Riot Blockchain (RIOT): “Strong Buy” Bitcoin Mining Stocks That Could Double From Current Levels

Bitcoin and its sibling cryptocurrencies have been picking up headlines lately, sometimes scooping them in by the bucketful. That’s inevitable, given the spectacular volatility the cryptos have seen in recent months, more than doubling in value and falling back down again. Bitcoin, the flagship, peaked above $67,000 in November, only to fall as low as $35,000 in the latter half of January. It’s trading at $43,000 now, on an upward tack.

These kind of asset movements naturally attract investors – but the high price of some cryptos can be a turnoff. For investors looking to profit from the cryptocurrency boom, however, there is an alternative in the form of the bitcoin miners. These are tech companies, computer and computing firms that run banks of high-powered linked servers dedicated to solving blockchain equations and ‘mining’ bitcoin.

Sector expert Chris Brendler, looking at bitcoin miners for D.A. Davidson, sums up the situation in a recent note: “With the stocks at these levels, the miners offer a superior risk/reward to the underlying BTC as we see limited downside from here, barring a complete BTC collapse sub-$10,000…"

Bearing this in mind, we used TipRanks’ database to find two compelling bitcoin mining stocks, according to Wall Street analysts. Both tickers boast a Strong Buy consensus rating and could climb over 100% higher in the year ahead.

Riot Blockchain (RIOT)

Now let’s look at Riot Blockchain. Riot is a peer of Marathon, and the second-largest company in the US bitcoin mining industry. With a market cap of $2.25 billion, Riot has deep enough pockets to develop the expensive server assets needed in crypto mining. Over the course of the past two years, the company has been expanding its data centers, and is estimated to have over 22,646 mining rigs in operation, with a hashing capacity exceeding 3.0 EH/s. Looking ahead, the company has 58,500 S19 series mining rigs on order, with full deployment expected by the end of 4Q22.

Riot has a current operating energy consumption of 91 megawatts; the company cut back on that during the recent winter storms in Texas. The Texas facility, Whinstone, is the largest single bitcoin mining data center in North America and operates in 190,000 square feet of space. Leveraging on the site’s scale, the company is able to keep power costs down to 2.5 cents per kilowatt hour.

In its January update, Riot noted production of 458 bitcoin for the month, up 252% year-over-year. The company stated that its mining rigs expanded to 32,552 sets, and reached a total hash capacity of 3.4 EH/s. The company claims 5,347 bitcoin in its holdings, worth approximately $234 million. Riot expects to receive a total of 5,768 new S19j bitcoin mining rigs during the course of February, and to finish 2022 with a total has rate of 12.8 EH/s.

Writing for Roth Capital, 5-star analyst Darren Aftahi is impressed with Riot Blockchain, noting: "One of the largest differentiators we see with RIOT is the level of vertical integration and expertise with developing infrastructure. The most fundamental difference in an owned and operated (O&O) model compared to an outsourced model is the tradeoff of upfront capital expenditures for higher margins moving forward, which is an important factor in RIOT’s aim to become one of the lowest cost producers of BTC. There are also benefits to this if BTC were to experience a prolonged bear market where the need for a low cost of production is paramount."

These comments back up Aftahi’s Buy rating, and his $46 price target indicates confidence in RIOT's ability to soar ~139% in the next twelve months. 

The Street generally has taken a bullish stance on this stock, giving it 6 positive reviews for a Strong Buy consensus rating. RIOT shares are trading for $19.27 and have an average target of $44.20, for an upside potential of ~129% over the next 12 months. (See RIOT stock forecast on TipRanks)

To find good ideas for crypto stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.