RIOT - Riot Platforms: A Cash-Burning Machine Even In The Crypto Bull Market

2024-07-05 03:01:02 ET

Summary

• Riot Platforms has failed to consistently show profitability in its mining operations, even after the recent Bitcoin bull market.
• The company's profits are attributed to Bitcoin's fair value changes, which may become negative given its recent declines.
• Riot Platforms has raised over $1B in investor cash on a TTM basis, which is nearly half of its current market value. This suggests significant and potentially fruitless equity dilution.
• The company may have some support from its tangible book value. To me, that depends on whether or not its physical investments can be used for non-Bitcoin activities.
• RIOT's political risk appears high as more voters and politicians question its voracious power needs, which can be argued to provide limited general economic benefit, particularly given ERCOT's grid difficulties.

In December of 2021, I published a bearish view regarding the blockchain mining company Riot Platforms ( RIOT ) in " Why Riot Blockchain May Never Generate Consistent Profits ." The stock has declined by ~64% despite a significant Bitcoin rally over the past year. RIOT is also down 28% YoY despite an 86% increase in Bitcoin's value. Analyst sentiment remains very mixed, with many bullish and bearish outlooks....

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