Summary Riot Platforms is a profitable Bitcoin miner with a consistent BTC pipelining strategy and a 4% share of global mining power. RIOT's growth ambitions require heavy CapEx, with execution and network difficulty risks potentially pressuring unit economics and future returns. The stock trades at a 3.2–3.3x NAV and 2.2x book value, pricing in significant future growth and operational success. While bullish on BTC, I remain neutral on RIOT shares, favoring direct BTC exposure for better risk/reward. I've said numerous times before that I'm quite bullish on Bitcoin ( BTC-USD ). I've also spent a silly amount of time exploring the "Bitcoin-plus" plays, names that carry sizable BTC treasuries where you can sometimes unlock value from quirks in the capital stack. For instance, I have discussed how investors can take advantage of Strategy's ( MSTR ) fat-premium options when the common swings too wide or look for quietly undervalued operating businesses sitting on top of coin reserves, like in the case of Semler ( SMLR ). Today, I'm looking at Riot Platforms ( RIOT ), a Bitcoin miner that turned into a Bitcoin treasury company. I love the consistency of its BTC accumulation and the way its mining engine actually makes money. But I don't love the premium the stock commands over its coin pile, especially with the CapEx commitments looming in the background. A 4% Slice of a Zettahash World The Bitcoin network's seven-day average hashrate finally settled in at roughly one zettahash per second in early September. Additionally, Riot's deployed hashrate in August reached 36.4 exahash per second, so we are looking at ~3.6%, or possibly 4%, of the global mining muscle, which the company has achieved by deploying more machines, increasing megawatts, and improving uptime. Importantly, Riot's mining business is actually notably profitable. In Q2, Riot's revenue was $153.0 million, net income was $219.5 million, and adjusted EBITDA was $495.3 million. It produced 1,426 BTC with an average "cost to mine" of $48,992 per coin (ex-depreciation) and a segment gross margin of roughly 50%, with its net cost of power for the quarter at just 3.5¢ per kWh, still among the best in the peer group. With Bitcoin now hovering around $114,000, you can see how these unit economics are quite attractive. The BTC accumulation drumbeat continued after the quarter. August brought 477 BTC mined , $16.1 million in total power credits (that power-curtailment game is a material lever in Texas), and an all-in power cost of 2.6¢/kWh for the month. The average operating hashrate for August sat at 31.4 EH/s, while the end-of-month deployed figure hit 36.4 EH/s, evidence that capacity was still ramping up into the end of September. Management says that if Riot keeps scaling roughly in step with the network, it should be able to maintain its 4% share in the space, with a 2025 target lifted to 40 EH/s and a Q1 2026 goal of 45 EH/s, via the integration of the Rhodium assets, continued Kentucky expansion, and steady build at Corsicana, among other projects coming online. Bitcoin Mining Market Share (Koyfin) Will Growth Bite Back? The problem is that this very expansion comes with risks. Expansion is both the moat and the migraine for any miner. Year-to-date, Riot spent $179.6 million on growth CapEx, with another $201.6 million forecast for Q3-Q4, and management says these "key capital expenditures [are] fully funded through year-end 2025 with current cash." Here's the breakdown from the latest presentation: CapEx commitments (Q2 Investor Presentation) Now, beyond that CapEx table Riot shared in its quarterly presentation, the Q2 10-Q also adds two useful commitments: (1) a remaining $83.5 million miner-purchase obligation under the MicroBT agreement, expected to be paid in the rest of 2025; and (2) ~$7.5 million of Corsicana water-infrastructure spend still to come, expected through 2026. Again, the reason Riot spends this much is that for a Bitcoin miner, scale is the moat. Evidently, management lifted the 2025 hash-rate target to 40 EH/s (from 38.4), set 45 EH/s for Q1'26, and explicitly said they "anticipate Riot will maintain ~4% share of [the] global network." Of course, this assumes that the mining operations are profitable, and as I discussed, they are. But then again, this whole operation comes with risks. Riot says 2025 CapEx is funded, but execution risk is always there. Then you have cycle risk, because network hashrate just entered the zettahash era (7-day SMA ~1.03-1.09 ZH/s in mid/late September), which mechanically squeezes unit economics unless BTC outruns difficulty. Riot's own Q2 math assumed an average hash price of $51/PH/s/day, and recent Hashrate Index weeklies hover in the low-mid $50s, which is fine, but it's also thin ice if difficulty keeps grinding up faster than price. Is the Premium Worth It ? Now here's where things get tricky, even if I am willing to see past the CapEx-related risks. Today, Riot's BTC stack (19,309 BTC) is valued at approximately $2.20 billion at current prices, meaning Riot is trading at an "mNAV" multiple of around 3.25 (i.e., market cap versus the marked value of its coins). Bitcoin Holdings Over Time ( BitcoinTreasuries.NET) Does Riot deserve a premium? Maybe. But even if you generously assign value to the mining operation, the accounting book is still well below the stock price, as Riot's book value per share stands at roughly $9.00, a 2.2x premium, which is not insane for a capital-intensive growth story. Still, it's a decent reminder that a lot of tomorrow is priced in. And remember, the "tomorrow" includes not just higher output but extensive checks, longer build cycles, and an arms race against a network that never stops adding exahash. If BTC rips another leg higher, the premium could end up looking justified in hindsight (and then some). But if BTC stalls or Corsicana timelines/returns slip, the path of least resistance should be multiple compressions toward NAV and/or book. In that light, although in my latest Strategy piece I argued the risk/reward is better in the preferreds (or by renting out the common via rich options) vs. holding the common stock, when I look at that setup stacked against Riot, I actually prefer MSTR's common. Its premium to the BTC stack is much thinner, and at least we know that when MSTR raises equity, the cash goes straight into more coin, which is always per-share accretive without the hardware CapEx and execution headaches that come with mining. Final Thoughts I like Riot, the operator. The business is mining profitably, stacking BTC, and leveraging a power strategy that many rivals wish they had. Nevertheless, at ~3.2-3.3× NAV and ~2.2× book, you're paying for growth plus the promise of power-rich optionality. That can work, and I'm bullish on BTC, after all, but the CapEx meter is running and the network is speeding up, and if Riot wants to maintain a ~4% share, the capital commitments are going to remain a risk. For this reason, I feel neutral about owning the stock. I think there are better bets out there for exposure to BTC, including MSTR's preferreds, smart options selling on high-vol instruments, and, probably, the best option, just owning pure BTC in the form of a low-cost ETF or self-custodying your own coins if you are in that camp.
