Shares of Riot Platforms (RIOT) experienced an 8% increase on Friday, sparked 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 pivot from bitcoin mining towards 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 the potential to increase to 150MW. The agreement is expected to generate approximately $636 million over a 10-year term, as per the earnings transcript.
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 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 factoring in a lower cost of capital, driven by the expanded AMD deal, which is boosting lender confidence,' stated Matthew Sigel, head of digital assets research at VanEck. Riot was one of the last 'pure play' mining companies that had not ventured into hosting AI computing, while its peers opened their data centers to diversify away from mining. Recently, activist investor Starboard urged the management to accelerate its transition from bitcoin mining to an AI infrastructure provider. 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 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. However, bitcoin mining revenue declined to $111.9 million from $142.9 million, primarily due to lower bitcoin prices and increased mining competition. The mining company's shares have surged about 147% over the last 12 months, while bitcoin has fallen nearly 17%.
The company, which previously retained all its mined bitcoin, is also 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.