I’ve never understood the appeal of RIOT Blockchain (NASDAQ:RIOT). RIOT Blockchain stock appears as if it is built on hope rather than anything practical.
Oh, I understand blockchain. It holds enormous potential for good. Encrypting a general ledger database can make tracking assets and trading cheaper.
I also understand the problems with blockchain. Decrypting technology, in the hands of bad guys, can wreak havoc. Custodial control, version control, these are serious problems. It’s a game for serious technologists, working alongside financial and security experts.
RIOT Blockchain stock addresses none of those things.
A year ago RIOT Blockchain was called was Bioptix. It was a company that was making diagnostic equipment for the medical industry. Then, last October, they renamed themselves and the stock took off, from about $5 per share in early October to a high of $38.60 in December, before cooler heads prevailed.
The shares are still around, and open for trade recently at around $7 each. This gives the company a market cap of almost $95 million.
What They’re Doing
The biotech has been scrubbed from RIOT’s web site and what’s left is a company that seems to have put cash into three other companies that are going nowhere fast. What they want you to know is they’re now a Bitcoin mining operation.
In May, for instance, they found the equivalent of 122 new Bitcoin. At the end of the month this was worth about $878,000. A month later this haul was worth $724,000.
To read the Bitcoin press, of course, Bitcoin is almost always rising, and about to break out. You’ve got to have it, the bulls insist. Those dollars you hold are a scam. Look at what just happened to the Turkish Lira.
The truth is quite different. As this was written Bitcoin was trading at just under $6,500. This compares to nearly $20,000 at the start of the year and (to be fair) just $4,186 a year ago. During the year there have been sporadic rallies (one in late July took it over $8,000 } but generally the trend is down, because what can you do with it?
Which brings us back to RIOT Blockchain stock. RIOT has invested in Coinsquare, a Canadian cryptocurrency exchange currently worth $8.65 million, according to Coinmarketcap.
It launched Tess, which said it was a blockchain supply chain outfit, and it owned 52% of it, before selling in December for 80 million shares of Cresval Capital, a Canadian mining company, which sounds great. Cresval stock is currently worth half a Canadian cent per share, making the stake worth about $3 million.
Then there’s Verady, which says it’s a Bitcoin auditor located about five miles from my office in Midtown Atlanta. They launched their platform, Veranet, last October and have since produced a notable string of press releases, including one on RIOT’s investment, in December.
The Bottom Line on RIOT Blockchain Stock
RIOT Blockchain does not have enough assets to justify its market cap. It doesn’t make money. It isn’t likely to.
The only reason anyone buys the stock is to speculate on Bitcoin without buying Bitcoin. It got a boost during the last Bitcoin run-up in July, and it’s attracting some attention during the current crisis over the Turkish Lira.
If I were a Turk with Lira, I would be seriously considering buying some Bitcoin and perhaps taking a long business trip to Europe. But I would then be turning that Bitcoin into a stable currency, like the U.S. dollar or Euro.
I wouldn’t be turning it into stock in a flailing Colorado-based Bitcoin miner with some dodgy investments.
Dana Blankenhorn is a financial and technology journalist. He is the author of a mystery novella involving Bitcoin, The Reluctant Detective Saves the World, available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing he owned no shares in companies mentioned in this story, and no cryptocurrency. To follow the value of cryptocurrencies bookmark https://coinmarketcap.com/
