Recent months have brought a great deal of optimism around Bitcoin (BTCUSD), particularly as President Donald Trump has ushered in a more crypto-friendly administration. Against this backdrop, shares of a prominent Bitcoin miner have been on the up due to rumors of a takeover. Moreover, the company saw its shares pop in December after an activist investor purchased a stake. So, is it an investable idea now? Let’s have a closer look.
About Riot Platforms Stock
Founded in 1998 as an oil and gas exploration company, Riot Platforms (RIOT) is a leading Bitcoin mining and digital infrastructure company focused on large-scale mining operations in the United States, with data centers in central Texas and Kentucky.
Valued at a market cap of about $4 billion, RIOT stock is 9% on a year-to-date basis, outperforming the S&P 500 Index ($SPX) and the Nasdaq Composite Index ($NASX).
Riot Missed Revenue, Earnings Estimates
Riot’s results for the most recent quarter were a disappointment with both revenue and earnings missing estimates. However, revenues clocked a healthy yearly growth rate of 65% to come in at $84.8 million as core Bitcoin Mining revenue more than doubled to $67.5 million from $31.2 million in the year-ago period.
Losses per share widened to $0.54 from $0.25 in the previous year amid escalating Bitcoin mining costs.
The company produced 1,104 Bitcoins during the quarter, comparable to the previous year’s figure of 1,106. The company closed the September quarter with 10,427 Bitcoin on its balance sheet.
Riot Platforms has adjusted its guidance for hash rate growth, which raises concerns about its expansion trajectory. The hash rate, a key metric representing the computational power dedicated to Bitcoin mining, is now expected to reach 34.9 EH/s by the end of 2024, a downward revision from the previous target of 36.3 EH/s. This adjustment stems primarily from delays in scaling operations at newly acquired facilities in Kentucky, which were initially slated to come online this year but are now expected to commence operations in 2025.
The revised outlook extends into 2025, with Riot now forecasting a year-end hash rate of 46.7 EH/s, a notable reduction from the prior guidance of 56.6 EH/s. This revision is attributed to the postponement of planned expansions in Kentucky, which will now take shape in 2026, as well as extended lead times for the next substation at its Corsicana Facility. As a result, only two new buildings are expected to become operational in 2025, rather than the originally anticipated three.
Despite these near-term setbacks, Riot remains committed to scaling its mining operations aggressively. As of its latest quarterly update, the company has achieved approximately 31.5 EH/s, representing a 3% to 4% share of the current Bitcoin network. This marks a significant increase from the 12.4 EH/s recorded at the close of 2023. By the end of 2025, Riot aims to approach the 50 EH/s mark, and the company has affirmed that its growth plans for that year are fully funded. Looking further ahead, Riot’s ambitious roadmap targets a mining capacity of 100 EH/s by 2027, reinforcing its long-term vision to cement its leadership position in the industry.
Riot's cash position however remained at a somewhat comfortable $355.7 million, much higher than its short-term debt levels of just $0.657 million.
Strategic Drivers
As the second-largest publicly traded Bitcoin mining company by market capitalization, Riot Platforms maintains a formidable position in the industry, strategically positioned to meet the rising demand for cryptocurrency from central banks and sovereign wealth funds worldwide.
Riot’s U.S.-centric operations serve as a key advantage, particularly amid escalating geopolitical tensions. The company operates three primary mining sites in Corsicana and Rockdale, Texas, as well as Kentucky. Notably, its Rockdale facility is recognized as the largest Bitcoin mining operation in the United States, reinforcing Riot’s dominance in the sector.
Despite the intensifying competition within the Bitcoin mining landscape, Riot has expanded its total hash rate by an impressive 159%, outpacing overall network growth. The company achieves this not only by increasing mining capacity but also by continuously enhancing the efficiency of its fleet. A critical driver of this progress is its strategic partnership with MicroBT, established in December 2023, which secures access to high-performance mining rigs at a fixed future price ceiling. This ensures Riot remains at the forefront of technological advancements in mining hardware.
Moreover, following the April 2024 Bitcoin halving, Riot has demonstrated resilience by increasing its mining revenue while scaling its hash rate from 12.4 EH/s to 28 EH/s between Q1 and Q3 2024. This achievement is particularly significant, as Bitcoin halving events inherently reduce mining rewards, making it twice as challenging to generate new Bitcoin.
Riot has also executed strategic acquisitions to strengthen its footprint. The recent purchase of Block Mining added an immediate 60 MW and 1 EH/s to its operations, with an ambitious plan to expand by another 16 EH/s by 2025. This acquisition not only bolsters Riot’s production capacity but also enables geographical diversification, reducing dependence on Texas-based operations. Kentucky, in particular, offers lower electricity costs and energy-saving incentives, presenting an attractive alternative for expansion.
Analyst Opinion on RIOT Stock
Overall, analysts have assigned a rating of “Strong Buy” for the stock with a mean target price of $18.49 which denotes an upside potential of about 60% from current levels. Out of 15 analysts covering the stock, 12 have a “Strong Buy” rating, two have a “Moderate Buy” rating and one has a “Hold” rating.
