With a gain of more than 240% in 2023, this bitcoin mining stock is still a screaming buy

Since the competition in the Bitcoin (BTC 0.35%) As the mining industry intensifies, one company stands out from the crowded field. Already recognized as one of the leading bitcoin mining companies, Riot Platforms (REVOLT 1.04%) is poised to extend its lead and solidify its position as an industry leader.

With a groundbreaking agreement and ambitious expansion plans, Riot is set for long-term success and poised to capitalize on the growing profitability of bitcoin mining.

Image source: Getty Images.

The groundbreaking announcement

On June 26, Riot made headlines when the company announced its agreement to purchase 33,280 mining rigs from MicroBT, an up-and-coming Bitcoin mining equipment manufacturer. With a total cost of $162.9 million, the state-of-the-art miners will be manufactured in the USA and are expected to nearly double Riot’s mining capacity of 10.5 exahashes per second (EH/s) and reach an impressive 20.1 EH/s. These state-of-the-art machines will be used at Riot’s new facility in Corsicana, Texas. Delivery is scheduled for the end of the year and operations will begin in the first quarter of 2024.

Additionally, Riot has secured an option to purchase an additional 66,560 miners which, if exercised, would increase its hash rate capacity to a staggering 35.4 EH/s, positioning it as the top bitcoin miner by hash rate.

Hash rate refers to the computing power that a bitcoin miner contributes to the network and represents its effective mining capacity. Simply put, the higher the hash rate, the greater the ability to mine bitcoin.

Strengthening of the leadership position

The added benefits of a more efficient domestic supply chain and additional online mining machines will likely only increase Riot’s dominance in bitcoin mining production. Year to date in 2023, the company ranks third in total bitcoin mined and ended 2022 in second place overall.

The company has also demonstrated remarkable efficiency by minimizing mining costs. Riot is the second cheapest miner in terms of cost per bitcoin mined, and also has a near-unprecedented financial position with virtually no debt.

However, one of Riot’s most beneficial factors is its ability to offset the cost of electricity. This is made possible by its strategic location in Texas, where the company benefits from the unique flexibility of the Texas power grid. Unlike other regions, the Lone Star State has an independent power grid infrastructure, giving Riot the ability to sell excess power back to the grid during periods of high demand, further contributing to its profitability.

Embrace the future

While the announcement of additional miners is beneficial in itself, Riot looks even more compelling given the current state of the crypto economy.

Despite a challenging second half of 2022, when the Bitcoin price plunged 70%, Riot proved its resilience by weathering the worst of the bear market and strategically managing its reserves. Now that Bitcoin is regaining momentum, Riot is poised to capitalize on revived profitability and potentially outperform the cryptocurrency itself if a bull market returns. This year alone is evidence that Riot stock is up over 245% year to date, beating Bitcoin’s more modest 75% surge.

Success as a bitcoin miner lies in its ability to maximize machine performance and manage costs efficiently. This rare combination is exactly what sets Riot apart from its competitors. Based on its track record and plans to increase mining production, Riot is poised to establish itself as the leader in bitcoin mining for years to come.

RJ Fulton has positions in Bitcoin and Riot Platforms. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

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