Riot Platforms (RIOT) shares rose about 8% on Friday after Advanced Micro Devices (AMD) expanded production capacity at its Rockdale, Texas, campus, highlighting Riot’s continued shift away from Bitcoin mining toward artificial intelligence and high-performance computing.
AMD exercised an option to double contracted capacity to 50 megawatts (MW), with the potential to expand to 150 MW, based on first-quarter financial results. According to the financial report, Riot said the agreement could generate approximately $636 million in revenue over 10 years.
Riot also improved the terms of its $200 million Bitcoin-backed credit facility with Coinbase, lowering the fixed interest rate from 8.3% to 6.15% and releasing 1,544 collateral Bitcoin, a sign of the lender’s growing confidence in its expanding data center business.
Combined with AMD’s improving trading and credit conditions, investors are paying a premium for the stock. Matthew Sigel, director of digital asset research at VanEck, said: “As the AMD deal expands, boosting lender confidence, the market is pricing in lower costs of capital.”
Riot is one of the last “pure” mining companies not involved in hosted AI computing, while other companies have opened up their data centers to move away from mining operations. Only recently, activist investor Starboard began urging management to accelerate the transition from Bitcoin mining to an artificial intelligence infrastructure provider.
The move to expand its data center operations to host artificial intelligence 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, driven by initial data center revenue of $33.2 million. However, Bitcoin mining revenue fell from $142.9 million to $111.9 million, mainly due to falling Bitcoin prices and increased mining competition. The mining company’s shares are up about 147% in the past 12 months, while Bitcoin is down nearly 17%.
The company, which previously held all mined Bitcoin, is also accelerating its Bitcoin sales. According to Bitcoin Treasury data, the company sold 3,688 Bitcoins in the first quarter. As of March, the company had 15,679 Bitcoin and $282.5 million in cash.
Read more: The Bitcoin Treasury boom is fading as some companies and governments sell their holdings