What happened

Shares of cryptocurrency miner Riot Blockchain (RIOT 4.67%) soared 37.1% in November, according to data from S&P Global Market Intelligence. The company reported strong growth in its latest quarterly report and was likely buoyed by high Bitcoin prices last month. 

So what

On Nov. 15, Riot Blockchain released its quarterly results for the three months ending in September. The company, which has transitioned to becoming a full-scale Bitcoin miner, posted strong growth numbers in the period. Total revenue grew 2,500% year over year to $64.8 million, however, the company is still unprofitable, posting a net loss of $15.3 million in the period. These strong growth numbers are likely why investors got excited about Riot Blockchain stock last month. It also doesn't hurt that Bitcoin prices stayed close to all-time highs for most of the month, which will have a direct correlation to the company's fourth-quarter revenue.

A Bitcoin symbol on a computer chip.

Image source: Getty Images.

Riot Blockchain is hemorrhaging cash, with a negative operating cash flow of $61 million so far this year. However, a lot of this is because of the Bitcoin the company is accumulating on its balance sheet. At the end of Q3, Riot Blockchain had $102 million in cryptocurrencies on its balance sheet, which is counted as a cash outflow under generally accepted accounting principles (GAAP).

Now what

If you're going to invest in Riot Blockchain, it is because you think the price of Bitcoin is going to rise in the future. And if you think the price of Bitcoin will rise in the future, there's no reason not to just buy the cryptocurrency yourself, skipping all the expenses that Riot Blockchain has running a public company. Avoiding Riot Blockchain is probably a smart move for all investors with its current business model.