Impairment Charge for Bitcoin Assets of $99.8 Million
In its second-quarter earnings report released on Monday after the close, Riot Blockchain (RIOT), one of the biggest publicly traded bitcoin miners, reported $349.1 million in goodwill impairment charges related to its acquisitions of miner Whinstone U.S. and electrical equipment provider ESS Metron in 2021. Additionally, it disclosed an impairment charge for its bitcoin assets of $99.8 million. For miners, significant impairment adjustments have been a frequent occurrence as cryptocurrency values have fallen this year. Most recently, competitor Marathon Digital (MARA) said that the drop in the value of digital currencies caused them to record $127.6 million in impairment charges during the second quarter.
Although difficult global market conditions in the second quarter, which were further impacted by a sharp decline in the price of Bitcoin and the ensuing decline in market valuations for publicly-traded Bitcoin miners, including Riot, required non-cash impairment charges this quarter, these non-cash charges had no impact on the company’s strong financial position and ample liquidity, both of which were further strengthened this quarter, according to CEO Jason Les in a statement.
Macroeconomic Problems Have Decreased the Value of Holdings.
Last week, when the majority of its competitors announced their results, the miner was supposed to declare its earnings. However, Riot said on August 9 that it has postponed the release of its quarterly profits report in order to give itself more time to determine the extent to which the Bitcoin crash, the conflict in Ukraine, and other macroeconomic problems have decreased the value of its holdings. As originally predicted on August 3, Riot kept their hash rate increase prediction of around 12.5 exahashes per second (EH/s) by the first quarter of 2019.
According to statistics, Riot also reported first-quarter sales totaling $72.9 million, falling short of the average projection of $75.5 million. It has 44,720 bitcoin miners and a 4.4 EH/s hash rate capability right now. Tuesday saw a roughly 6% decline in Riot stock. In accordance with other mining companies, its stock has declined by almost 60% this year, and bitcoin’s price has decreased by around 50%.
Source: https://www.thecoinrepublic.com/2022/08/20/riot-a-bitcoin-miner-on-its-349m-acquisition/