On Wednesday, JPMorgan made a notable change to its rating on Riot Platforms (NASDAQ:RIOT), upgrading the stock from Neutral to Overweight and setting a price target of $15.00.
The adjustment comes as Riot Platforms is expected to significantly increase its hashrate, a key performance metric in the cryptocurrency mining industry. The company is on track to boost its hashrate by 9 EH/s in the coming months, with an additional 10 EH/s expected in the second half of 2024. This expansion could elevate the firm's total hashrate to an impressive 31.5 EH/s by the end of the year.
Riot Platforms' shares have experienced a 31% decline over the last month, a stark contrast to the 2% increase in bitcoin prices during the same period. This drop is attributed to a mix of stagnant hashrate growth, equity dilution, and profit-taking across the broader industry. The closing price on Tuesday stood at $11.09, marking the lowest point since the period following the bitcoin ETF approval.
The firm's advantageous position is partly due to its industry-leading power contracts, scale, and liquidity. With approximately $600 million in cash and $470 million in bitcoin holdings, Riot Platforms is well-capitalized. The company is also considered to have the best relative upside when compared to its peers, including CleanSpark (NASDAQ:CLSK) and Marathon Digital Holdings (NASDAQ:MARA).
Currently, Riot operates a 12.4 EH/s hashrate at its 700MW Rockdale facility. Plans are underway to activate nearly 20 EH/s at the new 1GW Corsicana facility throughout 2024. This expansion is expected to enhance fleet efficiency and improve the economics of the company's mining operations.
Compared to other publicly listed miners, Riot Platforms is believed to have a clearer path to growth, as competitors may need to acquire smaller sites or develop greenfield facilities to meet their near-term hashrate goals.
The $15 price target for December 2024 set by JPMorgan suggests a 35% upside from the current levels, assuming a conservative bitcoin price of $60,000. This target reflects the firm's confidence in Riot Platforms' growth trajectory and potential for increased value.
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