As the competition in the Bitcoin (BTC 1.63%) mining industry intensifies, one company stands out in a crowded field. Already recognized as one of the premier Bitcoin mining companies, Riot Platforms (RIOT -1.49%) is on the verge of extending its lead and solidifying its position as the industry leader.
Thanks to a groundbreaking agreement and ambitious expansion plans, Riot is positioned for long-term success and poised to capitalize on the growing profitability of Bitcoin mining.
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The game-changing announcement
On June 26, Riot made headlines when the company announced its agreement to purchase 33,280 mining rigs from MicroBT, an up-and-coming manufacturer of Bitcoin mining equipment. With a total cost of $162.9 million, the state-of-the-art miners will be manufactured in the U.S. and are expected to nearly double Riot's mining capacity of 10.5 exahashes per second (EH/s), reaching an impressive 20.1 EH/s. These cutting-edge machines will be deployed at Riot's new facility in Corsicana, Texas, with delivery scheduled by the end of the year and operation commencing in the first quarter of 2024.
Furthermore, Riot has secured an option to purchase an additional 66,560 miners, which, if exercised, would elevate its hash rate capacity to a staggering 35.4 EH/s, positioning it to become the leading Bitcoin miner by hash rate.
Hash rate refers to the computational power a Bitcoin mining company contributes to the network and represents its effective mining capacity. Simply put, the greater the hash rate, the greater the ability to mine Bitcoin.
Strengthening its leadership position
The added benefits of a more streamlined domestic supply chain and additional miners coming online will likely only add to Riot's dominance of Bitcoin mining production. Year to date in 2023 the company ranks third in total bitcoins mined and finished 2022 as second overall.
The company has also demonstrated remarkable efficiency by keeping mining expenses minimized. Riot ranks as the second most cost-effective miner in terms of cost per bitcoin mined and also boasts a near unheard-of financial position with virtually no debt.
However, one of Riot's most advantageous factors is its ability to offset electricity costs. This is made possible by its strategic location in Texas, where it takes advantage of the unique flexibility offered by the Texas power grid. Unlike other regions, the Lone Star State has an independent power grid infrastructure that grants Riot the opportunity to sell excess electricity back to the grid during periods of high demand, further contributing to its profitability.
Embracing the future
While the announcement of additional miners is advantageous in itself, when considering the current landscape of the crypto economy, Riot's upside looks even more compelling.
Despite a challenging second half of 2022, when Bitcoin's price plummeted by 70%, Riot demonstrated its resilience by weathering the worst of the bear market and strategically managing its reserves. Now, as Bitcoin regains momentum, Riot is poised to capitalize on revived profitability and potentially surpass the cryptocurrency's performance itself if a bull market returns. This year alone serves as evidence, with Riot's stock surging over 245% year to date, outpacing Bitcoin's more modest 75% gain.
Achieving success as a Bitcoin miner lies in its ability to maximize machine power and efficiently manage costs. This rare combination is precisely what sets Riot apart from its competitors. Based on its track record and plans to increase mining production, Riot is in a position to cement itself as the leader of Bitcoin mining for years to come.
