Shares of Riot Platforms (RIOT) experienced a significant 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 primary focus on bitcoin mining to a more diversified approach, incorporating AI and high-performance computing. The Q1 financial results revealed that AMD had exercised an option to double its contracted capacity to 50 megawatts (MW), with potential for further expansion to 150MW. According to the earnings transcript, this agreement is anticipated to generate approximately $636 million over a 10-year term.
Furthermore, Riot has secured more favorable terms on its $200 million bitcoin-backed credit facility with Coinbase, lowering 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 lower costs of capital as the expanded AMD deal drives lender confidence, according to Matthew Sigel, head of digital assets research at VanEck.
Riot was among the last 'pure play' mining companies that hadn't ventured into hosting AI computing, while its peers had begun opening their data centers to move away from mining. The company's recent move to expand its data center business to host AI computers 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 a year earlier, supported by $33.2 million in initial data center revenue.
However, revenue from bitcoin mining decreased to $111.9 million from $142.9 million, primarily due to lower bitcoin prices and increased mining competition. The company's shares have surged approximately 147% over the last 12 months, while bitcoin has fallen nearly 17%. Riot, which previously retained all its mined bitcoin, is also accelerating its bitcoin sales, having sold 3,688 BTC during Q1. As of March, the company held 15,679 BTC and $282.5 million in cash.