Shares of cryptocurrency mining company Riot Blockchain (NASDAQ:RIOT) were up 38.8% in June, according to data provided by S&P Global Market Intelligence. It’s important to note that the company mines Bitcoin (CRYPTO:BTC) and the price of Bitcoin was actually down 7% in June. However, the company was able to overcome this headwind with some important updates and by scoring positive comments from Wall Street analysts.
Early in June, Riot Blockchain stock soared on news of its deal with Mogo (NASDAQ:MOGO), a fintech company based in Canada. In short, Riot gave its stake in cryptocurrency exchange Coinsquare to Mogo in exchange for a stake of Mogo. According to terms of the deal, it now has almost 3.2 million shares of Mogo, valued at around $23 million. This stake is less than 5% of its total outstanding shares.
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Later in June, Riot Blockchain updated shareholders with its mining results. In May, the company mined 227 Bitcoin tokens. And for 2021, it has mined 924 tokens, more than double what it had mined through the first five months of 2020. As a result of its mining activity, it now has 2,000 Bitcoin tokens, valued at over $67 million (the price of Bitcoin as of this writing was around $33,700).
As previously mentioned, analysts were bullish on Riot Blockchain stock in June. For example, a Compass Point analyst started covering the stock during June, giving it a $43 price target, according to The Fly. However, this analyst was more intrigued by the company’s May acquisition of Bitcoin miner Whinestone. Riot Blockchain will try to leverage Whinestone’s energy management expertise as it continues increasing its computing power to mine more Bitcoin.
Indeed, one of the few things that a cryptocurrency miner can control is efficient use of electricity. Therefore, this is an important area for Riot Blockchain shareholders to watch. The company doesn’t just need to increase the amount of Bitcoin it’s mining, it also needs to decrease its costs.
Right now, the company is benefiting from the high price of Bitcoin. But this might not always be in the company’s favor, and it’s therefore in its best interest to cut costs now to be prepared if Bitcoin suddenly drops in value later in 2021 or beyond.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
Jon Quast owns shares of Bitcoin. The Motley Fool owns shares of and recommends Bitcoin. The Motley Fool has a disclosure policy.