Publicly traded Bitcoin miner Riot Platforms faces a critical window to capitalize on a significant AI opportunity, according to activist investor Starboard Value. The firm asserts that Riot can achieve a valuation bump of up to $21 billion by powering the burgeoning high-performance computing industry through its AI data centers.
Starboard Value Managing Member Peter Feld stated in a letter to Riot's leadership that while the company is positioned to execute its AI/HPC strategy, it must also complete its governance and operational transformation to fully realize the benefits. The miner is among several publicly traded firms pivoting to AI, leveraging the energy infrastructure of their mining sites.
Riot has already initiated this transition, signing a data center deal with Advanced Micro Devices (AMD) in January. The company also recently divested approximately $200 million in Bitcoin, a move some analysts suggest will fuel its expansion into the AI sector.
However, Starboard believes Riot may be moving too slowly. Feld noted that Riot's share price has significantly underperformed competitors that have secured substantial AI/HPC deals. He emphasized the urgency required to finalize more material agreements.
Starboard estimates that the AI/HPC data centers at Riot's Corsicana and Rockdale facilities could contribute between $9 billion and $21 billion to its equity value, substantially exceeding the company's current market capitalization. Factoring in Riot's net cash balance, the firm projects a share value between $23 and $53.
Riot's shares saw a nearly 6% increase on Wednesday, closing at $15.49. This marks a gain of over 25% in the past six months, with a target of $53 representing a potential 242% surge for shareholders.