Shares of Riot Platforms (RIOT) experienced an 8% increase on Friday, driven by the expansion of Advanced Micro Devices' (AMD) capacity at Riot's Rockdale, Texas facility. This development highlights Riot's ongoing pivot towards artificial intelligence (AI) and high-performance computing, marking a significant shift from its primary focus on bitcoin mining. According to the company's Q1 financial results, AMD has exercised an option to double its contracted capacity to 50 megawatts (MW), with potential upsizing to 150MW. The agreement is expected to generate approximately $636 million over a 10-year term, as per the earnings transcript.
Furthermore, Riot has secured improved terms on 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. This move signals 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, with market pricing reflecting lower costs of capital driven by the expanded AMD deal. Matthew Sigel, head of digital assets research at VanEck, noted that 'market pricing in lower cost of capital as the expanded AMD deal drives lender confidence.' Riot was one of the last 'pure play' mining companies to venture into hosting AI computing, while its peers opened their data centers to diversify away from mining. Recently, activist investor Starboard urged the management to accelerate its transition from bitcoin mining to an AI infrastructure provider. The strategic expansion of its data center business to host AI computers appears to be yielding positive results for the Castle Rock, Colorado-based company.
Riot reported total revenue of $167.2 million for the quarter ending March 31, up from $161.4 million a year earlier, supported by $33.2 million in initial data center revenue. However, bitcoin mining revenue declined to $111.9 million from $142.9 million, primarily due to lower bitcoin prices and increased mining competition. The company's shares have risen by approximately 147% over the last 12 months, whereas bitcoin has fallen nearly 17%.
Riot, which previously retained all its mined bitcoin, is also accelerating its bitcoin sales. According to Bitcoin Treasuries data, the company sold 3,688 BTC during Q1 and ended March with 15,679 BTC and $282.5 million in cash.