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 solely focusing on bitcoin mining to exploring opportunities in AI and high-performance computing. According to the company's Q1 financial results, AMD has opted to double its contracted capacity to 50 megawatts (MW), with the potential for further expansion to 150MW.
Riot anticipates that this agreement could generate approximately $636 million over a 10-year period, as per the earnings transcript. Additionally, Riot has secured more favorable terms for its $200 million bitcoin-backed credit facility with Coinbase, lowering 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 lower costs of capital as the expanded AMD deal drives lender confidence, according to Matthew Sigel, head of digital assets research at VanEck. Riot was one of the few remaining 'pure play' mining companies that had not yet ventured into hosting AI computing, while its peers were already expanding their data centers to move away from mining.
Recently, activist investor Starboard urged the management to accelerate its transition from bitcoin mining to becoming an AI infrastructure provider. The decision to expand 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, representing an increase from $161.4 million in the same period last 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.