Riot Platforms' stock experienced an 8% surge following the announcement that Advanced Micro Devices would be expanding its capacity at the Rockdale, Texas campus, marking a significant pivot by Riot into the realms of AI and high-performance computing. According to the Q1 financial results, AMD has opted to double its contracted capacity to 50 megawatts, with potential upsizing to 150MW, which could yield approximately $636 million over a decade.
The earnings transcript also revealed that Riot has secured more favorable terms for its $200 million bitcoin-backed credit facility with Coinbase, lowering the interest rate to a fixed 6.15% and releasing 1,544 pledged collateral bitcoins, signaling increased lender confidence in the company's data center business. This development, combined with the AMD deal and improved credit terms, has led investors to pay a premium for 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 among the last 'pure play' mining companies to venture into hosting AI computing. However, with activist investor Starboard urging the management to accelerate its transition to an AI infrastructure provider, the company's expansion into data center business to host AI computers appears to be yielding positive results.
The firm reported a total revenue of $167.2 million for the quarter ending March 31, up from $161.4 million in the previous year, supported by $33.2 million in initial data center revenue. Although bitcoin mining revenue declined to $111.9 million from $142.9 million due to lower bitcoin prices and increased competition, the company's shares have risen by approximately 147% over the last 12 months, while bitcoin prices have dropped nearly 17%. Riot, which previously retained all its mined bitcoin, is also increasing its bitcoin sales, having sold 3,688 BTC during Q1, and ending March with 15,679 BTC and $282.5 million in cash.