Quarterly report pursuant to Section 13 or 15(d)

Property and Equipment

v3.21.2
Property and Equipment
9 Months Ended
Sep. 30, 2021
Property, Plant and Equipment [Abstract]  
Property and Equipment

Note 8. Property and Equipment

Property and equipment:

Property and equipment consisted of the following as of September 30, 2021 and December 31, 2020:

September 30, 2021

December 31, 2020

Buildings and improvements

$

75,608

$

-

Miners and mining equipment

67,466

14,406

Machinery and facility equipment

7,819

-

 

Office and computer equipment

239

83

 

Construction in progress

68,920

-

 

Total cost of property and equipment

220,052

14,489

 

Less accumulated depreciation

(19,301

)

(4,346

)

Property and equipment, net

$

200,751

$

10,143

During the nine months ended September 30, 2021, the Company received 18,603 miners related to its current purchase contracts with Bitmain and, as of September 30, 2021, the Company had cumulatively received and deployed a total of 25,646 new Antminer model S17-Pro or newer miners.

During the nine months ended September 30, 2021, the Company paid approximately $103.2 million as deposits, primarily for miners, including $86.9 million paid to Bitmain as refundable deposits for the acquisition of 55,500 Antminer S19j (90 TH/s) miners for an aggregate purchase price of $172.0 million, which are scheduled to be delivered, on a monthly basis, between October 2021 and December 2022, with the remainder of the payments due in advance of deliveries. As of September 30, 2021, the Company reclassified $46.7 million to property and equipment in connection with the receipt of 18,603 miners at the Coinmint Facility or at the Whinstone Facility.

In December 2020, the Company entered into a pilot project with a dual focus of evaluating next-generation immersion technology to increase mining productivity, in addition to evaluating software to reduce energy costs. These technologies have the potential to reduce the Company’s Bitcoin production costs, increase hashrate capacity and significantly extend the life of the Company’s Bitcoin mining ASICs. During June 2021, this pilot project had commenced full operation and the approximate $2.7 million in equipment costs for this project previously not yet operational and included in “Miners and mining equipment” in the table above, commenced being depreciated.

Depreciation and amortization expense related to property and equipment totaled approximately $7.3 million and $1.3 million for the three months ended September 30, 2021 and 2020, respectively. Depreciation and amortization expense related to property and equipment totaled approximately $15.0 million and $2.7 million for the nine months ended September 30, 2021 and 2020, respectively.

Depreciation is computed on the straight-line basis for the periods the assets are in service.

24


Riot Blockchain, Inc. and Subsidiaries

Notes to the Condensed Interim Consolidated Financial Statements

(Unaudited)

Construction in progress:

Upon completion of the Whinstone Acquisition, the Company commenced expansion of the Whinstone Facility from its existing 300 MW developed capacity to 750 MW. This expanded Bitcoin mining infrastructure is expected to comprise four new buildings totaling approximately 240,000 square feet, with the capacity to support an estimated 112,000 S19j Antminers based upon current configurations. It is expected that the first portion of this expansion will be completed by Q1 2022 and the balance during Q2 2022. Two of these four buildings are being developed utilizing air-cooling infrastructure, with the optionality to upgrade to immersion-cooling. The other two of these buildings are being developed utilizing immersion-cooling technology, a technique that offers improved cooling performance as compared to air-cooling infrastructure. The expansion of Bitcoin mining infrastructure at Whinstone provides critical capacity for Riot to deploy its future shipments of Bitcoin mining hardware, in addition to providing an opportunity to expand Whinstone’s hosting business for third-party Bitcoin miners.

As of September 30, 2021, the Company had outstanding executed purchase agreements for the purchase of miners from Bitmain for a total of 13,500 new S19j-Pro model miners, scheduled to be delivered through October 2021, and had paid a deposit of 20% of the total purchase price for the acquisition of an additional 42,000 model S19j miners pursuant to a purchase agreement entered into by the Company and Bitmain, dated effective as of April 5, 2021. A summary of the purchase agreement commitments, deposits paid and expected delivery timing (remaining balances are payable in advance of shipping) is summarized as follows:

Agreement Date*

Original Purchase Commitment

Open Purchase Commitment

Deposit Balance

Expected Shipping

December 18, 2020 (1 of 2)

$

26,308

$

-

$

26,308

Fourth Quarter 2021

March 11, 2021

7,224

-

7,224

Fourth Quarter 2021

April 5, 2021**

138,506

82,498

56,008

Fourth Quarter 2021 - Fourth Quarter 2022

Total

$

172,038

$

82,498

$

89,540

* Pursuant to the Company’s agreements with Bitmain, the Company is responsible for all shipping charges incurred in connection with the delivery of the miners.

** The Company paid approximately $29 million as a deposit for the miners to be acquired under the purchase agreement, dated effective as of April 5, 2021, with Bitmain to acquire approximately 42,000 Antminer model S19j Miners, which are scheduled to be shipped in 12 batches of approximately 3,500 miners each, on a monthly basis, between November 2021 and October 2022.

Subsequent to September 30, 2021, in October 2021, the Company entered into a purchase agreement with Bitmain to acquire 9,000 S19j Pro (100 TH/s) miners, for a total purchase price of approximately $54 million, with an anticipated delivery and deployment schedule set for May 2022 through October 2022.