Miner Weekly: Rhodium, the next US public miner?

Oct 22, 2022

The company has the cheapest cost of production among pubco peers in the US – for now

Currently, there are at least four mining companies that seek to go public in the U.S via merger or acquisition: BitDeer, BitFuFu, Griid, and Rhodium Enterprises.

While the former three have postponed deadlines, Rhodium moved a step forward this week with an S-4 filing, where it disclosed more information about its business for FY’21 and H1’22. The filing also contained some interesting data that went somewhat unnoticed.

Per the filing, Rhodium mined 961 and 867 BTC in Q1 and Q2, respectively, amounting to 2.2 EH/s in average Realized Hashrate – one of the largest among pubco peers. Meanwhile, Rhodium has been a consistent BTC liquidation force, netting about $106 million in proceeds by selling 2,720 BTC during the first half of the year.

Sub-$7.5k cost for how long?

As of Sept. 30, Rhodium had two sites for its 44,500 deployed miners, most of which were co-located at Riot’s Whinstone facility in Rockdale, Texas (2.7 EH/s).

Based on its cost of revenue breakdown, excluding depreciation, Rhodium’s cost of mining production was relatively low compared to its pubco competitors, at least for the first two quarters this year.

Rhodium said in the filing that it had 125 MW online for H1’22 and incurred $13.6 million in cost of revenue. In a simplified estimation, that could translate to an all-in cost of $25 per MWh, including electricity, direct site cost, insurance, etc.

The other site Rhoidum operates through a data center lease with Temple Green Data LLC is also interesting. Rhodium plans to eventually have 225 MW of liquid-cooled miners at its Temple site, where it had deployed 40 MW for commissioning and testing purposes as of late September.

However, it appears that Rhodium has been paying spiking energy rates for the Temple operation since Q3. Prior to the energization of the Temple site in July, Rhodium’s initial power supplier NetZero notified that it was unable to provide energy at the terms that Rhodium requested in its long-term contract. Rhodium has since switched power suppliers and is “currently operating without a hedged power product (e.g., a power purchase agreement) and purchasing electricity at real-time market rates for the Temple Site.”