Starboard Value has prompted RIOT Platforms to accelerate its transition into artificial intelligence and high-performance computing, according to a report. On wednesday, the activist investor said the company had a rare opportunity to create as much as $21 billion in value with its large power-ready data center sites.
Starboard made its point in its letter to RIOT CEO Jason Les, Executive Chairman Benjamin Yi, and the company’s board of directors. It said the company has “begun an important transformation process in the last year.”
The firm believes that RIOT’s facilities in Texas could create substantial earnings in the long run. The company stated that utilizing these facilities for its AI and HPC services could change its valuation. It claimed that the potential valuation would far exceed RIOT’s market capitalization.
Source: Starboard
AMD Deal Supports RIOT’s AI Strategy
Starboard estimated that the equity value of RIOT’s AI and HPC segment could range from $9 billion to $21 billion. The firm claimed that the valuation would far exceed RIOT’s worth. It linked the outlook to rising demand for large-scale computing capacity.
For deciding to implement its AI strategy, RIOT received praise from the investor. It cited its deal with Advanced Micro Devices as proof of this change. It stated that this deal proves that the platform can meet enterprise computing demands.
In this deal, AMD will lease 25 megawatts of power from the Rockdale site. It, however, has options to add up to 200 megawatts. The platform retains 1.4 gigawatts of extra capacity.
However, their rivals have moved further in the field of AI infrastructure. For instance, Bitfarms changed its name to Keel Infrastructure and shut down its mining business.
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Hive Digital expanded its cloud business. CleanSpark and Cipher Mining launched new data center construction in the U.S., which is related to AI demand.
RIOT Races to Shift Power Capacity Toward AI Demand
The platform has large-scale Bitcoin mining operations. However, it has also started working on converting part of its power supply to meet AI clients’ demand. According to Starboard, the change needs to happen quickly with increasing competition in the sector.
The firm mentioned RIOT’s Corsicana and Rockdale properties. The company stated that both properties have excellent access to power, which has become a scarce resource for new data centers. The company referred to the properties as highly attractive for new customers.
Starboard mentioned the company’s governance and efficiency enhancements over the last year. The company mentioned the addition of new directors with relevant experience.
This investor also stated that the company needs to finish its transition to the data center model. These firms have better valuations in the market. It further stated that the company might attract buyers if it is having difficulty in its execution.
Currently, the trading price of the shares of RIOT is around $15.98, according to Yahoo Finance. Its shares have risen by 38% in the last year, although they have not risen as much as the shares of its peers, like TeraWulf, Hut 8, and Cipher Mining.
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