In a recent interview with analysts at research and brokerage firm Bernstein, Jason Les, CEO of bitcoin miner Riot Platforms, said the firm would be open to considering AI opportunities if the right partner and deal structure came along.

Les specifically identified Core Scientific’s hosting deal with AI Hyperscaler CoreWeave as one such example—expected to generate revenue of more than $3.5 billion over a 12-year period. Still, Bernstein digital assets lead Gautam Chhugani wrote in a Monday note to clients that he expressed skepticism that many comparable deals were on the cards.

He also highlighted the suitability of Riot’s Texas-based “mega” sites, such as its 750MW capacity facility in Rockdale and the world’s largest 1GW capacity bitcoin mining operation in Corsicana. Both sites are within one hour of urban centers like Austin and Dallas, with access to talent and adequate infrastructure in terms of cheap power and network latency, Les noted.

However, the firm’s openness to AI doesn’t mark a definite pivot to take advantage of market hype. Les remains cautious and stresses that Riot would not simply chase the AI narrative. Such a strategy may require miners to incorporate AI-specific machines utilizing GPUs into their facilities, as ASIC machines used for bitcoin mining are unsuitable for AI training tasks.

“I think the Core Scientific deal is fantastic, if a similar deal came along for us, we would be very interested in that,” Les said. “But, we are not announcing a pivot, just for the sake of it right now. But, it is important for investors to know that Riot has valuable assets, and we have received inbounds about those.”

This comes as the mining industry is now evenly divided between those concentrating on Bitcoin mining and those shifting toward AI data centers.

Riot will not be turning away from its pure-play bitcoin mining roots anytime soon. Les argues that the arrival of relatively new players like Jack Dorsey’s Block, Bitdeer and Auradine to the mining hardware scene has made the economics more attractive by reducing dependence on one single supplier, Bitmain, which has market dominance.

“Historically, we have focused on bitcoin mining and right now our future plans have been focused on bitcoin mining too, because we are able to do it at a very efficient cost,” Les said. “So, I think our view is that we remain focused on that strategy, create optionality and utilize the power capacity in the best way.”

This has allowed Riot to invest in a new bitcoin cycle aggressively, acquiring pipeline equipment at cheaper locked-in prices of up to 100 EH/s—three times its current mining capacity.

Chhugani believes Riot is currently undervalued for its power assets, trading at around $800,000 per MW compared to a miner average of $2.1 million per MW. 

At Bernstein’s bitcoin price forecast of $200,000 by the end of 2025, the company’s EBITDA (earnings before interest, taxes, depreciation and amortization) could rise to $1.1 billion. Riot's current 1.4x enterprise value/EBITDA multiple suggests the company is relatively undervalued based on its projected future earnings, the analyst said.

Whether it be from strong bitcoin upside potential or a cheap AI option, Bernstein rates Riot stock as outperform, with a target of $22 compared to Friday’s closing price of $7.85, according to TradingView.

Riot’s stock is up 17.3% over the past month. However, it remains down 54% year-to-date and has underperformed so far this year alongside other pure-play miners like CleanSpark and Marathon compared to AI diversifiers such as Core Scientific, IREN and TeraWulf. However, pure-play firms have argued the return on bitcoin mining’s cheaper infrastructure and faster energization is far quicker than AI gestation periods, especially amid a potential bull run.

In contrast to the general inventory selling strategy of AI diversifiers, Riot also holds approximately 10,000 BTC on its balance sheet, according to Les, which is currently worth roughly $630 million.

“Over the next 100 years, there is little over 2 million bitcoin left to be mined. As a bitcoin company, we want to position ourselves to get the most out of that. We are believers in the long-term proposition of Bitcoin, which is why it is a part of our treasury,” Les said. “By being large scale and taking advantage of the capital efficiency, we are positioned to get the biggest piece of this limited pie, that we believe has so much upside over the coming years.”

Earlier this year, Riot attempted a hostile takeover of rival bitcoin miner Bitfarms. However, the months-long saga appeared to end in September, with the firms reaching a settlement prohibiting Riot from acquiring more than 20% of Bitfarms without prior board approval.

Gautam Chhugani maintains a long position in various cryptocurrencies. Certain Bernstein affiliates act as market makers or liquidity providers in Riot Platforms' debt securities.

Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.

© 2024 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。