Shares of cryptocurrency miner Riot Blockchain, Inc. (RIOT) have soared 572% over the past 12 months. However, the company recently reported a higher year-over-year net loss for the third quarter. Notably, during this period its bitcoin production increased 482% over the previous year.
The company’s bitcoin balance was at 3,995 BTC at the end of October. Keeping these developments in mind, let us take a look at the changes in Riot’s key risk factors that investors should know.
Risk Factors
According to the TipRanks Risk Factors tool, Riot’s top two risk categories are Finance & Corporate and Tech & Innovation, each accounting for 22% of the total 69 risks identified. In its recent Q3 report, the company has added four key risk factors. The first three of these new risks fall under the Tech & Innovation risk category.
Firstly, Riot noted that it may experience delays or unanticipated difficulties in completing its 200MW liquid immersion-cooled Bitcoin mining infrastructure and hardware. Other miners have witnessed substantial setbacks and cost overruns while implementing other liquid-cooling techniques, which are different from Riot’s at scale. If Riot is unable to complete the project on schedule and has to devote more resources for completion, then it may not realize the anticipated benefits from the project.
Secondly, Riot has seen higher operational efficiency of its miners while testing its liquid immersion-cooled Bitcoin mining hardware. But the company has not yet tested the technology at the scale it is currently developing. Any unforeseen technological hurdles related to the deployment of the 200MW project may cause the company a loss of investment, or lead to a drop in its share price.
Thirdly, technological advances in mining equipment may lead to the adoption of newer technologies and machines, and the discontinuation of existing mining equipment before its useful life is over. This early retirement of equipment may cause accelerated depreciation on such equipment, and may harm Riot’s results.
In the fourth risk factor, under the Production risk category, Riot highlighted that it depends on a limited number of suppliers and partners for its immersion-cooling technology. This reliance on limited sources exposes the company to supply disruption and price fluctuation.
Moreover, increased adoption of liquid immersion cooling technology in cryptocurrency mining or in the computing industry may lead to higher demand for the required materials, which can increase Riot’s operations costs and affect the its operations results adversely. (See Insiders’ Hot Stocks on TipRanks)
Against a sector average of 4%, Riot’s Tech & Innovation risk factor is at 22%.
Wall Street’s Take
On November 16, BTIG analyst Gregory Lewis reiterated a Buy rating on the stock and increased the price target to $50 from $45.
Consensus on the Street is a Strong Buy based on 5 unanimous Buys. The average Riot Blockchain price target of $47.60 implies a potential upside of 34.92% for the stock.
Related News:
Accenture Buys London-Based Founders Intelligence
Pfizer Applies for Emergency Use Authorization of COVID-19 Pill
TransDigm Delivers Mixed Q4 Results; Shares Fall
