Riot Platforms Inks Massive Deal with Anthropic for 191 Megawatts

Riot Platforms, a Bitcoin miner turned AI and high-performance computing company, has signed a massive deal with Anthropic. The contract involves a 20-year lease for 191 megawatts at Rockdale, with expected rent of around $9.1 billion or up to $16.1 billion if Anthropic renews twice.

The agreement is significant because it's larger than Riot Platforms' current market capitalization of $7.5 billion. The company will receive the revenue over 20 years, with the first 96 megawatts expected online in December 2027 and the full capacity by June 2028.

Riot Platforms will need to spend a significant amount to meet the agreement's requirements, including arranging up to $573 million from Morgan Stanley to fund initial development costs. The company has expressed concerns that AI firms like Anthropic are giving away capacity for fixed payments, potentially leaving them vulnerable to rising electricity and data center upkeep costs.

Despite these concerns, experts believe the deal could lead to further agreements with other AI companies. However, investors should exercise caution as Riot Platforms' stock is highly dilutive and may experience short-term pain before long-term gains.