Shares of Riot Platforms (RIOT) experienced an 8% increase on Friday, driven by the announcement that Advanced Micro Devices (AMD) would be expanding its capacity at Riot's Rockdale, 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 (MW), with the 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 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 move signals growing lender confidence in the company's expanding data center business. The combined impact of the AMD deal and improved credit terms has led investors to pay a premium for the stock.
As noted by Matthew Sigel, head of digital assets research at VanEck, 'The market is factoring in a 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 yet ventured into hosting AI computing, while its peers had begun to diversify their operations. However, with the encouragement of activist investor Starboard, the company has started 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, representing a increase from $161.4 million in the same period last year, with $33.2 million in initial data center revenue contributing to this growth. Although bitcoin mining revenue decreased to $111.9 million from $142.9 million due to lower bitcoin prices and increased mining competition, the company's shares have risen by approximately 147% over the last 12 months, while bitcoin has declined by nearly 17%.
In addition to its strategic expansion, the company is also accelerating its bitcoin sales, having sold 3,688 BTC during Q1. As of the end of March, the company held 15,679 BTC and $282.5 million in cash.