Bernstein has issued an "Outperform" rating for Riot Platforms (NASDAQ:RIOT) with a price target of $22, indicating a 196% upside from its current price of $7.42.
What Happened: The investment bank bases its optimistic forecast on Riot's strategic focus on Bitcoin (CRYPTO: BTC) mining, extensive power capacity and its positioning in the cryptocurrency market.
Riot is currently building the world's largest Bitcoin mining data center in Corsicana, Texas, aiming for a 1-gigawatt (GW) power capacity.
By 2025, the company is expected to control 8% of the Bitcoin network, translating to an estimated 57 exahashes per second (EH/s) of the network's hash rate.
"We believe a Bitcoin bull market is the immediate upside, and expect Bitcoin to touch a peak cycle high of $200,000 by 2025 year-end," Bernstein analysts noted.
Also Read: BlackRock's Ethereum ETF Lags Behind Its Bitcoin ETF—Here's Why
This emphasis on Bitcoin mining sets Riot apart from some of its peers, who are diversifying into AI data centers.
Bernstein, however, favors Riot's decision to stick with Bitcoin mining, arguing that the AI market requires a longer gestation period of 18 to 24 months before becoming profitable. Riot's dynamic power strategy has also contributed to its positive outlook.
"Riot received ~$70 million in power credits in FY23, around 25% of its total revenue," the report mentions, highlighting Riot's flexibility in managing its power costs.
Riot's financial strategy also comes under the spotlight in Bernstein's assessment.
The company's focus on vertical integration and self-mining capacity gives it an edge, and the firm has avoided entering into hosting contracts.
Moreover, Riot's flexible power strategy, including its involvement in demand response programs, is seen as reducing its all-in cash cost for Bitcoin mining.
Bernstein projects Riot's revenue to grow at a 149.6% compound annual growth rate (CAGR) from 2023 to 2025, with an EBITDA of approximately $1.1 billion in 2025.
- The Dollar Is Weakening—Here's Why That Could Be Good For Bitcoin: 10x Research
Image: Shutterstock