Shares of Riot Platforms (RIOT) experienced an 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 transition from a focus on bitcoin mining to a more diversified approach that incorporates 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. The agreement is expected to generate approximately $636 million over a 10-year term, as outlined in the earnings transcript.
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 bitcoin. This move signals growing confidence among lenders in Riot's expanding data center business. The combined impact of the AMD deal and improved credit terms has led investors to assign a premium value to 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 enhances lender confidence.' Riot was one of the last remaining 'pure play' mining companies that had not yet ventured into hosting AI computing.
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. For the quarter ended March 31, the company reported total revenue of $167.2 million, up from $161.4 million in the same period last year.
This increase was supported by $33.2 million in initial data center revenue. Although bitcoin mining revenue decreased 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.
In contrast, the value of bitcoin has fallen by nearly 17% during the same period. In addition to its strategic shift, Riot is also accelerating its bitcoin sales. According to data from Bitcoin Treasuries, the company sold 3,688 BTC during Q1.
As of the end of March, Riot held 15,679 BTC and $282.5 million in cash, marking a significant change from its previous strategy of retaining all mined bitcoin.