As an analyst with over two decades of experience in the tech and financial industries, I find this recent development intriguing. Riot’s strategic move to amass such a substantial Bitcoin (BTC) holding and potentially pivot towards AI services is reminiscent of MicroStrategy’s bold corporate treasury strategy led by Michael Saylor.
On December 10th to 12th, Riot Platforms purchased approximately $510 million in Bitcoins (BTC), boosting their Bitcoin mining company’s total BTC holdings close to $1.7 billion, as revealed in a recent regulatory filing dated December 13th.
The purchases coincide with reports that activist investor Starboard Value has taken a “significant position” in the Bitcoin miner.
On December 12th, as per The Wall Street Journal’s report, Starboard suggested that Riot reallocate a portion of their Bitcoin mining resources towards powering artificial intelligence models. Investors have found additional value in Bitcoin mining through the acquisition of Bitcoin itself.
According to a report by The Wall Street Journal, Riot stated that they strive to generate value for every shareholder and eagerly anticipate productive discussions with Starboard regarding methods to mutually attain this objective.
Pivoting toward AI
The need for computational power in artificial intelligence (AI) models is rapidly increasing, and bitcoin miners, who frequently have their own power sources and large data centers, are particularly suited to meet this demand.
In essence, the partnership is straightforward: AI firms require energy, while Bitcoin miners can supply it,” as per a report on August 16th by Matthew Sigel, head of digital assets research at VanEck.
Should Bitcoin miners shift their focus towards Artificial Intelligence, they potentially stand to unveil a combined market value of approximately $37 billion, according to VanEck.
Specifically, if Riot were to prioritize serving AI-centric companies, an analyst’s estimate suggests they could potentially boost their market value to over $4.8 billion.
If this deal goes through, it will significantly increase Riot’s market value, which is currently approximately $4.4 billion, as reported by Google Finance on December 13th.
Doubling down on Bitcoin buying
Meanwhile, investors are also rewarding Bitcoin miners for building large BTC treasuries.
On December 10th, analysts from JPMorgan increased the projected prices for four stocks of Bitcoin mining companies, including Riot, partly due to the worth of the miners’ held Bitcoins.
The analysts stated that they had earlier assessed the value of Bitcoin miners by considering the potential four-year net profit for each miner’s operation.
“We are expanding upon this framework by incorporating 1) the value of each company’s land and power assets […] and 2) a HODL premium, which gives miners credit for holding Bitcoin on their balance like MicroStrategy.”
Starting from the year 2020, MicroStrategy has invested about $25 billion in purchasing Bitcoin, following a strategic approach for their corporate treasury that was primarily led by its co-founder, Michael Saylor.
The strategy paid off as BTC’s price steadily rose, breaking $100,000 per coin earlier this month.
Over the past two years, from 2020 onwards, I’ve observed a remarkable surge in MicroStrategy’s stock (MSTR), with an impressive growth of approximately 2,500%. This performance has placed it among the top outliers, second only to Nvidia, according to data sourced from Google Finance.
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2024-12-13 20:01