What You Should Know:
- Starboard has taken an undisclosed position in bitcoin mining company Riot Platforms (RIOT), pushing for significant changes in their operations as reported by The Wall Street Journal.
- The activist investor aims to persuade Riot to transform part of its bitcoin mining sites into data centers to leverage the increasing demand for high-performance computing (HPC) and artificial intelligence (AI).
- Riot has confirmed it has "engaged with Starboard on multiple occasions."
Activist investor Starboard Value has acquired a stake in bitcoin miner Riot Platforms (RIOT) and is advocating for a shift in the company's strategy. Starboard is particularly focused on encouraging Riot to repurpose certain mining facilities as HPC data centers to cater to technological giants.
Currently, Riot operates exclusively as a bitcoin miner, earning solely from bitcoin mining—unlike some competitors like Core Scientific (CORZ), which have diversified into HPC and AI services.
Starboard has expressed that it seeks to initiate dialogue and investigation into opportunities that could enrich value for stakeholders involved. In contrast, Riot has stated, "We regularly communicate with our shareholders and appreciate their insights. We are open to discussions with Starboard on enhancing shareholder value."
Historically, publicly listed mining companies were a primary avenue for institutional investors seeking exposure to bitcoin, especially during the crypto bull run of 2020-2021. However, the subsequent crypto downturn in 2022 significantly impacted stock values, with most companies still lagging behind their previous highs.
Industry-wide challenges concerning profitability have continued post the recent bitcoin halving, prompting miners to pursue alternate revenue streams. Core Scientific's multi-billion dollar deal with a hyperscaler firm has notably shifted market sentiments, revitalizing investment interest in the sector.
Despite these shifting tides, Riot is still maintaining a traditional mining stance, although CEO Jason Les has hinted at exploring partnerships with major tech firms. Thus far, however, nothing concrete has materialized while other miners advance with HPC engagements.
Riot's shares experienced an increase of up to 11% shortly after the news, reflecting growing investor interest despite a nearly 30% yearly decline, whereas the CoinShares Valkyrie Bitcoin Miners ETF saw a 40% rise.
