Shares of Riot Platforms (RIOT) experienced a significant 8% increase on Friday, driven by the announcement that Advanced Micro Devices (AMD) has expanded its capacity at Riot's Rockdale, Texas campus. This development highlights Riot's ongoing transition 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 potential for further expansion to 150MW. The agreement is expected to generate approximately $636 million over a 10-year term, as per the earnings transcript.
Furthermore, Riot has secured improved 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 bitcoins. 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 pricing reflecting a lower cost of capital driven by the expanded AMD deal. 'Market pricing in lower cost of capital as the expanded AMD deal drives lender confidence,' stated Matthew Sigel, head of digital assets research at VanEck.
Riot was one of the last 'pure play' mining companies to venture into hosting AI computing, while its peers have been transitioning their data centers away from mining. Recently, activist investor Starboard urged the management to accelerate its transition from bitcoin mining to an AI infrastructure provider. The strategic expansion of its data center business to host AI computers appears 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. However, revenue from bitcoin mining declined to $111.9 million from $142.9 million, primarily due to lower bitcoin prices and increased mining competition. The mining company's shares have surged approximately 147% over the last 12 months, while bitcoin has fallen nearly 17%. The company, which previously retained all its mined bitcoin, is also 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.