AGM 2020

Nov 12, 2020

Like to call the meeting to order. Welcome, ladies and gentlemen, to the 2020 Annual Meeting of the Shareholders of Riot Blockchain Inc. My name is Raimo Mancini, Chairman of the Board of Directors of Riot Blockchain. I'd like the meeting to please come to order. Thank you for joining us today for this entirely virtual shareholders meeting via the web portal link provided to you in the proxy materials. As a Board, we made the decision not to hold an in person meeting in the interest of the health and safety of our shareholders in light of the ongoing COVID-nineteen pandemic. We understand that this may not be the preferred meeting venue for some of our shareholders and we appreciate your attendance and support. Although we are conducting today's meeting virtually, we will conduct the meeting as usual. After my introductions, we will conduct the formal business of the meeting and time permitting, we will respond to appropriate shareholder questions at the end. Please submit your questions via the designated field on the web portal. We have a team working in the background to review your questions and we will make every effort to respond to all appropriate questions asked and we will address any unanswered questions via our corporate website shortly after the meeting, if warranted. I would like to begin today's meeting by introducing the other Board members who are all present at this meeting. Joining me today are Mr. Jason Less and Mr. Benjamin Yee. We also have the company's officers here with us. Joining us today are Mr. Jeffrey McGonigal, Chief Executive Officer and Chief Financial Officer Ms. Megan Brooks, Vice President, Finance and Assistant Corporate Secretary. Also joining us today are the company's independent auditor, Mr. Robert Wiseman of Markham LLP and the company's legal counsel, Mr. William Jackman of Rogers Towers. Any shareholder questions for our auditors should be submitted via the question field on the web portal and time permitting Mr. Wiseman will respond to appropriate questions at the end of the meeting. As with general shareholder questions, unanswered appropriate shareholder questions for our auditors will be addressed via our corporate website as warranted. Ms. Megan Brooks, the company's Vice President of Finance and Corporate Assistant Secretary, will be acting as secretary of this meeting and will record the proceedings. Finally, Ms. Christine M. Rine has been duly sworn in as the Inspector of Elections for today's meetings. This year, Riot Blockchain engaged Broadridge Financial Solutions to facilitate the virtual only format of this year's meeting and to provide other services related to this meeting. In the proxy materials you received, Broadridge assigned each of you a specific user access key to gain access to the web portal for this meeting. Upon entering the media via the web portal, each of you was presented with an agenda for the meeting. Along with the agenda, you are presented with the rules of conduct, which includes a disclaimer regarding any forward looking statements, which may be made during the meeting. In order to conduct an orderly meeting, we ask that all participants abide by these rules. As stated in the rules of conduct, shareholder questions will be submitted via the designated field on the web portal. To preserve the privacy of the meeting and to promote an open exchange between the company and the shareholders, The rules of conduct do not permit any recording of this meeting by any attendee unless specifically authorized in writing by the Board of Directors. Further, as a formal reminder, this is a closed meeting open only to shareholders of Riot Blockchain Inc. And their permitted guests. Thank you for cooperation and for the support of these rules. The Board established Wednesday, October 7, 2020 as the official record date of this meeting and for this meeting. Only shareholders of record as of that date are entitled to vote in this meeting. We have received an affidavit of Broadridge Financial Solutions Inc. Attesting to the mailing of the notice of the meeting, which states that beginning on October 14, 2020, notice of the meeting together with the related proxy materials and the company's 2019 annual report was mailed to all shareholders on record for this meeting. Aquinity Trust Company, Riot Blockchain's transfer agent and registrar has confirmed that as of the record date, there were 48,922,790 shares of common stock entitled to vote. In this meeting, as of the record date, we are informed by the Inspector of Elections that more than 29,000,000 shares of common stock represented by shareholders directly or by proxy are present at this meeting. These shares present at the meeting represent approximately 60% of the shares entitled to vote at this meeting. Our bylaws require that at least 1 third of all our issued and outstanding common stock as of the record date be present at a meeting for a quorum to be present. Accordingly, since approximately 60% of the shares of our issued outstanding common stock entitled to vote at this meeting are present here today, I hereby declare and certify that present pardon me, I hereby declare and certify a quorum is present and I declare this meeting to be duly convened for the purposes of transacting such business as may properly come before it. We will now proceed to the business of the meeting and I will present the matters to be voted upon. Proposal number 1, election of directors. The first item of business on the agenda is the election of 3 directors of the company. The proxy statement sent to shareholders listed the persons standing for election as Director, all of whom have been nominated by the Governance and Nominating Committee. The candidates standing for election as Directors of Riot Blockchain Inc. Are Mr. Jason Less, who is presently serving as a Director Mr. Benjamin Yee, also presently serving as a Director and myself, Raimo Mancini, presently serving as a Director and Chairman of the Board. If elected, the candidates for Director will hold office until the 2021 Annual Shareholders' Meeting and their successors are duly elected and qualified or until their earlier resignation and God forbid death or removal from the Board. The second item of business on the meeting agenda is to ratify the appointment of Markham LLP as the company's independent registered public accounting firm for the year ending December 31, 2020. The appointment of Markham LLP is discussed in the proxy statements provided to the shareholders. Proposal number 3, stay on pay. The 3rd item of business on the meeting agenda is to approve the 2019 compensation of the company's named executive offices. This proposal is a non binding shareholder advisory vote. The company's 2019 executive compensation is discussed in the proxy statements provided to the shareholders. Proposal number 4, approval of the First Amendment to the 2019 Equity Plan. The 4th and final item of business today, before the meeting pardon me, before the meeting today is to vote to approve the 1st amendment to the Riot Blockchain Inc. 2019 Equity Incentive Plan to increase the number of shares of common stock reserved for issuance under the plan by 3,500,000 shares. As discussed in the proxy statements provided to the shareholders, the Board believes this increase will provide the company the ability to make competitive grants of equity awards to help to track and retain the talent the company needs. If any shareholders would like to make a comment regarding any of the proposals, please submit your comment through the web portal now and we will make every effort to respond to them in the time allotted at the end of the meeting as appropriate. It is now approximately 12:12 pm Eastern on November 12, 2020, and I declare the polls are now open. Any shareholder who did not vote or wishes to change their vote, they do so by clicking on the voting button on the web portal and following the instructions there. Shareholders who have sent in their proxies or voted via telephone or Internet and do not want to change their vote do not take do not need to take any further action. We're going to give everyone a short moment or 2 to vote or change their votes or take no action. So there'll be silence on the phone now for a moment or 2 while we allow this to happen. Thank you for your participation and your patience. Everyone entitled to vote at this meeting has now been provided the opportunity to vote and all submitted ballots have been collected. Accordingly, I hereby declare the polls for the 2020 Annual Meeting of the Shareholders of Riot Blockchain Inc. Closed at 12:14 Eastern Time on November 12, 2020. The Inspector of Elections will now tally the votes. The Secretary of the Needy, I believe has now had sufficient time and has informed me that the Inspector of Elections has counted all the ballots and the voting results are in. The shareholders of Riot Blockchain have approved each of the 4 proposals presented at today's meeting. Therefore, with respect to proposal 1, all nominees for election to the Board of Directors have been duly elected. With respect to proposal 2, the shareholders have ratified the company's appointment of Markham LLP as its auditors for 2020. With respect to proposal 3, the shareholders have approved the company's 2019 executive compensation. And with respect to proposal for the shareholders have approved the 1st amendment to the 2019 Riot Blockchain Inc. Equity Incentive Plan. I wish to sincerely thank everyone who attended today's annual meeting of the shareholders of Riot Blockchain Inc. We appreciate your attendance and we thank you for accommodating this year's virtual only meeting. We are excited to be we are excited by the high shareholder participation at this year's meeting. And we hope this trend continues as we push forward with another exciting year for Riot Blockchain. As there are no other items to come before the meeting, this meeting is now adjourned. Having adjourned the meeting, we are now in the time period allotted for questions and answers. Are there any questions that we need to respond to? And if so, could they be read aloud? Yes, Mr. Chairman. First question here. What was the impetus and foregoing intention of the shelf offering that occurred a month or so ago? Thank you. That's an important question and we thank the person who asked. I'll ask our Chief Executive Officer, Mr. Jeff McGonigal to reply to that, please. Sure. Thanks, Raimo. We've previously publicly disclosed our focus on Bitcoin Mining as the primary focus of the company, which is a very capital intensive operation. And the shelf that was originally filed in 2019 was approximately a little more than 70% used with shares that were raised capital against. And given the fact that we recently announced that for 2020 2021, we would be we're committed to spending over $50,000,000 during that period in support of new miner acquisitions to increase our presence in the Bitcoin mining production. The amendment to the shelf that was filed recently helps prepare the future cash availability for that for those purchases and potential additional purchases. I would add that the prior shelf that was originally filed at the time the new the shelf was amended, that registration was terminated. So it is no longer available. Thank you for that, Jeff. And I just want to highlight, the important fact that you stated that we're aggressively expanding our business. And as we said publicly, we're going to exceed 2 ex of hashing power by the end of the second quarter next year. And the industry is very dynamic as you know. And hashing power is very, very fundamental to the success of the company. And I'm really proud of the decisions that the Board of Directors and Management has made to ensure that we're going to be very well positioned to compete in the field of Bitcoin Mining. Is there any other questions that we need to answer? Yes, Mr. Chairman. I think this is a good follow-up to the previous question. And that is for how long will Riot try and expand the number of operating ASIC miners? Yes, that is a good question. Jeff, do you want to take a moment or 2 to address that question, please? Sure. We are continually evaluating the performance of the minor operations relative to their operating cost and successful achievement of Bitcoin production awarded to Riot Blockchain. So I think it is an ongoing evaluation that continually changes dependent upon the hash rate as Raimo indicated, our operating expenses, which we continue to monitor. But with our stated intention of continuing to focus on Bitcoin mining, I would see that the evaluation and the focus on adding machines will continue. No sense of how long, but as long as the metrics are favorable for performance, we would plan, I believe, to continue to move forward in that area. Yes, Jeff, that's an excellent response. And in addition to that, I think the decisions made by the Board and the management to aggressively order these miners and find a suitable home for these miners as we have done has proved to be a good decision, especially with the recent spike in the price of Bitcoin and the hashing rate has gone down as well. The global exahash rate has been lower than expected these last couple of weeks. So I think that we made the correct decision looking at this in hindsight and really support and really appreciated the attention that the Board and the management and our advisors were paying to this matter. Are there any other questions from our shareholders? Yes, Mr. Chairman, another question here. And that is asking for a reason why the Riot stock price has not kept up with the price of Bitcoin since that is what Riot is mining. Okay. Jeff, would you like to try that? Sure. I will provide my commentary on that. I think that historically, the price of our stock as compared to the Bitcoin price graph has been generally fairly well correlated at times. There have been other times where it has been not correlated as well or even not tracking in a correlated manner. There are obviously a number of factors that affect our stock that do not affect Bitcoin, just what's going on with the markets, what's going on with the economy. There is external factors in terms of the Bitcoin sector with public and private companies competing in that area. So while I think we will continue to generally correlate, I think there will be periods of disattachment of the correlation to varying degrees. So I'm sure that's not a satisfactory answer, but that's some points that I would make relative to the question. Thanks. Well, thank you, Jeff. In addition to Jeff's comments, I'd like to say the following. Due to the activities of the Board of Directors, the strenuous activities over the last 2 years and the support and the dedication of our management, we have positioned Riot Blockchain for success. We have a great chance now for success. And let me tell you why I think that. Our balance sheet is looking really good. We've cleaned up a ton of outstanding payments. That many of you recall were holding the company down a couple of years ago. We brought in new vendors that are more aligned with the company, but that is all out there. We have 0 debt. We've been able to have the SEC investigation closed with no adverse effects to Riot. We've been able to order many thousands of miners and hope to have 2 plus X ash rate by the end of the second quarter next year. We have money in the bank. We can move quickly if we have to. And we're continuously, as we have publicly stated, exploring all reasonable opportunities to advance the company. So I don't believe that all of that has yet been factored into the share price. But as Bitcoin becomes more aggressive in its upward movement of price, I would expect and I would think and we're all looking at the same picture here and we're all optimistic. So I'm optimistic about where we're going because I can list everything we've done in the past 2 years to reasonably expect an optimistic result. The share price on any given day has many factors. Some are global in nature, some are industry specific. But when you look at where Riot Blockchain sits today, debt free, money in the bank, miners ordered, 2 exahash on the way and everyone working hard, I think we can be optimistic. And I hope this additional information has helped. Are there any other questions? No, Mr. Chairman. No more questions at this time. Okay. Our allotted time for the meeting is upon us accordingly. The meeting is going to be concluded. And I want to thank all of you again for your attendance at the 2020 Annual Meeting of the shareholders of Riot Blockchain. And Jeff, just in case any of our shareholders have any other questions that they may think of after we are all off the line? How should they get their questions submitted and answered? There is a button on our website, and also there's a direct email address, which is the initialsirriotblockchain.com that will be distributed to the appropriate individuals within the company for a response if there are follow-up questions that come to mind. I appreciate that. Again, thanks to all the shareholders for participating. Thanks to Broadridge for helping us with this virtual conference meeting. Thank you to the Board members who are here, to the management and to all those who are supporting Riot Blockchain. We'll see you next year. Bye bye.