What happened

Shares of Riot Platforms (RIOT -1.49%) rose 249% in the first half of 2023, according to data from S&P Global Market Intelligence. But that's not the whole story. The Bitcoin (BTC 1.57%) miner's stock continued to rise in early July, adding another 71.4% gain by the end of July 13. As of this writing, Riot's shareholders have pocketed a 499% return in 2023.

So what

The crypto market is getting back on its feet after a brutal 2022. For example, Bitcoin has gained 83% year to date amid a strengthening global economy and various crypto-specific catalysts. Good news for Bitcoin is automatically great for Riot's stock, because the company's only business is Bitcoin mining on an industrial scale.

Last year's downturn set Riot up for a dramatic rebound in 2023. The stock plunged 84.8%, amplifying Bitcoin's full-year price drop of 64.8%. Riot has not made a complete recovery yet, trading 9.1% below its 2021 year-end price today.

Furthermore, Riot Platforms' stock is quite capable of moving without a Bitcoin booster. For example, Bitcoin gained just 1.4% in the first few days of July, far behind the mining specialist's 71.4%. A steady stream of strong Bitcoin production reports has helped, and investors also see promise in Riot's commitment to adding more Bitcoin mining hardware over time. The company's money-making assets more than doubled from 42,000 to 96,000 mining systems over the last year, driving the hash rate up from 4.4 to 10.7 exahashes per second.

Now what

The combination of rising Bitcoin prices and heavy investment in expanded mining capacity adds up to a solid-looking business plan. However, it's not all digital rainbows and encrypted butterflies -- Riot produced 460 new Bitcoins in June but sold 400 of them to pay the power bills and keep the business going. It's not cheap to keep thousands of Bitcoin miners running at full power.

The portion of crypto tokens Riot needs to sell should shrink over time, as its production capacity rises and the ratio of Bitcoin prices to electric power bills hopefully drops. When crypto prices run low, or the power grid in Texas needs a helping hand, Riot can juice its revenues by selling energy back to the ERCOT grid.

Still, Riot can't wait to get out of this crypto winter and start making some real money on those Bitcoin sales. This is a high-risk, high-reward investment -- even more so than Bitcoin itself due to the added financial risk of building and operating expensive crypto-mining equipment.

For investors comfortable with such volatility, Riot's potential to capitalize on its expanded mining capacity could spell significant upside if Bitcoin prices continue to rise. Just make sure you can deal with the consequences if Bitcoin prices run into another brick wall.