TANGENT: TIKR Analysis Seems A Lil’ Too Optimistic, But Correct As To Where The Pivot Point Sits.

This — at least in its concluding paragraph — gets it mostly right. Riot faces a near term existential crisis: vast cap ex needed — very lil’ revenue, before late 2028. Watch Q3 for the proverbial “canary in the coal mine“, says TIKR. I agree.

The TIKR analyst thinks Riot might be able to use a strategy its CFO calls “recycling financing”. I highly doubt that (not to its intended effect, in any event).
Moreover, and of equal importance, the management of Riot was an abject failure, the last time it tried to be a customer service / contractor (for third party computes, then running Bitcoin miners — all under these same West Texas roofs).

My strong suspicion is that Riot hasn’t transformed its culture from “pirate rules” — to a true “customer service mentality”… at the rank and file / operating levels.

And that will all be deeply damaging to Riot — with demanding clients like AMD and Anthropic pushing the limit of what is humanly possible, 24×7.

Note that Riot is still embroiled in a $546 million suit with a Japanese mega tech co., over what is claimed to have been “deceptive accounting”, for electric power credit sharing, when the company was hosting others’ Bitcoin mining racks.

That is a strong tell. And those sorts of shenanigans will cause Anthropic and AMD to take the side exit, very early — if that is what the CFO means by “recycling financing”.

Here’s TIKR — and it is correct, speaking in directionality — if a lil’ too rosy:

…The cleanest test comes in late October or early November, when Riot reports its third quarter. Two things decide whether the cheap price is opportunity or trap. First, does the Corsicana LOI convert into a signed lease, turning a two-tenant company into a three-tenant platform with more than $1 billion of additional annual rent behind it?

Second, does the AMD project financing close at nearly double the initial equity, as management guided, proving the capital-recycling engine works outside a slide deck? Both would validate the thesis that the stock refuses to pay for. Another quarter of “advanced discussions” with nothing executed, against a widening cash burn, tells that the market’s caution was correct. Riot’s backlog says one thing, and its share price says another, and only delivery breaks the tie….

Now you know — onward (the second, legacy-2021 era graphic tells the tale — from last time around, with GMO Internet).

नमस्ते