As the company's name implies, Riot Platforms (RIOT 3.17%) is a Bitcoin (BTC +0.53%) miner that's not afraid to show its revolutionary streak. Even as Securities and Exchange Commission Chairman Gary Gensler continues to argue that Bitcoin is a "highly speculative, volatile underlying asset," Riot Platforms presses on as a relentless Bitcoin producer.
Granted, Bitcoin is volatile, and so is Riot Platforms stock. Still, a right-sized stake in this ambitious Bitcoin miner could produce riotous results for crypto-amenable portfolios.
Dizzying heights and gut-wrenching depths
There's no denying that a pre-COVID-19 position in Riot Platforms stock yielded outsized gains. However, riding out the peaks and valleys seems easier in hindsight than it undoubtedly was in real time.
NASDAQ: RIOT
Key Data Points
Believe it or not, Riot Platforms stock traded for about $1 five years ago. After the pandemic panic came and went, speculative fervor set in; consequently, the share price catapulted above $70 for a hot minute in 2021.
Perhaps it wasn't Gensler but the Federal Reserve that threw a wet blanket on that rally. As the central bank imposed a series of interest rate hikes, traders sold risk-on assets like Riot Platforms stock.
Thus, the Riot Platforms share price recently landed at about $11.90; today's shareholders are either princes or paupers, depending on when they got into the trade.
In any case, a $1,000 stake in Riot Platforms stock purchased at $1 per share five years ago would have increased 1,060% to get to $11.60. Therefore, that $1,000 investment would now be worth roughly $11,600.
Achieving similar results during the next five years won't be easy because the starting point isn't $1 this time and Riot Platforms isn't a little-known nano-cap company anymore. Still, if you're going to have a dog in the race, Riot Platforms isn't your worst possible pick among Bitcoin producers.
Riot Platforms recently reinvested its capital into buying more Bitcoin miners, and the company's Bitcoin-production total grew 19% in 2023 from the prior year. Moreover, Riot Platforms produced 14.4 Bitcoin per day in February of this year and held 8,067 Bitcoin in total, if you can wrap your head around that.
Yet even while Riot Platforms remains an ultra-active cryptocurrency miner, the company also just made a strategic investment in Texas-based Reformed Energy, which converts solid and liquid waste into usable energy. This, one can hope, is a signal from Riot Platforms that the company is serious about addressing the vast energy-usage requirements of crypto mining.
April could be a turning point
So Riot Platforms appears to be an aggressive but mindful Bitcoin producer. That's all fine and well, but Bitcoin mining could soon be less rewarding in the most literal sense.
As you may have heard by now, the reward for mining Bitcoin is about to get cut in half; this happens about once every four years in order to control the available, circulating supply of Bitcoin. This is known as a Bitcoin "halving" or "halvening" event, and the next one is expected to take place on or about April 19.
The halving could prove to be a turning point for Bitcoin and for Riot Platforms, but in different ways. The sample size is small, but since 2009, Bitcoin's price has tended to rise ahead of or soon after halving events. The market certainly knows this by now, though, and may have bid up the Bitcoin price in advance; the SEC's approval of spot Bitcoin ETFs certainly contributed to the general fervor surrounding cryptocurrency now.
Riot Platforms has risen in tandem with Bitcoin in 2024 so far, but consider the potential impact of the halving event on Bitcoin miners generally. Sure, Riot Platforms will continue to hold a valuable hoard of mined Bitcoin if cryptocurrency prices remain high. At the same time, investors may dump their mining shares in anticipation of the Bitcoin-mining reward literally being cut in half.
Frankly, it's impossible to know how crypto-related stock traders will behave in the near term. But then, that's not necessarily the greatest concern of buy-and-holders hoping to replicate the returns of the past five years in the coming five years. Just know that an appropriately sized investment in Riot Platforms stock will provide equal measures of volatility and opportunity, along with thrills and chills galore, for brave, bullish Bitcoin believers.
