A research report singing the praises of the cryptocurrency mining sector was a key impetus behind Riot Platforms‘ (RIOT 0.75%) rise over the past few stock trading sessions. The Bitcoin (CRYPTO: BTC) specialist’s shares were enjoying a nearly 11% lift week to date as of Friday before market open as a result, according to data compiled by S&P Global Market Intelligence.
A quartet of potential
Before market open on Wednesday, Piper Sandler prognosticator Patrick Moley published a report on Bitcoin mining companies. In his analysis, according to reports, he was particularly bullish about four of them — Riot, Hut 8, Mara Holdings, and Canada-based Galaxy Digital.
The crux of Moley’s argument in favor of such operators is the promise of artificial intelligence (AI) and high-performance computing (HPC) data centers. The analyst believes that by pursuing arrangements with businesses that specialize in providing those services (rather than their traditional model of keeping their computing power in-house), these companies could boost their earnings before interest, taxes, depreciation, and amortization (EBITDA) by a factor of as much as 3 in certain cases.
The pundit went on to say that although numerous deals for such services have been agreed in the mining segment, he expects far more to be finalized this year. Of the four mentioned companies, in his view Riot has the highest level of production that could benefit from the shift.
Keep your eye on those price graphs
Although Moley makes a valid point, a great deal of the value of any cryptocurrency mining company is dependent on the price of the assets it specializes in. Very often, if Bitcoin is doing well, so are its miners. So even if AI and HPCs start to make a difference for companies like Riot, I think their value will remain strongly dependent on the trajectory of the coins and tokens associated with them.
There are several reasons why the market was so thrilled with Riot Blockchain’s stock this week.
Firstly, Riot Blockchain announced that it had purchased 2,500 new Bitmain S19 Pro Antminers, which will significantly increase the company’s mining capacity. This news was well-received by investors as it demonstrates Riot’s commitment to expanding its operations and staying competitive in the rapidly growing cryptocurrency mining industry.
Additionally, the price of Bitcoin, which is a key driver of Riot’s profitability, has been on the rise recently. This has had a positive impact on Riot’s stock price, as investors see the potential for increased revenue and profitability in the near future.
Furthermore, Riot’s recent rebranding and focus on becoming a more environmentally sustainable company has also been well-received by investors. With growing concerns about the environmental impact of cryptocurrency mining, Riot’s efforts to reduce its carbon footprint and operate more sustainably have been seen as a positive development by the market.
Overall, these factors, combined with a general bullish sentiment towards the cryptocurrency market, have contributed to the market’s enthusiasm for Riot Blockchain’s stock this week.
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