CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.67% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money

Riot Blockchain (RIOT) sags on inflation concerns

By Robert Davis

18:17, 17 November 2021

Bitcoin mining concept of real miner digging for Bitcoin
Riot Blockchain (RIOT) invested heavily in power stations and mining equipment to increase its hash rate. Photo – Shutterstock

Riot Blockchain shares extended their slide Wednesday after the cryptocurrency mining company issued an underwhelming third quarter earnings report late Monday night.

The stock dropped 12% Tuesday following the earnings release and was down more than 2% at 19:00 UTC.

Earnings details

The Castle Rock, Colorado-based company reported revenue of $64.8m (£48.2m) for the three months ended 30 September compared to the $2.5m figure the company brought in last year.

However, Riot Blockchain still produced a net loss of $15.3m compared to the $1.7m it lost last year. The losses were “significantly impacted” by $36m in non-cash stock-based compensation expenses and an unrealised loss of $11.2m in equity securities, the company said.

Riot also reported an earnings per share loss of $0.16, compared to a $0.04 loss in the prior year quarter.

For comparison, five analysts surveyed by Yahoo Finance expected the company to report revenue of $68m and an EPS gain of $0.35.

Adjusted EBITDA was $37.6m compared to negative $398k in the prior year quarter.

What is your sentiment on RIOT?

12.48
Bullish
or
Bearish
Vote to see Traders sentiment!

Moody crypto market

One reason analysts at Coinbase point to for Riot’s recent performance is that the overall cryptocurrency market has been “moody” lately because of inflation.

At 15:00 UTC, the crypto market was mostly down with popular assets like Solana and Terra down 4.56% and 2.89%, respectively.

While bitcoin (BTC) and other cryptocurrencies are still seen as a hedge against inflation, analysts at Coinbase said “investors may have taken advantage of high prices to secure profits, and some may be seeking more certainty around crypto regulation.”

COIN

287.05 Price
-0.080% 1D Chg, %
Long position overnight fee -0.0248%
Short position overnight fee 0.0026%
Overnight fee time 22:00 (UTC)
Spread 0.45

TSLA

319.70 Price
-2.490% 1D Chg, %
Long position overnight fee -0.0248%
Short position overnight fee 0.0026%
Overnight fee time 22:00 (UTC)
Spread 0.20

GME

26.98 Price
+1.830% 1D Chg, %
Long position overnight fee -0.0248%
Short position overnight fee 0.0026%
Overnight fee time 22:00 (UTC)
Spread 0.17

NVDA

148.27 Price
+1.270% 1D Chg, %
Long position overnight fee -0.0248%
Short position overnight fee 0.0026%
Overnight fee time 22:00 (UTC)
Spread 0.12

“It’s important to remember that inflation doesn’t automatically signal ‘endless gains’ to every BTC trader — and the prospect of higher interest rates has the potential to spook markets of all kinds, including crypto,” the company wrote in a blog post.

Inflation also seems to be impacting other crypto mining companies such as HIVE Blockchain Technologies and Stronghold Digital Mining, both of which are down 3% and 8% over the last week, respectively.

Hash rate

The future success of Riot seems to hinge on its ability to increase its hash rate. The company said in its Q3 earnings statement that it expects to have a hash rate of 8.6 EH/s, without calculating for incremental productivity gains, by the end of next year.

Hash rate measures the speed at which cryptocurrency miners operate. Therefore, Riot would be able to produce more assets to help offset its stock-based compensation expenses.

The company was able to increase its deployed hash rate capacity in Q3 to 2.6 EH/s from 1.6 last year while also making substantial progress toward completing two mega-power stations.

Riot currently employs more than 27,000 miners with another 11,500 units of mining equipment on order, the third quarter earnings say.

Analyst expectations

Analysts seem optimistic that Riot will be able to overcome its inflationary pressures and produce higher revenue and EPS totals looking ahead to the fourth quarter and the rest of the fiscal year.

Five analysts surveyed by Yahoo Finance expect the company to report EPS of $0.41 and revenues nearing $99m in Q4.

For the full year, Riot is expected to produce EPS gains of $0.98 and revenue of $225.2m.

Read more: Riot Blockchain reports massive Q2 gains

Markets in this article

RIOT
Riot Blockchain, Inc.
12.48 USD
-0.25 -1.980%
RIOT
Riot Blockchain, Inc.
12.48 USD
-0.25 -1.980%
RIOT
Riot Blockchain, Inc.
12.48 USD
-0.25 -1.980%
SOL/USD
Solana / USD
214.1703 USD
2.5325 +1.200%
SOL/USD
Solana / USD
214.1703 USD
2.5325 +1.200%

Related topics

Rate this article

The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided in this article is for information purposes only and should not be understood as investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents and has not been prepared in accordance with the legal requirements designed to promote investment research independence. While the information in this communication, or on which this communication is based, has been obtained from sources that Capital.com believes to be reliable and accurate, it has not undergone independent verification. No representation or warranty, whether expressed or implied, is made as to the accuracy or completeness of any information obtained from third parties. If you rely on the information on this page, then you do so entirely at your own risk.

Still looking for a broker you can trust?

Join the 660,000+ traders worldwide that chose to trade with Capital.com

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading