- Needham Analyst John Todaro reiterated the buy recommendation Riot Platforms, Inc REVOLT and lowered the Price target of $15 to $13.
- REVOLT reported for the first quarter of fiscal 23 Results after Wednesday’s close, missing results on sales and earnings estimates, due to an overhang in the data center segment, where costs rose 46% from the previous quarter.
- The increase in costs was due to operating costs after the winter storm and higher property and casualty insurance.
- In addition, RIOT is engaged in litigation with three companies related to the Whinestone acquisition.
- RIOT currently hosts two out of three hosting deals inherited from the Whinestone acquisition.
- Given the sizeable negative margin from the hosting business, it’s in RIOT’s best interest to use the 100MW+ site for its self-mining, which is likely at the heart of the litigation.
- RIOT’s self-mining business performed as Todaro expected, albeit at a slightly better cost. Additionally, he pointed to an expected increase in self-mining revenue in the second quarter due to higher transaction fees, leading to an increase in daily mining revenue across the Bitcoin network.
- He believes expanding use cases for bitcoin will result in higher daily bitcoin mining earnings, which will help reduce the risk of a halving as mining earnings can now grow beyond that Coinbase Global, Inc COIN Reward (which decreases by 50% with each halving).
- Price promotions: RIOT shares were trading 14.40% lower at $10.52 at last check on Thursday.
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