Riot Platforms Stock Surge

Shares of Riot Platforms (ticker RIOT) surged over 10% during Thursday's trading following news that activist investor Starboard Value acquired a stake in the company.

Starboard Value aims for Riot to convert some of its bitcoin-mining facilities into capacity for 'hyperscalers,' as reported by The Wall Street Journal.

Hyperscalers and Demand

Hyperscalers manage large-scale data centers designed for substantial computing power and storage. The recent surge in demand for such data centers, partly driven by the AI boom, comes as the recent Bitcoin halving event in April halved miners’ revenue, prompting many to seek strategic alternatives. For instance, Core Scientific, another miner, signed a 12-year contract in June with AI hyperscaler CoreWeave, potentially worth up to $3.5 billion.

Starboard's Vision

According to sources close to the situation, Starboard envisions Riot adopting a strategy similar to Core Scientific, which collaborates with CoreWeave—an Nvidia-backed startup—for infrastructure support.

Riot Platforms recently reported a net loss of $154.4 million for the third quarter, attributed to increasing costs and unrealized investment losses, resulting in a lowered hash rate forecast. The company reduced its 2025 target from 56.6 EH/s to 46.7 EH/s.

Company Response

In response, Riot confirmed their commitment to shareholders and openness to discussions with Starboard to enhance value creation.

In a Bernstein analyst interview last fall, Riot's CEO, Jason Les, indicated the company might consider AI-related opportunities if favorable deals arise.

Riot's stock had declined by 25% this year amid efforts for a hostile acquisition of Bitfarms, which would have formed the largest publicly traded bitcoin mining firm. A settlement restricts Riot from acquiring over 20% of Bitfarms without prior board consent.

As of publication, Riot shares had increased by 7.6% to $12.68, valuing the company at $4.2 billion.