Shares of Riot Platforms (RIOT) rose about 8% on Friday after Advanced Micro Devices (AMD) expanded its capacity at the company’s campus in Rockdale, Texas, highlighting Riot’s continued pivot from bitcoin mining to artificial intelligence and high-performance computing.
Based on first quarter financial results, AMD exercised an option to double its contracted capacity to 50 megawatts (MW), with the potential to increase it to 150 MW. According to the earnings transcript, Riot said the deal could generate approximately $636 million over 10 years.
Riot also secured better terms for its $200 million bitcoin-backed credit facility with Coinbase, reducing the rate to a flat 6.15% from 8.3% and releasing a promised 1,544 bitcoin collateral, signaling growing confidence from lenders in its growing data center business.
Coupled with the deal with AMD and improved credit conditions, investors are paying a premium for the stock. “Market pricing in lower cost of capital as expanded deal with AMD boosts lender confidence,” said Matthew Sigel, head of digital asset research at VanEck.
Riot was one of the last few remaining “pure” mining companies that were not dedicated to hosting AI computing, while others opened 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 business to house AI-enabled 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 lower bitcoin prices and increased mining competition. Shares of the mining company have risen about 147% in the last 12 months, while bitcoin fell almost 17%.
The company, which previously held all mined bitcoins, is also accelerating its bitcoin sales. According to data from Bitcoin Treasuries, the company sold 3,688 BTC during the first quarter. The company ended March with 15,679 BTC and $282.5 million in cash.
Read more: Bitcoin’s treasury boom is weakening as some companies and governments sell their stakes
