Several crypto stocks have witnessed a dramatic rebound this year after a disappointing 2022. Shares of Bitcoin (BTC-USD) miner Riot Platforms (NASDAQ:RIOT) have rallied 166% year-to-date despite an 18% pullback over the past one month. The company’s efforts to boost its mining capacity and improve its profitability have impressed investors. Wall Street analysts are bullish on this high-risk, high-reward crypto miner and see robust upside potential even after a stellar run so far this year.
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Promising Growth Prospects
Riot Platforms has been making significant investments in expanding its Bitcoin mining capacity. In September, the miner produced 362 Bitcoins, reflecting a 2% year-over-year increase and a 9% growth compared to August. The company’s deployed hash rate increased to 10.9 Exahash per second (EH/s) from 5.6 EH/s in September 2022 and 10.7 EH/s in August 2023.
Riot expects to enhance its hash rate further. It has entered into a long-term purchase agreement with MicroBT, which involves an initial order of 7.6 EH/s of next-generation Bitcoin miners for the Corsicana facility. Riot’s total self-mining hash rate capacity is expected to reach 20.1 EH/s once this initial order is fully deployed by mid-2024. It aims to ramp up its hash rate to 35.4 EH/s by 2025.
Interestingly, the company’s power strategy is also boosting its results. Under long-term power contracts, the company earns power curtailment credits by selling pre-purchased power back to its utility provider at market-driven spot prices.
In September, the company received $11 million in power credits by “strategically curtailing mining operations” at a time when Texas faced another month of extreme heat. Riot also earned $2.5 million in demand response credits by participating in ERCOT’s (Texas’ power grid operator) ancillary services program. Overall, these power credits seem to be a good way of diversifying revenue streams. CEO Jason Les believes that these power credits significantly reduce the company’s cost to mine Bitcoin and are vital in making it one of the lowest-cost BTC producers in the industry.
Overall, the company has a strong financial position, with the first half of 2023 ending with zero long-term debt and $289 million in cash. As of the end of September 2023, Riot held 7,327 Bitcoins.
Is Riot Platforms a Buy?
In early September, Roth MKM analyst Darren Aftahi reiterated a Buy rating on RIOT stock with a price target of $19.50. The analyst believes that the combination of the company’s “unique power strategy and rock-solid balance sheet” makes it well positioned for driving improved profitability and doubling its hash rate exiting 2024.
Overall, Riot Platforms earns Wall Street’s Strong Buy consensus rating based on eight unanimous Buys. The average price target of $19.94 indicates further upside potential of 121.3%.
Conclusion
Wall Street is highly bullish on Bitcoin miner Riot Platforms and estimates robust upside potential, backed by the company’s improving fundamentals and power strategy. Nonetheless, investors should consider the high risks and volatility associated with crypto stocks like RIOT before making an investment decsion.
