As the market for alternative assets heated up earlier this year, many investors found themselves trying to differentiate between the various investment options.
With the initial public offering of Coinbase and the prevalence of cryptocurrency miners, it can be hard to determine if one will prove a better investment than the asset itself.
Theoretically, the earnings the company generates are simply the value of the mined coins minus all of the costs that go into setting up and running the operation.
Other than the past three months, the change in Riot’s stock price seems to be about 2.75 to 1 when compared to Bitcoin.
The company has issued a lot of equity to fund purchases of special mining computers, called Antminers.
In 2018, 2019, and 2020, management filed a notification with the Securities and Exchange Commission stating that it would not be able to submit its full-year report in a timely manner.
Of the top ten, one is the creator of Bitcoin, two are the founders of Bitmain Technologies — the company selling Antminers to Riot, three others are founders of Chinese crypto trading platforms, and two are the Winklevoss twins of Facebook fame.
For instance, Riot Blockchain raised about $260 million from issuing those additional shares in 2020 and $8 million from selling cryptocurrency.
In a year where the price of Bitcoin went up more than 300%, Riot Blockchain spent tens of millions of dollars and ended up burning cash rather than generating it.
The company doesn’t report Bitcoin production numbers on a consistent basis, so it’s hard to calculate a detailed performance versus just buying Bitcoin.
Although just buying Bitcoin has also been the clear winner over the past few months, the longer term has highlighted how levered Riot’s prospects are to the digital currency.
With the company mining 697 coins at an average price of $46,640 during the period, the money flowing in shouldn’t be eaten away by investments.