The agreement would lease 191 megawatts at Riot’s Rockdale, Texas computer campus, giving Anthropic access to scarce, grid-connected power as demand surges for computing power that can be used to provide artificial intelligence – and transitioning Riot from bitcoin miner to AI infrastructure landlord. Shares initially soared more than 20% in reaction before giving up almost the entire gain.
The agreement is expected to generate $9.1 billion in revenue over its 20-year term, rising to roughly $16.1 billion if the agreement is extended for two additional five-year periods. It follows Riot’s existing agreement with Advanced Micro Devices, meaning Riot now has a “two-tenant campus carrying $9.8 [billion] of contracted data center revenue,” Compass Point analyst Michael Donovan said in a note Tuesday.
Bitcoin mining stocks once looked like a way to gain leveraged exposure to the price of bitcoin. But with the growth of AI, and against the backdrop of a prolonged slump in cryptocurrency prices, most publicly traded bitcoin miners are increasingly valued by investors as owners of digital infrastructure rather than producers of bitcoin, given their power capacity, data center assets and energy contracts.
The bitcoin miner-to-AI pivot began taking shape the last time crypto prices tumbled, in 2022, though usually among smaller companies that are more likely to be under water when the bitcoin price is in a sustained pullback — meaning the price of bitcoin has fallen below the cost of mining it, including electricity, hardware and operating expenses.
With lower prices, more competition and the reduction in mining incentives driven by the quadrennial Bitcoin halving, mining companies see their profits squeezed until they finally operate at a loss.
Bitcoin-miners-turned-AI-infrastructure providers offer investors exposure to AI demand without requiring a bet on which model or application ultimately wins — because the AI companies all require the same increasingly scarce power, compute capacity and physical facilities.
Cipher Mining, Hut 8 and Terawulf are among what has become known as the hybrid bitcoin miners. Riot, along with Mara Holdings and CleanSpark, have largely remained the pure-play miners of the sector.
That scarcity could become even more valuable as the Electric Reliability Council of Texas, known as ERCOT, scrutinizes new power projects, according to Donovan, the Compass Point analyst.
“ERCOT’s increased scrutiny may slow speculative projects still navigating the queue, but it does not reduce tenant demand for large blocks of near-term power,” he said. “If anything, the scarcity of greenlit capacity should increase its strategic value. Therefore, we reiterate our Buy rating and maintain our $29 price target” on Riot shares, he wrote.
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