Riot Blockchain Stock Forecast: Is RIOT A Buy?

Written by Sean GraytokUpdated: 8th May 2022
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Looking for a second-order bet on bitcoin? This Riot Blockchain Stock Forecast explains how RIOT is a pick-and-shovel play on the bitcoin ecosystem. 

Riot Blockchain Stock Forecast: Background

Riot Blockchain is a large-scale Bitcoinmining company with locations in Texas and New York. It has a market cap of just shy of $3 billion.

Riot began mining in February 2020 and has significantly grown its capabilities over the last two years.

Riot represents “R” in the new CHARM acronym that describes the best bitcoin mining stocks in North America.

Miners like Riot are the critical infrastructure of the Bitcoin ecosystem. Next, we’ll analyze three drivers behind Riot’s potential success as an investment.

Riot Stock Forecast: Investment Potential

#1. Mine and Hodl

Well-capitalized, publicly-traded miners like Riot are no longer selling their block rewards to pay operational costs.

They’re paying bills in depreciating fiat and holding onto appreciating bitcoin.

As of September 30, 2021, Riot held approximately 3,534 BTC, all of which were produced by its self-mining operations.

Riot mined that BTC at a hashrate of 2.6 EH/s spread across 25,646 miners. It expects to grow that number to 7.7 EH/s by Q4 2022.

#2. Riot & The Heartland of US Mining

In May 2021, Riot acquired a 300 MW Bitcoin mining hosting facility in Rockdale, Texas, and immediately announced a 400 MW expansion.

The acquisition turned Riot into the largest publicly traded Bitcoin mining and hosting company in the US, setting it on a path to become the leading US Bitcoin platform.

According to Nic Carter, Texas is becoming the heartland of US mining. He points to several reasons:

  • Deregulated grid with real-time spot pricing
  • Cheap
  • Aligned policymakers
  • Significant excess renewable energy and stranded or flared natural gas
  • The development of immersion mining will eliminate cooling issues

Carter explains how mining with flared gas is more profitable than capturing it and how mining with “otherwise-flared gas” is actually carbon-negative.

He adds that flared gas in Texas could power 34% of the Bitcoin network today if fully exploited.

This is a massive opportunity for Texas-based miners like Riot, and it helps that policymakers are on board.

Texas Governor Greg Abbot recently tweeted, “Blockchain is a booming industry that Texas needs to be involved in. I just signed a law for Texas to create a master plan for expanding the blockchain industry in Texas.”

With mining infrastructure development, energy innovation, capitalist incentives, and regulators all pulling in the same direction, Riot has a geographical advantage over other miners in the industry.

#3. Mining Infrastructure Development

Riot recently announced the development of 200 MW of immersion-cooling technology at its Whinstone facility, becoming the first industrial-scale immersion-cooled bitcoin mining operation.

Traditionally, miners have relied on air-cooling to keep their machines from running hot, but this method requires large amounts of electricity, which increases production costs.

Immersion-cooling minimizes these costs by submerging the machines in a specialized fluid to keep the circuits at lower temperatures.

Riot expects immersion-cooling to increase its hashrate by 25%, with an estimated potential to increase ASIC performance by as much as 50%.

This is a groundbreaking achievement for Riot and the broader blockchain industry.

Optimizing existing equipment to improve productivity without relying solely on buying new mining equipment (which can be difficult to attain) will profoundly impact the bitcoin mining economy.

Hashrate goes up, costs go down, and the number of miners stays the same.

Riot exemplifies the benefits of deflationary technology.

Riot Stock Forecast: Moat

The following is our attempt to describe Riot’s differentiator from other bitcoin companies or miners in the space:

Industrialized Hodler + Texas + Blockchain Innovation

While companies like Coinbase (COIN) and Tesla (TSLA) can buy bitcoin, Riot creates bitcoin.

Considering miners are the only way new bitcoin enters the supply, Riot effectively operates at the bottleneck of an industry with exponentially increasing demand.

What happens to the price of bitcoin when Riot stops selling its earned bitcoin?

Next, Riot conducts operations in an area that not only accepts proof-of-work mining but encourages it.

Texas and Texas-based miners will be far ahead once other areas realize the vital role mining plays in optimizing an energy grid.

Last, Riot’s development of immersion-cooling technology directionally suggests more mining innovation in the future.

Bitcoin is barely a decade old, and industrialized miners are an even newer phenomenon.

The miners that innovate faster than their competition will enjoy momentous advantages, and Riot’s track record suggests it is one of those miners.

Riot Blockchain Stock Analysis

In such a fast-moving industry like mining, quarterly earnings reports don’t quite cut it. So, Riot publishes monthly production and operations updates instead.

Here are the highlights from the September update:

  • Produced 406 BTC in the month, an increase of 346% over its September 2020 production
  • Produced a total of 2,457 BTC year to date, an increase of 236% over the same 2020 period
  • Held a total of 3,534 BTC self-mined bitcoin
  • Hashrate capacity of 2.6 EH/s across a deployed fleet of 25, 646 miners

Upon completing the Whinstone expansion, Riot anticipates a self-mined total hashrate capacity of 7.7 EH/s, assuming a full deployment of 81,150 Antminers acquired from Bitmain.

Riot Stock Forecast: Top Competitors

Riot has a handful of competitors trying to prevent it from securing block subsidies:

  • Marathon Digital (MARA)
  • Hut 8 Mining (HUT)
  • Core Scientific (CORE)
  • Argo Blockchain (ARBK)
  • Elizabeth Warren
  • Bitfarms (BITF)

The incentive structure for mining will pull forward innovation at a rapid pace.

The companies that can stay ahead of the pack, and weather a prolonged bear market, are best suited to survive.

Riot Blockchain Stock Forecast: The Risks

Historically, bitcoin has traded in four-year price cycles. The number goes up in a big way, then it enters a multi-year consolidation period of sideways or decreasing price action.

If this cycle repeats going forward, only the strongest industrialized miners will survive.

However, this time is actually different.

Now, publicly traded miners are well-capitalized to better endure BTC bear markets — but to varying degrees.

A brutal bear market will be uncharted territory for the new class of publicly traded mining companies, including Riot.

Riot Stock Allocation in Your Portfolio

Here’s a series of questions to help you decide on the right amount of Riot stock to buy if any:

  • How many bitcoin mining stocks do you want to own?
  • Where does Riot rank amongst the best bitcoin mining stocks?
  • Will Riot outperform bitcoin over the next 5-10 years?
  • Do you already have enough bitcoin exposure (if that is even possible)?
  • Are you willing to hold shares of RIOT during a bitcoin bear market?
  • Are there better publicly traded BTC proxies like GBTCor MicroStrategy (MSTR)?
  • Is a blockchain ETF like Global X Blockchain ETF (BKCH) a better investment?

If you decide to purchase shares of RIOT, we believe it’s best to hold it in a tax-advantaged account like a Roth IRA.

Riot Blockchain Stock Forecast: FAQs

Is RIOT a good long-term investment?

RIOT is a good long-term investment if you believe in Bitcoin’s success over the coming decades and you believe Riot can remain competitive amongst fellow miners.

Will RIOT stock go back up?

RIOT stock is largely dependent on the price action of bitcoin. A significant portion of RIOT’s value is tied to the value of its balance-sheet-BTC. When BTC goes back up, shares of RIOT will follow to varying degrees.

Why is RIOT stock falling?

RIOT stock tends to fall with the price of bitcoin. When bitcoin tumbles, you can expect RIOT to trade in a similar direction.

Can you invest in RIOT?

Yes, you can invest in RIOT by searching for the ticker symbol “RIOT” on your favorite brokerage platforms, such asVanguard or Robinhood. Then, enter the number of shares you’d like to buy and execute your order.

Bottom Line: Riot Blockchain Stock Forecast

Riot is an important letter in the CHARM stocks acronym. We believe it’s well-positioned to benefit from the increased adoption of Bitcoin in the years to come.

This article is for informational purposes only, and it is not intended to be investment advice. Read our editorial guidelines and public equities research methodology to learn more about how we researched Riot Blockchain stock. 

Sean Graytok
Sean Graytok

Sean Graytok is our Co-Founder and is a recognized expert in investing, financial management, and Bitcoin. His work has been cited in leading industry publications, such as InvestorPlace and Business Insider. Sean is interested in the people and companies who are driving technological innovation.