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 Texas campus. This development highlights Riot's ongoing transition 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 potential for further expansion to 150 megawatts. The agreement is anticipated to generate approximately $636 million over a 10-year term.

Furthermore, 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 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. As noted by Matthew Sigel, head of digital assets research at VanEck, 'market pricing in lower cost of capital as the expanded AMD deal drives lender confidence.' Riot was one of the last remaining 'pure play' mining companies that had not ventured into hosting AI computing, while its peers opened their data centers to diversify away from mining. However, with activist investor Starboard urging management to accelerate its transition to an AI infrastructure provider, Riot's strategic expansion into data center business appears to be yielding positive results. The company reported total revenue of $167.2 million for the quarter ended March 31, up from $161.4 million in the previous year, 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 competition, the company's shares have surged approximately 147% over the last 12 months, while bitcoin prices fell nearly 17%. In addition to its strategic shift, Riot is also accelerating the sale of its mined bitcoins, 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.