Shares of Riot Platforms experienced an 8% increase on Friday following the announcement that Advanced Micro Devices would be expanding its capacity at the Rockdale, Texas campus, highlighting Riot's ongoing transition from bitcoin mining to AI and high-performance computing. According to the Q1 financial results, AMD has exercised an option to double its contracted capacity to 50 megawatts, with potential upsizing to 150MW, which could generate approximately $636 million over a decade. The earnings transcript also revealed that Riot secured more favorable terms for its $200 million bitcoin-backed credit facility with Coinbase, lowering the interest rate to a fixed 6.15% and releasing 1,544 pledged collateral bitcoins, signaling increased lender confidence in the company's expanding data center business.
The combined effect of the AMD deal and improved credit terms has led investors to pay a premium for the stock. 'The market is factoring in a lower cost of capital as the expanded AMD deal boosts lender confidence,' stated Matthew Sigel, head of digital assets research at VanEck.
Riot was one of the last 'pure play' mining companies to diversify into hosting AI computing. Until recently, activist investor Starboard urged management to accelerate the transition from bitcoin mining to AI infrastructure provision. 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 $167.2 million in total revenue for the quarter ending March 31, up from $161.4 million the previous year, supported by $33.2 million in initial data center revenue.
However, bitcoin mining revenue declined to $111.9 million from $142.9 million, primarily due to lower bitcoin prices and increased mining competition. The company's shares have risen about 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.