Riot stock jumps on massive $28B AI data center deal while Hut 8 plummets amid earnings shortfall
Riot Platforms offloads Bitcoin holdings to bankroll AI infrastructure pivot, as Hut 8 grapples with declining revenues and mounting costs before data center rollout.
Bitcoin mining company Riot Platforms saw its stock price jump over 13% on Wednesday following the revelation of a $28 billion artificial intelligence data center lease agreement, marking the firm's most substantial contract as it fast-tracks its pivot into AI infrastructure services.
The multi-year contract spanning 15 years encompasses 910 megawatts of capacity at the company's Texas-based Corsicana facility, elevating Riot's cumulative future data center revenue commitments to roughly $38 billion spread across three separate lease agreements executed during the current year. This landmark deal signifies a pivotal transformation in Riot's business model as the company shifts away from its historical dependence on Bitcoin mining operations for revenue generation.
"A year ago, our cash flow depended on the price of Bitcoin, and now, at full deployment of currently executed deals, nearly all of our expected cash flow will be generated from long-term leases with leading players in the AI ecosystem,"
CEO Jason Les said during Wednesday's earnings call
Based on the third-quarter earnings disclosure from Riot, the company's role will involve supplying the physical property and electrical power infrastructure that was initially constructed for cryptocurrency mining operations, whereas the AI customer, revealed as Anthropic in the quarterly regulatory filing, will maintain ownership of the computing hardware and assume responsibility for operational costs.
The company projects total capital expenditures for the initiative at $5.5 billion, with funding planned predominantly through debt instruments supported by the stream of lease revenues, though the necessary financing arrangements have not yet been finalized. Initial phase completion is anticipated for September 2027, with lease payments set to commence within a 60-day window following delivery.
The company additionally disclosed third-quarter revenues totaling $181.4 million, reflecting a modest 1% increase compared to the prior year period, and liquidated 10,599 BTC throughout the quarter to support funding requirements for its data center buildout. Speaking on Wednesday's earnings call, CEO Jason Les indicated that Bitcoin mining activities at the Corsicana location may start phasing out during the summer months of 2027.
Hut 8 shares tumble as AI transition weighs on revenue
In contrast, shares of competing Bitcoin mining operation Hut 8 experienced a dramatic drop exceeding 22% at its lowest point on Wednesday after releasing third-quarter results that fell short of market expectations as the company navigates its strategic shift toward AI infrastructure services.
Revenue for the third quarter decreased 15% to $71.1 million, falling below Wall Street projections of $75.8 million, based on MarketBeat consensus figures. On Wednesday's earnings conference call, CFO Sean Glennan explained the downturn was partially driven by divestment of certain assets and reduced profitability per unit of Bitcoin extracted, while administrative cash outlays simultaneously increased on a year-over-year basis.
"The legacy revenue base is no longer the main growth driver, while the larger contracted infrastructure revenues remain tied to delivery milestones,"
Glennan said
Chief Executive Officer Asher Genoot also highlighted the intricate nature and substantial costs associated with conventional AI data center construction methodologies as the organization pursues development initiatives of increased magnitude.
"Many of today's data centers resemble NASA rocket programs—remarkable engineering, but complex, expensive, and slow to deliver,"
Genoot said
Per the company's third-quarter earnings investor presentation, Hut 8 has successfully obtained $7.5 billion in project bond financing to completely fund two significant AI data center construction projects, though neither facility has yet commenced producing rental income from lease agreements.