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 pivot from bitcoin mining to artificial intelligence (AI) and high-performance computing. According to the company's Q1 financial results, AMD has exercised an option to double its contracted capacity to 50 megawatts (MW), with the potential for further expansion to 150MW.
This agreement is expected to generate approximately $636 million over a 10-year period. Furthermore, Riot has secured more favorable 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 bitcoin. This move 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 pay a premium for the stock, with market analysts noting that the expanded AMD deal is driving lender confidence and resulting in a lower cost of capital.
Riot was one of the last remaining 'pure play' mining companies that had not yet ventured into hosting AI computing, while its peers had begun to diversify their data centers. However, following pressure from activist investor Starboard to accelerate its transition from bitcoin mining to an AI infrastructure provider, the company appears to be reaping the benefits of its expanded data center business. The company reported a total revenue of $167.2 million for the quarter ended March 31, representing an increase from $161.4 million in the same period last year, supported by $33.2 million in initial data center revenue.
Although bitcoin mining revenue decreased to $111.9 million from $142.9 million due to lower bitcoin prices and increased mining competition, the firm's shares have surged by approximately 147% over the last 12 months, while bitcoin prices have fallen by nearly 17%. In addition to its strategic expansion, the company is also accelerating its bitcoin sales, having sold 3,688 BTC during Q1, and ending March with 15,679 BTC and $282.5 million in cash.