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 the Rockdale, Texas campus. This development highlights Riot's ongoing transition from bitcoin mining to artificial intelligence (AI) 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 upside to 150MW. The agreement is expected to generate approximately $636 million over a 10-year term.
Additionally, 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 the company'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. 'The market is pricing in a lower cost of capital as the expanded AMD deal drives lender confidence,' stated Matthew Sigel, head of digital assets research at VanEck.
Riot was one of the few remaining 'pure play' mining companies that had not yet ventured into hosting AI computing. However, the company has recently begun to transition towards becoming an AI infrastructure provider, a move that appears to be paying off.
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.
In contrast, bitcoin prices have fallen nearly 17% during the same period. The company, which previously retained all its mined bitcoin, is now accelerating its bitcoin sales. According to Bitcoin Treasuries data, the company sold 3,688 BTC during Q1, ending March with 15,679 BTC and $282.5 million in cash.