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CORRESP
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 Correspondence

April 24, 2018

United States Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, DC 20549

Attention:   Joe McCann

Re:

Riot Blockchain, Inc.

Current Report on Form 8-K filed October 4, 2017

Response dated March 26, 2018

File No. 001-33675

Ladies and Gentlemen:

On behalf of Riot Blockchain, Inc. (the "Company"), please accept this letter as the Company's response to the comments of the Staff of the Securities and Exchange Commission (the "Staff") in connection with the above referenced filing as set forth in the Staff's comment letter dated April 13, 2018 (the "Comment Letter").

The Comment Letter relates to an October 4, 2017 Current Report on Form 8-K (the "October 2017 8-K") that reported a single investment made by the Company.  That investment involved an approximate 10.9% ownership interest in a privately-held Canadian operating company with warrants that would equate to an addtional 3.8% if exercised.

The Comment Letter seeks information concerning  questions related to the Investment Company Act of 1940 (the "1940 Act") accounting matters for transactions and results relative to acquisitions not made until the first quarter of 2018 which principally have not yet been accounted for in any periodic report filed with the SEC.  Our client has endeavored to provide the Staff with reasoned answers to the Comment Letter questions being raised and notes that responses to forward looking periods on matters unrelated to the October 2017 8-K is the subject of ongoing review by the Company's accounting advisors, which is what has been summarized herein.    These matters (the ongoing nature of review and the regulatory uncertainty under the 1940 Act) have been extensively addressed in the Company's disclosures (including under "Risk Factors") included in its 2017 Annual Report on Form 10-K filed April 17, 2018 (the "2017 Annual Report") and in Risk Factor disclosures in the public SEC filings dating back to the Company's Current Report on Form 8-K filed October 23, 2017.

The below responses are directed to resolving open issues concerning the October 2017 8-K on which the Staff has provided its comments, the bulk of which apply to subsequent events occurring and which have been addressed in the 2017 Annual Report filed April 17, 2018 and the results of which will be initially reported on the Quarterly Report for the first quarter of 2018 expected to be filed on or prior to May 15, 2018.

SEC Comment

Response Dated March 26, 2018

General

1.

We note your response to prior comment 3. It appears from your response that you consider your digital assets (including bitcoin, bitcoin cash and litecoin) to be intangible assets but that you do not believe the existing accounting model for intangible assets best reflects the economics of these unique assets. We do not believe you have provided a sufficient basis to justify a departure from the required accounting treatment for intangible assets under ASC 350. Please advise.

1185 Avenue of the Americas | 37th Floor | New York, NY | 10036

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Response:

Digital assets technically meet the definition of an intangible asset, as intangible assets are those that lack physical substance. This model results in holdings of digital assets being recorded at the cost of acquisition, subject to impairment. That is, the model will only capture declines in the value of the digital assets, not increases.

In the Company's opinion, while digital assets meet the strict definition of intangible assets, this model does not best reflect the nature and economics of digital assets, which have unique characteristics that differ from most intangible assets. While digital assets have no physical substance, many are traded on exchanges (unlike other intangibles), are designed to be accepted as payment for other goods and services (which is very infrequent for intangibles), and their value is subject to significant volatility. The Company believes these differences are fundamental, and point to the appropriateness of a fair value model.

This position is reflected in and consistent with "PWC's Point of View Cryptocurrencies" (March 2018).

2. We note your response to prior comment 2. Your response focuses on whether you meet the definition of an investment company under Section 3 of the Investment Company Act of 1940 ("40 Act"). Notwithstanding your determination of your 40 Act status, please provide specific responses to each bullet of prior comment 2 and any additional information necessary to understand your conclusion that you are not an investment company for U.S. GAAP purposes under ASC 946.

Response:

Provided below are responses to each of the bullet points set forth in the comment letter of the Staff dated March 8, 2018 ("prior comment 2" referred to above).  The Company notes that the bullet points set forth in that comment letter are consistent with the guidance in ASC 946-10-15-6 that sets forth the fundamental characteristics of an investment company under U.S. GAAP, and the Company has added the implementation guidance in ASC 946-10-55-4 through 55-10 that illustrates these concepts. The Company has evaluated this accounting guidance in conjunction with its advisors who have addressed the bullet points set forth below and concludes that the Company does not have the fundamental characteristics of an investment company for U.S. GAAP purposes under ASC 946.

U.S. GAAP describes the following fundamental characteristics of an investment company:

946-10-15-6 An investment company has the following fundamental characteristics:

a. It is an entity that does both of the following:

1. Obtains funds from one or more investors and provides the investor(s) with investment management services

2. Commits to its investor(s) that its business purpose and only substantive activities are investing the funds solely for returns from capital appreciation, investment income, or both.

b. The entity or its affiliates do not obtain or have the objective of obtaining returns or benefits from an investee or its affiliates that are not normally attributable to ownership interests or that are other than capital appreciation or investment income.

946-10-55-4: An investment company should have no substantive activities other than its investing activities and should not have significant assets or liabilities other than those relating to its investing activities, subject to the exception in the following paragraph.

946-10-55-5: An investment company may provide investing-related services (for example, investment advisory or transfer agent services) to other entities, directly or indirectly through an investment in an entity that provides those services, as long as those services are not substantive. However, an investment company may provide substantive investing-related services, directly or indirectly through an investment in an entity that provides those services, if the substantive services are provided to the investment company only.

Responsive information below appears in the  various Company  public filings and reports, most recently as set forth in the Company's 2017 Annual Report  filed with the SEC on April 17, 2018.

• Describe for us the company's design, business purpose(s), and how it holds itself out to investors.

The Company describes its business activities as follows in the Annual Report:

The Company, since late 2017, has directed its efforts towards blockchain and cryptocurrency businesses.  Specifically, the Company has begun to enter businesses involving cryptocurrencies and intends, in the near, future, to consider entering and evolving businesses related to these types of cryptocurrencies.  This strategy represents a departure from the Company's historical mission following several failed efforts to obtain regulatory approval for new drugs and the manufacture and distribution of specialized medical equipment.   The Company experienced large accumulated losses from those efforts and determined to control expenses and seek to curtail ongoing losses expected from those efforts which were effectively ended after a new management team and board of directors joined the Company during 2017 and early 2018.

New Business Initiative in Blockchain and Cryptocurrency Mining.

The Company is building a cryptocurrency mining operation, operating specialized computers (also known as "miners") that generate cryptocurrency (primarily Bitcoin).   As of December 31, 2017, the Company owned 1,200 miners acquired with the Kairos Global Technology, Inc., ("Kairos") acquisition in November 2017. During February 2018 in two separate transactions the Company acquired an additional 6,800 miners bringing the total miners owned to 8,000.  During February 2018, Kairos entered into a lease agreement for approximately a 107,000-square foot facility in Oklahoma City, Oklahoma, which included data center improvements. Upon the execution of the facility lease the Company began consolidating all of its miners at the data center facility.  As of March 31, 2018, approximately 3,500 of the miners were installed and operating.

The Company utilizes specialized servers manufactured by Bitmain. Many of these servers are in short supply and the cost of acquisition of servers especially in large quantities, when available, varies widely.   The Company has acquired all of its servers from third parties, some of whom were shareholders in the Company as well, and certain of the acquisitions have included access to operating facilities, support and related equipment for which the Company has paid a premium over the listed retail cost from the manufacturers.  The Company's current facility in Oklahoma was obtained as part of its overall transaction with Prive.  It is expected that this shortage condition may continue and that in order to continue to grow the Company may need to continue to source mining equipment that may become available from third parties.  We participate in mining pools wherein groups of miners associate to pool resources and earn cryptocurrency together allocated to each miner according to the "hashing" capacity they contribute to the pool.  As it relates to Bitcoin, the hash rate is the speed at which a computer is completing an operation in the Bitcoin code, and hashing capacity would be a miner's total output.  A higher hash rate increases the opportunity of solving the next block and receiving the mining reward.  Mining pools were established to help limit the variance involved with competing to solve blocks.  As more and more miners competed for the limited supply of blocks, individuals found that they were working for months without finding a block and receiving any reward for their mining efforts.  To address this variance, miners started organizing into pools to share mining rewards more evenly on a pro rata basis based on total hashing capacity contributed to the mining pool.

In addition to mining, we are seeking to pursue our diversified blockchain and cryptocurrency focused strategy, in part through targeted investments in, and acquisitions of, businesses and assets within the blockchain ecosystem. As of December 31, 2017, we owned approximately 12.9% of goNumerical Ltd., (d/b/a "Coinsquare") which operates a leading Canadian exchange for purchasing and selling cryptocurrencies.  We also subsequently invested $200,000 in a convertible note of Verady, LLC, which seeks to provide accounting, audit and verification services for blockchain based assets such as cryptocurrencies.  We also own approximately 52% of Tess Inc., ("Tess") which is developing TessPay and other blockchain solutions for telecommunications companies. TessPay is a payments ecosystem for component and sub-component supply chain settlements (payments).  Subsequent to December 31, 2017, we formed Digital Green Energy Corp., a wholly owned subsidiary, which is seeking to identify environmentally friendly projects with large energy capacity and a cost-effective rate for energy for cryptocurrency mining operations and data center projects.

Logical Brokerage Corp

On March 27, 2018 we acquired 92.5% of Logical Brokerage Corp. ("Logical Brokerage") for a $600,000 cash payment. Logical Brokerage is registered with the Commodity Futures Trading Commission ("CFTC") as an introducing broker and a member of the National Futures Association ("NFA").  The Company believes that Logical Brokerage will allow the Company to investigate the establishment of a futures brokerage operation and a U.S. digital currency exchange operating lawfully in several states, and a futures brokerage operation, although there can be no assurance the Company will be successful. Neither the CFTC nor the NFA regulate spot-market digital currency exchanges or activity, although the CFTC's jurisdiction is implicated when there is fraud or manipulation involving a virtual currency traded in interstate commerce.

As described above, the Company has substantive activities other than investing activities.  Further, the Company does have significant assets or liabilities other than those relating to its investing activities.  Such significant assets include data center locations performing mining activities and related infrastructure (electricity and cooling) for these properties and liabilities such as lease liabilities associated with such business.  The Company does not provide investing-related services to other entities.

• Identify for us examples of your public disclosure referenced in your response that indicates that the company's business purposes consist of both capital appreciation and investment income.

1 Update includes the business activities described in the Annual Report continuing to be applicable to March 31, 2018, the end of the current fiscal quarter.

U.S. GAAP describes the following:

946-10-55-6: Evidence of the entity's business purpose and substantive activities may be included in the entity's offering memorandum, publications distributed by the entity, and other corporate or partnership documents that indicate the investment objectives of the entity. Evidence of the entity's business purpose and substantive activities also may include the manner in which the entity presents itself to other parties (such as potential investors or potential investees). For example, an entity that presents its business to its investors as having the objective of investing for realizable capital appreciation has characteristics that are consistent with the business purpose and substantive activities of an investment company. Alternatively, an entity that presents itself as an investor whose objective is jointly developing, producing, or marketing products with its investees has characteristics that are, the documents show that the Company's business purpose is inconsistent with the business purpose and substantive activities of an investment company.

See our response above, which quotes the descriptions of the Company's business purpose and substantive activities which appear in the Annual Report.  In addition, in a Business Update press release issued April 17, 2018 the Company's business purpose is presented to investors and clearly identifies that the Company satisfies the business purposes that are inconsistent with the business purposes and substantive activities of an investment company.  As stated therein the Company (via its leased datacenter facilities in which it consumes energy and computer services to generate cryptocurrency) had generated during March 2018 69 Bitcoins  and 44 Bitcoin Cash from operations, owns interests in both goNumerical and Tess/Cresval which through jointly developing, producing or marketing, have significant value "step-ups" since the investments were made.   The principal purpose of these investments is presented to investors as being the ability to enter into diff