Activist investor Starboard Value has recently made a significant investment in bitcoin miner Riot Platforms (RIOT) and is advocating for changes in the company’s business model, as reported by The Wall Street Journal. Starboard is urging Riot to transition some of its bitcoin mining sites into data centers capable of hosting machines for high-performance computing (HPC) needs of major tech companies. Currently, Riot operates solely as a bitcoin miner, unlike some of its competitors such as Core Scientific (CORZ) which have diversified their facilities to support HPC and AI computing.
In response to Starboard’s push for change, Riot stated, “We have engaged with Starboard on multiple occasions and welcome their input on the company. We are committed to creating value for all shareholders and look forward to constructive dialogue with Starboard on ways to achieve this shared goal.” This move by Starboard comes at a time when publicly traded mining companies are struggling to recover from the recent crypto winter, despite the surge in bitcoin prices.
The mining industry faced a significant profit squeeze after the bitcoin halving earlier this year, prompting miners to explore alternative revenue streams. Core Scientific’s multi-billion dollar deal with a hyperscaler, a large-scale data center operator, reignited investor interest in the sector. However, companies like Riot that have remained focused on bitcoin mining have lagged behind their peers who have embraced HPC and AI deals.
While Riot’s CEO Jason Les has expressed interest in partnering with tech giants for AI projects, the company has yet to announce any concrete plans. In contrast, other miners like Galaxy Digital and IREN have already secured deals to transition their mining capacity into hosting high-performance computers. As a result, Riot’s stock saw an 11% increase in early trading on Thursday, although it has fallen by nearly 30% this year.
As the mining industry continues to evolve, Riot faces pressure to adapt its business model to meet the changing demands of the market. The company’s willingness to engage with activist investors like Starboard signals a potential shift towards diversifying its revenue sources and aligning with industry trends. Investors will be watching closely to see how Riot navigates this transition and whether it can regain its competitive edge in the evolving crypto landscape.