Riot Blockchain Inc

Riot Blockchain Inc. (NASDAQ: RIOT), previously Bioptix, Inc., is pursuing exposure to the blockchain ecosystem through cryptocurrency mining, internally formed enterprises, collaborative partnerships, and targeted investments. The company's primary focus is on Bitcoin and blockchain technologies in general.

RIOT Details

Latest News

• Riot Blockchain, Inc. stated on June 1, 2022, that Jeff McGonegal, following twenty-year employment with the company, will resign as Chief Financial Officer and transition to a new role as Senior Advisor to Riot beginning August 15th, 2022. In line with Riot's succession planning process, Colin Yee, presently Head of Corporate & Financial Operations, has been chosen by the Company's Board of Directors to follow Mr. McGonegal as CFO as of August 15th, 2022.
• Riot Blockchain, Inc. stated on April 27, 2022, that it has begun a large-scale, 1-gigawatt development in Navarro County, Texas, to enhance its Bitcoin mining and hosting capabilities. The Expansion started with the construction of an initial 400 megawatts of capacity on a 265-acre site, with immersion-cooled mining and hosting activities set to begin in July 2023.

May 2022 production and Operational update

• Riot generated 466 BTC in May 2022, up from 228 BTC in May 2021, representing a 104 percent gain.
• Riot controlled roughly 6,536 BTC as of May 31, 2022, all of which were generated through the company's self-mining operations.
• Riot sold 250 Bitcoin in May 2022, making a net profit of almost USD7.5 million.

Q1 FY22 Financial result

• For the three months ending March 31, 2022, overall revenue increased by 244 percent to a record USD79.8 million, compared to USD23.2 million for the same three-month period in 2021.
• For the three months ending March 31, 2022, the company had a record net income of USD35.6 million, compared to USD7.5 million for the same three-month period in 2021.
• Despite a 12 percent lower price of BTC in Q1 2022 of USD41,241 compared to USD46,729 for the same period in 2021, the mining revenue margin remained stable at around 67 percent of mining revenues year over year, reflecting the Company's rising operating efficiency in its mining sector.

Key Risks

• Underlying price risk: The value of the firm depends upon the prices of the bitcoin mined by the company. The price of bitcoin has corrected by around 70% since making an all-time high in November 2021 and simultaneously the price of RIOT has corrected by almost 90% during the same period, showing the correlation between them.
• Macro-economic risk: Under the current macroeconomic situation with respect to rising inflation and the tense situation in Europe has affected the capital markets in all the asset classes.

Outlook

Riot expects a total self-mining hash rate capacity of around 12.8 EH/s by January 2023, assuming complete deployment of around 120,150 Antminer ASICs but ignoring any potential further productivity improvements from the Company's use of 200 MW of immersion-cooling infrastructure. The newest generation S19 series miner type will make up around 97 percent of the Company's self-mining fleet. The Company's whole self-mining fleet will require roughly 370 MW of electricity once all presently contracted miners are fully deployed. Riot supports roughly 200 MW of institutional Bitcoin mining clients in addition to its own self-mining activities.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

Source: REFINITIV, Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation

Over the past six months, RIOT's share price has corrected by 81.76%. The stock is currently leaning towards the lower end of its 52-week range of USD 4.36 to USD 46.28. We have valued the stock using the EV/EBITDA multiple-based relative valuation method and arrived at a target price of USD 5.52. We believe that the company is trading at a discount from its peer's average but considering strong fundamentals and competitive advantages in profitability give bullish estimates for the upcoming near future.

Considering the strong fundamentals, robust top-line results, associated risks, positive outlook, and current valuation, we give a "Speculative Buy" recommendation on the stock at the entry price of USD 4.64, up 0.98%, as of June 23, 2022, at 07:30 AM PDT.

One Year Technical Chart, as of June 23, 2022, at 07:30 AM PDT. Data Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

*Entry Price as of June 23, 2022, at 07:30 AM PDT.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above. 

Note 3: The report publishing date is as per the Pacific Time Zone.

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