Cryptocurrency mining stocks, like Riot Blockchain (NASDAQ:RIOT), have been just as explosive as the digital currencies themselves have been. From here, as long as Bitcoin (CCC:BTC-USD) can push to higher highs, the mining companies are sure to follow. Therefore, smart investors will look into RIOT stock and add it to their portfolios.
Already, between March 2020 and now, Bitcoin rallied from $6,139 to $50,417.
As the digital currency exploded, so did the cryptocurrency miners:
- Riot Blockchain ran from 65 cents to $42.20.
- Marathon Patent Group (NASDAQ:MARA) ran from 53 cents to $31.50.
- Canaan Inc. (NASDAQ:CAN) ran from $2.53 to $20.71.
- HIVE Blockchain (OTCMKTS:HVBTF) ran from 11 cents to $3.93.
Those are life-changing results. However, even after these big runs, there’s further upside remaining for companies like RIOT. And that’s all as retail and institutional interest continue to flood into cryptocurrencies. Even cryptocurrency exchange Kraken CEO says Bitcoin could reach $1 million at some point, as reported by Bloomberg. Imagine what cryptocurrency miners like Riot Blockchain could be worth if that were to happen.
There’s a Good Deal of Growth Behind RIOT
For those unaware of RIOT, the company focuses on mining Bitcoin through proof-of-work (PoW) mining. As compared to proof-of-stake, PoW miners compete with one another to solve puzzles that eventually lead to rewarded Bitcoin.
In addition, the company just announced it could achieve a hash rate capacity of 1.06 Exahash per second after deploying 2,002 Pro Antminers, as noted in a company press release. “Exceeding 1 EH/s in hash rate capacity marks a major milestone for the Company,” CEO Jason Les added. “While we are proud of this accomplishment, we view it as the successful completion of just one of many steps of our ongoing growth plan. Riot continues to receive and deploy next-generation miners from Bitmain and remains on schedule to more than triple our currently deployed capacity by the fourth quarter of 2021.”
Earnings haven’t been too shabby either. While we wait for its latest earnings report, RIOT’s last report showed a 21% jump in mining revenue to $6.7 million for the nine-month period ended September 2020. That was up from $5.6 million year-over-year. Margins also increased to 38% for the same time period, as compared to 18% year-over-year, as well.
I expect its latest earnings report to show even better growth.
There’s No Shortage of Cryptocurrency Bulls
Analysts at Citibank say BTC-USD could hit $318,000 this year. Square (NYSE:SQ) bought $170 million worth of the coin. MicroStrategy (NASDAQ:MSTR) CEO Michael Saylor believes Bitcoin could eventually have a market capitalization of $100 trillion. Tesla (NASDAQ:TSLA) bought $1.5 billion worth.
Sure, folks like Janet Yellen and Bill Gates have tried to talk Bitcoin down. However, every time they do, retailers and institutions buy the dip.
Again, it’s not just the digital currencies seeing big interest, but also the miners. With mining growth picking up momentum, the industry could be worth up to $2.58 billion from $1.01 billion in 2020, according to industry research.
The Bottom Line on RIOT Stock
Whether you like the cryptocurrency story or not, it’s tough to ignore the rapid growth.
It’s also tough to ignore the crypto mining stocks, some of which are up well over 6,000%. While there’s no such thing as a “sure thing,” it may be best to “strike while the iron is hot.”
That’s especially true if Bitcoin can achieve that $100 trillion valuation that MicroStrategy CEO Michael Saylor refers to.
Bottom line — if we continue to see big growth in Bitcoin, we could also see big growth in the mining stocks, like Riot Blockchain. With patience, I wouldn’t be shocked to see RIOT stock double, if not triple, in the long term.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.