Castle Rock, CO, April 8, 2021 (GLOBE NEWSWIRE) – Riot Blockchain, Inc. (NASDAQ: RIOT) (“Riot”, “Riot Blockchain” or the “Company”) announced today that there is a definitive agreement under this Agreement signed to which Riot will acquire Whinstone US, Inc. (“Whinstone”), including all of its assets and operations, for a consideration of $ 80 million in cash plus 11.8 million fixed common shares of Riot, for a total implied transaction value of approximately $ 651 million based on Riot’s last closing price of $ 48.37.
- Whinstone is the owner and operator of North America’s largest Bitcoin hosting facility with a developed capacity of 300 MW and an attractive long-term power purchase agreement
- Diversify Riot’s revenues and propel Riot into a market-leading position in the bitcoin mining and hosting business
- Creates significant financial and operational synergies for Riot
- Provides Riot with a clear and significantly risk-free growth path as Whinstone’s facility can be quickly expanded by an additional 450 MW
- Transaction valued at $ 651 million, $ 80 million in cash and the remainder in Riot common stock
The Whinstone acquisition is a transformative event for Riot and its shareholders. Riot sees Whinstone as a fundamental element of its strategy to become an industry-leading Bitcoin mining platform on a global scale. Upon completion of this acquisition, Riot is expected to be the largest publicly traded bitcoin mining and hosting company in North America by total developed capacity.
“The Whinstone acquisition is the most significant achievement to date for Riot’s growth and positions Riot as the industry leader in bitcoin mining,” said Jason Les, CEO of Riot. “After completing this transaction, we have found a very clear path for the company’s future growth. Riot will fully own the largest bitcoin mining facility in North America with a very low cost of electricity and one of the most talented development teams in the industry. Whinstone will serve as the foundation for Riot’s bitcoin mining operations, on the basis of which we will advance our goal of enhancing the American presence in the global bitcoin mining landscape. “
Riot will be able to rapidly grow its self-mining business with Whinstone’s industry-leading team. Led by Chad Harris, the Whinstone team has grown into an industry leading developer and operator of bitcoin hosting facilities over the past two years as bitcoin mining has reached institutional scales. The Whinstone team consists of approximately 100 people who took Whinstone’s Texas business from greenfield to commercialization in less than twelve months. The talented Whinstone team combined with the plant’s substantial expansion capacity puts Riot’s future operational and financial growth at serious risk.
Whinstone is based in Rockdale, Texas and its facility is located on 100 acres that house bitcoin mining customers in three buildings totaling 190,000 square feet. Another 60,000 square meter building is also under development. The location is subject to a long-term lease, in which the electricity is provided via a long-term power supply contract.
The Whinstone site has a total capacity of 750 MW with 300 MW currently under development. Whinstone’s facility is believed to be the largest single facility in North America by its developed capacity for bitcoin mining. To achieve the most efficient power strategy, Whinstone combines fixed, low cost power agreements, real-time spot power procurement, and revenue from additional power service revenues. Bitcoin miners benefit from cheaper energy to maximize production margins. You benefit from a power supply with the flexibility to react quickly to supply and demand events on the electricity market.
Whinstone is currently home to bitcoin mining operations for three institutional clients that are expected to utilize a total power capacity of up to 300MW by the end of 2021. In addition to hosting revenue, Whinstone generates revenue from engineering and construction services from on-site hosting customers, including revenue from the manufacture and use of immersion cooling technology for bitcoin mining.
“We are very excited to be part of Riot as both Riot and Whinstone share a vision for the future of bitcoin mining in America,” said Chad Harris, Co-Founder of Whinstone. “Riot’s strategic vision and resources combined with Whinstone’s infrastructure strength will enable our combined teams to achieve our shared growth plans.”
Northern Data AG, a leading developer and operator of high-performance computing (HPC) infrastructure solutions, acquired Whinstone in 2020 and successfully demonstrated its capabilities in building one of the world’s largest HPC centers.
“With Whinstone, we have built and set up one of the largest HPC centers in the world with significant potential and scope to further increase capacity. The transaction gives Riot the opportunity not only to leverage Whinstone’s existing operating capacity for its own mining operations, but also to scale the capacity and establish itself as the leading bitcoin miner in the US. Northern Data will become a minority shareholder in Riot and will benefit from the synergies generated by the transaction through its stake in Riot. The company continues to be directly involved in the growth of the Bitcoin value potential. At the same time, Northern Data can use the cash proceeds from the transaction to focus on and further implement its decentralized, multi-location, scalable and ESG-focused strategy. The transaction will allow both companies to further strengthen their respective core businesses and significantly accelerate their strategies, ”said Aroosh Thillainathan, CEO of Northern Data.
Upon completion of the transaction, Northern Data will own approximately 12% percent of Riot’s total outstanding common stock.
The transaction is expected to close in the second quarter of 2021, subject to the satisfaction or waiver of customary closing conditions, including receipt of required regulatory approvals.
XMS Capital Partners, LLC is serving as exclusive financial advisor and Sidley Austin LLP is serving as legal advisor to Riot.
Riot will host a live conference call on April 8, 2021 at 8:30 a.m. ET to discuss the transaction. Visit www.tinyurl.com/RiotIR for more details. The presentation will also be available on the Riot website.
About Riot Blockchain, Inc.
Riot Blockchain (NASDAQ: RIOT) focuses on the cryptocurrency mining of Bitcoin. The company is expanding and improving its mining operations by securing the most energy efficient miners available today. Riot is headquartered in Castle Rock, Colorado and the company’s mining facility is located in New York State under a co-location hosting agreement with Coinmint. More information is available at www.RiotBlockchain.com.
The information contained in this press release may contain forward-looking statements within the meaning of federal securities laws, including the completion and impact of the Company’s proposed acquisition of Whinstone and the Company’s future financial performance and operations. Because such statements are subject to risks and uncertainties, actual results could differ materially from those expressed or implied in such forward-looking statements. Words such as “anticipate,” “believe,” “plan,” “expect,” “intend,” “will,” “potentially,” “hope” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on the company’s current expectations and include assumptions that may never materialize or prove to be incorrect. The actual results and timing of events could differ materially from those anticipated in such forward-looking statements due to various risks and uncertainties. These forward-looking statements include, but are not limited to, statements about the benefits of the proposed acquisition of Whinstone, including its financial and operating results, and the company’s plans, goals, expectations and intentions. Risks and uncertainties that could cause actual results to differ from those expressed in the forward-looking statements include: (1) the satisfaction or waiver of the conditions prior to the completion of the proposed acquisition, including receipt of the required regulatory approvals; (2) the occurrence of an event, change, or other circumstance that could result in the termination of the definitive sales contract; (3) unexpected difficulties or expenses related to not realizing the benefits of the proposed acquisition; (4) Legal proceedings, judgments or settlements in connection with the proposed acquisition; (5) disruptions in ongoing plans and operations caused by the announcement and suspension of the proposed acquisition; and (6) the response of employees, customers, suppliers, business partners and regulators to the announcement of the proposed acquisition. For detailed information about other factors that could cause actual results to differ materially from those expressed or implied in this company news release, please refer to the company’s filings with the SEC, including in the “Risk Factors” and “Forward-Looking Statement” sections of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which was filed with the SEC on March 31, 2021, copies of which are on the website available from the SEC at www.sec.gov. The company assumes no obligation to update the forward-looking statements contained in this press release.