Shares of Riot Platforms experienced a significant increase of approximately 8% on Friday, driven by the announcement that Advanced Micro Devices would be expanding its capacity at Riot's Texas-based facility. This development highlights Riot's ongoing efforts to diversify its operations, shifting focus from bitcoin mining towards high-performance computing and artificial intelligence. According to the company's Q1 financial report, AMD has opted to double its contracted capacity to 50 megawatts, with potential for further expansion to 150 megawatts. The agreement is expected to generate roughly $636 million over a decade.
Furthermore, Riot has renegotiated the terms of its $200 million bitcoin-backed credit facility with Coinbase, securing a reduced interest rate of 6.15% and releasing 1,544 bitcoin from collateral. This move signals growing confidence among lenders in the company's expanding data center business.
The combination of the AMD deal and improved credit terms has led investors to assign a premium value to the stock, with market analysts citing the lower cost of capital as a key factor. Riot's strategic pivot towards hosting AI computing had been anticipated, particularly after activist investor Starboard urged the company to accelerate its transition from bitcoin mining to AI infrastructure provision. The company's decision to expand its data center operations to accommodate AI computing appears to be yielding positive results. In its quarterly report, Riot disclosed total revenue of $167.2 million, supported by $33.2 million in initial data center revenue.
Although bitcoin mining revenue declined to $111.9 million due to lower bitcoin prices and increased competition, the company's shares have surged approximately 147% over the past 12 months. Riot is also accelerating the sale of its mined bitcoin, having sold 3,688 BTC during Q1, and now holds 15,679 BTC and $282.5 million in cash.