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 Rockdale, Texas campus. This development highlights Riot's ongoing pivot 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 (MW), with potential for further expansion to 150MW.
The agreement is expected to generate approximately $636 million over a 10-year period. Furthermore, Riot has secured more favorable terms on 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 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 cost of capital as the expanded AMD deal drives lender confidence, according to Matthew Sigel, head of digital assets research at VanEck. Riot was one of the last remaining 'pure play' mining companies that had not yet ventured into hosting AI computing, while its peers opened up their data centers to diversify beyond mining.
However, activist investor Starboard recently urged the management to accelerate its transition from bitcoin mining to an AI infrastructure provider. The decision to expand 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. Although bitcoin mining revenue declined to $111.9 million from $142.9 million 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, with 3,688 BTC sold during Q1, according to Bitcoin Treasuries data. As of March, the company held 15,679 BTC and $282.5 million in cash.