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 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 the potential to increase this to 150MW. The agreement is expected to generate approximately $636 million over a 10-year period.
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, with market pricing reflecting a lower cost of capital driven by the expanded AMD deal and increased lender confidence.
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 ventured into hosting AI computing, while its peers had begun to open up their data centers to move away from mining. However, following pressure from activist investor Starboard to accelerate its transition from bitcoin mining to an AI infrastructure provider, the company appears to be reaping the benefits of expanding its data center business to host AI computers. The company 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 firm's shares have surged approximately 147% over the last 12 months, while bitcoin has fallen nearly 17%. In addition to its strategic shift, 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.