Key Takeaways
- Riot Platforms jumped 13% on a 15-year, $28 billion lease for its whole Corsicana campus with a frontier AI lab.
- It costs Riot half what a typical data center does, and Riot doesn’t expect to sell stock to fund it.
- The Texas deal is a good sign for Cipher Digital and CleanSpark, both downgraded today after Texas’s governor race.
- One lab now carries nearly all of Riot’s contracted revenue.
Riot Platforms (RIOT) is up 13% today on the biggest lease in its history: about $28 billion over 15 years for all 910 megawatts of critical IT capacity at its Corsicana, Texas, campus. The tenant is the AI lab already leasing part of its Rockdale site.
That came two days after Keefe Bruyette warned of a possible “lease catalyst drought” for the group. And today, after Gina Hinojosa defeated Gov. Greg Abbott in Texas’s governor race, the firm downgraded Cipher Digital (CIFR) and CleanSpark (CLSK).
Half the cost of a typical build
CEO Jason Les said in the release that “the structure of this new lease matters as much as the scale.”
Riot supplies land, power and pads. The lab brings its own computers and pays nearly all operating costs. That gets Riot about $1.8 billion of yearly rent at a roughly 99% NOI margin, for $6 million per IT megawatt, against $11 million to $12 million for its Rockdale build. Two-thirds of that $6 million is paid only after each phase pays rent, through project debt or rent credits, so Riot doesn’t expect to issue stock.
Before the deal, analysts expected Riot’s revenue to nearly double from 2025 to 2028.
Riot expects its signed leases alone to bring in $2.3 billion of revenue in 2029, so I’d expect those estimates to rise.
TIKR tracks 22 analysts on Riot Platforms. How many say “Buy”?
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Good news for Texas
Cipher builds mostly in Texas and holds about $9.1 billion of contracted revenue at Barber Lake, but CEO Tyler Page said it’s “advancing design work before committing to new leases.”
CleanSpark’s Sandersville tenant has held exclusivity over up to 885 MW in Texas since July, with no lease signed. A frontier lab just committed to Texas power for 15 years. Will that tenant follow?
The rent isn’t priced in
Riot’s bitcoin mining revenue fell to $116.0 million in the third quarter from $160.8 million a year earlier, and it has sold 20,264 bitcoin this year to fund construction. Yet its forward price-to-sales ratio was 6.3x on Monday, right at its five-year average and far below June’s 16x peak.
This week’s jump lifts it, but nowhere near that peak.
Bottom line: Riot is now a landlord with a mining business attached, and I think the multiple has room to climb. Of course, one lab carries nearly all of its $38 billion in contracted revenue, and its $573 million bridge loan comes due Dec. 31.
So what is Riot Platforms stock actually worth?
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