Here's Why Riot Platforms Closed More than 10% Lower Today

It's been a horrid day for any company that calls itself a cryptocurrency miner (or did). Riot Platforms (NASDAQ: RIOT) is one such company, having recently announced its own plans to transition away from Bitcoin mining activities, though that hasn't helped the company's stock price today. Closing 10.4% lower on Monday, shares of Riot Platforms appear to be under pressure from several angles.

Let's dive into what investors are watching when it comes to this U.S.-based crypto mining firm.

Why all the selling pressure today?

Source: Getty Images.

After reporting what could only be described as blowout earnings approximately six weeks ago (with record revenue and EPS of $0.26, beating estimates), Riot Platforms also announced a massive transition as part of its report to investors.

The company announced that it would initiate "core and shell development of the first two buildings at our Corsicana data center campus, representing 112 MW of total critical IT capacity. This development has been made possible by four key achievements this quarter, namely; (i) the acquisition of an additional 67-acre parcel of land directly adjacent to our original Corsicana site, (ii) the completion of the Campus Design for Corsicana, which will transform the entire site for data center development, (iii) the completion of the Basis of Design for our standard data center build, and (iv) the ongoing build out of our in-house data center team."

This move has signaled to investors that Riot, as a pure-play Bitcoin miner, will no longer exist. The company is looking instead to become a truly large-scale data center operator, leveraging its low-cost power sources and land assets accordingly.

With data centers becoming increasingly expensive to build, utilizing existing resources could be highly beneficial for investors seeking to maximize returns on Riot's existing asset portfolio. But with hefty price tags associated with other builds in this sector, and concerns around financing and the broader financial system coming into focus today, companies like Riot are being viewed as riskier than they were yesterday.

I think today's decline could be short-lived, but we'll see. It all depends on how pervasive this increasingly bearish investor sentiment becomes.

Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.