Shares of Riot Platforms (RIOT) experienced a significant 8% increase on Friday, driven by the announcement that Advanced Micro Devices (AMD) would be expanding its capacity at Riot's Rockdale, Texas campus. This development highlights Riot's ongoing transition from a focus on bitcoin mining to a more diversified approach, incorporating AI and high-performance computing. The Q1 financial results revealed that AMD has opted to double its contracted capacity to 50 megawatts (MW), with the potential for further expansion to 150MW.
According to the earnings transcript, this agreement is expected to generate approximately $636 million over a 10-year period. Furthermore, Riot has successfully renegotiated the terms of its $200 million bitcoin-backed credit facility with Coinbase, securing a reduced interest rate of 6.15% from the initial 8.3% and releasing 1,544 pledged collateral bitcoin. This revised agreement signals growing lender confidence in Riot's expanding data center business. The combination of the AMD deal and improved credit terms has led investors to assign a premium value to the stock.
As noted by Matthew Sigel, head of digital assets research at VanEck, 'the market is factoring in a lower cost of capital as the expanded AMD deal drives lender confidence.' Riot was one of the last remaining 'pure play' mining companies that had not ventured into hosting AI computing, while its peers were transitioning their data centers away from mining. Recently, activist investor Starboard urged the management to accelerate its transition from bitcoin mining to an AI infrastructure provider. The decision to expand its data center business to host AI computers appears to be yielding positive results for the Castle Rock, Colorado-based company. The firm reported total revenue of $167.2 million for the quarter ended March 31, representing a slight increase from $161.4 million in the same period last year.
This growth was supported by $33.2 million in initial data center revenue. However, revenue from bitcoin mining declined to $111.9 million from $142.9 million, primarily due to lower bitcoin prices and increased mining competition.
Over the last 12 months, the mining company's shares have surged by approximately 147%, while bitcoin has experienced a decline of nearly 17%. In addition to its strategic shift, the company, which previously retained all its mined bitcoin, is now accelerating its bitcoin sales. According to Bitcoin Treasuries data, the company sold 3,688 BTC during Q1, ending March with 15,679 BTC and $282.5 million in cash.