Starboard Is Said to Urge Riot to Speed Up Shift to Data Centers

Article content(Bloomberg) — Activist investor Starboard Value is asking Riot Platforms Inc. to speed up its transition from Bitcoin miner to a data center company that could house hyperscaler tenants, according to a letter reviewed by Bloomberg News.Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentStarboard, which helped appoint directors to Riot’s board last year, could make its views known as soon as Wednesday, the firm said in the letter, which was signed by Peter Feld, Starboard’s managing member.Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentRiot is among the largest public Bitcoin mining companies in the US, operating some of the world’s largest mining sites in Texas. Shares of Riot have climbed 19% in the past year, giving the company a market value of about $6 billion. Starboard is Riot’s fourth-largest shareholder as of the end of last year.Article contentArticle contentRepresentatives for Riot and Starboard couldn’t immediately be reached for comment. Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentStarboard views Riot’s two primary sites, Corsicana, outside of Dallas, and Rockdale, near Austin, as two of the most attractive US locations for high-performance computing and artificial intelligence data centers. Together, the sites comprise 1.7 gigawatts of fully available power, Starboard said. Article content“In such a dynamic and rapidly evolving AI/High Performance Computing demand environment, Riot must urgently seize this extraordinary opportunity,” Feld said in the letter. Article contentRiot is on a growing list of Bitcoin miners that are pivoting to high-performance compute services to meet the growing demand for power, driven by the exponential rise in AI.Article contentThe pivot also comes as Bitcoin mining sees a plunge in revenue amid the crypto market crash that started in early October, and a surge in energy prices under recent extreme weather. Article contentRiot Chief Executive Officer Jason Les said last summer after second-quarter earnings that, given the attractive economics and higher valuation multiples associated with data center leasing, the company would convert much of its power portfolio to it. Article contentArticle content“The pace of transition from Bitcoin mining to data centers will be influenced by customer demand trends, the availability of financing and the general data center market,” Les said. “Our current efforts are laying a strong foundation for a pipeline of future transactions.”Article contentRiot competitors such as Cipher and Terawulf that have ventured into AI projects have attracted big name investors like SoftBank Group Corp. and Google to develop data centers. Such partnerships are bringing in billions of dollars in projected revenue and enabling the firms to raise even more capital from debt financing, Bloomberg News has previously reported.Article contentStarboard said that if Riot can monetize its power in line with recent transactions in the space, it could generate more than $1.6 billion in annual earnings before interest, taxes, depreciation and amortization.Article contentThe activist said that it expects Riot to execute on its strategy but added that it could also be “an exciting candidate for consolidation and we would expect there to be significant interest in the company and its premier power assets.”Article content—With assistance from David Pan.Article contentTrending Cooler inflation gives Bank of Canada an opening to cut rates if economy falters, say economists Economy Posthaste: Canada's biggest city is losing momentum, and that's a problem for the whole country News U.S. open to changing steel and aluminum tariffs, Greer says Commodities Taxing unrealized gains is a silly idea that Canada should ignore Personal Finance Subscriber only. 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Cooler inflation gives Bank of Canada an opening to cut rates if economy falters, say economists Economy Posthaste: Canada's biggest city is losing momentum, and that's a problem for the whole country News U.S. open to changing steel and aluminum tariffs, Greer says Commodities Taxing unrealized gains is a silly idea that Canada should ignore Personal Finance Subscriber only. 'We need to wake up': Atlantic Canada a microcosm of the problems facing the rest of the country Subscriber only Economy