Riot Platforms - Earnings Call - Q1 2025
May 1, 2025
Executive Summary
- Record revenue of $161.4M, a slight beat vs S&P Global consensus of $160.7M; gross margin improved to 46% from 39% in Q4, driven by higher BTC price and improved uptime; Bitcoin Mining revenue doubled YoY to $142.9M. Bold beat: Revenue beat.
- Bold miss: EPS of -$0.90 missed consensus (-$0.21), largely due to $271.2M mark-to-market losses on BTC holdings and marketable equity securities; D&A $77.9M and SBC $29.6M also weighed on GAAP results.
- Strategic catalysts: Rhodium acquisition and settlement terminated an unprofitable hosting contract (~$15M gross loss in FY24), repurposed 125 MW power to self-mining, and eliminated related litigation; progress on AI/HPC (feasibility complete, added land/fiber/water); $100M Coinbase credit facility diversified funding.
- Guidance/tone: Management narrowed execution focus to an AI/HPC build-to-suit path, indicated an LOI would precede any lease, and raised cash SG&A run-rate guidance to $30–$33M per quarter; hash rate exit-2025 now targeted at 38.4 EH/s, below prior 46.7 EH/s.
What Went Well and What Went Wrong
What Went Well
- Record quarterly revenue and improved operating uptime (>88%), enabling BTC production to rise to 1,530 despite a 10% increase in network hash rate. “We achieved a new record for quarterly revenue… significantly expanding our hash rate, and further enhancing our operating efficiency.”
- Power strategy maintained one of the industry’s lowest net power costs (3.4 c/kWh) and reduced non-power direct costs per BTC; cost to mine excluding depreciation essentially flat QoQ.
- Engineering segment returned to profitability with $13.9M revenue and 15% gross margin, aided by the E4A acquisition.
What Went Wrong
- EPS missed due to mark-to-market losses as BTC fell from $93,354 to $82,534 at quarter-end, causing $208M of fair-value impact on BTC plus $63.2M loss on marketable equity securities.
- Cost to mine per BTC rose YoY (ex-depr: $43,808 vs $23,034), reflecting the April 2024 halving and higher global network hash rate.
- Guidance trajectory lower: exit-2025 installed hash rate now 38.4 EH/s vs prior 46.7; cash SG&A run-rate increased to $30–$33M/quarter (excluding one-time litigation/advisory).
Transcript
Operator (participant)
Today, and thank you for standing by. Welcome to the Riot Platforms First Quarter 2025 Earnings Conference Call. Please note that all participants have been placed in listen-only mode until the question-and-answer session begins, following the company's presentation of its prepared remarks. Please also be advised that today's call is being recorded. I would now like to hand the conference over to Phil McPherson, Vice President of Capital Markets and Investor Relations at Riot Platforms. Please go ahead.
Phil McPherson (VP of Capital Markets and Investor Relations)
Thank you, Lisa. Good afternoon and welcome to Riot Platforms First Quarter 2025 Earnings Conference Call. My name is Phil McPherson, Vice President of Capital Markets and Investor Relations, and joining me on today's call from Riot are Jason Les, CEO; Benjamin Yi, Executive Chairman; Colin Yee, CFO; and Jason Chung, Executive Vice President and Head of Corporate Development and Strategy. On the Riot Investor Relations website, you can find our First Quarter 2025 earnings press release and accompanying earnings presentation, which are intended to supplement today's prepared remarks and which include a discussion of certain non-GAAP items. Non-GAAP financial measures provided should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP and are included as additional clarifying items to aid investors in further understanding the company's First Quarter 2025 performance.
During today's call, we will be making forward-looking statements regarding potential future events. These statements are based on management's current expectations and assumptions and are subject to risks and uncertainties. Actual results could materially differ due to factors discussed in today's earnings press release, in comments and responses made during today's call, and in the risk factor section of our Form 10-K and Form 10-Q, including for the three months ended March 31, 2025, which will be filed later today, as well as other filings with the Securities and Exchange Commission. With that, I will turn the call over to Jason Les, CEO of Riot Platforms.
Jason Les (CEO)
Thank you, Phil, and good afternoon, everyone. Before we dive into Riot's First Quarter 2025 results, I'd like to begin with a review of Riot's key accomplishments during the First Quarter of 2025: mining uptime.
Throughout the quarter, we were able to achieve an average uptime of nearly 90% in our Bitcoin mining operations, representing a significant improvement on prior periods and a testament to the work our teams have been putting in to enhance our operating efficiency. The acquisition of Rhodium assets and settlement agreement. As announced on April 28, Riot has acquired certain assets of Rhodium, Riot's final hosting customer, including all of Rhodium's mining operations and access to 125 MW of contracted power at the Rockdale facility. Riot and Rhodium have also entered into a settlement agreement in which we have mutually agreed to end all litigation between the two parties. This acquisition can potentially enhance our hash rate capacity in the near future while giving us access to significant power capacity for future development.
Further, it will significantly reduce operating losses and litigation costs associated with this legacy contract, which was inherited as part of our acquisition of Whinstone U.S. in 2021. This strategic acquisition aligns closely with Riot's long-term objectives to streamline operations, significantly reduce ongoing operating costs, and reallocate resources to our more profitable core business: prudent financial management. As a result of our strong balance sheet, Riot has had limited use of our ATM program in 2024 year to date, limiting dilution to our shareholders. Instead, we have been able to access other sources of financing to fund the necessary capital for growth and operating expenses.
For example, during the month of April, Riot sold our monthly Bitcoin production and also entered into our first Bitcoin-collateralized credit facility with Coinbase, allowing us to leverage our strength to reduce dilution while maintaining a strong balance sheet, which remains a core pillar of our business strategy. Advancing our AI HPC data center business, Riot has made significant progress on building our data center business this quarter, and advancing on this objective remains our primary focus as a management team. In addition to the completion of Altman Solon's feasibility study of Corsicana for data center development, we are expanding our site footprint with additional land acquisitions, enhancing our internal expertise with key additions to the team, and advancing ongoing engagement with potential counterparties.
I am proud of what we have been able to achieve in the first quarter of 2025 and look forward to continuing to report on our progress throughout the year and beyond. With that, I would now like to turn the call over to Colin Yee, CFO of Riot Platforms, to present our Q1 2025 financial update.
Colin Yee (CFO)
Thank you, Jason. I'm excited to present Riot's financial results for the first quarter of 2025. For ease of reference, we have highlighted key metrics on Slide 6, which presents a snapshot of key financial and operating metrics for the first quarter of 2025. I'll give everyone a moment to look over the snapshot before I jump into the details on the following slides. During the first quarter of 2025, Riot increased its self-mining hash rate from 31.5 exahash to 33.7 exahash, representing a 7% increase over the course of the quarter, nearly keeping pace with the increase in global hash rate, which rose by 10% in the same period.
Despite the global network hash rate growing at a slightly greater pace than Riot's deployed hash rate, Riot produced 1,530 Bitcoin in the first quarter of 2025, an increase as compared to the 1,516 Bitcoin produced in the prior quarter. Riot was able to mine more Bitcoin than in the prior quarter due to substantial improvements in our operating efficiency. Year to date for 2025, we have increased Bitcoin holdings per million fully diluted shares from 44.3 to 47.4, representing a Bitcoin yield of 7% through the period ended March 31st, 2025. Going forward, we will continue to focus on generating an accretive Bitcoin yield in order to ensure that our shareholders are able to participate in the long-term value creation opportunity that Bitcoin represents. Riot also ended the quarter holding 19,223 Bitcoin, an increase of 8% relative to the 17,722 Bitcoin that we held at the end of 2024.
For the first quarter of 2025, Riot reported total revenue of $161.4 million as compared to $142.6 million for the previous quarter, a 13% increase quarter over quarter. This increase was primarily driven by increased uptime and improved operating efficiency in our Bitcoin mining business. Gross profit for the first quarter of 2025 was $73.6 million as compared to gross profit of $55.7 million for the prior quarter. Gross margin in the first quarter of 2025 equaled 46%, an increase from 39% in the prior quarter. Non-GAAP adjusted EBITDA for the first quarter of 2025 was negative $176.3 million as compared to non-GAAP adjusted EBITDA of $296.3 million for the prior quarter. Net loss for the first quarter of 2025 was $296.4 million, or $0.90 per share, compared to a net income of $136.4 million, or $0.43 per share for the prior quarter.
This net loss was primarily driven by mark-to-market adjustments due to the quarter-end decline in Bitcoin price and marketable securities, totaling $271.2 million. As a reference, the Bitcoin price at the end of the fourth quarter of 2024 was $93,354, while the price at the end of the first quarter of 2025 was $82,534. This resulted in a mark-to-market downward adjustment of $208 million for the quarter. Net loss for the quarter also included depreciation and amortization expense of $77.9 million and non-cash stock-based compensation expense of $29.6 million. Cash SG&A for the quarter was $41.9 million, including one-time litigation expenses of $8.6 million and advisory fees of $3.0 million. Excluding these one-time expenses, Riot's cash SG&A expenses equal $30.6 million, in line with our prior guidance of a run rate of $30-$33 million per quarter for 2025.
For the first quarter of 2025, Bitcoin mining revenue totaled $142.9 million, a 13% increase relative to the prior quarter Bitcoin mining revenue of $126.3 million. This increase was primarily driven by an increase in Bitcoin production for the quarter, which resulted from our 7% increase in self-mining hash rate and enhanced operating efficiency. Bitcoin mining gross margin for the quarter was 48%, nearly flat when compared to the Bitcoin mining gross margin of 50% for the prior quarter. Direct cost to mine, excluding depreciation in the first quarter of 2025, was $43,808 per Bitcoin, of which power costs amounted to $35,313 per Bitcoin, or 81% of total direct costs per Bitcoin. Quarter over quarter, our net power costs decreased from $0.038 a kilowatt-hour to $0.034 a kilowatt-hour as Riot's power strategy continued to yield strong results.
Direct non-power costs, which include direct labor, miner insurance, miner and miner-related equipment repairs, land lease and related property taxes, network costs, and other utility expenses, totaled $8,495, or 19% per Bitcoin mined, down from the fourth quarter of 2024 when direct non-power costs accounted for 21% of total costs. This represents the third consecutive quarter in which direct non-power costs, as a percentage of total direct costs per Bitcoin, have dropped, and is a strong demonstration of Riot's ability to leverage improved economies of scale at our operating facilities. For the first quarter of 2025, engineering revenue totaled $13.9 million, a 20% increase relative to the prior quarter engineering revenue of $11.6 million. Total revenue does not include $6.4 million of intercompany purchases made in the first quarter by Riot for capital expenditures associated with our mining operations.
Riot's prior fiscal year 2025 guidance of $100 million in engineering revenue included approximately $16 million of intercompany purchases, which under GAAP accounting are not included in our reported consolidated results. That being said, we remain on track to meet GAAP guidance of $84 million, and we expect revenue to continue increasing in upcoming quarters. The engineering division also saw a return to profitability this quarter, achieving a gross profit of $2.1 million, representing a gross margin of 15%, as compared to a gross loss of $2.4 million in the prior quarter. Our recent acquisition of ESS Solutions has helped support this profitability rebound in our engineering division, which continued to see robust demand growth as this was the first full quarter which incorporated the financial results of ESS Solutions in our engineering business.
With that, I would now like to turn the call over to Jason Chung to provide an update on our most recent transaction.
Jason Chung (EVP and Head of Corporate Development and Strategy)
Thank you, Colin. On April 28th, Riot announced the acquisition of Rhodium's operations and tangible assets, including all ASIC miners, at our Rockdale facility as part of a settlement agreement, which also included an agreement to mutually dismiss all existing litigation and a release on all future claims not connected to the closing of this transaction. The transaction consideration totaled $185 million and was comprised of $129.9 million in cash, return of Rhodium's $6.1 million power security deposit, and $49 million in Riot common stock. For background context, Riot assumed certain legacy Whinstone hosting agreements, including the agreement with Rhodium, as part of Riot's acquisition of Whinstone U.S. in May 2021.
As outlined on this slide, Rhodium formerly occupied roughly one-half of Building B and all of Building C at our Rockdale facility and had contractual rights to 125 MW of power capacity, representing a significant portion of total square footage and power capacity available on-site. This legacy hosting contract was responsible for an approximately $14.6 million loss in 2024 alone and had a remaining term through December 2030. With this acquisition and settlement agreement, Riot has completely exited the hosting business and now has full control over the on-site infrastructure and 125 MW of power capacity previously dedicated to Rhodium at our Rockdale facility. We are in the process of evaluating the best use of this additional capacity to optimize the value of the additional infrastructure, power capacity, and on-site assets going forward. I will now turn the call back over to Jason Les.
Jason Les (CEO)
Thank you, Jason. Riot had $48.9 million in capital expenditures in the first quarter, primarily to continue the 600 MW substation expansion at Corsicana and advance on initiatives to enhance the optionality of the site for data center development. We have also incurred capital expenditures to grow Bitcoin mining hash rate at our Kentucky facilities. As part of our work developing our AI HPC data center business, Riot has secured the necessary easements for municipal water at Corsicana while also acquiring additional land parcels for data center development. Riot is also in the process of securing additional fiber capacity for Corsicana, which will increase the number of connections from two to four. By taking these early steps to address long-lead items, we continue to aggressively pursue a value-maximizing outcome for our data center business. Riot's hash rate growth forecast for 2025 remains unchanged from our previously issued guidance.
However, with the recent acquisition of Rhodium's assets at our Rockdale facility, there is potential upside to our hash rate forecast. Our operations team is currently in the process of performing a full evaluation of the assets to determine the value-maximizing use of this new capacity. As this work is completed, we will update investors on the anticipated impact these new assets will have on our hash rate guidance. Earlier this year, Riot commissioned a feasibility study with Altman Solon, a leading consultant to the data center industry, to validate the opportunity for an AI HPC data center campus at our Corsicana facility and to identify potential areas for improvement. We were pleased with the results of Altman Solon's feasibility study, which reinforced our thesis that large-scale access to power in close proximity to tier-one markets, as we have at Corsicana, is scarce and valuable.
Altman Solon identified four primary factors at our Corsicana facility that they believe make it ideally suited for data center development. Number one, secured power. Corsicana is fully approved to draw 1 GW of power, and we are actively developing infrastructure to support this power availability. Number two, owned land. Corsicana has 35 acres immediately ready to develop a first-phase data center, and in the coming weeks, we are closing on the acquisition of significant additional land. Number three, the attractive location. Corsicana is only 60 mi from a tier-one data center market in Dallas, in close proximity to existing core hyperscaler architecture. Finally, scalability. Beyond the 600 MW of available capacity at Corsicana, Riot has additional expansion potential through its existing portfolio, and our engineering division provides critical advantages to deliver on aggressive timelines.
The civil work already completed at Corsicana provides a prime development path for immediate first-phase development for our AI HPC data center campus. The overview map on this slide shows the current layout of the site, which features the existing Bitcoin mining operation on 20 acres, our current and future substation expansion, which upon completion will cover 15 acres, and the remaining available footprint totaling 35 acres. While this area is well-suited for a first-phase development, we have proactively been procuring additional development acreage to fully utilize all 1 GW of power. This month, we will be closing on an additional 355 acres of land less than a mile away from our Corsicana facility, and we are actively pursuing multiple options to add additional acreage in the immediate vicinity of our Corsicana facility for future development.
This additional land, combined with the favorable zoning and tax treatment in Navarro County, allows for maximum flexibility and expedited development timelines that we can offer to tenants. The Corsicana facility is already well-suited for data center development, and some of the largest constraints facing the market today, such as access to power, have already been solved. We are actively working to further improve the site and enhance its attractiveness to tenants. In addition to the progress on the power and land we have already made, additional areas where we have made progress in Corsicana include water. We are progressing with the development of two on-site wells and a municipal water source to bring ample additional water supply in 2026. Connectivity is another area. We are in the process of bringing in additional fiber lines to the site to ensure an optimal amount of redundancy and diverse paths.
This continued progress will ensure that our Corsicana site is the most attractive overall offering possible. We are working on an aggressive timeline to achieve the key milestones required for Riot to execute on our data center business objectives. In just the past few months, we have engaged industry experts, added expertise to our board of directors, and engaged financial advisors, all while continuing to develop the critical infrastructure components needed to achieve energization in 2026. Over the next few quarters, we will be further expanding our internal expertise through key hires and anticipate we will soon announce a best-in-class team to further drive top-level execution on our data center business. This will allow us to complete the basis of design for the first phase of the Corsicana data center campus, which will ultimately result in us securing an attractive lease with a high-quality tenant.
We are continuing to make rapid progress through the pursuit of this initiative and have engaged with several counterparties who are already performing due diligence and will continue to share updates on our completion of these key milestones as they occur. In closing, Riot's first quarter 2025 results were driven by our Bitcoin mining business and resulted in one of our strongest quarters as a result of improved operating uptime and other efficiencies. Riot's cost to mine in the first quarter of 2025 was essentially flat with the fourth quarter of 2024, despite the network difficulty increasing by 10%. Riot's proven power strategy continues to differentiate us from our competitors. This strategy continues to result in one of the lowest cost-to-mine Bitcoin amongst our peers, a key differentiator in our industry.
Strong and efficient Bitcoin production, combined with prudent financial management, has resulted in a Bitcoin yield of 7% year to date. We will continue to focus on achieving industry-leading results while minimizing dilution and accomplishing our goal of maximizing value of all available power capacity. The development and leasing of an AI HPC data center is our primary focus in 2025, and we will continue to build on the incredibly positive momentum already underway. We are investing in building a design ready to meet hyperscaler demand and create the most compelling data center offering possible as we sit in an enviable position with one of the most attractive data center sites available in the country. I look forward to updating you on our progress. We will now open the call up for questions. Operator.
Operator (participant)
Thank you. As a reminder, if you would like to ask a question, please press star one one on your telephone. You will then hear an automated message advising your hand is raised. If you would like to remove yourself from the queue, press star one one again. We also ask that you wait for your first and last name to be announced before proceeding with your question. One moment for the first question. Our first question will come from the line of Nick Giles of B. Riley Securities. Your line is open.
Nick Giles (Senior Research Analyst)
Thank you, Operator. Good afternoon, everyone, and guys. Congrats on the progress so far. My first question, you know, if I'm not mistaken, Riot was behind the inception of the Large Flexible Load Task Force, if I'm saying that correctly. I was curious what your main learnings are thus far in this process where you could be moving away from power loads that are more flexible towards, you know, power loads that are more redundant in nature.
Jason Les (CEO)
Yeah, Nick, I wouldn't say Riot was necessarily behind the Large Flexible Load Task Force. The inception of that task force was from legislative action in Texas, but we are closely involved in public policy efforts. We really keep our ear to the ground on that and try to contribute industry insight, expertise, and viewpoints to ensure regulators are as successful as possible with what they're trying to accomplish. The color I can give you is that when you think about the Large Flexible Load Task Force, it's not just about curtailing for high prices or participating in ancillary services, although that's a big part of it. There's a host of technical qualities and characteristics that it's important for all large loads to meet on a grid.
I think we've learned a lot about the technical aspects and requirements, and I think we've developed a very strong capability with respect to understanding regulator viewpoints, understanding grid operator requirements, and what they're looking for for any type of large load. I think that experience interacting with grid operators is one of the reasons that Riot is so successful at securing powered land and operating sites at really unprecedented volumes of power.
Nick Giles (Senior Research Analyst)
Jason, I appreciate all that color. My next question was just really how you're thinking about how you're approaching potential economics here. You know, given that it seems like some of these key capital projects are being completed now, what could the benefit ultimately be in any deal? Or, you know, is there any targeted level of CapEx that we should be thinking about on the back of these?
Jason Les (CEO)
I think it's too early to know what that exact type of target is. You know, there remains a variety of structures and flavors that this could come together. Of course, we're focused on the structure that is going to maximize shareholder value. We don't prejudice any structure necessarily, but we're looking at the options and looking at what is going to get us the maximum value of our assets, which we believe are scarce and valuable. What we're doing, Nick, with the work we have going on right now, is ensuring the ball moves forward. The fact that we are continuing to build on substation, bringing additional fiber to the site, to bring additional land, to bring in additional water, all of these things continue progress on the site.
It is really, you can think about it as advancing on what would be the powered shell stage of a traditional development. Doing this work, we think, is making the overall offering just more attractive as time goes on. To the core of your question, you know, what does this mean for a development cost or those types of specifics? I think it is too early to say. Our focus is on making this as valuable as possible and ensuring we are as successful as possible when engaging with hyperscalers.
Nick Giles (Senior Research Analyst)
Okay, fair enough. Again, congrats on the progress so far and continued best of luck.
Jason Les (CEO)
Thank you.
Operator (participant)
Thank you. One moment for the next question. Our next question is coming from the line of Patrick Moley of Piper Sandler. Your line is open.
Hey, how's it going? This is Will Kobursky for Patrick. Thanks for taking my question. Since you all began looking at AI HPC opportunities in your conversations with potential tenants, have you sensed any tone shift or change in demand or change in potential decision-making timelines or signed deals? Thanks.
Jason Les (CEO)
Yeah, I would say that demand continues to be as robust as it's ever been. I think we're starting to see more commentary from other hyperscalers that reinforces that. We've continued to be very encouraged by the feedback that we've received, not just from hyperscalers, but potential financing partners, which would be critical in this development as well. Everyone continues to recognize the value of power that can be delivered in the near term. You know, in this case, we're talking about 2026. The fact remains, there's approximately 5 GW of data center capacity being used for generative AI today. The forecast is we're going to need about 30 GW by 2030. That's a pretty big delta to fill in a pretty short period of time. As a result, you know, we continue to see strong demand.
has been commentary, I believe, on Meta's earnings call yesterday about how they are increasing CapEx spend and commentary from other hyperscalers that they continue to be extremely focused on securing more data center capacity. We are encouraged.
Maybe as a quick follow-up, I know you mentioned financing partners. Can you give us an idea of what would project-level financing for one of these deals look like? Would you tap into the Bitcoin treasury, kind of like you were mentioning with the April production, or what would that look like?
Yeah, we will look at whatever is the value maximizing option and whatever is going to give us the best cost of capital. That's what that decision comes down to. I wouldn't preclude any option. I think details of what a financing deal would look like would really be dependent on the off-taker terms. We're not, of course, at the level of discussing—we're not at the stage of discussing that level of detail yet, but we believe we're very well positioned on the financing sources with our advisors Evercore and Northland. We really think the quality of the tenant that we eventually would be able to secure is going to positively influence the amount and the quality of financing options available to us.
That is why our focus remains on not just getting, you know, a deal in a binary sense, but going after blue chip, very strong counterparties where the market will value those cash flows and those cash flows can be securitized.
Thanks a lot, guys.
Operator (participant)
Thank you. One moment for the next question. Our next question will be coming from the line of Paul Golding of Macquarie. Your line is open.
Paul Golding (Senior US Payments and Digital Commerce Analyst)
Thanks so much. Congrats on the efficiency approaching 90%. I wanted to dive into some of the commentary around the HPC focus for this year. To what extent is the vertical integration with ESS Metron something that has come up in discussions or that you see as being additive to timelines or ability to deliver on an HPC client's expectations? Secondly, just wanted to touch base on power across a couple of items, one being backup generation. In the presentation, you noted on-site backup diesel generation. Just wanted to get a sense of some of those other long lead time items, how you're approaching that, how much is stocked, or how you're looking at that. Thanks so much.
Jason Les (CEO)
Yeah, Paul, thank you for the question on the vertical integration. We think this is a really important differentiator that Riot has. We have an electrical engineering and manufacturing division with ESS Metron that engineers and manufactures critical switchgear. By the way, it manufactures it here in the United States, which is becoming increasingly important when you think about de-risking supply chains. Our recent acquisition of ESS also enhances our ability to do electrical work using a skill set that, as you can imagine, when everyone is doing these data center demands, is very constrained and difficult to secure that type of expertise. I'll also add that ESS does a considerable amount of work in generation, so they can be very helpful on the backup generation side.
Feedback that we've gotten broadly from counterparties and from those who have been evaluating the opportunity, they have been positively, I'd say, inclined around the fact that we have this differentiating capability. On the generator side, as I touched on, that's something that our engineering division has an expertise and does on a regular basis for counterparties. We think we come well positioned there and we'll have good insights into that supply chain. We don't have any commentary on if we secure or when we will secure backup generation and lead time on that yet. You know, that is a key component. That's something that we'll be paying close attention to in order to be aggressive on delivery timelines.
Paul Golding (Senior US Payments and Digital Commerce Analyst)
Thanks, Jason. If I could just squeeze one housekeeping question in here as well. I see in the presentation that you have 1 GW approved. Obviously, that's the entirety of the current Corsicana site. Then past to HPC, fully contracted 1 GW as well. Presumably, that's adding 400, not reallocating some Bitcoin mining power. Is that correct?
Jason Les (CEO)
What we're trying to show on that slide is that we have 1 GW approved. 400 MW is currently being utilized for Bitcoin mining, and 600 MW is available for an AI HPC data center deal. Now, however, if economics are attractive and things develop on the line, you know, the whole 1 GW is potentially on the table. The focus is, you know, just maximizing the value of that asset overall.
Paul Golding (Senior US Payments and Digital Commerce Analyst)
Great. Thanks so much, Jason.
Jason Les (CEO)
Thank you.
Operator (participant)
Thank you. One moment for the next question. The next question is coming from the line of Ben Sommers of BTIG. Your line is open.
Ben Sommers (Equity Research Associate)
Hey, guys. Good afternoon. Thanks for taking my questions. On the recent $100 million facility with Coinbase, just kind of curious why now for this and how are we thinking about, you know, the capital strategy moving forward here?
Jason Les (CEO)
Yeah, turn that over to Jason Chung.
Jason Chung (EVP and Head of Corporate Development and Strategy)
Sure. Thanks, Jason. Thanks for the question. I think our financing activities this quarter could give a good sense of how we're thinking about all the different financing options that we have available to us. We saw extremely limited use of the ATM and therefore very minimal dilution to our shareholders. When we did issue into the ATM, we achieved an average share price of $13.05 per share. We feel pretty good about our timing when we did utilize the ATM on a limited basis. In addition to that, we took two other steps, right? In April, we started selling our monthly Bitcoin production as well, raising additional funds that way. Now with the Coinbase facility, we've, you know, opened up another avenue of financing for us that, again, sidesteps the ATM.
As we see kind of weak valuations in the market at the moment, we've been very actively exploring these alternate financing options. We'll continue to aggressively pursue other options in the market as they're available. That comes within the constraint on the debt side, on the leverage side, as we previously mentioned, of targeting no more than 40% debt to Bitcoin on our balance sheet to maintain what we feel is a fairly comfortable sort of margin of safety on that.
Ben Sommers (Equity Research Associate)
Awesome. Thank you. My follow-up, kind of on the topic of global hash, any color on how you think about global hash trending in the current tariff environment? Can this open up any opportunities for you guys to increase market share, whether in 2025 or beyond there?
Jason Les (CEO)
Yeah, Ben, I think tariffs will generally impact a fair amount of miners' growth plans. I think we're already seeing some commentary from different miners on how they're reevaluating their hash rate growth forecasts. Riot is in a good position for a number of years now, dating back to 2023, when we entered into a long-term miner purchase agreement with MicroBT out of their U.S. production facilities. That's really helped insulate us from tariffs, at least for our growth plans in 2025 for hash rate so far. I think the opportunity for Riot is that, with it being more expensive to perhaps grow Bitcoin mining operations, global network hash rate may not grow as quickly towards the end of the year, assuming the Bitcoin price remains where it is. Of course, if the price goes up, that would probably incentivize more development.
I think with where Riot is today and the development that we have going on, we get a good market share from where we're at. Our low-cost operations will ensure that we continue to have a healthy margin through any volatility in hash price.
Ben Sommers (Equity Research Associate)
Thanks, sir. Thanks for taking my questions.
Operator (participant)
Thank you. One moment for the next question. The next question will be coming from the line of Darren Aftahi of Roth. Your line is open.
Darren Aftahi (Managing Director and Senior Research Analyst)
Hey, guys. Thanks for taking my questions. First one, if I may, just Jason, you talked about there's a lot of moving parts here with acquiring more land, kind of expanding your water capabilities, and then redundant fiber. I guess first question is just around, once you get the substation in the existing pad you have in the deck, like, what's the capacity theoretically for HPC there? I guess what steps have to be taken to kind of make that other piece of land that you're in the process of acquiring kind of usable? What's kind of the timeline we can think about in terms of phases theoretically? I guess how is that kind of dovetailing into kind of lease discussions? Thanks.
Jason Les (CEO)
Yeah. There are a number of development strategies that you can take with the amount of land that's available there. You can get very aggressive on density. The trade-off could be higher cost and potential limitations on future-proofing of the design. Or, you know, the reason that we are procuring more land is the more footprint you have available, just the more development options that you have. The fact that we have a substation that's coming on and a development pad that's already completed makes conversations really helpful with potential tenants, hyperscalers, because this isn't a greenfield exercise for a first phase. You can begin on a first phase and, you know, work on additional phases in parallel. The main thing we would need to do to get those additional phases ready would be some civil work. You know, we're not acquiring just development pads there.
There would need to be civil work done to get those sites ready for development, as well as some electrical work. I think, you know, typically, from what we've seen in the market, large players, large tenants are looking for multiple-phase developments. The fact that we could get started with one right away and then being able to continue from additional phases in parallel in the future makes the offering possible. You know, we don't have, like, strong guidance on what I can tell you is what's possible on that site, on that footprint. You know, I think something in the range of 100 MW-200 MW of critical IT load, depending on that tenant's preference, can be done there. You know, with higher expense, higher capital expense, you could get higher density there.
The name of the game for us is improving the optionality of the site, making it a successful position as possible when we're engaging with hyperscalers.
Darren Aftahi (Managing Director and Senior Research Analyst)
Great. If I could just squeeze one more in, with the Rhodium building, what's the feasibility that that could be used for something other than Bitcoin? I guess what's the decision process between potentially retrofitting that 125 for HPC or actually using existing capacity at your Corsicana that you just built? Thanks.
Jason Les (CEO)
I think, you know, it's too early to tell exactly what we're going to do with the assets and the power capacity that we acquired. We want to choose the value-maximizing approach with these assets. The fact that this is part of a substation that's already been built means that, you know, this could potentially work for an AI HPC data center development as well. It's going to have all the same qualities as a Corsicana, which is why we're most focused on Corsicana. What we get that's really valuable with this acquisition is we eliminate the ongoing hosting loss. We eliminate the ongoing litigation loss. We get a meaningful amount of power that we can decide what to do with. Like I said, we're going to choose the value-maximizing approach with that capacity.
More specifically, to address your question, Darren, I don't think we would retrofit that building for AI HPC, but we have land available around there. We could, we have the potential to build, you know, a data center development or building around there to just use the power that's already available, if that's the path we chose. Still too early to say.
Darren Aftahi (Managing Director and Senior Research Analyst)
Helpful. Thank you.
Operator (participant)
Thank you. One moment for the next question. The next question is coming from the line of Reggie Smith of JPMorgan. Your line is open.
Reggie Smith (Executive Director of Equity Research)
Hey, thank you. Two questions for me. The first, I know you talked about tariffs, and I think you were referring to ASIC prices. I was curious if there's any exposure on the power infrastructure side to higher tariffs. I got a follow-up. Thank you.
Jason Les (CEO)
Yeah. Reggie, good question. On the power infrastructure side, it can kind of depend on the component, right? When you're looking at at least, like, the switchgear side and what components, like, our engineering division produced, they produce those domestically. At least, you know, purchasing from the OEM would not be subject to tariffs. They have their own components that they source to put this equipment together, though. It's such a fluid situation with tariffs that it really is changing in the views. Ideas are changing on a day-to-day basis. It's too early to say what it would impact, how it would impact our engineering division and their components.
More broadly, from other suppliers of electrical infrastructure, in particular, if you're talking about high-voltage transformers, it would, of course, impact the cost of transformers that would be produced in China or other electrical equipment that would come from China. We are seeing a lot of things happen all over the marketplace. We are staying really close to it. Too early to say what the overall impact would be.
Reggie Smith (Executive Director of Equity Research)
Understood. Got it. This may be a tough question to answer, but I'm thinking about, you know, milestones along the path, more client-facing milestones on the HPC side. As we, you know, think about the next 12 months or so, what are some things we should look for to kind of let us know that you guys are kind of moving the ball down the field? Obviously, you do not have to give me any dates, but, like, what type of announcements should, you know, should we be looking for or thinking about?
Jason Les (CEO)
Yeah, that's a good question, Reggie. I think you'll see us continuing to work at building an internal team to optimize our success here. That doesn't necessarily mean that we would be building something like this on our own. Building internal expertise would augment and support our ability to be successful in a JV type of structure as well. We are going to continue to work on building that team. We are working on completing a basis of design for what a potential data center would look like. That way, we have something more concrete that we can have discussions around. We think that would be very helpful. Of course, the ultimate milestone finish line would be securing a lease at a tenant. You know, they would ultimately have the requirements on what a design would look like.
You know, we would work collaboratively with them on what that design would be. In addition, also, you know, financing would be an important milestone along the way there. We are really focused on this. We strongly believe in the opportunity here. We think there is a great opportunity for Riot to build an AI HPC data center business. That is our priority. I think we are in a very good position to be successful at doing so.
Reggie Smith (Executive Director of Equity Research)
That makes a lot of sense. I'm not sure if you can, if there is anything else that would happen, but related to that tenant agreement, are there any, you know, kind of milestones there that may precipitate a deal or precede a deal that we may look for? I don't know if it's a fluid negotiating window. Like, what typically happens there? Is it just that, you know, a lease is announced with no forewarning from the market perspective?
Jason Les (CEO)
Reggie, I think you'd probably see some commentary around an LOI before a lease takes place. You know, a lease in this type of arrangement is a pretty big undertaking. It is typically preceded by the two parties entering into an LOI. You know, what the terms around that LOI are, I can't say right now, but that would probably be a first step that you see before a lease.
Reggie Smith (Executive Director of Equity Research)
Got it. Okay. That makes sense. Perfect. Thank you, guys.
Jason Les (CEO)
Thank you.
Operator (participant)
Thank you. One moment for the next question. The next question is coming from the line of Bill Papanastasiou of KBW. Your line is open.
Bill Papanastasiou (Director of Equity Research)
Good evening. Thanks for taking my questions, gentlemen. For the first one, I was just hoping you could provide some more color on how you expect cash OpEx to trend following the settlement with Rhodium. Is that $27-$30 million target for quarterly SG&A still in play, or could we expect that to come even lower in the second half of 2025 now that that settlement has finalized?
Jason Les (CEO)
Bill, our guidance on run rate SG&A for 2025 was $30 million-$33 million per quarter. That does not include these one-off non-run rate expenses, like you're asking about, like litigation expenses. It's really just so difficult to predict those. Those come so lumpy and different milestones come up. You know, for example, this quarter, all of a sudden, working on an acquisition and settlement agreement with Rhodium in the midst of a bankruptcy process they had underway, that's not something we could have forecasted 12 months ago, but suddenly, you know, a bunch of expenses are incurred around that. We feel good about our guidance on $30 million-$33 million run rate SG&A, a cash SG&A. The expenses that are core to running our business, litigation or any type of special advisory fees, that's more unpredictable.
We still do have active litigation with one of the former hosting customers, GMO. We very likely will incur litigation expenses on that, but it's very difficult to predict. We can't provide guidance around that right now.
Bill Papanastasiou (Director of Equity Research)
Appreciate that color and apologies. I got that target number incorrect. In the last earnings call, it was mentioned that you guys were analyzing all sorts of deal structure options in order to maximize shareholder value. Has your assessment of these options changed since the last update, and have you been able to narrow down that selection further? How are you comfortable with that?
Jason Les (CEO)
Yeah. As you noted, Bill, we're most inclined to the options that's going to maximize the value of our assets. From that perspective, we are narrowing down, narrowing in on a build-to-suit data center being our optimal path. We believe that that type of structure can take all sorts of flavors, from us solely self-performing in developing that to entirely relying on a JV infrastructure development partner or kind of somewhere in between. In any one of those scenarios, though, a financing partner is critical. That is an area where our advisors, Evercore and Northland, have been especially helpful. We have received strong interest from potential financing partners because of the quality of. Would involve greater internal capabilities than what we entered 2025 with. We are rapidly assembling a data center team, and we are bringing upgraded capabilities to the table for more serious discussions.
All that being said, if there is a world where another structure or option, such as doing a powered shell or doing leased land, maximizes value, we are very open to that. That is not what we are seeing in the marketplace today. What we are trying to do is maximize our ability to be successful with a build-to-suit data center option. We will keep an eye on any potential deal structures and keep it an open-minded approach.
Bill Papanastasiou (Director of Equity Research)
Appreciate the color. Thank you.
Operator (participant)
Thank you. One moment for the next question. Our next question will be coming from the line of Martin Toner of ATB Capital Markets. Your line is open.
Martin Toner (Managing Director)
Thank you for taking the question. Is there, now that you are being more flexible with respect to the way you raise capital, is there a way we should think about, like, the range around which you guys will choose to hold mined Bitcoin going forward?
Jason Les (CEO)
Martin, I think the way that we're thinking about it is we're in a great position where we've created, we've put ourselves in a position where we have lots of levers for financing all the time. We have the ability to run an ATM. We have a large Bitcoin balance. With the Coinbase facility demonstrated, we can take a very low-risk vehicle to borrow against that balance. We're working on other types of financing options as well. As you noted, we can sell out of our monthly production and still maintain a very strong Bitcoin balance. The way we look at it, Martin, is we're looking at our capital needs, and we're trying to choose the lowest cost capital, least dilutive option at any time. In the recent month, that was selling our monthly production.
You know, we may continue to do that in upcoming months, but it's something that we evaluate on an ongoing basis. We're just always looking at what our best position is amongst all the options that we've had. We're grateful to be in the position we have this many levers to choose from every day.
Martin Toner (Managing Director)
Makes sense. Thanks. On this nearby Corsicana, I'm assuming that will need to go through, like, the typical, like, approval process before you guys can start building?
Jason Les (CEO)
No, there's no regulatory process. We already have the power approved at our location. Us buying additional land is a very simple land acquisition. That just gives us additional land.
Martin Toner (Managing Director)
Okay.
Jason Les (CEO)
On what to use the power from our existing PPA.
Martin Toner (Managing Director)
It's perfectly fungible with the existing assets that are already approved.
Jason Les (CEO)
Yes.
Martin Toner (Managing Director)
Awesome. Thanks.
Operator (participant)
Thank you. One moment for the next question. Our next question will be coming from the line of Mike Grondahl of Northland Capital. Your line is open.
Mike Grondahl (Senior Research Analyst)
Hey, guys. Thanks. In your discussion with potential tenants, any interesting or helpful feedback you're getting from them on the Corsicana site? As a follow-up to that, at this point, does any one or two potential tenants stick out, or is it kind of a wide-open contest right now?
Jason Les (CEO)
You know, starting with your second question, Mike, there are a number of hyperscalers and even large companies beyond hyperscalers that are in high need of power data center capacity to meet their growth targets. I would say, especially because of the location of our site that allows it to be used for generative AI training, inference, or cloud applications being, you know, 60 mi away from Dallas' tier-one data center, there's a lot of different things you can do at that site. You know, our view is the whole hyperscaler landscape and beyond that, our potential tenants in this for the Corsicana facility. As far as feedback, feedback from our advisors has matched really what we've gotten from tenants. That's why we've been working on improving the land, adding water and additional fiber connectivity.
These were not things that were holding us back, but we have gotten feedback on what we can do to make the offering more compelling and put ourselves in the best position possible to be successful. We have a great site. It is in a very good position as it is. What we have been working on in parallel with having these conversations is doing different things to enhance the overall offering and put ourselves in the best position to be successful.
Mike Grondahl (Senior Research Analyst)
Got it. Thank you. That's helpful.
Operator (participant)
Thank you. One moment for the next question. That next question is coming from the line of Brian Dobson of Clear Street. Your line is open.
Brian Dobson (Managing Director)
Hi. Thanks so much for taking my question. I was wondering if you could comment and give us a little bit of color on what you're seeing as the core driver of the, you know, call it semi-recent uptick in global hash. Can you perhaps opine on where that's coming from, which regions of the globe, and if you think it's sustainable? Certainly, it appears that way.
Jason Les (CEO)
Yeah, Brian, that's a good question. You know, there's always a lag between when hash rate is getting deployed relative to market signals. Here we are now on May 1. It was, you know, about six months ago when Bitcoin really started taking off leading up to and then after the election. For miners who saw that increase in hash price then and wanted to act on it, their hash rate is coming on now. I think we're seeing global advancement in hash rate. You know, I don't have any particular area that I could tell you is, you know, a particular global hotbed. There remains to be, I think, robust continued growth here in the United States. A number of our publicly traded peers still have accomplished significant hash rate growth this year and have more underway.
It seemed to me that the publicly traded Bitcoin miners continue to contribute to a lot of the global hash rate growth.
Brian Dobson (Managing Director)
Yeah, certainly. Thanks very much for that color. I mean, we're hearing that there are some pockets globally that are pushing that forward. We appreciate it. Thanks very much.
Operator (participant)
Thank you. One moment for the next question. The next question is coming from the line of Joe Flynn of Compass Point Research. Your line is open.
Joe Flynn (Senior Research Analyst)
Hi, guys. I was hoping maybe you could just expand on the, you know, initial development you're doing at the site. You kind of touched on it, but specifically, was, you know, adding a fiber line's customer directed and ultimately kind of what that process entails, you know, outsourcing to an OSP supplier and any, like, you know, completion timelines would be helpful.
Jason Les (CEO)
Yeah, Joe, good question. It was not a request from a potential tenant. It was just something that we've identified in the process that adding that would enhance our ability to sign a lease quicker and be able to have a data center fully utilized on that site quicker. We have just been looking at things from feedback we've gotten that we can do to improve the offering of the site and improve our ability to get a lease with strong economics with a strong tenant. We think additional fiber probably could be completed in about 12 months. That would be used by, we would use a third party to get that done.
The good news is because of the area that the Corsicana site is in, 60 mi from this tier-one market in Dallas, that there's a significant amount of fiber that we can tap into that area to add additional lines. It is not as daunting of an activity as it may be in a more remote location. What's also interesting is because of the close proximity of our two sites, we even have the ability to potentially run dark fiber between the two sites. For a tenant that was looking for a substantial amount of capacity and was interested in both sites, they could potentially have a 1.7-gigawatt campus connected with their own fiber in between. We are in a good area to do this. We are bringing in outside help to help us get this done. Probably take about 12 months to complete the additional fiber.
Joe Flynn (Senior Research Analyst)
That's really good color. There is a reason it's a longer-term opportunity. I think at one of your site visits, you talked about, you know, the potential to do on-site generation. I think the deck says, you know, using generators, but there's also been a lot of interest in kind of these microgrids. Like, do you ultimately see an opportunity for, you know, to run nat gas turbines as a source of redundancy in addition to your grid connect? Any color there would be helpful.
Jason Les (CEO)
Yeah. From the work that we've done, Joe, we think that diesel generation would be the ideal way to provide backup redundant power at the Corsicana facility. You know, with our capabilities from ESS, like I touched on with the earlier question, they bring a strong expertise in nat gas generation. If there was an opportunity to use gas to provide that, I'm sorry. If we had the ability to use gas to provide backup generation using natural gas, that was something we'd be very well positioned to do with them. For Corsicana, likely would be useful.
Joe Flynn (Senior Research Analyst)
All right. Thanks.
Operator (participant)
Thank you. One moment for the next question. The next question is coming from the line of John Todaro of Needham. Your line is open.
John Todaro (Senior Analyst)
Great. Thanks for taking my question. I just wanted to go back to two points that were brought up earlier. You mentioned an LOI is not in place right now. I just want to confirm that. So no LOI right now. The second point, you said you'd be very open to a powered shell, but you didn't think the market wanted that right now. You know, I think we kind of got some of the sense that hyperscalers are maybe pushing Bitcoin miners to do a powered shell. That'd be interesting if that's not the case, if they want a full-stack build. Would love to get color on those two.
Jason Les (CEO)
Yeah, John. So there's not an LOI in place right now. With respect to my comments on a powered shell, what I meant to convey was we do not believe that is a value-maximizing route for Riot specifically. There's, you know, for example, a lot of interest in just leasing land. That would not be value-maximizing for Riot based on what we're seeing right now. We remain open to that, you know, in case the right deal structure came along. I think the hyperscalers out there are looking at all types of options. They are looking to just lease powered land. They are looking to take powered shells, and they are looking at build-to-suit data centers as well. Our objective as a management team is to maximize the value of our assets, keep an eyes-wide-open approach on the way that might be.
What we're seeing right now is that a build-to-suit data center is likely the best way for Riot to accomplish that.
John Todaro (Senior Analyst)
Understood. Do you get the sense that if they want a powered shell instead of that, you would maybe just do Bitcoin mining with Corsicana? Is that kind of option number two?
Jason Les (CEO)
We're not really thinking about it like that right now. To be honest, John, we're pretty committed to this path. We believe that we can be successful in building a data center at Corsicana. We think it's just such an attractive offering. We are working on putting together a team that will be able to deliver a build here. I think that's an important differentiator that Riot is going to have when it comes to these conversations. Yeah, we're not thinking of HPC or Bitcoin mining right now. We are committed to the data center path.
John Todaro (Senior Analyst)
Understood. Makes sense. Sounds good. Thank you, gentlemen.
Jason Les (CEO)
Thank you.
Operator (participant)
Thank you. This does conclude today's Q&A session. I would like to turn the call back over to Phil for closing remarks.
Phil McPherson (VP of Capital Markets and Investor Relations)
Thank you, Lisa. Like, thank everybody for joining us today on Riot's first quarter earnings call. We look forward to updating you on our future progress. Take care.
Operator (participant)
Thank you all for participating in today's conference. You can now disconnect.