What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-28 compared with 2024-02-23 · 751 added, 634 removed, 786 unchanged (64% of the section changed)

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Riot Platforms, Inc.

and subsidiaries (the "Company") as of December 31, 2023, the related consolidated statement of operations, comprehensive income (loss), stockholders' equity, and cash flows, for the year ended December 31, 2023 and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheets of Riot Platforms, Inc.

and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows, for the years then ended, and the related notes (collectively referred to as the "financial statements").

In our opinion, the 2024 and 2023 financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The consolidated financial statements of the Company for the year ended December 31, 2022, before the effects of the retrospective adjustments to the disclosures for a change in the composition of reportable segments and the adoption of ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (ASU 2023-07), discussed in Notes 2 and 20 to the financial statements, were audited by predecessor auditors whose report, dated March 2, 2023, expressed an unqualified opinion on those statements.

We have also audited the adjustments to the 2022 consolidated financial statements to retrospectively adjust the disclosures for a change in the composition of reportable segments and apply the change in accounting for the adoption of ASU 2023-07 in 2024, as discussed in Notes 2 and 20 to the financial statements.

Our procedures included (1) comparing the amounts of segment revenues, segment costs of revenue, and gross profit (loss) for both the change in composition of reportable segments and the adoption of ASU 2023-07 to the Company’s underlying accounting analysis, (2) comparing the previously reported segment information per the Company’s accounting analysis to the adjustments for the adoption of ASU 2023-07, and (3) recalculating the mathematical accuracy of the reconciliations of segment amounts to the consolidated financial statements.

In our opinion, such retrospective adjustments are appropriate and have been properly applied.

However, we were not engaged to audit, review, or apply any procedures to the 2022 consolidated financial statements of the Company other than with respect to these retrospective adjustments, and accordingly, we do not express an opinion or any other form of assurance on the 2022 consolidated financial statements taken as a whole.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 2 to the financial statements, the Company has changed its method of accounting for Bitcoin to fair value, with changes in fair value recognized in net income, effective as of January 1, 2023 due to the adoption of Accounting Standards Update (“ASU”) No.

2023-08, Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60):

Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”).

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Bitcoin Mining Revenue – Refer to Notes 2 and 4 to the financial statements

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Mining Revenue – Refer to Notes 2 to the financial statements

Critical Audit Matter Description

The Company participates in a digital asset mining pool ("the mining pool”) by providing computing power to the mining pool operator.

The Company recognizes revenue as they fulfill their performance obligation over time by providing computing power in exchange for bitcoin.

Once the computing power is transferred to the mining pool operator, the mining pool operator will compensate

the Company for the computing power provided with a payout in bitcoin.

The Company participates in a digital asset mining pool (“the mining pool”) by executing agreements with mining pool operators for the provision of hash calculation services to the mining pool.

The Company decides when to provide hash calculation services under the agreements and the Company’s enforceable rights to compensation begins only when and lasts as long as the Company provides hash calculation services to the mining pool operator and is created as power is provided over time.

In exchange for providing hash calculation services, the Company is entitled to a payout of Bitcoin based on a contractual formula, which primarily calculates the hash rate provided to the mining pool as a percentage of total network hash rate, and other inputs.

Revenue is recognized on the same day that control of the contracted service transfers to the mining pool operator, which is the same day as contract inception.

For the years ended December 31, 2024, and 2023, Bitcoin Mining revenue was $321.0 million, and $189.0 million, respectively.

We identified the auditing of bitcoin mining revenue as a critical audit matter due to the extent of audit effort required to perform audit procedures over the Company’s computing power provided to the mining pool operator, the associated contractual payouts including the blockchain contractual inputs, the Company’s valuation of bitcoin received from the mining pool operator, and evaluating the results of those procedures.

We identified the auditing of Bitcoin Mining revenue as a critical audit matter due to the extent of audit effort required to perform audit procedures over the Company’s hash calculation services provided to the mining pool operator, the associated contractual payouts including the blockchain contractual inputs, the Company’s valuation of Bitcoin received from the mining pool operator and evaluating the results of those procedures.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s process for recording Bitcoin Mining revenue included the following, among others:

● With the assistance of our Information Technology (IT) specialists, we identified the significant systems used to monitor computing power and tested the general IT controls over each of these systems.

● We tested the effectiveness of controls over the Company’s mining revenue calculation.

● We tested the amount of the mining revenue recorded by developing an expectation for the amount recorded based on the computing power provided to the mining pool operator per the calculation prescribed in the contract with the mining pool operator and comparing our expectation to the amount recorded by the Company.

● We confirmed with the mining pool operator the significant contractual terms utilized in the determination of mining revenue, total mining rewards earned, and the digital asset wallet addressesin which the rewards are deposited.

● We utilized our proprietary audit tool to independently obtain evidence from the Bitcoin blockchain to test the occurrence and accuracy of mining revenue.

● With the assistance of our fair value specialists, we evaluated the reasonableness of the prices utilized by the Company to value bitcoin by obtaining independent bitcoin prices and comparing those to the prices selected by the Company.

● With the assistance of our Information Technology (IT) specialists, we identified the significant systems used to monitor hash calculation services and tested the general IT controls over each of these systems.

● We tested the effectiveness of controls over the Company’s Bitcoin Mining revenue calculation.

● We tested the amount of the Bitcoin Mining revenue recorded by developing an expectation for the amount recorded based on the hash calculation services provided to the mining pool operator and the payout method prescribed in the contract with the mining pool operator and comparing our expectation to the amount recorded by the Company.

● We confirmed with the mining pool operator the significant contractual terms utilized in the determination of Bitcoin Mining revenue, total mining rewards earned, and the digital asset wallet addresses in which the rewards are deposited.

● We utilized our proprietary audit tool to independently obtain evidence from the Bitcoin blockchain to test the occurrence and accuracy of Bitcoin Mining revenue.

● With the assistance of our Valuation specialists, we evaluated the reasonableness of the prices utilized by the Company to value Bitcoin by obtaining independent Bitcoin prices and comparing those to the prices selected by the Company.

/s/ DELOITTE & TOUCHE LLP

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Riot Platforms, Inc.

and Subsidiaries (the “Company”) as of December 31, 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have audited, before the effects of the retrospective adjustments to the disclosures for a change in the composition of reportable segments and the adoption of ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”) discussed in Note 2 and Note 20 to the consolidated financial statements, comprising of the consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows of Riot Platforms, Inc.

(the “Company”) for the year ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”) (the 2022 consolidated financial statements before the effects of the adjustments discussed in Note 2 and Note 20 to the financial statements are not presented herein).

In our opinion, the 2022 financial statements, before the effects of the retrospective adjustments to the disclosures for a change in the composition of reportable segments and adoption of ASU 2023-07 discussed in Note 2 and Note 20 to the financial statements, present fairly, in all material respects, the results of the Company’s operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to audit, review, or apply any procedures to the retrospective adjustments to the disclosures for a change in the composition of reportable segments and adoption of ASU 2023-07 discussed in Note 2 and Note 20 to the consolidated financial statements, and accordingly, we do not express an opinion or any other form of assurance about whether such retrospective adjustments are appropriate and have been properly applied.

Those retrospective adjustments were audited by other auditors.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Marcum llp

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(in thousands, except for share and per share amounts)

December 31, 2024

December 31, 2023

Current assets

Cash and cash equivalents

Restricted cash

Accounts receivable, net

Contract assets, including retainage of $ 3,166 and $ 3,012 , respectively

Contract assets

Prepaid expenses and other current assets

Derivative asset, current portion

Equity method investment - marketable securities, at fair value

Future power credits, current portion

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Deferred revenue, current portion

Contingent consideration liability - future power credits, current portion

Contingent consideration liabilities, current portion

Current portion of long-term debt

Operating lease liability, current portion

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Operating lease liability, less current portion

Contingent consideration liability - future power credits, less current portion

Contingent consideration liabilities, less current portion

Long-term debt, less current portion

Other long-term liabilities

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2 % Series A Convertible Preferred stock, 2,000,000 shares authorized;

no shares issued and outstanding as of December 31, 2023 and December 31, 2022

no shares issued and outstanding as of December 31, 2024 and 2023

0 % Series B Convertible Preferred stock, 1,750,001 shares authorized;

no shares issued and outstanding as of December 31, 2023 and December 31, 2022

no shares issued and outstanding as of December 31, 2024 and 2023

Common stock, no par value;

680,000,000 shares authorized;

230,836,624 and 167,751,112 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively

344,890,208 and 230,836,624 shares issued and outstanding as of December 31, 2024 and 2023, respectively

Accumulated deficit

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Bitcoin Mining

Data Center Hosting

Other revenue

Total revenue

Costs and expenses:

Cost of revenue:

Cost of revenue (excludes depreciation and amortization presented below):

Bitcoin Mining

Data Center Hosting

Acquisition-related costs

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Other income (expense):

Interest income (expense)

Realized loss on sale of marketable equity securities

Realized gain on sale/exchange of long-term investment

Unrealized gain (loss) on marketable equity securities

Interest income

Interest expense

Unrealized gain (loss) on equity method investment - marketable securities

Other income (expense)

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Net income (loss)

Basic and diluted net income (loss) per share

Basic and diluted weighted average number of shares outstanding

Basic net income (loss) per share

Diluted net income (loss) per share

Basic weighted average number of shares outstanding

Diluted weighted average number of shares outstanding

See accompanying Notes to Consolidated Financial Statements.

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Balance as of January 1, 2022

Delivery of common stock underlying restricted stock units, net of shares settled for tax withholding

Issuance of common stock related to exercise of warrants

Issuance of common stock for settlement of 1,257,235 warrants on a cashless basis

Issuance of common stock in connection with the acquisition of Whinstone

Issuance of common stock in connection with the acquisition of ESS Metron, net of 70,156 shares withheld

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 warrant for settlement of advisory fees

Conversion of preferred stock to common stock

Stock option exercise

Stock-based compensation

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Balance as of December 31, 2022

Cumulative effect upon adoption of ASU 2023-08

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

Conversion of preferred stock to common stock

Issuance of common stock in connection with acquisition of ESS Metron

Stock-based compensation

Net income (loss)

Other comprehensive income (loss)

Balance as of December 31, 2023

Cumulative effect upon adoption of ASU 2023-08

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, LLC

Issuance of common stock in connection with the Block Mining Acquisition

Issuance of common stock to a third-party advisor

Stock-based compensation

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Stock-based compensation

Issuance of common stock to a third-party advisor

Depreciation and amortization

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Noncash lease expense

Amortization of debt issuance costs

Deferred income tax expense (benefit)

Issuance of common stock warrant for settlement of advisory fees

Impairment of Bitcoin

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Change in fair value of contingent consideration

Realized loss on sale of marketable equity securities

Realized gain on sale/exchange of long-term investment

Unrealized (gain) loss on equity method investment - marketable securities

Realized gain on sale of Bitcoin

Unrealized loss on marketable equity securities

Loss (gain) on sale/exchange of equipment

Casualty-related charges

Bitcoin Mining revenue

Revenue recognized from Bitcoin mined

Proceeds from sale of Bitcoin

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Proceeds from the sale of marketable equity securities

Acquisition of Whinstone, net of cash acquired

Acquisition of ESS Metron, net of cash acquired

Proceeds from the sale of long-term investments

Block Mining Acquisition, net of cash acquired

E4A Solutions Acquisition, net of cash acquired

Acquisition of Bitcoin

Deposits on equipment

Security deposits

Investment in equity method investment - marketable securities

Investment in convertible debt

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Net cash provided by (used in) investing activities

( 1,508,805 )

Financing activities

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Offering costs for the issuance of common stock / At-the-market offering

Proceeds from exercise of common stock warrants

Proceeds from issuance of convertible notes

Payments on contingent consideration liability - future power credits

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Debt issuance costs

Repayment of debt assumed in Block Mining Acquisition

Repayment of note payable

Repurchase of common shares to pay employee withholding taxes

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Net increase (decrease) in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash at beginning of period

Cash and cash equivalents and restricted cash at end of period

See accompanying Notes to Consolidated Financial Statements.

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Non-cash transactions

Issuance of common stock for business combination

Issuance of common stock for the Block Mining Acquisition

Contingent liability entered into for the Block Mining Acquisition

Contingent liability entered into for the E4A Solutions Acquisition

Reclassification of deposits to property and equipment

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Property and equipment obtained in exchange transaction

The following reconciles cash, cash equivalents, and restricted cash to the amounts presented above:

Cash, cash equivalents, and restricted cash, beginning of the period:

Cash and cash equivalents

Restricted cash

Total cash, cash equivalents, and restricted cash as presented above

Cash, cash equivalents, and restricted cash, end of the period:

Cash and cash equivalents

Restricted cash

Total cash, cash equivalents, and restricted cash as presented above

See accompanying Notes to Consolidated Financial Statements.

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Organization and Basis of Presentation

Riot Platforms, Inc.

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 mining infrastructure for institutional-scale hosted clients to mine Bitcoin at its Rockdale Facility.

The Rockdale Facility currently provides 700 MW in total developed capacity for Bitcoin mining and data center hosting services for institutional-scale hosted clients.

The Company is also developing the Corsicana Facility, a second large-scale Bitcoin mining data center facility, which, upon completion, is expected to have approximately one gigawatt of capacity available for Bitcoin mining and data center hosting services for institutional-scale hosted clients.

As described in Note 20.

Segment Information , we operate in three business segments:

Bitcoin Mining, Data Center Hosting, and Engineering.

Riot Platforms is a vertically-integrated Bitcoin mining company principally engaged in enhancing our capabilities to mine Bitcoin in support of the Bitcoin blockchain.

The Rockdale Facility is a large-scale Bitcoin mining facility in Rockdale, Texas and we completed Phase I of development of a second large-scale Bitcoin mining facility, the Corsicana Facility, which is currently equipped to provide up to 400 MW of capacity for our Bitcoin Mining.

Upon completion, the Corsicana Facility is expected to have approximately 1 GW of capacity available.

During 2024, the Company acquired the Kentucky Facility, which has existing operational Bitcoin mining capacity and the potential for significant expansion.

Also, during 2024, the Company acquired E4A Solutions, a leading provider of electrical engineering services to a diverse customer base of energy developers and data center operators.

Basis of presentation and principles of consolidation

The accompanying Consolidated Financial Statements of the Company include the accounts of the Company and its wholly or majority owned and controlled subsidiaries.

Consolidated subsidiaries’ results are included from the date the subsidiary was formed or acquired.

Intercompany investments, balances and transactions have been eliminated in consolidation.

The accompanying consolidated financial statements (“Consolidated Financial Statements”) and these notes (these “Notes”) have been prepared in accordance with GAAP.

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

The accompanying audited Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries.

All intercompany balances and transactions have been eliminated in consolidation.

Amounts disclosed are in thousands of U.S.

Dollars except for share, per share, and miner amounts, and Bitcoin quantities, prices and hash rate, or as otherwise noted.

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

Dollars except for:

share, per share, and miner amounts;

Bitcoin quantities, prices, and hash rate;

cost to mine one Bitcoin;

and production value of one Bitcoin mined.

As described in Note 20.

Segment Information , we operate in two reportable business segments:

Bitcoin Mining and Engineering.

Significant Accounting Policies and Recent Accounting Pronouncements

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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 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 fixed assets and finite-lived intangibles, stock-based compensation, and the valuation allowance associated with the Company’s deferred tax assets.

Actual results may differ materially from those estimates.

The most significant accounting estimates inherent in the preparation of the Company’s financial statements include revenue recognition;

valuation of the derivative asset classified under Level 3 on the fair value hierarchy;

determination of the useful lives and recoverability of long-lived assets;

impairment analysis of fixed assets and finite-lived intangibles;

impairment analysis of goodwill;

allocating the fair value of purchase consideration to assets acquired and liabilities assumed in business acquisitions;

stock-based compensation;

and the valuation allowance associated with the Company’s deferred tax assets.

Reclassifications

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Accounts receivable

The Company’s accounts receivable balance consists of amounts due from its mining pool operator and data center hosting and engineering customers.

The Company records accounts receivable at the invoiced amount less an allowance for any potentially uncollectable accounts under the current expected credit loss (“CECL”) impairment model and presents the net amount of the financial instrument expected to be collected.

The CECL impairment model requires an estimate of expected credit losses, measured

The Company’s accounts receivable balance consists of amounts due from its mining pool operator and engineering customers.

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

over the contractual life of an instrument, that considers forecasts of future economic conditions in addition to information about past events and current conditions.

The CECL impairment model requires an estimate of expected credit losses, measured over the contractual life of an instrument, which considers forecasts of future economic conditions in addition to information about past events and current conditions.

Based on this model, the Company considers many factors, including the age of the balance, collection history, and current economic trends.

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Recoveries of financial assets previously written off are recorded when received.

For the years ended December 31, 2023, 2022, and 2021, the Company did no t record any credit losses or recoveries.

For the years ended December 31, 2024, 2023, and 2022, the Company recognized $ 0.1 million, $ 0.0 million, and $ 0.0 million respectively, in bad debt expense.

Based on the Company’s current and historical collection experience, management recorded allowances for doubtful accounts of $ 2.9 million and $ 1.5 million as of December 31, 2024 and December 31, 2023, respectively.

As a result of the adoption of ASU 2023-08, Bitcoin is recorded at fair value, and changes in fair value are recognized in Change in fair value of Bitcoin, in Operating income (loss) on the Consolidated Statements of Operations, as of, and for the year ended December 31, 2023.

Prior to the adoption of ASU 2023-08, Bitcoin was accounted for as intangible assets with an indefinite useful life.

Bitcoin was sold on a FIFO basis and measured for impairment whenever indicators of impairment are identified based on the intraday low quoted price of Bitcoin.

To the extent an impairment loss was recognized, the loss established the new cost basis of the Bitcoin.

Subsequent reversal of impairment losses was not permitted.

Bitcoin awarded to the Company through its mining activities are accounted for in connection with the Company’s revenue recognition policy.

Bitcoin is classified on the Company’s Consolidated Balance Sheet as a current asset due to the Company’s ability to sell it in a highly liquid marketplace and its intent to liquidate its Bitcoin to support operations when needed.

Purchases and sales of Bitcoin by the Company and Bitcoin awarded to the Company are included within Operating activities on the Consolidated Statements of Cash Flows as substantially all of the Company’s Bitcoin production is sold within days of being produced, but never more than the production on a monthly basis per the Company’s internal policy .

During 2024, the Company made a strategic decision to temporarily cease the sales of all its Bitcoin production and instead, increase its Bitcoin holdings.

The Company will continue to monitor its cash needs and expects to sell Bitcoin in the future to fund its cash expenditures.

As of December 31, 2024 and 2023, retainage of $ 1.0 million and $ 3.2 million, respectively, was included in Accounts receivable, net , on the Consolidated Balance Sheets.

The Company’s Bitcoin is recorded at fair value, as determined using the period-end closing price of Bitcoin on the Company’s principal market, Coinbase (the “Principal Market”), and changes in fair value are recognized in Change in fair value of Bitcoin , in Operating income (loss) on the Consolidated Statements of Operations.

During 2024, Riot made the strategic decision to temporarily halt the sale of its Bitcoin production and instead, increase its Bitcoin holdings.

As a result of its intent to hold its Bitcoin, the Company began classifying its Bitcoin held as a non-current asset on its Consolidated Balance Sheet.

For all periods presented, all sales of Bitcoin occurred before the strategic decision and, as such Bitcoin was sold nearly immediately after receipt by the Company, the proceeds were recognized within Operating activities on the Consolidated Statements of Cash Flows.

Long-term investments

For equity investments, the Company initially records equity investments at cost then adjusts the carrying value of such equity investments through earnings when there is an observable transaction involving the same or a similar investment with the same issuer or upon an impairment.

For debt investments, such as convertible notes, the Company classifies them as available-for-sale debt instruments and recognizes the investments at fair value in Other long-term assets on the Consolidated Balance Sheets.

Unrealized changes in the fair value of the convertible note are recognized in Other comprehensive income (loss) on the Consolidated Statements of Comprehensive Income (Loss).

Interest income is recognized within Interest income (expense) on the Consolidated Statements of Operations.

Revenue recognition

Bitcoin Mining

The Company has entered into digital asset mining pools by executing contracts with mining pool operators to provide computing power to the mining pool.

The Company’s enforceable right to compensation begins only when, and lasts as long as, the Company provides computing power to the mining pool operator and is created as power is provided over time.

The only consideration due to the Company relates to the provision of computing power.

The contracts are terminable at any time by the Company, at no cost to the Company, or by the pool operator, under certain conditions specified in the contract.

Providing computing power in digital asset transaction verification services is an output of the Company’s ordinary activities.

Providing such computing power is the only performance obligation in the Company’s contracts with mining pool operators.

The transaction consideration the Company receives, if any, is noncash consideration in the form of Bitcoin.

Changes in the fair value of the noncash consideration due to form of the consideration (changes in the market price of Bitcoin) are not included in the transaction price and therefore, are not included in revenue.

Certain mining pool operators charge fees to cover the costs of maintaining the pool, which are deducted from amounts we may otherwise earn and are treated as a reduction to the consideration

The Company participates in digital asset mining pools by executing agreements with mining pool operators for the provision of hash calculation services to the mining pool.

Currently, the Company only participates in a Full-Pay-Per-Share (“FPPS”) mining pool.

The Company decides when to provide hash calculation services under the agreements and the Company’s enforceable right to compensation begins only when, and lasts as long as, the Company provides hash calculation services to the mining pool operator and is created as power is provided over time.

The only consideration due to the Company relates to the provision of hash calculation services.

Such agreements are freely terminable at any time by the Company or by the pool operator, without penalty to either party.

Providing hash calculation services in digital asset transaction verification services is an output of the Company’s ordinary activities and is the only performance obligation in the agreements with mining pool operators.

The transaction consideration received, if any, is noncash consideration in the form of Bitcoin.

Changes in the fair value of the noncash consideration after contract inception due to the form of the consideration (changes in the market price of Bitcoin) are not included in the transaction price and, therefore, are not included in revenue.

Certain mining pool operators charge fees to cover the costs of maintaining the pool.

These fees are deducted from amounts we may otherwise earn and are treated as a reduction to the

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

Fees fluctuate and historically have been no more than approximately 2% per reward earned, on average.

The terms of the agreements provide that neither party can dispute settlement terms after approximately thirty-five days following settlement.

In exchange for providing computing power, the Company is entitled to either:

● a Full-Pay-Per-Share payout of Bitcoin based on a contractual formula, which primarily calculates the hash rate provided by the Company to the mining pool as a percentage of total network hash rate, and other inputs.

consideration received.

Fees fluctuate and historically have averaged no more than approximately 2 % per reward earned.

Under the agreements neither party can dispute settlement terms after approximately 35 days following settlement.

In exchange for providing hash calculation services, the Company is entitled to a FPPS payout of Bitcoin based on a contractual formula, which primarily calculates the hash rate provided to the mining pool as a percentage of total network hash rate, and other inputs.

The Company is entitled to consideration even if a block is not successfully placed by the mining pool operator.

The contract is in effect until terminated by either party.

● The consideration is all variable.

Because it is probable that a significant reversal of cumulative revenue will not occur and the Company is able to calculate the payout based on the contractual formula, noncash consideration is estimated and recognized based on the spot price of Bitcoin determined using the Company’s principal market for Bitcoin at the inception of each contract.

Noncash consideration is measured at fair value at contract inception.

Fair value of the crypto asset consideration is determined using the quoted price on the Company’s principal market for Bitcoin at the beginning of the contract period at the single bitcoin level (one bitcoin).

This amount is recognized in revenue as hash rate is provided.

● The Company transitioned completely to this mining pool type in December 2022 and utilized it for the year ended December 31, 2023.

● a fractional share of the fixed Bitcoin award the mining pool operator receives (less digital asset transaction fees to the mining pool operator which are immaterial and are recorded as a deduction from revenue) for successfully adding a block to the blockchain based on a proportion of the Company’s “scoring hash rate” to the pool’s “scoring hash rate” where the scoring hash rate as defined by the pool is the exponential moving average of the hash power contributed by the Company or by all pool members combined.

The Company’s fractional share of the Bitcoin reward is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm.

● Because the consideration to which the Company expects to be entitled for providing computing power is entirely variable, as well as being noncash consideration, the Company assesses the estimated amount of the variable noncash consideration to which it expects to be entitled for providing computing power at contract inception and subsequently, to determine when and to what extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur once the uncertainty associated with the variable consideration is subsequently resolved (the “constraint”).

Only when significant revenue reversal is concluded probable of not occurring can estimated variable consideration be included in revenue.

Based on evaluation of likelihood and magnitude of a reversal in applying the constraint, the estimated variable noncash consideration is constrained from inclusion in revenue until the end of the contract term, when the underlying uncertainties have been resolved and number of Bitcoin to which the Company is entitled becomes known.

● Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the mining pool operator successfully places a block (by being the first to solve an algorithm) and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized based on the spot rate of Bitcoin determined using the Company’s principal market for Bitcoin at the time of receipt.

● The Company utilized this mining pool type during the year ended December 31, 2021 and throughout 2022, until mid-December 2022.

Bitcoin network block subsidies are based on the total amount of block subsidies that are expected to be generated on the Bitcoin network as a whole during the 24-hour period beginning at 0:00:00 UTC daily (i.e., the “measurement period”), while network transaction fees are based on the total amount of transaction fees and block rewards that are actually generated on the blockchain network as a whole during the measurement period.

The Company is also entitled to a fractional share of the Bitcoin award and transaction fees from the mining pool operator as determined based on the hash rate provided by the Company to the mining pool as a percentage of the total expected Bitcoin network hash rate based on the current network difficulty.

The Company is entitled to its relative share of consideration at the end of each measurement period, even if a block is not successfully placed by the mining pool.

For accounting purposes, the agreement by and between the Company and the mining pool operator has a duration of less than 24 hours as a result of the agreement being continually renewed at the beginning of each measurement period.

However, the continual renewal of the agreement does not represent a material right requiring separate performance obligations, as the FPPS formula remains the same upon each renewal.

Consideration is all variable.

Revenue is recognized on the same day that control of the contracted service transfers to the mining pool operator, which is the same day as contract inception.

As it is probable that a significant reversal of cumulative revenue will not occur and we are able to calculate the payout based on the contractual formula, revenue is estimated and recognized based on the spot price of Bitcoin determined using the Company’s Principal Market at the beginning of each measurement period, which the Company considers to be 0:00:00 UTC on the date of contract inception.

Noncash consideration is measured at fair value at agreement inception.

The fair value of the crypto asset consideration is determined using the quoted price per the Principal Market at the beginning of each measurement period at the single Bitcoin level (one Bitcoin).

There is no significant financing component in these transactions, due to the performance obligations and settlement of the transactions being on a daily basis.

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

Data Center Hosting

In general, we provide power for our data center customers on a variable (sub-metered) basis.

A customer pays us variable monthly fees for the specific amount of power utilized at rates specified in each contract, subject to certain minimums.

We recognize variable power revenue each month as the uncertainty related to the consideration is resolved, power is provided to our customers, and our customers utilize the power (the customer simultaneously receives and consumes the benefits of the Company’s performance).

We have determined that our contracts contain a series of performance obligations which qualify to be recognized under a practical expedient available known as the “right to invoice.” This determination allows variable consideration in such contracts to be allocated to and recognized in the period to which the consideration relates, which is typically the period in which it is billed, rather than requiring estimation of variable consideration at the inception of the contract.

We have also determined that the contracts contain a significant financing component because the timing of revenue recognition differs from the timing of invoicing by a period, exceeding one year.

The Company also installs certain hosted customers’ mining equipment and bills the customer at a fixed fee per piece of equipment or at an hourly rate.

Revenue is recognized upon completion of the installation.

We generate engineering and construction services revenue from the fabrication and deployment of immersion cooling technology for Bitcoin mining customers, for which we bill the customer at a fixed monthly fee or at an hourly rate.

For the construction of customer-owned equipment, revenue is recognized upon completion of each phase of the construction project, as defined in each contract.

For the construction of assets owned by us but paid for and used by the customer during the term of their data center hosting contract, revenue is recognized on a straight-line basis over the remaining life of the contract.

Due to the long-term nature of the hosting contracts, there is a significant financing component in transactions where the customer paid for the construction of assets owned by the Company.

Maintenance services include cleaning, cabling, and other services to maintain customer equipment.

We bill the customer at a fixed monthly fee or at an hourly rate.

Revenue is recognized as these services are provided.

Deferred revenue is primarily from advance payments received and is recognized on a straight-line basis over the remaining life of the contract or upon completion of the installation of the customers’ equipment.

Our primary data center hosting contracts contain Service Level Agreement clauses, which guarantee a certain percentage of time that power will be available to our customers.

In the rare case that we may incur penalties under these clauses, we recognize the payment as variable consideration and a reduction of the transaction price and, therefore, of revenue, when not in exchange for a good or service from the customer.

Substantially all revenue is derived from the sale of custom products built to customers’ specifications under fixed-price contracts with one identified performance obligation.

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As the cost-to-cost method is driven by incurred cost, the Company calculates the percentage of completion by dividing costs incurred to date by the total estimated cost.

The percentage of completion is then multiplied by estimated revenue to determine inception-to-date revenue.

The percentage of completion is then multiplied by the estimated contract amount to determine inception-to-date revenue.

Approved changes to design plans are generally recognized as a cumulative adjustment to the percentage of completion calculation.

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The length of time for the Company to complete a custom product varies but is typically between four to 12 weeks.

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

Customers are typically required to make periodic progress payments to the Company based on contractually agreed-upon milestones.

Invoices are due net, 30 days, and retainage, if any, is generally due 30 days after delivery.

Taxes collected from customers and remitted to governmental authorities are excluded from revenue.

Taxes collected from

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

customers and remitted to governmental authorities are excluded from revenue.

Shipping and handling costs are treated as fulfillment costs and are included in cost of sales.

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Property and equipment

Property and equipment is stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets.

Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets.

Estimated useful lives for leasehold improvements are typically the lesser of the estimated useful life of the asset or the life of the term of the lease.

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We use both qualitative and quantitative analyses in making this determination.

The Company determined that it has three reporting units for goodwill impairment testing purposes, Bitcoin Mining, Data Center Hosting, and Engineering, which is consistent with internal management reporting and management’s oversight of operations.

Our analyses require significant assumptions and judgments, including

The Company determined that it has two reporting units for goodwill impairment testing purposes, Bitcoin Mining and Engineering, which are consistent with internal management reporting and management’s oversight of operations.

Our analyses require significant assumptions and judgments, including assumptions about future economic conditions, revenue growth, and operating margins, among other factors.

Examples of events or changes in circumstances considered in the qualitative analysis, many of which are subjective in nature, include:

a significant negative trend in our industry or overall

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

assumptions about future economic conditions, revenue growth, and operating margins, among other factors.

Example events or changes in circumstances considered in the qualitative analysis, many of which are subjective in nature, include:

a significant negative trend in our industry or overall economic trends, a significant change in how we use the acquired assets, a significant change in our business strategy, a significant decrease in the market value of the asset, a significant change in regulations or in the industry that could affect the value of the asset, and a change in segments.

If it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company performs the quantitative test to identify and measure the amount of goodwill impairment loss.

The Company compares the fair value of the reporting unit with its carrying amount.

economic trends, a significant change in how we use the acquired assets, a significant change in our business strategy, a significant decrease in the market value of the asset, a significant change in regulations or in the industry that could affect the value of the asset, and a change in segments.

If the carrying amount exceeds the fair value, goodwill of the reporting unit is considered impaired and that excess is recognized as a goodwill impairment loss.

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Intangible assets with finite lives are comprised of customer contracts, trademarks, UL Listings, and patents that are amortized on a straight-line basis over their expected useful lives, which is their contractual term or estimated useful life.

Patents costs consisting of filing and legal fees incurred are initially recorded at cost.

Certain patents are in the legal application process and therefore are not currently being amortized.

Patent costs consisting of filing and legal fees incurred are initially recorded at cost.

The Company performs assessments to determine whether finite-lived classification is still appropriate at least annually.

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Accounting for business combinations requires management to make significant estimates and assumptions, especially at the acquisition date, including estimates for intangible assets, contractual obligations assumed, pre-acquisition contingencies, and contingent consideration, where applicable.

Although we believe the assumptions and estimates we have made have been reasonable and appropriate, they are based in part on historical experience and information obtained from management of the acquired companies and are inherently uncertain.

Critical estimates in valuing certain of the intangible assets we have acquired include;

future expected cash flows from customer contracts, discount rates, and estimated market changes in the value of the PPA, which is accounted for as a nonhedged derivative contract.

The fair value assigned to acquired assets and liabilities assumed are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques.

Critical estimates in valuing certain of the intangible assets we have acquired include future expected cash flows from customer contracts, discount rates, and estimated market changes in the value of the Rockdale PPA, which is accounted for as a nonhedged derivative contract.

Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates, or actual results.

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Investment in marketable equity securities

The Company measures its investments in marketable equity securities at fair value at each balance sheet date, with unrealized holding gains and losses recorded in other income (expense), as the shares have a readily determinable fair value since they are publicly traded and have significant average daily volume traded.

For investments in marketable equity securities in which the Company has the ability to exercise significant influence, but not control, over the operating and financial policies of the investee, the Company accounts for its investment using the equity method of accounting.

Determining the ability of an investor to exercise significant influence is not always clear and applying judgment is necessary to assess the status of each investment.

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

The Company has elected to measure its equity method marketable equity securities at fair value at each balance sheet date, with unrealized holding gains and losses recorded in other income (expense), as the shares have a readily determinable fair value since they are publicly traded and have significant average daily volume traded.

Convertible Debt Arrangements

Convertible debt securities contain embedded conversion options that must be first evaluated to determine if bifurcation and separate accounting would be required for the embedded feature.

As a result, the Company is required:

(1) to analyze whether the conversion feature meets the definition of a derivative and is not eligible for an exception from this guidance (otherwise, the conversion feature will be recognized as a derivative) and (2) to analyze whether there is a significant premium associated with the convertible debt instrument (otherwise, the Company will allocate the debt proceeds with the premium being allocated to equity).

If neither condition is met, the entire instrument will be accounted for as debt (i.e., no bifurcation is needed).

The embedded conversion features in the Company’s convertible debt securities are deemed to be indexed to the Company’s common stock and meet the criteria for classification in stockholders’ equity, and therefore derivative accounting does not apply.

Therefore, the Company recognizes its convertible debt securities as long-term debt on its Consolidated Balance Sheets, net of unamortized debt issuance costs.

The associated debt issuance costs are amortized into interest expense on the Consolidated Statements of Operations using the effective interest method over the term of the debt.

The Company determines whether an arrangement contains a lease at the inception of the arrangement.

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Operating segments

Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the CODM in deciding how to allocate resources to an individual segment and in assessing performance.

The Company’s CODM is comprised of several members of its executive management team who use revenue and cost of revenue of its three reporting segments to assess the performance of the business of our reportable operating segments.

Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the chief operating decision maker (“CODM”), which is comprised of several members of its executive management team, including the CEO, Executive Chairman, EVO-CFO, EVP-Head of Corporate Development & Strategy, and COO.

The CODM uses segment gross profit (loss) to assess the performance of, manage the operations of, and allocate capital and operational resources to the Company’s two reportable segments.

Change in Reportable Segments

Previously, the Company operated in three reportable business segments:

Bitcoin Mining, Data Center Hosting, and Engineering.

As of January 1, 2024, the Company has terminated all contracts with its legacy data center hosting customers and made the strategic decision to no longer offer data center hosting services to customers.

Commencing with the three months ended March 31, 2024, the

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

Data Center Hosting Segment no longer met the quantitative requirements as a reportable segment, and the CODM ceased analyzing the performance of the Company’s legacy data center hosting operations.

As such, the Data Center Hosting Segment has been eliminated as a separate reportable segment.

Bitcoin Mining and Engineering are the Company’s two remaining reportable business segments.

Segment Information for more information.

The Company accounts for income taxes under the asset and liability method, in which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards.

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Contract assets consist of costs and estimated earnings in excess of billings on uncompleted engineering contracts.

Deferred revenue relates to upfront payments and consideration received from customers for data center hosting and the upfront license fee generated from our legacy animal health business.

Deferred revenue relates to upfront payments and consideration received from customers for the upfront license fee generated from our legacy animal health business.

Contract liabilities consist of billings in excess of costs and estimated earnings on uncompleted engineering contracts.

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The Company elected the practical expedient to not adjust the transaction price for the existence of a significant financing component if the timing difference between a customer’s payment and our performance is one year or less.

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

Stock-based compensation

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Recently issued accounting pronouncements

The Company continually assesses any new accounting pronouncements to determine their applicability.

When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change to its Consolidated Financial Statements and assures that there are proper controls in place to ascertain that the Company’s Consolidated Financial Statements properly reflect the change.

The Company continually assesses new accounting pronouncements to determine their applicability.

When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of such change to its Consolidated Financial Statements and assures that there are proper controls in place to ascertain that the Company’s Consolidated Financial Statements properly reflect the change.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No.

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early adoption is permitted.

The Company does note expect the updated guidance to have a material impact on its disclosures.

The Company is evaluating the impact the updated guidance will have on its disclosures.

In December 2023, the FASB issued ASU 2023-08, Intangibles - Goodwill and Other - Crypto Assets (Subtopic 350-60):

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Bitcoin meets this criteria.

The amendments require crypto assets meeting the criteria to be recognized at fair value with changes recognized in net income each reporting period.

The amendments require crypto assets meeting the criteria to be recognized at fair value with changes recognized in net income for each reporting period.

Upon adoption, a cumulative-effect adjustment is made to the opening balance of retained earnings as of the beginning of the annual reporting period of adoption.

ASU 2023-08 is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years.

ASU 2023-08 is effective for fiscal years beginning after December

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

15, 2024, including interim periods within those fiscal years.

Early adoption is permitted.

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As a result of the adoption, the Company recorded a cumulative effect adjustment to its Accumulated deficit balance of approximately $ 6.0 million as of January 1, 2023, as a result of recognizing its Bitcoin held as of January 1, 2023, at fair value.

Impacts of Adoption of ASU 2023-08 for a summary of the impacts on the Company’s interim Condensed Consolidated Statements of Operations provided during the year ended December 31, 2023.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

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ASU 2023-07 is effective for the Company for annual periods beginning after December 31, 2023.

The Company adopted ASU 2023-07 for the year ended December 31, 2024.

As a result of the adoption, the Company expanded its disclosures in Note 20.

Segment Information , to present significant expenses that are included within cost of revenue, by reportable segment, which are presented to the CODM.

In December 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”).

ASU 2024-03 requires, in the notes to the financial statements, disclosures of specified information about certain costs and expenses specified in the updated guidance.

ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The updated guidance is not expected to have a material impact on the Company’s disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which was codified with its subsequent amendments as Accounting Standards Codification (“ASC”) Topic 326, Financial Instruments – Credit Losses (“ASC 326”).

ASC 326 seeks to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments, including trade receivables, and other commitments to extend credit held by a reporting entity at each reporting date.

The amendments require an entity to replace the incurred loss impairment methodology in other GAAP with a methodology that reflects current expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

The updated guidance is effective for the Company for annual reporting periods beginning after December 15, 2022, and early adoption is permitted.

In connection with the Company’s acquisitions during the year ended December 31, 2021, the Company adopted this standard on January 1, 2021, and the adoption did not have a material impact on the financial statements and related disclosures.

The Company is evaluating the impact the updated guidance will have on its disclosures.

E4A Solutions Acquisition

On December 16, 2024, the Company acquired 100 % of the equity interests of E4A Solutions, a Texas-based electrical engineering solutions company, for total consideration of approximately $ 54.4 million, which was comprised of $ 51.8 million paid for using the Company’s existing cash and a contingent purchase price payable to the sellers with an estimated fair value of $ 2.6 million.

Under the contingent purchase price payable, the sellers are eligible to earn potential earn-out targets based on E4A Solutions’ Adjusted EBITDA during the two years ending December 31, 2026, payable in cash or Riot common stock at the Company’s discretion.

The potential earnout is calculated as 2.65 times the amount the average adjusted EBITDA exceeds the Earnout threshold, as defined in the purchase agreement.

E4A Solutions is a provider of electrical engineering services to a diverse customer base of energy developers and data center operators.

This acquisition adds to Riot’s vertically integrated strategy by adding engineering expertise to service its own existing and future electrical infrastructure as well as provide solutions and services to the rapidly growing market for electrical infrastructure.

The acquisition was accounted for as an acquisition of a business using the acquisition method of accounting, which requires recognition of assets acquired and liabilities assumed at their respective fair values on the date of acquisition.

As of December 31, 2024, the Company has completed a preliminary allocation of the purchase consideration.

Therefore, the allocation of the purchase price to assets acquired and liabilities assumed is based on provisional estimates and is subject to continuing management analysis, with assistance from third party valuation advisors.

The Company expects to finalize the valuation of these assets and liabilities, and consideration transferred, as soon as practicable, but not later than one year from the acquisition date.

Any changes to the preliminary estimates of the fair value of the assets acquired and liabilities assumed will be recorded as adjustments to those assets and liabilities and residual amounts will be allocated to goodwill.

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

Acquisition of Corsicana Facility land site

During the year ended December 31, 2022, the Company initiated a large-scale development to expand its Bitcoin mining and data center hosting capabilities with the acquisition of a 265 -acre site in Navarro County, Texas, strategically located next to the Navarro switch, for $ 10.1 million, where its anticipated one -gigawatt Bitcoin mining and data center facility complex, the Corsicana Facility, is under development.

Property and Equipment , for more information about the Corsicana Facility.

Acquisition of ESS Metron

On December 1, 2021, the Company acquired 100 % of the equity interests of ESS Metron.

ESS Metron is a power distribution and management systems manufacturing, design and engineering firm based in Denver, Colorado, operating from facilities totaling approximately 121,000 square feet of manufacturing, office, and warehouse space in the metropolitan Denver area.

These facilities are subject to long-term lease agreements.

The acquisition of ESS Metron established the Company’s Engineering business and enhanced the Company’s ability to scale its Bitcoin Mining and Data Center Hosting operations.

Total consideration transferred of $ 56.9 million was comprised of a cash payment of approximately $ 30.1 million, net of $ 3.7 million of seller transaction costs, and 715,413 shares of the Company’s common stock with an acquisition date fair value of approximately $ 26.7 million.

Of the 715,413 shares of common stock, 645,248 were issued upon closing and the remaining 70,165 were withheld as security for the sellers’ indemnification obligations for 18 months following the transaction closing date.

During the year ended December 31, 2023, the indemnification period ended and all 70,165 of the withheld shares were issued to the ESS Metron sellers.

Other than an insignificant post-closing settlement of preliminary net working capital, there were no adjustments to the provisional purchase price and fair value estimates.

The Company finalized the valuation of the acquired assets and liabilities, and consideration transferred, in December 2022.

The following table presents the allocation of the purchase consideration:

The following table presents the preliminary allocation of the purchase consideration:

Cash and cash equivalents

Accounts receivable

Prepaid and other current assets

Inventory and work-in-progress

Costs and estimated earnings in excess of billings

Prepaid expenses and other current assets

Contract assets

Property and equipment

Intangible assets

Right of use asset

Operating lease right-of-use asset

Finite-lived intangible assets:

Customer contracts

Other long-term assets

Accounts payable

Deferred revenue, current portion

Accrued expenses

Billings in excess of costs and estimated earnings

Operating lease liabilities

Warranty liability

Operating lease liability, current portion

Operating lease liability, less current portion

Other long-term liabilities

Total identifiable assets and liabilities acquired

Total purchase consideration

Goodwill was attributable to the assembled workforce of experienced personnel at ESS Metron and synergies expected to be achieved from the combined operations of Riot and ESS Metron.

The goodwill recognized is expected to be deductible for tax purposes.

We assigned the goodwill to our Engineering segment.

The Company determined that the 70,165 shares withheld met the conditions necessary to be classified as equity because the consideration was indexed to the Company’s own equity, there were no exercise contingencies based on an observable market not based on its stock or operations, settlement was consistent with a fixed-for-fixed equity instrument, the agreement contained an explicit number of shares and there were no cash payment provisions.

Additionally, based on these assessments, the Company recorded the shares at fair value on the acquisition date, similar to escrowed shares or securities and accounted for them in total consideration transferred.

This consideration related to representations and warranties of circumstances that existed as of the

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

acquisition date and which the Company believed to be accurate, with future issuance of the share consideration deemed likely to occur.

The fair values of cash and cash equivalents, accounts receivable, prepaid and other current assets, inventory and work-in-progress, accounts payable, accrued expenses, and warranty liability were determined to be the carrying values due to the short-term nature of the assets and liabilities.

The fair value of the acquired trade receivables was determined to be the net realizable amount of the closing date book value of $ 9.9 million.

Contract assets consisted of costs and estimated earnings in excess of billings on uncompleted contracts and unearned revenue consists of billings in excess of costs and estimated earnings on uncompleted contracts.

The fair values of these assets and liabilities were determined to be the carrying values due to the short-term nature of the underlying project contracts incurring costs and the associated customer billings.

The fair value of property and equipment was estimated by applying the cost approach.

The cost approach uses the replacement or reproduction cost as an indicator of fair value.

The assumptions of the cost approach include replacement cost new, projected capital expenditures, and physical deterioration factors including economic useful life, remaining useful life, age, and effective age.

Intangible assets reflect the identifiable intangible assets acquired, consisting of customer relationships, a trademark and UL Listings.

Customer relationships are assigned an estimated useful life of approximately 10 years based on the low attrition of the customer base, in part due to the customized nature of the Company’s products.

Fair value of the customer relationships was estimated by applying an income approach – multi period excess earnings method.

The fair value was determined by calculating the present value of estimated future operating cash flows generated from the existing customers less costs to realize the revenue.

The Company applied a discount rate of 21 % , which reflected the nature of the assets as they relate to the risk and uncertainty of the estimated future operating cash flows.

Other significant assumptions used to estimate the fair value of the customer contracts included an assumed income tax rate of 25 % .

Although ESS Metron had been in business for over 60 years, the trademark was assigned a 10-year life due to the Company obtaining more data center customers where the longevity of the projects may be shorter than have been historically.

Fair value of the trademark was estimated by applying the relief from royalty rate method.

The fair value was determined by applying an estimated royalty rate to revenue, measuring the value the Company would pay in royalties to a market participant if it did not own the trademark and had to license it from a third party.

UL Listings were assigned a 12-year life.

A UL Listing means that independent safety organization UL, LLC has tested representative samples of a product and determined that the product meets specific, defined requirements.

These requirements are often based on UL’s published and nationally recognized Standards for Safety.

Although the UL Listing certifications do not expire, due to technological improvements in similar products, particularly in the data center industry, a 12-year life was assumed.

Fair value of the UL Listings was estimated by applying an estimated developer’s profit margin of approximately 4.5 % to estimated costs to be incurred over an estimated six months to re-acquire the UL Listings.

The Company applied a discount rate of 15 % , which reflected the short time necessary to re-acquire the asset.

The right of use asset and operating lease liabilities consisted of two operating leases of the manufacturing facility in Denver, Colorado.

These leases had combined annual payments of approximately $ 0.9 million and remaining lease terms of approximately 3.5 and 10 years as of acquisition.

The operating results of ESS Metron have been included in the Company’s Consolidated Statements of Operations since the acquisition date.

The Company recognized $ 2.1 million of acquisition-related costs related to this acquisition that were expensed as incurred.

From the acquisition date through December 31, 2021, ESS Metron’s total revenue and net income was approximately $ 4.2 million and $ 0.2 million, respectively.

Acquisition of Whinstone

On May 26, 2021, the Company acquired 100 % of the equity interests of Whinstone US, Inc., the owner and operator of the Rockdale Facility.

The assets and operations of Whinstone increased the scale and scope of Riot’s operations, which is a foundational element in the Company’s strategy to become an industry-leading Bitcoin mining platform on a global scale.

Total consideration transferred of $ 460.4 million was comprised of a $ 53.0 million cash payment (including $ 38.1 million of debt payoff and certain seller transaction costs), 11.8 million shares of the Company’s common stock with an acquisition date fair value

The fair values of cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, other long-term assets, accounts payable, contract liabilities, accrued expenses, and other long-term liabilities were determined to be the carrying values due to the immaterial and/or short-term nature of the assets and liabilities.

The finite-lived intangible assets consist of a trademark and customer relationships.

The fair value of the trademark was estimated using the relief from royalty rate method, which estimated future royalty charges attributable to the trademark.

The fair value of the customer relationships was estimated using the income approach, which estimated future revenues and costs of the existing customer relationships.

The estimated fair values of the trademark and customer relationship utilized a discount rate of 13.4 % .

The right of use asset and operating lease liabilities consisted of an operating lease of office and commercial space in Houston, Texas.

The lease has annual payments of approximately $ 0.4 million and a remaining lease term of approximately two years as of acquisition.

Goodwill was attributable to the assembled workforce of experienced personnel at E4A Solutions and synergies expected to be achieved from the combined operations of Riot and E4A Solutions.

The goodwill recognized is not expected to be deductible for tax purposes.

We assigned the goodwill to our Engineering reportable segment.

The operating results of E4A Solutions have been included in the Company’s Consolidated Statements of Operations since the acquisition date.

Through December 31, 2024, the Company recognized approximately $ 2.7 million of acquisition-related costs related to this acquisition that were expensed as incurred.

From the acquisition date through December 31, 2024, E4A Solution’s total revenue and net income was approximately $ 0.8 million and less than $ 0.1 million, respectively.

Block Mining Acquisition

On July 23, 2024, the Company acquired 100 % of the equity interests of Block Mining, for total consideration of approximately $ 113.6 million, which was comprised of $ 13.5 million in cash (adjusted for net working capital acquired and other items, excluding the payoff of debt of $ 5.0 million, which was accounted for as a transaction separate from the acquisition) from the Company’s existing cash, 7.2 million shares of Riot common stock valued at approximately $ 74.0 million, and a contingent purchase price payable to the sellers with an estimated fair value of $ 26.1 million.

Under the contingent purchase price payable, the sellers are eligible to earn up to $ 32.5 million in potential earn-out targets if certain milestones are reached by December 31, 2025.

The Block Mining Acquisition immediately increased Riot’s hash rate, expanded Riot’s footprint geographically, and provided exposure to additional energy markets outside of ERCOT , including the Paducah Power Systems, Tennessee Valley Authority (TVA)

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

of approximately $ 326.2 million, an $ 83.0 million contingent purchase price payable to the Seller (see Note 17.

Commitments and Contingencies ), and other net items of $( 1.7 million).

There were no adjustments to the provisional purchase price and fair value estimates.

The Company finalized the valuation of these assets and liabilities, and consideration transferred, in May 2022.

The following table presents the allocation of the purchase consideration:

and Big Rivers Electric Corporation in the MISO region .

Block Mining is a vertically-integrated Bitcoin miner consisting of two operational sites, both in Kentucky, which consist of existing operational Bitcoin mining capacity, with the potential to expand.

Additionally, Block Mining owns a separate greenfield expansion opportunity in Kentucky, adjacent to an existing substation, presenting the opportunity for further expansion.

Block Mining is a capital efficient developer and operator of Bitcoin mining facilities with an experienced management team that will add to Riot’s ability to execute on its vertically-integrated strategy.

As of December 31, 2024, the Company has completed a preliminary allocation of the purchase consideration.

The Company expects to finalize the valuation of these assets and liabilities, and consideration transferred, as soon as practicable, but not later than one year from the acquisition date.

The following table presents the preliminary allocation of the purchase consideration:

Cash and cash equivalents

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Property and equipment

Derivative asset

Right of use asset

Security deposits

Future power credits

Operating lease right-of-use asset

Accounts payable

Accrued expenses

Deferred revenue and customer deposits

Operating lease liabilities

Operating lease liability, current portion

Operating lease liability, less current portion

Long-term debt

Total identifiable assets and liabilities acquired

Total purchase consideration

Goodwill represented the excess of total purchase consideration over the fair value of the underlying assets acquired and liabilities assumed.

Goodwill was attributable to the assembled workforce of experienced personnel at Whinstone and synergies expected to be achieved from the combined operations of Riot and Whinstone.

None of the goodwill recognized is expected to be deductible for tax purposes.

We assigned the goodwill to our Data Center Hosting segment.

As part of the share purchase agreement Riot entered into with the seller in connection with the Whinstone Acquisition, Riot was obligated to the seller to pay up to a maximum amount of $ 86.0 million, net of income taxes, as defined under the stock purchase agreement (undiscounted) of additional consideration if certain power credits were received or realized by Whinstone.

Those power credits arose from the February 2021 weather event.

The purchase price included the estimated fair value of the contingent consideration at the Whinstone Acquisition Date of approximately $ 83.0 million.

The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement.

These assumptions for the power credits whose utilization by Whinstone is contingent on ERCOT’s future power billings, included the timing of receipt or realization of the power credits, estimates of future power consumption, the discount rate and credit risk of the Company and the owing party (ERCOT).

The fair value of the acquired trade receivables was determined to be the net realizable amount of the closing date book value of $ 1.1 million.

The fair value of the acquired long-term other asset of approximately $ 83.0 million related to the estimated amount of power credits due Whinstone from the February 2021 weather event.

We estimated the fair value of the power credits to be the same as that of the contingent consideration arrangement because the Company is required to remit to the seller in cash as additional consideration the amount of such power credits received or realized by Whinstone.

See discussion above on contingent consideration.

The derivative asset acquired pertained to the PPA.

The fair value of the contract of approximately $ 14.0 million was estimated by applying a discounted debt-free cash flow approach.

This fair value measurement was based on significant inputs not observable in the market and thus represented a Level 3 measurement as defined in ASC 820.

The significant assumptions used to estimate fair value of the derivative contract included a discount rate of 21 % , 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 fair value of property and equipment was estimated by applying the cost approach.

The cost approach uses the replacement or reproduction cost as an indicator of fair value.

The assumptions of the cost approach included replacement costs, projected capital expenditures, and physical deterioration factors including economic useful life, remaining useful life, age, and effective age.

The fair values of cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, and accrued expenses were determined to be the carrying values due to the short-term nature of the assets and liabilities.

The fair value of property and equipment was estimated by applying the cost approach, which uses the replacement cost as an indicator of fair value.

The assumptions of the cost approach include replacement cost new and physical deterioration factors including remaining life and effective age.

The replacement cost new was based on a price per terahash consistent with prices the Company pays for new Bitcoin miners and an effective age of three years, consistent with the Company’s current estimated useful life of Bitcoin miners.

The right of use asset and operating lease liabilities consisted of an operating lease of a data center in Calvert City, Kentucky.

The lease has annual payments of approximately $ 1.4 million and a remaining lease term of approximately 3.0 years as of acquisition.

The assumed debt consisted of a $ 5.0 million secured loan and a $ 5.7 million note payable.

The secured loan was paid off on the date of acquisition.

The note payable carries a fixed rate of 8.81 % , and matures in December 2035, with annual principal and accrued interest payments beginning on December 31, 2024.

The fair value of the debt at acquisition of $ 5.7 million was determined to equal its carrying value due at acquisition, as the interest rate is reasonably consistent with rates the Company would expect to incur for similar debt instruments.

Goodwill was attributable to the assembled workforce of experienced personnel at Block Mining and synergies expected to be achieved from the combined operations of Riot and Block Mining.

The goodwill recognized is not expected to be deductible for tax purposes.

We assigned the goodwill to our Bitcoin Mining reportable segment.

The operating results of Block Mining have been included in the Company’s Consolidated Statements of Operations since the acquisition date.

Through December 31, 2024, the Company recognized $ 2.8 million of acquisition-related costs related to this acquisition that were expensed as incurred.

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Notes to Consolidated Financial Statements

The operating results of Whinstone have been included in the Company’s Consolidated Statements of Operations since the acquisition date.

The Company recognized $ 19.1 million of acquisition-related costs that were expensed as incurred.

The financial results of the acquisition have been included in the Company’s Consolidated Financial Statements from the closing of the acquisition.

From the acquisition date through December 31, 2021, Whinstone’s total revenue and net income was approximately $ 24.5 million and $ 1.2 million, respectively.

From the acquisition date through December 31, 2024, Block Mining’s total revenue and net loss were approximately $ 13.3 million and $ 20.9 million, respectively.

Pro-forma financial information

The following unaudited pro forma financial information summarizes the combined results of operations for Riot, Block Mining, and E4A Solutions, as if the companies were combined as of January 1, 2023.

The unaudited pro forma information does not reflect the effect of costs or synergies that may result from the acquisition and excludes acquisition-related costs of $ 5.5 million incurred during the year ended December 31, 2024.

This unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of future operating results of the combined company.

This information should not be used as a predictive measure of the Company’s future financial position, results of operations, or liquidity.

Net income (loss)

Acquisition of Corsicana Facility land site

During the year ended December 31, 2022, the Company initiated a large-scale development to expand its Bitcoin mining capabilities with the acquisition of a 265 -acre site in Navarro County, Texas, strategically located next to the Navarro switch, for $ 10.1 million.

Property and Equipment , for more information about the Corsicana Facility.

Revenue from Contracts with Customers

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As of December 31, 2024 and 2023, contract assets were $ 6.5 million and $ 15.4 million, respectively.

Contract liabilities primarily relate to upfront payments and consideration received for Data Center Hosting services and Deferred revenue relates to uncompleted Engineering contracts.

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

Years Ended December 31,

Beginning balance

Revenue recognized

Other changes in contract liabilities

Ending balance

Contract liabilities primarily relate to upfront payments and consideration received from a legacy data center hosting customer and uncompleted Engineering contracts.

As of December 31, 2024 and 2023, contract liabilities and deferred revenue were $ 26.1 million and $ 22.3 million, respectively.

During the years ended December 31, 2024 and 2023, $ 6.1 million and $ 11.2 million, respectively, of the beginning balance of contract liabilities and deferred revenue was recognized as revenue.

During the years ended December 31, 2024 and 2023, $3.5 million and $0.7 million, respectively, was recognized as revenue as a result of satisfying performance obligations in previous periods.

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.

Data Center Hosting

Legacy data center hosting contract

Total contract liabilities

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

Balance as of January 1, 2022

Balance as of December 31, 2023

Revenue recognized from Bitcoin mined

Change in Bitcoin receivable

Acquisition of Bitcoin

Proceeds from sale of Bitcoin

Exchange of Bitcoin for employee compensation

Realized gain on sale/exchange of Bitcoin

Impairment of Bitcoin

Change in fair value of Bitcoin

Balance as of December 31, 2024

Carrying value of Bitcoin as of December 31, 2024 (a)

Realized gains on the sale or exchange of Bitcoin for the year ended December 31, 2024 (b)

Balance as of December 31, 2022

Cumulative effect upon adoption of ASU 2023-08

Revenue recognized from Bitcoin mined

Bitcoin receivable

Change in Bitcoin receivable

Proceeds from sale of Bitcoin

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Carrying value of Bitcoin as of December 31, 2023 (a)

Realized gains on the sale of Bitcoin for the year ended December 31, 2023 (b)

(a) The carrying value of Bitcoin is equal to the post-impairment value of all Bitcoin held as of the adoption of ASU 2023-08 on January 1, 2023, and, for Bitcoin produced subsequent to the adoption ASU 2023-08, the initial value of the Bitcoin as determined for revenue recognition purposes.

(b) Bitcoin is sold on a FIFO basis.

During the year ended December 31, 2023, gains were recognized on all sales of Bitcoin and are included in Change in fair value of Bitcoin on the Consolidated Statements of Operations.

Realized gains on the sale or exchange of Bitcoin for the year ended December 31, 2023 (b)

(a) The carrying value of Bitcoin is equal to the post-impairment value of all Bitcoin held as of the adoption of ASU 2023-08 on January 1, 2023;

for Bitcoin produced subsequent to the adoption ASU 2023-08, the initial value of the Bitcoin as determined for revenue recognition purposes;

and, for Bitcoin acquired, the acquisition value.

(b) Bitcoin is sold on a first in, first out (FIFO) basis.

For all periods presented, gains were recognized on all sales of Bitcoin and exchanges of Bitcoin for employee compensation and are included in Change in fair value of Bitcoin on the Consolidated Statements of Operations.

All additions of Bitcoin were the result of Bitcoin generated by the Company’s Bitcoin Mining operations (see Note 4.

Revenue from Contracts with Customers ).

Revenue from Contracts with Customers ) and acquisitions on the open market.

All dispositions of Bitcoin were the result of sales on the open market to fund Company operations and for compensation for certain employees.

Equity method investment - marketable securities

During the year ended December 31, 2024, the Company acquired approximately 90.1 million common shares of Bitfarms Ltd.

(“Bitfarms”) on the open market for approximately $ 203.8 million.

As of December 31, 2024, the Company’s investment in Bitfarms was equal to approximately 19.9 % of all outstanding Bitfarms common stock.

In September 2024, the Company and Bitfarms entered into a settlement agreement, under which the Company intends to review its investment in Bitfarms on a continuing basis and, subject to the terms of the settlement agreement, depending upon various factors, including without limitation, any discussion between the Company, Bitfarms and/or the Board of Bitfarms and Bitfarms’ advisors regarding, among other things, Bitfarms’ financial position and strategic direction, overall market conditions, other investment opportunities available to the Company, and the availability of securities of Bitfarms at prices that would make the purchase or sale of such securities desirable, the Company may (i) increase or decrease its position in Bitfarms through, among other things, the purchase or sale of securities of Bitfarms, including through transactions involving its common shares and/or other equity, debt,

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

notes, other securities, or derivative or other instruments that are based upon or relate to the value of securities of Bitfarms in the open market or otherwise, (ii) enter into transactions that increase or hedge its economic exposure to its investment without affecting its beneficial ownership of Bitfarms common stock or (iii) consider or propose other actions, including submitting a revised proposal to acquire Bitfarms.

On September 23, 2024, Bitfarms appointed an independent director to its board of directors that the Company proposed to be nominated and supported.

As a result, for accounting purposes, the Company determined it obtained the ability to exercise significant influence over its investment.

Therefore, the Company began accounting for its investment under the equity method of accounting and elected to account for it at fair value.

There have been no intra-entity transactions, and therefore, no intra-entity profits or losses.

Unrealized gains and losses are recognized in Other income (expense) on the Consolidated Statements of Operations.

The fair value measurement of the Company’s investment in Bitfarms is based on quoted prices in an active market and valued at the closing price reported at the end of each period and thus represents a Level 1 measurement on the fair value hierarchy.

The following table presents information about the equity method investment - marketable securities (“marketable securities):

Investment, at cost

Unrealized losses

Fair value as of December 31, 2024

Convertible note

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Interest income is recognized within Interest income (expense) on the Consolidated Statements of Operations.

The fair value measurement of the convertible note is based on significant inputs not observable in the market and thus represents a Level 3 measurement.

The significant assumptions used to estimate fair value of the convertible note included a discount rate of 12.3 % , which reflected the issuance date spread premium over the selected yield for the remaining time to maturity.

The issuance date discount rate of 14.0 % reflected an estimated required return for mezzanine financing after taking into consideration the principal of the convertible note and the investee’s early stage of development.

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

The fair value measurement of the convertible note is based on significant inputs not observable in the market and thus represents a Level 3 measurement on the fair value hierarchy.

The significant assumptions used to estimate fair value of the convertible note as of December 31, 2024, primarily consisted of a discount rate of 12.4 % , which reflected the issuance date spread premium over the selected yield for the remaining time to maturity.

The following table presents information about the convertible note:

Fair value as of December 31, 2023

Accrued interest

8 unchanged sentences

In September 2017, and February 2018, the Company acquired a minority interest for $ 9.4 million in Coinsquare Ltd., a Canadian cryptocurrency exchange (“Coinsquare”), which operates a digital cryptocurrency exchange platform in Canada.

The investment resulted in an ownership in Coinsquare by the Company of approximately 11.7 % ownership in Coinsquare on a fully diluted basis.

The Company elected to account for the investment using the measurement alternative as the equity securities are without a readily determinable fair value and do not give the Company significant influence over Coinsquare.

The investment resulted in an approximately 11.7 % ownership in Coinsquare by the Company on a fully diluted basis.

The Company elected to account for the investment using the measurement alternative as the equity securities are without a readily determinable fair value

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

and do not give the Company significant influence over Coinsquare.

Per the measurement alternative, the investment is recorded at cost, less any impairment, plus or minus changes resulting from observable price changes.

During June 2020, the Company became aware of allegations brought by the Ontario Securities Commission (the “OSC”) that Coinsquare and certain of its executives and directors engaged in systematic “wash trading” of cryptocurrencies on its Coinsquare market to manipulate the market’s trading volume during 2018 and 2019.

On July 21, 2020, a hearing panel of the OSC entered an order (the “Order”) approving the settlement agreement between OSC, Coinsquare, and certain of its executives and directors (the “Settlement Agreement”), in which they admitted to breaches of Ontario securities laws and/or conduct contrary to the public interest including, market manipulation through reporting inflated trading volumes on its Coinsquare Market, misleading its clients and investors about these trading volumes, and taking reprisal against an internal whistleblower who brought this conduct to the attention of the named executives and directors.

The Order requires certain oversight and governance procedures and to prohibit the named executives and directors from engaging in certain activities with respect to Coinsquare;

additionally, the named executives and directors were required to resign from Coinsquare and Coinsquare and the named executives and directors were required to pay penalties and costs totaling approximately CAD $ 2.2 million.

The Company thereupon determined there were indicators that would cause a 100 % impairment of the Coinsquare investment and observed price changes and recorded an impairment expense of $ 9.4 million for its investment in Coinsquare during the year ended December 31, 2020.

During the year ended December 31, 2021, under agreements between Coinsquare, Coinsquare’s shareholders (including Riot) and Mogo Inc.

MOGO), a digital payments and financial technology company (“Mogo”), Riot sold all 3.4 million common shares of Coinsquare in exchange for approximately 3.2 million common shares of Mogo and approximately $ 1.8 million in cash.

During the year ended December 31, 2021, the Company recorded a gain on sale/exchange of long-term investments of $ 26.3 million for the sale of its shares of Coinsquare.

Concurrently, the Company recorded the fair value of the Mogo shares received in the exchange of $ 24.8 million in investments in marketable equity securities within current assets on the Consolidated Balance Sheets.

The fair value was calculated as 3.2 million shares of Mogo common stock multiplied by the fair value of the Mogo shares received.

During the year ended December 31, 2021, we recorded an unrealized loss on the shares of approximately $ 13.7 million based on the closing price per share of Mogo common stock on the Nasdaq Stock Market on December 31, 2021 of $ 3.42 .

During the year ended December 31, 2022, the Company sold all 3.2 million shares of its shares of Mogo for proceeds of $ 1.8 million, resulting in realized losses of approximately $ 9.0 million.

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

Property and Equipment

Property and equipment consists of the following:

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

Buildings and building improvements

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Miners and mining equipment

As of December 31, 2023, the Company had deployed a total of 112,944 miners in its mining operation, all at the Rockdale Facility.

During the year ended December 31, 2023, the Company entered into the Master Agreement to acquire 99,840 miners from MicroBT (consisting of 8,320 M56S+ model miners, 22,684 M56S++ model miners, 20,778 M66 model miners, and 48,058 M66S model miners), primarily for use at the Corsicana Facility, for a total purchase price of approximately $ 453.4 million, subject to adjustment.

Delivery of the miners began in the fourth quarter of 2023, with all miners expected to be received and deployed by mid-2025.

The Master Agreement also provides us an option to purchase up to an additional 265,000 additional miners, on the same terms as the initial order.

During the year ended December 31, 2023, the Company sold 2,700 Antminer model S19 XP miners for gross proceeds of $ 6.4 million, which resulted in a loss on sale of equipment of $ 5.3 million.

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, all of which were received in January 2023.

As of December 31, 2023, the Company did not have any outstanding purchase agreements for the purchase of miners from Bitmain.

During the year ended December 31, 2022, the Company elected not to renew its co-location mining services agreement with Coinmint, which was therefore terminated automatically per its terms.

In connection with the termination, the Company arranged for the transfer of the miners it was operating at Coinmint’s Massena, New York facility (the “Coinmint Facility”).

The Company then entered into an equipment exchange agreement with a third-party Bitcoin mining company (the “Counterparty”), whereby the Company transferred approximately 5,700 of the Antminer model S19 Pro miners it had previously deployed at the Coinmint Facility to the Counterparty in exchange for 5,000 factory-new Antminer model S19j Pro miners delivered to the Rockdale Facility.

After completing the transfer of the miners to the Counterparty, the Company relocated the balance of the miners it had deployed at the Coinmint Facility to the Rockdale Facility.

As a result of the exchange with the Counterparty, the Company recognized a gain on the exchange of equipment of approximately $ 16.3 million during the year ended December 31, 2022.

Impairment of miners

During the year ended December 31, 2022, adverse changes in business climate, including decreases in the price of Bitcoin and resulting decrease in the market price of miners, indicated that an impairment triggering event had occurred.

Testing performed indicated the estimated fair value of the Company’s miners to be less than their net carrying value as of December 31, 2022, and an impairment charge of $ 55.5 million was recognized, decreasing the net carrying value of the Company’s miners to their estimated

As of December 31, 2024, the Company had deployed miners in its Bitcoin Mining operations at its Rockdale Facility, Corsicana Facility, and Kentucky Facility.

As of December 31, 2023, all the Company’s deployed miners were at its Rockdale Facility.

During the year ended December 31, 2023, the Company entered into the Master Agreement to acquire miners from MicroBT .

In 2023 , we executed purchase orders with MicroBT to acquire U.S.-manufactured miners with a total hash rate of 25.6 EH/s, for a total purchase price of approximately $ 453.4 million, subject to downward adjustment, as provided under the Master Agreement.

Delivery of these miners to the Corsicana Facility, for deployment in immersion cooling systems, began in 2023, and all miners under these purchase orders are expected to be received and deployed by mid-2025.

The Master Agreement also provides the Company with an option to purchase additional miners with a total hash rate of approximately 75.0 EH/s, on the same terms as the initial order.

During the year ended December 31, 2024, the Company entered into an additional purchase order with MicroBT under the Master Agreement to acquire 31,500 air-cooled miners with a total hash rate of 5.9 EH/s for a total purchase price of approximately $ 96.7 million.

This purchase order is in addition to existing purchase options under the Master Agreement.

Delivery of these miners occurred during the year ended December 31, 2024.

During the years ended December 31, 2024 and 2023, we sold 19,817 and 2,700 , underperforming Antminer model S19 XP miners, respectively, for which we recognized losses of $ 17.4 million and $ 5.3 million during the years ended December 31, 2024 and 2023, respectively.

Effective January 1, 2024, as a result of new information about the useful lives of Bitcoin miners, the Company determined the estimated useful life of its Bitcoin miners will be increased from two years to three years .

In making this determination, the Company

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

took into consideration its first-hand experience of miners remaining in service beyond a two-year period, as well as its increased use of immersion-based mining, which the Company anticipates will extend the useful life of miners, due to improved heat removal and reduced exposure to particulates, as compared to traditional air-cooled mining.

For the year ended December 31, 2024, the effect of this change in estimate was a reduction in depreciation expense and an increase in net income of approximately $ 78.3 million, and increases in basic earnings per share of $ 0.28 and diluted earnings per share of $ 0.25 .

Impairment of miners

The estimated fair value of the Company’s miners was classified in Level 2 of the fair value hierarchy due to the quoted market prices for similar assets.

2 unchanged sentences

As of December 31, 2024, the Company estimated that total damages of $ 10.3 million had been incurred.

During the year ended December 31, 2023, the Company received net insurance recoveries of $ 7.5 million.

During the year ended December 31, 2024, the Company received net insurance recoveries of $ 2.8 million, in addition to the $ 7.5 million recovered during the year ended December 31, 2023, primarily related to the damage incurred at Rockdale Facility.

Recoveries are recognized when they are probable of being received.

Construction in progress

As of December 31, 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 by the end of the first quarter of 2024, following commissioning of the substation.

Through December 31, 2023, the Company had incurred costs of approximately $ 217.8 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, $ 203.0 million of initial developments costs and equipment, and a $ 4.7 million deposit for future power usage.

During the year ended December 31, 2023, the Company entered into a purchase agreement with Midas for the purchase of 200 MW of immersion cooling systems for its Corsicana Facility.

Delivery of the immersion cooling systems began in the fourth quarter of 2023 and is expected to be completed in the first quarter of 2024.

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.

In 2022, the Company initiated development of the Corsicana Facility to expand its Bitcoin Mining capabilities, on a 265 -acre site in Navarro County, Texas, located near the Navarro Switch.

The initial phase of development of the Corsicana Facility involves the construction of immersion-cooled Bitcoin Mining infrastructure, including a high-voltage power substation and electrical and water transmission facilities to supply power and water to the facility.

Operations of this initial phase of the development commenced in April 2024, following energization of the substation.

As of December 31, 2024, the initial phase of Corsicana was complete with deployed Bitcoin Mining infrastructure comprising of four operational buildings, Buildings A1, A2, B1, and B2.

During the year ended December 31, 2023, the Company entered into a purchase agreement to acquire immersion cooling systems for use in Bitcoin Mining facilities developed at the Corsicana Facility.

Delivery and installation of these immersion cooling systems was completed during the year ended December 31, 2024, with miner installation and operations commencing progressively as the systems were installed.

The purchase agreement also provides the Company an option to purchase additional immersion cooling systems from the same manufacturer, on the same terms as the initial order, through December 31, 2025.

During the year ended December 31, 2024, the Company entered into a second purchase agreement to acquire immersion cooling systems from a different manufacturer for use in the Bitcoin Mining facilities at the Corsicana Facility.

Delivery of these immersion cooling systems was completed during the year ended December 31, 2024.

Through December 31, 2024, the Company incurred total costs of approximately $ 415.9 million related to the development of the first phase of the Corsicana Facility (exclusive of miners), including $ 10.1 million paid to acquire the land on which the facility was developed.

Related party land transaction

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The transaction was accounted for as an asset acquisition.

During the year ended December 31, 2023, the Company paid $ 191.1 million in deposits and payments to MicroBT for the purchase of miners pursuant to the Master Agreement described herein.

The remaining commitment of approximately $ 270.4 million is due in installments through approximately April 2025 based on the estimated miner delivery schedule.

Total payments of $ 220.0 million and $ 50.4 million are expected to be made in 2024 and 2025, respectively.

During the year ended December 31, 2023, the Company paid $ 31.2 million in deposits and payments to Midas for the purchase of immersion cooling systems described herein.

The remaining commitment of approximately $ 21.1 million is due in installments in early 2024, based on the estimated delivery schedule.

Riot Platforms, Inc.

1 unchanged sentence

Goodwill and Intangible Assets

The goodwill balance of $ 121.9 million as of December 31, 2024, was attributable to the assembled workforces of experienced personnel at Block Mining and E4A Solutions and synergies expected to be achieved as a result of the Company’s acquisitions.

Acquisitions .

During the second quarter of 2022, adverse changes in business climate, including decreases in the price of Bitcoin and increased volatility of equity markets, as evidenced by declines in the market price of the Company’s securities, those of its peers, and major market indices, reduced market multiples and increased weighted-average costs of capital, primarily driven by an increase in interest rates.

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Finite-lived intangible assets

The customer contracts, trademark, and UL listings were recognized as the result of acquisitions during the year ended December 31, 2021 (see Note 3.

Acquisitions ).

The customer contracts and trademark were recognized as the result of the E4A Solutions Acquisition in December 2024 and the ESS Metron acquisition which occurred during the year ended December 31, 2021.

The UL listings were recognized as the result of the ESS Metron acquisition which occurred during the year ended December 31, 2021.

During the year ended December 31, 2022, the Company paid $ 9.5 million to license a patent for technology being used in the development of the Corsicana Facility.

The amount paid is being amortized over the term of the license, which expires on December 31, 2024.

The amount paid was amortized over the term of the license, which expired on December 31, 2024.

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The Company did not identify any impairment of its finite-lived intangible assets during the years ended December 31, 2024, 2023, and 2022.

Power Supply Agreements

Rockdale Facility

Power Purchase Agreement

In May 2020, the Company, through its subsidiary, Whinstone, entered into 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:

In May 2020, the Company, through its subsidiary, Whinstone, entered into the Rockdale PPA to provide for the delivery of power to its Rockdale Facility, via the nearby Sandow Switch.

Pursuant to the Rockdale 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;

1 unchanged sentence

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 ERCOT and are recorded in Cost of revenue on the 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.

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,

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

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 2023 monthly power bills were 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.

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

Under the Rockdale 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, as described below, participation in ERCOT’s Four Coincident Peak (“4CP”) program, and sales of power, to attempt to manage operating costs most efficiently.

During the years ended December 31, 2024, 2023, and 2022, the Company earned credits against future power costs in exchange for power resold of approximately $ 33.7 million, $ 71.2 million, and $ 27.3 million, respectively.

These amounts are recorded in Power curtailment credits on the 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 Consolidated Balance Sheets with the change in the fair value recorded in Change in fair value of derivative asset on the 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 23.1 %, 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 compared to the fixed price stated in the contract.

The Company determined the Rockdale 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 outside of the Rockdale PPA, 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 Rockdale PPA.

Accordingly, the Rockdale 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 Consolidated Balance Sheets with the change in the fair value recorded in Change in fair

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

value of derivative asset on the Consolidated Statements of Operations.

The Rockdale PPA is not designated as a hedging instrument.

The Facilities Agreement, Demand Response Service Programs, and the 4CP program are not part of the Rockdale PPA, and are therefore not subject to treatment and valuation as a derivative along with Rockdale PPA.

The terms of the Rockdale 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 December 31, 2024, 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.

Demand Response Services Programs

Concurrently with the Rockdale PPA, Whinstone entered into an interconnection agreement for the extension of delivery system transmission/substation facilities to facilitate delivery of 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 ERCOT and are recorded in Cost of revenue on the Consolidated Statements of Operations.

During the year ended December 31, 2024, the construction of the interconnection was completed and power costs under the Facilities Agreement are no longer being incurred.

ERCOT has implemented Demand Response Services Programs for customers like the Company 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 grid stability and economic services by helping to preserve system reliability, enhancing competition and load predictability, 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 flexible 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.

The Demand Response Services Programs run concurrent with the Rockdale PPA.

For each respective Demand Response Services Program, the Company receives compensation based on hourly rates for power and the amount of electrical load which it has bid into the program.

Through ancillary services, the Company competitively bids amongst other market participants to sell ERCOT the ability to control the Company’s electrical load on demand, which requires the Company to remain powered on during the times in which its power is bid into ancillary services, and giving ERCOT the ability to direct the Company to power down the amount of power bid into the program.

The Company receives compensation for its participation in ancillary services whether or not the Company is actually called to power down.

The Company also participates in the 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 typically at its highest across the ERCOT grid.

The 4CP program 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 for the year.

As a result of participation in the 4CP program in 2023, the Company’s transmission charges in its ongoing 2024 monthly power bills are substantially reduced.

The 4CP program has an indefinite life.

Corsicana Facility

During the year ended December 31, 2024, the Company’s subsidiary, Riot Corsicana, LLC, entered into an agreement with ICE Futures U.S., Inc., a subsidiary of the InterContinental Exchange to access the exchange for the execution of electricity futures contracts.

The Company intends to purchase agreements up to the amount of power used at the Corsicana Facility.

These financial instruments meet the definition of derivatives, but are not designated as hedging instruments, and will be recognized at fair value, with any gains or losses recognized in Net income (loss) on the Consolidated Statements of Operations.

The Company has entered into the electricity futures contracts to manage electricity price risk and reduce the variability of cash flows associated with purchases of electricity used for the Company’s Bitcoin Mining operations at the Corsicana Facility.

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

As of December 31, 2024, the Company held outstanding electricity futures contracts for 26,992 mWh with a combined fair value of $ 0.3 million included in Prepaid expenses and other current assets on the Consolidated Balance Sheets.

During the year ended December 31, 2024, realized and unrealized gains of $ 0.3 million were recognized in Other income (expense) on the Consolidated Statements of Operations.

During the year ended December 31, 2024, the Company’s subsidiary, Riot Corsicana, LLC, also entered into a requirements contract with MEMS Industrial Supply (“MEMSIS” or “Mitsui”) under which it will purchase retail power to meet the consumption requirements of the Corsicana Facility.

Electric power will be invoiced by MEMSIS based upon the market price for electric power at the ERCOT North Load Zone, plus a retail adder corresponding to the peak consumption threshold of the Corsicana Facility, and pass through charges (ex., ancillary charges, taxes, congestion, and line loss), based on the actual variable consumption of the Corsicana Facility.

The contract, dated November 12, 2024, has a 3-year term ending November 25, 2027.

Although this contract does not require the supply of power at a fixed price, it allows the parties to enter into fixed-price contracts.

Under the requirements contract with MEMSIS, during the year ended December 31, 2024, Riot and MEMSIS entered into the Corsicana PPA, a 3-year contract (January 1, 2025 through December 31, 2027, but excluding July and August contracts during the period) for a fixed quantity of 25 MW at a fixed price of $ 43.95 per mWh.

The Company determined the Corsicana PPA with MEMSIS meets the definition of a derivative and, accordingly, the Corsicana PPA (a non-hedging derivative contract) is recorded at its estimated fair value each reporting period in Derivative asset on the Consolidated Balance Sheets with the change in the fair value recorded in Change in fair value of derivative asset on the Consolidated Statements of Operations.

The requirements contract is not designated as a hedging instrument.

Kentucky Facility

In April 2021, the Company’s subsidiary, Block Mining, entered into the Kentucky PPA, a long-term power purchase agreement to provide power to one of its locations in Kentucky.

Pursuant to the Kentucky PPA, the Company has the ability, but not the obligation, to acquire up to a total of 60 MW of power at one of its facilities through mid-April 2041.

The all-in power rate includes a portion of the total fee that is at a fixed rate and another portion that adjusts annually.

The Company determined the Kentucky PPA does not meet the definition of a derivative because it does not contain a notional amount.

Under the Kentucky 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 back into the MISO grid 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, to attempt to manage operating costs most efficiently.

Derivative Asset

The following table presents the unobservable inputs used in the valuation of the Derivative asset :

Valuation Date

Significant Unobservable Input

December 31, 2024

Forward prices (per mWh)

December 31, 2023

Forward prices (per mWh)

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:

Change due to future price curve

Change due to passage of time and settlements

Total change in fair value of derivative assets

Balance as of December 31, 2024

The estimated fair values of the Rockdale PPA and Corsicana PPA are classified under Level 3 of the fair value hierarchy due to the significant unobservable inputs utilized in the valuation, which include the fixed price of each block for all 345 MW of power to be delivered per the Rockdale PPA and 25 MW of power to be delivered per the Corsicana PPA, discounted cash flow estimation models containing quoted commodity exchange spot and forward prices in mWh and are adjusted for basis spreads for load zone-to-hub differentials through the term of the Rockdale PPA, which is scheduled to end as of April 30, 2030, and the term of the Corsicana

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

PPA, which is scheduled to end as of December 31, 2027, and a discount rate of 23.8 %.

Actual power usage is not a variable input in the determination of the fair value as the price and quantity of power to be delivered per the Rockdale PPA and the Corsicana PPA are fixed despite the existence of multiple blocks with separate power amounts.

The discount rate reflects 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, risk-free rate of return, which is determined from United States Treasury Bond yields, estimated cost of debt, which includes a Moody’s rating, and an equity risk premium based upon market data provided by a global cost of capital service provider.

The discount rate includes observable market inputs, but also includes unobservable inputs based on qualitative judgment related to Company credit risk.

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

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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 year ended December 31, 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 year ended December 31, 2023, the Company paid deposits and advance payments of $ 191.1 million to MicroBT for the purchase of miners, paid a deposit of $ 20.8 million to Midas for the purchase of immersion cooling systems, and paid deposits of $ 18.5 million for other purchases of miners from various suppliers.

During the year ended December 31, 2024, the Company made deposits and advance payments of $ 364.8 million to MicroBT for the purchase of miners and made deposits of $ 77.7 million for the purchases of other property and equipment, primarily consisting of electrical components and immersion tanks used in the development of the Corsicana Facility.

During the year ended December 31, 2024, the Company reclassified $ 540.4 million of deposits made to MicroBT and $ 82.9 million of other deposits to property and equipment in connection with the receipt of the equipment.

Property and Equipment.

During the year ended December 31, 2023, $ 12.6 million of the deposits made to MicroBT, all of the $ 20.8 million deposit made to Midas, and $ 11.7 million of the deposits for other purchases of miners were reclassified to property and equipment in connection with the receipt of the equipment.

Security deposits

During the year ended December 31, 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 .

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 remains held as a deposit as of December 31, 2023.

During the year ended December 31, 2021, the Company paid approximately $ 3.1 million 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, all of which has been returned to the Company as of December 31, 2023.

During the year ended December 31, 2023, the Company paid $ 23.0 million, all of which remains held as a deposit as of December 31, 2024, as a security deposit in connection with its 215 MW increase to the long-term, fixed-price power secured under the Rockdale PPA, resulting in a total of 345 MW under contract at fixed prices at the Rockdale Facility.

Power Supply Agreements .

The Company has other security deposits totaling approximately $ 2.6 million for its offices and facilities, including $ 1.8 million associated with its ground lease.

Accrued Expenses

The Company’s accrued expenses consist of the following:

Construction in progress

The following table presents the Company’s accrued expenses:

Property and equipment

Power related costs and remittances

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Notes to Consolidated Financial Statements

In December 2024, the Company sold $ 594.4 million aggregate principal of 0.75 % Convertible Senior Notes (the “2030 Notes”).

Interest is payable semiannually in arrears on January 15 and July 15 of each year, beginning on July 15, 2025.

The notes will mature on January 15, 2030, unless earlier repurchased, redeemed, or converted.

Until July 15, 2029, the 2030 Notes may be converted at the option of the holder only upon the occurrence of certain events.

On or after July 15, 2029, until the close of business on the second trading day immediately preceding the maturity date, the 2030 Notes may be converted at the option of the holder at the conversion rate then in effect.

The Company may not redeem the 2030 Notes prior to January 20, 2028, at which time the Company may redeem the 2030 Notes upon the occurrence of certain events.

The Company will settle any conversions of the 2030 Notes by paying or delivering cash, shares of common shares, or a combination of cash and shares of common shares, at the Company’s election.

The 2030 Notes are convertible based upon an initial conversion rate of 67.2767 shares of the Company's common stocks per $ 1,000 principal amount of the 2030 Notes, equivalent to an initial conversion price of approximately $ 14.86 per share of Company common stock.

The conversion rate is subject to adjustment upon the occurrence of certain anti-dilutive events.

The Company incurred $ 15.2 million of issuance costs related to the 2030 Notes, which it will amortize into Interest expense, (income) on the Consolidated Statements of Operations over the term of the 2030 Notes.

The 2030 Notes are recognized as long-term debt on the Consolidated Balance Sheets, net of unamortized debt issuance costs, and as of December 31, 2024, the amount recognized was $ 579.3 million ($ 594.4 million principal less $ 15.1 million of unamortized debt issuance costs).

During the year ended December 31, 2024, the Company recognized $ 0.2 million of amortization of the deferred issuance costs.

As of December 31, 2024, the 2030 Notes had an estimated fair value of approximately $ 548.6 million.

The estimated fair value is based on quoted prices in an active market and valued at the closing price reported at the end of the period and thus represents a Level 1 measurement on the fair value hierarchy.

Revolving Credit Facilities

$50 Million Credit Facility

In July 2024, the Company entered into a one-year $ 50.0 million Revolving Credit Facility (“$50 Million Credit Facility”).

Revolving Loans borrowed by the Company under the $50 Million Credit Facility carry a per annum interest rate of 1.25 % plus the Secured Overnight Financing Rate.

Letters of Credit issued under the $50 Million Credit Facility have a one-year term and incur fees of 1.25 % per annum on the amount of Letters of Credit outstanding.

Letters of Credit require the issuance of cash collateral by the Company equal to 105 % of the Letter of Credit exposure.

Concurrent with entry into the $50 Million Credit Facility, as required by the agreement, the Company funded the entire $ 50.0 million amount of the credit facility as security into a control account maintained by the lender to serve as collateral.

The balance maintained in the control account is included in Restricted cash on the Consolidated Balance Sheets.

Variable interest, equal to approximately 5.6 % per annum as of December 31, 2024, is earned by the Company on the amount held in the control account.

During the year ended December 31, 2024, the Company issued $ 8.4 million in Letters of Credit against the $50 Million Credit Facility.

$20 Million Credit Facility

In August 2024, the Company entered into a two-year $ 20.0 million Revolving Credit Facility (“$20 Million Credit Facility”).

Revolving Loans borrowed by the Company under the $20 Million Credit Facility carry a per annum interest rate of 1.60 % plus the Secured Overnight Financing Rate.

Letters of Credit issued under the $20 Million Credit Facility have a one-year term and incur

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

fees of 1.5 % per annum on the amount of Letters of Credit outstanding.

Letters of Credit require the issuance of cash collateral by the Company equal to 105 % of the Letter of Credit exposure.

Concurrent with entry into the $20 Million Credit Facility, as required by the agreement, the Company funded the entire $ 20.0 million amount as security into a control account maintained by the lender to serve as collateral.

The balance maintained in the control account is included in Restricted cash on the Consolidated Balance Sheets.

Variable interest, equal to approximately 3.96 % per annum as of December 31, 2024, is earned by the Company on the amount held in the control account.

During the year ended December 31, 2024, the Company did no t issue any Letters of Credit against the $20 Million Credit Facility.

As part of the Block Mining Acquisition, the Company assumed a $ 5.7 million note payable with a fixed rate of 8.81 % .

The note matures in December 2035, with annual principal and accrued interest payments due beginning on December 31, 2024.

The following table presents the future minimum principal payments due on the note payable as of December 31, 2024:

As of December, 31, 2024, the note payable had an estimated fair value of approximately $ 5.1 million.

The fair value measurement of the note payable is based on significant inputs not observable in the market and thus represents a Level 3 measurement on the fair value hierarchy.

The significant assumptions used to estimate fair value of the convertible note as of December 31, 2024, primarily consisted of management’s best estimate of both the probability and timing of a conversion event and an interest rate range of 8.9 % to 10.5 % , which reflected the issuance date spread premium over the selected yield for the remaining time to maturity.

Credit and Security Facility

The Company’s subsidiary, ESS Metron, has a Credit and Security Facility Agreement, as amended, which provides for a $ 10.0 million credit and security facility consisting of a $ 6.0 million revolving line of credit (the “Revolving Line of Credit”) and a $ 4.0 million equipment guidance line (the “Equipment Guidance Line”).

The Revolving Line of Credit has a term of two years with interest due monthly and principal due at maturity.

All amounts borrowed under the Revolving Line of Credit carry a variable interest of not less than 4.0 % and are secured by the assets of ESS Metron.

As of December 31, 2023, the interest rate was 8.5 %.

Total borrowings under the Revolving Line of Credit during the year ended December 31, 2023, were $ 6.0 million and payments were $ 6.0 million.

The Company’s subsidiary, ESS Metron, had a Credit and Security Facility Agreement, as amended, which provided for a $ 10.0 million credit and security facility consisting of a $ 6.0 million revolving line of credit (the “Revolving Line of Credit”) and a $ 4.0 million equipment guidance line (the “Equipment Guidance Line”).

The Revolving Line of Credit matured in December 2024 and had interest due monthly and principal due at maturity.

Upon maturity, the Revolving Line of Credit was not renewed or extended.

All amounts borrowed under the Revolving Line of Credit carried a variable interest of not less than 4.0 % and were secured by the assets of ESS Metron.

There were no borrowings under the Revolving Line of Credit during the year ended December 31, 2024.

As of December 31, 2023, the outstanding balance on the Revolving Line of Credit was $ 0 .

The Equipment Guidance Line has a term of two years 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 of not less than 4.0 % and are secured by the assets of ESS Metron.

As of December 31, 2023, the interest rate was 8.5 %.

Total borrowings under the Equipment Guidance Line during the year ended December 31, 2023, were approximately $ 0.9 million.

During the year ended December 31, 2023, approximately $ 0.4 million outstanding under the Equipment Guidance Line converted to a fixed rate term loan (see below).

A s of December 31, 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 made upon the first conversion of guidance line 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 made upon the first conversion of guidance line loans carry interest at a fixed rate equal to the three-year treasury rate plus 2.5 % as of conversion.

All subsequent conversions to Manufacturing Term Loans and Equipment Term Loans carry interest at a fluctuating rate equal to the lender’s prime rate.

The Equipment Guidance Line also matured in December 2024 and permitted the Company to finance up to 80.0 % of certain equipment purchases.

Upon maturity, the Equipment Guidance Line was not renewed or extended.

All amounts borrowed under the Equipment Guidance Line carried a variable interest of not less than 4.0 % and were secured by the assets of ESS Metron.

During the year ended December 31, 2024, there were no borrowings under the Equipment Guidance Line and approximately $ 0.5 million outstanding under the Equipment Guidance Line converted to a fixed rate term loan (see below).

A s of December 31, 2023, the outstanding balance on the Equipment Guidance Line was $ 0.5 million.

All borrowings and accrued interest under the Equipment Guidance Line converted to fixed rate term loans every six months, which had 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 made upon the first conversion of guidance line loans carried interest at a fixed rate equal to the five-year treasury rate plus 2.5 % as of conversion and the Equipment Term Loans made upon the first conversion of guidance line loans carried interest at a fixed rate equal to the three-year treasury rate plus 2.5 % as of conversion.

All subsequent conversions to Manufacturing Term Loans and Equipment Term Loans carried interest at a fluctuating rate equal to the lender’s prime rate.

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

During the year ended December 31, 2024, approximately $ 0.5 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 December 31, 2023, the outstanding balance on the Equipment Term Loan was approximately $ 0.3 million.

As of December 31, 2023, the outstanding balance on the Equipment Guidance Line and Equipment Term Loans was recognized net of deferred financing costs of approximately $ 0.1 million.

The net current outstanding debt balance of $ 0.3 million was recognized within Accrued Expenses and the net long-term outstanding debt balance of $ 0.5 million was recognized within Other long-term liabilities on the Consolidated Balance Sheets.

As of December 31, 2023, the Company was in compliance with all covenants of the Credit and Security Facility Agreement.

As of December 31, 2023, the Company had operating leases primarily for its offices and the manufacturing facilities of ESS Metron, and a ground lease for the Rockdale Facility, all of which expire on various dates through January 2032.

The outstanding Equipment Term Loan principal of $ 0.8 million was paid in full during the year ended December 31, 2024.

As of December 31, 2023, the outstanding balance on the Equipment Term Loan was $ 0.3 million.

As of December 31, 2024, the Company had operating leases primarily for its various offices, the manufacturing facilities of ESS Metron and E4A Solutions, a ground lease for the Rockdale Facility, and the Kentucky Facility data center, all of which expire on various dates through January 2032.

During the year ended December 31, 2024, the Company acquired an operating lease of a data center in Calvert City, Kentucky as part of the Block Mining Acquisition and an office and commercial space in Houston, Texas as part of the E4A Solutions Acquisition.

Acquisitions .

Subsequent to the Block Mining Acquisition, the data center lease capacity was further expanded and the term of the expanded lease was extended from three years to five years .

During the year ended December 31, 2022, the Company executed an amendment to the ground lease for the Rockdale Facility to add a second 100-acre tract of land, adjacent to the land subject to the original ground lease, for an additional $ 0.9 million in annual payments.

3 unchanged sentences

As of December 31, 2024 and 2023, operating lease right of use assets were $ 27.5 million and $ 20.4 million, respectively, and operating lease liabilities were $ 28.5 million and $ 21.3 million, respectively.

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

The following table presents the components of the Company’s lease expense, which the ground and facilities’ leases are included in Cost of revenue and the office leases are included in Selling, general, and administrative on the Consolidated Statements of Operations:

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

Ground and facilities lease expenses are included in Cost of revenue and office lease expenses are included in Selling, general, and administrative on the Consolidated Statements of Operations:

Years Ended December 31,

2 unchanged sentences

Operating lease expense

Short-term lease rent expense

Total lease expense

The following table presents supplemental lease information:

Operating cash outflows for operating leases

Operating leases net operating cash outflows

Right of use assets exchanged for new operating lease liabilities

1 unchanged sentence

Weighted-average discount rate – operating leases

The following table represents our future minimum operating lease payments as of December 31, 2023:

The following table presents the Company’s future minimum operating lease payments as of December 31, 2024:

Office and other leases

2 unchanged sentences

Present value of lease liabilities

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

Stockholders’ Equity

4 unchanged sentences

The stated value of each share of 0 % Series B Convertible Preferred Stock is $ 6.80 and the initial conversion price is $ 6.80 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions or other similar events.

The holders of 0 % Series B Convertible Preferred Stock are entitled to receive dividends if and when declared by the Company’s board of directors.

Holders of 0 % Series B Convertible Preferred Stock are entitled to receive dividends if and when declared by the Company’s Board.

The 0 % Series B Convertible Preferred Stock is also subject to beneficial ownership limitations and conversion limitations.

During the year ended December 31, 2022, the remaining 2,199 shares outstanding of the Company’s 0 % Series B Convertible Preferred Stock were converted to 2,199 shares of its common stock.

As of December 31, 2023, no shares of the Company’s 0 % Series B Convertible Preferred Stock were outstanding.

As of December 31, 2024 and 2023, no shares of the Company’s 0 % Series B Convertible Preferred Stock were outstanding.

The Company is authorized to issue up to 680,000,000 shares of Common Stock, without any par value per share.

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

Each holder of Common Stock is entitled to one vote for each share held of record on all matters to be voted on by such holders.

2 unchanged sentences

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.

During the year ended December 31, 2023, the Company received net proceeds of approximately $ 571.6 million ($ 583.3 million of gross proceeds, net of $ 11.7 million in commissions and expenses) from the sale of 45,758,400 shares of its common stock at a weighted average fair value of $ 13.07 per share under its 2023 ATM Offering.

Subsequent to December 31, 2023, and through February 20, 2024, the Company received net proceeds of approximately $ 114.9 million from the sale of 8,644,100 shares of its common stock at a weighted average fair value of $ 13.57 per share under its 2023 ATM Offering.

2022 ATM Offering

In March 2022, the Company entered into an ATM sales agreement under which it could offer and sell up to $ 500.0 million in shares of the Company’s common stock.

During the year ended December 31, 2022, the Company received gross proceeds of approximately $ 304.8 million ( $ 298.2 million, net of $ 6.6 million in commissions and expenses), from the sale of 37,052,612 shares of common stock at an average fair value of $ 8.23 per share under the 2022 ATM Offering.

During the year ended December 31, 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.

2021 ATM Offering

In August 2021, the Company entered into an ATM sales agreement under which it could offer and sell up to $ 600.0 million in shares of the Company’s common stock.

During the year ended December 31, 2021, the Company received gross proceeds of approximately $ 600.0 million ($ 587.2 million, net of $ 12.8 million in commissions and expenses), from the sale of 19,910,589 shares of common stock at a weighted average fair value of $ 29.53 per share.

With the sale and issuance of these shares, all $ 600.0 million in shares of the Company’s common stock available for sale under 2021 ATM Offering had been issued.

2020 ATM Offering

In October 2020, the Company entered into an ATM sales agreement under which it received proceeds of approximately $ 100.0 million from the sale of common shares.

The Company incurred fees of up to 3.0 % of the gross proceeds received.

In January 2021, the Company received gross proceeds of approximately $ 84.8 million ($ 82.7 million net, after $ 2.1 million in expenses) from the sale of 4,433,468 shares of common stock at an average fair value of $ 19.13 per share under an ATM agreement entered into in December 2020.

With the sale and issuance of these shares, all $ 200 million in shares of Company common stock available for sale under the December 2020 ATM Offering had been issued.

Under the terms of the 2023, 2022, 2021, and 2020 ATM Offerings, the Company only issued shares of its common stock.

August 2024 ATM Program

In August 2024, the Company established the August 2024 ATM Program, under which it could offer and sell up to $ 750.0 million in shares of the Company’s common stock.

During the year ended December 31, 2024, the Company received net proceeds of approximately $ 380.0 million ($ 387.8 million of gross proceeds, net of $ 7.8 million in commissions and expenses) from the sale of 41,336,261 shares of its common stock at a weighted average fair value of $ 9.38 per share under the August 2024 ATM Program.

As of December 31, 2024, approximately $ 362.2 million of shares of the Company’s common stock were available for sale under the August 2024 ATM Program.

February 2024 ATM Program

In February 2024, the Company established the February 2024 ATM Program, under which it could offer and sell up to $ 750.0 million in shares of the Company’s common stock.

During the year ended December 31, 2024, the Company received net proceeds of approximately $ 462.5 million ($ 471.9 million of gross proceeds, net of $ 9.4 million in commissions and expenses) from the sale of 40,646,055 shares of its common stock at a weighted average fair value of $ 11.61 per share under the February 2024 ATM Program.

With the sale and issuance of those shares, no additional shares of common stock will be offered or sold under the February 2024 ATM Program.

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

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 year ended December 31, 2023, the indemnification period ended and all 70,165 of the withheld shares were issued to the ESS Metron sellers.

During the year ended December 31, 2021, the Company issued warrants to XMS Capital Partners, LLC as partial payment for its advisory services in connection with the Whinstone Acquisition.

2023 ATM Program

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

During the year ended December 31, 2024, the Company received net proceeds of approximately $ 114.9 million ($ 117.3 million of gross proceeds, net of $ 2.4 million in commissions and expenses) from the sale of 8,644,100 shares of its common stock at a weighted average fair value of $ 13.57 per share under the 2023 ATM Program.

With the sale and issuance of those shares, no additional shares of common stock will be offered or sold under the 2023 ATM Program.

2022 ATM Program

In March 2022, the Company entered into an ATM sales agreement under which it could offer and sell up to $ 500.0 million in shares of the Company’s common stock.

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 Program had been issued.

Under the terms of the August 2024, February 2024, 2023, and 2022 ATM Programs, the Company only issued shares of its common stock.

During the year ended December 31, 2021, the Company issued warrants to XMS Capital Partners, LLC as partial payment for its advisory services in connection with the acquisition of Whinstone.

The warrants entitle XMS to purchase up to 63,000 shares of the Company’s common stock at a purchase price of $ 48.37 per share.

The warrants may be exercised at any time through August 12, 2026.

The warrants are recognized as a liability with a fair value of zero upon issuance and a redemption value of zero as of December 31, 2023.

The warrants are recognized as a liability with a fair value of zero upon issuance and a redemption value of zero as of December 31, 2024 and 2023.

2024 Transactions

During the year ended December 31, 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 2019 Equity Incentive Plan.

The Company withheld approximately 1.3 million of these shares, with a fair value of approximately $ 14.0 million, to cover the withholding taxes related to the settlement of these vested restricted stock awards, as permitted by the 2019 Equity Incentive Plan.

During the year ended December 31, 2024, the Company increased its authorized shares of common stock from 340.0 million shares to 680.0 million shares.

During the year ended December 31, 2024, the Company issued approximately 7.2 million shares of common stock with a value of approximately $ 74.0 million as consideration for the Block Mining Acquisition (see Note 3.

Acquisitions ).

During the year ended December 31, 2024, approximately 16.0 million shares of restricted stock, net of forfeitures and delivery of common stock underlying stock awards, and net of tax withholding, were issued.

The Company withheld approximately 1.1 million shares of the common stock issued upon vesting, with a fair value of approximately $ 11.6 million, to cover the withholding taxes related to the settlement of these vested restricted stock awards, as permitted by the 2019 Equity Incentive Plan.

Stock-Based Compensation , for a complete description of the 2019 Equity Incentive Plan.

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

In June 2024, the Company’s stockholders approved the Sixth Amendment to the 2019 Equity Incentive Plan, which increased the shares of common stock reserved for issuance by 15.0 million shares.

2023 Transactions

During the year ended December 31, 2023, approximately 5.0 million shares of restricted stock, net of forfeitures and delivery of common stock underlying the stock awards, and net of tax withholding, were issued.

The Company withheld approximately 1.3 million shares of the common stock issued upon vesting, with a fair value of approximately $ 14.0 million, to cover the withholding taxes related to the settlement of these vested restricted stock awards, as permitted by the 2019 Equity Incentive Plan.

In June 2023, the Company’s stockholders approved the Fourth Amendment to the 2019 Equity Incentive Plan, which increased the shares of common stock reserved for issuance under the 2019 Equity Incentive Plan by 4.0 million shares.

In December 2023, the Company’s stockholders approved the Fifth Amendment to the 2019 Equity Incentive Plan, which increased the shares of common stock reserved for issuance under the 2019 Equity Inventive Plan by 13.0 million shares.

During the year ended December 31, 2023, the indemnification period ended and all 70,165 of the withheld shares were issued to the ESS Metron sellers.

2022 Transactions

During the year ended December 31, 2022, the Company increased its authorized shares of common stock from 170.0 million shares to 340.0 million shares.

During the year ended December 31, 2022, 1,819,332 shares of common stock were issued to the Company’s board of directors, officers, employees, and advisors of the Company in settlement of an equal number of fully vested restricted stock units awarded to such individuals by the Company under the 2019 Equity Incentive Plan.

The Company withheld 685,781 of these shares, at a fair value of approximately $ 10.1 million, to cover the withholding taxes related to the settlement of these vested restricted stock units, as permitted by the 2019 Equity Incentive Plan.

During the year ended December 31, 2022, approximately 1.8 million shares of restricted stock, net of forfeitures and delivery of common stock underlying stock awards, and net of tax withholding, were issued.

The Company withheld approximately 0.7 million shares of the common stock issued upon vesting, with a fair value of approximately $ 10.1 million, to cover the withholding taxes related to the settlement of these vested restricted stock units, as permitted by the 2019 Equity Incentive Plan.

During the year ended December 31, 2022, 2,199 shares of the Company’s 0 % Series B Convertible Preferred Stock were converted into 2,199 shares of its common stock, leaving no shares outstanding.

In July 2022, the Company’s stockholders approved the Third Amendment to its 2019 Equity Incentive Plan, which increased the number of shares of the Company’s common stock reserved for issuance by 10.0 million shares .

2021 Transactions

During the year ended December 31, 2021, the Company issued 11,800,000 shares of its common stock in connection with its acquisition of Whinstone.

Acquisitions .

During the year ended December 31, 2021, the Company issued 645,248 shares of its common stock in connection with its acquisition of ESS Metron.

Acquisitions .

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

During the year ended December 31, 2021, 464,021 shares of common stock were issued to the Company’s board of directors, officers, employees and advisors of the Company in settlement of an equal number of fully vested restricted stock units awarded to such individuals by the Company pursuant to grants made under the Company’s 2019 Equity Incentive Plan, as amended.

The Company withheld 174,685 of these shares, at a fair value of approximately $ 5.1 million, to cover the withholding taxes related to the settlement of these vested restricted stock units, as permitted by the 2019 Equity Incentive Plan.

During the year ended December 31, 2021, the Company issued 415,657 shares of its common stock in connection with the exercise of 415,657 common stock warrants issued to investors in connection with the Company’s January 2019 private placement transaction, for net proceeds of approximately $ 0.8 million.

During the year ended December 31, 2021, the Company issued 543,686 shares of its common stock in connection with the cashless exercise of warrants to purchase 1,257,235 shares of common stock, which were issued to investors in connection with private placement transactions in December 2017.

During the year ended December 31, 2021, the Company issued 10,286 shares of its common stock upon the cashless exercise of 12,000 stock options.

During the year ended December 31, 2021, 2,000 shares of the Company’s 0 % Series B Convertible Preferred Stock were converted into 2,000 shares of its common stock, leaving 2,199 shares outstanding.

The Company currently has one equity compensation plan, the 2019 Equity Incentive Plan.

On October 19, 2021, the Company’s stockholders approved the Second Amendment to its 2019 Equity Incentive Plan, which increased the number of shares of the Company’s common stock reserved for issuance by 4.4 million shares .

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.

3.6 million shares of common stock were initially reserved for issuance.

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 RSAs or RSUs and service-based RSAs or RSUs.

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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.

In November 2020, the Company’s stockholders approved the First Amendment to the 2019 Equity Incentive Plan, which increased the shares of common stock reserved for issuance by 3.5 million shares.

In October 2021, the Company’s stockholders approved the Second Amendment to the 2019 Equity Inventive Plan, which increased the shares of common stock reserved for issuance by 4.4 million shares.

In July 2022, the Company’s stockholders approved the Third Amendment to the 2019 Equity Incentive Plan, which increased the shares of common stock reserved for issuance by 10.0 million shares.

In June 2023, the Company’s stockholders approved the Fourth Amendment to the 2019 Equity Incentive Plan, which increased the shares of common stock reserved for issuance by 4.0 million shares.

In December 2023, the Company’s stockholders approved the Fifth Amendment to the 2019 Equity Incentive Plan, which increased the shares of common stock reserved for issuance by 13.0 million shares.

As of December 31, 2024, the Company had 14,666,096 shares of common stock reserved for issuance under the 2019 Equity Incentive Plan.

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

As of December 31, 2023, the Company had 18,517,831 shares of common stock reserved for issuance under the 2019 Equity Incentive Plan.

The following table presents stock-based compensation expense by category:

The following table presents the Company’s stock-based compensation expense by category:

Years Ended December 31,

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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.

Performance-based RSAs and RSUs and units are eligible to vest over a three-year performance period based on the Company’s TSR as compared to the performance of the Index TSR.

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

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Balance as of January 1, 2024

( 3,149,956 )

Balance as of December 31, 2024

During the year ended December 31, 2023, the Company granted 2,076,340 with a grant-date fair value of $ 36.3 million.

During the year ended December 31, 2022, the Company granted 245,266 performance-based RSAs with a grant date fair value of $ 1.7 million.

During the year ended December 31, 2021, no performance-based RSAs were awarded.

As of December 31, 2024, there was approximately $ 159.1 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 1.8 years.

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Weighted Average

Number of Shares

Number of Units

Balance as of January 1, 2024

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During the year ended December 31, 2023, the Company granted 246,426 performance-based RSUs with a grant date fair value of $ 4.8 million.

During the year ended December 31, 2021, the Company granted 4,033,159 performance-based RSUs with a grant date fair value of $ 148.0 million.

During the year ended December 31, 2022, all outstanding performance-based RSUs were converted into performance-based RSAs.

During the year ended December 31, 2022, the Company granted 1,412,299 performance-based RSUs with a grant date fair value of $ 15.1 million and all outstanding performance-based RSUs were converted into performance-based RSAs.

As of December 31, 2024, there was approximately $ 13.9 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 1.9 years.

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( 4,280,308 )

( 6,077,072 )

Balance as of December 31, 2024

During the year ended December 31, 2023, the Company awarded 1,313,925 service-based RSAs with a grant date fair value of $ 20.3 million.

During the year ended December 31, 2021, no service-based RSAs were awarded.

As of December 31, 2023, there was approximately $ 29.0 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 10 months .

During the year ended December 31, 2022, the Company awarded 10,310,115 service-based RSAs with a grant date fair value of $ 69.4 million.

As of December 31, 2024, there was approximately $ 25.6 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 2.2 years.

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

Weighted Average

Number of Shares

Number of Units

Balance as of January 1, 2024

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During the year ended December 31, 2023, the Company awarded 155,213 service-based RSUs with a grant date fair value of $ 3.0 million.

During the year ended December 31, 2021, the Company granted 212,189 service-based RSUs with a grant date fair value of $ 7.1 million.

During the year ended December 31, 2022, all outstanding service-based RSUs were converted into service-based RSAs.

During the year ended December 31, 2022, the Company awarded 922,552 service-based RSUs with a grant date fair value of $ 6.4 million and all outstanding service-based RSUs were converted into service-based RSAs.

As of December 31, 2024, there was approximately $ 3.6 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 2.2 years.

Subsequent Awards

In January 2024, the Company awarded 1,000,000 performance-based RSUs with a grant date fair value of approximately $ 14.1 million, 14,071,926 performance-based RSAs with a grant date fair value of approximately $ 199.5 million, and 38,707 service-based RSAs with a grant date fair value of approximately $ 0.6 million and a three-year service period.

The performance-based awards are eligible to vest based on the Company’s TSR as compared to the Index TSR through December 31, 2025.

Riot Platforms, Inc.

9 unchanged sentences

observable inputs

Equity method investment - marketable securities (b)

Convertible note (b)

Derivative asset (c)

Contingent consideration liability (d)

Contingent consideration liabilities (d)

Fair value measured as of December 31, 2023

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observable inputs

Derivative asset (b)

Contingent consideration liability (c)

Convertible note (b)

Derivative asset (c)

Contingent consideration liability (d)

(a) See Note 5.

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Power Purchase Agreement

Power Supply Agreements

(d) See Note 17.

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These assets are recorded at fair value only when an impairment charge is recognized.

As of December 31, 2023 and 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 their short-term nature.

As of December 31, 2024 and 2023, 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.

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Miners and mining equipment

During the year ended December 31, 2023, the Company paid $ 191.1 million in deposits and payments to MicroBT for the purchase of miners pursuant to the Master Agreement described herein.

The remaining commitment of approximately $ 270.4 million is due in installments through approximately April 2025 based on the estimated miner delivery schedule.

Total payments of $ 220.0 million and $ 50.4 million are expected to be made in 2024 and 2025, respectively.

During the year ended December 31, 2023, the Company paid $ 31.2 million in deposits and payments to Midas for the purchase of immersion cooling systems described herein.

The remaining commitment of approximately $ 21.1 million is due in installments in early 2024, based on the estimated delivery schedule.

During the years ended December 31, 2024 and 2023, the Company paid a total of $ 555.9 million in deposits and payments to MicroBT for the purchase of miners pursuant to the Master Agreement described herein.

The remaining commitment of approximately $ 1.0 million due as of December 31, 2024, was paid in January 2025.

Infrastructure

During 2024, the Company entered into agreements related to water supply infrastructure for the Corsicana Facility resulting in total remaining commitments of approximately $ 16.8 million.

The Company expects to incur these costs throughout 2026.

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.

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

For additional information see Note 13.

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 $ 2.4 million.

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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

Contingent consideration liabilities

As part of the Block Mining Acquisition, the sellers are eligible to earn an additional $ 32.5 million in potential earn-out targets, payable in cash or stock, if certain milestones are reached by December 31, 2025 (See Note 3.

Acquisitions ).

This contingent consideration was recognized as the acquisition date fair value of $ 26.1 million and is recognized on the Consolidated Balance Sheets in Contingent consideration liabilities, current portion.

The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement on the fair value hierarchy.

These inputs include management’s best estimate of both the probability and timing of achieving the milestones, a risk-free interest rate of approximately 5% based on the U.S.

Treasury rate for the corresponding time periods and a credit spread of approximately 1% based on the median of Investment Grade High Yield Debt Instruments with a Standard & Poor’s BB credit rating.

This credit rating was selected based on an independently-produced synthetic credit rating analysis.

As of December 31, 2024, the Block Mining contingent consideration had an estimated fair value of $ 23.6 million.

E4A Solutions

As part of the E4A Solutions Acquisition, the sellers are eligible to earn potential earn-out targets based on E4A Solutions’ Adjusted EBITDA, calculated as 2.65 times the amount the average adjusted EBITDA exceeds the Earnout threshold, as defined in the purchase agreement, during the two years ending December 31, 2026, payable in cash or Riot common stock at the Company’s discretion.

This contingent consideration was recognized as the acquisition date fair value of $ 2.6 million and is recognized on the Consolidated Balance Sheets in Contingent consideration liabilities, less current portion.

The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement on the fair value hierarchy .

These inputs include management’s best estimate of both the probability and timing of achieving the milestones, a risk-free interest rate of

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

approximately 4.25% based on the U.S.

Treasury rate for the corresponding time periods and a credit spread of approximately 1% based on the median of Investment Grade and High Yield Debt Instruments with a Standard & Poor’s BB credit rating.

This credit rating was selected based on an independently-produced synthetic credit rating analysis.

In February 2021, the State of Texas experienced an extreme and unprecedented winter weather event that resulted in prolonged freezing temperatures and caused an electricity generation shortage that was severely disruptive to the whole state.

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Due to the extreme market price of electricity during this time, at the request of ERCOT, the Company stopped supplying power to its customers and instead sold power back to the grid.

In April 2021, under the provisions of the PPA, and as a result of the weather event, the Company entered into a Qualified Scheduling Entity (“QSE”) Letter Agreement, which resulted in the Company being entitled to receive approximately $ 125.1 million for its power sales during the February winter storm, all under the terms and conditions of the QSE Letter Agreement.

In April 2021, under the provisions of the Rockdale PPA, and as a result of the weather event, the Company entered into a Qualified Scheduling Entity (“QSE”) Letter Agreement, which resulted in the Company being entitled to receive approximately $ 125.1 million for its power sales during the February winter storm, all under the terms and conditions of the QSE Letter Agreement.

The Company received cash of $ 29.0 million in April 2021 (after deducting $ 10.0 million in power management fees owed by Whinstone), approximately $ 59.7 million was credited against power bills of the Company during 2022, with the remaining $ 26.3 million being contingent upon ERCOT’s future remittance.

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The fair value of the settlement agreement was estimated and recognized as an asset as part of acquisition accounting.

As part of the Whinstone Acquisition (see Note 3.

Acquisitions ), the Company is obligated to pay the seller up to $ 86.0 million, net of income taxes, (undiscounted) of additional consideration if certain power credits are received or realized by the Company arising from the February 2021 weather event.

As part of the acquisition of Whinstone, the Company is obligated to pay the seller up to $ 86.0 million, net of income taxes, (undiscounted) of additional consideration if certain power credits are received or realized by the Company arising from the February 2021 weather event.

Upon the acquisition of Whinstone, the estimated fair value of the contingent consideration was approximately $ 83.0 million.

The estimated fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement.

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

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.

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Although these estimates are based on management’s best knowledge of current events, the estimates could change significantly from period to period.

The following table presents the changes in the estimated fair value of our contingent consideration liability:

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 December 31, 2024, using a discount rate of approximately 8.0 % , which was based on the factors above, including the recent increase in interest rates.

The following table presents the changes in the estimated fair value of the Company’s contingent consideration liabilities:

Balance as of December 31, 2023

Block Mining Acquisition

E4A Solutions Acquisition

Change in contingent consideration

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Balance as of December 31, 2024

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 December 31, 2023, using a discount rate of approximately 8.0 % , which was based on the factors above, including the recent increase in interest rates.

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

Contingencies

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If it is reasonably possible that an asset may be impaired as of the date of the financial statement, then we disclose the range of possible loss.

Paid expenses related to the defense of such claims are recorded by us as incurred and paid.

Costs related to the defense of such claims are recorded by us as they are incurred.

Management, with the assistance of outside counsel, may from time to time adjust such accruals according to new developments in the matter, court rulings, or changes in the strategy affecting our defense of such matters.

On the basis of current information, we do not believe there is a reasonable possibility that any material loss, if any, will result from any claims, lawsuits and proceedings to which we are subject to either individually, or in the aggregate.

Green Revolution Cooling Patent Dispute

On March 22, 2024, GRC filed a complaint against the Company in Case No.

6:24-CV-152 in the Western District of Texas for patent infringement.

More specifically, GRC has alleged that the immersion cooling systems provided to the Company by third parties infringe GRC’s U.S.

9,992,914 (“the ’914 Patent”) and 10,123,463 (“the ’463 Patent”).

In the complaint, GRC seeks unspecified damages and an injunction against all products that allegedly infringe the ’914 Patent and the ’463 Patent (or in lieu of an injunction, an award of a compulsory forward royalty).

The Company has engaged counsel and is working with its counsel to evaluate and defend the Company from this infringement claim.

While a preliminary investigation of GRC’s claims is underway, the Company cannot reasonably predict the outcome of such ongoing litigation, or the magnitude of such outcome, at this time.

Northern Data Working Capital Disputes

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Accordingly, approximately $ 27.1 million of the escrowed amount was released from escrow and distributed to the Company on June 13, 2023, with the remaining approximately $ 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 Consolidated Balance Sheets.

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

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 (the “Chancery Court”) on June 23, 2023 (Case No.

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The Company contests the legal and factual basis of Northern Data’s claims and filed a motion to dismiss the complaint on July 17, 2023, which the Chancery Court heard on February 13, 2024.

The Chancery Court took the matter under advisement and it is now pending a ruling.

While the Company intends to vigorously oppose such complaint, the Company cannot accurately predict the outcome of such ongoing litigation, or estimate the magnitude of such outcome, due to its early stage.

The Chancery Court denied the motion to dismiss on May 17, 2024, at which time the court advised the parties that summary judgment briefing after focused discovery may be a worthwhile endeavor.

Both the Company and Northern Data moved for summary judgment on November 6, 2024.

On February 17, 2025, the Chancery Court heard the parties motions for summary judgment and took the matter under advisement.

The Chancery Court has not yet issued a ruling on the motions.

While the Company intends to vigorously oppose such complaint, the Company cannot accurately predict the outcome of the ongoing litigation, estimate the magnitude of such outcome, or forecast when such litigation will be resolved, at this time .

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

Legacy Hosting Customer Disputes

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.

Whinstone seeks recovery of more than $ 26.0 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 $ 7.0 -$ 10.0 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 $ 42.0 million in alleged energy credits, at least $ 1.0 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 November 27, 2023, Whinstone terminated the Rhodium JV, LLC and Air HPC LLC hosting agreements at the Rockdale Facility with immediate effect.

On December 11, 2023, Rhodium and the Non-Parties submitted an arbitration demand to the American Arbitration Association seeking approximately $ 55.0 million in damages and specific performance of unspecified contracts.

Whinstone believes Rhodium’s claims are without merit and intends to vigorously contest them, as appropriate.

On May 2, 2023, Whinstone filed a petition against Rhodium 30MW, LLC (“Rhodium 30MW”), Rhodium JV, LLC (“Rhodium JV”), Air HPC LLC (“Air HPC”), and Jordan HPC, LLC (“Jordan HPC” and, together with Rhodium 30MW, Rhodium JV, and Air HPC, collectively, the “Defendants”) in Case No.

CV41873 in the 20th District Court (the “District Court”) of Milam County, Texas.

In its amended petition filed May 3, 2023, Whinstone asserted breach of contract claims for Rhodium JV and Air HPC’s failure to pay certain hosting and service fees under the now-terminated Whinstone-Rhodium hosting agreements (“Hosting Agreements”) and sought a declaration regarding the rights and obligations under certain hosting agreements with the Defendants and that no power credits are owed to any Rhodium entity under any agreement.

Whinstone sought recovery of more than $ 26 million, plus reasonable attorneys’ fees and costs, expenses, and pre- and post-judgment interest.

On June 12, 2023, Defendants answered and, along with non-parties Rhodium Encore LLC, Rhodium 2.0 LLC, and Rhodium 10mw LLC (collectively, the “Rhodium Non-Parties” and, together with Defendants, collectively, “Rhodium”), filed contingent counterclaims for breach of contract and moved to compel arbitration for alleged unpaid energy sale credits and lost profits.

On August 14, 2023, Whinstone filed a second amended petition to include a declaration regarding the rights and obligations under the now-terminated water agreement between Whinstone and various Rhodium entities.

On September 13, 2023, the District Court compelled Whinstone’s claims against Defendants to arbitration over Whinstone’s objection and stayed the lawsuit pending such arbitration.

On December 11, 2023, Rhodium submitted an arbitration demand to the American Arbitration Association (“AAA”), seeking damages and specific performance of unspecified contracts.

Rhodium amended its demand on June 4, 2024 to include additional claims and disclosed it seeks at least $ 67 million in damages.

Whinstone does not believe Rhodium’s claims have any merit, and will vigorously contest such claims, as appropriate.

Whinstone objected to the AAA’s jurisdiction and authority to entertain the claims and decide any issues of arbitrability.

Subject to those objections, Whinstone submitted counterclaims to the AAA on December 29, 2023 against Rhodium JV and Air HPC for breach of contract, seeking recovery of at least $ 20 million in past-due revenue share payments, plus reasonable attorneys’ fees and costs, expenses, and pre- and post-judgment interest.

After a permanent arbitrator was appointed and written discovery commenced, Rhodium filed for bankruptcy protection on August 24, 2024 and August 29, 2024 in a now jointly administered proceeding styled In re:

Rhodium Encore LLC, et al.

24-90448 (ARP), in the United States Bankruptcy Court for the Southern District of Texas—Houston Division (the "Bankruptcy Court").

Therein, Rhodium filed a motion to assume the Hosting Agreements, and the Bankruptcy Court set a contested hearing on the matter for November 12-29, 2024.

On October 3, 2024, Whinstone filed a motion for partial summary judgment and on October 16, 2024, Rhodium filed its own motion for partial summary judgment.

The Bankruptcy Court denied both motions on November 8, 2024.

From November 11, 2024 to November 14, 2024, the Bankruptcy Court heard phase one of Rhodium's Motion to Assume, which the Court granted in an interim order on December 16, 2024.

Phase two of Rhodium’s Motion to Assume is set for February 26, 2025.

The Company anticipates appealing the Bankruptcy Court’s decision and cannot reasonably predict the outcome of such ongoing proceedings, or the magnitude of such an outcome, at this time.

On February 11, 2025, Rhodium Encore LLC, Rhodium JV LLC, Rhodium 30MW LLC, Rhodium 2.0 LLC, Rhodium 10MW LLC, Air HPC LLC, Jordan HPC LLC, Rhodium Industries LLC and Rhodium Renewables LLC (collectively, "Plaintiffs") filed a complaint against Riot and Whinstone in the United States Bankruptcy Court for the Southern District of Texas, Houston Division.

Plaintiffs allege damages for breach of contract and tortious interference, and requests an application for permanent injunctive relief seeking more than $300 million in damages.

Riot and Whinstone believe Plaintiff'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.

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(“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.

6:23-cv-252), which it later amended, against Whinstone alleging breach of contract, fraud, and negligent bailment claims related to a colocation services agreement between Whinstone and SBI that was terminated in 2021.

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 $ 15.0 million in lost profits, at least $ 16.0 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.

SBI seeks recovery of at least $ 15.0 million in lost profits and at least $ 16.0 million for equipment damage, plus reasonable attorneys’ fees and costs, expenses, costs, and pre-

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

and post-judgment interest.

Whinstone believes many of the claims are barred or waived, and that all of SBI’s claims 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 and because this litigation is still at this early stage, the Company cannot reasonably estimate the outcome of such ongoing litigation, or the magnitude of such an outcome, at this time.

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 $ 150.0 million.

and its parent, GMO Internet Group, Inc., (collectively “GMO”) filed a complaint against Whinstone alleging breach of a colocation services agreement between GMO and Whinstone, which has since been terminated, seeking damages in excess of $ 150.0 million for lost profit and profit sharing payments GMO alleges it was owed from Whinstone.

The case is pending in the United States District Court for the Southern District of New York (Case No.

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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 $ 25.0 million.

On October 19, 2023, GMO filed its fourth amended complaint claiming an additional $ 496.0 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.

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

Class Actions and Related Shareholder Derivative Actions

On August 25, 2023, the United States District Court for the District of New Jersey dismissed the Takata v.

Riot Blockchain action (Case No.

18-cv-02293, the “Takata Action”), with prejudice, dismissing all claims.

Following the dismissal of the Takata Action, all shareholder derivative complaints filed against the Company were subsequently dismissed without prejudice.

On October 23, 2023, the parties in Jackson v.

Riot Blockchain, Inc., et al.

604520/18) filed a joint stipulation of discontinuance dismissing all claims without prejudice.

On January 18, 2023, the Eighth Judicial District Court of the State of Nevada entered an order voluntarily dismissing In re Riot Blockchain, Inc.

Shareholder Derivative Litigation (Case No.

A-18-774890-B) without prejudice.

On October 6, 2023, plaintiff filed a notice in Finitz v.

O’Rourke, et al.

1:18-cv-09640) voluntarily dismissing all claims without prejudice.

On September 26, 2023, plaintiff filed a notice in Monts v.

O’Rourke, et al.

1:18-cv-01443) voluntarily dismissing all claims without prejudice.

On October 19, 2023, GMO filed its fourth amended complaint claiming an additional $ 496.0 million in damages, for loss of future profits and future profit sharing payments GMO alleges would have been received through the term of the agreement, based on Whinstone’s allegedly wrongful termination of the colocation services agreement as of June 29, 2023.

The Company cannot reasonably estimate the outcome of such ongoing litigation, or the magnitude of such an outcome, at this time.

The following table presents the components of the loss before provision for income taxes:

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Right of use asset

LT Investments

Unrealized G/L

Other deferred tax liabilities

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The Company has not been under tax examination in any jurisdiction for the years ended December 31, 2023 and 2022.

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

Earnings Per Share

The following table presents the computation of basic and diluted earnings per share (“EPS”):

Years Ended December 31,

Net income (loss)

Interest incurred on the 2030 Notes, net of income taxes

Numerator for diluted EPS

Denominator for basic EPS - weighted average shares outstanding

Effect of dilutive securities:

Unvested RSAs

Unvested RSUs

Dilutive potential common shares

Denominator for diluted EPS - adjusted weighted average shares outstanding

The following table presents potentially dilutive securities that are not included in the computation of diluted net income (loss) per share as their inclusion would be anti-dilutive:

Warrants to purchase common stock

Unvested restricted stock awards (a)

Unvested restricted stock units

Convertible Series B preferred shares

Unvested RSAs (a)

Unvested RSUs

(a) Unvested restricted stock awards are included in total common shares outstanding but are excluded from the calculation of basic earnings per share.

Segment Information

The Company has three reportable segments:

Bitcoin Mining, Data Center Hosting, and Engineering.

The Company has two reportable segments:

Bitcoin Mining and Engineering.

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

The Bitcoin Mining segment generates revenue from the Bitcoin the Company earns through its mining activities.

Bitcoin Mining cost of revenue consists primarily of direct production costs of mining operations, including electricity, labor, insurance, variable data center hosting fees, but excluding depreciation and amortization.

The Data Center Hosting segment generates revenue from long-term customer contracts for the provision/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.

Data Center Hosting cost of revenue consists primarily of direct power costs, rent and compensation costs.

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

Gross profit (loss) is the segment performance measure the CODM uses to assess the Company’s reportable segments, and is before elimination of intersegment profits.

Prior to 2024, the Company had a Data Center Hosting reportable segment but has since terminated all contracts with its Data Center Hosting customers.

Commencing with the three months ended March 31, 2024, the CODM ceased analyzing the performance of the Data Center Hosting operations and the Company ceased reporting Data Center Hosting as a separate reportable business segment.

The Company has no plans to offer data center hosting services to new customers.

All residual revenue and costs of revenue related to Data Center Hosting incurred during the year ended December 31, 2024, are included in Revenue:

Other and Cost of Revenue:

Prior period amounts related to Data Center Hosting have been recast into Revenue:

Other and Cost of Revenue:

Other than the $ 96.9 million of goodwill from the Block Mining Acquisition allocated to the Bitcoin Mining segment, and $ 25.0 million of goodwill from the E4A Solutions Acquisition allocated to the Engineering segment, the Company does not allocate assets

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

to the reporting segments because its assets are managed on an entity-wide basis and, therefore, 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 Engineering segment generates revenue through customer contracts for custom engineered electrical products.

Engineering cost of revenue consists primarily of direct materials and labor, as well as indirect manufacturing costs.

The 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 these are managed on an entity-wide basis.

Therefore, the Company does not separately disclose the total assets of its reportable operating segments.

The Data Center Hosting segment purchases custom engineered electrical products from the Engineering segment in the ordinary course of business.

Other revenue is from external customers.

All revenue and cost of revenue from intersegment transactions have been eliminated in the Consolidated Statements of Operations.

All Other revenue is from external customers.

Concentrations

During the years ended December 31, 2023 and 2021, aside from the Bitcoin Mining revenue generated as a result of the Company’s participation in a mining pool, no single customer or related group of customers contributed 10% or more of the Company’s total consolidated revenue .

During the year ended December 31, 2022, aside from the Bitcoin Mining revenue generated as a result of the Company’s participation in a mining pool, the Company earned revenue of approximately $ 29.7 million from one customer, representing 11.4 % of the Company’s total consolidated revenue, in its Engineering segment.

No other individual customer accounted for more than 10% of total revenue for the year ended December 31, 2022.

As of December 31, 2023 and 2022, five customers accounted for more than 70 % and 80 %, respectively, of consolidated accounts receivable, net.

The following tables present segment revenue and segment gross profit (loss), including the significant expense items reviewed by the CODM:

Year ended December 31, 2024

Bitcoin Mining

Revenue from external customers

Intersegment revenue

Segment revenue

Reconciliation of revenue

Other revenue (a)

Elimination of intersegment revenue

Total consolidated revenue

Insurance on miners

Ground rent and related water and property tax

Other segment items (b)

Segment gross profit (loss)

Year ended December 31, 2023

Bitcoin Mining

Revenue from external customers

Intersegment revenue

Segment revenue

Reconciliation of revenue

Other revenue (a)

Elimination of intersegment revenue

Total consolidated revenue

Segment cost of revenue:

Insurance on miners

Other segment items (b)

Segment gross profit (loss)

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

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

Years Ended December 31,

Reportable segment revenue:

Bitcoin Mining

Data Center Hosting

Other revenue

Total segment and consolidated revenue

Reportable segment cost of revenue:

Year ended December 31, 2022

Bitcoin Mining

Data Center Hosting

Total segment and consolidated cost of revenue

Revenue from external customers

Intersegment revenue

Segment revenue

Reconciliation of revenue

Other revenue (a)

Elimination of intersegment revenue

Total consolidated revenue

Segment cost of revenue:

Insurance on miners

Third-party hosting fees paid

Other segment items (b)

Segment gross profit (loss)

(a) Other revenue is primarily attributable to Data Center Hosting revenue and is therefore not included in the total for segment gross profit (loss).

(b) For each reportable segment, the other segment items category primarily consists of:

Bitcoin Mining – Bitcoin miner and network repair and maintenance costs.

Engineering – Manufacturing overhead costs.

The following table presents the reconciliation of segment gross profit (loss) to net income (loss) before taxes :

Years Ended December 31,

Segment gross profit (loss)

Reconciling Items:

Other profit (loss) (a)

Elimination of intersegment profits

Acquisition-related costs

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Impairment of miners

Interest income (expense)

Realized loss on sale of marketable equity securities

Realized gain on sale/exchange of long-term investment

Unrealized loss on marketable equity securities

Interest income

Interest expense

Unrealized gain (loss) on equity method investment - marketable securities

Other income (expense)

Current income tax benefit (expense)

Deferred income tax benefit (expense)

Net income (loss)

Net income (loss) before taxes

Riot Platforms, Inc.

Notes to Consolidated Financial Statements

Impacts of Adoption of ASU 2023-08

The following tables present a summary of the impacts of the adoption of ASU 2023-08, effective January 1, 2023, on the Company’s interim Condensed Consolidated Statements of Operations provided during the year ended December 31, 2023 ( all amounts are unaudited ):

For the three months ended March 31, 2023

Consolidated Statements of Operations

As previously

Total revenue

Realized gain on sale of Bitcoin

Impairment of Bitcoin

Change in fair value of Bitcoin

Operating income (loss)

Net income (loss)

Basic net income (loss) per share

Diluted net income (loss) per share

Basic weighted average number of shares outstanding

Diluted weighted average number of shares outstanding

For the three months ended June 30, 2023

For the six months ended June 30, 2023

Consolidated Statements of Operations

As previously

Total revenue

Realized gain on sale of Bitcoin

Impairment of Bitcoin

Change in fair value of Bitcoin

Operating income (loss)

Net income (loss)

Basic and diluted net income (loss) per share

Basic and diluted weighted average number of shares outstanding

For the three months ended September 30, 2023

For the nine months ended September 30, 2023

Consolidated Statements of Operations

As previously

Total revenue

Realized gain on sale of Bitcoin

Impairment of Bitcoin

Change in fair value of Bitcoin

Operating income (loss)

Net income (loss)

Basic and diluted net income (loss) per share

Basic and diluted weighted average number of shares outstanding

(a) Other profit (loss) is primarily attributable to Data Center Hosting activity and is therefore not included in the total for segment gross profit (loss).

Concentrations

During the years ended December 31, 2024 and 2023, aside from the Bitcoin Mining revenue generated as a result of the Company’s participation in a mining pool, no single customer or related group of customers contributed 10% or more of the Company’s total consolidated revenue .

No other individual customer accounted for more than 10% of total revenue for the year ended December 31, 2022.

As of December 31, 2024 and 2023, six customers accounted for more than 50 % and 70 %, respectively, of consolidated accounts receivable, net.

During the years ended December 31, 2024 and 2023, Bitcoin Mining power was primarily obtained from ERCOT.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

As of May 18, 2023, the Company dismissed Marcum LLP (“Marcum”) as it’s independent registered public accounting firm, not as a result of any disagreement on any matter of accounting principles or practices, financial statement disclosure, or audit scope or procedure.

As of May 18, 2023, the Company dismissed Marcum LLP (“Marcum”) as its independent registered public accounting firm, not as a result of any disagreement on any matter of accounting principles or practices, financial statement disclosure, or audit scope or procedure.

During the Company’s fiscal year ended December 31, 2022, as well as the subsequent interim periods through Marcum’s dismissal, there were no disagreements within the meaning of Item 304(a)(1)(iv) of Regulation S-K with Marcum on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to Marcum’s satisfaction, would have caused Marcum to make reference to the subject matter of the disagreements in connection with its reports on the Company’s financial statements for such fiscal years.

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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-K

Item 8. Financial Statements and Supplementary Data