Riot Rides Bitcoin To Profit, But Market Frets Over Slow Data Center Growth

Riot Platforms, Inc. (NASDAQ:RIOT) shares are trading lower on Friday.

Riot reported second-quarter revenue of $152.99 million, beating analyst estimates of $147.65 million.

The firm reported second-quarter earnings of 57 cents per share, beating estimates for a loss of 10 cents per share.

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Following the earnings release, JP Morgan analyst Reginald L. Smith reiterated the Neutral rating on the company.

Smith notes that Riot’s second-quarter results were largely in line with JP Morgan’s expectations, with a modest sequential dip in revenue and cash operating profit due to seasonal curtailment that reduced bitcoin output.

During the earnings call, management highlighted their long-term strategy to monetize Riot’s power infrastructure through high-performance computing (HPC) data centers, starting with 600 MW at the upcoming Corsicana site set to launch in 2026.

In the short term, Riot intends to continue leveraging its energy assets primarily for bitcoin mining while gradually preparing its 1.8 GW portfolio to cater to HPC clients.

Smith believes Riot’s infrastructure is well-positioned to support low-latency HPC workloads and sees promise in recent team expansions and site upgrades.

However, he cautions that investors awaiting near-term colocation deals may need to stay patient, as Riot was relatively late to embrace the HPC model and such agreements typically require over nine months to finalize.

Smith observes that management continues to see robust interest in power from hyperscalers, especially in key markets like Dallas, and is actively in discussions with potential partners.

Riot’s top focus is securing a tenant for its planned 600 MW build-to-suit data center at the Corsicana site, with 400 MW expected to be available in the first half of 2026 and the remaining 200 MW in the second half.

The company has also made site-specific upgrades to support high-performance computing needs, including acquiring adjacent land and obtaining approval for a new water line.

Smith notes that location is a key factor for hyperscalers evaluating new data center builds, and he believes Riot is well-positioned to meet the requirements of large-scale, low-latency HPC operations.

However, since Riot only began seriously pursuing the HPC strategy in late 2024 and such deals typically require nine months or more to finalize, Smith does not anticipate a near-term colocation announcement.

Price Action: RIOT shares are trading lower by 16.5% to $11.21 at last check Friday.

Photo by T. Schneider via Shutterstock