PADUCAH, Ky. — Riot Platforms Inc., a Castle Rock, Colo.-based vertically integrated Bitcoin mining company, recently acquired Block Mining Inc., a Kentucky-based vertically integrated Bitcoin miner, for consideration totaling $92.5 million.
Riot paid $18.5 million of cash from its balance sheet and $74 million of Riot common stock. Block Mining can earn an additional $32.5 million through 2025 by executing purchase agreements to add electric power capacity. Block Mining immediately increases Riot’s hash rate, expands Riot’s footprint geographically and provides exposure to important energy markets outside of ERCOT.
Block Mining consists of two operational sites in Kentucky totaling 60 MW of operational capacity with potential to expand up to 155 MW. Of the existing 60 MW, 23 MW are currently used for self-mining, 19 MW are available for miner deployment, and 18 MW are contracted by Bitcoin mining tenants under hosting agreements. Some 8 MW of the 18 MW of contracted capacity has change-of-control provisions that will make it available for mining by Riot in 60 to 90 days.
Greater Paducah Economic Development has partnered with Block Mining since its opening in 2021 when it chose to locate in Paducah for its favorable business environment and access to renewable energy sources, aligning with its focus on sustainable Bitcoin mining.
GPED said it is “thrilled to have supported this transaction and look forward to the continued success of Block Mining Inc. under its new ownership. Their ongoing investment in Paducah is a testament to the strength of our community.”
Riot intends to expand Block Mining’s two sites, targeting 110 MW for self-mining operations by the end of 2024. Additionally, Block Mining owns a greenfield expansion opportunity in Kentucky, adjacent to an existing substation, presenting an opportunity to develop 60 MW and with potential to expand to 150 MW.
Block Mining has an experienced Bitcoin mining facilities management team that will add to Riot’s ability to execute on its leading vertically integrated strategy. The team will remain in place to operate existing assets in Kentucky and drive expansion by leveraging strong local relationships, access to Riot’s balance sheet and its long-term fixed price hash rate agreement with MicroBT.
Block Mining’s sites are serviced by power companies including the Tennessee Valley Authority (TVA) and Big Rivers Electric Corp. in the Midcontinent Independent System Operator (“MISO”) region. MISO facilitates one of the world’s largest energy markets with four demand-response programs allowing users to employ a sophisticated power strategy.
Block Mining can expand its operating capacity up to 110 MW under existing agreements and has identified a pipeline that could bring operations in Kentucky to an aggregate of over 300 MW across three sites, subject to executing requisite power purchase agreements.
“The acquisition of Block Mining marks a significant milestone for Riot as we continue to expand our growth pipeline,” said Jason Les, CEO of Riot. “This transaction allows us to diversify our operations nationally and accelerate Block Mining’s expansion in Kentucky. With a combined 60 MW of existing developed capacity, and a pipeline to rapidly scale to over 300 MW, this acquisition expands our operations and further enhances our path towards our growth target of 100 EH/s.
“The acquisition of Block Mining also diversifies Riot geographically into new power markets and brings onboard a proven operating team,” Les said. “We are excited to welcome the talented Block Mining team to Riot and look forward to working together to execute on these new expansion opportunities in Kentucky.”
In assessing potential acquisition partners, said Michael Stoltzner, CEO and co-founder of Block Mining, “it became evident that Riot Platforms not only shares our vision for an energy-efficient Bitcoin miner, but also a complementary culture that values teamwork, creativity, and a relentless pursuit of excellence.
Stoltzner said the Block Mining team members “are excited to leverage our collective strengths and expertise to build Bitcoin-first data centers that will propel us to the forefront of the industry.
“This partnership presents a unique opportunity for Riot to expand geographically in a cost-effective manner, tapping into new energy markets in the great state of Kentucky. By combining our resources and knowledge, we are confident in our ability to scale operations efficiently and sustainably, while delivering value to Riot shareholders. As we embark on this transformative journey, we are filled with excitement and optimism for what Block Mining brings to the Riot family. The Block Mining team, led by Erik Ellingson, Jeremy Witten and I look forward to working closely with the talented team at Riot to push the boundaries of what is possible and to lead the way in shaping the digital landscape of tomorrow.”
Stifel acted as exclusive financial advisor to Riot, and Greenberg Traurig LLP served as legal counsel. XMS Capital Partners LLC acted as exclusive financial advisor to Block Mining, and Winston & Strawn LLP served as legal counsel.
Riot’s self-declared vision is to be the world’s leading Bitcoin-driven infrastructure platform. It has Bitcoin mining operations in central Texas and Kentucky, and electrical switchgear engineering and fabrication operations in Denver, Colorado.
