According to a report by The WSJ, activist investor Starboard Value has taken a significant stake in Riot Platforms (RIOT), a leading bitcoin-mining company based in Castle Rock, Colorado, with a current market value of $3.91 billion. Despite a general uptick in cryptocurrency values, Riot’s stock has fallen nearly 18% year to date, highlighting challenges amidst a sector-wide rally. Starboard’s involvement comes as it seeks to steer Riot towards a new strategic direction, particularly in leveraging its infrastructure for hyperscale computing needs.
Riot operates by using high-powered computers to solve complex mathematical equations necessary for processing bitcoin transactions, earning bitcoin as compensation. The push from Starboard involves converting some of Riot’s facilities into capacity for hyperscalers, companies like Amazon Web Services and Google Cloud, which require vast computing and storage resources, especially with the surge in demand due to the AI boom.
This year, Riot’s shares, currently up by more than 10% to $12.95, faced pressure due to its pursuit of merging with Bitfarms, another bitcoin miner. Riot had amassed nearly a 20% stake in Bitfarms aiming to create the largest publicly traded bitcoin miner, but the negotiations fell through. A subsequent settlement in September led to Riot securing a board position at Bitfarms, yet the company’s performance lagged behind its peers like MicroStrategy (MSTR) and Coinbase (COIN), who benefited from the post-election optimism regarding crypto regulations under the incoming Trump administration.
The report notes that Starboard sees potential in Riot following a model similar to that of Core Scientific, which has been collaborating with CoreWeave, an Nvidia-backed startup, to provide power infrastructure for cloud computing operations. This move reflects a broader trend among bitcoin miners to capitalize on the scarcity of data-center space and the high demand for power driven by AI technologies. According to the publication, Riot’s CEO, Jason Les, has indicated openness to such strategic shifts should suitable opportunities arise.
Starboard Value, led by Jeff Smith, has been notably active in the tech sector, with recent engagements at companies like Autodesk and Match Group, alongside revealing stakes in Pfizer and Kenvue. Their latest move with Riot Platforms is indicative of their strategy to drive operational changes and improve shareholder value by aligning traditional crypto mining with the burgeoning data and AI markets
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