The Bitcoin (BTC 1.20%) halving event took place in April, as expected. Bitcoin miners now get half the rewards for the same amount of work. Are mining specialists like Riot Platforms (RIOT 5.65%) facing insurmountable economic challenges now, or are they poised to skyrocket on the back of a soaring Bitcoin price? Or does the truth lie somewhere in between?

Let's take a closer look at Riot Platforms to see what's up.

How Riot adapted to the 2020 halving

This isn't Riot's first halving rodeo. The company used to pursue veterinary medicine patents, but acquired a small Bitcoin miner in 2017 and changed its focus to blockchain operations the next year. Two years later, on May 11, 2020, the third Bitcoin halving took place.

It was a different time for Riot. Apart from the global impact of the then-current coronavirus pandemic, the company was building its Bitcoin mining infrastructure. Crypto mining generated $2.4 million of revenue in the first quarter of 2020, and $23.2 million a year later. Riot's property and equipment -- largely accounting for its crypto-mining hardware and facilities -- tripled in value over the same span. And the first-quarter cost of electric power more than quintupled from $1.4 million to $7.5 million.

Riot was burning a ton of cash back then, keeping the lights on thanks to dilutive stock sales and a small amount of Bitcoin sales. And thanks to the halving of Bitcoin miner rewards, Riot's Bitcoin production fell 28% year over year in the first full quarter after the 2020 halving.

Bitcoin prices were rumbling in this period, gaining a modest 10% from September 1, 2019, to September 1, 2020. But then a couple of halving effects kicked in with a vengeance.

Survival of the fittest in Bitcoin mining

Halving events put a ton of pressure on inefficient crypto miners. Many people and companies generating Bitcoin data blocks with low-power hardware or high electricity costs get forced out of business in each four-year halving cycle. When these failed mining experts step out, the high-efficiency miners that remain will get their hands on a larger percentage of the total rewards.

"When those higher-cost producers fall off, [mining] difficulty adjusts and then that widens the margin again as we're mining more Bitcoin," Riot CEO Jason Les explained in a recent earnings call. "To reach that long term, to be a leading Bitcoin mining company, we have to focus on having this low cost of power and maintain a low cost of production through more difficult points in the market."

Riot's strategy for the 2020 halving

The April 2020 halving presents another "difficult point" in the Bitcoin mining market. If history is any guide, low-cost miners like Riot should thrive as inferior rivals fall away -- and Bitcoin's price should start surging as this dynamic plays out. Here's how Riot's business results worked out around the 2020 halving cycle:

RIOT Revenue (TTM) Chart

RIOT Revenue (TTM) data by YCharts

Past results are not a guarantee of future success, and every halving cycle is different. Still, the economic themes around this crypto-market driver tend to rhyme and echo over the ages. If anything, Riot is in a stronger position heading into this particular cycle, armed with a rich balance sheet and more substantial mining operations. The company is even reselling energy to the Texas power grid as heat waves strain the local power grid.

Riot's not a no-brainer, but perhaps a buy

Is Riot a no-brainer buy, then?

Not necessarily, but the stock may post solid gains if this halving cycle works out like the last one. Riot's position in the market, strengthened by its low-cost operations and expanding infrastructure, provides a strong case for potential upside.

However, you should review your risk tolerance, recognize Riot's high-risk, high-reward nature, and make your moves accordingly. This investment isn't for the faint-hearted, but it could be a strategic addition for those bullish on Bitcoin's long-term prospects.