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 transition from a primary focus on bitcoin mining to a more diversified approach, incorporating 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 upsizing to 150MW. The agreement is anticipated 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 bitcoins. This adjustment reflects 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 pricing factoring in a lower cost of capital driven by the expanded AMD agreement and increased lender confidence. As noted by Matthew Sigel, head of digital assets research at VanEck, '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 ventured into hosting AI computing, while its peers were transitioning their data centers away from mining. Recently, activist investor Starboard urged the management to accelerate its shift from bitcoin mining to an AI infrastructure provider. The strategic move to expand its data center business to host AI computers appears to be yielding positive results for the Castle Rock, Colorado-based company.
For the quarter ended March 31, the firm reported total revenue of $167.2 million, up from $161.4 million in the previous year, supported by $33.2 million in initial data center revenue. However, revenue from bitcoin mining declined to $111.9 million from $142.9 million, primarily due to lower bitcoin prices and increased mining competition. Over the last 12 months, the mining company's shares have risen by approximately 147%, 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.