Riot Blockchain Inc. – A stock analysis

Overview

Riot Blockchain Inc. is a Bitcoin mining company, fueling the increase in Bitcoin through their rapidly expanding large-scale mining in the US. Like their close rivals, Marathon Digital, Riot are focused on expanding their operations, throughout the US, through increasing their Bitcoin mining hash rate and infrastructure capacity, details of which can be explained further on their website. To summarize, the construction of four additional buildings has commenced at the Whinstone site, so by the fourth quarter of 2022 the company anticipates a hash rate capacity of 7.7 EH/S, demonstrating the company’s committment to building the largest and most efficient Bitcoin mining company in the industry. It is no surprise to then see analysts rating Riot as a STRONG BUY with an October 2021 price target at around $47.75.

However, recently the price of Riot Blockchain, and other cryptocurrency stocks, plunged with many investors questioning the volatility of this stock, whether it is a long-term stock or even whether it could compete with its competitors (Marathon etc.). This article aims to cover how Riot is a must have crypto-stock in your portfolio and is most definitely one for the long term.

Analysis

$RIOT has crumbled in the past 7 days by 7.75% to a valuation of $29.62 per share. This was massively due to El Salvador making Bitcoin legal tender alongside the US dollar on the 7th September. Most investors were prompted to think that the price of Bitcin would spike, and in turn crypto stocks. However, the price of Bitcoin slumped from around $51,000 to around $42,000 in a matter of hours. Subsequently, causing the 7.75% dip in the Riot stock.

Everything pointed towards a massive spike in the Riot stock: El Salvador not only made Bitcoin legal tender but the government was also buying bitcoin. President Nayib Bukele shared on social media on the 7th of September of how the country held 550 bitcoins. Online trading communities spoke of “massive spikes to come,” prompting further investment in the stock. However, what came was a price plunge not a price jump. According to Bybt, over $1.2 billion in Bitcoin long options were forced to liquidate on the 6th of September. These liquidations led to the massive drop in the price of cryptocurrencies and subsequently crypto stocks. Although the price of Bitcoin has roughly rebounded by around 9% since the massive drop in price, the price of the Riot stock has continued to fall due to investors selling off their stocks.

Investors should capitalize on the falling value of the stock. Analysts not only regard Riot as a ‘strong buy’, but the October 2021 price target is estimated by many analysts to exceed the $50 dollar mark to around $51. Investors may point out the volatility of the stock as a major drawback to investing in Riot but investors would be foolish not to invest in the stock at the moment. A $1000 investment right now could result in a return of $720 at a minimum come October 2021. With cryptocurrencies being increasingly accepted and integrated into new countries, such as El Salvador and the UK, who have recently signed a deal to offer crypto vouchers at the Post Office, this increasing interest in cryptocurrencies could be extremely beneficial for crypto-stock holders in the long term.

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