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The Texas Blockchain Council (TBC) and Riot Platforms recently won a legal battle against U.S. energy officials, securing a temporary restraining order. Additionally, Riot Platforms navigates various operational risks, like the global chip shortage affecting mining equipment availability and costs, amidst preparing for the Bitcoin halving event. Despite these challenges, Riot reported a 19% increase in Bitcoin mined in 2023, contributing to a revenue growth to $280.7 million and achieving a notable reduction in the cost of mining Bitcoin.
Legal Win for Bitcoin Miners Against U.S. Energy Officials
The Texas Blockchain Council (TBC) and Bitcoin mining firm Riot Platforms recently achieved a big legal victory against several U.S. energy officials. In a lawsuit filed against the U.S. Department of Energy, Energy Information Administration (EIA), Office of Management and Budget (OMB), and their respective leaders, the plaintiffs accused the governmental bodies of engaging in overly invasive data collection practices targeting cryptocurrency miners.
On Feb. 22, the case saw a pivotal moment when a United States District judge in the Western District of Texas ruled in favor of the TBC and Riot. The court issued a temporary restraining order (TRO), effectively halting the EIA's requirement for crypto miners to participate in a survey and preventing the agency from distributing any data already collected. This decision came after the TBC and Riot presented evidence suggesting that without the TRO, they would suffer immediate and irreparable harm, including the risks of non-recoverable compliance costs, potential prosecution, and the exposure of sensitive proprietary information.
A major point of contention in the lawsuit was the estimated time and resources required to comply with the government's survey. While the EIA suggested that the survey would take approximately 30 minutes to complete, this estimate was contested by the plaintiffs and ultimately rejected by the court as "extremely inaccurate." In fact, the TBC and Riot argued that the actual cost of compliance had exceeded 40 hours, a figure that very clearly contrasts with the government's initial projection.
The court's ruling and the issued restraining order, which expires in Mar. 25, was not only a temporary measure to prevent immediate damage to the plaintiffs but also a signal that the TBC and Riot are very likely to succeed in their lawsuit.
Challenges Ahead for Riot
Riot Platforms seems to have a lot to say about the crackdown on crypto miners. The Bitcoin mining firm has shed light on multiple risk factors that could affect its profitability and balance sheet in the face of the upcoming Bitcoin halving event, according to its recent annual 10-K filing. A major concern for Riot is the ongoing global chip shortage that is impacting the availability of specialized ASIC chips necessary for mining operations. This shortage, coupled with a surge in demand for these chips, has led Riot to foresee elevated costs for obtaining and installing mining machines.
In December, Riot made a huge investment in its mining capabilities by buying 66,560 miners for $291 million from MicroBT, the largest order in the company's history. Despite this expansion, Riot still acknowledges potential challenges like design flaws in ASIC miners and the need for continuous adaptation to keep up with technological advancements and competitive pressures in the industry.
The global increase in hash rates necessitates Riot to buy new miners not only to replace those lost to wear and tear but also to enhance its hash rate in order to maintain market share. Furthermore, Riot points out the scaling obstacles facing Bitcoin, which could potentially limit its adoption as a mainstream payment method. Any stagnation or decline in Bitcoin demand could adversely affect its price, thereby impacting Riot's financial health.
Moreover, Riot is navigating an increasingly pro-climate change regulatory landscape in the United States, particularly in Texas, where it operates. The company is concerned that new legislation and regulations aimed at addressing climate change could impose massive costs, including those related to energy consumption, capital equipment, and compliance.
Bitcoin Mining in 2023
Riot Platforms reported a big uptick in its operational performance for the year 2023. The firm successfully mined 6,626 Bitcoin, a 19% increase from its previous year's production. This rise in output contributed to the company's revenue growth, with annual figures reaching $280.7 million, up from $259.2 million in 2022. The improvement in revenue is attributed to the higher average price of Bitcoin throughout 2023, coupled with the company's enhanced efficiency in mining operations.
Riot Platforms also achieved a notable reduction in the cost of mining Bitcoin. A report highlighted that the average cost to mine a single Bitcoin fell by 33% year-over-year, from $11,225 in 2022 to $7,539 in 2023. This decrease in mining expenses was facilitated by the allocation of power credits to self-mining activities.
The crypto market in 2023 saw a recovery from the bear market conditions of 2022, which was littered by large downturns and the collapse of several crypto firms, including the major exchange FTX. The average value of Bitcoin mined by Riot Platforms in 2023 stood at $28,859, slightly above the 2022 average price of $28,245, further boosting the company's financial performance.
The broader Bitcoin mining industry also witnessed varied production outcomes among different firms. Core Scientific led the pack with 19,274 Bitcoin mined, while CleanSpark reported a 60% increase in its mining yield, totaling over 7,300 Bitcoin for the year. Marathon Digital also reported impressive results, mining 12,852 Bitcoin in 2023.