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From Mining to AI: Is Riot Platforms’ Shift a Game Changer?

Ellis HobbsAvatar
Written by Ellis Hobbs
Reviewed by Jack Kellogg Fact-checked by Tim Sykes

Riot Platforms Inc. is experiencing increased stock movement, bolstered by positive sentiment around its recent advancements in cryptocurrency mining and strong investor confidence in its growth trajectory. On Wednesday, Riot Platforms Inc.’s stocks have been trading up by 4.7 percent.

Recent Developments

  • The company expressed its intention to use the remaining capacity of 600 MW at the Corsicana Facility for AI and HPC tasks, halting its second phase in Bitcoin mining.
  • Riot Platforms completed an offering of convertible senior notes, raising about $579.2 million intended for purchasing more Bitcoin as a strategic growth move.
  • Roth MKM indicates that changes under Trump’s administration could benefit BTC miners like Riot Platforms.
  • Major digital assets witnessed a remarkable rally, with Bitcoin nearing its record high, which could potentially uplift related stocks such as Riot Platforms.

Candlestick Chart

Live Update At 14:31:52 EST: On Wednesday, January 22, 2025 Riot Platforms Inc. stock [NASDAQ: RIOT] is trending up by 4.7%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

Financial Overview of Riot Platforms

As millionaire penny stock trader and teacher Tim Sykes says, “Consistency is key in trading; don’t let emotions dictate your trades.” This piece of advice is crucial for anyone involved in the volatile world of markets. It emphasizes the importance of maintaining a steady approach, immune to whims and emotional swings. Emotions can often lead to impulsive decisions, which is why traders should focus on a systematic and disciplined strategy. In trading, it can be easy to be swayed by fear or greed, but those who succeed in the long run achieve it by adhering to this principle of consistency.

Despite Riot Platforms’ recent strategic planning, the numbers tell a more intricate story. In the third quarter of 2024, Riot reported total revenues of $84.79M. Yet, their expenses overshadowed this with total costs reaching an imposing $202.86M, culminating in a net loss of $154.36M. Notably, Riot’s cash reserves were still robust, standing at approximately $354.71M, primarily backed by common stock equity valued at around $2.75B.

From the perspective of key financial metrics, Riot’s gross margin was a modest 26.1%, plunging into a negative ebitmargin of -120.5%. The company’s cash flow showed a significant negative free cash flow of $131.84M, which partially helps explain the need for additional capital through convertible senior notes.

More Breaking News

Riot Platforms is attracted by the prospect of long-term, stable cash flows through diversifying its operations towards AI and high-performance computing (HPC). This transition away from exclusively depending on Bitcoin mining could provide the necessary resilience against volatile cryptocurrency markets.

A Closer Look at the Forecast

Bitcoin’s recent price surge underscored the volatility yet potential profitability within the cryptocurrency market. Traders have witnessed BTC approaching peaks of $108,000, which naturally attracts attention to Riot’s stock. Given this context, understanding Bitcoin’s dynamics helps gauge Riot’s future path. Despite Riot’s immense earnings deficit, there remains calculated optimism linked to its plans for growth and diversification.

While Riot attempts to navigate through this financial maze, external factors such as the potential favorable policies for BTC miners could provide an unexpected uplift. Roth MKM mentioning Trump’s administration adds a layer of intrigue, as operational cost advantages and regulatory clarity may enhance profitability prospects for companies like Riot engaged in Bitcoin mining.

Potential Impact on Market

The journey from predominantly Bitcoin mining to a dual focus including AI/HPC marks Riot’s attempt to diversify its revenue streams and increase shareholder value. Meanwhile, Riot’s move could kindle investors’ interest, aligning them with growth beyond cryptocurrency:

  1. Strategic Diversification: Riot’s halting of its Bitcoin mining expansion signifies bracing for long-term prospects rather than quick gains. AI/HPC ventures represent more consistent cash flows, minimizing the unpredictable nature of crypto earnings.

  2. Capital Infusion: The convertible senior notes offering reveals Riot’s pressing need for liquidity, paving the way to expand its Bitcoin holdings amid market enthusiasm. Yet, over-reliance on borrowed funds presents challenges, particularly with capital expenditures cutback plans amid AI exploration.

  3. Market Momentum: Energized by Bitcoin’s resurgence, Riot stock might tantalize market participants, harboring expectations of riding Bitcoin’s bullish wave. As firms like Riot endeavor to harness this momentum, the precarious balance of investor sentiment could dictate the course in the months ahead.

Conclusion

Riot Platforms stands at a crossroads, juggling between volatile crypto prospects and promising AI innovations. While its financial footing reveals weaknesses, strategic adjustments canvas potential stability. Traders must weigh Riot’s new AI pursuits against the backing of substantial capital ventures; however, the clear navigational theme remains—exploit technological growth avenues, aimed at tempering cryptocurrency’s randomness. As millionaire penny stock trader and teacher Tim Sykes, says, “The goal is not to win every trade but to protect your capital and keep moving forward.” This evolving narrative holds the potential to redefine Riot’s landscape, bolstered by the broader sentiment of optimism in the crypto world. How Riot addresses its balance sheet unease alongside market shifts will guide future growth customs. Already displaying impressive infrastructural capacity, the multifaceted strategy might yet spotlight Riot Platforms as a beacon of progress in an ever-adapting technological era.

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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”