Riot Platforms' stock experienced an 8% increase on Friday following 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 AI and high-performance computing. According to the company's Q1 financial results, AMD has opted to double its contracted capacity to 50 megawatts, with the potential to increase to 150 megawatts. The agreement is expected to generate approximately $636 million over a 10-year period.
Additionally, Riot has secured more favorable terms for 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 move signals growing lender confidence in the company's expanding data center business. The combined effect 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 as the expanded AMD deal boosts lender confidence,' stated Matthew Sigel, head of digital assets research at VanEck.
Riot was one of the last remaining 'pure play' mining companies that had not ventured into hosting AI computing. However, with the urging of activist investor Starboard, the company has accelerated 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 ending March 31, a increase from $161.4 million in the same period last year, 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 risen by 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. As of March, the company held 15,679 BTC and $282.5 million in cash.