Don’t Let This Popular Crypto Stock Fool You - InvestingChannel

Don’t Let This Popular Crypto Stock Fool You

Proprietary Data Insights

Financial Pros’ Top Cryptocurrency Stock Searches in the Last Month

Rank Ticker Name Searches
#1 RIOT Riot Blockchain 199
#2 MARA Marathon Digital Hldgs 80
#3 COIN Coinbase 66
#4 MSTR Microstrategy 41
#5 HUT Hut8 19
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Don’t Let This Popular Crypto Stock Fool You

Until recently, if you wanted to invest in Bitcoins, you had to own them, trade Bitcoin futures, or invest in Bitcoin miners.

Now that we have multiple Bitcoin ETFs, people want to know: Are Bitcoin miners worth your money?

Using our proprietary TrackStar data, we pulled the top cryptocurrency-related companies searched by financial pros.

Riot Blockchain (RIOT) topped the list by a mile.

It’s one of the most well-known publicly traded Bitcoin miners.

We’ve not been a fan of these Bitcoin mining companies.

Cutting to the chase – we don’t like Riot either.

It doesn’t generate positive operating cash flow, which is a  big red flag for us.

Plus, we think there are other opportunities out there.

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Riot’s Business

To understand Riot, you need to understand Bitcoin mining.

Mining is essentially online math puzzles computers solve to add a ‘block’ to the blockchain. They play a crucial role as the transaction processors.

For their work, they’re rewarded with Bitcoins.

A miner’s profitability is defined by the reward compared to the energy and infrastructure costs for computing.

Riot, like many miners, set up operations near cheap energy reserves or renewable resources. They’ll do whatever they can to add revenue, even pumping heat generated by their servers to local communities.


Source: Riot Investor Relations

The company’s business falls into three categories:

  • Bitcoin Mining (70% of total revenues) – Encompasses the company’s primary activities related to the mining and holding of bitcoin.
  • Data Center Hosting (20% of total revenues) – Provides co-location services for institutional-scale bitcoin mining companies.
  • Engineering (10% of total revenues) – Focuses on designing and manufacturing power distribution equipment and custom-engineered electrical products.



Source: Stock Analysis

Riot lives and dies by the price of Bitcoin and halving events.

Every four years or so, the number of Bitcoins awarded to miners is cut in half.

That’s what makes Riot’s model so worrisome.

While revenues continue to increase the company burns cash from operations.

That means it takes more money to operate a business that gets less profitable over time.



Source: Seeking Alpha

Riot doesn’t turn a profit, but none of the other cryptocurrency related companies do either.

Marathon Digital (MARA) expects to turn a profit next year. Coinbase (COIN) and Microstrategy (MSTR) both generate positive cash flow. But neither of those two are miners.



Source: Seeking Alpha

With Bitcoin prices soaring, forward revenue growth looks great for many of these companies.

Yet, the last 3-5 years of growth have been phenomenal, and they still don’t turn a profit.



Source: Seeking Alpha

Speaking of not turning a profit, Riot’s gross margins are the only positive one on this list.

Everything else is negative.

Our Opinion 0/10

There’s the right way to play cryptocurrency and the wrong way.

Miners are the wrong way.

They operate an unsustainable business model destined for failure.

Cryptocurrencies aren’t like commodities. 

You don’t need to invest in derivatives. You can own these tokens directly.

And there are opportunities galore if you know where to look.

Sponsored These are EXCITING times in the cryptocurrency market.

Staying informed about potential bullish events is key to capitalizing on the opportunities. 

Remember, the last event in 2020 led to unprecedented gains for certain altcoins. 

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