Shares of Riot Platforms (RIOT) experienced a significant 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 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 the potential for further expansion to 150MW. The agreement is expected to generate approximately $636 million over a 10-year term, as noted in the earnings transcript.
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 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 analysts citing the lowered cost of capital driven by the expanded AMD deal as a key factor. Matthew Sigel, head of digital assets research at VanEck, noted that 'market pricing in 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 diversified into hosting AI computing, while its peers had begun to open their data centers to move away from mining.
However, with activist investor Starboard urging the management to accelerate its transition from bitcoin mining to an AI infrastructure provider, the company appears to be adapting to the changing landscape. The expansion of its data center business to host AI computers seems 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, mainly 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%. The company, which previously retained all its mined bitcoin, is also accelerating its bitcoin sales, having sold 3,688 BTC during Q1, according to Bitcoin Treasuries data. As of the end of March, the company held 15,679 BTC and $282.5 million in cash.