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The activist investor indicated that Riot’s 1.7 GW power capacity can facilitate premium AI hosting agreements at its Texas locations.
Riot Platforms’ stock increased by nearly 7% following Starboard’s recommendation for a quicker transition to AI hosting, highlighting a potential EBITDA of $1.6 billion from Texas energy assets. (Michal Bednarek/Shutterstock)
Key points:
- Activist investor Starboard Value is encouraging Riot Platforms to expedite its transition from bitcoin mining to more profitable artificial intelligence and high-performance computing infrastructure.
- Starboard contends that Riot’s 1.7 gigawatts of power capacity at its Texas locations could enable “premier” data centers and potentially yield over $1.6 billion in annual EBITDA if effectively utilized.
- Despite a recent collaboration with AMD, Riot has fallen behind competitors that have made earlier moves into AI, leading Starboard to urge company leaders to act promptly to redefine the company as a sustainable AI infrastructure provider.
Riot Platforms (RIOT) shares rose nearly 9% on Wednesday after activist investor Starboard Value LP issued a letter urging the company to hasten its shift from bitcoin mining to AI infrastructure provider. The objective is for Riot to target high-margin artificial intelligence and high-performance computing (AI/HPC) hosting arrangements.
Riot’s 1.7 gigawatts of fully available power capacity positions the company “well to secure high-quality AI/HPC agreements,” stated Starboard, emphasizing Riot’s Texas-based locations, Corsicana and Rockdale, as “premier” sites for data center development.
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Starboard indicated that if Riot can capitalize on its energy resources similarly to recent transactions in the sector, “it could yield more than $1.6 billion” in annual EBITDA. The group acknowledged Riot’s recent partnership with AMD, which is anticipated to generate $311 million over a decade.
With a market capitalization of $4.25 billion, Texas-based Riot ranks as the fifth-largest bitcoin mining firm in the U.S. Its shares have appreciated by 19% over the past year, yet remain approximately 80% lower than peaks reached during the 2021 bitcoin bull run. They have also underperformed compared to miners such as IREN, Cipher Mining, and Hut 8, which were quicker to adapt and shift towards AI strategies.
As of the close of the previous year, Starboard was Riot’s fourth-largest shareholder, and this marks its latest initiative with the company. In December 2024, Starboard requested Riot to convert some of its bitcoin mining facilities into data centers equipped to host HPC machines for major technology firms.
Although Riot Platforms has centered its operations around bitcoin mining, the transition towards AI infrastructure could provide revenue diversification as power-intensive models like OpenAI’s GPT-4o and others increase demand for data centers. Riot’s access to power, a scarce resource in the current energy-limited data center market, could be leveraged to lease capacity to significant AI enterprises.
Starboard encouraged CEO Jason Les and Executive Chairman Benjamin Yi to take action “with urgency” and position Riot as a sustainable infrastructure provider for AI workloads.
