Shares of Riot Platforms experienced an 8% surge on Friday following the announcement that Advanced Micro Devices would be expanding its capacity at the Rockdale, Texas campus, marking a significant pivot by Riot towards artificial intelligence and high-performance computing. According to the company's Q1 financial results, AMD has opted to double its contracted capacity to 50 megawatts, with the potential for further expansion to 150 megawatts. This agreement is anticipated to generate approximately $636 million over a decade.
Furthermore, Riot has secured more favorable terms for its $200 million bitcoin-backed credit facility with Coinbase, reducing the interest rate to a fixed 6.15% from 8.3% and releasing 1,544 pledged collateral bitcoins, indicating growing lender confidence in the company's expanding data center business. The combined impact of 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 due to the expanded AMD deal, which is driving lender confidence.' Riot was one of the few remaining 'pure play' mining companies that had not ventured into hosting AI computing, while its peers were expanding their data centers to diversify away from mining.
The company's decision to expand its data center business to accommodate AI computing appears to be yielding positive results. For the quarter ending March 31, the company reported total revenue of $167.2 million, up from $161.4 million in the same period last year, 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 competition in the mining sector.
Over the last 12 months, the company's shares have risen by approximately 147%, while bitcoin has fallen by nearly 17%. The company, which previously retained all its mined bitcoin, is also accelerating its sales of the cryptocurrency. According to Bitcoin Treasuries data, Riot sold 3,688 BTC during Q1, ending March with 15,679 BTC and $282.5 million in cash.