Riot Platforms, Inc. Q2 FY2025 earnings call

• Riot's strategy is to maximize the value of its power portfolio, shift power capacity towards data centers, expand power assets, and increase shareholders' exposure to value-accreting assets. - Added Jonathan Gibbs as Chief Data Center Officer and expanded land around Corsicana to 858 acres. - Continued progress in Bitcoin mining with improved operational efficiency and hash rate utilization. - Engineering business has record order bookings and provides strategic benefits for data center and Bitcoin mining development.

In the second quarter, Riot Platforms' Bitcoin mining revenue totaled $140.9 million, in line with the prior quarter's $142.9 million. Bitcoin mining gross margin was 50% for the quarter, an increase from 48% in the prior quarter. Self-mining hash rate increased from 33.7 EH/s to 35.4 EH/s during the quarter. Total revenue for the second quarter was $153 million, a 5% decrease quarter-over-quarter. The engineering business achieved record order bookings with backlog at $118.7 million, but revenue totaled $10.6 million in the quarter, a 14% decrease from the prior quarter's $13.9 million.

• Raised 2025 fourth quarter hash rate forecast from 38.4 exahash to 40 exahash, with year-over-year hash rate growth of 26%. - Provided initial first quarter 2026 hash rate forecast of 45 exahash. - Progressing on basis of design for data centers, aiming to complete it by the end of the third quarter, and continuing to build internal expertise for data center business.

• Texas Senate Bill 6 may affect the cost structure and operations of mining and HPC activities at Corsicana and Rockdale, but the specific impact is currently uncertain as it is in the exploratory and information-gathering stage.

Q: There's definitely a lot to chew through on the HPC opportunity ahead for Riot. But I did want to ask about the decision. It was clearly a good quarter for generating Bitcoin. But clearly, from the action, we took that Bitcoin generation to really -- we sold that to monetize. Could you talk a little bit about that decision to do that and how you're thinking about the HODL strategy in the back half of the year or even longer term?

A: Thanks for the question, Greg. This is Jason Chung. Maybe I'll take a stab at that one. So I think this quarter is an interesting representation of how we think about our financing strategy and the different levers available to us. And just looking at for the past quarter, the 2 levers that we exercised most heavily, one was the sales of our Bitcoin production. And the second was leaning into our Bitcoin Stash to borrow and enter into the Coinbase facility for $200 million. The sale of Bitcoin production allows us to more than cover our operating costs and therefore, frees up the additional capacity or minimizes our requirement to issue into the ATM and really allows us to focus any financing raised through that very specifically towards growth opportunities, which we believe are going to be value accretive to our shareholders. And so I think that's kind of how we think about -- thought about things for the quarter and probably a good reflection of how we currently think about things as well. As Bitcoin prices increase, that does give us additional room for comfort around our leverage levels and the ability to consider expanding the amount of financing we draw upon there as well. So I think as we continue to see how Bitcoin prices evolve, you'll see us continue to take advantage of different market conditions as we think about what's optimal from a capital perspective for the quarter.

Q: I think it's become clear that Riot is not going to rush to get a deal done. So I want to commend you for your measured approach. But I think in recent months, forming a basis of design has been at the core of Riot's efforts towards the data center side. And so I was wondering if you could provide any detail on what aspects of that document are clearly defined versus ones you may still be working on? I think factors that come to mind are cooling resources, redundancy, security layout. Any color that you can add there would be great.

A: Yes. So first off, bringing an experienced data center executive like Jonathan Gibbs on board alongside other talent that's been recruited with significant experience in data center development has aided us considerably in building the basis of design. Of course, it is this team -- this data center team's project and objective to accomplish here. And this basis of design is very foundational to being able to go to market. What we're putting together here is the technical strategy, design elements that we can then take and then have something concrete to be able to discuss with potential customers, with potential tenants to ultimately arrive at a more customized design and then a lease. So we see this as one of multiple milestones, but a very key milestone in progressing towards getting a lease here. We have been working on this quite a bit. Jonathan and his team has rather, and there's been significant progress made already. We expect that we will be able to complete this basis of design by the end of this quarter -- by the end of the third quarter, that is, and be moving on to next steps in our data center strategy.