American cryptocurrency mining company Riot Blockchain has published its latest financial report, revealing a $58 million loss in 2018.
Given that the company has been housing the majority of its cryptocurrency miners in Oklahoma City, its fixed costs related to utilities, labor, and depreciation are likely higher than most other mining companies.
Prior to its abrupt interest in the digital currency industry, Riot positioned itself as a biotechnology firm that developed medical diagnostic machinery. The company mined 1,081 bitcoins and 3,0213 litecoins last year, earning a total of $7.7 million.
Riots and Pandemonium
Riot Blockchain was among the handful of companies that changed its name to include the term ‘blockchain.’ The result of the title change from Bioptix was a near immediate spike in share price in February 2018. The price of each share exploded from a mere $8 to over $40 within a few days — attracting the ire of the Securities and Exchange Commission (SEC).
According to a CNBC report published April 3, 2019, Riot’s financial auditor has also raised concerns over the company’s reports. While the recent annual report appears to be factually correct, the auditor said that Riot’s financial reporting contained “material weaknesses” that could affect the accuracy of future reports. The company said that it aims to fix these issues by the end of the 2019 fiscal year.
While the company had $41.6 million in cash at the end of 2017, its recent report claims that the figure now sits closer to $225,000. Furthermore, Riot is currently on the receiving end of a formal investigation by the SEC in relation to a subpoena filed in April 2018. For now, the company plans to turn to equity or debt in order to finance its lease and other expenses.
Mining Pools in Trouble?
All things considered, Riot Blockchain is far from the only company to have lost money on cryptocurrency mining since the heyday of the 2017 bull run. ASIC manufacturer and mining giant Bitmain found itself in a tight spot after the prices of Bitcoin (BTC) and Bitcoin Cash (BCH) slumped heavily throughout 2018. After posting a healthy profit in 2017, the company is believed to have lost upwards of $500 million in the third quarter of 2018 alone.
Notably, Bitmain had intended to launch an initial public offering (IPO) on the Hong Kong Stock Exchange (HKEX) in an effort to raise funds. However, the application expired on March 26, 2019, likely due to the dismal financial state of both the market and the company.
In a separate incident, Japanese internet service provider GMO announced a $5.5 million loss for its cryptocurrency mining division for the third quarter of 2018. According to the publicly released financial report, the depreciation cost far exceeded the revenue obtained from mining activities, leading to a net loss. Additionally, it was unable to turn a profit on hardware sales due to delays in shipments of electronic components.
Do you think mining pools will start to shut down now that the market has suffered an extended period of turmoil? Or will Bitcoin’s recent price surge help solve some of the industry’s woes? Let us know your thoughts in the comments below!
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