Bitcoin miner Riot Platforms bleeds money – what happens now?
Riot Platforms struggles to make a profit and looks absurdly overvalued. Are troubles brewing?


Bitcoin has been an extremely lucrative asset for those who invested when it first took off. Even if you had bought as late as four years ago, and simply held on, you would be looking at a very good return. However, since early 2021, bitcoin has been a lot more volatile, prone to large rises and falls.
Owing to this volatility, many people have turned to bitcoin mining – the process of using brute computer power – to unlock more bitcoins. However, even this is starting to become unprofitable, which is bad news for bitcoin miners such as Riot Platforms (Nasdaq: RIOT).
There are several big problems with bitcoin mining. In order to protect the value of bitcoin, the designers set a limit to the total number of bitcoins that can be unlocked, with the amount of effort to unlock each bitcoin increasing at regular intervals the more that bitcoin is mined.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
This means that companies engaging in bitcoin mining have to keep increasing their amount of processing power, which requires large amounts of capital investment. This, in turn, requires more and more energy, which is controversial at a time when there is a major emphasis on trying to reduce carbon emissions.
The problem with Riot Platforms
Perhaps the most pressing problem is the increasing amount of competition. As short seller Kerrisdale Capital points out, bitcoin mining is global in nature, with miners from around the world competing to mine bitcoin ever more cheaply.
Even miners in areas like Texas (where Riot is located), which is regarded as the most bitcoin-friendly part of the US thanks to relatively light regulation and cheap energy, are finding it difficult to compete with rivals from Africa and South America, which have much lower labour costs and can access cheap Chinese equipment more easily.
As a result, even as bitcoin soared, Riot has struggled to make money. It has made a loss in five of the last six years (only in 2023 did it manage to produce earnings). While it hopes to make a small profit next year, even the most optimistic estimates have it trading at 58 times 2025 earnings, the sort of valuation you would associate with a successful company, not one bleeding red ink.
The losses, combined with the constant need for capital to upgrade equipment, have forced the group to keep issuing additional shares, diluting shareholders – usually a sign of a company in trouble.
Given these fundamental problems, it is hardly surprising that Riot’s shares have done poorly recently, suggesting that they have further to fall. They are trading well below both the 50-day and 200-day moving averages and have also lagged the wider stock market; they have halved since December. I would therefore suggest that you short them at the current price of $7.20 at £200 per $1. I would put the stop loss at $12, which would give you a total downside of £960.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.
He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.
Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.
As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.
Follow Matthew on Twitter: @DrMatthewPartri
-
Council tax bills in worst hit areas set to rise by £500 in the next four years
Branded the ‘ultimate stealth tax’, the council tax burden is increasing across the country, with some areas potentially having to find hundreds of pounds more a year to pay the bill
-
Crypto ETNs are approved for UK retail investors
The FCA has approved the sale of crypto ETNs to retail investors from October. What is a crypto ETN, and what does this mean for investors?
-
Electronic Arts: a winning game group
Electronic Arts is a fast-growing video-game maker which looks set for further success
-
How do stablecoins work – and are they risky business?
Stablecoins – cryptocurrencies backed by real assets – are all the rage and have been enthusiastically backed by Donald Trump’s administration. Are they a danger to financial stability?
-
Airtel Africa is dialling the right numbers – should you buy?
Opinion Mobile phone services group Airtel Africa is inexpensive and growing fast
-
The stocks spearheading the charge of cryptocurrency
Opinion Companies are starting to invest in bitcoin and other cryptocurrencies, a trend likely to hasten the mass adoption of digital money. Buy before the stampede arrives, says Dominic Frisby
-
IonQ 'offers no quantum of solace'
Opinion Quantum computing group IonQ is inefficient, overhyped and overpriced
-
How Corpay is cashing in on expenses
Financial technology company Corpay has found a profitable niche managing corporate payments
-
Drone company Red Cat Holdings sees shares tumble
Red Cat, the unprofitable and inefficient US drone manufacturer is set to slide
-
Why Sezzle's shares may be overvalued
Sezzle, the US buy-now-pay-later provider, is resting on shaky foundations. Is it time to sell this stock?