Riot Platoforms, one of the largest Bitcoin mining companies in the world, is trying in every way to make up for the reduction in revenue resulting from the advent of the halving of the cryptocurrency, which has halved the reward for digital extraction.
In particular, the miner, headquartered in Castle Rock, Colorado, is upgrading its infrastructure to achieve more efficient Bitcoin production, as well as considering acquisitions of other groups and implementing energy-saving strategies.
Despite all these new developments, Riot records a 43% drop in earnings compared to last month: will the miner be able to withstand the post-halving storms?
Let’s see everything in detail below.
The mining operator Riot moves between infrastructure updates, acquisitions, and energy strategies to survive the impact of Bitcoin halving
The arrival of the Bitcoin halving in April had negative effects on the main Bitcoin mining operators, also putting in crisis the company Riot Platforms which represents the second largest miner in the United States and the sixth entity in the world by number of BTC held on the balance sheet.
Riot is trying in every way to reduce the negative impact of the halving of mining rewards, implementing a real operational plan.
First and foremost, according to a press release, the Colorado miner is upgrading its infrastructure by launching a new Bitcoin mining facility in Corsicana, Texas, which produces approximately 3.1 exahash per second (EH/s).
This allows Riot’s total self-mining capacity to reach 14.7 EH/s, an increase of 17% compared to the previous month.
The mining facility currently operates at 100 megawatts (MW) and will eventually reach 1 gigawatt (1,000 MW) once fully developed.
This choice reflects Riot’s extremely positive view on the appreciation of Bitcoin in the long term: it indeed seeks to mine as many coins as possible to secure a greater profit in the future and recover the recent losses due to the halving.
In the plans of the mining company, there is indeed the intention to reach a total hash capacity of 31 EH/s by the end of 2024 and 41 EH/s by 2025.
To achieve this, the group has entered into an agreement with MicroBT to add 33,280 extraction devices to its farms through a gradual process, committing to ensure constant profitability even during bear periods.
Furthermore, Riot is looking to expand by acquiring competing companies such as Bitfarms, to which it has proposed a buyout offer with a combination of cash and common shares, amounting to 950 million dollars, with a 24% premium compared to the average price of the company’s shares.
The offer arrived at a time when the management of Bitfarms is in transition, searching for a new CEO.
Among other things, Riot, as explained by its CEO Jason Les, is trying to efficiently manage Bitcoin mining by also leveraging energy strategies, already used by the company in the past, such as the so-called “energy credits in response to demand”.
These are the words of the CEO:
“The exclusive energy strategy of Riot, which we generally use more actively in the summer months, has already started to show significant results for this year, generating approximately 7.3 million dollars in energy credits and demand response in May.”
In August of last year, Riot had earned a substantial 31.7 million dollars in energy credits for partially halting its mining operations during the hottest hours of the day, avoiding severe blackouts for ERCOT (Electric Reliability Council of Texas) and simultaneously achieving a boost in profits.
In May 2023 Riot obtained only 500 thousand dollars in energy credits from ERCOT, despite recording a 43% decrease in the amount of Bitcoin mined compared to the previous month, with a -68% year-on-year.
We will see if in the coming months it will be able to replicate last year’s trend by compensating for post-halving losses with alternative credits.
Despite the difficulties encountered in recent months, it is clear that Riot is well positioned to face the post-halving period.
His mixed strategy, with the tendency to aim at producing more and more hashrate and at the same time to cash in continuously, can only be successful in the future, especially in a scenario that sees Bitcoin appreciating significantly, becoming in all respects one of the most performing assets of traditional finance.
It is clear that if the bull market does not go as hoped and BTC never sees the 100,000 dollars, then Riot will have to review its exposure in the sector to better manage its financial situation.
Analysis and price forecast of the stock Riot Platforms (RIOT)
The company Riot Platforms, engaged in Bitcoin mining, is listed on the Nasdaq with the ticker RIOT and boasts a market capitalization of 2.79 billion dollars.
The stock during the last bull market recorded a stellar performance, marking a growth of over 3000% from the halving of May 2020 until the top of February 2021.
From that point onwards, we witnessed a long distribution phase, losing up to 95% of the quotations, which ended around mid-2023, marking the beginning of a lateral trend that continues to this day.
The prices as of today are compressed below the EMA 50 weekly, in the middle of a very long range that has been ongoing for over a year, waiting for investors to take a clear direction in the chart.
Very interesting to note how the top of RIOT arrived a good 9 months before the top of Bitcoin (or if we want 2 months before the top of April 2021). If there will be the same correlation also in this bull market, then this means that we are still extremely far from the maximum of Bitcoin.
The future price action of the titolo will partly depend on the company’s ability to bring home large profits from Bitcoin mining activities, but above all on the performance of BTC itself, which will decide the fate of an entire mining industry.
In this sense, exposing oneself to stocks like that of Riot Platforms offers a leverage of the investment on BTC, with boosted profits in case of a rise, but at the same time with dumps of greater proportions in case of a fall.
By the end of 2024, if there is a new rally by Bitcoin, we expect a strong rise in the RIOT stock, with prices likely to revisit the area around 40 dollars.
Even the stocks of Bitcoin mining producers like MARA, HIVE, HUT8 etc. have offered great profit opportunities in the last bull cycle and could replicate the trend in the coming months.
