What to know:
- Starboard has taken an unspecified position in bitcoin miner Riot Platforms (RIOT), WSJ reported, citing people familiar with the matter.
- The activist investor is pushing the company to convert some mining sites into data centers to capitalize on the hype surrounding HPC and AI.
- Riot said it has “engaged with Starboard on multiple occasions.”
As an analyst with over two decades of experience navigating the ever-evolving tech landscape, I find Starboard Value’s move into Bitcoin miner Riot Platforms (RIOT) intriguing. The push for data center conversion to capitalize on HPC and AI hype is a strategic shift that could potentially bring significant returns if executed effectively.
It was reported by The Wall Street Journal, based on sources close to the situation, that active investor Starboard Value has significantly increased its stake in bitcoin mining firm Riot Platforms (RIOT). The investor is reportedly advocating for adjustments to Riot’s business strategy.
Starboard is urging Riot to transform certain Bitcoin mining operations into data centers for high-performance computing (HPC) use by large tech firms, the report states. Unlike companies like Core Scientific (CORZ), which have allocated a substantial portion of their facilities towards HPC and AI computing, Riot primarily focuses on Bitcoin mining as its sole revenue source.
A representative from the company stated to CoinDesk via email that Riot frequently communicates with its shareholders and appreciates their insights. They’ve had several discussions with Starboard and are open to hearing their ideas about the company. The firm is dedicated to enhancing value for all shareholders, and they are eager to have a productive conversation with Starboard regarding strategies to reach this common objective.
For many years, publicly traded mining companies were considered one of the main ways for institutional investors to get exposure to bitcoin. This was good for their stock prices, which soared during the 2020-21 bull market. The 2022 crypto winter, though, decimated the sector and most of the names haven’t come anywhere close to recovering the previous bull market highs even though bitcoin has soared past $100,000.
In response to the tightening profit margins due to the bitcoin halving earlier this year, which reduced mining profits, some miners have been seeking alternative income streams. However, it wasn’t until Core Scientific sealed a multi-billion dollar agreement with a hyperscaler (a company running massive data centers for cloud computing and AI) that the tide began to turn, attracting significant investors back to the sector.
Riot, led by CEO Jason Les, hasn’t explicitly ruled out partnerships with big tech firms, but no definitive moves towards such deals have been made public yet. Meanwhile, other mining companies are actively pursuing collaborations in areas like AI and HPC.
Most recently, Galaxy Digital – led by Michael Novogratz – announced a potential agreement with an American hyperscaler company for transforming their entire 800-megawatt mining infrastructure into a hub for high-performance computing. Simultaneously, shares of bitcoin miner IREN soared after disclosing they had received inquiries from a hyperscaler firm valued at over a trillion dollars. Additionally, there have been rumors that Hut 8 is developing a data center in partnership with Meta Platforms (Facebook’s parent company), identified by its ticker symbol META.
On the morning of Thursday, Riot’s stock experienced a surge of up to 11%, and by the press time, it had climbed approximately 6%. However, over the course of this year, its shares have dropped by almost 30%. Meanwhile, the CoinShares Valkyrie Bitcoin Miners ETF (WGMI) saw an increase of 40% during the same period.
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2024-12-12 18:59