Jeff McGonegal, CEO of Riot Blockchain, believes that expansion is Riot’s key to success.
On Monday, August 17, Riot Blockchain announced that it would allow the purchase of an additional 8,000 Bitmain S19 Pro Antminers for $17.7 million from BitmainTech. The deployment of these machines by January 2021 will bring a total of 9,000 mining machines online. This purchase agreement will continue through April 2021 until the order is complete.
McGonegal said that the goal is to keep growing by 2,000 machines per month through April of next year – until 15,000 miners have been deployed at their Messina, NY facility. “There is no question that quantity and scale mean a lot in this business,” said McGonegal. “Being a public company helps us raise funds and, as our share price grows, create the opportunity to expand.”
As a frame of reference, Riot consumed about 10 megawatts (MW) of power back on June 30. By January 2021, the company expects to reach a power consumption of 19MW. By May 2021, McGonegal believes that Riot will reach 45MW as new machines come on-line.
The cost of operating servers is the greatest cost for Bitcoin mining. McGonegal commented that Riot’s new Messina NY facility is advantageous because it is more energy efficient. Upstate NY is regionally cooler and has cost-competitive rates. McGonegal discussed how their old Oklahoma City Facility, during parts of the day, because of electricity demand, may have to turn down their compute power to reduce cost.
Bitcoin becomes harder to mine as the cryptographic algorithm needed to solve for a reward becomes progressively more complex. As more miners worldwide seek those rewards, success in bitcoin mining comes down to computing power, hash rate, and electricity cost.
This purchase positions the company to achieve and exceed its previously reported goal of exceeding one exahash per second (EH/s) of total hash rate capacity by early 2021. When fully deployed, Riot expects its total hash rate capacity to be approximately 1.45 EH/s (1,446 PH/s) while utilizing approximately 47 megawatts (MW) of energy.
“This substantial order of 8,000 next-generation miners is a milestone for the Company, demonstrating that the second phase of Riot’s strategic transformation is well underway,” said Remo Mancini, Independent Chairman of Riot Blockchain. “We have previously announced our goal to become one of the largest bitcoin miners in North America and this purchase represents a significant step in achieving that goal. With our current miner deployment schedule, we anticipate that based upon current factors, Riot would achieve positive cash flow in late 2020.”
“The latest order from Riot Blockchain marks another milestone for their company as they continue to expand their mining operations across North America. The Antminer S19 Pro houses the latest technology offered by Bitmain, achieving remarkable hash rates that serve to further the growth and position of the company. We are confident with their business and continue to strengthen our relationship with Riot Blockchain”, said Irene Gao, Antminer Sales Director of NCSA Region, Bitmain.
In combination with its 7,040 disclosed fleet of miners, this order of 8,000 S19 Pros is expected to bring the company’s aggregate mining efficiency to 33.12±% 5 joules per terahash (J/TH).