Bitcoin Miner Riot Scoops Small Kentucky Rival for $92 Million as Sector Sags

Riot Platforms said Tuesday it had acquired Kentucky-based Block Mining for $92.5 million, as headwinds faced by smaller Bitcoin miners continue to pose challenges for the sector.

The terms of the deal included $18.5 million in cash and $74 million in Riot common stock, with potential additional payments based on performance milestones, the company said in a statement.

The Colorado-based Bitcoin miner's acquisition has bolstered its operational capacity by 60 megawatts (MW), with plans to reach 110 MW by year-end and over 300 MW in the future

Riot's added capacity allows it to bolster its total hash rate, the measure of computing power dedicated to mining Bitcoin. A higher hash rate enhances Riot's ability to solve complex mathematical problems faster, thereby securing more Bitcoin rewards.

It follows Bitcoin’s halving back in April, which slashed block reward from 6.25 BTC to 3.125 BTC, effectively doubling the cost of mining a single coin.

The cost increase has forced less efficient miners to run at operational losses this year as rising energy costs and reduced profitability margins have weighed heavily.

Smaller miners with higher operating costs are particularly vulnerable, while larger firms with access to cheaper electricity and more efficient equipment have managed to ride out the uncertainty.

Despite recent headwinds, Riot's acquisition aims to leverage Block Mining's existing infrastructure and management team to drive expansion and improve efficiency, it said.

The acquisition has immediately boosted Riot’s hash rate by 1 exahash per second (EH/s), the company said, with potential growth to 16 EH/s by the end of 2025. 

Riot's acquisition has both expanded its operational capacity and diversified its geographical footprint, offering a reprieve from shifting energy costs tied to a particular region, it said.

Riot has Bitcoin mining operations in central Texas and Kentucky.