Shares of Riot Platforms (RIOT) experienced an 8% increase on Friday following the announcement that Advanced Micro Devices (AMD) would be expanding its capacity at Riot's Rockdale, Texas campus, marking a significant pivot by Riot into the realms of artificial intelligence and high-performance computing. According to the company's Q1 financial results, AMD has opted to double its contracted capacity to 50 megawatts, with the potential for further expansion to 150 megawatts. This agreement is anticipated to generate approximately $636 million over the course of a decade. Furthermore, Riot has renegotiated the terms of its $200 million bitcoin-backed credit facility with Coinbase, securing a reduced fixed interest rate of 6.15% and releasing 1,544 bitcoin from the pledged collateral.
This development signals growing confidence among lenders in Riot's expanding data center business. The combined effect of the AMD deal and the 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, driven by the expanded AMD agreement, which in turn boosts 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 transitioning their data centers away from mining. However, with the urging of activist investor Starboard to accelerate its shift from bitcoin mining to AI infrastructure provision, Riot appears to be reaping the benefits of expanding its data center business to accommodate AI computing.
The company reported a total revenue of $167.2 million for the quarter ending March 31, representing an increase from $161.4 million in the previous year, supported by $33.2 million in initial data center revenue. Conversely, revenue from bitcoin mining declined to $111.9 million from $142.9 million, primarily due to lower bitcoin prices and intensified mining competition.
Over the last 12 months, the company's shares have risen by approximately 147%, while bitcoin has experienced a decline of nearly 17%. Riot, which previously retained all its mined bitcoin, is also accelerating the sale of its bitcoin holdings. According to data from Bitcoin Treasuries, the company sold 3,688 BTC during Q1, concluding March with 15,679 BTC and $282.5 million in cash.