the leading Bitcoin mining equipment manufacturers. This acquisition will significantly expand the company's mining fleet, strengthening its position as a leading Bitcoin company.

Riot Platforms' management team comprises experienced executives with diverse finance, technology, and operations backgrounds. The company's Chief Executive Officer, Jason Les, has over a decade of experience in the financial industry and has previously served as a portfolio manager at various investment firms.

Over the past few years, Riot Platforms' financial performance has been impressive, driven primarily by the strong demand for Bitcoin mining services. In 2020, the company's revenue decreased recently due to the sharp decline in the price of Bitcoin. The company has not been profitable, but the net loss has been manageable at around $15 million yearly. However, in 2022, the company noted a net loss of $509 million, a significant jump from previous years. 

Riot's profit margins have also declined with the fall of the price of Bitcoin. However, during this challenging time for Riot, the company's debt levels have remained manageable. Riot's total assets are more than sufficient enough to cover company liabilities. 

Riot Platforms' valuation metrics are relatively high compared to its industry peers, reflecting its position as a leading Bitcoin mining company. The company's price-to-earnings and price-to-sales ratios are significantly higher than industry averages. 

Investor sentiment towards Riot Platforms has been positive, driven by the strong demand for Bitcoin mining services and the company's growth prospects. 

Riot Platforms' stock has performed well over the past year compared to industry peers. The stock has experienced significant price movements, driven primarily by changes in Bitcoin prices and the company's operational performance.

Riot Platforms operates in the rapidly growing cryptocurrency industry, which has seen explosive growth in recent years. Cryptocurrencies are digital assets that use cryptography to secure transactions and control the creation of new units. They are decentralized and operate independently of traditional financial institutions. Riot Platforms specifically operates in the Bitcoin mining sector of the cryptocurrency industry, which involves using powerful computers to solve complex mathematical problems to validate transactions and earn new Bitcoins.

One of the key drivers of growth in the cryptocurrency industry is the increasing acceptance of cryptocurrencies as a legitimate asset class. This has been driven partly by the growing adoption of blockchain technology, which underpins cryptocurrencies and provides a secure and transparent way to track and verify transactions. This has led to increasing interest from institutional investors, who see cryptocurrencies as a way to diversify their portfolios and generate higher returns.

Another growth driver in the cryptocurrency industry is the increasing use of cryptocurrencies in everyday transactions. Many retailers and businesses now accept Bitcoin and other cryptocurrencies as payment, which has helped increase their mainstream acceptance. In addition, the rise of decentralized finance (DeFi) has created new opportunities for cryptocurrencies, such as earning interest on cryptocurrency holdings or using them as collateral for loans.

There are growth opportunities for the company in the expansion into new markets. Riot Platforms is already working on expanding its operations into Canada with the acquisition of Whinstone and plans to expand into other regions. This could give the company access to new customers and markets, which could help drive future growth.

Riot Platforms also invests in research and development, focusing on developing new products and services. The company recently announced the launch of a new subsidiary called RiotX Ventures, which will focus on developing new blockchain-based products and services. This could help the company stay ahead of the competition and continue to grow.

However, the cryptocurrency industry is also subject to a number of risks and challenges. One of the most significant risks is the volatility of cryptocurrencies. The value of cryptocurrencies, including Bitcoin, can fluctuate widely in a short period, which can impact the profitability of cryptocurrency miners like Riot Platforms. In addition, there is a risk of regulatory intervention as governments worldwide seek to address concerns about using cryptocurrencies in illicit activities. 

Another potential challenge for Riot Platforms is competition. The cryptocurrency industry is highly competitive, with many companies vying for market share. While Riot Platforms has a strong position in the market, it will need to continue to innovate and develop new products and services to stay ahead of the competition.

Riot Platforms Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Good day and thank you for standing by. Welcome to RIOT Platform's Fourth Quarter twenty twenty four and Full Year twenty twenty four Earnings Conference Call. Please note that all participants have been placed in listen only mode until the question and answer session begins following the company's presentation of its prepared remarks. Please also be advised that today's call is being recorded. I would now like to hand the conference over to Phil McPherson, Vice President of Capital Markets and Investor Relations at RIOT Platforms.

[Operator]

Please go ahead.

[Phil McPherson, VP of Capital Markets & Investor Relations at Riot Platforms]

Thank you, Michelle. Good afternoon, and welcome to RIOT Platforms' fourth quarter and full year twenty twenty four earnings conference call. My name is Phil McPherson, Vice President of Capital Markets and Investor Relations. And joining me on today's call from RIOT are Jason Les, CEO Colin Yee, CFO and Jason Chung, Executive Vice President and Head of Corporate Development and Strategy. On the RIOT Investor Relations website, you can find our fourth quarter and full year twenty twenty four earnings press release and accompanying earnings presentation, which are intended to supplement today's prepared remarks and which include discussion of certain non GAAP items.

[Phil McPherson, VP of Capital Markets & Investor Relations at Riot Platforms]

Non GAAP financial measures provided should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP and are included as additional clarifying items to aid investors in further understanding the company's fourth quarter and full year twenty twenty four performance. During today's call, we will be making forward looking statements regarding potential future events. These statements are based on management's current expectations and assumptions and are subject to risks and uncertainties. Actual results could materially differ due to factors discussed in today's earnings press release, in comments and responses made during today's call and in the Risk Factors section of our Form 10 ks and Form 10 Q, including for the year ended 12/31/2024, which will be filed later today, as well as other filings with the Securities and Exchange Commission. With that, I will turn the call over to Jason Less, CEO of RIOS Platforms.

[Jason Les, CEO & Executive Director at Riot Platforms]

Thank you, Phil, and good afternoon, everyone. Before we dive into RIOT's twenty twenty four results, I would like to reflect on the industry as a whole. When RIOT began mining Bitcoin in 2017, the entire network hash rate was just 3x a Hash. By 2024, Riot alone grew our self mining Hash rate by 19.1x a Hash to a total of 31.5x a Hash, while the global network reached an all time high of over seven fifty exahash. In January of twenty twenty four, the approval of the Bitcoin ETF brought further institutional adoption, resulting in the most successful launch of ETFs ever as measured by AUM.

[Jason Les, CEO & Executive Director at Riot Platforms]

By July of twenty twenty four, Bitcoin had become a key topic during the presidential election and post election Bitcoin hit new all time highs of $75,000 and then $100,000 Riot has been mining Bitcoin since 2017 with conviction in its long term value proposition. In January 2024, Riot stopped selling bitcoin produced through our mining activities in order to retain more bitcoin. Additionally, we purchased bitcoin for the first time in December 2024, following our inaugural successful convertible debt offering, ultimately adding over 10,000 Bitcoin to our balance sheet over the course of the year, ending 2024 with 17,722 Bitcoin worth $1,700,000,000 based on the Bitcoin price of $93,354 as of 12/01/2024. Our efforts to maximize the value of our unique power assets does not mean we have changed our long term view on Bitcoin. Riot currently maintains approximately 4% of the global network and we will continue to pursue a compounding increase in the value of Bitcoin held per share as a key operating metric, while seeking to maximize the value of all of our assets for our shareholders.

[Jason Les, CEO & Executive Director at Riot Platforms]

In 2024, AI HPC demand for access to power resulted in Bitcoin mining power assets being converted into AI HPC use. This has continued into 2025 increasing the value of large scale sites with secured access to power near major metropolitan areas, sites such as our Corsicana and Rockdale facilities. There is a unique timely opportunity for RIOT shareholders to benefit from the value of our assets and to maximize shareholder value. And I am excited to share further updates on our aggressive pursuit of this opportunity. I would like to start by reviewing RIOT's key accomplishments during 2024.

[Jason Les, CEO & Executive Director at Riot Platforms]

We successfully energized the Corsicana facility. Following approximately twenty four months of development, RIOT successfully energized the 400 megawatt substation, developed four buildings and deployed immersion systems and miners, ending the year with approximately 14 extra Hash of self mining Hash rate at the Corsicana facility alone. Our Bitcoin yield strategy. In January of twenty twenty four with ETF approvals imminent and the 2024 halving approaching, Riot's decision to retain all mined Bitcoin and focus on increasing Bitcoin per share, I. E.

[Jason Les, CEO & Executive Director at Riot Platforms]

Bitcoin yield has resulted in a nearly 40% Bitcoin yield in 2024 and more than $100,000,000 in incremental asset value appreciation in 2024 alone. Our convertible senior notes offering. In line with RIOT's Bitcoin yield strategy and target to continue to increase Bitcoin held per share, RIOT was able to take advantage of favorable market conditions and issue our inaugural convertible senior notes offering. This issuance lowered our cost of capital, expanded our institutional investor base and proceeds were utilized to acquire Bitcoin and further enhance Bitcoin yield. The Block Mining acquisition.

[Jason Les, CEO & Executive Director at Riot Platforms]

This was Rite's first acquisition in more than two years and our first business expansion outside of Texas into jurisdiction, offering 60 megawatts of current mining operations and expansion opportunities to three zero five megawatts and beyond. And finally, the E4A acquisition, our most recent acquisition, which supplements our engineering business, while also enhancing our core operating capabilities. For 2025, we expect to grow our Bitcoin mining hash rate by approximately 22%, while aggressively pursuing AI HPC opportunities to maximize the value of our unique assets. We believe that this approach will bring the most value to our shareholders, while allowing us to remain flexible as market opportunities continue to present themselves. With a strong balance sheet, a solid operating team and a management team focused on value creation, I am truly excited at the path we have ahead of ourselves.

[Jason Les, CEO & Executive Director at Riot Platforms]

With that, I would like to now turn the call over to Colin Yee, CFO of Riot Platforms.

[Colin Yee, Executive VP & CFO at Riot Platforms]

Thank you, Jason. I'm excited to present Riot's financial results for the fourth quarter and fiscal year ending 2024. For ease of reference, we have highlighted key metrics on Slide six, which presents a snapshot of key financial and operating metrics for the full year 2024. However, let's just jump into the details on the following slides. During 2024, RIDE increased its self mining hash rate from 12.4 X of hash to 31.5 X of hash, representing a 154% increase over the course of the year and outpacing the increase in the global Hash rate, which rose by 67% in 2024.

[Colin Yee, Executive VP & CFO at Riot Platforms]

Furthermore, in 2024, Riot produced 4,828 Bitcoin, 20 7 percent lower than the Bitcoin produced in 2023, primarily as a result of the twenty twenty four halving event in April. However, in spite of this April's having, Riot ended the year producing approximately 16.6 Bitcoin per day as compared to 16.8 Bitcoin per day at the start of the year. In January of this past year, Riot stopped selling Bitcoin produced in order to increase our Bitcoin holdings ahead of the halving. In conjunction with December's convertible notes offering, proceeds from which were used to acquire Bitcoin in the spot market, we have increased Bitcoin holdings per million fully diluted shares from $31,800,000 to $44,300,000 representing an increasing Bitcoin yield of 39 for the year. Going forward, we will continue to focus on increasing Bitcoin yield in order to ensure that our shareholders are able to participate in the long term value creation opportunity that we believe Bitcoin represents.

[Colin Yee, Executive VP & CFO at Riot Platforms]

Riot ended 2024 holding 17,722 Bitcoin, an increase of 141% relative to the 7,362 Bitcoin that we held at the end of 'eighty three and RI continues to retain 100% of all self mined Bitcoin. For the full year 2024, RI reported total revenue of $376,700,000 as compared to $280,700,000 for 2023, a 34% increase year over year. This increase was primarily driven by higher Bitcoin prices. Gross profit for the full year 2024 was $147,600,000 as compared to gross profit of $97,600,000 for the full year 2023. Non GAAP adjusted EBITDA for the full year 2024 was $463,200,000 as compared to non GAAP adjusted EBITDA of $214,000,000 for the full year 2023.

[Colin Yee, Executive VP & CFO at Riot Platforms]

Riot adopted FASB's final standard on crypto assets issued in December 2023, under which Riot now recognizes its Bitcoin held at fair value and with it changes in fair value are now recognized in income. As a reference, the Bitcoin price at the end of 2023 was $42,265 and the price at the end of 2024 was $93,354 This resulted in a mark to market upward adjustment of $458,700,000 for 2018. Net income for the full year 2024 was $109,400,000 or $0.4 per share compared to a net loss of $49,500,000 or $0.28 per share for the full year 2023. Full year 2024 net income includes non debt based compensation expense of $125,200,000 unrealized loss on marketable equity securities of $69,500,000 and depreciation and amortization of $212,000,000 As a reminder, beginning in the first quarter of twenty twenty four, we adjusted our depreciation schedule for mining hardware from a two year to a three year schedule based on our evaluation of our own operational history. For the full year 2024, Bitcoin mining revenue totaled $321,000,000 a 70% increase relative to the full year 2023 Bitcoin mining revenue of $189,000,000 Bitcoin mining cost of revenue primarily consists of direct production costs of Bitcoin mining operations, including electricity, labor, insurance and other expenses, but excluding depreciation and amortization.

[Colin Yee, Executive VP & CFO at Riot Platforms]

Bitcoin mining gross profit for the quarter was $165,500,000 representing a margin of 52% as compared to $163,600,000 or a margin of 87% for the full year 2023. Cost to mine, excluding depreciation, in the fourth quarter totaled $42,011 per bitcoin, of which power costs amounted to $33,281 per bitcoin or 79% of total cost per bitcoin. Quarter over quarter, power costs increased from $0.031 a kilowatt hour to $0.038 a kilowatt hour as a greater proportion of our power was procured at the Corsicana facility at spot market rates, which at the times purchased were on average elevated relative to the fixed rate under PPAs at the Rockdale facility with proportionally fewer offsetting power credits than in the previous quarter. For the full year 2024, we achieved an all in cost of power of $0.034 a kilowatt hour, which remains one of the lowest in the industry. Direct non power costs, which include direct labor, minor insurance, minor and minor related equipment repairs, land lease and related property taxes, network costs and other utility expenses totaled $8,730 or 21% per down from the third quarter of twenty twenty four when direct non power costs accounted for 25% of total costs.

[Colin Yee, Executive VP & CFO at Riot Platforms]

This drop is a result of RIDE continuing to achieve economies of scale at our operating facilities. As RIDE continues to grow hash rate, we expect to see non power direct costs as a percentage of the total cost per Bitcoin to trend lower. I'd now like to turn the call over to Jason Chum, RIDE's EVP and and Head of Corporate Development and Strategy to discuss our most recent acquisition.

[Jason Chung, Executive VP and Head of Corporate Development & Strategy at Riot Platforms]

Thanks, Colin. I'm excited to share information on RIOT's latest acquisition. This past December, we closed the acquisition of E4A Solutions for $52,000,000 in cash consideration at closing. E4A Solutions based in Houston, Texas is a leading provider of consulting, commissioning and procurement services designed to support electrical project needs for substations from low voltage to high voltage. E4A employs approximately 50 employees and services power plants, transformers, substation equipment and switch gears for a blue chip roster of clients, which include FirstEnergy, Hitachi, Hyundai and Toshiba among many others.

[Jason Chung, Executive VP and Head of Corporate Development & Strategy at Riot Platforms]

In 2024, E4A generated $28,200,000 in revenue, a 31% increase over 2023 revenue of $21,500,000 and $4,600,000 in EBITDA, representing margins north of 16%. The acquisition of E4A Solutions offers a number of strategic benefits for RIOT and significantly bolsters our engineering business. More specifically, our engineering business ESS METRON will now have the ability to add higher margin recurring services revenues to customers. E4A's services expertise in maintenance, servicing, training and repair can now be offered on equipment manufactured by ESS Metron, while the countercyclical profile of the services business relative to ESS Metron's business is also expected to reduce overall revenue volatility in our engineering business going forward. With this acquisition, Ryot has now brought in house expertise in developing, maintaining and servicing medium and high voltage substations, which will further de risk infrastructure development and save costs, while also improving our ability to perform on-site maintenance on switch gears, and most importantly, leading to further improvements in operating uptime for Bitcoin mining business.

[Jason Chung, Executive VP and Head of Corporate Development & Strategy at Riot Platforms]

In 2024, RIOT's engineering business generated $38,500,000 in revenue, down from $64,300,000 in 2023. This reduction in top line revenue was largely driven by one large manufacturing contract for a governmental entity, which took longer than anticipated to complete due to supply chain constraints during the year, which resulted in decreased receipts of materials and delayed recognition of revenue. The custom electrical products manufactured by RIOT's engineering business such as switchgear and power distribution centers are particularly important components in data center development and in power generation and distribution facilities. And there has been a significant increase in demand for these products due to the continued increase in AIHPC data center development and the continually increasing demand for power. With our now expanded engineering business products and services capabilities, RIOT is well positioned to capitalize on this growing demand and alongside the recent acquisition of E4A Solutions has a clear path towards reaching $100,000,000 in revenue in 2025, while also increasing gainfully.

[Jason Chung, Executive VP and Head of Corporate Development & Strategy at Riot Platforms]

With that, I'd now like to turn the call back over to Jason Les.

[Jason Les, CEO & Executive Director at Riot Platforms]

Thank you, Jason. Now, I'd like to turn the presentation to RIOT's treasury strategy. RIOT continues to hold all of its self mined Bitcoin. In 2024, holding all of our Bitcoin versus selling at the time it was mined resulted in an increase of $120,000,000 in value. Our bullish belief in Bitcoin has not wavered and we believe that holding Bitcoin, increasing Bitcoin yield will result in greater shareholder value over time.

[Jason Les, CEO & Executive Director at Riot Platforms]

This slide demonstrates the delta we achieve on holding Bitcoin production over the year versus selling it at various end of year Bitcoin prices. One of the tenets of Riot's strategy has been to maintain a strong balance sheet underpinned by our growing Bitcoin balance since 2018. This has allowed RIOT to act opportunistically and grow our portfolio of assets, which in turn has created the new opportunity set that we are executing on today. While RIOT has always been conservative with regards to long term debt, the increased value of our Bitcoin and the attractive terms in the convertible debt market led to our inaugural debt issuance in December 2024. We view this as a method to utilize our strong balance sheet to acquire more Bitcoin at an attractive cost of capital.

[Jason Les, CEO & Executive Director at Riot Platforms]

Our internal policy is to not take on additional debt such that doing so would exceed a 40% debt to Bitcoin value ratio. We feel this limit on leverage is prudent and allows us to create additional value for our shareholders. Further, as we continue to increase our Bitcoin balance every month by retaining production from our mining operations, we are organically deleveraging over time. For 2025, Riot anticipates capital expenditures totaling $198,000,000 While we have halted the Bitcoin mining expansion at Corsicana, existing expenses primarily consisting of the 600 megawatt substation development continue. Additionally, we continue developing the various facilities that comprise our Kentucky operations, including $23,000,000 on infrastructure expense and $110,000,000 on miners.

[Jason Les, CEO & Executive Director at Riot Platforms]

However, it's important to note that $35,000,000 of that is for deposits for Hashrate coming online in the first half of twenty twenty six. As a result of these investments and our efforts on the ground, we expect to end 2025 with 38.4 exahash in deployed hash rate, a 22% increase over the 31.5 exahash we ended the year 2024 with. We expect this to approximately match the pace of global network hash rate growth this year, maintaining our approximate 4% share of the overall network. In 2024, the rapid growth of AI applications and the resulting increase in demand for large scale access to power needed for large language models and inference compute became a dominant market theme. We have long viewed our Bitcoin mining business as being at the forefront of the convergence of energy and sound money.

[Jason Les, CEO & Executive Director at Riot Platforms]

With the emergence of AI HPC, we now find ourselves at the center of the convergence of energy and high performance compute. As such, RIOT's uniquely positioned portfolio of high quality energy assets can now be viewed through a wider lens. The core of RIOT's strategy has been to take a vertically integrated approach to securing, developing and operating energy infrastructure for Bitcoin mining. This focus has led to Riot owning and operating two premier power assets, which now form the basis for the expanded opportunity set uniquely available today to explore all opportunities available to us to maximize the value of energy assets across our portfolio. The market has already taken notice of the value of AI HPC contracts and has rewarded those companies which have made this pivot with elevated valuation multiples.

[Jason Les, CEO & Executive Director at Riot Platforms]

The chart on Page 21 demonstrates both the valuation multiple expansion some of our public peers have experienced as they have pivoted parts of the power assets to also include AI HPC, as well as the lagging valuation multiple seen by the remaining Bitcoin mining pure play players. While revenues from Bitcoin mining can exhibit volatility in the near term, AIHPC contracts offer long term predictable cash flows with credible counterparties, which can reduce the overall volatility in our financial performance and to which the market is signed higher valuation multiples. One of the most active themes we see in the market today relates to the significant need for power faced by the major hyperscalers in their arms race to deploy more high performance compute capacity and the associated capital expenditure plans they committed to in order to achieve their goals. Microsoft, Meta and Alphabet alone have collectively committed to more than $200,000,000,000 in spending plans this year with the rest of the industry closely following suit. In order to meet their aggressive growth targets, hyperscalers face immediate need for large scale access to power with industry forecast calling for nearly 30 gigawatts of additional power demand over the next five years.

[Jason Les, CEO & Executive Director at Riot Platforms]

As I will get into, RIOT has a clear and unique opportunity to capitalize on this tremendous demand imbalance. As hyperscalers continue to search for large scale access to power, they particularly prioritize three key attributes. One, proximity to major markets two, speed to market to deploy compute quickly and three, large scale access to power in the hundreds of megawatts. Rive's primary assets in Rockdale and Corsicana are particularly well suited to satisfy each of these key requirements, which I will get into shortly. We believe the Corsicana facility offers the most compelling opportunity available today for hyperscaler to get immediate access to large scale power, all in close proximity to Dallas, One of the most sought after data center markets in the country.

[Jason Les, CEO & Executive Director at Riot Platforms]

This gives hyperscalers access to existing connectivity hubs and lower latency. Most importantly, Corsicana has 400 megawatts of power that can be utilized today and we're actively developing an additional 600 megawatt substation to be ready in early twenty twenty six. Combined, this is one gigawatt of power that can be available for hyperscaler to deploy almost immediately, which when combined with this location, we believe makes Corsicana an extremely rare offering. In addition, we own the land at Corsicana. We have access to water with that access growing further and multiple redundant sources of fiber available today.

[Jason Les, CEO & Executive Director at Riot Platforms]

These are the key criteria hyperscalers are first looking at when evaluating sites and we think Corsicana is extremely well suited. For many of the same reasons Corsicana is uniquely well positioned to attract hyperscalers, we believe that Rockdale represents an exciting opportunity as well. At Rockdale, we have a 700 megawatt substation already developed and capacity that can be made immediately available. The current Rockdale site stands more than 200 acres, most of which is cleared open land, which a hyperscaler could begin immediate development on in order to take advantage of this large scale access to power. Similar to Corsicana, Rockdale is located just 45 miles from Austin, which also represents a major data center market, which hyperscalers are seeking proximity to.

[Jason Les, CEO & Executive Director at Riot Platforms]

We also believe the relatively short distance between the Rockdale and Corsicana facilities at about 100 miles creates another compelling opportunity for one hyperscaler to deploy up to 1.7 gigawatts of power across the two sites that are not only in close proximity to each other, but to two major data center markets. Late last year, RIOT began to receive inbound inquiries from hyperscalers interested in exploring opportunities related to our power assets. And as these discussions progressed, it became clear to us that there was a significant opportunity at hand. As a result and since then, we have taken a number of steps to capitalize on this tremendous opportunity presented to us. First, this past January, we engaged Altman Salome, a leading telecommunication strategy consultancy to help us conduct a study to evaluate the feasibility of utilizing our Corsicanosight for AIBC uses.

[Jason Les, CEO & Executive Director at Riot Platforms]

This study has now been underway for a number of weeks and is expected to conclude next month. Second, earlier this month, we made meaningful changes to our Board of Directors with the addition of three new independent directors and the expansion of our Board to include six directors in total. The new independent directors who have joined our Board come with a unique set of skills including significant data center development expertise, deep real asset development, capital allocation experience and broad corporate governance experience. Our newly constituted Board will continue to oversee and advise the management team on this and other key initiatives at RIOT. Third, we have engaged Evercore and Northland as our financial advisors to advise us on engaging with potential AIHPC partners in a value maximizing approach.

[Jason Les, CEO & Executive Director at Riot Platforms]

Both firms have significant experience and strong relationships with hyperscalers, data center developers and financing partners and in advising companies like Riot. Fourth, although we previously announced the halt to the Phase two expansion of Bitcoin mining at our Corsicana facility, it is important to highlight that we continue to develop the additional 600 megawatt substation on-site to ensure that we enhance the attractiveness of the site to hyperscalers and data center operators. We are taking concrete steps to ensure that we are maximizing the value of the opportunity available to us today and will provide further updates on our progress as they occur. As a result of the foundation we have built over the previous years, we believe that 2025 will be an exciting and rewarding year for RIOT shareholders. We are dedicating a tremendous amount of resources towards executing on AI HPC opportunities.

[Jason Les, CEO & Executive Director at Riot Platforms]

We also continue to remain focused on increasing Bitcoin yield, driven by our Bitcoin mining operations and prudent capital strategy. Underpinning our mining operations is our industry leading low cost of power, which RIOT continues to demonstrate exceptional results over our now multi year track record. For the past few quarters, we have talked about our focus on operational efficiency and the results of these efforts have taken shape over the past few months as demonstrated in our monthly production results. Operational excellence continues to be one of our priorities and our teams are hard at work to drive top tier results. In closing, myself and the rest of the RIOT team could not be more excited about the direction the company is heading.

[Jason Les, CEO & Executive Director at Riot Platforms]

We have the assets, the capital and the right team to execute on significant growth of shareholder value. Thank you all for listening to our presentation. We would now like to open the call to questions. Operator?

[Operator]

Thank Our first question comes from Greg Lewis with BTIG. Your line is open.

[Gregory Lewis, Managing Director at BTIG]

Jason, thank you for the presentation. Definitely a little more insightful than in previous quarters. I guess my first question is around the HPC opportunity. And I know we've been talking about this on and off for a while now. But as you look at the landscape, I think from going back to last year, there was always this expectation of a requirement of prompt power, where there was a window.

[Gregory Lewis, Managing Director at BTIG]

As you've engaged and had increasing conversations with more hyperscalers, are you seeing that window potentially widening, I. E, hey, it's great to have power in 2025, but having power in further out years is almost just as valuable.

[Jason Les, CEO & Executive Director at Riot Platforms]

Yes, Greg. I think the power is extremely valuable in 2025, but any power available including the '26 and '27 is extremely valuable as well. As Colin in the presentation, you're looking at about 30 gigawatts of AI HPC demand that's just AI HPC demand alone over the next five years. Transmission, new interconnects take four or five years to get approved. Log lead substation items, those are taking four to five years to get shipped now and transmission cannot keep up with the growth.

[Jason Les, CEO & Executive Director at Riot Platforms]

So capacity in 2025 commands a real premium, which is why we think our assets are so valuable, both with hundreds of megawatts available today and continuing

[Jason Les, CEO & Executive Director at Riot Platforms]

to grow.

[Jason Les, CEO & Executive Director at Riot Platforms]

We're looking for a solution to and RIOT is very well positioned to be that solution for hyperscalers.

[Gregory Lewis, Managing Director at BTIG]

Okay, great. Thank you for that. And then the other question is, obviously we're engaging with hyperscalers in signing up or potentially signing up HPC transactions. What is there kind of a dual process, I. E, as RIETS kind of talking with EPCs and some of the companies or suppliers that would help build these facilities?

[Gregory Lewis, Managing Director at BTIG]

Or is it kind of let's get the hyperscaler in first and then figure out kind of let them lead the build out of the conversion or the build out of the Greenfield site?

[Jason Les, CEO & Executive Director at Riot Platforms]

Greg, I'd say we have multiple tracks going on at once. There's a number of ways that these opportunities can materialize and we're keeping our options wide open in order to make sure we get the value maximizing approach. We've received interest from hyperscalers and large AI companies. These discussions have been ongoing with our new financial partners. We're now reaching out to

[Jason Les, CEO & Executive Director at Riot Platforms]

additional

[Jason Les, CEO & Executive Director at Riot Platforms]

infrastructure partners and financing partners as well. So, a lot of going on in the mix. And where we're going to end up to is the path that maximizes value after surveying kind of the whole market here. But as I highlighted in parallel, we're continuing to build out the capacity at the site. We're pursuing on what would be the first stage of the development anyways.

[Jason Les, CEO & Executive Director at Riot Platforms]

So, I would say multiple tracks being run down at once.

[Gregory Lewis, Managing Director at BTIG]

Okay. Super helpful. Thank you guys. Have a great day.

[Jason Les, CEO & Executive Director at Riot Platforms]

Thank you, Greg.

[Operator]

Thank you. Our next question comes from Nick Giles with B. Riley Securities. Your line is open.

[Nick Giles, Senior Research Analyst at B.Riley Securities]

Thanks, operator. Good afternoon, everyone. My first question is, as hyperscalers race for readily available capacity at scale, there's a clear desire to build large scale campuses and this does require significant amounts of land. So I was curious to what extent Corsicana could accommodate additional capacity beyond the targeted one gigawatt or based on your earlier comments, could Rockdale be better positioned from this perspective? Thanks very much.

[Jason Les, CEO & Executive Director at Riot Platforms]

So we think the Corsicana is an amazing site because it has the one gigawatt interconnect approved, it has the power capacity available today, it's expanding, we have dual sources of fiber, water close to a major data center market. We're really excited about what Corsicana can mean in these discussions. So when you think about land for AIHPC developments, there's kind of a spectrum of which these things can take and that impacts design decisions. The more lanes you have generally, the cheaper it is to build, the easier it is from a layout and cooling perspective. So the less than you have, the more next generation kind of rack and cooling technologies that you end up using that can kind of be more expensive.

[Jason Les, CEO & Executive Director at Riot Platforms]

But nonetheless, we have you noted we have a lot of land at Rockdale. We have a good amount of land at Corsicana and we are expanding that land portfolio at Corsicana right now as well. And the final point I'll make is oftentimes when hyperscalers are talking about campuses, they don't always generally mean they are directly adjacent to each other. Sometimes they are many sometimes up to 100 miles apart. So we are increasing our land portfolio in order to increase the optionality of what we can do here in this endeavor.

[Nick Giles, Senior Research Analyst at B.Riley Securities]

Jason, that's super helpful. I appreciate those comments. My next question was, we've seen economics vary to some degree in the deals that have been announced. So what's your main priority as you think about terms of any potential HPC deal? Is it margins, capital contribution, duration, size or kind of all of the above?

[Jason Les, CEO & Executive Director at Riot Platforms]

Well, Nick, I'd say a key part to getting a project of this scale done, in the hundreds of megawatts, gigawatts that we're talking about, financing is a key thing. So to be successful at financing, you really need a blue chip counterparty, someone who's very well capitalized that we would be able to securitize the cash flows on the best possible terms. And further, we're talking about hundreds of megawatts that's really only attracting the largest player in the space. So, in addition to driving the financing terms, the type of counterparties that we would enter into is really going to have a big impact in driving valuations. So, as you can see, one of the key points I'm hammering on that we think about is the type of counterparty is necessary in order to maximize shareholder value here.

[Jason Les, CEO & Executive Director at Riot Platforms]

As far as some of the other terms, there's a whole mix of how all of these things can be played together. I think it's kind of too early to say which one may be more or less important to another. At the end of the day, what's important to note is Corsicana and Rockdale, but specifically Corsicana is ideally well positioned. We think this is a premier asset that commands a premium for its quality and its timing to getting power online and that's something obviously that hyperscalers are prioritizing. And that these attributes will ultimately lead to better deal terms that reflect the value of those assets.

[Nick Giles, Senior Research Analyst at B.Riley Securities]

Jason, I really appreciate all the color. Continued. Best of luck.

[Jason Les, CEO & Executive Director at Riot Platforms]

Thank you, Nick.

[Operator]

Thank you. Our next question comes from Darren Aftahi with Roth. Your line is open.

[Darren Aftahi, Senior Research Analyst-Internet, Media and Enabling Technologies at Roth Capital Partners, LLC]

Yes. Hey, guys. Thanks for taking my questions. First, if I may, Jason, on your comments about Corsicana, you talked about procuring additional land. Any kind of indulgence on how large of an additional plot that would be?

[Darren Aftahi, Senior Research Analyst-Internet, Media and Enabling Technologies at Roth Capital Partners, LLC]

And is that something that the counterparties you're potentially talking to have kind of asked for?

[Jason Les, CEO & Executive Director at Riot Platforms]

We have spoken to counterparties to some it matters, to some it doesn't. No. Like I touched on earlier, it ultimately depends on the type of build up that you're looking to do. The technology with data center development is becoming very efficient with density. We're on to 100, two hundred kilowatt racks now, direct chip liquid cooling, all of these components, all of these technologies are improving density.

[Jason Les, CEO & Executive Director at Riot Platforms]

So, it kind of depends different types of customers have different needs for this plan. Nonetheless, our focus is on increasing, maximizing the optionality that we have. So I don't have a specific number for you, but I can tell you we're procuring in the hundreds of acres in order to just like I said, make sure we can accommodate as wide of a market as possible.

[Darren Aftahi, Senior Research Analyst-Internet, Media and Enabling Technologies at Roth Capital Partners, LLC]

Great. And then one more if I may. Just in the deck, you kind of advertising Corsicana, advertising Rockdale and then you're potentially talking about maybe doing a fiber loop and advertising the whole campus. So I guess as it stand stay, Rockdale has always been a Bitcoin mining facility. Is there a scenario analysis economically where you would flip the switch and completely make that an HPC campus?

[Darren Aftahi, Senior Research Analyst-Internet, Media and Enabling Technologies at Roth Capital Partners, LLC]

Thanks.

[Jason Les, CEO & Executive Director at Riot Platforms]

Yes. If the opportunity was there to if there was interest in that site and the economics made sense to take over the capacity that we have there, we would certainly be interested in that. I think when you think about 30 gigawatts of demand, one gigawatt at Corsicana and then 700 megawatts of Rockdale represents a really meaningful portion of something that could fulfill that demand. 1.7 gigawatts would be about 5% if Someone had both of those sites 5% of hyperscaler AI demand over the next five years. I think that would give those players a real strategic advantage.

[Jason Les, CEO & Executive Director at Riot Platforms]

So, if there is that interest and the economics are required there to convert that site, we will certainly be looking and evaluating that closely.

[Darren Aftahi, Senior Research Analyst-Internet, Media and Enabling Technologies at Roth Capital Partners, LLC]

Great. Thanks, Jason.

[Jason Les, CEO & Executive Director at Riot Platforms]

Thanks, Darren.

[Operator]

Thank you. Our next question comes from Brett Knoblauch with Cantor Fitzgerald. Your line is open.

[Brett Knoblauch, Managing Director at Cantor Fitzgerald]

Hi guys. Maybe my first question, similar to the last, is all of Corsicana on the table, if a hyperscaler wanted the full gigawatt there?

[Jason Les, CEO & Executive Director at Riot Platforms]

Well, so we have the 600 megawatts that's being unutilized that's being developed right now. That would be the least friction way to accomplish a deal, Brett. But if there was someone that was interested in the full one gigawatt taking over the entire site as it is and have the economics to make that accretive to right shareholders, yes, we would definitely look at that. And that is always possible that presents itself because that's a lot of power coming online, 400 megawatts now and then the remaining 600 megawatts twelve months from now or approximately twelve months from now. So, we're assessing demand and we are going to maximize the value of these assets.

[Brett Knoblauch, Managing Director at Cantor Fitzgerald]

Understood. And then maybe just on the power agreement in place at these sites, do they need to be authored to support AI HPC? And maybe in particular with Rockdale, does like your participation in a lot of the demand response and curtailment programs, does that need to switch from maybe a flex load to firm load?

[Jason Les, CEO & Executive Director at Riot Platforms]

No, they do not need to be altered. Our power supply agreements do not require any participation in demand response. Everything we do there is voluntary as a part of our power strategy that works with Bitcoin mining because of the interruptible load. Obviously, that doesn't work with AIHPC. So we do that with Bitcoin mining voluntarily to drive the best economics, but not a requirement as a part of our power supply agreements.

[Brett Knoblauch, Managing Director at Cantor Fitzgerald]

Perfect. Thanks guys. I really appreciate it.

[Jason Les, CEO & Executive Director at Riot Platforms]

Thanks Brett.

[Operator]

Thank you. Our next question comes from Reggie Smith with JPM. Your line is open.

[Reggie Smith, Executive Director, Equity Research at JP Morgan]

Hey guys. Thanks for taking

[Reggie Smith, Executive Director, Equity Research at JP Morgan]

the question. Congrats on the quarter and the year. Had a question, I was looking at your OpEx trends and I don't want to rain on any parade or anything like that, but notice when we look at SG and A minus stock comp and we've seen that number grow sequentially each quarter. Sounds like you've done some acquisitions, there may be some deal costs in there, but like what's driving that? How are you benchmarking OpEx growth and things of that nature?

[Reggie Smith, Executive Director, Equity Research at JP Morgan]

And I was curious if you had an employee count because I was trying to calculate Com per employee. And I got a follow-up. Thank you.

[Jason Les, CEO & Executive Director at Riot Platforms]

Okay. So working backwards, Reggie, I don't have an exact employee count for you. It will be in the 10 K, which should be filed very shortly here. As far as G and A goes, so our G and A has been elevated both in 2023 and 2024 I'm sorry, Q3 and Q4 twenty twenty four due to one time M and A and legal litigation expenses. They are not recurring expenses for running our business.

[Jason Les, CEO & Executive Director at Riot Platforms]

They're not a part of running a Bitcoin mining operation or AICC operation. So that was pretty meaningful in especially Q4. We had approximately $22,000,000 in one off costs. Like I said, mainly litigation expense. We had some stock based advisory services that was closing out a three year engagement.

[Jason Les, CEO & Executive Director at Riot Platforms]

We had some M and A expenses as well. So obviously, we would like our litigation tied up in a timely manner. So we're not incurring these expenses anymore and we can get cash SG and A down. And I have an employee count for you. Thanks to help in the room here, seven eighty three full time employees.

[Reggie Smith, Executive Director, Equity Research at JP Morgan]

Got it. Okay. That makes sense. So it sounds like there is some one timers. Is it possible to handicap like where you would like that to be kind of on a run rate or go forward basis like stripping out all the noise?

[Reggie Smith, Executive Director, Equity Research at JP Morgan]

Like what do you think you can run your Corsicana facility in your Rockdale and everything else you get going on on a kind of quarterly basis?

[Jason Les, CEO & Executive Director at Riot Platforms]

So first to note how the expenses are allocated, there's a split between direct operating costs, those are in cost of goods in addition to power, although power is a big business expense. And then we have some other kind of more corporate operating expenses, facility wide expenses that fall under SG and A. But to directly get to your question, we think our 2024 cash run rate quarter is going to be in line to modestly above what our previous Q4 twenty twenty four run rate guidance was, which is approximately $30,000,000 to $33,000,000 It's very difficult to anticipate what litigation or one time maybe M and A items by fee or advisory fees that may pop up. But on a run rate basis, that's what we are looking at for quarter, $30,000,000 to $33,000,000 cash. And we're focused on optimizing that, especially relative to our overall Hashtag portfolio.

[Reggie Smith, Executive Director, Equity Research at JP Morgan]

Got it. Makes sense. Okay, great. And then if I could get one more in. I was curious, the consultants that you've spoken with, have they given you any guidance on like how long it may take to finalize a deal?

[Reggie Smith, Executive Director, Equity Research at JP Morgan]

Just kind of thinking through like how quickly something could get done or how long might it drag on. And it sounds like and maybe I'm reading too much into this that if something isn't done by late twenty five then you would then consider going back to kind of Bitcoin mining, expanding your Bitcoin mining operation. Because it sounds like you've given you feel comfortable with where your hash rate will be relative to the network hash rate. Am I thinking about that right?

[Jason Les, CEO & Executive Director at Riot Platforms]

Well, I don't think we're thinking of, we need to get if there wasn't capacity fully spoken for by the end of this year, we would resume Bitcoin mining. I think based on the demand and the quality of assets that we have, we're pretty optimistic about getting something done. How long that takes is probably unpredictable from a suit to nuts to completion, but there are going to be steps along this way. Depending on the ultimate deal structure that comes through, multiple steps can include signing the lease, having a development partner, for example, securing financing, for example, and those could occur in a number of orders. So, we're really aggressively pursuing this.

[Jason Les, CEO & Executive Director at Riot Platforms]

We want to communicate updates as they occur. But we aren't thinking about this as we need to get this done by X date or we're going to go back to Bitcoin mining. We think these assets are really exciting for AIHPC data center development and we want to get something meaningful done there.

[Reggie Smith, Executive Director, Equity Research at JP Morgan]

Got it, great. And I guess again, I just want to congratulate you guys. I know we had talked previous quarters about improving uptime and operations. You guys have done a good job of that. So I wanted to acknowledge that.

[Reggie Smith, Executive Director, Equity Research at JP Morgan]

So great job on that and I look forward to for more updates on the HPC side. Thank you.

[Jason Les, CEO & Executive Director at Riot Platforms]

Thank you, Reggie. Appreciate that. All the credit goes to the guys in the field, guys and gals in the field working hard to approve operations every day.

[Operator]

Thank you. Our next question comes from Mike Grondahl with Northland. Your line is open.

[Mike Grondahl, Head of Equities & Director of Research at Northland Capital Markets]

Hey guys, thank you. Two questions. The first one, can you provide a little bit more color? I guess my specific question is on the 400 megawatts at Corsicana and the 700 at Rockdale, have you gotten specific interest for that power yet? Or would you say it all kind of so far relates to the 600 megawatts at Corsicana?

[Mike Grondahl, Head of Equities & Director of Research at Northland Capital Markets]

And then secondly, any operational goals for 2025 on the mining side?

[Jason Les, CEO & Executive Director at Riot Platforms]

So starting backwards with your question there, Mike. Operational goals on the Bitcoin mining side, we're looking to increase our Hash rate by approximately 22% this year. That's really driven by expansion at our Kentucky facilities. We're focused on operational excellence. We want to continue executing on our power strategy and improving uptime as month goes on.

[Jason Les, CEO & Executive Director at Riot Platforms]

So we have a good amount of work ahead of us to improve that business line as well. And I think we're making all the right moves to show better results there and hit those growth targets in Bitcoin mining and in the year with 38.4 X the Hash. As far as the interest in the power, I would say that hyperscalers, large companies have seen our access to power and they're interested in getting some piece of it. It hasn't the inquiry has not necessarily been specific as we want your next 600 or we want the 400 here or anything like that. It's more of, hey, we need Powerfast.

[Jason Les, CEO & Executive Director at Riot Platforms]

We want to have a conversation with you of how might that work with your assets.

[Mike Grondahl, Head of Equities & Director of Research at Northland Capital Markets]

Got it. Okay. Hey, thanks a lot.

[Operator]

Thank you. Our next question comes from John Taddeiro with Needham. Your line is open.

[John Todaro, Senior Analyst at Needham & Company]

Hey guys, thanks for taking my question. I have two. So I know it's early days in the convos and I hear you on all the demand out there and what everyone's expecting. But I think the market is starting to question some of that demand, especially on days like today. So first question is just as those conversations with hyperscalers have gone, have you noticed any change recently versus maybe a

[John Todaro, Senior Analyst at Needham & Company]

few weeks ago or a

[John Todaro, Senior Analyst at Needham & Company]

month or so ago, just kind of any key leaves there? That's my first question.

[Jason Les, CEO & Executive Director at Riot Platforms]

We have not seen any change yet. We're expanding the scope of the counterparties we are talking to now in conjunction with our financial advisors Evercore and Northland in order to make sure we get the fullest view of the market here. But I think there's been lots of new stories on AI demand and how that's fluctuated. The news about Microsoft today seems very quickly that a lot of that was disputed and was a bit misleading or misunderstood information to start. But I also point out the developments like GROC3 is now the number one rated AI.

[Jason Les, CEO & Executive Director at Riot Platforms]

And how did they achieve the results in that AI? They did a significant amount of pre trading because XAI got 100,000 going on 200,000 video GPUs up fast. So even though there's efficiency gains being had or being studied, it still remains that large scale access to power and then by extension compute gives hyperscalers, gives AI developers an edge in these products. So,

[Jason Les, CEO & Executive Director at Riot Platforms]

as

[Jason Les, CEO & Executive Director at Riot Platforms]

long as there's demand for AI, which I only believe is going to continue, I think we're going to continue to see increased demand for power to build data centers to get a competitive edge in that sector.

[John Todaro, Senior Analyst at Needham & Company]

That's great. And then my next question, so just try and frame it again for us because I know you guys have made the argument before how the Bitcoin business complements HPC because I see you're basically doubling down in Bitcoin, especially on Bitcoin on the balance sheet, but they want to aggressively go at HPC. And it seems like at least from the investors we talk to, like the guys who like HPC don't really like Bitcoin. So do you spin off one of them or how do they

[John Todaro, Senior Analyst at Needham & Company]

complement each other, I guess?

[Jason Les, CEO & Executive Director at Riot Platforms]

Well, I'd say today, RIOT's basically positioned itself at the center of two rapidly growing industries. We have Bitcoin and we have AIHPC data center demand, which is a very common theme. Bitcoin's rapid rise to institutional adoption and the price appreciation is what has positioned Riot as uniquely one of the handful of companies that has direct exposure to Bitcoin. This our Bitcoin balance in addition to our Bitcoin mining business has provided RIOT with the framework to raise capital at attractive levels and invest in projects like Corsicana, like roaming Rockdale and that has resulted in the opportunities that today. We think we can create a lot of value from that.

[Jason Les, CEO & Executive Director at Riot Platforms]

So with the AAHBC opportunity, this gives us another way, seemingly better way to use energy assets and generate substantial economics returns. And I think being flexible and opportunistic is what is going to give our shareholders a diversified path to greater returns. So, John, I would say that Bitcoin is the reactor that has grown our business and grown our assets and got us to the point where we could do this. And we believe it's going to continue generating opportunities for us and having the ability to develop AIHPC data centers or do deals in that sector is just another super exciting way in which we can increase value.

[John Todaro, Senior Analyst at Needham & Company]

Great. Thanks for that and congrats on the quarter guys.

[Jason Les, CEO & Executive Director at Riot Platforms]

Thank you.

[Operator]

Thank you. Our next question comes from Martin Toner with ATB Capital Markets. Your line is open.

[Martin Toner, Managing Director - Institutional Research, Growth & Innovation at ATB Capital Markets]

Thank you so much for taking the question. Congrats on the deal and the improved efficiency this quarter.

[Jason Les, CEO & Executive Director at Riot Platforms]

Thank you, Martin.

[Martin Toner, Managing Director - Institutional Research, Growth & Innovation at ATB Capital Markets]

Quick question on the deal and the $100,000,000 run rate and the margins. Just wondering at what when might you expect this business to produce like industry margins more in line with the industry and more in line with the acquired company?

[Jason Les, CEO & Executive Director at Riot Platforms]

Thanks, Martin. I'm going to turn that question over to Jason Chun, our EVP and Head of Corporate Development.

[Jason Chung, Executive VP and Head of Corporate Development & Strategy at Riot Platforms]

Hi,

[Jason Chung, Executive VP and Head of Corporate Development & Strategy at Riot Platforms]

Martin. Interesting question. We definitely see if we think about what the engineering business is today, following the acquisition of E4A Solutions, the services business by nature tends to have higher margins. And so we definitely see that higher margin profile demonstrated by their financial performance. They're at the center of this incredible growth we see in demand for power generation and data center development.

[Jason Chung, Executive VP and Head of Corporate Development & Strategy at Riot Platforms]

So we've seen historically their top line continues to grow while they've been able to maintain healthy margins and we definitely expect to see that continue going forward. And I think that really forms the basis for the sort of high level view we have around twenty twenty five performance on the engineering side. The other part of that the other component to that is the Metron business, where now that we've gotten this one particular contract behind us, we expect that business to recover meaningfully. And so if you look at where they were, call it in 2023, top line there similar margins, but now combining the E4A business on with a top line that's expected to continue to grow strongly this year and maintain healthy margins that on a sort of combined pro form a basis, we think that that engineering business will show significant improvement in margins. Then as you kind of look out further, we continue to see some really interesting synergy opportunities in combining these two businesses, both on the cost savings side and cross selling.

[Jason Chung, Executive VP and Head of Corporate Development & Strategy at Riot Platforms]

And even just given the E4A Solutions based in Houston, where we think some of the capacity issues that have currently constrained the ESS Metron business can potentially be alleviated. So I think there's some really interesting near to midterm opportunities to increase that margin profile even further now that we've got the two businesses together.

[Martin Toner, Managing Director - Institutional Research, Growth & Innovation at ATB Capital Markets]

That's great. Thanks very much. That's it for me. Thank you.

[Operator]

Thank you. Our next question comes from Patrick Moly with Piper Sandler. Your line is open.

[Patrick Moley, Sr. Research Analyst at Piper Sandler Companies]

Yes. Good evening. Thanks for taking the question. So I have one on the Rockdale site. If I'm not mistaken, I think that you currently lease that site.

[Patrick Moley, Sr. Research Analyst at Piper Sandler Companies]

You don't own it outright like you do with Corsicana. So I'm just can you maybe just talk about the specifics of that lease and whether the fact that you lease that land makes it any less attractive to hyperscalers when they're thinking about choosing a site for the data center? Thanks.

[Jason Les, CEO & Executive Director at Riot Platforms]

Yes, Patrick. So you are correct. Whereas at Corsicana, we own the land at Rockdale, we are on a land lease. That is on a pretty long term though. The initial term is ten years and then there are multiple ten year renewals at our option.

[Jason Les, CEO & Executive Director at Riot Platforms]

I think a total of forty or fifty years in total on there. So it's a pretty long term ground lease. I think what would impact a deal there is the type of deal that's getting done. I think it depends on what the level of involvement from the customer would be. I think ultimately drives whether or not Rossdale and the fact that the land is leased impacts if it's viable for them.

[Jason Les, CEO & Executive Director at Riot Platforms]

But at the end of the day, the major theme here is constraint on power. And we believe that as that constraint becomes more and more real and these hyperscalers and AI companies are competing with each other for capacity, factors like that may start to mean less if it means getting capacity on sooner.

[Patrick Moley, Sr. Research Analyst at Piper Sandler Companies]

Okay, got it. And then just a follow-up, it's obviously going to vary by the needs of the tenant, but some of the similar deals that we've seen get done in the space have been north of ten year lease terms or sorry, ten year terms on the AIHPC deals. So based on your conversations, can you talk about how long you think a contract, if you were to sign one, could potentially be? Has that come in at all as some of these questions have risen about longer term demand? Anything on kind of like the length of some of these deal terms would be great.

[Patrick Moley, Sr. Research Analyst at Piper Sandler Companies]

Thanks.

[Jason Les, CEO & Executive Director at Riot Platforms]

Yes. I think long term demand is I'm sorry, the long term of an agreement is a key point and that's both for customers and for us. We're going to be building infrastructure, we're going to be spending capital on this and there are good terms available today. We want a long term agreement to lock that in and give ourselves a visibility of the financial return for the assets over a long term. So I think both sides are similarly interested in having long term agreements or ten years and beyond.

[Patrick Moley, Sr. Research Analyst at Piper Sandler Companies]

All right, great. That's it for me. Thanks guys.

[Jason Les, CEO & Executive Director at Riot Platforms]

Thank you.

[Operator]

Thank you. Our next question comes from Bill Papasanathasoo with KBW. Your line is open.

[Bill Papanastasiou, Vice President at Keefe, Bruyette & Woods (KBW)]

Good evening, gentlemen. Congrats on

[Bill Papanastasiou, Vice President at Keefe, Bruyette & Woods (KBW)]

the deal and thanks for taking my questions. My first question is with respect to driving higher Bitcoin yields. Curious to hear how the company is thinking about dilution going forward to drive a higher Bitcoin per share? And could we see Ride issuing other forms of structured products down the road?

[Jason Les, CEO & Executive Director at Riot Platforms]

So minimizing dilution is a key part of being successful at Bitcoin yields. The core part that drives it for us as a Bitcoin miner is our mining operations, we're achieving a very low direct cost of production. That is what is, yes, the basis that forms how we organically generate Bitcoin yields. And of course, always going to be looking to raise capital in the least dilutive, lowest cost of capital manner in order to enhance Bitcoin yield. And it's a reason why this metric is powerful, we think.

[Jason Les, CEO & Executive Director at Riot Platforms]

It helps whole teams such as ourselves accountable to making dilution as minimal as possible. So, that leads to how we think about going into the market with equity. You'll notice over the past few months or so, we've been very light with our ATM program. It also is what drives us to find additional forms of financing. We think with our assets and the things that we've what we build up here at RIOT, we are well positioned to find alternative forms of financing.

[Jason Les, CEO & Executive Director at Riot Platforms]

All of this contributes to driving a Bitcoin yield. As far as other kind of structured products, I assume you're looking to the things that like what a strategy has done. That's not something that we've looked too closely at yet. Our main focus has been the AIHPC opportunity right now, but I think we'll closely monitor how these products come about and see what investor and market demand looks like for them.

[Bill Papanastasiou, Vice President at Keefe, Bruyette & Woods (KBW)]

Appreciate that color. And then secondly, and apologies if I missed this earlier in the call, but can you share some more color on how the design and engineering aspects of the AI HPC data center could look like? Will you need to hire or partner with more external parties to get it up and running? Curious to hear what the plan is there. Thanks.

[Jason Les, CEO & Executive Director at Riot Platforms]

So I

[Jason Les, CEO & Executive Director at Riot Platforms]

think it will ultimately depend, Bill, on the type of deal that comes together. Like we talked about earlier, we want to pursue what maximizes the most value on a risk adjusted basis. And there's multiple different avenues in which we can execute there. In some of these avenues, we already have a team in place to do that. We're building out our power capacity very well.

[Jason Les, CEO & Executive Director at Riot Platforms]

We did exceptionally good at that and the acquisition of E4A makes us even better at building out what you would say is the powered shell of an infrastructure of a data center development. Further, Riot and Bitcoin mining, we've developed our infrastructure there with state of the art coin techniques and that experience translates into supporting data center development, especially with the type of state of the art coin techniques we're seeing there. So, I think we have a good amount of talent. Nonetheless, we are focused on bringing on additional help to support an execution there and we're working on that from both an internal and third party perspective.

[Bill Papanastasiou, Vice President at Keefe, Bruyette & Woods (KBW)]

Awesome. Thanks for the color. Looking forward to the feasibility study next month.

[Jason Les, CEO & Executive Director at Riot Platforms]

Thank you, Bill.

[Operator]

Thank you. Our next question comes from Joe Flynn with Compass Point Research and Trading. Your line is open.

[Joe Flynn, Senior Research Analyst at Compass Point Research & Trading LLC]

Hi, thanks for the question. I was wondering maybe based on early conversations with your consultants, if there's any operational metrics you can share such as ultimately what PoE you'll be able to deliver at and your build cost per megawatt and how that could be different between the 600 megawatts at Corsicana and the Rockdale site given there's already existing power infrastructure on in the ground? Thanks.

[Jason Les, CEO & Executive Director at Riot Platforms]

Yes, I think it's probably too early to comment on what PoEs could look like, especially since the technology is changing. So rapidly, it's going to depend a lot on what the type of customer would be. I think both Rockdale and Corsicana are in very similar climates, only being 100 miles from each other. So, they would be similar on both sides. At both sides though, we have very sufficient access to water, especially at Rockdale.

[Jason Les, CEO & Executive Director at Riot Platforms]

So, we have the ability to support a wide variety of cooling technologies there. So, Joe, I couldn't tell you what it would be like just yet. I think the conversations would need to advance further. We'd have to be kind of in the design phase to know what that particular customer is looking to accomplish.

[Joe Flynn, Senior Research Analyst at Compass Point Research & Trading LLC]

And then just going back to just maximizing the value of the sites, does that include potential outright sales of capacity? And like on that front, have you been approached or even gotten offers for an outright asset sale?

[Jason Les, CEO & Executive Director at Riot Platforms]

There's a whole spectrum of potential deal structure here. It could be on one end, it could be lease land, it could be a powered shell, it could be building something to suit, basically a large complete data center. And then the biggest end of the spectrum would be an outright sale of the asset. So we're open to all of these as we progress in discussions here. And we want to drive a strong competitive process here, why we've engaged Evercore and Northland to give us the most broad penetrations in the market we can.

[Joe Flynn, Senior Research Analyst at Compass Point Research & Trading LLC]

Great. Thanks.

[Jason Les, CEO & Executive Director at Riot Platforms]

Thanks, Joe.

[Operator]

Thank you. That's all the time we have for questions. I'd like to turn the call back over to Phil McPherson for closing remarks.

[Phil McPherson, VP of Capital Markets & Investor Relations at Riot Platforms]

I'd like to thank everybody for tuning in today to our earnings conference call. We look forward to updating you on future events for RIOT platforms. As always, you can contact us at irriot. Inc for any other future questions and we'll talk soon. Thank you.

[Operator]

Thank you for your participation. This does conclude the program and you may now disconnect. Good day.

Participants

Executives

• Phil McPherson, VP of Capital Markets & Investor Relations
• Jason Les, CEO & Executive Director
• Colin Yee, Executive VP & CFO
• Jason Chung, Executive VP and Head of Corporate Development & Strategy

Analysts

• Gregory Lewis, Managing Director at BTIG
• Nick Giles, Senior Research Analyst at B.Riley Securities
• Darren Aftahi, Senior Research Analyst-Internet, Media and Enabling Technologies at Roth Capital Partners, LLC
• Brett Knoblauch, Managing Director at Cantor Fitzgerald
• Reggie Smith, Executive Director, Equity Research at JP Morgan
• Mike Grondahl, Head of Equities & Director of Research at Northland Capital Markets
• John Todaro, Senior Analyst at Needham & Company
• Martin Toner, Managing Director - Institutional Research, Growth & Innovation at ATB Capital Markets
• Patrick Moley, Sr. Research Analyst at Piper Sandler Companies
• Bill Papanastasiou, Vice President at Keefe, Bruyette & Woods (KBW)
• Joe Flynn, Senior Research Analyst at Compass Point Research & Trading LLC