Publicly traded Bitcoin miner Riot Platforms is facing pressure from activist investor Starboard Value to accelerate its strategic shift toward artificial intelligence (AI). In a recent letter to Riot’s CEO and Executive Chairman, Starboard Value outlined significant potential for value creation in the burgeoning high-performance computing (HPC) sector, estimating that Riot could see a valuation increase of up to $21 billion if it successfully pivots towards AI.
Starboard Value argues that, under the right circumstances, Riot’s share price could soar to as high as $53, marking an increase of more than 240% from its closing price of $15.49 on Wednesday. The firm believes that Riot has a “tremendous opportunity” to leverage its mining operations to support AI data centers, positioning itself as a key player in the growing HPC industry.
In the letter, Managing Member Peter Feld emphasized the urgency of advancing Riot’s governance and operational changes. He stated that while Riot has streamlined its operations to focus on AI, it needs to eliminate distractions and expedite decision-making to capitalize on this opportunity. Feld noted that Riot’s share performance has lagged behind its competitors, which have secured lucrative AI and HPC deals worth billions—some backed by tech giants like Google.
Riot has already begun its foray into AI, having signed a significant data center agreement with Advanced Micro Devices (AMD) earlier this year. The company also took the step of liquidating approximately $200 million in Bitcoin, a move that analysts believe could provide essential funding for its expansion into the AI sector.
In a marked contrast to its peers, which have successfully completed substantial deals, Starboard asserts that Riot possesses superior capabilities to secure high-value contracts in the AI landscape. “Time is of the essence,” Feld warned, urging Riot to adopt a renewed sense of urgency to finalize more significant deals.
As of now, Riot’s equity valuation could rise dramatically, with estimates suggesting that the AI and HPC data center investments at its facilities in Corsicana and Rockdale could contribute between $9 billion and $21 billion to its equity value. This potential growth dwarfs Riot’s current market capitalization, indicating room for significant appreciation.
Despite the challenges ahead, shares of Riot Platforms saw an increase of nearly 6% on Wednesday, reflecting a broader gain of over 25% in the last six months. However, for investors, a leap to $53 would require a transformative shift in the company’s operational focus and deal execution.
As the company navigates this crucial period, inquiries for comments from Riot regarding Starboard’s analysis remained unanswered. The unfolding developments will be closely watched by investors and industry stakeholders alike as Riot straddles the divide between traditional Bitcoin mining and innovative AI applications.
