Riot Platforms May Over Power Marathon Digital As Largest Publicly Traded Bitcoin Miner - Analyst Explains How

Zinger Key Points
  • Riot Platforms seeks to overtake Marathon Digital as the largest Bitcoin miner through Bitfarms acquisition.
  • Analysts foresee Riot Platforms' expanded power capacity and geographic reach driving its growth in the cryptocurrency mining sector.
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ROTH MKM analyst Darren Aftahi reiterated a Buy rating on Riot Platforms, Inc. RIOT, with a price forecast of $20.

Yesterday, the company made a proposal to acquire Bitfarms Ltd. BITF and accumulated a 9.25% stake.

Per Aftahi, the combination would add a more diversified power footprint to Riot Platforms’ portfolio, with Bitfarms operating 13 sites across four countries, with major exposure in Latin and South America, which itself does propose some geopolitical and regulatory risks.

This would help diversify Riot Platforms’ power footprint geographically and make it the largest publicly traded miner by 2024 at 52 EH/s and a long-term power capacity of 2.2GW.

The development will also make it the largest publicly traded miner by hash rate, slightly ahead of Marathon Digital Holdings, Inc.’s MARA 50 EH/s target.

This comes after Riot Platforms had privately proposed an offer to Bitfarmsboard in April, which was rejected.

Bitfarms has also struggled from a corporate governance perspective as its previous CEO’s exit was accelerated into a termination, with the CEO then bringing a $27 million breach of contract lawsuit against Bitfarms.

Long term, with an additional 600MW of capacity at Riot Platforms Corsicana site and additional Bitfarms expansion (528MW total), Riot Platforms would have a line of sight to 2.3GW of total power capacity, the analyst adds.

Bitfarms has a $96 million machine prepayment which would help to offset some of the CapEx costs for the Bitfarms expansion, while Riot Platforms was previously fully funded through 2025, but that would be subject to change post acquisition.

H.C. Wainwright analyst Mike Colonnese reiterated Buy rating on Riot Platforms with a price forecast of $17.

If the proposed transaction were to be successful, Riot Platforms’s self-mining capacity would grow to nearly 20 EH/s on a pro forma basis, up from 12.6 EH/s at the end of April, and the company would have 1 GW of combined power capacity, with potential to become the largest public miner this year.

On a pro forma basis, Riot Platforms would own and operate 15 mining facilities across the U.S., Canada, Paraguay, and Argentina.

Price Action: RIOT shares are trading lower by 2.90% to $10.04 at last check Wednesday.

Photo via Shutterstock

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