Summary Riot Platforms (RIOT) is transitioning from pure crypto mining to a data center-focused business model. This strategic pivot aims to diversify RIOT's revenue streams and reduce dependence on the cash burning of BTC mining. Their Corsicana facility could do $1B in business in a few years, based on comparable data center contracts. The ever-present need for financing, which can lead to shareholder dilution, counter-balances the growth of this opportunity. Riot Platforms ( RIOT ) is a crypto miner pivoting into AI data centers. I think the story is improving here, but it's not enough quite yet, so I maintain my Hold rating. Summary of Previous Theses When I first covered RIOT , I doubted it would ever be a Buy. Its BTC mining business just didn't seem to have the operating results it needed. Screenshot from previous thesis (Author's display of 10K data) Even with growth and scale, RIOT had constant cash burn, largely driven by the capex required for new ASIC hardware, an increasingly demanding task due to the competition of mining. It required them to keep issuing new shares in order to raise capital and stay operational. When I followed up earlier this year, I upgraded it to Hold, noting that the opportunity of AI data centers might give them an out. Screenshot from previous thesis (Q3 2024 Company Presentation) In essence, the electrical capacity of their BTC mining sites could be repurposed into energy-efficient data centers for hyperscalers investing in AI. This would be commercially relevant product, one capable of generating positive cash flow. I also noted that the long-term future of BTC faced risks from quantum computing, which could overpower the cryptographic features of the coin. Updates Through 2025 In terms of reportable story, Riot has not changed too much. Revenue remains overwhelmingly based on BTC mining. Income Statement (Q3 2025 Form 10Q) Nevertheless, their engineering segment, which provides services to electrical infrastructure, showed year-over-year growth, hinting at the data center opportunity ahead. Assets (Q3 2025 Form 10Q) The BTC holdings also grew slightly by the end of Q3. It should be noted that this reflects the fair value of BTC, prior to the price decline it's experienced in this quarter. The value of their assets has likely declined, depending on how many have been liquidated already. BTC Mining Production (RIOT Press Releases) We can already see the impact on the monthly production updates. November's $37M in proceeds is down from September's $52.6M. Cash Flow Statement (Q3 2025 Form 10Q) The cash flow situation remains tight. Operating cash flow remains negative. Capex (in the form of land, property, equipment, and right-of-use assets) is a further drag, resulting in a total cash burn of $778.9M. This was mitigated somewhat by BTC sales, which provided $291M. It's also worth noting that $106M in proceeds were raised from the sale of Bitfarms ( BITF ) shares. I had discussed this more in my coverage of BITF , which Riot had attempted to take over last year in a contested and litigious struggle. After getting nearly 20% of the company in 2024, recent sales have brought Riot under 10% again . On the M&A front, Riot acquired a facility from Rhodium early in the year, an acquisition focused on the pivot into AI/HPC. Cash Flow Statement (Q3 2025 Form 10Q) As cash fell short from these purchases and liquidations, Riot issued another $200M in stock and raised $200M from a credit facility with Coinbase ( COIN ). Overall, it's been a company working hard to reposition itself with tight finances. Outlook and Valuation RIOT currently trades near $15 per share, for a market cap of about $5.8B. I think this represents what is likely full value, not a discount. Q3 2025 Company Presentation The company just finished their data center design, so there's a lot of actual work to do still. They have to build it and win customers. While I don't doubt their ability to do that, they will need to get money to finance these efforts in the meantime. In the Q3 earnings call , CEO Jason Les made the following observation: In addition to the cash that we have on our balance sheet, we have -- including restricted cash, we have about $400 million today and our large Bitcoin balance. We also have a robust Bitcoin mining business that is generating strong cash flows, and that really is a very important and valuable tool to funding all the development that we have going on. It's interesting that he says that, given the history of cash burn and the regular need for outside financing. I continue to worry that additional shareholder dilution will occur with this business. Year to date, shares outstanding have grown from 345M to 371M. With no contracts yet and no financial estimates provided by management, we can still make some inferences about the 1GW scale provided by their Corsicana facility, which is in development. I've looked at these contracts by other players as examples: Applied Digital's ( APLD ) contract with a hyperscaler Another deal between APLD and CoreWeave ( CRWV ) Ionic Digital's contract with Nscale These contracts show that a data center can make about $1M to $1.5M per MW each year. I've included a table for your convenience. Author's display of data center revenue estimates In a few years, Corsicana could be doing $1B in business. Margins vary, depending on how the contract is structured and what costs will be like for them. It's still reasonable to think that Riot could produce a few hundred million in earnings after a few years, once Corsicana is built and operating. A $5.8B market cap is perhaps a medium-growth multiple in the range of 10 to 15 on that value. While this means more upside exists over time as they scale and compound, the near-term financing needs are the issue. Riot historically doesn't shy away from dilution if necessary which would nullify upside. Credit facilities are also not easy debt. That's why I see it more as fair value at $15. RIOT looks like it will finally have some meat on its bones, and it's less risky than before on its fundamentals. It may actually be a Buy some day, just not now. Conclusion Going forward, we'll need to watch progress on Corsicana, as well ashow they court customers. While I have educated guesses, the numbers they actually close will matter. Then there's the issue of paying for these capital projects. With that uncertainty on the financing, in spite of the growth potential, I maintain my Hold.
