Shares of Riot Platforms (RIOT) jumped about 8% on Friday after Advanced Micro Devices (AMD) expanded its capacity at the Rockdale, Texas, campus, highlighting Riot’s continued pivot from Bitcoin mining to AI and high-performance computing.
According to first quarter financial results, AMD exercised an option to double its contracted capacity to 50 megawatts (MW), with the possibility of increasing it to 150 MW. According to the earnings statement, Riot said the deal could generate approximately $636 million over a 10-year term.
Riot also secured improved terms on its $200 million Bitcoin-backed credit facility with Coinbase, lowering the rate from 8.3% to a flat 6.15% and releasing 1,544 bitcoins of pledged collateral, signaling lenders’ growing confidence in its expanding data center business.
With the AMD deal and improving credit conditions, investors are paying a premium for the stock. “The market is pricing in a lower cost of capital as the expanded agreement with AMD builds lender confidence,” said Matthew Sigel, head of digital assets research at VanEck.
Riot was one of the last “pure play” mining companies not to move into hosting AI computing, while others opened up their data centers to move away from mining. Until recently, activist investor Starboard began urging management to accelerate its transition from Bitcoin mining to an AI infrastructure provider.
The decision to expand its data center operations to house AI computers appears to be paying off for the Castle Rock, Colorado-based company.
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. However, bitcoin mining revenue fell to $111.9 million from $142.9 million, mainly due to falling bitcoin prices and increased competition in the mining sector. Shares of the mining company are up about 147% over the past 12 months, while bitcoin is down almost 17%.
The company, which previously held all of its mined bitcoins, is also ramping up its bitcoin sales. According to data from Bitcoin Treasuries, the company sold 3,688 BTC in the first quarter. The company ended March with 15,679 BTC and $282.5 million in cash.
Read more: Bitcoin cash boom fades as some companies and governments sell off their holdings.
