Annual report pursuant to Section 13 and 15(d)

Organization

v3.21.1
Organization
12 Months Ended
Dec. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization

Note 1. Organization

Nature of operations and corporate information:

Riot Blockchain, Inc., operates a cryptocurrency mining operation, which utilizes specialized computers (also known as “miners”) using application-specific integrated circuit (ASIC) chips to solve complex cryptographic algorithms in order to support the Bitcoin blockchain (in a process known as “solving a block”), in exchange for cryptocurrency rewards. As of December 30, 2020, the Company exclusively operated the Antminer series of miners manufactured by Bitmain Technologies Limited (“Bitmain”), which use ASIC chips designed around the 256-bit secure hashing algorithm (“SHA-256”) used by the Bitcoin blockchain and, therefore the primary cryptocurrency the Company seeks to mine is bitcoin. The Company has also historically mined bitcoin cash and litecoin; however, the Company focused its efforts on mining bitcoin. The Company generates substantially all its revenue through its cryptocurrency mining operation by holding the cryptocurrency it mines and selling it on the market for its own account.

The Company was originally organized on July 24, 2000, as a Colorado corporation. Effective October 19, 2017, the Company’s name was changed to Riot Blockchain, Inc., from Bioptix, Inc., and effective October 19, 2017, the Company changed its state of incorporation to Nevada from Colorado.

Mining equipment:

The Company’s current focus is on its cryptocurrency mining operation, and during the year ended December 31, 2020, it continued a full network upgrade of its miners with the objective of increasing the Company’s operational efficiency and performance, which it had begun in December 2019 with the acquisition of 4,000 model S17-Pro Antminer series of miners manufactured by Bitmain for a total purchase price of $6.3 million.

As of December 31, 2020, the Company operated a fleet of 7,043 of the Antminer series of miners manufactured by Bitmain, including 4,000 model S17-Pro miners, 1,040 model S19 miners, and 2,003 model S19-Pro miners, all of which were purchased directly from Bitmain and deployed in the Company’s mining operation pursuant to a co-location mining services agreement with Coinmint, LLC (“Coinmint”) at Coinmint’s facility in New York (the “Coinmint Facility”).

During the year ended December 31, 2020, the Company entered into purchase agreements with Bitmain for the acquisition of a total of 33,646 of their model S19, S19-Pro, and S19j-Pro Antminer series of miners, to be shipped and delivered during 2020 and 2021. During the year ended December 31, 2020, the Company received 3,043 model S19 Antminers of these 33,646 new miners, all of which have been deployed at the Coinmint Facility. The remaining 30,603 of these new miners are scheduled for monthly deliveries in 2021. The purchase commitment for these new miners totals $76.1 million, including $6.6 million paid for the 3,043 miners delivered during the year ended December 31, 2020, $31.9 million paid as deposits in deposits during the same period, and the remaining $37.6 million due to be paid during the year ending December 31, 2021 according to the payment schedules set forth in the applicable purchase agreements.

During the year ended December 31, 2020, the Company retired all of the approximately 8,000 Bitmain Antminer S9 miners it had historically acquired through its acquisition of Kairos Global Technology, Inc., (“Kairos”) in November 2017, and from Prive Technologies, LLP (“Prive”) and Blockchain Mining Supply & Services Ltd. (“BMSS”) in February 2018. The Company discontinued its use of these older model miners in favor of the 4,000 S17 miners, the 1,040 S19 miners, and 2,000 S19-Pro miners it acquired from Bitmain, which offer greater electricity usage efficiency and hash rate power than the retired models.