Riot Platforms, a Bitcoin mining company listed on public exchanges, has received a strong endorsement from activist investor Starboard Value, which sees significant potential for value creation through the integration of artificial intelligence (AI) within the high-performance computing (HPC) industry. In a recent letter addressed to Riot’s CEO and Executive Chairman, Starboard emphasized that the company must act swiftly to capitalize on this opportunity.
Peter Feld, Managing Member of Starboard Value, stated that after streamlining expenses and eliminating distractions, Riot is now in a position to execute its AI and HPC strategy effectively. However, he warned that to fully benefit from this strategic shift, Riot needs to complete its governance and operational transformation without delay.
Riot has emerged as one of the few publicly traded mining companies venturing into the AI sector, leveraging the capabilities of its existing mining infrastructure. Earlier in January, the company announced its first partnership with Advanced Micro Devices (AMD) to develop data centers, a move that aligns with its strategy to expand into AI. Moreover, Riot recently liquidated approximately $200 million in Bitcoin, a move analysts believe is aimed at financing its expansion into the AI landscape.
Despite this activity, Starboard believes that Riot’s pace of progress may not be sufficient. Feld pointed out that Riot’s share price has significantly lagged behind its peers, many of whom have secured multi-billion-dollar AI and HPC agreements. He stressed the need for Riot to act with renewed urgency in finalizing more substantial deals, especially when its competitors are already capitalizing on lucrative agreements supported by industry giants like Google.
Starboard projects that the market potential for Riot could significantly impact its valuation, estimating that the favorable attributes of its operational sites could translate into a valuation increase of $21 billion—approximately four times the company’s current market capitalization. Feld highlighted that the equity value contribution from AI and HPC data centers at Riot’s locations could range between $9 billion and $21 billion, potentially elevating Riot’s overall worth to between $23 and $53 per share.
Following the release of this information, Riot Platforms’ stock price rose nearly 6%, closing at $15.49. This marks an increase of over 25% in the last six months, but achieving the projected target of $53 would represent a staggering 242% gain for current shareholders.
Decrypt has made attempts to reach out to Riot Platforms for comments concerning the contents of the letter from Starboard Value, but has yet to receive a response.
