Riot Platforms' Strategic Shift: Bitcoin Purchases and AI Potential Attract Activist Investor

Starboard Value takes stake in Riot Platforms, eyes AI shift

Activist investor Starboard Value has taken a "significant position" in Bitcoin miner Riot Platforms, The Wall Street Journal said. The financial details were not reported, but the news gave Riot a boost in stock price. Looking to unlock Riot's value According to the newspaper's unnamed sources, Starboard Value has been urging Riot to repurpose some of its Bitcoin BTC $99,940 mining capacity for hyperscalers -- large data center users -- which have grown drastically in number due to the artificial intelligence boom. The newspaper had seen a statement by Riot confirming that talks had taken place between the parties. It quoted Riot as saying: "We are committed to creating value for all shareholders, and we look forward to constructive dialogue with Starboard on ways to achieve this shared goal." According to its website, Starboard "seeks to invest in deeply undervalued companies and actively engage with management teams and boards of directors to identify and execute on opportunities to unlock value for the benefit of all shareholders." Several miners have already converted capacity to high-performance computing and artificial intelligence. According to fund manager VanEck, as of August, Riot, MARA and Cleanspark were among the publicly traded miners holding out against the trend. Bit Digital, Core Scientific, Hive Digital, Hut 8 and IREN had already made the transition to mixed use. Riot announced on Dec. 9 that it was proposing to raise $500 million to buy more Bitcoin through senior convertible notes. In that respect, it was following at least seven publicly traded Bitcoin miners and data centers in doing so. Riot's stock price was down almost 25% this year, according to the newspaper. It hit a high of $17.64 on Feb. 14 and a low of $6.38 on Sept. 6. The price rose over 10% on Dec. 12 on news of Starboard Value's involvement. The stock closed up 4.8% at $12.33. Neither Riot nor Starboard Value responded immediately to a Cointelegraph request for comment.

Riot Platforms buys more than $500M in Bitcoin

Riot Platforms bought approximately $510 million worth of Bitcoin BTC $100,945 between Dec. 10-12, bringing the Bitcoin miner's total BTC holdings to nearly $1.7 billion, according to a Dec. 13 regulatory filing. The purchases coincide with reports that activist investor Starboard Value has taken a "significant position" in the Bitcoin miner. On Dec. 12, The Wall Street Journal reported that Starboard urged Riot to repurpose some of its Bitcoin mining capacity to service artificial intelligence models. Buying BTC has shown itself to be another way for Bitcoin miners to win over investors. "We are committed to creating value for all shareholders, and we look forward to constructive dialogue with Starboard on ways to achieve this shared goal," Riot reportedly told The Wall Street Journal. Demand for computational power from AI models is surging. Bitcoin miners -- often armed with captive power supplies and expansive data centers -- are well-equipped to service this market. "The synergy is simple: AI companies need energy, and Bitcoin miners have it," according to an Aug. 16 report by Matthew Sigel, fund manager VanEck's head of digital assets research. If Bitcoin miners pivot toward AI, they could collectively unlock nearly $37 billion in market capitalization, VanEck said. In particular, Riot could gain more than $4.8 billion in market capitalization by focusing on servicing AI businesses, the asset manager estimated. That would more than double Riot's market capitalization, which stands at around $4.4 billion as of Dec. 13, according to Google Finance. On Dec. 10, analysts at JPMorgan raised price targets for four Bitcoin mining stocks -- including Riot -- partly to reflect the value of the miners' BTC holdings. "We previously valued Bitcoin miners based on the four-year gross profit opportunity for each operator," the analysts said. "We are expanding upon this framework by incorporating 1) the value of each company's land and power assets [...] and 2) a HODL premium, which gives miners credit for holding Bitcoin on their balance like MicroStrategy." Since 2020, MicroStrategy has spent approximately $25 billion buying Bitcoin as part of a corporate treasury strategy spearheaded by co-founder Michael Saylor. The strategy paid off as BTC's price steadily rose, breaking $100,000 per coin earlier this month. Since 2020, MicroStrategy's stock, MSTR, has gained about 2,500%, outperforming practically every sizeable public company except Nvidia, according to Google Finance data. Magazine: BTC hits $100K, Trump taps Paul Atkins for SEC chair, and more: Hodler's Digest, Dec. 1 - 7