Riot Platforms, Inc. 10-Q

Item 1. Financial Statements Riot Platforms, Inc. Condensed Consolidated Balance Sheets (Unaudited; and in thousands, except for share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ ​ 2023 ​ 2022 ASSETS ​ ​ Current assets ​ ​ Cash and cash equivalents ​ $ 289,176 ​ $ 230,328 Accounts receivable, net ​ 13,181 ​ 26,932 Contract assets, including retainage of $ 4,222 and $ 3,012 , respectively ​ 19,063 ​ 19,743 Prepaid expenses and other current assets ​ 20,132 ​ 32,661 Bitcoin ​ 140,931 ​ 109,420 Future power credits, current portion ​ 271 ​ 24,297 Total current assets ​ 482,754 ​ 443,381 ​ ​ ​ ​ ​ ​ ​ Property and equipment, net ​ 699,637 ​ 692,555 Deposits ​ 30,414 ​ 42,433 Finite-lived intangible assets, net ​ 18,622 ​ 21,477 Derivative asset ​ ​ 104,828 ​ ​ 97,497 Operating lease right-of-use assets ​ ​ 21,221 ​ ​ 21,673 Future power credits, less current portion ​ 638 ​ 638 Other long-term assets ​ 816 ​ 310 Total assets ​ $ 1,358,930 ​ $ 1,319,964 ​ ​ ​ LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ Current liabilities ​ ​ Accounts payable ​ $ 12,616 ​ $ 18,445 Contract liabilities ​ 3,117 ​ 8,446 Accrued expenses ​ ​ 27,307 ​ ​ 65,464 Deferred gain on acquisition post-close dispute settlement ​ ​ 26,007 ​ ​ — Deferred revenue, current portion ​ 2,670 ​ 2,882 Contingent consideration liability - future power credits, current portion ​ 271 ​ 24,297 Operating lease liability, current portion ​ 2,343 ​ 2,009 Total current liabilities ​ 74,331 ​ 121,543 ​ ​ ​ Deferred revenue, less current portion ​ 16,853 ​ 17,869 Operating lease liability, less current portion ​ 19,510 ​ 20,242 Contingent consideration liability - future power credits, less current portion ​ 638 ​ 638 Other long-term liabilities ​ 6,688 ​ 8,230 Total liabilities ​ 118,020 ​ 168,522 ​ ​ ​ Commitments and contingencies - Note 16 ​ ​ ​ ​ ​ Stockholders’ equity ​ ​ Preferred stock, no par value, 15,000,000 shares authorized: ​ ​ 2 % Series A Convertible Preferred stock, 2,000,000 shares authorized; no shares issued and outstanding as of June 30, 2023 and December 31, 2022 ​ — ​ — 0 % Series B Convertible Preferred stock, 1,750,001 shares authorized; no shares issued and outstanding as of June 30, 2023 and December 31, 2022 ​ — ​ — Common stock, no par value; 340,000,000 shares authorized; 182,250,554 and 167,751,112 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively ​ 2,080,627 ​ 1,907,784 Accumulated deficit ​ ( 839,717 ) ​ ( 756,342 ) Total stockholders’ equity ​ 1,240,910 ​ 1,151,442 Total liabilities and stockholders’ equity ​ $ 1,358,930 ​ $ 1,319,964 ​ See accompanying notes to condensed consolidated financial statements. 1 Table of Contents Riot Platforms, Inc. Condensed Consolidated Statements of Operations (Unaudited; and in thousands, except for share and per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ ​ June 30, ​ June 30, ​ 2023 2022 2023 2022 Revenue: ​ ​ ​ ​ ​ ​ ​ ​ Bitcoin Mining ​ $ 49,742 ​ $ 46,151 ​ $ 97,765 ​ $ 104,096 Data Center Hosting ​ 7,661 ​ 9,834 ​ 16,703 ​ 19,528 Engineering ​ 19,312 ​ 16,938 ​ 35,459 ​ 29,062 Other revenue ​ 24 ​ 24 ​ 48 ​ 48 Total revenue ​ 76,739 ​ 72,947 ​ 149,975 ​ 152,734 ​ ​ ​ ​ ​ Costs and expenses: ​ ​ ​ ​ Cost of revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Bitcoin Mining ​ 23,647 ​ 17,995 ​ 45,546 ​ 37,089 Data Center Hosting ​ 22,134 ​ 15,184 ​ 47,794 ​ 30,169 Engineering ​ 18,182 ​ 15,175 ​ 33,745 ​ 26,724 Acquisition-related costs ​ — ​ — ​ — ​ 78 Selling, general, and administrative ​ 19,836 ​ 10,713 ​ 32,511 ​ 21,545 Depreciation and amortization ​ 66,162 ​ 20,562 ​ 125,502 ​ 34,807 Change in fair value of derivative asset ​ ( 13,109 ) ​ ( 60,931 ) ​ ( 7,331 ) ​ ( 104,614 ) Power curtailment credits ​ ​ ( 13,470 ) ​ ​ ( 5,706 ) ​ ​ ( 16,545 ) ​ ​ ( 8,258 ) Change in fair value of contingent consideration ​ — ​ — ​ — ​ 176 Realized gain on sale of Bitcoin ​ ( 19,828 ) ​ ( 15,260 ) ​ ( 33,603 ) ​ ( 24,925 ) Gain (loss) on sale/exchange of equipment ​ ​ 30 ​ ​ ( 8,614 ) ​ ​ 30 ​ ​ ( 8,614 ) Casualty-related charges (recoveries), net ​ ​ — ​ ​ — ​ ​ 1,526 ​ ​ — Impairment of Bitcoin ​ ​ 5,638 ​ ​ 101,419 ​ ​ 10,110 ​ ​ 127,289 Impairment of goodwill ​ ​ — ​ ​ 335,648 ​ ​ — ​ ​ 335,648 Total costs and expenses ​ 109,222 ​ 426,185 ​ 239,285 ​ 467,114 Operating income (loss) ​ ( 32,483 ) ​ ( 353,238 ) ​ ( 89,310 ) ​ ( 314,380 ) ​ ​ ​ ​ ​ Other income (expense): ​ ​ ​ ​ Interest income (expense) ​ ​ 4,843 ​ ​ — ​ ​ 1,013 ​ ​ ( 357 ) Realized loss on sale of marketable equity securities ​ ​ — ​ ​ ( 1,624 ) ​ ​ — ​ ​ ( 1,624 ) Unrealized loss on marketable equity securities ​ — ​ ( 4,837 ) ​ — ​ ( 6,448 ) Other income (expense) ​ ​ 65 ​ ​ ( 59 ) ​ ​ 65 ​ ​ ( 59 ) Total other income (expense) ​ 4,908 ​ ( 6,520 ) ​ 1,078 ​ ( 8,488 ) ​ ​ ​ ​ ​ Net income (loss) before taxes ​ ( 27,575 ) ​ ( 359,758 ) ​ ( 88,232 ) ​ ( 322,868 ) ​ ​ ​ ​ ​ Current income tax benefit (expense) ​ ( 112 ) ​ ( 427 ) ​ ( 188 ) ​ ( 739 ) Deferred income tax benefit (expense) ​ — ​ 6,626 ​ 5,045 ​ 6,626 Total income tax benefit (expense) ​ ( 112 ) ​ 6,199 ​ 4,857 ​ 5,887 ​ ​ ​ ​ ​ Net income (loss) ​ $ ( 27,687 ) ​ $ ( 353,559 ) ​ $ ( 83,375 ) ​ $ ( 316,981 ) ​ ​ ​ ​ ​ Basic and diluted net income (loss) per share ​ $ ( 0.17 ) ​ $ ( 2.71 ) ​ $ ( 0.51 ) ​ $ ( 2.56 ) Basic and diluted weighted average number of shares outstanding ​ 167,342,813 ​ 130,405,502 ​ 162,559,956 ​ 123,760,839 ​ See accompanying notes to condensed consolidated financial statements. ​ 2 Table of Contents Riot Platforms, Inc. Condensed Consolidated Statements of Stockholders’ Equity (Unaudited; and in thousands, except for share amounts) ​ Three Months Ended June 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Common Stock ​ Accumulated ​ stockholders’ ​ ​ Shares ​ Amount ​ deficit ​ equity Balance as of April 1, 2023 166,966,766 ​ $ 1,904,175 ​ $ ( 812,030 ) ​ $ 1,092,145 Issuance of restricted stock, net of forfeitures and delivery of common stock underlying stock awards, net of tax withholding ( 663,377 ) ​ ( 11,638 ) ​ — ​ ( 11,638 ) Issuance of common stock/At-the-market offering, net of offering costs 15,877,000 ​ 184,661 ​ — ​ 184,661 Issuance of common stock in connection with acquisition of ESS Metron ​ 70,165 ​ ​ — ​ ​ — ​ ​ — Stock-based compensation — ​ 3,429 ​ — ​ 3,429 Net income (loss) — ​ — ​ ( 27,687 ) ​ ( 27,687 ) Balance as of June 30, 2023 182,250,554 ​ $ 2,080,627 ​ $ ( 839,717 ) ​ $ 1,240,910 ​ ​ Three Months Ended June 30, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Common Stock ​ Accumulated ​ stockholders’ ​ ​ Shares ​ Amount ​ deficit ​ equity Balance as of April 1, 2022 117,304,304 ​ $ 1,589,893 ​ $ ( 210,211 ) ​ $ 1,379,682 Issuance of restricted stock, net of forfeitures and delivery of common stock underlying stock awards, net of tax withholding 122,052 ​ ( 508 ) ​ — ​ ( 508 ) Issuance of common stock/At-the-market offering, net of offering costs 30,559,817 ​ 267,022 ​ — ​ 267,022 Stock-based compensation — ​ 701 ​ — ​ 701 Net income (loss) — ​ — ​ ( 353,559 ) ​ ( 353,559 ) Balance as of June 30, 2022 147,986,173 ​ $ 1,857,108 ​ $ ( 563,770 ) ​ $ 1,293,338 ​ ​ Six Months Ended June 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Common Stock ​ Accumulated ​ stockholders’ ​ ​ Shares ​ Amount ​ deficit ​ equity Balance as of January 1, 2023 ​ 167,751,112 ​ $ 1,907,784 ​ $ ( 756,342 ) ​ $ 1,151,442 Issuance of restricted stock, net of forfeitures and delivery of common stock underlying stock awards, net of tax withholding ( 1,447,723 ) ​ ( 12,951 ) ​ — ​ ( 12,951 ) Issuance of common stock/At-the-market offering, net of offering costs 15,877,000 ​ 184,661 ​ — ​ 184,661 Issuance of common stock in connection with acquisition of ESS Metron ​ 70,165 ​ ​ — ​ ​ — ​ ​ — Stock-based compensation — ​ 1,133 ​ — ​ 1,133 Net income (loss) — ​ — ​ ( 83,375 ) ​ ( 83,375 ) Balance as of June 30, 2023 182,250,554 ​ $ 2,080,627 ​ $ ( 839,717 ) ​ $ 1,240,910 ​ ​ Six Months Ended June 30, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Preferred Stock ​ Common Stock ​ Accumulated ​ stockholders’ ​ ​ Shares ​ Amount ​ Shares ​ Amount ​ deficit ​ equity Balance as of January 1, 2022 2,199 ​ $ 11 116,748,472 ​ $ 1,595,147 ​ $ ( 246,789 ) ​ $ 1,348,369 Issuance of restricted stock, net of forfeitures and delivery of common stock underlying stock awards, net of tax withholding — ​ — 675,685 ​ ( 8,815 ) ​ — ​ ( 8,815 ) Issuance of common stock/At-the-market offering, net of offering costs — ​ — 30,559,817 ​ 267,022 ​ — ​ 267,022 Conversion of preferred stock to common stock ( 2,199 ) ​ ( 11 ) 2,199 ​ 11 ​ — ​ — Stock-based compensation — ​ — — ​ 3,743 ​ — ​ 3,743 Net income (loss) — ​ — — ​ — ​ ( 316,981 ) ​ ( 316,981 ) Balance as of June 30, 2022 — ​ $ — 147,986,173 ​ $ 1,857,108 ​ $ ( 563,770 ) ​ $ 1,293,338 ​ See accompanying notes to condensed consolidated financial statements. 3 Table of Contents Riot Platforms, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited, in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, ​ ​ 2023 2022 Operating activities ​ ​ ​ Net income (loss) ​ $ ( 83,375 ) ​ $ ( 316,981 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: ​ ​ Stock-based compensation ​ 1,133 ​ 3,743 Depreciation and amortization ​ 125,502 ​ 34,807 Amortization of license fee revenue ​ ( 48 ) ​ ( 48 ) Noncash lease expense ​ 1,134 ​ 807 Deferred income tax expense (benefit) ​ ( 5,045 ) ​ ( 6,626 ) Impairment of Bitcoin ​ 10,110 ​ 127,289 Impairment of goodwill ​ ​ — ​ ​ 335,648 Change in fair value of derivative asset ​ ( 7,331 ) ​ ( 104,614 ) Change in fair value of contingent consideration ​ — ​ 176 Realized loss on sale of marketable equity securities ​ ​ — ​ ​ 1,624 Realized gain on sale of Bitcoin ​ ( 33,603 ) ​ ( 24,925 ) Unrealized loss on marketable equity securities ​ — ​ 6,448 Gain (loss) on sale/exchange of equipment ​ 30 ​ ( 8,614 ) Casualty-related charges ​ ​ 1,526 ​ ​ — Bitcoin Mining revenue ​ ​ ( 97,765 ) ​ ​ ( 104,096 ) Proceeds from sale of Bitcoin ​ ​ 89,162 ​ ​ 33,116 Changes in assets and liabilities: ​ ​ (Increase)/decrease in operating assets ​ ​ 29,226 ​ ​ 18,983 Increase/(decrease) in operating liabilities ​ ​ ( 36,440 ) ​ ​ ( 11,130 ) Net cash provided by (used in) operating activities ​ ( 5,784 ) ​ ( 14,393 ) ​ ​ ​ Investing activities ​ ​ Proceeds from the sale of marketable equity securities ​ ​ — ​ ​ 704 Deposits on equipment ​ — ​ ( 192,485 ) Security deposits ​ ​ — ​ ​ ( 709 ) Purchases of property and equipment, including construction in progress ​ ( 107,424 ) ​ ( 77,403 ) Patent costs incurred ​ ( 34 ) ​ ( 28 ) Net cash provided by (used in) investing activities ​ ( 107,458 ) ​ ( 269,921 ) ​ ​ ​ Financing activities ​ ​ Proceeds from the issuance of common stock / At-the-market offering ​ 188,430 ​ 272,737 Offering costs for the issuance of common stock / At-the-market offering ​ ( 3,769 ) ​ ( 5,715 ) Payments on contingent consideration liability - future power credits ​ ​ — ​ ​ ( 15,725 ) Proceeds from Credit and Security Facility ​ ​ 880 ​ ​ — Repayments of Credit and Security Facility ​ ​ ( 500 ) ​ ​ — Repurchase of common shares to pay employee withholding taxes ​ ( 12,951 ) ​ ( 8,815 ) Net cash provided by (used in) financing activities ​ 172,090 ​ 242,482 ​ ​ ​ Net increase (decrease) in cash and cash equivalents ​ 58,848 ​ ( 41,832 ) Cash and cash equivalents at beginning of period ​ 230,328 ​ 312,315 Cash and cash equivalents at end of period ​ $ 289,176 ​ $ 270,483 ​ ​ ​ ​ ​ ​ ​ ​ Supplemental information: ​ ​ Cash paid for interest ​ $ 17 ​ $ — Cash paid for taxes ​ $ — ​ $ — Non-cash transactions ​ ​ Reclassification of deposits to property and equipment ​ $ 33,273 ​ $ 96,348 Construction in progress included in accrued expenses ​ $ 7,353 ​ $ 2,020 Bitcoin exchanged for employee compensation ​ $ 585 ​ $ 1,362 Conversion of preferred stock to common stock ​ $ — ​ $ 11 Right of use assets exchanged for new operating lease liabilities ​ $ 682 ​ $ 8,784 Property and equipment obtained in exchange transaction ​ $ — ​ $ 10,409 ​ ​ See accompanying notes to condensed consolidated financial statements. ​ ​ 4 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Note 1. Organization and Operation of Our Business Nature of Operations Riot is a vertically integrated Bitcoin mining company principally engaged in enhancing our capabilities to mine Bitcoin in support of the Bitcoin blockchain. The Company also provides comprehensive and critical infrastructure for its own Bitcoin Mining, as well as provides such infrastructure for institutional-scale hosted clients to mine Bitcoin at its Bitcoin mining facility in Rockdale, Texas (the “Rockdale Facility”). Currently, the Rockdale Facility has 700 megawatts (“MW”) in total developed capacity for Riot’s Bitcoin Mining and Data Center Hosting services for institutional-scale hosted clients. The Company is also developing a second large-scale Bitcoin Mining and Data Center Services facility located outside of Corsicana, Texas (the “Corsicana Facility”), which, upon completion, is expected to have approximately one gigawatt of capacity available for Riot’s Bitcoin Mining and Data Center Hosting services for institutional-scale hosted clients. The Company also provides Engineering services, which includes providing engineered electrical equipment products to third-party customers and customized electrical infrastructure essential to the Company’s Bitcoin Mining and hosting of institutional-scale clients. ​ As described in Note 19. Segment Information , we operate in three reportable business segments: Bitcoin Mining, Data Center Hosting, and Engineering. Note 2. Liquidity and Financial Condition At June 30, 2023, the Company had approximate balances of cash and cash equivalents of $ 289.2 million, working capital of $ 408.4 million, total stockholders’ equity of $ 1.2 billion and an accumulated deficit of $ 839.7 million. To date, the Company has, in large part, relied on equity financing to fund its operations and growth. During the six months ended June 30, 2023, the Company sold 3,575 Bitcoin for proceeds of approximately $ 89.2 million. The Company monitors its balance sheet on an ongoing basis and continuously evaluates the level of Bitcoin retained from monthly production in consideration of cash requirements and its ongoing operations and expansion. Bitcoin is classified on the balance sheet as a current asset due to its ability to be sold in a highly liquid marketplace and the Company’s intent to liquidate its Bitcoin to support its operations when needed. During the six months ended June 30, 2023, the Company issued 15,877,000 shares of common stock, at a weighted average price of $ 11.87 per share, for net proceeds of approximately $ 184.7 million. During July 2023, the Company issued 570,645 shares of common stock, at a weighted average price of $ 11.78 per share, for net proceeds of approximately $ 6.6 million (see Note 13. Stockholders’ Equity ). Inflation The Company has experienced, and is experiencing, the impact of domestic and global inflationary pressures largely outside of its control, as well as the impact of central banks’ responses to such pressures. This inflationary pressure impacts the Company’s cost structure by increasing the cost of materials, parts, and labor, making both its operations and development more expensive, despite a continued focus on controlling our costs where possible. The development of the Corsicana Facility has been impacted by increased materials prices, labor costs, and higher rates for services, all of which may adversely affect the Company’s ability to complete the planned expansion on time and within its anticipated budget. Management is unable to accurately predict when, or if, these inflationary pressures will subside, or whether and to what extent a broad-based economic recession will arise in connection with these pressures. As a result, management is unable to predict the impact these inflationary pressures and possible follow-on conditions may have on the business and results of operations, as well as access to financing. See the Company’s 2022 Annual Report for additional discussion regarding the potential impacts of sustained, elevated inflationary pressures may have on its operations and plans for expansion. Note 3. Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the accompanying unaudited 5 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of such interim results. Amounts are stated in thousands of U.S. Dollars except for share, per share and miner amounts. The results in the accompanying unaudited condensed consolidated statements of operations are not necessarily indicative of results to be expected for the fiscal year ending December 31, 2023 or for any future interim period. The accompanying unaudited condensed consolidated financial statements do not include all the information and notes required by GAAP for complete financial statements and, as such, should be read in conjunction with the consolidated financial statements for the fiscal year ended December 31, 2022, and notes thereto, included in the 2022 Annual Report. Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ significantly from those estimates. The most significant accounting estimates inherent in the preparation of the Company’s financial statements include estimates associated with valuing contingent consideration for a business combination and periodic reassessment of its fair value, allocating the fair value of purchase consideration to assets acquired and liabilities assumed in business acquisitions, revenue recognition, valuing the derivative asset classified under Level 3 fair value hierarchy, determining the useful lives and recoverability of long-lived assets, impairment analysis of goodwill, fixed assets, and finite-lived intangibles, stock-based compensation, and the valuation allowance associated with the Company’s deferred tax assets. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation in the unaudited condensed consolidated financial statements and these accompanying notes. The reclassifications did not have a material impact on the Company’s unaudited condensed consolidated financial statements and related disclosures. The impact on any prior period disclosures was immaterial. Significant Accounting Policies For a detailed discussion about the Company’s significant accounting policies, see the Company’s 2022 Annual Report. Recently Issued and Adopted Accounting Pronouncements The Company has evaluated all recently issued accounting pronouncements and believes such pronouncements do not have a material effect on the Company’s financial statements. Note 4. Revenue from Contracts with Customers Disaggregated revenue Revenue disaggregated by reportable segment is presented in Note 19. Segment Information . Contract balances Contract assets relate to uncompleted Engineering contracts. As of June 30, 2023 and December 31, 2022, contract assets were $ 19.1 million and $ 19.7 million, respectively. 6 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Contract liabilities primarily relate to upfront payments and consideration received for Data Center Hosting services and uncompleted Engineering contracts. The following table presents changes in contract liabilities and deferred revenue: ​ ​ ​ ​ ​ ​ ​ Six Months Ended ​ ​ June 30, 2023 Beginning balance ​ $ 29,197 Revenue recognized ​ ​ ( 8,763 ) Other changes in contract liabilities ​ ​ 2,206 Ending balance ​ $ 22,640 ​ Remaining performance obligation The following table presents the Company’s remaining performance obligations, which represent the transaction price of contracts for work that has not yet been performed. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2024 2025 2026 ​ 2027 Thereafter Total Data Center Hosting $ 1,394 $ 2,362 $ 2,362 $ 2,362 ​ $ 2,362 $ 8,147 $ 18,989 Engineering ​ 3,117 ​ — ​ — ​ — ​ ​ — ​ — ​ 3,117 Other ​ ​ 49 ​ ​ 97 ​ ​ 97 ​ ​ 97 ​ ​ 97 ​ ​ 97 ​ ​ 534 Total contract liabilities ​ $ 4,560 ​ $ 2,459 ​ $ 2,459 ​ $ 2,459 ​ $ 2,459 ​ $ 8,244 ​ $ 22,640 ​ ​ Note 5. Bitcoin The following table presents information about the Company’s Bitcoin holdings: ​ ​ ​ ​ ​ ​ Six Months Ended ​ ​ June 30, 2023 Beginning balance $ 109,420 Revenue recognized from Bitcoin mined ​ 97,765 Proceeds from sale of Bitcoin ​ ( 89,162 ) Exchange of Bitcoin for employee compensation ​ ( 585 ) Realized gain on sale of Bitcoin ​ 33,603 Impairment of Bitcoin ​ ( 10,110 ) Ending balance ​ $ 140,931 ​ During the three and six months ended June 30, 2023, the Company recorded impairment charges on its Bitcoin holdings of $ 5.6 million and $ 10.1 million, respectively. During the three and six months ended June 30, 2022, the Company recorded impairment charges on its Bitcoin holdings of $ 101.4 million and $ 127.3 million, respectively. Applying the market price of one Bitcoin on June 30, 2023 of approximately $ 30,477 to the Company’s 7,265 Bitcoin held at that date resulted in an estimated fair value of the Company’s Bitcoin of $ 221.4 million. Applying the market price of one Bitcoin on December 31, 2022 of approximately $ 16,548 to the Company’s 6,974 Bitcoin held at that date resulted in an estimated fair value of the Company’s Bitcoin of $ 115.4 million. The valuation of Bitcoin held is classified under Level 1 of the fair value hierarchy as it is based on quoted prices in active markets for identical assets. ​ 7 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Note 6. Property and Equipment The following table presents the Company’s property and equipment: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ 2023 2022 Buildings and building improvements ​ $ 312,128 ​ $ 229,685 Land rights and land improvements ​ 10,164 ​ 10,164 Miners and mining equipment ​ 491,783 ​ 441,324 Machinery and facility equipment ​ ​ 38,030 ​ ​ 35,125 Office and computer equipment ​ 1,649 ​ 1,206 Construction in progress ​ 90,257 ​ 97,231 Total cost of property and equipment ​ 944,011 ​ 814,735 Less accumulated depreciation ​ ( 244,374 ) ​ ( 122,180 ) Property and equipment, net ​ $ 699,637 ​ $ 692,555 ​ The Company did no t incur any impairment charges for its property and equipment during the three and six months ended June 30, 2023 and 2022. During the three months ended June 30, 2023 and 2022, depreciation expense related to property and equipment totaled $ 64.7 million and $ 20.2 million, respectively, and during the six months ended June 30, 2023 and 2022, totaled $ 122.6 million and $ 34.1 million, respectively. Miners and mining equipment As of June 30, 2023, the Company had a total of 95,904 miners deployed in its Bitcoin mining operation at the Rockdale Facility, excluding 17,040 miners currently offline as a result of damage sustained to the facility’s infrastructure during severe winter storms affecting Texas in December 2022. In June 2023, the Company entered into a purchase agreement with MicroBT Electronics Technology Co., LTD, through its manufacturing affiliate, SuperAcme Technology (Hong Kong) Limited (collectively, “MicroBT”) to acquire 8,320 M56S+ model miners and 24,960 M56S++ model miners, primarily for its Corsicana Facility, for a total purchase price of approximately $ 162.9 million. Delivery of the miners is expected to begin in December 2023, with all miners expected to be received and deployed by mid-2024. The purchase agreement also provides the Company an option to purchase up to an additional 66,560 additional M56S++ miners, on the same terms as the initial order, through December 31, 2024. In July 2023, the Company entered into a purchase agreement with Midas Green Technologies, LLC (d/b/a “Midas Immersion Cooling”) (“Midas”) for the purchase of 200 MW of immersion cooling systems for its Corsicana Facility. Delivery of the immersion cooling systems is expected to begin in the third quarter of 2023 and be completed by the end of 2023. The purchase agreement also provides the Company an option to purchase up to an additional 400 MW of immersion cooling systems, on the same terms as the initial order, through December 31, 2025. As of December 31, 2022, the Company had outstanding executed purchase agreements for the purchase of miners from Bitmain Technologies Limited (“Bitmain”) for a total of 5,130 S19 series miners, which were received in January 2023. As of June 30, 2023, the Company did not have any outstanding purchase agreements for the purchase of miners from Bitmain. Casualty-related charges (recoveries), net In December 2022, the Rockdale Facility was damaged during severe winter storms in Texas, impacting approximately 2.5 exahash per second (“EH/s”) of hash rate capacity. The Company has estimated that total damages of $ 11.2 million were incurred. No insurance recoveries have been received. Recoveries will be recognized when they are probable of being received. 8 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Construction in progress In 2021, the Company commenced expansion of the Rockdale Facility to 700 MW from its initial 300 MW of developed capacity. As of June 30, 2023, the 400 MW expansion of the Rockdale Facility had been completed. In 2022, the Company initiated development of the Corsicana Facility to expand its Bitcoin mining and data center hosting capabilities, on a 265 -acre site in Navarro County, Texas, located next to the Navarro switch. Once complete, the Company expects the Corsicana Facility to have one gigawatt of developed capacity for its Bitcoin mining and data center operations. The initial phase of the development of the Corsicana Facility involves the construction of 400 MW of immersion-cooled Bitcoin mining and data center hosting infrastructure, as well as a high-voltage power substation and transmission facilities to supply power and water to the facility. Construction of the substation and the data centers is ongoing and Bitcoin Mining and Data Center Hosting operations are expected to commence following the commissioning of the substation. Through June 30, 2023, the Company had incurred costs of approximately $ 102.0 million related to the development of the Corsicana Facility, including $ 10.1 million paid to acquire the land on which the facility is being developed, $ 87.2 million of initial developments costs and equipment, and a $ 4.7 million deposit for future power usage. Commitments In July 2023, the Company paid a deposit of $ 48.9 million to MicroBT for the purchase of miners described herein, leaving an additional commitment of approximately $ 114.0 million due in installments through approximately April 2024 based on the estimated delivery schedule. In July 2023, the Company paid a deposit of $ 20.8 million to Midas for the purchase of immersion cooling systems described herein, leaving an additional commitment of approximately $ 31.2 million due in installments through approximately February 2024 based on the estimated delivery schedule. Related party land transaction During the year ended December 31, 2022, the Company began an initiative to provide certain on-site temporary housing for stakeholders, including partners, analysts, stockholders, employees, vendors, and other visitors to the Rockdale Facility, which is located in a relatively remote area of central Texas, with limited accommodations for visitors. In July 2023, Riot completed its acquisition of the property and land for the development of temporary housing from Lyle Theriot (indirectly, through a limited liability company controlled by Mr. Theriot) for approximately $ 1.1 million, consisting of $ 0.2 million for land and $ 0.9 million for buildings and improvements. Mr. Theriot is part of the management team at Riot and is considered a related party of Riot. The transaction was accounted for as an asset acquisition. ​ Note 7. Finite-Lived Intangible Assets The following table presents the Company’s finite-lived intangible assets as of June 30, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ ​ Gross ​ Accumulated ​ Net book ​ average life ​ book value amortization value (years) Customer contracts ​ $ 6,300 ​ $ ( 982 ) ​ $ 5,318 10 Trademark ​ 5,000 ​ ( 792 ) ​ 4,208 10 UL Listings ​ 2,700 ​ ( 357 ) ​ 2,343 12 Patents ​ 10,060 ​ ( 3,307 ) ​ 6,753 Various Finite-lived intangible assets ​ $ 24,060 ​ $ ( 5,438 ) ​ $ 18,622 ​ ​ ​ 9 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) The following table presents the Company’s finite-lived intangible assets as of December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ ​ Gross Accumulated Net book ​ average life ​ book value amortization value (years) Customer contracts ​ $ 6,300 ​ $ ( 671 ) ​ $ 5,629 10 Trademark ​ 5,000 ​ ( 542 ) ​ 4,458 10 UL Listings ​ 2,700 ​ ( 244 ) ​ 2,456 12 Patents ​ 10,060 ​ ( 1,126 ) ​ 8,934 Various Finite-lived intangible assets ​ $ 24,060 ​ $ ( 2,583 ) ​ $ 21,477 ​ ​ ​ During the three months ended June 30, 2023 and 2022, amortization expense related to finite-lived intangible assets was $ 1.4 million and $ 0.3 million, respectively, and during the six months ended June 30, 2023 and 2022, was $ 2.9 million and $ 0.7 million, respectively. The following table presents the estimated future amortization of the Company’s finite-lived intangible assets as of June 30, 2023: ​ ​ ​ ​ Remainder of 2023 ​ $ 3,535 2024 ​ 5,815 2025 ​ 1,355 2026 ​ 1,355 2027 ​ 1,355 Thereafter ​ 5,207 Total ​ $ 18,622 ​ The Company did not identify any impairment of its finite-lived intangible assets during the three and six months ended June 30, 2023 and 2022. Note 8. Power Supply Contract Power Supply Contract and Demand Response Services Programs In May 2020, the Company entered into a Power Supply Agreement with TXU Energy Retail Company LLC (“TXU”) (the “Power Supply Agreement”) to provide the delivery of 130 MW of electricity by TXU to the Rockdale Facility, via the facility owned by Oncor Electric Delivery Company, LLC (“Oncor”), at fixed prices through April 30, 2030. In March and November 2022, the Company and TXU agreed to increase the amount of electricity to be provided under the Power Supply Agreement by 65 MW and 150 MW, respectively, of electricity at fixed prices through April 30, 2030 and October 31, 2027, respectively, for a total of 345 MW under contract at fixed prices. If electricity used exceeds the amount contracted, the cost of the excess electricity is incurred at the then-current spot rate. Concurrently with the Power Supply Agreement, the Company entered into an agreement with Oncor for the extension of delivery system transmission/substation facilities to facilitate delivery of the electricity to the Rockdale Facility (the “Facilities Agreement”). Power costs incurred under the Facilities Agreement are determined every 15 minutes using settlement information provided by the Electric Reliability Council of Texas (“ERCOT”) and are recorded in Cost of revenue on the Condensed Consolidated Statements of Operations. In collaboration with market participants such as the Company, ERCOT has a Demand Response Services Program for customers that have the ability to reduce or modify electricity use in response to instructions or signals. The Demand Response Services Program provides the ERCOT market with valuable reliability and economic services by helping to preserve system reliability, enhancing competition, mitigating price spikes, and encouraging the demand side of the market to respond better to wholesale price signals. Market participants with electrical loads like the Company may participate in the Demand Response Service Program directly by offering their electrical loads into the ERCOT markets, or indirectly by voluntarily reducing their energy usage in response to increasing wholesale prices. 10 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Under the Demand Response Services Program, the Company can participate in a variety of programs by electing to designate a portion of its available electrical load for participation in such programs on an hourly basis. The Company receives a cash payment from ERCOT based on hourly rates for electricity and the amount of electrical load it bids into each respective Demand Response Services Program. Through ancillary services, the Company competitively bids to sell ERCOT the ability to control Riot’s electrical load on demand, and to power down when needed in order to stabilize the grid. The Company receives compensation for its participation in ancillary services directly from ERCOT whether or not Riot is actually called to power down. Riot also participates in ERCOT’s Four Coincident Peak (“4CP”) program, which refers to the highest-load settlement intervals in each of the four summer months of June, July, August, and September, during which demand for power is at its highest. Market participants can voluntarily power down operations during these times and in doing so, make more electrical load available to the grid. Participants that reduce their load in these peak periods receive credits to transmission costs on future power bills during the subsequent year, reducing overall power costs. As a result of Riot’s participation in 4CP in 2022, the Company’s transmission charges in its ongoing 2023 monthly power bills are substantially reduced. Under the Company’s Power Supply Agreement with TXU, the Company may offer electricity back to TXU for sale on the ERCOT marketplace, in exchange for credits against future power costs, rather than using the power for the Company’s operations, when there is a benefit to the Company, depending on the spot market price of electricity. The Company’s power strategy combines participation in Demand Response Services Programs and sales of power during times of peak demand, to manage operating costs most efficiently. During the three months ended June 30, 2023 and 2022, the Company sold approximately $ 13.5 million and $ 5.7 million, respectively, in electricity back to ERCOT in exchange for credits against power costs. During the six months ended June 30, 2023 and 2022 sold approximately $ 16.5 million and $ 8.3 million, respectively, in electricity back to ERCOT in exchange for credits against power costs. These sales are recorded in Power curtailment credits on the Condensed Consolidated Statements of Operations. The Company determined the Power Supply Agreement meets the definition of a derivative because it allows for net settlement. However, because the Company has the ability to offer the power back to the grid rather than take physical delivery, physical delivery is not probable through the entirety of the contract and therefore, the Company does not believe the normal purchases and normal sales scope exception applies to the Power Supply Agreement. Accordingly, the Power Supply Agreement (a non-hedging derivative contract) is accounted for as a derivative and recorded at its estimated fair value each reporting period in Derivative asset on the Condensed Consolidated Balance Sheets with the change in the fair value recorded in Change in fair value of derivative asset on the Condensed Consolidated Statements of Operations. The Power Supply Agreement is not designated as a hedging instrument. The estimated fair value of the Company’s derivate asset is classified under Level 3 of the fair value hierarchy due to the significant unobservable inputs utilized in the valuation. Specifically, the Company’s discounted cash flow estimation models contain quoted commodity exchange spot and forward prices and are adjusted for basis spreads for load zone-to-hub differentials through the term of the Power Supply Agreement, which ends in December 2030. The significant assumptions used to estimate fair value of the derivative contract include a discount rate of 23.3 %, which reflected the nature of the contract as it relates to the risk and uncertainty of the estimated future mark-to-market adjustments, forward price curves of the power supply, broker/dealer quotes and other similar data obtained from quoted market prices or independent pricing vendors. The discount rate includes observable market inputs, but also includes unobservable inputs based on qualitative judgment related to company-specific risk factors. The terms of the Power Supply Agreement require margin-based collateral, calculated as exposure resulting from fluctuations in the market cost rate of electricity versus the fixed price stated in the contract. As of June 30, 2023, the margin-based collateral requirement of the Company was zero. While the Company manages operating costs at the Rockdale Facility in part by periodically selling unused or uneconomical power back to TXU for sale on the ERCOT marketplace, the Company does not consider such actions to be trading activities. The following table presents changes in the estimated fair value of the Derivative asset : ​ ​ ​ ​ ​ Balance as of December 31, 2022 ​ $ 97,497 Change in fair value of derivative asset ​ 7,331 Balance as of June 30, 2023 ​ $ 104,828 ​ ​ 11 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) ​ Note 9. Long-Term Assets Deposits The following table presents the Company’s deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, ​ ​ 2023 ​ 2022 Deposits on equipment ​ $ — ​ 33,273 Security deposits ​ 30,414 ​ 9,160 Total deposits ​ $ 30,414 ​ $ 42,433 ​ Deposits on Equipment As of December 31, 2022, the Company had outstanding executed purchase agreements for the purchase of miners from Bitmain for a total of 5,130 S19 series miners, which were received in January 2023. During the six months ended June 30, 2023, the Company reclassified the outstanding deposit of $ 33.3 million to property and equipment in connection with the receipt of the miners at the Rockdale Facility. See Note 6, Property and Equipment. In July 2023, the Company paid a deposit of $ 48.9 million to MicroBT for the purchase of miners and a deposit of $ 20.8 million to Midas for the purchase of immersion cooling systems. See Note 6, Property and Equipment. Security Deposits During the six months ended June 30, 2023, the Company paid $ 23.0 million as a security deposit in connection with its 215 MW increase to the Power Supply Agreement with TXU, resulting in a total of 345 MW under contract at fixed prices. During the year ended December 31, 2022, the Company paid approximately $ 4.7 million as a security deposit for the development of the Corsicana Facility, all of which was outstanding as of June 30, 2023. As of June 30, 2023, all $ 3.1 million paid to Oncor in 2021 in connection with an amended and restated Transmission/Substation Facility Extension Agreement, for the construction of the Oncor-owned Delivery System facilities to serve the expansion of the Rockdale Facility, had been utilized. The Company has other security deposits totaling approximately $ 2.7 million, which includes $ 1.8 million on the ground lease. Note 10. Accrued Expenses Accrued expenses consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ ​ 2023 ​ 2022 Construction in progress ​ $ 7,353 ​ $ 16,621 Power related costs and remittances ​ 2,981 ​ 32,632 Accrued compensation ​ ​ 6,491 ​ ​ 8,582 Insurance ​ 928 ​ 3,660 Other ​ 9,554 ​ 3,969 Total accrued expenses ​ $ 27,307 ​ $ 65,464 ​ ​ Note 11. Debt ​ Credit and Security Facility ​ ESS Metron a wholly owned subsidiary of the Company, has a $ 10.0 million Credit and Security Facility, which consists of a $ 6.0 million Revolving Line of Credit and a $ 4.0 million Equipment Guidance Line. ​ 12 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) The $ 6.0 million Revolving Line of Credit has a term of one year with interest due monthly and principal due at maturity. All amounts borrowed under the Revolving Line of Credit carry a variable interest rate of not less than 4.0 % and are secured by the assets of ESS Metron. As of June 30, 2023, the interest rate was 7.5 %. ​ The $ 4.0 million Equipment Guidance Line has a term of one year and permits the Company to finance up to 80.0 % of certain equipment purchases. All amounts borrowed under the Equipment Guidance Line carry a variable interest rate of not less than 4.0 % and are secured by the assets of ESS Metron. As of June 30, 2023, the interest rate was 7.5 %. ​ Total borrowings under the Revolving Line of Credit during the six months ended June 30, 2023, were approximately $ 0.9 million and payments were $ 0.5 million. During the six months ended June 30, 2023, the entire amount outstanding under the Revolving Line of Credit of approximately $ 0.4 million converted to a fixed rate term loan (see below). As of June 30, 2023 and December 31, 2022, the outstanding balance of the Revolving Line of Credit was zero and less than $ 0.1 million, respectively, and was recognized within Other long-term liabilities on the Condensed Consolidated Balance Sheets. ​ All borrowings and accrued interest under the Equipment Guidance Line convert to fixed rate term loans every six months, which have either five-year terms for borrowings used to acquire vehicles and manufacturing equipment (“Manufacturing Term Loans”) or three-year terms for borrowings of equipment other than vehicles and manufacturing equipment (“Equipment Term Loans”). The Manufacturing Term Loans carry interest at a fixed rate equal to the five-year treasury rate plus 2.5 % as of conversion and the Equipment Term Loans carry interest at a fixed rate equal to the three-year treasury rate plus 2.5 % as of conversion. During the six months ended June 30, 2023, approximately $ 0.4 million outstanding under the Credit and Security Facility was converted into a three-year Equipment Term Loan with a fixed interest rate of 6.6 %. As of June 30, 2023, no amount was outstanding under Manufacturing Term Loans and approximately $ 0.4 million was outstanding under Equipment Term Loans. ​ As of June 30, 2023, the outstanding balance on the Equipment Term Loans was recognized net of approximately $ 0.1 million of deferred financing costs. The net current balance on the Equipment Term Loans of $ 0.1 million was recognized within Accrued Expenses and the net long-term balance of $ 0.3 million was recognized within Other long-term liabilities on the Condensed Consolidated Balance Sheets. ​ As of June 30, 2023, the Company was in compliance with all covenants of the Credit and Security Facility. Note 12. Leases As of June 30, 2023 and December 31, 2022, operating lease right of use assets were $ 21.2 million and $ 21.7 million, respectively, and operating lease liabilities were $ 21.9 million and $ 22.3 million, respectively. The following table presents the components of the Company’s lease expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended Six Months Ended ​ June 30, June 30, ​ ​ 2023 2022 ​ 2023 2022 Operating lease cost ​ $ 951 ​ $ 803 ​ $ 1,855 ​ $ 1,425 Variable lease cost ​ 49 ​ 31 ​ 104 ​ 76 Operating lease expense ​ 1,000 ​ 834 ​ $ 1,959 ​ $ 1,501 ​ The following table presents supplemental lease information: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ ​ June 30, ​ June 30, ​ ​ 2023 ​ 2022 ​ 2023 ​ 2022 Operating cash outflows for operating leases ​ $ 920 ​ $ 719 ​ $ 1,794 ​ ​ $ 719 ​ Right of use assets exchanged for new operating lease liabilities ​ $ — ​ $ — ​ $ 682 ​ ​ $ 8,784 ​ Weighted-average remaining lease term – operating leases ​ 7.9 ​ 9.3 ​ 7.9 ​ ​ 9.3 ​ Weighted-average discount rate – operating leases ​ 6.6 % 6.5 % 6.6 % ​ 6.5 % ​ 13 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) The following table represents our future minimum operating lease payments as of June 30, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ground lease Office and other leases Total Remainder of 2023 ​ $ 970 ​ $ 862 ​ $ 1,832 2024 ​ 1,998 ​ 1,701 ​ 3,699 2025 ​ ​ 2,058 ​ ​ 1,347 ​ ​ 3,405 2026 ​ 2,119 ​ 1,273 ​ 3,392 2027 ​ 2,183 ​ 1,148 ​ 3,331 Thereafter ​ 9,618 ​ 3,227 ​ 12,845 Total undiscounted lease payments ​ 18,946 ​ 9,558 ​ 28,504 Less present value discount ​ ( 5,719 ) ​ ( 932 ) ​ ( 6,651 ) Present value of lease liabilities ​ $ 13,227 ​ $ 8,626 ​ $ 21,853 ​ In July 2023, the Company entered into a five-year office space lease, which will result in the recognition of approximately $ 0.6 million of operating lease right of use assets and operating lease liabilities in the third quarter of 2023. ​ Note 13. Stockholders’ Equity During the six months ended June 30, 2023, approximately 4.6 million shares of common stock were issued to the Company’s board of directors, officers, employees, and advisors in settlement of an equal number of fully vested restricted stock awards awarded to such individuals by the Company under the Company’s 2019 Equity Incentive Plan, as amended (the “2019 Equity Incentive Plan”). The Company withheld approximately 1.2 million of these shares, with a fair value of approximately $ 12.8 million, to cover the withholding taxes related to the settlement of these vested restricted stock awards, as permitted by the 2019 Equity Incentive Plan. At-the-Market (“ATM”) Equity Offerings 2022 ATM Offering In March 2022, the Company entered into the 2022 ATM Offering, under which it could offer and sell up to $ 500.0 million in shares of the Company’s common stock. During the six months ended June 30, 2023, the Company received net proceeds of approximately $ 184.7 million ($ 188.4 million of gross proceeds, net of $ 3.7 million in commissions and expenses) from the sale of 15,877,000 shares of its common stock at a weighted average fair value of $ 11.87 per share under its 2022 ATM Offering. In July 2023, the Company received net proceeds of approximately $ 6.6 million ($ 6.7 million of gross proceeds, net of $ 0.1 million in commissions and expenses) from the sale of 570,645 shares of its common stock at a weighted average fair value of $ 11.78 per share under its 2022 ATM Offering. With the sale and issuance of these shares, all $ 500.0 million in shares of the Company’s common stock available for sale under its 2022 ATM Offering had been issued. ​ ESS Metron Holdback Shares ​ On December 31, 2021, the Company acquired 100 % of the equity interests in ESS Metron for consideration that included 715,413 shares of the Company’s common stock, 70,165 shares of which were withheld as security for the sellers’ indemnification obligations for 18 months . During the six months ended June 30, 2023, the indemnification period ended, and all 70,165 of the withheld shares were issued to the ESS Metron sellers. ​ Note 14. Stock-Based Compensation The 2019 Equity Incentive Plan authorizes the granting of stock-based compensation awards to directors, officers, employees, and advisors of the Company in the form of restricted stock awards or stock options that settle in shares of the Company’s common stock upon vesting. 14 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) The following table presents the Company’s stock-based compensation expense by category: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ ​ June 30, ​ June 30, ​ 2023 2022 2023 2022 Performance-based stock awards ​ $ ( 5,459 ) ​ $ 2,656 ​ $ ( 16,349 ) ​ $ 3,938 Service-based stock awards ​ ​ 8,888 ​ ​ ( 1,955 ) ​ ​ 17,482 ​ ​ ( 195 ) Total stock-based compensation ​ $ 3,429 ​ $ 701 ​ $ 1,133 ​ $ 3,743 ​ Stock-based compensation expense is recognized in Selling, general and administrative on the Condensed Consolidated Statements of Operations. Restricted Common Stock Awards Performance-Based Awards Performance-based awards are eligible to vest over a three-year performance period upon the successful completion of specified milestones related to added infrastructure capacity and Adjusted EBITDA through December 31, 2023. The following table presents a summary of the Company’s performance-based awards activity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ ​ ​ Grant-Date ​ ​ ​ ​ Per Share ​ Number of Shares Fair Value Balance as of January 1, 2023 ​ 3,918,935 ​ $ 25.92 Granted ​ 380,700 ​ $ 8.07 Vested ​ ( 373,520 ) ​ $ 25.78 Forfeited ​ ( 231,800 ) ​ $ 34.89 Balance as of June 30, 2023 ​ 3,694,315 ​ $ 23.54 ​ As of June 30, 2023, there was no unrecognized compensation cost related to the performance-based awards. In July 2023, the Company adopted a new long-term incentive program under its 2019 Equity Incentive Plan, under which employees are eligible to receive performance-based awards that are eligible to vest based on the relative performance of the Company’s common stock (the Company “Total Stockholder Return” or “TSR”), compared to the performance of the Russell 3000 Index (the “Index TSR”), during the three-year performance period ending December 31, 2025. The TSR awards have a vesting range of 0 % to 200 % of the recipient’s target award, subject to the recipient’s continuous employment with the Company through July 31, 2026. In July 2023, the Company awarded 1.7 million shares of restricted common stock and 0.2 million restricted stock units. The awards have an aggregate grant date fair value of approximately $ 38.0 million. 15 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Service-Based Awards Service-based awards generally vest over a one to two-year service period. ​ The following table presents a summary of the Company’s service-based awards activity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ ​ ​ Grant-Date ​ ​ ​ ​ Per Share ​ Number of Shares Fair Value Balance as of January 1, 2023 ​ 8,855,744 ​ $ 6.84 Granted ​ 378,889 ​ $ 4.89 Vested ​ ( 4,227,077 ) ​ $ 6.85 Forfeited ​ ( 779,297 ) ​ $ 6.81 Balance as of June 30, 2023 4,228,259 ​ $ 6.75 ​ As of June 30, 2023, there was approximately $ 29.8 million of unrecognized compensation cost related to the service-based awards, which is expected to be recognized over a remaining weighted-average vesting period of approximately 12 months . In July 2023, the Company awarded 0.8 million service-based restricted common stock and 0.1 million restricted stock units to its employees under the 2019 Equity Incentive Plan. These awards are eligible to vest in one -third annual installments over a three-year service period, subject to the recipient’s continuous employment with the Company through the applicable vesting dates, and have an aggregate grant date fair value of $ 19.7 million. Note 15. Fair Value Measurements Assets and Liabilities Measured at Fair Value on a Recurring Basis: The Company’s assets and liabilities measured at fair value on a recurring basis consisted of the following as of June 30, 2023, and December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value measured as of June 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Significant ​ ​ ​ ​ ​ Quoted prices in ​ Significant other ​ unobservable ​ ​ Total carrying ​ active markets ​ observable inputs ​ inputs ​ Value (Level 1) (Level 2) (Level 3) Derivative asset (a) ​ $ 104,828 ​ $ — ​ $ — ​ $ 104,828 Contingent consideration liability (b) ​ $ 909 ​ $ — ​ $ — ​ $ 909 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value measured as of December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Significant ​ ​ ​ ​ ​ Quoted prices in ​ Significant other ​ unobservable ​ ​ Total carrying ​ active markets ​ observable inputs ​ inputs ​ Value (Level 1) (Level 2) (Level 3) Derivative asset (a) ​ $ 97,497 ​ $ — ​ $ — ​ $ 97,497 Contingent consideration liability (b) ​ $ 24,935 ​ $ — ​ $ — ​ $ 24,935 ​ (a) See Note 8. Power Supply Contract . (b) See Note 16. Commitments and Contingencies . ​ Assets and Liabilities Not Measured at Fair Value on a Recurring Basis: As of June 30, 2023 and December 31, 2022, the fair values of cash and cash equivalents, restricted cash, accounts receivable, contract assets, prepaid expenses and other current assets, accounts payable, contract liabilities, and accrued expenses approximated their carrying values because of the short-term nature of these instruments. 16 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) ​ Note 16. Commitments and Contingencies Commitments Operating Leases The Company leases its primary office locations and data center hosting facilities, as well as a ground lease, under noncancelable lease agreements that expire on varying dates through 2032. See Note 12. Leases . Water Reservation Agreement The Company has a water reservation agreement with the lessor of its ground lease to obtain a certain quantity of non-potable water from a nearby lake to be used by the Company for evaporative cooling purposes at our Rockdale Facility. The term of the agreement, including the impact of the amendment, runs through January 2032, followed by three ten-year renewal periods, and requires annual payments of approximately $ 2.1 million. The Company concluded that the water reservation agreement was not a lease or a derivative instrument. Because the Company obtained an additional right of use for the reserved water amount, and the charges were increased by a standalone price commensurate with the additional water use rights and at market rates, the water reservation agreement was determined to be a lease modification accounted for as a separate contract. As such, the fees of the water reservation agreement were excluded from the lease payments of the ground lease and the water reservation agreement was accounted for as a separate executory contract. Contingent Consideration Liability Upon the acquisition of Whinstone in May 2021, the Company was obligated to pay up to $ 86.0 million, net of income taxes, (undiscounted) of consideration if certain power credits were received or realized by the Company arising from a severe weather event in Texas in February 2021. Through June 30, 2023, portions of the power credits were received, and a portion of the obligation was settled. The following table presents the changes in the estimated fair value of the Company’s contingent consideration liability: ​ ​ ​ ​ ​ Balance as of December 31, 2022 ​ $ 24,935 Change in contingent consideration ​ ( 24,026 ) Change in fair value of contingent consideration ​ ​ — Balance as of June 30, 2023 ​ $ 909 ​ The estimated fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement. The Company estimated the fair value of the contingent consideration using a discounted cash flow analysis, which includes estimates of both the timing and amounts of potential future power credits. These estimates were determined using the Company’s historical consumption quantities and patterns combined with management’s expectations of its future consumption requirements, which require significant judgment and depend on various factors outside the Company’s control, such as construction delays. The discount rate of approximately 2.5 % includes observable market inputs, such as TXU’s parent company’s Standard & Poor’s credit rating of BB, but also includes unobservable inputs such as interest rate spreads, which were estimated based on qualitative judgment related to company-specific risk factors. Specifically, due to the power credits being subordinated obligations for TXU’s parent, the Company used one credit rating lower than BB in the yield curve to estimate a reasonable interest rate spread to determine the cost of debt input. Although these estimates are based on management’s best knowledge of current events, the estimates could change significantly from period to period. ​ Approximately $ 1.2 million of remaining future power credits to be received are estimated to be received over a period of 12 years . The Company determined the value of the contingent consideration as of June 30, 2023, using a discount rate of approximately 8.0 %, which was based on the factors above, including the recent increase in interest rates. ​ 17 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Contingencies Legal Proceedings The Company, and its subsidiaries, are subject at times to various claims, lawsuits and governmental proceedings relating to the Company’s business and transactions arising in the ordinary course of business, as described in the 2022 Annual Report, as supplemented by the following: Northern Data Working Capital Disputes On September 7, 2022, the Company filed a complaint against Northern Data AG (“Northern Data”) disputing the purchase price of Whinstone and seeking declaratory relief and specific performance of the stock purchase agreement. Northern Data filed an answer and counterclaims alleging that the Company and Whinstone withheld certain energy credit payments and that the Company is improperly seeking to introduce indemnification claims into the contractual process to resolve the parties’ dispute. On March 31, 2023, the Parties filed a stipulation agreeing to dismiss all claims without prejudice and to submit the dispute for final determination to an independent accountant. The Company placed $ 29.5 million in escrow pending the final determination. On June 9, 2023, the independent accountant rendered a written final determination finding in favor of the Company on disputed issues totaling approximately $ 27.1 million, which were released from escrow and distributed to the Company on June 13, 2023. The remaining amount in escrow was allocated to Northern Data. As a result, we recognized a Deferred gain on acquisition post-close dispute settlement of $ 26.0 million on the Condensed Consolidated Balance Sheets. Following the final determination almost entirely in favor of the Company, on June 23, 2023, Northern Data filed a complaint against the Company seeking a declaratory judgment that (1) certain parts of the independent accountant’s determination constitute manifest error and are thus null and void, (2) the Company improperly introduced an indemnification claim into the purchase price adjustment process, and (3) the Company pay Northern Data the amounts awarded to the Company or, alternatively, the court order a new purchase price adjustment process. The Company intends to vigorously oppose Northern Data’s complaint to set aside the independent accountant’s final determination. The Company filed a motion to dismiss the complaint on July 17, 2023, and subject to approval from the Court, the parties agreed that briefing on the motion to dismiss will be completed by October 17, 2023. Although the Company entirely disagrees with the allegations and arguments raised by Northern Data and considers its complaint to be without merit, the Company cannot accurately predict the outcome of ongoing litigation. Legacy Hosting Customer Disputes ​ Rhodium ​ On May 2, 2023, Whinstone filed a petition against Rhodium 30MW, LLC, Rhodium JV, LLC, Air HPC LLC, and Jordan HPC, LLC (collectively, “Rhodium”) and later amended the petition asserting breach of contract claims for Rhodium’s failure to pay hosting and service fees under certain hosting agreements. Additionally, the amended petition seeks a declaration that certain hosting agreements with Rhodium are terminated and that no power credits are owed to Rhodium under any agreement. Whinstone seeks recovery of more than $ 26 million, plus reasonable attorneys’ fees and costs, expenses, and pre- and post-judgment interest. On June 12, 2023, Rhodium answered and, along with non-parties Rhodium Encore LLC, Rhodium 2.0 LLC, and Rhodium 10mw LLC (collectively, the “Non-Parties”), filed counterclaims for breach of contract and moved to compel arbitration seeking recovery of at least $ 7 -$ 10 million in alleged unpaid energy sale credits and between seven to eight figures in lost profits. Whinstone believes Rhodium’s claims are without merit and intends to vigorously contest them, as appropriate. A hearing on the parties’ arguments is set for August 25, 2023. Because this litigation is still at this early stage, we cannot reasonably estimate the likelihood of an unfavorable outcome or the magnitude of such an outcome, if any. ​ SBI Crypto Co. ​ On April 5, 2023, SBI Crypto Co., Ltd. (“SBI”) filed a complaint against Whinstone alleging breach of contract, fraud/fraudulent inducement, fraud by nondisclosure, and negligent bailment claims. Whinstone filed a motion to dismiss SBI’s complaint and on July 7, 2023, SBI filed an amended complaint asserting breach of contract, fraud/fraudulent inducement, and fraud by nondisclosure. On July 21, 2023, Whinstone filed a motion to dismiss the amended complaint. SBI seeks recovery of at least $ 15 million in lost profits, at least $ 16 million for equipment damage, reasonable attorneys’ fees and costs, expenses, costs, and pre- and post-judgment 18 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) interest. While a preliminary investigation of the merits of SBI’s claims has commenced, Whinstone believes many of the claims are barred or waived and substantively lack merit, and Whinstone plans to vigorously contest the same. Because this litigation is still at this early stage, we cannot reasonably estimate the likelihood of an unfavorable outcome or the magnitude of such an outcome, if any. ​ GMO On June 13, 2022, GMO Gamecenter USA, Inc. and its parent GMO Internet, Inc. (collectively “GMO”), filed a complaint against Whinstone alleging breach of contract under the colocation services agreement between GMO and Whinstone, seeking damages in excess of $ 150  million. Whinstone has responded to GMO’s claims and raised counterclaims of its own, alleging GMO itself breached the colocation services agreement, seeking a declaratory judgment and damages in excess of $ 25 million. At this preliminary stage, the Company believes that GMO’s claims lack merit. Because this litigation is still at this early stage, we cannot reasonably estimate the likelihood of an unfavorable outcome or the magnitude of such an outcome, if any. Class Actions and Related Claims ​ On February 17, 2018, Creighton Takata filed an action asserting putative class action claims on behalf of the Company’s stockholders in the United District Court for the District of New Jersey, Takata v. Riot Blockchain Inc., et al. , Case No. 3: 18-cv-02293. The complaint asserts violations of federal securities laws under Section 10(b) and Section 20(a) of the Exchange Act on behalf of a putative class of stockholders that purchased stock from November 13, 2017 through February 15, 2018. The complaint alleges that the Company and certain of its officers and directors made, caused to be made, or failed to correct false and/or misleading statements in press releases and public filings regarding its business plan in connection with its cryptocurrency business. The complaint requests damages in unspecified amounts, costs and fees of bringing the action, and other unspecified relief. ​ On April 18, 2018, Joseph J. Klapper, Jr., filed a complaint against Riot Blockchain, Inc., and certain of its officers and directors in the United District Court for the District of New Jersey ( Klapper v. Riot Blockchain Inc., et al. , Case No. 3: 18-cv-8031). The complaint contained substantially similar allegations and the same claims as those filed by Mr. Takata, and requests damages in unspecified amounts, costs and fees of bringing the action, and other unspecified relief. ​ On November 6, 2018, the court in the Takata action issued an order consolidating Takata with Klapper into a single putative class action. The court also appointed Dr. Golovac as Lead Plaintiff and Motely Rice as Lead Counsel of the consolidated class action. ​ Lead Plaintiff filed a consolidated complaint on January 15, 2019. Defendants filed motions to dismiss on March 18, 2019. In lieu of opposing defendants’ motions to dismiss, Lead Plaintiff filed another amended complaint on May 9, 2019. Defendants filed multiple motions to dismiss the amended complaint starting on September 3, 2019. On April 30, 2020, the court granted the motions to dismiss, which resulted in the dismissal of all claims without prejudice. On December 24, 2020, Lead Plaintiff filed another amended complaint. Defendants filed multiple motions to dismiss the amended complaint starting on February 8, 2021, which were fully briefed. On February 28, 2022, the court issued an order instructing the parties to submit supplemental briefing by March 14, 2022 on particular issues raised in the motions to dismiss. On May 27, 2022, Lead Plaintiff filed the third amended consolidated complaint. Defendants submitted motions to dismiss on July 18, 2022. Briefing on the motions to dismiss was completed in October 2022. Because this litigation is still at this early stage, we cannot reasonably estimate the likelihood of an unfavorable outcome or the magnitude of such an outcome, if any. Shareholder Derivative Actions ​ On April 5, 2018, Michael Jackson filed a shareholder derivative complaint on behalf of the Company in the Supreme Court of the State of New York, County of Nassau, against certain of the Company’s officers and directors, as well as against an investor ( Jackson v. Riot Blockchain, Inc., et al. , Case No. 604520/18). The complaint contains similar allegations to those contained in the shareholder class action complaints and seeks recovery for alleged breaches of fiduciary duty, unjust enrichment, waste of corporate assets, abuse of control and gross mismanagement. The complaint seeks unspecified monetary damages and corporate governance changes. At the last preliminary conference, the court adjourned the conference until October 26, 2023 in lieu of staying the action. Defendants do not anticipate any other activity on this case until the next preliminary conference. ​ 19 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) On May 22, 2018, two additional shareholder derivative complaints were filed on behalf of the Company in the Eighth Judicial District Court of the State of Nevada in and for the County of Clark ( Kish v. O’Rourke, et al. , Case No. A-18-774890-B & Gaft v. O’Rourke, et al. , Case No. A-18-774896-8). The two complaints made nearly identical allegations, which were similar to the allegations contained in the shareholder class action complaints. The shareholder derivative plaintiffs also sought recovery for alleged breaches of fiduciary duty, unjust enrichment, waste of corporate assets, and aiding abetting a breach of fiduciary duty. The complaints seek unspecific monetary damages and corporate governance changes. The court entered an order consolidating the Gaft and Kish actions, which was styled as In re Riot Blockchain, Inc. Shareholder Derivative Litigation , Case No. A-18-774890-B. On January 18, 2023, the court entered an order voluntarily dismissing the consolidated action without prejudice. ​ On October 22, 2018, another shareholder derivative complaint was filed on behalf of the Company in the United District Court for the Southern District of New York ( Finitz v. O’Rourke, et al. , Case No. 1:18-cv-09640). The shareholder plaintiffs allege breach of fiduciary duty, waste of corporate assets, and unjust enrichment against certain of the Company’s officers, directors, and an investor. The complaint’s allegations are substantially similar to those made in the other securities class action and shareholder derivative complaints filed in 2018. The complaint seeks unspecific monetary damages and corporate governance changes. Upon the parties’ stipulation, the court issued an order temporarily staying this action until the resolution of the motion(s) to dismiss in the securities class action pending in the United District Court for the District of New Jersey. ​ On December 13, 2018, another shareholder derivative complaint was filed on behalf of the Company in the United District Court for the Northern District of New York ( Monts v. O’Rourke, et al. , Case No. 1:18-cv-01443). The shareholder plaintiffs allege claims for violation of Section 14(a) of the Exchange Act, breach of fiduciary duties, unjust enrichment, waste of corporate assets, and aiding and abetting against certain of the Company’s officers, directors, and an investor. The complaint’s allegations are substantially similar to those made in the other securities class action and shareholder derivative complaints filed in 2018. The complaint seeks unspecific monetary damages and corporate governance changes. Upon the parties’ stipulation, the court issued an order temporarily staying this action until the resolution of the motion(s) to dismiss in the securities class action pending in the United District Court for the District of New Jersey. ​ Defendants intend to vigorously contest plaintiffs’ allegations in the shareholder derivative actions and plaintiffs’ right to bring the action in the name of Riot Blockchain. Because this litigation is still at this early stage, we cannot reasonably estimate the likelihood of an unfavorable outcome or the magnitude of such an outcome, if any. Note 17. Income Taxes During the three months ended June 30, 2023 and 2022, the Company realized deferred income tax benefits of $ 0.0 million and $ 6.6 million, respectively, and $ 5.0 million and $ 6.6 million during the six months ended June 30, 2023 and 2022, respectively, related primarily to the contingent consideration liability and future power credits. ​ Note 18. Earnings Per Share The following table presents potentially dilutive securities that were not included in the computation of diluted net income (loss) per share as their inclusion would be anti-dilutive: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 June 30, 2022 Warrants to purchase common stock 63,000 63,000 Unvested restricted stock awards (a) ​ 5,540,298 ​ — Unvested restricted stock units — 4,244,534 Total 5,603,298 4,307,534 ​ (a) Unvested restricted stock awards are included in total common shares outstanding but are excluded from the calculation of basic earnings per share. ​ ​ Note 19. Segment Information The Company has three reportable segments: Bitcoin Mining, Data Center Hosting, and Engineering. The reportable segments are identified based on the types of service performed. The chief operating decision maker (“CODM”) analyzes the performance of the 20 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) segments based on reportable segment revenue and reportable segment cost of revenue. No operating segments have been aggregated to form the reportable segments. The Company does not allocate all assets to the reporting segments as they are managed on an entity-wide basis. Therefore, the Company does not separately disclose the total assets of its reportable operating segments. The Bitcoin Mining segment generates revenue from the Bitcoin the Company earns through its Bitcoin mining activities. The Data Center Hosting segment generates revenue from long-term customer contracts for the provision of data center hosting/colocation services, including from the consumption of electricity, construction of infrastructure, operation of data centers, and maintenance/management of computing capacity from the Company’s high performance data center facility in Rockdale, Texas. The Engineering segment generates revenue through customer contracts for custom engineered electrical products. The Data Center Hosting segment purchases custom engineered electrical products from the Engineering segment in the ordinary course of business. All revenue and cost of revenues from intersegment transactions have been eliminated in the consolidated statements of operations. All Other revenue is from external customers. During the three and six months ended June 30, 2023 and 2022, no single customer or related group of customers contributed 10% or more of the Company’s total consolidated revenue. 21 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) The following table presents revenue and cost of revenues for the Company’s reportable segments, reconciled to the Condensed Consolidated Statements of Operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, ​ Six Months Ended June 30, ​ 2023 2022 2023 2022 Reportable segment revenue: ​ ​ ​ ​ ​ ​ ​ ​ Bitcoin Mining ​ $ 49,742 ​ $ 46,151 ​ $ 97,765 ​ $ 104,096 Data Center Hosting ​ 39,387 ​ 23,577 ​ 76,383 ​ 44,616 Engineering ​ 20,183 ​ 19,512 ​ 41,539 ​ 34,750 Other revenue ​ 24 ​ 24 ​ 48 ​ 48 Eliminations ​ ( 32,597 ) ​ ( 16,317 ) ​ ( 65,760 ) ​ ( 30,776 ) Total segment and consolidated revenue ​ $ 76,739 ​ $ 72,947 ​ $ 149,975 ​ $ 152,734 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reportable segment cost of revenues: ​ ​ ​ ​ Bitcoin Mining ​ 33,482 ​ 20,913 ​ 62,173 ​ 44,844 Data Center Hosting ​ 44,026 ​ 26,012 ​ 90,847 ​ 47,504 Engineering ​ 18,932 ​ 16,983 ​ 37,818 ​ 30,535 Eliminations ​ ( 32,477 ) ​ ( 15,554 ) ​ ( 63,753 ) ​ ( 28,901 ) Total segment and consolidated cost of revenues ​ $ 63,963 ​ $ 48,354 ​ $ 127,085 ​ $ 93,982 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reconciling Items: ​ ​ ​ ​ Acquisition-related costs ​ — ​ — ​ — ​ ( 78 ) Selling, general, and administrative ​ ( 19,836 ) ​ ( 10,713 ) ​ ( 32,511 ) ​ ( 21,545 ) Depreciation and amortization ​ ( 66,162 ) ​ ( 20,562 ) ​ ( 125,502 ) ​ ( 34,807 ) Change in fair value of derivative asset ​ 13,109 ​ 60,931 ​ 7,331 ​ 104,614 Power curtailment credits ​ ​ 13,470 ​ ​ 5,706 ​ ​ 16,545 ​ ​ 8,258 Change in fair value of contingent consideration ​ — ​ — ​ — ​ ( 176 ) Realized gain on sale of Bitcoin ​ 19,828 ​ 15,260 ​ 33,603 ​ 24,925 Gain (loss) on sale/exchange of equipment ​ ​ ( 30 ) ​ ​ 8,614 ​ ​ ( 30 ) ​ ​ 8,614 Casualty-related charges (recoveries), net ​ — ​ — ​ ( 1,526 ) ​ — Impairment of Bitcoin ​ ​ ( 5,638 ) ​ ​ ( 101,419 ) ​ ​ ( 10,110 ) ​ ​ ( 127,289 ) Impairment of goodwill ​ — ​ ( 335,648 ) ​ — ​ ( 335,648 ) Interest income (expense) ​ 4,843 ​ — ​ 1,013 ​ ( 357 ) Realized loss on sale of marketable equity securities ​ — ​ ( 1,624 ) ​ — ​ ( 1,624 ) Unrealized loss on marketable equity securities ​ — ​ ( 4,837 ) ​ — ​ ( 6,448 ) Other income (expense) ​ 65 ​ ( 59 ) ​ 65 ​ ( 59 ) Current income tax benefit (expense) ​ ​ ( 112 ) ​ ​ ( 427 ) ​ ​ ( 188 ) ​ ​ ( 739 ) Deferred income tax benefit (expense) ​ — ​ 6,626 ​ 5,045 ​ 6,626 Net income (loss) ​ $ ( 27,687 ) ​ $ ( 353,559 ) ​ $ ( 83,375 ) ​ $ ( 316,981 ) ​ ​ ​ ​ ​ ​ ​ ​ 22 Table of Contents