Riot Platforms Buy $500 Million in Bitcoin
Riot Platforms acquired around $510 million worth of Bitcoin between Dec. 10 and 12, increasing the Bitcoin miner's total holdings to nearly $1.7 billion, according to a regulatory filing on Dec. 13.
The purchases coincided with news that activist investor Starboard Value has taken a “significant position” in Riot.
On Dec. 12, The Wall Street Journal reported that Starboard encouraged Riot to repurpose part of its Bitcoin mining capacity to support artificial intelligence (AI) models.
Acquiring Bitcoin has also emerged as a strategy for miners to appeal to investors.
“We are committed to creating value for all shareholders, and we look forward to constructive dialogue with Starboard on ways to achieve this shared goal,” Riot reportedly told The Wall Street Journal.
Demand for computational power to train AI models is growing rapidly.
Bitcoin miners, equipped with their own power supplies and vast data centers, are in a strong position to serve this market.
“The synergy is simple: AI companies need energy, and Bitcoin miners have it,” stated an Aug. 16 report by Matthew Sigel, head of digital assets research at fund manager VanEck.
According to VanEck, if Bitcoin miners pivot toward AI, they could collectively unlock approximately $37 billion in market capitalization.
Riot specifically could gain over $4.8 billion, which would more than double its current market capitalization of around $4.4 billion as of Dec. 13, based on Google Finance data.
At the same time, investors are rewarding Bitcoin miners for accumulating large BTC reserves.
On Dec. 10, analysts at JPMorgan raised price targets for four Bitcoin mining stocks, including Riot, reflecting the value of their BTC holdings.
“We previously valued Bitcoin miners based on the four-year gross profit opportunity for each operator,” the analysts noted, adding:
“We are expanding upon this framework by incorporating 1) the value of each company’s land and power assets […] and 2) a HODL premium, which gives miners credit for holding Bitcoin on their balance like MicroStrategy.”
Since 2020, MicroStrategy has spent approximately $25 billion acquiring Bitcoin as part of a corporate treasury strategy led by co-founder Michael Saylor.
This strategy has proven effective, with Bitcoin's price steadily increasing, surpassing $100,000 per coin earlier this month.
Since 2020, MicroStrategy’s stock (MSTR) has surged about 2,500%, outperforming nearly all major public companies except Nvidia, according to Google Finance data.
Sources:
https://cointelegraph.com/news/riot-platforms-buys-more-than-500-million-bitcoin
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