Riot Platforms' stock experienced an 8% surge following the announcement of Advanced Micro Devices' (AMD) expansion of its capacity at Riot's Rockdale, Texas facility, marking a significant pivot towards artificial intelligence (AI) and high-performance computing. The Q1 financial results revealed that AMD has exercised an option to double its contracted capacity to 50 megawatts, with potential upsizing to 150 megawatts, which could yield approximately $636 million over a decade. Additionally, Riot 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 its expanding data center operations.
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 partnership. According to Matthew Sigel, head of digital assets research at VanEck, 'the market is pricing in lower cost of capital as the expanded AMD deal drives lender confidence.' Riot, one of the last remaining 'pure play' mining companies, had been under pressure from activist investor Starboard to accelerate its transition from bitcoin mining to AI infrastructure provision.
The company's strategic expansion into data center hosting for AI computing appears to be yielding positive results. For the quarter ended March 31, Riot reported total revenue of $167.2 million, up from $161.4 million in the previous year, supported by $33.2 million in initial data center revenue. However, bitcoin mining revenue declined to $111.9 million from $142.9 million due to lower bitcoin prices and increased mining competition. The company's shares have risen by approximately 147% over the last 12 months, while bitcoin prices have fallen by nearly 17%.
Riot, which previously retained all its mined bitcoin, is also accelerating its bitcoin sales, having sold 3,688 BTC during Q1, and ended March with 15,679 BTC and $282.5 million in cash.