Riot Platforms, a Colorado-based Bitcoin mining company, has announced record profits for the month of August, earning $31.7 million. These profits were boosted by $7 million in energy credits received from the Electric Reliability Council of Texas (ERCOT) for voluntarily reducing its energy consumption during a historic heatwave in Texas.
ERCOT paid Riot Platforms to cut its power usage as the state’s electricity demand reached record levels due to the extreme temperatures. Riot Platforms was able to decrease its power usage by over 95% during peak demand periods, according to the company’s report.
In addition to the energy credits from ERCOT, Riot Platforms also sold approximately $24 million worth of pre-purchased energy to the Texas Utilities Electric Company. This strategy of selling excess energy and receiving credits for future energy bills has allowed Riot Platforms to significantly lower its cost of mining Bitcoin.
Jason Les, CEO of Riot Platforms, believes that this power strategy will give the company a competitive advantage and position it well for the upcoming Bitcoin ‘halving’ event next year. He emphasized that combining the company’s strong financial position, efficient miner fleet, and low-cost Bitcoin production makes Riot Platforms a leading player in the industry.
The profits earned by Riot Platforms in August amounted to approximately a quarter of the value of the Bitcoin it mined during that month, which was around $8.9 million. This demonstrates the significant impact of the energy credits and selling excess energy on the company’s profitability.
While 2021 was a successful year for Riot Platforms, with an 8,000% revenue growth driven by rising Bitcoin demand, the market downturn in 2022 resulted in a net loss of $500 million for the company. Although Riot Platforms has not fully recovered, it has seen a slight improvement in 2023. However, the market has yet to reach its peak from 2021, with Riot Platforms’ stock price still significantly down compared to its highest point in that year.
Texas has been known for its friendly stance towards crypto mining, offering incentives like energy credits to attract mining companies. In April, a bill was passed in the Texas State Senate that would have prohibited Bitcoin miners from utilizing energy credits on peak demand days. However, the bill did not progress further. Instead, two mining-friendly bills came into effect on September 1, increasing incentives and removing obstacles for mining operations.
Riot Platforms has plans to expand its operations by building another facility in Corsicana, as mentioned in a recent presentation. This expansion aims to further enhance the company’s mining capacity and profitability.
In conclusion, Riot Platforms’ record profits in August, including energy credits from ERCOT, demonstrate the company’s successful power strategy and low-cost Bitcoin production. Despite facing market challenges, Riot Platforms remains optimistic about its future, especially with the upcoming Bitcoin ‘halving’ event. The expansion plans in Corsicana indicate the company’s commitment to further growth and success in the crypto mining industry.
