Riot Platforms, Inc. 10-Q

Item 1. Financial Statements Riot Platforms, Inc. Condensed Consolidated Balance Sheets (Unaudited; and in thousands, except for share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ ​ 2023 ​ 2022 ASSETS ​ ​ Current assets ​ ​ Cash and cash equivalents ​ $ 290,107 ​ $ 230,328 Accounts receivable, net ​ 12,683 ​ 26,932 Contract assets, including retainage of $ 3,997 and $ 3,012 , respectively ​ 22,513 ​ 19,743 Prepaid expenses and other current assets ​ 35,989 ​ 32,661 Bitcoin ​ 151,825 ​ 109,420 Future power credits, current portion ​ 271 ​ 24,297 Total current assets ​ 513,388 ​ 443,381 ​ ​ ​ ​ ​ ​ ​ Property and equipment, net ​ 667,808 ​ 692,555 Deposits ​ 120,936 ​ 42,433 Finite-lived intangible assets, net ​ 17,159 ​ 21,477 Derivative asset ​ ​ 108,771 ​ ​ 97,497 Operating lease right-of-use assets ​ ​ 21,064 ​ ​ 21,673 Future power credits, less current portion ​ 638 ​ 638 Other long-term assets ​ 5,620 ​ 310 Total assets ​ $ 1,455,384 ​ $ 1,319,964 ​ ​ ​ LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ Current liabilities ​ ​ Accounts payable ​ $ 8,898 ​ $ 18,445 Contract liabilities ​ 5,787 ​ 8,446 Accrued expenses ​ ​ 25,200 ​ ​ 65,464 Deferred gain on acquisition post-close dispute settlement ​ ​ 26,007 ​ ​ — Deferred revenue, current portion ​ 2,564 ​ 2,882 Contingent consideration liability - future power credits, current portion ​ 271 ​ 24,297 Operating lease liability, current portion ​ 2,388 ​ 2,009 Total current liabilities ​ 71,115 ​ 121,543 ​ ​ ​ Deferred revenue, less current portion ​ 16,331 ​ 17,869 Operating lease liability, less current portion ​ 19,516 ​ 20,242 Contingent consideration liability - future power credits, less current portion ​ 638 ​ 638 Other long-term liabilities ​ 7,083 ​ 8,230 Total liabilities ​ 114,683 ​ 168,522 ​ ​ ​ Commitments and contingencies - Note 16 ​ ​ ​ ​ ​ Stockholders’ equity ​ ​ Preferred stock, no par value, 15,000,000 shares authorized: ​ ​ 2 % Series A Convertible Preferred stock, 2,000,000 shares authorized; no shares issued and outstanding as of 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 September 30, 2023 and December 31, 2022 ​ — ​ — Common stock, no par value; 340,000,000 shares authorized; 196,300,944 and 167,751,112 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively ​ 2,225,743 ​ 1,907,784 Accumulated deficit ​ ( 885,042 ) ​ ( 756,342 ) Total stockholders’ equity ​ 1,340,701 ​ 1,151,442 Total liabilities and stockholders’ equity ​ $ 1,455,384 ​ $ 1,319,964 ​ See the accompanying Notes to these Condensed Consolidated Financial Statements. 1 Table of Contents Riot Platforms, Inc. Condensed Consolidated Statements of Operations (Unaudited; and in thousands, except for share and per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2023 2022 2023 2022 Revenue: ​ ​ ​ ​ ​ ​ ​ ​ Bitcoin Mining ​ $ 31,222 ​ $ 22,070 ​ $ 128,987 ​ $ 126,166 Data Center Hosting ​ 5,108 ​ 8,371 ​ 21,811 ​ 27,899 Engineering ​ 15,536 ​ 15,824 ​ 50,995 ​ 44,886 Other revenue ​ 25 ​ 25 ​ 73 ​ 73 Total revenue ​ 51,891 ​ 46,290 ​ 201,866 ​ 199,024 ​ ​ ​ ​ ​ Costs and expenses: ​ ​ ​ ​ Cost of revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Bitcoin Mining ​ 24,449 ​ 14,677 ​ 69,995 ​ 51,766 Data Center Hosting ​ 26,135 ​ 14,223 ​ 73,929 ​ 44,392 Engineering ​ 13,194 ​ 13,780 ​ 46,939 ​ 40,504 Acquisition-related costs ​ — ​ — ​ — ​ 78 Selling, general, and administrative ​ 29,067 ​ 16,004 ​ 61,578 ​ 37,549 Depreciation and amortization ​ 64,569 ​ 26,559 ​ 190,071 ​ 61,366 Change in fair value of derivative asset ​ ( 3,943 ) ​ 17,749 ​ ( 11,274 ) ​ ( 86,865 ) Power curtailment credits ​ ​ ( 49,601 ) ​ ​ ( 13,070 ) ​ ​ ( 66,146 ) ​ ​ ( 21,328 ) Change in fair value of contingent consideration ​ — ​ — ​ — ​ 176 Realized gain on sale of Bitcoin ​ ( 13,495 ) ​ ( 3,109 ) ​ ( 47,098 ) ​ ( 28,034 ) Loss (gain) on sale/exchange of equipment ​ ​ 5,306 ​ ​ ( 7,667 ) ​ ​ 5,336 ​ ​ ( 16,281 ) Casualty-related charges ​ ​ — ​ ​ — ​ ​ 1,526 ​ ​ — Impairment of Bitcoin ​ ​ 4,041 ​ ​ 3,021 ​ ​ 14,151 ​ ​ 130,310 Impairment of goodwill ​ ​ — ​ ​ — ​ ​ — ​ ​ 335,648 Total costs and expenses ​ 99,722 ​ 82,167 ​ 339,007 ​ 549,281 Operating income (loss) ​ ( 47,831 ) ​ ( 35,877 ) ​ ( 137,141 ) ​ ( 350,257 ) ​ ​ ​ ​ ​ Other income (expense): ​ ​ ​ ​ Interest income (expense) ​ ​ 2,318 ​ ​ 348 ​ ​ 3,331 ​ ​ ( 9 ) Realized loss on sale of marketable equity securities ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 1,624 ) Unrealized gain (loss) on marketable equity securities ​ — ​ 142 ​ — ​ ( 6,306 ) Other income (expense) ​ ​ 31 ​ ​ — ​ ​ 96 ​ ​ ( 59 ) Total other income (expense) ​ 2,349 ​ 490 ​ 3,427 ​ ( 7,998 ) ​ ​ ​ ​ ​ Net income (loss) before taxes ​ ( 45,482 ) ​ ( 35,387 ) ​ ( 133,714 ) ​ ( 358,255 ) ​ ​ ​ ​ ​ Current income tax benefit (expense) ​ 157 ​ ( 89 ) ​ ( 31 ) ​ ( 828 ) Deferred income tax benefit (expense) ​ — ​ 3,041 ​ 5,045 ​ 9,667 Total income tax benefit (expense) ​ 157 ​ 2,952 ​ 5,014 ​ 8,839 ​ ​ ​ ​ ​ Net income (loss) ​ $ ( 45,325 ) ​ $ ( 32,435 ) ​ $ ( 128,700 ) ​ $ ( 349,416 ) ​ ​ ​ ​ ​ Basic and diluted net income (loss) per share ​ $ ( 0.25 ) ​ $ ( 0.21 ) ​ $ ( 0.76 ) ​ $ ( 2.61 ) Basic and diluted weighted average number of shares outstanding ​ 180,952,689 ​ 153,895,123 ​ 168,758,240 ​ 133,894,338 ​ See the accompanying Notes to these Condensed Consolidated Financial Statements. ​ 2 Table of Contents Riot Platforms, Inc. Condensed Consolidated Statements of Stockholders’ Equity (Unaudited; and in thousands, except for share amounts) ​ Three Months Ended September 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Common Stock ​ Accumulated ​ stockholders’ ​ ​ Shares ​ Amount ​ deficit ​ equity Balance as of July 1, 2023 182,250,554 ​ $ 2,080,627 ​ $ ( 839,717 ) ​ $ 1,240,910 Issuance of restricted stock, net of forfeitures and delivery of common stock underlying stock awards, net of tax withholding 2,435,045 ​ ( 974 ) ​ — ​ ( 974 ) Issuance of common stock/At-the-market offering, net of offering costs 11,615,345 ​ 132,571 ​ — ​ 132,571 Stock-based compensation — ​ 13,519 ​ — ​ 13,519 Net income (loss) — ​ — ​ ( 45,325 ) ​ ( 45,325 ) Balance as of September 30, 2023 196,300,944 ​ $ 2,225,743 ​ $ ( 885,042 ) ​ $ 1,340,701 ​ ​ Three Months Ended September 30, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Common Stock ​ Accumulated ​ stockholders’ ​ ​ Shares ​ Amount ​ deficit ​ equity Balance as of July 1, 2022 147,986,173 ​ $ 1,857,108 ​ $ ( 563,770 ) ​ $ 1,293,338 Issuance of restricted stock, net of forfeitures and delivery of common stock underlying stock awards, net of tax withholding 12,817,944 ​ ( 1,058 ) ​ — ​ ( 1,058 ) Issuance of common stock/At-the-market offering, net of offering costs 6,492,795 ​ 31,372 ​ — ​ 31,372 Stock-based compensation — ​ 3,561 ​ — ​ 3,561 Net income (loss) — ​ — ​ ( 32,435 ) ​ ( 32,435 ) Balance as of September 30, 2022 167,296,912 ​ $ 1,890,983 ​ $ ( 596,205 ) ​ $ 1,294,778 ​ ​ Nine Months Ended September 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Common Stock ​ Accumulated ​ stockholders’ ​ ​ Shares ​ Amount ​ deficit ​ equity Balance as of January 1, 2023 ​ 167,751,112 ​ $ 1,907,784 ​ $ ( 756,342 ) ​ $ 1,151,442 Issuance of restricted stock, net of forfeitures and delivery of common stock underlying stock awards, net of tax withholding 987,322 ​ ( 13,925 ) ​ — ​ ( 13,925 ) Issuance of common stock/At-the-market offering, net of offering costs 27,492,345 ​ 317,232 ​ — ​ 317,232 Issuance of common stock in connection with acquisition of ESS Metron, LLC ​ 70,165 ​ ​ — ​ ​ — ​ ​ — Stock-based compensation — ​ 14,652 ​ — ​ 14,652 Net income (loss) — ​ — ​ ( 128,700 ) ​ ( 128,700 ) Balance as of September 30, 2023 196,300,944 ​ $ 2,225,743 ​ $ ( 885,042 ) ​ $ 1,340,701 ​ ​ Nine Months Ended September 30, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Preferred Stock ​ Common Stock ​ Accumulated ​ stockholders’ ​ ​ Shares ​ Amount ​ Shares ​ Amount ​ deficit ​ equity Balance as of January 1, 2022 2,199 ​ $ 11 116,748,472 ​ $ 1,595,147 ​ $ ( 246,789 ) ​ $ 1,348,369 Issuance of restricted stock, net of forfeitures and delivery of common stock underlying stock awards, net of tax withholding — ​ — 13,493,629 ​ ( 9,873 ) ​ — ​ ( 9,873 ) Issuance of common stock/At-the-market offering, net of offering costs — ​ — 37,052,612 ​ 298,394 ​ — ​ 298,394 Conversion of preferred stock to common stock ( 2,199 ) ​ ( 11 ) 2,199 ​ 11 ​ — ​ — Stock-based compensation — ​ — — ​ 7,304 ​ — ​ 7,304 Net income (loss) — ​ — — ​ — ​ ( 349,416 ) ​ ( 349,416 ) Balance as of September 30, 2022 — ​ $ — 167,296,912 ​ $ 1,890,983 ​ $ ( 596,205 ) ​ $ 1,294,778 ​ See the accompanying Notes to these Condensed Consolidated Financial Statements. 3 Table of Contents Riot Platforms, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited; and in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ September 30, ​ ​ 2023 2022 Operating activities ​ ​ ​ Net income (loss) ​ $ ( 128,700 ) ​ $ ( 349,416 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: ​ ​ Stock-based compensation ​ 14,652 ​ 7,304 Depreciation and amortization ​ 190,071 ​ 61,366 Amortization of license fee revenue ​ ( 73 ) ​ ( 73 ) Noncash lease expense ​ 1,858 ​ 2,891 Deferred income tax expense (benefit) ​ ( 5,045 ) ​ ( 9,667 ) Impairment of Bitcoin ​ 14,151 ​ 130,310 Impairment of goodwill ​ ​ — ​ ​ 335,648 Change in fair value of derivative asset ​ ( 11,274 ) ​ ( 86,865 ) Change in fair value of contingent consideration ​ — ​ 176 Realized loss on sale of marketable equity securities ​ ​ — ​ ​ 1,624 Realized gain on sale of Bitcoin ​ ( 47,098 ) ​ ( 28,034 ) Unrealized loss on marketable equity securities ​ — ​ 6,306 Gain (loss) on sale/exchange of equipment ​ 5,336 ​ ( 16,281 ) Casualty-related charges ​ ​ 1,526 ​ ​ — Bitcoin Mining revenue ​ ​ ( 128,987 ) ​ ​ ( 126,166 ) Proceeds from sale of Bitcoin ​ ​ 118,833 ​ ​ 52,491 Changes in assets and liabilities: ​ ​ (Increase)/decrease in operating assets ​ ​ 5,603 ​ ​ 21,729 Increase/(decrease) in operating liabilities ​ ​ ( 42,803 ) ​ ​ ( 4,307 ) Net cash provided by (used in) operating activities ​ ( 11,950 ) ​ ( 964 ) ​ ​ ​ Investing activities ​ ​ Proceeds from the sale of marketable equity securities ​ ​ — ​ ​ 704 Deposits on equipment ​ ( 90,512 ) ​ ( 194,923 ) Security deposits ​ ​ — ​ ​ ( 5,479 ) Purchases of property and equipment, including construction in progress ​ ( 148,209 ) ​ ( 129,672 ) Proceeds from the sale of equipment ​ ​ 6,369 ​ ​ — Patent costs incurred ​ ( 34 ) ​ ( 27 ) Net cash provided by (used in) investing activities ​ ( 232,386 ) ​ ( 329,397 ) ​ ​ ​ Financing activities ​ ​ Proceeds from the issuance of common stock / At-the-market offering ​ 324,600 ​ 304,849 Offering costs for the issuance of common stock / At-the-market offering ​ ( 7,368 ) ​ ( 6,455 ) Payments on contingent consideration liability - future power credits ​ ​ — ​ ​ ( 15,725 ) Proceeds from Credit and Security Facility ​ ​ 4,420 ​ ​ — Repayments of Credit and Security Facility ​ ​ ( 3,530 ) ​ ​ — Debt issuance costs ​ ​ ( 82 ) ​ ​ — Repurchase of common shares to pay employee withholding taxes ​ ( 13,925 ) ​ ( 9,873 ) Net cash provided by (used in) financing activities ​ 304,115 ​ 272,796 ​ ​ ​ Net increase (decrease) in cash and cash equivalents ​ 59,779 ​ ( 57,565 ) Cash and cash equivalents at beginning of period ​ 230,328 ​ 312,315 Cash and cash equivalents at end of period ​ $ 290,107 ​ $ 254,750 ​ ​ ​ ​ ​ ​ ​ ​ Supplemental information: ​ ​ Cash paid for interest ​ $ 35 ​ $ — Cash paid for taxes ​ $ 680 ​ $ — Non-cash transactions ​ ​ Reclassification of deposits to property and equipment ​ $ 33,273 ​ $ 288,064 Construction in progress included in accrued expenses ​ $ 9,342 ​ $ 9,979 Bitcoin exchanged for employee compensation ​ $ 696 ​ $ 1,434 Conversion of preferred stock to common stock ​ $ — ​ $ 11 Right of use assets exchanged for new operating lease liabilities ​ $ 1,249 ​ $ 10,377 Property and equipment obtained in exchange transaction ​ $ — ​ $ 10,409 ​ ​ See the accompanying Notes to these Condensed Consolidated Financial Statements. ​ ​ 4 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Note 1. Organization and Operation of The Company’s Business Nature of Operations 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 , the Company operates in three reportable business segments: Bitcoin Mining, Data Center Hosting, and Engineering. Note 2. Liquidity and Financial Condition 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 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. See Note 13. Stockholders’ Equity . Inflation 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. Management is unable to accurately predict when, or if, these inflationary pressures will subside, or whether and to what extent a broad-based economic recession will arise in connection with these pressures. As a result, management is unable to predict the impact these inflationary pressures and possible follow-on conditions may have on the business and results of operations, as well as access to financing. See the 2022 Annual Report for additional discussion regarding the potential impacts that sustained, elevated inflationary pressure may have on its operations and plans for expansion. Note 3. Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements (“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 5 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) 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 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 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. Significant Accounting Policies For a detailed discussion about the Company’s significant accounting policies, see the Company’s 2022 Annual Report. 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. ​ Note 4. Revenue from Contracts with Customers Disaggregated revenue Revenue disaggregated by reportable segment is presented in Note 19. Segment Information . Contract balances Contract assets relate to uncompleted Engineering contracts. As of September 30, 2023 and December 31, 2022, contract assets were $ 22.5 million and $ 19.7 million, respectively. 6 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Contract liabilities primarily relate to upfront payments and consideration received for Data Center Hosting services and uncompleted Engineering contracts. The following table presents changes in contract liabilities and deferred revenue: ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ September 30, 2023 Beginning balance ​ $ 29,197 Revenue recognized ​ ​ ( 10,220 ) Additions and other changes in contract liabilities ​ ​ 5,705 Ending balance ​ $ 24,682 ​ Remaining performance obligation 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Remainder of ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2024 2025 2026 ​ 2027 Thereafter Total Data Center Hosting $ 697 $ 2,362 $ 2,362 $ 2,362 ​ $ 2,362 $ 8,241 $ 18,386 Engineering ​ 910 ​ 4,877 ​ — ​ — ​ ​ — ​ — ​ 5,787 Other ​ ​ 24 ​ ​ 97 ​ ​ 97 ​ ​ 97 ​ ​ 97 ​ ​ 97 ​ ​ 509 Total contract liabilities ​ $ 1,631 ​ $ 7,336 ​ $ 2,459 ​ $ 2,459 ​ $ 2,459 ​ $ 8,338 ​ $ 24,682 ​ ​ Note 5. Bitcoin The following table presents information about the Company’s Bitcoin holdings: ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ September 30, 2023 Beginning balance $ 109,420 Revenue recognized from Bitcoin mined ​ 128,987 Proceeds from sale of Bitcoin ​ ( 118,833 ) Exchange of Bitcoin for employee compensation ​ ( 696 ) Realized gain on sale of Bitcoin ​ 47,098 Impairment of Bitcoin ​ ( 14,151 ) Ending balance ​ $ 151,825 ​ 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. The valuation of Bitcoin held is classified under Level 1 of the fair value hierarchy as it is based on quoted prices in active markets for identical assets. ​ 7 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Note 6. Property and Equipment The following table presents the Company’s property and equipment: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ 2023 2022 Buildings and building improvements ​ $ 330,775 ​ $ 229,685 Land rights and land improvements ​ 10,320 ​ 10,164 Miners and mining equipment ​ 477,311 ​ 441,324 Machinery and facility equipment ​ ​ 38,673 ​ ​ 35,125 Office and computer equipment ​ 1,878 ​ 1,206 Construction in progress ​ 107,850 ​ 97,231 Total cost of property and equipment ​ 966,807 ​ 814,735 Less accumulated depreciation ​ ( 298,999 ) ​ ( 122,180 ) Property and equipment, net ​ $ 667,808 ​ $ 692,555 ​ 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 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. 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 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. 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. 8 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Construction in progress 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 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 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. Commitments 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. 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. Mr. Theriot is part of the management team at Riot and is considered a related party of Riot. The transaction was accounted for as an asset acquisition. ​ Note 7. Finite-Lived Intangible Assets The following table presents the Company’s finite-lived intangible assets as of September 30, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ ​ Gross ​ Accumulated ​ Net book ​ average life ​ book value amortization value (years) Customer contracts ​ $ 6,300 ​ $ ( 1,137 ) ​ $ 5,163 10 Trademark ​ 5,000 ​ ( 917 ) ​ 4,083 10 UL Listings ​ 2,700 ​ ( 413 ) ​ 2,287 12 Patents ​ 10,060 ​ ( 4,434 ) ​ 5,626 Various Finite-lived intangible assets ​ $ 24,060 ​ $ ( 6,901 ) ​ $ 17,159 ​ ​ ​ 9 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) The following table presents the Company’s finite-lived intangible assets as of December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ ​ Gross Accumulated Net book ​ average life ​ book value amortization value (years) Customer contracts ​ $ 6,300 ​ $ ( 671 ) ​ $ 5,629 10 Trademark ​ 5,000 ​ ( 542 ) ​ 4,458 10 UL Listings ​ 2,700 ​ ( 244 ) ​ 2,456 12 Patents ​ 10,060 ​ ( 1,126 ) ​ 8,934 Various Finite-lived intangible assets ​ $ 24,060 ​ $ ( 2,583 ) ​ $ 21,477 ​ ​ ​ During the three months ended 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 ​ $ 1,522 2024 ​ 5,815 2025 ​ 1,355 2026 ​ 1,355 2027 ​ 1,355 Thereafter ​ 5,757 Total ​ $ 17,159 ​ 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. Note 8. Power Purchase Agreement Power Supply Contract and Demand Response Services Programs 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 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 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. 10 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) ​ 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 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 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 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. 11 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) The following table presents changes in the estimated fair value of the Derivative asset : ​ ​ ​ ​ ​ Balance as of December 31, 2022 ​ $ 97,497 Change in fair value of derivative asset ​ 11,274 Balance as of September 30, 2023 ​ $ 108,771 ​ ​ Note 9. Deposits The following table presents the activity of the Company’s deposits paid: ​ ​ ​ ​ ​ Deposits on equipment: ​ Balance as of December 31, 2022 ​ $ 33,273 Additions ​ 90,512 Reclassifications to property and equipment ​ ( 33,273 ) Balance as of September 30, 2023 ​ ​ 90,512 Security deposits ​ 30,424 Total long-term deposits ​ $ 120,936 ​ 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 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. See Note 6. 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. See Note 6. Property and Equipment. Security Deposits 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. See Note 8. 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. 12 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Note 10. Accrued Expenses Accrued expenses consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ ​ 2023 ​ 2022 Construction in progress ​ $ 9,342 ​ $ 16,621 Power related costs and remittances ​ 158 ​ 32,632 Compensation ​ ​ 8,836 ​ ​ 8,582 Insurance ​ 2,684 ​ 3,660 Other ​ 4,180 ​ 3,969 Total accrued expenses ​ $ 25,200 ​ $ 65,464 ​ ​ Note 11. Debt ​ Credit and Security Facility ​ 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 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 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 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. Note 12. Leases 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. 13 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) The following table presents the components of the Company’s lease expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended Nine Months Ended ​ September 30, September 30, ​ ​ 2023 2022 ​ 2023 2022 Operating lease cost ​ $ 1,014 ​ $ 844 ​ $ 2,973 ​ $ 2,268 Variable lease cost ​ 55 ​ 45 ​ 162 ​ 121 Operating lease expense ​ 1,069 ​ 889 ​ $ 3,135 ​ $ 2,389 ​ The following table presents supplemental lease information: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ ​ 2023 ​ 2022 ​ 2023 ​ 2022 Operating cash outflows for operating leases ​ $ 806 ​ $ 249 ​ $ 2,600 ​ ​ $ 2,471 ​ Right of use assets exchanged for new operating lease liabilities ​ $ 567 ​ $ 1,088 ​ $ 1,249 ​ ​ $ 10,377 ​ Weighted-average remaining lease term – operating leases ​ 7.7 ​ 8.9 ​ 7.7 ​ ​ 8.9 ​ Weighted-average discount rate – operating leases ​ 6.7 % 6.6 % 6.7 % ​ 6.6 % ​ The following table represents the Company’s future minimum operating lease payments as of September 30, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ground lease Office and other leases Total Remainder of 2023 ​ $ 484 ​ $ 437 ​ $ 921 2024 ​ 1,998 ​ 1,798 ​ 3,796 2025 ​ ​ 2,058 ​ ​ 1,495 ​ ​ 3,553 2026 ​ 2,119 ​ 1,425 ​ 3,544 2027 ​ 2,183 ​ 1,305 ​ 3,488 Thereafter ​ 9,618 ​ 3,444 ​ 13,062 Total undiscounted lease payments ​ 18,460 ​ 9,904 ​ 28,364 Less present value discount ​ ( 4,937 ) ​ ( 1,523 ) ​ ( 6,460 ) Present value of lease liabilities ​ $ 13,523 ​ $ 8,381 ​ $ 21,904 ​ ​ Note 13. Stockholders’ Equity 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. At-the-Market (“ATM”) Equity Offerings 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. 14 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) 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 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. ESS Metron Holdback Shares ​ 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 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. ​ Note 14. Stock-Based Compensation The 2019 Equity Incentive Plan authorizes the granting of stock-based compensation awards to directors, officers, employees, and advisors of the Company in the form of restricted stock awards (“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. ​ 15 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) The following table presents the Company’s stock-based compensation expense by category: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2023 2022 2023 2022 Performance-based stock awards and units ​ $ 3,926 ​ $ 1,643 ​ $ ( 12,424 ) ​ $ 1,448 Service-based stock awards and units ​ ​ 9,593 ​ ​ 1,918 ​ ​ 27,076 ​ ​ 5,856 Total stock-based compensation ​ $ 13,519 ​ $ 3,561 ​ $ 14,652 ​ $ 7,304 ​ Stock-based compensation expense is recognized in Selling, general and administrative on the Condensed Consolidated Statements of Operations. 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 ​ ​ ​ ​ Grant-Date ​ ​ ​ ​ Per Share ​ Number of Shares Fair Value Balance as of January 1, 2023 ​ 3,918,935 ​ $ 25.92 Granted ​ 2,076,340 ​ $ 17.48 Vested ​ ( 567,281 ) ​ $ 24.96 Forfeited ​ ( 271,548 ) ​ $ 32.16 Balance as of September 30, 2023 ​ 5,156,446 ​ $ 22.30 ​ 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 ​ ​ ​ ​ Grant-Date ​ ​ ​ ​ Per Share ​ Number of Shares Fair Value Balance as of January 1, 2023 ​ — ​ $ — Granted ​ 246,426 ​ $ 19.59 Vested ​ — ​ $ — Forfeited ​ — ​ $ — Balance as of September 30, 2023 ​ 246,426 ​ $ 19.59 ​ 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. 16 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) 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 ​ ​ ​ ​ Grant-Date ​ ​ ​ ​ Per Share ​ Number of Shares Fair Value Balance as of January 1, 2023 ​ 8,855,744 ​ $ 6.84 Granted ​ 1,226,762 ​ $ 15.53 Vested ​ ( 4,386,376 ) ​ $ 6.87 Forfeited ​ ( 780,672 ) ​ $ 6.83 Balance as of September 30, 2023 4,915,458 ​ $ 9.04 ​ 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 ​ ​ ​ ​ Grant-Date ​ ​ ​ ​ Per Share ​ Number of Shares Fair Value Balance as of January 1, 2023 ​ — ​ $ — Granted ​ 123,213 ​ $ 20.29 Vested ​ — ​ $ — Forfeited ​ — ​ $ — Balance as of September 30, 2023 123,213 ​ $ 20.29 ​ 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. Note 15. Fair Value Measurements Assets and Liabilities Measured at Fair Value on a Recurring Basis: The Company’s assets and liabilities measured at fair value on a recurring basis consisted of the following as of September 30, 2023, and December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value measured as of September 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Significant ​ ​ ​ ​ ​ Quoted prices in ​ Significant other ​ unobservable ​ ​ Total carrying ​ active markets ​ observable inputs ​ inputs ​ Value (Level 1) (Level 2) (Level 3) Derivative asset (a) ​ $ 108,771 ​ $ — ​ $ — ​ $ 108,771 Contingent consideration liability (b) ​ $ 909 ​ $ — ​ $ — ​ $ 909 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value measured as of December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Significant ​ ​ ​ ​ ​ Quoted prices in ​ Significant other ​ unobservable ​ ​ Total carrying ​ active markets ​ observable inputs ​ inputs ​ Value (Level 1) (Level 2) (Level 3) Derivative asset (a) ​ $ 97,497 ​ $ — ​ $ — ​ $ 97,497 Contingent consideration liability (b) ​ $ 24,935 ​ $ — ​ $ — ​ $ 24,935 ​ 17 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) (a) See Note 8. Power Purchase Agreement . (b) See Note 16. Commitments and Contingencies . ​ Assets and Liabilities Not Measured at Fair Value on a Recurring Basis: 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. ​ Note 16. Commitments and Contingencies Commitments Operating Leases 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. See Note 12. Leases, for additional information. Water Reservation Agreement 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. Because the Company obtained an additional right of use for the reserved water amount, and the charges were increased by a standalone price commensurate with the additional water use rights and at market rates, the water reservation agreement was determined to be a lease modification accounted for as a separate contract. As such, the fees of the water reservation agreement were excluded from the lease payments of the ground lease and the water reservation agreement was accounted for as a separate executory contract. Contingent Consideration Liability Upon the acquisition of Whinstone in May 2021, the Company was obligated to pay up to $ 86.0 million, net of income taxes, (undiscounted) of consideration 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: ​ ​ ​ ​ ​ Balance as of December 31, 2022 ​ $ 24,935 Change in contingent consideration ​ ( 24,026 ) Change in fair value of contingent consideration ​ ​ — Balance as of September 30, 2023 ​ $ 909 ​ The estimated fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement. 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 18 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) 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 Legal Proceedings The Company, and its subsidiaries, are subject at times to various claims, lawsuits and governmental proceedings relating to the Company’s business and transactions arising in the ordinary course of business, as described in the 2022 Annual Report, as supplemented by the following: Northern Data Working Capital Disputes On September 7, 2022, the Company filed a complaint against Northern Data AG (“Northern Data”) in the Delaware Court of Chancery (Case No. C.A. 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 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. C.A. 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 ​ Rhodium ​ 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”), 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 19 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) 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. 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 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. ​ GMO On June 13, 2022, GMO Gamecenter USA, Inc. 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; 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. (Case No. 3: 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. (Case No. 604520/18)). 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. 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 ( In re Riot Blockchain, Inc. Shareholder Derivative Litigation (Case No. A-18-774890-B)). On January 18, 2023, the court entered an order voluntarily dismissing the 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. O’Rourke, et al. (Case No. 1:18-cv-09640)). 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. (Case No. 1:18-cv-01443)). Following dismissal of the Takata action, on September 26, 2023, Plaintiff filed a notice of voluntary dismissal without prejudice dismissing all Monts’ claims. ​ Note 17. Income Taxes 20 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) 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. ​ Note 18. Earnings Per Share The following table presents potentially dilutive securities that were not included in the computation of diluted net income (loss) per share as their inclusion would be anti-dilutive: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2023 September 30, 2022 Warrants to purchase common stock 63,000 63,000 Unvested restricted stock awards (a) ​ 7,689,628 ​ 12,478,290 Unvested restricted stock units 369,639 2,286,701 Total 8,122,267 14,827,991 ​ (a) Unvested restricted stock awards are included in total common shares outstanding but are excluded from the calculation of basic earnings per share. ​ ​ Note 19. Segment Information The Company has three reportable segments: Bitcoin Mining, Data Center Hosting, and Engineering. The reportable segments are identified based on the types of service performed. The chief operating decision maker (“CODM”) analyzes the performance of the segments based on reportable segment revenue and reportable segment cost of revenue. No operating segments have been aggregated to form the reportable segments. The Company does not allocate all assets to the reporting segments as they are managed on an entity-wide basis. Therefore, the Company does not separately disclose the total assets of its reportable operating segments. The Bitcoin Mining segment generates revenue from the Bitcoin the Company earns through its Bitcoin mining activities. The Data Center Hosting segment generates revenue from long-term customer contracts for the provision of data center hosting/colocation services, including from the consumption of electricity, construction of infrastructure, operation of data centers, and maintenance/management of computing capacity from the Company’s high performance data center facility in Rockdale, Texas. The Engineering segment generates revenue through customer contracts for custom engineered electrical products. The Data Center Hosting segment purchases custom engineered electrical products from the Engineering segment in the ordinary course of business. All revenue and cost of 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 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. 21 Table of Contents Riot Platforms, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) 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, ​ 2023 2022 2023 2022 Reportable segment revenue: ​ ​ ​ ​ ​ ​ ​ ​ Bitcoin Mining ​ $ 31,222 ​ $ 22,070 ​ $ 128,987 ​ $ 126,166 Data Center Hosting ​ 34,786 ​ 23,624 ​ 111,169 ​ 68,240 Engineering ​ 16,585 ​ 20,300 ​ 58,124 ​ 55,050 Other revenue ​ 25 ​ 25 ​ 73 ​ 73 Eliminations ​ ( 30,727 ) ​ ( 19,729 ) ​ ( 96,487 ) ​ ( 50,505 ) Total segment and consolidated revenue ​ $ 51,891 ​ $ 46,290 ​ $ 201,866 ​ $ 199,024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reportable segment cost of revenue: ​ ​ ​ ​ Bitcoin Mining ​ 31,667 ​ 15,949 ​ 93,840 ​ 60,793 Data Center Hosting ​ 48,595 ​ 28,201 ​ 139,442 ​ 75,705 Engineering ​ 13,973 ​ 16,767 ​ 51,791 ​ 47,302 Eliminations ​ ( 30,457 ) ​ ( 18,237 ) ​ ( 94,210 ) ​ ( 47,138 ) Total segment and consolidated cost of revenue ​ $ 63,778 ​ $ 42,680 ​ $ 190,863 ​ $ 136,662 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reconciling Items: ​ ​ ​ ​ Acquisition-related costs ​ — ​ — ​ — ​ ( 78 ) Selling, general, and administrative ​ ( 29,067 ) ​ ( 16,004 ) ​ ( 61,578 ) ​ ( 37,549 ) Depreciation and amortization ​ ( 64,569 ) ​ ( 26,559 ) ​ ( 190,071 ) ​ ( 61,366 ) Change in fair value of derivative asset ​ 3,943 ​ ( 17,749 ) ​ 11,274 ​ 86,865 Power curtailment credits ​ ​ 49,601 ​ ​ 13,070 ​ ​ 66,146 ​ ​ 21,328 Change in fair value of contingent consideration ​ — ​ — ​ — ​ ( 176 ) Realized gain on sale of Bitcoin ​ 13,495 ​ 3,109 ​ 47,098 ​ 28,034 (Loss) gain on sale/exchange of equipment ​ ​ ( 5,306 ) ​ ​ 7,667 ​ ​ ( 5,336 ) ​ ​ 16,281 Casualty-related charges ​ — ​ — ​ ( 1,526 ) ​ — Impairment of Bitcoin ​ ​ ( 4,041 ) ​ ​ ( 3,021 ) ​ ​ ( 14,151 ) ​ ​ ( 130,310 ) Impairment of goodwill ​ — ​ — ​ — ​ ( 335,648 ) Interest income (expense) ​ 2,318 ​ 348 ​ 3,331 ​ ( 9 ) Realized loss on sale of marketable equity securities ​ — ​ — ​ — ​ ( 1,624 ) Unrealized loss on marketable equity securities ​ — ​ 142 ​ — ​ ( 6,306 ) Other income (expense) ​ 31 ​ — ​ 96 ​ ( 59 ) Current income tax benefit (expense) ​ ​ 157 ​ ​ ( 89 ) ​ ​ ( 31 ) ​ ​ ( 828 ) Deferred income tax benefit (expense) ​ — ​ 3,041 ​ 5,045 ​ 9,667 Net income (loss) ​ $ ( 45,325 ) ​ $ ( 32,435 ) ​ $ ( 128,700 ) ​ $ ( 349,416 ) ​ ​ ​ ​ ​ ​ ​ 22 Table of Contents