Riot Platforms’ pivot from bitcoin mining to AI data centers is ‘encouraging,’ analysts say
2025-01-22
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Riot Platforms (ticker RIOT), one of the largest publicly traded bitcoin miners, is launching a formal process to evaluate the feasibility of directing the approximately 600 megawatts (MW) of remaining power capacity at its Corsicana, Texas facility toward artificial intelligence and high-performance computing uses.
Bitcoin miners have increasingly diversified their operations, moving beyond pure crypto mining toward hosting infrastructure for AI and HPC, and this trend accelerated following Bitcoin's fourth halving in April 2024.
Riot has been engaged in preliminary discussions with potential AI/HPC counterparties for several months and is now expanding and accelerating outreach to potential partners in that sector in parallel with this analysis. The company currently utilizes 400 MW of capacity for Bitcoin mining at Corsicana and has up to one gigawatt of total capacity at the site approved by the Electric Reliability Council of Texas.
In conjunction with this process, Riot is halting the development of its previously announced 600 MW Phase II Bitcoin mining expansion at the Corsicana facility. As a result, the company is reducing its previously announced total self-mining hash rate capacity growth and associated capital expenditures for 2025 and will provide additional updates as this review process progresses further.
"Our focus has always been on maximizing the potential of our assets and ensuring that any agreement we enter into with an AI/HPC counterparty would be the result of an informed, thorough process that puts the best interests of all our shareholders first," Riot CEO Jason Les said in a press release.
Riot previously expected to end 2025 with a total hash rate capacity of 46.7 EH/s, but now expects to end the year at 38.4 EH/s. Capital expenditures at the Corsicana facility this year are projected to be reduced by $245 million.
'This announcement is encouraging,' says JPMorgan
The move is "encouraging" and could mark the beginning of a "re-rating journey" for Rio Platforms, according to analysts at JPMorgan and Bernstein.
Last month, activist investor Starboard Value reportedly pushed Riot to convert some of its bitcoin-mining facilities into capacity for so-called "hyperscalers." Hyperscalers operate large-scale data centers designed to handle massive amounts of computing power and storage capacity.
"Two of the most important factors in determining if a bitcoin mining site could be used for AI/HPC workloads are 1) scale and 2) location," JPMorgan analysts wrote in a note to clients. "Our channel checks suggests potential AI partners need at least 50 MW of capacity, and data centers running high monetization, low-latency AI applications need to be within ~100 miles of a major metro area."
Five bitcoin miners in JPMorgan's coverage universe own and operate more than 35 distinct sites in various stages of construction, and eight sites are within 100 miles of a major city. Of those, only two are 500 MWs or more: Riot’s Corsicana and Rockdale facilities.
"This announcement is encouraging, and is something we have been lobbying for (to more aggressively explore the possibility of HPC at Corsicana) for months," they wrote. JPMorgan holds an "overweight" rating on RIOT stock with a $16 price target.
"Riot’s strategic shift towards AI at its Corsicana site could mark the beginning of a re-rating journey for the company," Bernstein analysts led by Gautam Chhugani wrote, noting Riot significantly underperformed compared to AI-focused miners like CORZ in 2014. Riot was down 34% while CORZ saw a 308% increase last year "We believe this market trend should reverse for Riot," Bernstein wrote.
Bernstein finds RIOT's stock trading "extremely cheap" on operating business ($1.2 million/MW on total capacity), with the potential to re-rate, given the allocation of power capacity to AI. The firm has an "outperform" rating and $22 price target on the stock.
Riot Platforms' stock was trading lower by 3.7% at publication time. Sitting at around $12.90 per share, the stock has appreciated about 21% over the past year.
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