Riot Locks $9.1 Billion AI Lease as Mining Margins Erode
Riot Platforms swung to a $237.2 million net loss even as it signed a 20-year, 191-megawatt data center lease worth up to $16.1 billion with extensions.
Riot Platforms (RIOT) signed a 20-year, 191-megawatt data center lease with a frontier AI lab after the quarter closed, a deal worth roughly $9.1 billion in initial contract revenue and up to $16.1 billion including extensions. The Colorado-based bitcoin miner and data-center developer has now signed 241 megawatts of contracted capacity worth about $9.8 billion in revenue since January, spanning agreements with AMD and the new AI tenant.
The lease announcement landed alongside a second-quarter report that showed the strain of funding that buildout. Riot posted a net loss of $237.2 million, reversing $219.5 million in net income a year earlier, as adjusted EBITDA swung to negative $69.7 million from positive $495.3 million in the same period. A newly disclosed $28.0 million impairment of property and equipment, with no comparable charge in the prior-year quarter, added to the swing.
Revenue rose 14% year-over-year to $174.2 million, up 4% sequentially from $167.2 million in the first quarter. The growth masked diverging trends within the two segments funding Riot's transition from a pure bitcoin miner into an AI infrastructure landlord.
Data Center segment revenue fell 30% sequentially to $23.2 million from $33.2 million, driven by a 43% drop in tenant fit-out revenue to $18.3 million as that one-time construction work wound down. Recurring operating lease revenue climbed 428% sequentially to $4.9 million as AMD's initial 25 megawatts came fully online, commissioned on time and on budget after AMD doubled its committed capacity to 50 megawatts in the first quarter. The mix shift toward recurring, higher-margin lease revenue lifted overall Data Center segment gross margin to 28% from 7% quarter-over-quarter, even as base rent margin itself compressed slightly to 91% from 94%. Engineering revenue, the segment building out that capacity, nearly quadrupled year-over-year to $37.3 million and rose 68% sequentially, though its backlog narrowed to $177.1 million from $193.4 million as work converted into revenue faster than new orders replaced it.
Bitcoin mining, still Riot's larger segment, moved in the opposite direction from the volumes it produced. The company mined 1,587 bitcoin in the quarter, up 11% year-over-year, while its share of global network hash rate climbed to 44.4 exahashes per second from 35.4 a year earlier. Segment revenue fell, down 19% year-over-year to $113.7 million, as the cost to mine each coin rose to $49,912 from $44,629 in the prior quarter and the value of newly mined bitcoin fell to $71,667 per coin from $98,800 a year earlier. Cost to mine as a share of production value jumped to 69.6% from 49.6%, a compression resulting from higher power costs and expansion at its Kentucky facility, which also saw uptime dip to 87% from 90% after May downtime.
Riot funded the gap by drawing down its bitcoin treasury. Holdings fell to 11,380 BTC at quarter-end from 18,005 at the end of fiscal 2024, even as cash on hand nearly doubled sequentially to $548.9 million from $282.5 million. Total liquidity stood at $1.2 billion, down from more than $1.9 billion at year-end.
The new AI lease, signed after quarter-end, sets up the next test of that trade-off: whether recurring lease income from AI tenants can scale fast enough to offset a mining business squeezed by rising costs and falling per-coin value.