Shares of Riot Platforms (RIOT) experienced an 8% surge on Friday, driven by the announcement that Advanced Micro Devices (AMD) would be expanding its presence at Riot's Rockdale, Texas campus. 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 opted to double its contracted capacity to 50 megawatts (MW), with the potential for further expansion to 150MW.
As per the earnings transcript, this agreement is anticipated to generate approximately $636 million over a 10-year period. Furthermore, Riot has secured more favorable terms for its $200 million bitcoin-backed credit facility with Coinbase. The interest rate has been reduced to a fixed 6.15% from 8.3%, and 1,544 pledged collateral bitcoins have been released, signaling 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. 'The market is factoring in a lower cost of capital as the expanded AMD deal drives lender confidence,' noted Matthew Sigel, head of digital assets research at VanEck. Riot was one of the last remaining 'pure play' mining companies that had not ventured into hosting AI computing, while its peers had begun to diversify by opening their data centers to non-mining activities.
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 expanding its data center business to host AI computers. The firm reported total revenue of $167.2 million for the quarter ending March 31, representing a increase from $161.4 million in the same period last year. This growth was supported by $33.2 million in initial data center revenue. In contrast, bitcoin mining revenue 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 company's shares have risen by approximately 147%, while bitcoin has fallen by nearly 17%. The company, which had 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.