What happened

Shares of Riot Blockchain (RIOT 5.43%) popped as much as 26.3% this week, according to data from S&P Global Market Intelligence. The cryptocurrency miner gave an update on its operations for December and announced a surprise name change. As of 3:30 PM EST on Thursday, Jan. 5, the stock is up 23.3% this week.

So what

On Jan. 4, Riot Blockchain gave an update on its operations for the month of December. The Bitcoin miner produced 659 coins for the month, up 55% year over year, and sold 600 Bitcoin for a total price of $10.2 million.

The impressive growth numbers may have gotten investors optimistic about the company, as shares of the stock soared on the day of the news. However, just because the company is mining more Bitcoin doesn't mean it is making money. Last quarter, the company posted an operating loss of $40 million and has lost $354 million through the first nine months of this year. Unless the price of Bitcoin rises -- and fast -- Riot Blockchain will lose a lot of money.

Shares of Riot Blockchain also may be trading so violently in recent trading days because of the high short interest on the stock. Short interest means the total amount of a stock's publicly traded shares borrowed by short sellers. Riot Blockchain has a short interest of approximately 20%, which is fairly high. As a highly shorted stock rises, it can cause short sellers to buy back their shares, further driving up the stock price in what is known as a short squeeze. This could have happened to Riot Blockchain this week.

In other news, management also announced this week that it is changing its name to Riot Platforms, although it is unclear whether anything is actually changing about the underlying business.

Now what

Investors should stay far away from Riot Blockchain (or whatever it decides to call itself), no matter how high or low the price goes. Frankly, this is just a highly promotional penny stock trying to latch on to new trends to pump its own shares. If you look at its price chart, it did this in 2007, 2018, and most recently in 2021. For a short period, shares of the stock soared, but any long-term shareholder has seen the vast majority of the money put into Riot Blockchain stock disappear.

There's no reason to think this time is different. Avoid buying Riot Blockchain stock.