Some cryptocurrency aficionados prefer to hold Bitcoin (CCC:BTC-USD), while others like to own shares of mining companies like Riot Blockchain (NASDAQ:RIOT). As I see it, it’s entirely reasonable to own both the crypto and RIOT stock shares.
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Not everyone shares my opinion on this matter, however. Indeed, a prominent critic recently expressed his opinion on Riot Blockchain – and suffice it to say, he’s not holding back.
We’ll delve into the criticism, while offering a counter-position and perhaps some data to support a long position in RIOT stock.
Along the way, there’s a point to be made about the value of critics in the financial sector. In some cases, it’s best to take their opinions with a sizable grain of salt.
A Closer Look at RIOT Stock
The price movements of Riot Blockchain shares don’t exactly mirror those of Bitcoin. There are similarities, however.
As recently as November of last year, RIOT stock was actually a penny stock — defined by the U.S. Securities and Exchange Commission (SEC) as a stock that trades under $5 per share.
That wouldn’t be the case at the end of 2020, though, as the stock price moved largely in tandem with Bitcoin’s ascent. Amazingly, by the end of the year, the shares were preparing to break through the $17 level.
However, the biggest gains were still ahead. In a mind-blowing rally, RIOT stock shot all the way up to a 52-week high of $79.50 on Feb. 17, 2021.
It’s probably no coincidence that Bitcoin experienced a powerful run-up during that time. This was followed by a cooling-off period for Riot Blockchain shares.
Thus, at the close of the markets on April 16, RIOT stock settled at $44.64. Clearly, any concerns over falling into penny-stock territory are in the rear-view mirror.
Impressive Hash Rates and BTC Production
Before we address the skepticism, let’s see what the data tells us. Without a doubt, it will paint a bullish picture for Riot Blockchain.
In a fresh press release, Riot Blockchain provided a number of production and operations updates. Some folks might not like the company, but it’s hard to argue with the numbers:
- 187 BTC produced in March 2021, an 80% increase over the year-ago month
- 491 BTC produced in the first quarter of 2021, a 75% increase compared to the year-ago quarter
- Over 1,565 BTC on the company’s balance sheet as of March 31, 2021; this was entirely produced by Riot Blockchain’s mining operations
- By the fourth quarter of 2022, the company expects to achieve a total hash rate capacity of 7.7 exahash per second (EH/s) with a fleet of around 81,146 Antminers
That’s some serious hash power, to say the least. If those figures don’t impress you, I’m not sure what would.
Apparently, though, there’s someone out there who’s not quite convinced.
Citron Weighs In
Back in January of 2021, Citron Research founder Andrew Left promised to cease what some folks considered to be a very bad habit.
“As of today, Citron Research will no longer be publishing what can be considered as short-selling reports. The Citron narrative is going to change and have a pivot,” Left reportedly promised.
Now, let’s fast-forward to April 13. This probably wouldn’t count as a short-selling report, but the negativity is unmistakable in Citron’s tweet from that day which said, “No replacement for $BTC,” and “Bitcoin much safer than RIOT.”
That same day, Citron dug deeper with this tweet: “While Cit loves $BTC, $RIOT should trade to NAV $2 (BTC+PP&E).”
You’re welcome to agree with Citron’s assessment that RIOT stock should trade at a net asset value of $2. It would take one heck of a correction to get the share price down there, though.
The Bottom Line
In the final analysis, you can form your opinion based on the positive data I cited above, or on a critic’s belief that Riot Blockchain shares ought to lose more than 90% of their current value.
Personally, I’d prefer to stick to what the data tells me. And right now, it’s telling me that RIOT stock’s probably headed for higher prices in 2021.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.