$349 million devaluation for Bitcoin mining company Riot

Riot Blockchain (RIOT) is by far one of the largest publicly traded Bitcoin miners in the world. 

Bitcoin miner Riot: market-driven devaluation

It has a market capitalization of over $1.2 billion, but it has depreciated greatly over the course of 2022. 

Not only was it negatively affected by the collapse in the value of BTC, but it had to write down its holdings in some other companies in the industry by as much as $349.1 million. 

In the note on the second quarter filed with the SEC, they stated that due to adverse market conditions, the company performed an interim valuation from which emerged:

“an impairment to goodwill of $349.1 million related to the acquisitions of Whinstone US and ESS Metron in 2021”.

The note also reports financial highlights for the second quarter of 2022, including an overall revenue increase of 112% compared to the second quarter of 2021, a 47% increase in direct mining revenue, and a 107% increase in BTC mining. In total, in the three months from April to June 2022 inclusive it mined 1,395 BTC, while in the same period last year it was only 675 BTC.

However, the average value of the individual BTC mined this year is significantly lower than those mined last year, as in April 2021 the price of Bitcoin rose as high as $64,000. 

Overall, it posted a loss EBITDA of $65 million in the second quarter of 2022, partly due to an additional $99.8 million write-down on the BTC held in the company’s cash. 

Curiously, however, these not-so-good financial data did not have a heavy impact on the stock price of RIOT shares. In fact, the price fell only 10% after their publication, with a subsequent 8% rebound followed by a 4% decline. Now, compared to the value before the data was published, the price is only 6% lower. 

Riot at a steady loss

It is worth mentioning that the stock still loses nearly 60% since the beginning of the year, which is in line with other high-risk stocks listed on the Nasdaq. Still, it has recovered 67% in the last month. 

This data suggests that investors and speculators do not believe in a further collapse of Bitcoin‘s price in the short term, although the situation could change very quickly in the event of a new crisis. 

Other large US-based Bitcoin miners have also suffered sharp devaluations. For example, Marathon Digital (MARA) reported $127.6 million in write-downs in the second quarter due to the falling prices of digital currencies.

Certainly, 2022 has not been a good year at all for Bitcoin miners, and particularly for publicly traded ones, but after the extraordinary results of 2021 it is possible that they have enough resources to survive.