The rising value of cryptocurrencies since the beginning of 2024 is also generally benefitting the crypto miners. That's because their performance tends to track that of the digital currency they mine. And yet, Riot Platforms (RIOT -1.49%) has underperformed its peers so far this year, declining by nearly 20%. This suggests a buying opportunity in the view of one analyst following the company.

New headwinds emerge for Riot Platforms

One big issue for cryptocurrency miners like Riot is the emergence of spot Bitcoin (BTC -2.57%) exchange-traded funds (ETFs). For years, mining stocks were proxies for direct ownership of cryptocurrencies. The new spot ETFs end up being much better proxies, given the relative ease of investing in them and their offer of near-direct crypto ownership for investors. Their growing popularity dimmed some luster from miner stocks.

Another Bitcoin halving is approaching as well. This is entirely expected, but investor nervousness may be growing as the event is very close now.

Analyst Reginald Smith of JPMorgan Securities said he feels the price weakness provides an opportunity to get a fine asset on the cheap. in mid-March, he upgraded his recommendation on Riot to "overweight" (i.e., buy) from "neutral" at a price target of $15 per share. That suggests a 20% upside over the next 12 months.

In his latest research note on the miner he wrote, "We like Riot's unique combination of industry-leading power contracts, scale and liquidity ... and think shares offer the best relative upside among the three largest and most liquid U.S.-listed mining stocks."

An essential investment for some

Smith may be on to something here. After all, those ETFs might have drawn some attention away from the miners, but overall they've been very healthy for Bitcoin's price. The foundational cryptocurrency seems like it's becoming a must-own asset. So this latest Bitcoin boom feels less like a rally and more like a rush into an investment now considered essential.

Riot is a company energetically working to produce that asset, so Smith's take on it being a buy on current price weakness is quite plausible.