Riot Blockchain (NASDAQ: RIOT), a Bitcoin miner, today announced that it will acquire Whinstone, a Texas data center, from Northern Data, for $80m in cash plus 11.8 million shares of Riot Blockchain common stock (valued at $571m), equating to an implied transaction value of $651m based on Riot’s prior day closing price of $48.37. The Whinstone data center in Texas is estimated to generate ~$23.7m of EBITDA, which equates to an EBITDA multiple of 27.5x.

Following completion of the transaction, which is expected in Q2 2021, Northern Data will own a 12% equity stake in Riot Blockchain. However, Northern Data has no lock-up period restricting it from selling its shares in the company. Therefore, it is to-be-determined whether Northern Data remains a shareholder in Riot Blockchain for the long-term.

Whinstone – Texas Data Center – Overview

Whinstone operates a data center in Rockdale, Texas that has 300 megawatts of developed capacity, through which it hosts bitcoin mining operations for its customers. The facility is located on a 100-acre site and spans three buildings that total 190k sqft. Additionally, the site is subject to a long-term lease agreement, with electricity provided through a long-term power supply contract.

Overall, Whinstone states that through this Texas data center, it owns and operates North America’s largest Bitcoin hosting facility. To manage the digital infrastructure, Whinstone has a team of 100+ employees. Indeed, this team brought Whinstone’s Texas data center from greenfield project to commercialization.


Currently, Whinstone hosts Bitcoin mining operations for three customers. Notably, by the end of 2021, these customers are expected to utilize up to 300 megawatts of aggregate power capacity. Therefore, Whinstone’s existing capacity could be occupied in its entirety, signaling a need to expand the data center campus.

Expansion Capacity

Overall, Riot Blockchain can expand Whinstone’s facility by an additional 450 megawatts of power capacity. Therefore, Whinstone will be able to offer 750 megawatts of total power capacity, post-expansion, at its Texas data center.

Whinstone’s Capacity Utilized by Bitcoin Mining, in Megawatts
Whinstone Capacity Utilized by Bitcoin Mining, in Megawatts

Currently, the company has an additional 60k sqft building which is under development.

Ancillary Revenue

In addition to hosting revenue, Whinstone generates engineering and construction services revenue from hosting customers on-site. Specifically, this includes revenue from the fabrication and deployment of immersion cooling technology for Bitcoin mining.

Transaction Rationale – Riot Blockchain

As a Bitcoin miner, the transaction rationale for Riot Blockchain centers on controlling its digital infrastructure and specifically, data centers. Notably, Riot Blockchain hosts its current mining operations at a third-party data center in Massena, New York.

Additionally, the site’s 450 megawatts of developable capacity allows Riot Blockchain to continue growing its Bitcoin mining operations alongside the certainty of having digital infrastructure to support it. Moreover, Whinstone’s team of 100+ employees provides Riot Blockchain the human capital to continue scaling its self-mining business.

Power Costs

Bitcoin miners like Riot Blockchain benefit from low-cost energy to maximize their production margins. Through Whinstone, Riot Blockchain will gain by having access to Texas’ electricity supply, which has comparatively low power costs. Additionally, the facility has the flexibility to quickly respond to supply and demand variations in the power market.

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Company Positioning – Mining and Hosting

Riot Blockchain, through its combination with Whinstone, will become the largest publicly-traded Bitcoin mining and hosting company in North America, based on total developed capacity.

Transaction Advisors – Riot Blockchain and Northern Data

Riot Blockchain’s financial advisor was XMS Capital Partners. Additionally, Riot Blockchain’s legal advisor was Sidley Austin.

Northern Data’s financial advisor was Greenhill. Additionally, Northern Data’s legal advisor was Sullivan & Cromwell.

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Mary Zhang covers Data Centers for Dgtl Infra, including Equinix (NASDAQ: EQIX), Digital Realty (NYSE: DLR), CyrusOne, CoreSite Realty, QTS Realty, Switch Inc, Iron Mountain (NYSE: IRM), Cyxtera (NASDAQ: CYXT), and many more. Within Data Centers, Mary focuses on the sub-sectors of hyperscale, enterprise / colocation, cloud service providers, and edge computing. Mary has over 5 years of experience in research and writing for Data Centers.


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