Riot Blockchain (RIOT) is caught on the radar of short sellers amid the declining value of Bitcoin (BTC) and other digital assets. The troubled cryptocurrency miner suffered a surge in short-term interest in November when its share value plunged to two-year lows.
Riot Blockchain (RIOT) Live Stock Price
What is the last value of the shares? Could there be a short contraction if the market recovers? Here we take a look at Riot Blockchain’s short interest.
What is Riot Blockchain (RIOT)?
Riot Blockchain is a cryptocurrency mining company that was operating nearly 31,000 rigs as of the end of 2021. The company’s main farm, the Whinstone Facility, is located in Rockdale, Texas, USA.
Riot generates revenue from three business segments:
- Bitcoin Mining: Riot uses advanced computers to validate transactions that need to be recorded on the Bitcoin blockchain and is rewarded with BTC tokens that are reserved or sold to generate revenue for the business.
- Data Center Hosting: With the acquisition of Whinstone US, Riot entered the data business. Whinstone provides the critical infrastructure and manpower necessary for institutional-level bitcoin miners to operate properly.
- Electrical Engineering and Products: Through the acquisition of ESS Metron, Riot offers access to top-tier components needed to develop high-end cooling systems.
Once known as Bioptix, the company changed its name to Riot Blockchain in October 2017. Bioptix has been a publicly traded company since 2003. Shares are listed on the Nasdaq stock exchange under the ticker symbol “RIOT.”
Riot Blockchain Short Interest: Bets Against Crypto Firms Rise Amid FTX Debacle
Riot Blockchain stock price has fallen 83% in 2022 (as of December 19). The cryptocurrency markets have been rocked by a change in the macroeconomic context caused by increases in the main central banks’ benchmark interest rates.
Furthermore, major projects and companies within this space, such as the Terra ecosystem, the Celsius network, and most recently, the giant cryptocurrency exchange FTX, suffered a collapse that rippled through the markets.
This resulted in sharp falls in digital assets across the board. Bitcoin (BTC) fell 65% in 2022, as of December 19, while altcoins like cardano (ADA) and solana (SOL) saw falls of 80% or more.
Bitcoin (BTC) Live Price Chart
Falling cryptocurrency prices have a direct impact on Riot Blockchain’s financial performance as its mining operations generate less revenue.
Thus, the stock has become the target of short sellers, who have been increasing their bets against RIOT since late August, as indicated by RIOT’s short interest.
Short sellers borrow a company’s stock with the expectation that its value will decline in the future. Meanwhile, the short interest on a stock measures the float percentage of the instrument that is currently being borrowed.
According to MarketBeat data, the number of RIOT shares lent by short sellers increased from 24.44 million in August 2022 to 31.18 million at the end of November 2022. This implies a 30% increase in short interest from Riot Blockchain in just three months.
During that same period, RIOT’s stock value fell 35.1%, which means that short sellers are mostly making a profit, as short interest hasn’t started to wane yet. As of November 30, the short-term interest on RIOT shares stood at 18.6%.
The days to cover metric, which measures the number of days it would take short sellers to fully fund their open positions, went from 1.5 to 2.8.
Is a Riot Blockchain Short Squeeze Likely?
When short interest is high, the probability of a short squeeze increases. A short squeeze occurs when the price of a heavily shorted asset rises, forcing short sellers to close their positions at a loss, driving the price even higher.
The current headwinds may reduce the likelihood that the value of bitcoin and other digital assets will recover any time soon.
Just a few days ago, Mazars, one of the few large accounting firms that provide auditing services to cryptocurrency companies and exchanges, said it will “temporarily halt” its work for cryptocurrency clients, including audits of their proof of proof statements. Bookings.
Even though Riot Blockchain’s short interest is high and its days to cover metric is at a level that could cause a short Riot Blockchain contraction, the absence of a positive catalyst that can increase RIOT’s value and take short sellers by surprise reduces the chances of such an event happening.
What’s next for Riot Blockchain?
According to data compiled by MarketBeat, the consensus recommendation for Riot Blockchain stock stood at “moderate buy” as of Dec. 18, with 7 out of 8 analysts rating the stock a “buy” and one a “hold.” .
The stock’s average price target for the next 12 months stood at $14.7 per share, implying 286% upside potential. The highest 12-month target was $46 and the lowest was $7.
In both November and December, analysts at B. Riley, DA Davidson and Northland Securities lowered their price targets for RIOT shares just after the company issued its latest quarterly report.
“Miner profitability is a discussion that comes up every time Bitcoin falls, and then it is perceived as a problem for all cryptocurrencies,” Anders Kvamme Jensen, co-fund manager at AKG Digital Assets, told the Financial Times.
Meanwhile, Chris Crawford, chief investment officer at Crawford Fund Management, told the news outlet:
Please note that analyst predictions may be wrong and should not be a substitute for your own research. Always perform your own due diligence on an asset before trading, looking at the latest news, fundamental and technical analysis, and a wide range of commentary.
Remember, past performance does not guarantee future returns. And never trade more money than you can afford to lose.