Shares of Riot Platforms (RIOT) saw an 8% increase on Friday following the announcement that Advanced Micro Devices (AMD) would be expanding its capacity at Riot's Rockdale, Texas campus. This move underscores Riot's continued transition from bitcoin mining to artificial intelligence (AI) and high-performance computing. According to the company's Q1 financial results, AMD has opted 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.
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 bitcoin. This development signals 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 a lower cost of capital driven by the expanded AMD deal and increased lender confidence, according to Matthew Sigel, head of digital assets research at VanEck.
Riot was among the last 'pure play' mining companies to diversify into hosting AI computing, while others have opened their data centers to move beyond mining. Recently, activist investor Starboard urged the management to accelerate its transition from bitcoin mining to an AI infrastructure provider. The 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. Over the last 12 months, the mining company's shares have risen by about 147%, while bitcoin has fallen nearly 17%.
The company, which previously retained all its mined bitcoin, is also accelerating its bitcoin sales, having sold 3,688 BTC during Q1, according to Bitcoin Treasuries data. As of March, the company held 15,679 BTC and $282.5 million in cash.