Shares of Riot Platforms experienced an 8% surge on Friday following the announcement that Advanced Micro Devices would be expanding its capacity at Riot's Rockdale, Texas campus, marking a significant pivot towards 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, with potential for further expansion to 150 megawatts. This agreement is expected to generate approximately $636 million over a 10-year period.
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 bitcoins, indicating 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 place a premium on the stock, with analysts noting that 'market pricing in lower cost of capital as the expanded AMD deal drives lender confidence.' Riot, one of the last remaining 'pure play' mining companies, had faced pressure from activist investor Starboard to accelerate its transition from bitcoin mining to an AI infrastructure provider.
The company's decision to expand its data center business to host AI computing appears to be yielding positive results. total revenue for the quarter ended March 31 was $167.2 million, up from $161.4 million in the previous year, supported by $33.2 million in initial data center revenue. However, bitcoin mining revenue 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 company's shares have risen by approximately 147%, while bitcoin has fallen by nearly 17%.
Furthermore, Riot is accelerating its bitcoin sales, having sold 3,688 BTC during Q1, and ending March with 15,679 BTC and $282.5 million in cash.