Shares of Riot Platforms (RIOT) experienced an 8% surge on Friday, driven by the announcement that Advanced Micro Devices (AMD) would be expanding its capacity at the Rockdale, Texas campus. This development highlights Riot's ongoing pivot from bitcoin mining to artificial intelligence 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, with the potential to increase to 150 megawatts. The agreement is expected to generate approximately $636 million over a 10-year term. Additionally, 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 bitcoins. This shift is seen as a signal of growing lender confidence in the company'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 pricing reflecting lower costs of capital. As Matthew Sigel, head of digital assets research at VanEck, noted, 'The expanded AMD deal is driving lender confidence.' Riot was one of the last remaining 'pure play' mining companies that had not ventured into hosting AI computing, while its peers were opening up their data centers to move away from mining.
However, with activist investor Starboard urging the management to accelerate its transition to an AI infrastructure provider, the company appears to be shifting its focus. The expansion of its data center business to host AI computers seems to be yielding positive results for the Castle Rock, Colorado-based company. The firm reported total revenue of $167.2 million for the quarter ended March 31, up from $161.4 million a year earlier, supported by $33.2 million in initial data center revenue. Although 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 has fallen nearly 17%.
Furthermore, the company, which 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.