Riot Profits From Bitcoin, Yet Market Worries About Slow Data Center Expansion

Riot Platforms, Inc. Stock Declines

Riot Platforms, Inc. (NASDAQ:RIOT) experienced a dip in trading on Friday.

The company disclosed that its revenue for the second quarter reached $152.99 million, exceeding analysts’ forecast of $147.65 million.

Riot also reported earnings of 57 cents per share, which is notably better than the anticipated loss of 10 cents per share.

Following the revenue announcement, JP Morgan analyst Reginald L. Smith maintained a neutral stance on the company’s stock.

Smith observed that Riot’s results align well with JP Morgan’s projections, although there was a slight decline in revenue and cash operating profits attributed to seasonal factors that impacted Bitcoin production.

During a revenue call, the management discussed plans to utilize Riot’s power infrastructure by establishing a high-performance computing (HPC) data center at the Corsicana site, projected to start operations in 2026.

In the meantime, Riot intends to focus on using its energy resources for Bitcoin mining while gradually preparing its 1.8 GW portfolio for HPC clients.

Smith believes that the company is strategically positioned to handle low-latency HPC tasks and sees potential in recent team expansions and facility enhancements.

That said, he cautioned that Riot’s late entry into the HPC market might slow things down, as contracts can take over nine months to finalize. So, those seeking swift colocation agreements should probably be prepared for a wait.

Furthermore, management has reported ongoing strong interest in power from hyperscale data centers, especially in major markets such as Dallas, and is actively engaging with prospective partners.

The priority for Riot is to secure tenants for the upcoming 600 MW data center in Corsicana, with an expectation that 400 MW will be available in the first half of 2026 and the remaining 200 MW later that year.

The company has been making specific site improvements to facilitate its HPC ambitions, including acquiring nearby land and securing approvals for additional water lines.

Smith highlighted that location plays a crucial role in hyperscale evaluations, and Riot is confident that its site meets the demands for extensive, low-latency HPC operations.

However, it’s important to note that Riot only began taking HPC strategies seriously in late 2024, and Smith does not foresee any short-term colocation announcements, given the lengthy process often required for such agreements.