North American Bitcoin mining firm Riot Platforms has now revealed that it has agreed to buy Block Mining in a deal worth $92.5m. This strategic move is to boost Riot’s mining operations as well as its standing in the Bitcoin mining industry.
Riot Platforms’ Capacity and Geographic Reach
The acquisition of Block Mining involves two operational sites in Kentucky with a current capacity of 60 Megawatts (MW). Based on the current power purchase agreements, this capacity can increase to 110MW this year. The deal will add to Riot’s operational capacity and allow up to 300MW across the three sites with the signing of more power purchase agreements.
Riot Platforms made a cash payment of $18.5 million and issued $74 million in common stock to complete the acquisition. Block Mining is also eligible for an additional incentive of up to $32.5 million through 2025 subject to the accomplishment of certain milestones related to these expansion plans.
Riot Platforms Market Position
The acquisition will boost Riot’s plans to improve its infrastructure and overall operational effectiveness. Presently, Riot has a self-mining hash rate of 22EH/s, which puts the company at the forefront of Bitcoin mining in the United States. With this acquisition, Riot’s hash rate is expected to grow, and it is projected to reach 31 EH/s by the end of 2024.
The deal also bolsters Riot’s capacity while enhancing its geographic spread and operational capacity beyond the Electric Reliability Council of Texas (ERCOT) market to the Midcontinent Independent System Operator (MISO) market.
This geographical expansion allows Riot to tap into different energy markets and possibly better regulatory conditions.
Financial and Operational Synergies
The structure also bolsters Riot’s operations and incorporates Block Mining’s talented management, who will continue to be based in Kentucky. This team’s experience and local knowledge will assist Riot in assimilating these new facilities into its business.
From the financial perspective, the transaction will be profitable for Riot as it will provide additional sources of income and enhance its operational efficiency. The deal will be funded by cash and stock, which means that Riot will still have enough liquidity and at the same time enhance its assets.
JPMorgan’s Financial Analysis
JPMorgan has expressed support for the deal, claiming that Riot’s plan to include Block Mining into its operations is a smart move. It diversifies the power source and expands the company’s mining capability.
In their view, the deal also has the potential to value undeveloped power assets giving Riot a competitive advantage in the mining sector. Nonetheless, the bank remains bullish on Riot’s equity, with a price target of $12.The optimism points to its trust in Riot’s prospects and financials after the acquisition.
The stock of Riot on Nasdaq was trading at $11.59 at the close of the market with a 2.67% jump. So far this year, the company’s stock has been down by 31.74%.
