What changed in this filing

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Item 1. Financial Statements

2023-11-08 compared with 2023-08-09 · 294 added, 287 removed, 415 unchanged (58% of the section changed)

3 unchanged sentences

and in thousands, except for share amounts)

September 30,

Current assets

30 unchanged sentences

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

no shares issued and outstanding as of September 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

no shares issued and outstanding as of September 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

196,300,944 and 167,751,112 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

Accumulated deficit

1 unchanged sentence

Total liabilities and stockholders’ equity

See accompanying notes to condensed consolidated financial statements.

See the accompanying Notes to these Condensed Consolidated Financial Statements.

Riot Platforms, Inc.

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Bitcoin Mining

13 unchanged sentences

Realized gain on sale of Bitcoin

Gain (loss) on sale/exchange of equipment

Casualty-related charges (recoveries), net

Loss (gain) on sale/exchange of equipment

Casualty-related charges

Impairment of Bitcoin

5 unchanged sentences

Realized loss on sale of marketable equity securities

Unrealized loss on marketable equity securities

Unrealized gain (loss) on marketable equity securities

Other income (expense)

7 unchanged sentences

Basic and diluted weighted average number of shares outstanding

See accompanying notes to condensed consolidated financial statements.

See the accompanying Notes to these Condensed Consolidated Financial Statements.

Riot Platforms, Inc.

1 unchanged sentence

and in thousands, except for share amounts)

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

stockholders’

Balance as of April 1, 2023

Balance as of July 1, 2023

Issuance of restricted stock, net of forfeitures and delivery of common stock underlying stock awards, net of tax withholding

Issuance of common stock/At-the-market offering, net of offering costs

Issuance of common stock in connection with acquisition of ESS Metron

Stock-based compensation

Net income (loss)

Balance as of June 30, 2023

Three Months Ended June 30, 2022

Balance as of September 30, 2023

Three Months Ended September 30, 2022

stockholders’

Balance as of April 1, 2022

Balance as of July 1, 2022

Issuance of restricted stock, net of forfeitures and delivery of common stock underlying stock awards, net of tax withholding

2 unchanged sentences

Net income (loss)

Balance as of June 30, 2022

Six Months Ended June 30, 2023

Balance as of September 30, 2022

Nine Months Ended September 30, 2023

stockholders’

1 unchanged sentence

Issuance of restricted stock, net of forfeitures and delivery of common stock underlying stock awards, net of tax withholding

( 1,447,723 )

Issuance of common stock/At-the-market offering, net of offering costs

Issuance of common stock in connection with acquisition of ESS Metron

Issuance of common stock in connection with acquisition of ESS Metron, LLC

Stock-based compensation

Net income (loss)

Balance as of June 30, 2023

Six Months Ended June 30, 2022

Balance as of September 30, 2023

Nine Months Ended September 30, 2022

Preferred Stock

6 unchanged sentences

Net income (loss)

Balance as of June 30, 2022

See accompanying notes to condensed consolidated financial statements.

Balance as of September 30, 2022

See the accompanying Notes to these Condensed Consolidated Financial Statements.

Riot Platforms, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)

Six Months Ended June 30,

and in thousands)

Nine Months Ended

September 30,

Operating activities

26 unchanged sentences

Purchases of property and equipment, including construction in progress

Proceeds from the sale of equipment

Patent costs incurred

6 unchanged sentences

Repayments of Credit and Security Facility

Debt issuance costs

Repurchase of common shares to pay employee withholding taxes

13 unchanged sentences

Property and equipment obtained in exchange transaction

See accompanying notes to condensed consolidated financial statements.

See the accompanying Notes to these Condensed Consolidated Financial Statements.

Riot Platforms, Inc.

Notes to Condensed Consolidated Financial Statements

Organization and Operation of Our Business

Organization and Operation of The Company’s 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.

Riot is a vertically integrated Bitcoin mining company principally engaged in enhancing the Company’s capabilities to mine Bitcoin in support of the Bitcoin blockchain.

The Company also provides comprehensive and critical infrastructure for Bitcoin Mining and Data Center Hosting for its institutional-scale clients at its first large-scale Bitcoin mining facility in Rockdale, Texas (the “Rockdale Facility”), which currently has 700 megawatts (“MW”) in total developed capacity.

The Company is also developing a second large-scale Bitcoin Mining and Data Center Hosting 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 activities and Data Center Hosting services.

Lastly, the Company provides Engineering services, which includes engineering, design, and manufacturing of electrical equipment products for third-party customers and customized electrical infrastructure essential to the Company’s Bitcoin Mining activities and Data Center Hosting services.

As described in Note 19.

Segment Information , we operate in three reportable business segments:

Segment Information , the Company operates in three reportable business segments:

Bitcoin Mining, Data Center Hosting, and Engineering.

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.

As of September 30, 2023, the Company had approximate balances of cash and cash equivalents of $ 290.1 million, working capital of $ 442.3 million, total stockholders’ equity of $ 1.3 billion, and an accumulated deficit of $ 885.0 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.

During the nine months ended September 30, 2023, the Company sold 4,615 Bitcoin for proceeds of approximately $ 118.8 million.

The Company sold substantially all of the Bitcoin it produced during the period, but never more than the total number of Bitcoin it produced on a monthly basis, per Company policy.

Bitcoin is classified on the balance sheet as a current asset due to its ability to be sold in a highly liquid marketplace.

Through its at-the-market equity offerings (“ATM Offerings”), during the nine months ended September 30, 2023, the Company issued 27,492,345 shares of common stock, at a weighted average price of $ 11.81 per share, for net proceeds of approximately $ 317.2 million.

Subsequent to September 30, 2023, and through November 6, 2023, the Company issued 10,196,000 shares of common stock, at a weighted average price of $ 10.12 per share, for net proceeds of approximately $ 101.1 million.

Stockholders’ Equity .

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 Company experiences the impact of domestic and global inflationary pressures and the impact of central banks’ responses to such pressures.

These inflationary pressures impact 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 the Company’s 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.

1 unchanged sentence

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.

See the 2022 Annual Report for additional discussion regarding the potential impacts that sustained, elevated inflationary pressure may have on its operations and plans for expansion.

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

The accompanying unaudited condensed consolidated financial statements (“Condensed Consolidated Financial Statements”) and these notes (these “Notes”) have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”).

In the opinion of management, the Condensed Consolidated Financial Statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of such interim results.

Unless otherwise

Riot Platforms, Inc.

Notes to Condensed Consolidated Financial Statements

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.

indicated, amounts are stated in thousands of U.S.

Dollars except for share, per share, and miner amounts, and Bitcoin quantities, prices, and hash rate.

The results in the Condensed Consolidated Financial Statements, including the Condensed Consolidated Statements of Operations, and these Notes include required estimates and assumptions of management, and are not necessarily indicative of results to be expected for the fiscal year ending December 31, 2023, or for any future interim period.

Further, the Condensed Consolidated Financial Statements and these Notes do not include all the information and notes required by GAAP for complete financial statements.

As such, the Condensed Consolidated Financial Statements and these Notes 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.

Actual results could differ materially 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.

For more information on the factors, risks, and uncertainties that could affect these estimates, please see the discussion under the heading “Risk Factors” in Part II, Item 1A of this Quarterly Report and in Part I, Item 1A of the 2022 Annual Report.

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.

Certain prior period amounts have been reclassified to conform to the current period presentation in the Condensed Consolidated Financial Statements and these Notes.

The reclassifications did not have a material impact on the Condensed Consolidated Financial Statements and related disclosures.

The impact on any prior period disclosures was immaterial.

1 unchanged sentence

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.

Recently Issued Accounting Pronouncements

The Company has evaluated all recently issued accounting pronouncements and does not believe any such pronouncements currently have, and does not expect such pronouncements to have, a material impact on the Condensed Consolidated Financial Statements on a prospective basis.

Revenue from Contracts with Customers

4 unchanged sentences

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.

As of September 30, 2023 and December 31, 2022, contract assets were $ 22.5 million and $ 19.7 million, respectively.

Riot Platforms, Inc.

2 unchanged sentences

The following table presents changes in contract liabilities and deferred revenue:

Six Months Ended

June 30, 2023

Nine Months Ended

September 30, 2023

Beginning balance

Revenue recognized

Other changes in contract liabilities

Additions and other changes in contract liabilities

Ending balance

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.

The following table presents the estimated future recognition of the Company’s remaining performance obligations, which represent the transaction price of current contracts for work to be performed.

Data Center Hosting

1 unchanged sentence

The following table presents information about the Company’s Bitcoin holdings:

Six Months Ended

June 30, 2023

Nine Months Ended

September 30, 2023

Beginning balance

5 unchanged sentences

Ending balance

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.

During the three months ended September 30, 2023 and 2022, the Company recorded impairment charges on its Bitcoin holdings of $ 4.0 million and $ 3.0 million, respectively, and during the nine months ended September 30, 2023 and 2022, the Company recorded impairment charges on its Bitcoin holdings of $ 14.2 million and $ 130.3 million, respectively.

Applying the market price of one Bitcoin on September 30, 2023 of approximately $ 26,968 to the Company’s 7,327 Bitcoin held at that date resulted in an estimated fair value of the Company’s Bitcoin of $ 197.6 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.

4 unchanged sentences

The following table presents the Company’s property and equipment:

September 30,

Buildings and building improvements

7 unchanged sentences

Property and equipment, net

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.

The Company did no t incur any impairment charges for its property and equipment during the three and nine months ended September 30, 2023 and 2022.

During the three months ended September 30, 2023 and 2022, depreciation expense related to property and equipment totaled $ 63.1 million and $ 26.2 million, respectively, and during the nine months ended September 30, 2023 and 2022, totaled $ 185.7 million and $ 60.3 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.

As of September 30, 2023, the Company had a total of 98,694 miners deployed in its Bitcoin mining operation at the Rockdale Facility, which excludes 14,250 miners currently offline as a result of damage sustained to the facility’s infrastructure during severe winter storms affecting Texas in December 2022.

During the nine months ended September 30, 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 use at the 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.

During the nine months ended September 30, 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 fourth quarter of 2023 and to 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 from Midas, 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.

As of September 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.

As of September 30, 2023, the Company has estimated that total damages of $ 11.2 million were incurred and no insurance recoveries have yet been received.

Recoveries will be recognized when they are probable of being received.

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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.

As of September 30, 2023, the Company’s 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.

Once complete, the Company expects the Corsicana Facility to have one gigawatt of developed capacity for its Bitcoin Mining and Data Center Hosting 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.

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.

Construction of the substation and the data centers is ongoing and operations are expected to commence during the first quarter of 2024, following commissioning of the substation.

Through September 30, 2023, the Company had incurred costs of approximately $ 155.2 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, $ 140.4 million of initial developments costs and equipment, and a $ 4.7 million deposit for future power usage.

During the nine months ended September 30, 2023, the Company paid a deposit of $ 48.9 million and made advanced payments of an additional $ 19.3 million to MicroBT for the purchase of miners described herein, leaving an additional commitment of approximately $ 94.7 million due in installments through approximately February 2024 based on the estimated delivery schedule.

During the nine months ended September 30, 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 December 2023 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.

During the nine months ended September 30, 2023, Riot completed its acquisition of 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.

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Finite-Lived Intangible Assets

The following table presents the Company’s finite-lived intangible assets as of June 30, 2023:

The following table presents the Company’s finite-lived intangible assets as of September 30, 2023:

Customer contracts

5 unchanged sentences

Finite-lived intangible assets

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:

During the three months ended September 30, 2023 and 2022, amortization expense related to finite-lived intangible assets was $ 1.5 million and $ 0.4 million, respectively, and during the nine months ended September 30, 2023 and 2022, was $ 4.4 million and $ 1.1 million, respectively.

The following table presents the estimated future amortization of the Company’s finite-lived intangible assets as of September 30, 2023:

Remainder of 2023

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.

Power Supply Contract

The Company did not identify any impairment of its finite-lived intangible assets during the three and nine months ended September 30, 2023 and 2022.

Power Purchase Agreement

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.

In May 2020, the Company, through its subsidiary, Whinstone US, Inc.

(“Whinstone”), entered into a long-term power purchase agreement (the “PPA”) to provide for the delivery of power to its Rockdale Facility, via the nearby Sandow Switch.

Pursuant to the PPA, the Company has agreed to acquire a total of 345 MW of long-term, fixed-price power, in multiple blocks, as follows:

130 MW contracted in May 2020, at fixed prices through April 30, 2030;

65 MW contracted in March 2022, at fixed prices through April 30, 2030;

and 150 MW contracted in November 2022, at fixed prices through October 31, 2027.

Additionally under the PPA, the Company has the option to purchase additional power at market prices, as needed.

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”).

Concurrently with the PPA, the Company entered into an interconnection agreement 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.

In collaboration with market participants such as the Company, ERCOT has implemented Demand Response Services Programs for customers that have the ability to reduce or modify electricity use in response to ERCOT instructions or signals.

These Demand Response Services Programs provide the ERCOT market with valuable reliability and economic services by helping to preserve system reliability, enhancing competition, mitigating price spikes, and stabilizing the grid by encouraging the demand side of the market to give more visibility and control of their power consumption to grid operators.

Market participants with electrical loads like the Company may participate in these Demand Response Service Programs directly by offering their electrical loads into the ERCOT markets, or indirectly by voluntarily reducing their energy usage in response to increasing power demand in the ERCOT marketplace.

Riot Platforms, Inc.

Notes to Condensed Consolidated Financial Statements

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.

Under these Demand Response Services Programs, the Company can participate in a variety of programs known as “ancillary services” by electing to designate a portion of its available electrical load for participation in such programs on an hourly basis.

For each respective Demand Response Services Program, the Company receives a cash payment based on hourly rates for power, and the amount of electrical load into which it bids.

Through ancillary services, the Company competitively bids amongst other market participants to sell ERCOT the ability to control Riot’s electrical load on demand, and to power down when directed to by ERCOT, as part of ERCOT’s efforts to stabilize the grid.

The Company receives compensation for its participation in ancillary services whether or not the Company 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 (June, July, August, and September), during which time, demand for power is at its highest.

4CP participants may voluntarily power down operations during these times and in doing so, reduce the electrical load demand on the ERCOT 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.

Under the PPA, the Company may also elect not to utilize its long-term, fixed-price power for its operations, and instead elect to sell that power in exchange for credits against future power costs 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 attempt to manage operating costs most efficiently.

During the three months ended September 30, 2023 and 2022, the Company earned credits against future power costs in exchange for power resold of approximately $ 49.6 million and $ 13.1 million, respectively.

During the nine months ended September 30, 2023 and 2022, the Company earned credits against future power costs in exchange for power resold of approximately $ 66.1 million and $ 21.3 million, respectively.

These amounts are recorded in Power curtailment credits on the Condensed Consolidated Statements of Operations.

The Company determined the PPA meets the definition of a derivative because it allows for net settlement.

However, because the Company has the ability to offer the power back for sale, rather than taking physical delivery, the Company determined that 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 PPA.

Accordingly, the PPA (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 PPA 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.

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 PPA, which is scheduled to end as of April 30, 2030.

The significant assumptions used to estimate fair value of the derivative contract include a discount rate of 23.6 %, 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 terms of the PPA 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 September 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 back unused or uneconomical power, the Company does not consider such actions to be trading activities.

Riot Platforms, Inc.

Notes to Condensed Consolidated Financial Statements

The following table presents changes in the estimated fair value of the Derivative asset :

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Change in fair value of derivative asset

Balance as of June 30, 2023

Riot Platforms, Inc.

Notes to Condensed Consolidated Financial Statements

Long-Term Assets

The following table presents the Company’s deposits:

Balance as of September 30, 2023

The following table presents the activity of the Company’s deposits paid:

Deposits on equipment:

Balance as of December 31, 2022

Reclassifications to property and equipment

Balance as of September 30, 2023

Security deposits

Total deposits

Total long-term deposits

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.

During the nine months ended September 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.

Property and Equipment.

During the nine months ended September 30, 2023, the Company paid a deposit of $ 48.9 million and made advanced payments of an additional $ 19.3 million to MicroBT for the purchase of miners and paid a deposit of $ 20.8 million to Midas for the purchase of immersion cooling systems.

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.

During the nine months ended September 30, 2023, the Company paid $ 23.0 million as a security deposit in connection with its 215 MW increase to the long-term, fixed-price power secured under the PPA, resulting in a total of 345 MW under contract at fixed prices.

Power Purchase Agreement .

As of September 30, 2023, there were approximately $ 4.7 million in security deposits paid by the Company for the development of the Corsicana Facility, all of which was paid during the year ended December 31, 2022.

As of September 30, 2023, all $ 3.1 million paid in 2021 in connection with the Facilities Agreement for the construction of the electricity delivery system facilities to serve the expansion of the Rockdale Facility, had been returned to the Company.

The Company has other security deposits totaling approximately $ 2.7 million, including $ 1.8 million associated with its ground lease.

Riot Platforms, Inc.

Notes to Condensed Consolidated Financial Statements

Accrued Expenses

Accrued expenses consist of the following:

September 30,

Construction in progress

Power related costs and remittances

Accrued compensation

Total accrued expenses

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.

Riot Platforms, Inc.

Notes to Condensed Consolidated Financial Statements

The Company’s subsidiary, ESS Metron, LLC, 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.

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 %.

As of September 30, 2023, the interest rate was 8.5 %.

Total borrowings under the Revolving Line of Credit during the nine months ended September 30, 2023, were $ 3.5 million and payments were $ 3.5 million.

As of September 30, 2023, the outstanding balance on the Revolving Line of Credit was $ 0 .

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.

As of September 30, 2023, the interest rate was 8.5 %.

Total borrowings under the Equipment Guidance Line during the nine months ended September 30, 2023, were approximately $ 0.9 million.

During the nine months ended September 30, 2023, approximately $ 0.4 million outstanding under the Equipment Guidance Line converted to a fixed rate term loan (see below).

As of September 30, 2023, the outstanding balance on the Equipment Guidance Line was approximately $ 0.5 million.

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.

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.

During the nine months ended September 30, 2023, approximately $ 0.4 million outstanding under the Equipment Guidance Line was converted into a three-year Equipment Term Loan with a fixed interest rate of 6.6 %.

As of September 30, 2023, the outstanding balance on the Equipment Term Loan was approximately $ 0.4 million.

As of September 30, 2023, the outstanding balance on the Equipment Guidance Line and Equipment Term Loans was recognized net of approximately $ 0.1 million of deferred financing costs.

The net current outstanding debt balance of $ 0.1 million was recognized within Accrued Expenses and the net long-term outstanding debt balance of $ 0.7 million was recognized within Other long-term liabilities on the Condensed Consolidated Balance Sheets.

As of September 30, 2023, the Company was in compliance with all covenants of the Credit and Security Facility.

As of September 30, 2023 and December 31, 2022, operating lease right of use assets were $ 21.1 million and $ 21.7 million, respectively, and operating lease liabilities were $ 21.9 million and $ 22.3 million, respectively.

Riot Platforms, Inc.

Notes to Condensed Consolidated Financial Statements

The following table presents the components of the Company’s lease expense:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Operating lease cost

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Operating cash outflows for operating leases

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Weighted-average discount rate – operating leases

Riot Platforms, Inc.

Notes to Condensed Consolidated Financial Statements

The following table represents our future minimum operating lease payments as of June 30, 2023:

The following table represents the Company’s future minimum operating lease payments as of September 30, 2023:

Office and other leases

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Present value of lease liabilities

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.

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”).

During the nine months ended September 30, 2023, approximately 5.0 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 1.3 million of these shares, with a fair value of approximately $ 13.9 million, to cover the withholding taxes related to the settlement of these vested restricted stock awards, as permitted by the 2019 Equity Incentive Plan.

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2023 ATM Offering

In August 2023, the Company entered into the 2023 ATM Offering, under which it could offer and sell up to $ 750.0 million in shares of the Company’s common stock.

Riot Platforms, Inc.

Notes to Condensed Consolidated Financial Statements

During the three months ended September 30, 2023, the Company received net proceeds of approximately $ 126.0 million ($ 129.4 million of gross proceeds, net of $ 3.4 million in commissions and expenses) from the sale of 11,044,700 shares of its common stock at a weighted average fair value of $ 11.72 per share under its 2023 ATM Offering.

Subsequent to September 30, 2023, and through November 6, 2023, the Company received net proceeds of approximately $ 101.1 million from the sale of 10,196,000 shares of its common stock at a weighted average fair value of $ 10.12 per share under its 2023 ATM Offering.

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.

During the nine months ended September 30, 2023, the Company received net proceeds of approximately $ 191.2 million ($ 195.2 million of gross proceeds, net of $ 3.9 million in commissions and expenses) from the sale of 16,447,645 shares of its common stock at a weighted average fair value of $ 11.86 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.

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On December 1, 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.

During the nine months ended September 30, 2023, the indemnification period ended and all 70,165 of the withheld shares were issued to the ESS Metron sellers.

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.

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 (“RSAs”), restricted stock units (“RSUs”), or stock options, all of which settle in shares of the Company’s common stock upon vesting.

As of July 13, 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 RSAs or RSUs and service-based RSAs or RSUs.

The performance-based awards 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 commencing as of the grant date of the TSR award (collectively, the “TSR Awards”).

The TSR Awards have a vesting range of 0 % to 200 % of the recipient’s target award, which is calculated based on the difference between the Company’s TSR and the Index TSR over the three-year performance period, subject to the recipient’s continuous employment with the Company through the third anniversary of the award’s grant date.

The service-based awards are eligible to vest in one-third annual installments over a three-year service period commencing on the award’s grant date, subject to the recipient’s continuous employment with the Company through the applicable vesting dates.

During the nine months ended September 30, 2023, under its new long-term incentive program, the Company issued 1.9 million shares as TSR Awards, including 1.7 million shares as performance-based RSAs and 0.2 million shares as performance-based RSUs, with an aggregate grant date fair value of approximately $ 38.0 million, as well as 0.8 million service-based RSAs and 0.1 million service-based RSUs, with an aggregate grant date fair value of $ 19.7 million.

Riot Platforms, Inc.

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Three Months Ended

Six Months Ended

Performance-based stock awards

Service-based stock awards

Nine Months Ended

September 30,

Performance-based stock awards and units

Service-based stock awards and units

Total stock-based compensation

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:

Performance-Based Awards and Units

Performance-based awards and units are eligible to vest either:

(i) over a three-year performance period ending December 31, 2023, based upon financial performance targets met during the performance period, and the completion of specified performance milestones related to development and monetization of added infrastructure capacity;

or (ii) based on the Company’s TSR as compared to the Index TSR through December 31, 2025.

The following table presents a summary of the activity of the Company’s performance-based RSAs:

Weighted Average

1 unchanged sentence

Balance as of January 1, 2023

Balance as of June 30, 2023

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.

Balance as of September 30, 2023

As of September 30, 2023, there was approximately $ 30.8 million of unrecognized compensation cost related to the performance-based RSAs, which is expected to be recognized over a remaining weighted-average vesting period of approximately 1.2 years.

The following table presents a summary of the activity of the Company’s performance-based RSUs:

Weighted Average

Number of Shares

Balance as of January 1, 2023

Balance as of September 30, 2023

As of September 30, 2023, there was approximately $ 4.5 million of unrecognized compensation cost related to the performance-based RSUs, which is expected to be recognized over a remaining weighted-average vesting period of approximately 2.8 years.

Riot Platforms, Inc.

Notes to Condensed Consolidated Financial Statements

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:

Service-Based Awards and Units

Service-based awards vest over one , two , and three-year service periods.

The following table presents a summary of the activity of the Company’s service-based RSAs:

Weighted Average

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( 4,386,376 )

Balance as of June 30, 2023

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.

Balance as of September 30, 2023

As of September 30, 2023, there was approximately $ 37.8 million of unrecognized compensation cost related to the service-based RSAs, which is expected to be recognized over a remaining weighted-average vesting period of approximately 1.1 years.

The following table presents a summary of the activity of the Company’s service-based RSUs:

Weighted Average

Number of Shares

Balance as of January 1, 2023

Balance as of September 30, 2023

As of September 30, 2023, there was approximately $ 2.3 million of unrecognized compensation cost related to the service-based RSUs, which is expected to be recognized over a remaining weighted-average vesting period of approximately 2.8 years.

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

The Company’s assets and liabilities measured at fair value on a recurring basis consisted of the following as of September 30, 2023, and December 31, 2022:

Fair value measured as of September 30, 2023

Quoted prices in

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Contingent consideration liability (b)

Riot Platforms, Inc.

Notes to Condensed Consolidated Financial Statements

(a) See Note 8.

Power Supply Contract .

Power Purchase Agreement .

(b) See Note 16.

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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.

Riot Platforms, Inc.

Notes to Condensed Consolidated Financial Statements

As of September 30, 2023 and December 31, 2022, the fair values of cash and cash equivalents, 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.

Commitments and Contingencies

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.

The Company leases its primary office locations and has a ground lease for its Rockdale Facility under noncancelable lease agreements that expire on varying dates through 2032.

Leases, for additional information.

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 has a water reservation agreement, as amended, with the lessor of its ground lease to secure a certain quantity of non-potable water from a nearby lake to be used by the Company at its Rockdale Facility.

The water reservation agreement runs through January 2032 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.

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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.

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 to the seller if certain power credits were received or realized by the Company arising from a severe weather event in Texas in February 2021.

Through September 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:

2 unchanged sentences

Change in fair value of contingent consideration

Balance as of June 30, 2023

Balance as of September 30, 2023

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.

Upon the acquisition of Whinstone, the Company estimated the fair value of the contingent consideration using a discounted cash flow analysis, which included 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 required significant judgment and depend on various factors outside the Company’s control, such as construction delays.

The discount rate of approximately 2.5 % included observable market inputs, but also included unobservable inputs such as interest rate spreads, which were estimated based on qualitative judgment related to company-specific

Riot Platforms, Inc.

Notes to Condensed Consolidated Financial Statements

risk factors.

Specifically, the Company used S&P Global’s B credit rating in the yield curve to estimate a reasonable interest rate spread to determine the cost of debt input because the power credits are subordinated obligations for the Company’s counterparty.

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 September 30, 2023, using a discount rate of approximately 8.0 %, which was based on the factors above, including the recent increase in interest rates.

Contingencies

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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 September 7, 2022, the Company filed a complaint against Northern Data AG (“Northern Data”) in the Delaware Court of Chancery (Case No.

2022-0792-LWW) disputing the purchase price of Whinstone and seeking declaratory relief and specific performance of the stock purchase agreement.

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.

The Company placed $ 29.5 million in escrow pending the final determination of the independent accountant, and, 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.

Accordingly, $ 27.1 million of the escrowed amount was released from escrow and distributed to the Company on June 13, 2023, with the remaining $ 2.4 million held in escrow allocated to Northern Data.

As a result, the Company recognized a Deferred gain on acquisition post-close dispute settlement of $ 26.0 million on the Condensed Consolidated Balance Sheets.

Following the final determination, Northern Data filed a complaint against the Company in the Delaware Court of Chancery on July 23, 2023 (Case No.

2023-0650-LWW) challenging the independent accountant’s written final determination and seeking to re-litigate the purchase price adjustment process.

The Company contests Northern Data’s right to bring this new complaint and entirely disagrees with the allegations and arguments it raises, and the Company filed a motion to dismiss the complaint on July 17, 2023, which is set to be heard on February 13, 2024.While the Company considers Northern Data’s new complaint to be without merit and intends to vigorously oppose such complaint, as appropriate, the Company cannot accurately predict the outcome of such ongoing litigation, or estimate the magnitude of such outcome, due to its early stage.

Legacy Hosting Customer Disputes

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.

On May 2, 2023, Whinstone filed a petition in the District Court for the 20th Judicial District of Milam County, Texas (Case No.

CV41873), which it later amended, against Rhodium 30MW, LLC, Rhodium JV, LLC, Air HPC LLC, and Jordan HPC, LLC (collectively, “Rhodium”) asserting breach of contract claims for Rhodium’s failure to pay amounts due under Rhodium’s colocation agreements with Whinstone.

The amended petition also seeks a declaration that certain superseded 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.

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”), moved to compel arbitration and filed counterclaims for breach of contract seeking recovery of at least $ 7 -$ 10 million in power credits allegedly owed to Rhodium under the superseded agreements, as well as lost profits.

On August 2, 2023, Rhodium disclosed the amount of damages it seeks to recover for these claims, which includes at least $ 42 million in alleged energy credits, at least $ 1 million in alleged lost profits for power diversion, and at least $ 0.7 million in alleged direct damages for breach of contract, plus lost profits and reasonable and necessary attorneys’ fees.

On August 28, 2023, the district court granted Rhodium’s motion to compel arbitration and stay litigation.

On October 24, 2023, Whinstone filed a petition for writ of mandamus with the Court of Appeal for the Third District of Texas, Austin Division (Case No.

03-23-00717-CV), requesting that the appellate court vacate the

Riot Platforms, Inc.

Notes to Condensed Consolidated Financial Statements

district court’s order compelling arbitration or, alternatively, the portion of its order staying litigation as to all claims arising under agreements without mandatory arbitration provisions.

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.

Because this litigation is still at this early stage, the Company 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

Riot Platforms, Inc.

Notes to Condensed Consolidated Financial Statements

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.

(“SBI”) filed a complaint in the United States District Court for the Western District of Texas (Case No.

6:23-cv-252), which it later amended, against Whinstone alleging breach of contract, fraud, and negligent bailment claims.

On July 21, 2023, Whinstone filed a motion to dismiss the amended complaint, which was denied on October 25, 2023.

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 interest.

Whinstone believes many of the claims are barred or waived and substantively lack merit, and Whinstone plans to vigorously contest the same, as appropriate.

While a preliminary investigation of the merits of SBI’s claims has commenced, because this litigation is still at this early stage, the Company cannot reasonably estimate the likelihood of an unfavorable outcome or the magnitude of such an outcome, if any.

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.

and its parent, GMO Internet, Inc., (collectively “GMO”) filed a complaint in the United States District Court for the Southern District of New York (Case No.

1:22-cv-05974-JPC) 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.

On October 19, 2023, GMO filed its fourth amended complaint claiming an additional $ 496 million in damages, for loss of profit and profit sharing, based on Whinstone’s alleged wrongful termination of the colocation services agreement as of June 29, 2023.

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.

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.

however, because this litigation is still at this early stage, the Company cannot reasonably estimate the likelihood of an unfavorable outcome or the magnitude of such an outcome, if any.

Class Actions and Related Shareholder Derivative Actions

On February 17, 2018, Creighton Takata filed an action asserting putative class action claims on behalf of the Company’s stockholders in the United States District Court for the District of New Jersey, Takata v.

Riot Blockchain Inc., et al.

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

18-cv-02293).

On August 25, 2023, the United States District Court for the District of New Jersey dismissed the Takata action, with prejudice, dismissing all of Takata’s claims.

Following the commencement of the Takata action, several shareholder derivative complaints were filed against the Company, all of which have been dismissed without prejudice.

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.

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.

Riot Platforms, Inc.

Notes to Condensed Consolidated Financial Statements

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.

A-18-774890-B & Gaft v.

O’Rourke, et al.

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.

Following dismissal of the Takata action, on October 23, 2023, the parties filed a joint stipulation of discontinuance dismissing all Jackson’s claims without prejudice.

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 January 18, 2023, the court entered an order voluntarily dismissing the two shareholder derivative complaints 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.

1 unchanged sentence

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.

Following dismissal of the Takata action, on October 6, 2023, Plaintiff filed a notice of voluntary dismissal without prejudice dismissing all Finitz’s claims.

Finally, on December 13, 2018, a 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.

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.

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.

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.

Following dismissal of the Takata action, on September 26, 2023, Plaintiff filed a notice of voluntary dismissal without prejudice dismissing all Monts’ claims.

Riot Platforms, Inc.

Notes to Condensed Consolidated Financial Statements

During the three months ended September 30, 2023 and 2022, the Company realized deferred income tax benefits of $ 0 and $ 3.0 million, respectively, and $ 5.0 million and $ 9.7 million during the nine months ended September 30, 2023 and 2022, respectively, related primarily to the contingent consideration liability and future power credits.

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

September 30, 2023

September 30, 2022

Warrants to purchase common stock

6 unchanged sentences

The reportable segments are identified based on the types of service performed.

The chief operating decision maker (“CODM”) analyzes the performance of the

Riot Platforms, Inc.

Notes to Condensed Consolidated Financial Statements

segments based on reportable segment revenue and reportable segment cost of revenue.

The chief operating decision maker (“CODM”) analyzes the performance of the segments based on reportable segment revenue and reportable segment cost of revenue.

No operating segments have been aggregated to form the reportable segments.

5 unchanged sentences

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 revenue and cost of revenue from intersegment transactions have been eliminated in the Condensed 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.

During the three and nine months ended September 30, 2023, aside from the Bitcoin Mining revenue generated as a result of the Company’s participation in a mining pool, the Company earned revenue of $ 6.4 million, or 12.3 % of consolidated revenue, and $ 20.9 million, or 10.4 % of consolidated revenue, respectively, from one customer in its Engineering segment.

During the three and nine months ended September 30, 2022, aside from the Bitcoin Mining revenue generated as a result of the Company’s participation in mining pools, no single customer or related group of customers contributed 10 % or more of the Company’s total condensed consolidated revenue.

Riot Platforms, Inc.

Notes to Condensed Consolidated Financial Statements

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,

The following table presents revenue and cost of revenue for the Company’s reportable segments, reconciled to the Condensed Consolidated Statements of Operations:

Three Months Ended September 30,

Nine Months Ended September 30,

Reportable segment revenue:

3 unchanged sentences

Total segment and consolidated revenue

Reportable segment cost of revenues:

Reportable segment cost of revenue:

Bitcoin Mining

Data Center Hosting

Total segment and consolidated cost of revenues

Total segment and consolidated cost of revenue

Reconciling Items:

6 unchanged sentences

Realized gain on sale of Bitcoin

Gain (loss) on sale/exchange of equipment

Casualty-related charges (recoveries), net

(Loss) gain on sale/exchange of equipment

Casualty-related charges

Impairment of Bitcoin

8 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements