Riot Platforms, Inc

Riot Platforms, Inc. (NASDAQ: RIOT) is a company specializing in Bitcoin mining and digital infrastructure. It operates Bitcoin mining facilities in central Texas and Kentucky, as well as electrical switchgear engineering and fabrication operations in Denver, Colorado. The company runs a Bitcoin-powered infrastructure platform and is organized into two segments: Bitcoin Mining and Engineering.

Recent Business and Financial Updates

• Third Quarter 2024 Financial and Operational Performance: Riot Platforms reported total revenue of USD 84.8 million for the third quarter of 2024, marking a significant increase from USD 51.9 million in the same period of 2023. This growth was largely driven by a USD 36.3 million rise in Bitcoin mining revenue. The company mined 1,104 Bitcoin during the quarter, slightly lower than the 1,106 Bitcoin produced in Q3 2023. Despite challenges from the block subsidy halving in April 2024 and a higher network difficulty, Riot managed to maintain steady production levels.
• Bitcoin Mining Costs and Power Credits: The average cost of mining Bitcoin, excluding depreciation, was USD 35,376 per Bitcoin in Q3 2024, a sharp rise from negative USD 22,741 per Bitcoin in the same period last year. This increase was largely due to a 75% reduction in power credits, the impact of the block subsidy halving, and a 59% rise in the global network hash rate. The company earned USD 12.4 million in power credits for the quarter, a significant decline from USD 49.6 million in Q3 2023, reflecting the changes in credit receipts.
• Revenue Breakdown and Profitability: Bitcoin mining revenue reached USD 67.5 million in the third quarter, up from USD 31.2 million in Q3 2023, driven by higher average Bitcoin prices and an increase in operational hash rate. However, these gains were partially offset by higher network difficulty and the block subsidy halving. Engineering revenue was USD 12.6 million, a decline from USD 15.5 million in the previous year. Additionally, the company earned USD 4.8 million in other revenue, which was primarily from third-party hosting services.
• Gross Profit and Loss: Riot’s Bitcoin mining gross profit, excluding depreciation, was USD 28.4 million, resulting in a margin of 42%. This marked a significant drop from the previous year's gross profit of USD 56.4 million, or a margin of 181%. The engineering segment reported a gross loss of USD 0.9 million, compared to a gross profit of USD 2.3 million in Q3 2023. Additionally, the company saw a substantial reduction in power curtailment credits, which totaled USD 12.4 million in Q3 2024, down from USD 49.6 million the previous year.
• Hash Rate Growth and Future Expectations: Riot now expects its self-mining hash rate capacity at the end of 2024 to reach 34.9 EH/s, lower than the previous forecast of 36.3 EH/s. This adjustment is due to delays in expanding its newly acquired Kentucky facilities, which are now expected to come online in 2025. The company has also revised its 2025 hash rate capacity projections to 46.7 EH/s, down from an earlier forecast of 56.6 EH/s. Full development of the Corsicana Facility is now expected by 2026, with plans to reach 65.7 EH/s by the end of that year, along with further expansion in Kentucky.
• ATM Offerings and Equity Financing: In August 2024, Riot launched an At-The-Market (ATM) offering, enabling the sale of up to USD 750.0 million in common stock. By September 30, 2024, the company had raised approximately USD 730.8 million in net proceeds from the sale of 70.1 million shares at a weighted average price of USD 10.65 per share. After September 30, an additional USD 62.1 million was raised from selling 8.1 million shares at an average price of USD 7.81 per share. As of October 30, 2024, Riot had 332.3 million shares of common stock outstanding.
• Bitcoin Production and Operations: In October 2024, Riot produced 505 Bitcoin, a 23% increase compared to September, fueled by an increase in deployed hash rate to 29.4 EH/s. Growth was also driven by new MicroBT miner deployments at the Corsicana Facility. Riot is nearing completion of Phase 1 (400 MW) and has started developing Phase 2 (600 MW) of the Corsicana Facility, with operations expected to begin in 2025.

Technical Observation (on the daily chart):

RIOT's stock price has demonstrated strength at lower levels and has recently seen a significant rise. Currently, however, the price is near a trendline resistance zone that is on a downward trajectory. Riot's stock is currently trading at $11.44, with key support levels at $10.64 and $9.95. The resistance levels are at $12.47 and $13.38. The stock has recently shown strength, but it is approaching a downward trendline resistance. The 14-day RSI is above the midpoint, suggesting potential for a downside pullback. The stock is above its 50-period SMA, which could provide short-term support.

Riot Platforms demonstrated strong financial growth in Q3 2024, with increased Bitcoin mining revenue and consistent production. Despite challenges, the company is expanding its facilities, raising significant capital, and optimizing its hash rate capacity, positioning itself for future success. 

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Speculative Buy’ rating has been given to Riot Platforms, Inc (NASDAQ: RIOT) at the current market price of USD 11.44 as of December 20,2024 at 07:52 AM PST. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is December 20,2024 at 07:52 AM PST. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.