Riot Platforms Inc
Riot Platforms, Inc. (NASDAQ: RIOT) is a vertically integrated bitcoin mining company. The Company is engaged in enhancing its capabilities to mine bitcoin in support of the bitcoin blockchain. It also provides comprehensive and critical mining infrastructure for institutional-scale hosted clients to mine bitcoin at its Rockdale Facility.
Recent Business Highlights
- The U.S. Securities and Exchange Commission (SEC) has granted approval for the first U.S.-listed exchange-traded funds (ETFs) tracking bitcoin, marking a significant development for the cryptocurrency industry. The approval includes applications from major entities such as BlackRock, Ark Investments/21Shares, Fidelity, Invesco, and VanEck. Despite concerns raised by some officials and investor advocates regarding potential risks, most of these ETFs are set to commence trading, initiating fierce competition for market share. Representing a game-changer for bitcoin, these ETFs allow investors exposure to cryptocurrency without direct ownership. Analysts anticipate substantial inflows, with estimates ranging from USD 50 billion to USD 100 billion in the first year. The cryptocurrency's market capitalization exceeded USD 913 billion, and bitcoin prices rose by 3% to USD 47,300 following the approval, reaching its highest level since March 2022. The success of these ETFs will hinge on factors such as fees and liquidity, prompting issuers like BlackRock and Ark/21Shares to adjust proposed fees to enhance competitiveness.
- Third Quarter 2023 Financial and Operational Highlights: In the third quarter of 2023, the company reported total revenue of USD 51.9 million, reflecting a notable increase from USD 46.3 million in the same period of 2022. The rise was driven by a 6% increase in Bitcoin production and higher Bitcoin prices, averaging USD 28,230 per Bitcoin, a 33% increase compared to the same quarter in 2022. Bitcoin Mining revenue reached USD 31.2 million, while Data Center Hosting revenue decreased to USD 5.1 million, and Engineering revenue remained relatively stable at USD 15.5 million. The company produced 1,106 Bitcoin during the quarter, marking an increase from 1,042 Bitcoin in the same period of 2022. Despite an average cost to mine Bitcoin being negative (USD -6,141) in Q3 2023, power curtailment credits earned during the quarter amounted to USD 49.6 million, significantly higher than the USD 13.1 million earned in Q3 2022.
- Third Quarter 2023 Financial Results: Total revenue for Q3 2023 comprised USD 31.2 million in Bitcoin Mining revenue, USD 5.1 million in Data Center Hosting revenue, and USD 15.5 million in Engineering revenue. Bitcoin Mining revenue exceeded Bitcoin Mining cost of revenue by USD 6.8 million, accounting for 22% of mining revenue. Despite a net loss of USD (45.3) million for the quarter, including non-cash stock-based compensation expense of USD 13.5 million, the company reported a Non-GAAP Adjusted EBITDA of USD 31.6 million. Selling, general, and administrative expenses increased to USD 29.1 million, primarily due to higher stock-based compensation and professional fees.
- Hash Rate Growth: Due to damage from a severe winter storm in Texas, the company expects to achieve a total self-mining hash rate capacity of 12.5 exahash per second (“EH/s”) in Q4 2023. Replacement dry coolers for the damaged facility have been received, and hash rate in the affected building is gradually returning to full capacity, expected by year-end. With a long-term purchase agreement with MicroBT, Riot anticipates reaching a total self-mining hash rate capacity of 20.2 EH/s by mid-2024.
Technical Observation (on the daily chart)
Presently, the stock has corrected by approximately 24.88% since reaching its highest point in the past 52 weeks, which occurred on July 14, 2023. The Relative Strength Index (RSI) over a 14-day period stands at 51.66, indicating a state of potential consolidation or a short-term correction to support levels. Additionally, the stock's current positioning is between both the 21-day Simple Moving Average (SMA) and the 50-day SMA, which may serve as dynamic short-term resistance and support levels respectively. The stock is expected to take support near next major support zone of USD 10-USD12.
As per the above-mentioned price action, momentum in the stock over the last month, and technical indicators analysis, a ‘WATCH’ rating has been given Riot Platforms, Inc. (NASDAQ: RIOT) at the current market price of USD 15.55 as of January 11, 2024, at 07:30 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.
How to Read the Charts?
The yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.
The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.
The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.
The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.
Technical Indicators Defined: -
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
Abbreviations
CMP: Current Market Price
SMA: Simple Moving Average
RSI: Relative Strength Index
USD: United States dollar
Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.
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 January 11, 2024. 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.’