Riot Platforms (RIOT), a significant player in the Bitcoin mining industry, has seen its shares surge 32% over the last three months despite the adverse impact of the Bitcoin halving event and DeepSeek shock to the markets. The company has been working hard to enhance its efficiency and strategically expand operations, leading to a 155% increase in its deployed hash rate in 2024. The rise in Bitcoin price has significantly boosted Riot’s yield, and the company aims to increase its hash rate to over 100 EH/s by 2027. Recent developments have seen investment firm D.E. Shaw acquire a stake in Riot, signaling potential company strategy and operations changes.
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Additionally, Riot Platforms has begun to review how it might extend its services beyond traditional Bitcoin mining, hinting at a broadening of its focus towards artificial intelligence and high-performance computing technology. Investors interested in Bitcoin miners might find this a compelling opportunity.
Riot’s Shifting Strategy to AI
Riot Platforms is a significant player in the North American bitcoin mining landscape. The company operates through three sectors: bitcoin mining, Data Center Hosting, and Engineering. Through its co-location services, Riot Platforms caters to institutional-scale Bitcoin mining firms and provides the necessary infrastructure and workforce for these clients to deploy and oversee their miners.
Riot has begun diversifying power capacity usage by exploring artificial intelligence (AI) and high-performance computing applications. In response to advocacy by recent investor Starboard, Riot initiated a formal review on leveraging its remaining power capacity at its Texas facility for AI applications. Furthermore, Riot’s attempted acquisition of Bitfarms Ltd (BITF) and consequent changes in Bitfarms’ board composition indicate its willingness to revise operational strategies.
RIOT Reduces Capex
Riot recently stopped the development of its 600 MW Phase II Bitcoin mining expansion at its Corsicana facility, while existing mining operations will remain in place. This decision impacts Riot’s previously announced total self-mining hash rate capacity growth and related capital expenditures for 2025. The expected hash rate capacity for 2025 has been reduced from 46.7 EH/s to 38.4 EH/s. While Riot continues to develop the substation to support the extra 600 MW of power at the Corsicana facility, the projected capital expenditures in 2025 are expected to be reduced by $245 million.
Investment firm D.E. Shaw has acquired a stake in the company. This is the second instance of an activist investor showing interest in Riot, following Starboard Value’s investment last year. While the exact size of D.E. Shaw’s stake is undisclosed, the firm has a history of influencing strategic changes through behind-the-scenes negotiations. The shift could lead Riot’s operational strategy and asset allocation in new directions.
Update on Recent Mining Progress
Most recently, in December, Riot saw a 4% increase in bitcoin mining, producing 516 bitcoins. This surge is attributed to the continuous optimization of the operational hash rate. The company successfully finished installing the final systems at the Corsicana Facility, initiating the first phase of a 400 MW development. All systems have been completed, and the company is now focusing on quality power supply to align with its commitment to responsible grid usage, causing a delay in some hash rate activation.
In 2024, Riot amplified its deployed hash rate by 155%, outpacing the network’s hash rate growth of 52%. This strategic growth resulted in the mining of 4,828 bitcoins. Additionally, the company increased its bitcoin holdings by 141% to 17,722 by the end of 2024, leading to a rise of 39% in bitcoin yield per share. The company plans to enhance this metric to benefit its shareholders continuously.
Analysts Are Bullish
The stock has been highly volatile (beta of 3.15), bouncing around between $6.36 and $18.36 and climbing roughly 6% in the past year. It demonstrates mixed momentum, trading above longer-running moving averages (50-day and up).
Analysts following the company have been bullish on the stock. For instance, Needham analyst John Todaro recently reiterated a Buy rating while raising the price target on the share to $16 (from $11), noting Riot’s adoption of high-performance computing and financing flexibility with a robust balance sheet.
Ten analysts recently recommended Riot Platforms as a Strong Buy. Their average 12-month price target for RIOT stock is $18.13, representing a potential upside of 51.21% from current levels.
RIOT in Review
Riot Platforms is among the leading players in the Bitcoin mining industry, expanding operations with an impressive 155% increase in deployed hash rate in 2024. The company also has its sights set on a broader horizon, exploring opportunities in artificial intelligence and high-performance computing. Even though there’s been a recent shift in strategy, with the development of Riot’s 600 MW Phase II Bitcoin mining paused, the firm remains dedicated to optimizing its operational hash rate. The stock market’s outlook on Riot is generally bullish, with recent investment from hedge fund firm D.E. Shaw. Given these factors, Riot Platforms presents a potentially compelling opportunity for investors interested in Bitcoin mining.
