We're in the data center business and we're in the business of meeting our customer requirements and providing solutions for them. So the way this engagement started with AMD is listening to what they needed and thinking about how we could deliver that. And what we were able to do for their requirements was leverage existing infrastructure that we already have, one of our buildings at Rockdale, which was formerly an immersion building for Bitcoin mining. We were able to repurpose that and meet the requirements, and that's how we could get both the low cost and the quick timeline for delivery. This is not Tier 3 capacity that typically sees capex costs in the 10 to $13 million per IT megawatt range. This was a different solution. The result is a deal that is, you know, maybe lower on the kilowatt per month revenue rate than you would see compared to other recent deals, but as you've noted, much lower on the capex cost. So the result is a very attractive yield and results coming in very quickly.
Riot Platforms just inked its first AI tenant with AMD, agreeing to a 10-year, $311 million deal for 25 megawatts of critical IT load at Riot's Rockdale facility in Texas. You're listening to the Blockspace Pod, brought to you by CleanSpark. And for today's flash show, we have CEO of Riot, Jason Les, on to discuss the deal, plus news that Riot also acquired the land for the Rockdale facility. We discussed the strategic importance of that acquisition, as well as what the deal means for Riot's Bitcoin mining operations, what it means for the future of their AI expansion, and how they intend to finance all of this. You're listening to the Blockspace Pod. We hope you enjoy this show, which we streamed live on X and YouTube on Friday.
Alrighty, y'all. Welcome back to the Blockspace Pod. We've got a flash edition today with Jason Les, CEO of Riot, to break down their big news, signing their first AI tenant at Rockdale. Jason, thank you for joining the show.
Thank you for having me, Colton.
Yeah, man. I really, really appreciate you carving out the time. I know that today is going to be wall-to-wall, probably, you know, won't log off until midnight tonight. So we'll try to keep it quick here. Let's give people just a 30,000-foot view of this deal, what it took to get here, and a quick breakdown of the news for today.
Yeah, this is a really big milestone for Riot. We're announcing two things in parallel today, the first necessary to make the second possible. First, we announced the acquisition of our Rockdale — of the land of our Rockdale site. So that is no longer on the ground lease. We fully own that. That unlocks the 700 megawatts we have at Rockdale for data center development. I think a lot of the story around Riot and its data center strategy in the past 12 months or so has been focused on just Corsicana, and what we are signaling today with the acquisition of this land is the full 1.7 gigawatts in our portfolio is being pursued for data center development. The second big announcement that we made that followed that is the signing of our first lease with AMD as our tenant, taking down 25 megawatts at our Rockdale site, but with an option and a right of first refusal to expand that deal to potentially 200 megawatts of critical IT capacity. And most importantly, we're delivering that revenue on a very quick timeline. Our first block of capacity for them is going live this month. So we're generating revenue this month, and the rest of the capacity will be delivered in May. So this is obviously an investment-grade tenant, a very highly regarded company, AMD, as our first tenant. And this is something — this is the foundation we've been talking about for a number of months that's been so important to start our data center business that we can then build on top of. It wasn't important that we had a huge deal to start. It was important that we had the right deal. This is that right deal, and now commercial discussions around all of our capacity are advancing.
I want to hone in on a few things you said there. The site acquisition, I think, is an important piece to this. I want to get to that after my next question, which is the time to market — or rather time to deployment — for this retrofit. It seems breakneck to me. You know, you're going to have the first five megawatts live at the end of January, and you're going to have the rest of it potentially online — or, you know, to their guidance — online by May. So just two questions there. How is it that it is coming online so fast? I assume that y'all started breaking ground on this retrofit earlier in the year, or maybe at the end of 2025. And my second question involves the cost to build this, because your cost per megawatt I think is $3.6 million, which puts you about a third of where a lot of peers are for this. So two-part question: How has this been such a quick go-to-market for this retrofit, and how has Riot kept their costs low for this buildout?
We're in the data center business and we're in the business of meeting our customer requirements and providing solutions for them. So the way this engagement started with AMD is listening to what they needed and thinking about working with them collaboratively on how we could deliver that. And what we were able to do for their requirements was leverage existing infrastructure that we already have. So one of our buildings at Rockdale, Building G, which was formerly an immersion building for Bitcoin mining, we were able to repurpose that and meet the requirements, and that's how we could get both the low cost and the quick timeline for delivery. You're right, Colin, we started working on this development many months ago. So the Bitcoin mining capacity we took down — we've already taken down many months ago. It was depreciated equipment, S19 generation miners. So it wasn't a huge impact on our hash rate. I think it largely went unnoticed. And we worked collaboratively with AMD to advance on this project in a de-risked way, so we could meet their requirements and their delivery timeline. This is not Tier 3 capacity that typically sees capex costs in the 10 to $13 million per IT megawatt range. We're focused primarily on building Tier 3 capacity, so we would expect development cost around that. But this was a different solution. It doesn't have the same Tier 3 requirements, but it is a data center space and we're able to deliver it quickly at a lower cost because of that. So the result is a deal that is, you know, maybe lower on the kilowatt per month revenue rate than you would see compared to other recent deals, but as you've noted, much lower on the capex cost. So the result is a very attractive yield and results coming in very quickly.
So Riot has sold Bitcoin to finance the Rockdale purchase, and you've also earmarked, I believe, roughly 3K Bitcoin based on current prices for these early retrofits and near-term expansion for AI. You also mentioned in that investor presentation that I just had up that the AMD deal will open up doors for financing down the road, most likely. Can you break down Riot's financing strategy for this expansion into AI services?
So a pillar of Riot's strategy has always been having a strong balance sheet, and we've done that with cash and primarily Bitcoin. Today, Riot sits on over $2 billion in cash and Bitcoin. And what is great about the data center business and the types of deals that we're pursuing is they are very financeable. We're looking at, you know, project financing typically in the 80% — let's say 75 to 85% range on a loan-to-cost basis once you have a lease in hand. So the majority of the deals can be financed with very long, very good terms, provided you have a good tenant — the type of tenants that we're going after. But there is still an equity portion of that you have to fund. With our cash and Bitcoin on hand, we can fund a significant amount of that equity required, if not all of it. That means that in isolation, for just these deals, we could potentially not need to, you know, issue any equity or do any diluted financing in order to fund everything. We're able to leverage our balance sheet entirely to fund the development of our full 1.7 gigawatt portfolio, which would be approximately 1.2 gigawatts of critical IT capacity. I would sum it up by saying we are leveraging all of our strengths. We are trying to maximize the value of our assets. We have power that we're putting forward for data center development, and we have the balance sheet of Bitcoin that enables us to fund this in a way that is potentially not dilutive at all in order to achieve significantly higher EBITDA or net operating income.
I just want to pull on that thread for a second because I think what's interesting about where a company like Riot finds itself in the middle of this transformation is not only have Bitcoin miners been stacking megawatts over the last four or five years, they've been stacking Bitcoin that they can now deploy for these expansions into the AI realm. And it's like this one-two punch that I don't think many people, at least, saw coming, you know, a few years ago before this whole transformation took place. And to me, it makes a lot of sense that you would want to leverage that. Bitcoin market's no longer valuing the treasuries of some of these Bitcoin miner and data center companies the way they did last cycle, where you'd have crazy betas compared to Bitcoin when it was ripping. We're just not seeing that same correlation as Bitcoin goes up. I would expect that — I would hope or expect more miners would follow this model because to me it seems a better use of that capital which otherwise is just kind of sitting idle without any sort of, you know, premium on that asset for the stock price.
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Going back to the Rockdale acquisition specifically, can you outline some of the benefits with this? Because I think, as I understand it, there are multiple parts of this. It's not just the land, but it's the power rights as well that come with this. Or there's an element here to where it helps not only Riot secure the land itself, but secure the access to power and potentially expansion to Rockdale above what y'all have currently as nameplate. Can you break that down for us?
Yeah, there's a few key elements here that made purchasing the Rockdale land so key. So first, let's just talk financial. We purchased this for $96 million. If we went through the full — all of our expansion options and all our obligations under the lease to the end, that would be about $130 million in payments. So we're saving operational costs not being on a lease and just owning this asset to begin with. Second, we already owned the interconnection agreement. So our relationship with our power supplier has always been direct to Riot at the site even before this acquisition. But now, I suppose it's even more clear in that we own the land that we are operating on. The expansion option is the other part of the story. There is a lot of electrical infrastructure being built in that area. And with the acquisition of the Rockdale site, we've also secured the necessary easements to bring in additional power supply lines into the site if that is an option that would get approved. So that can mean additional capacity, that can mean redundant capacity. What we're saying here is we have the elements necessary to advance on this optionality. And we think the fact that, you know, of course, access to new power is very constrained in ERCOT right now. Not a whole lot of power is getting approved, although we did see Galaxy get additional power approved yesterday, which is big news. But the fact that we are in an area that has a lot of capacity that's being built out, and that we are an in-place operator that has demonstrated ability to be good stewards of the grid and execute on the timelines that we say, we think puts us in a great position to potentially get additional power approved there in the future. That remains to be seen — the timeline's uncertain — but the story is that we have the elements in place to advance on that now.
Are you at liberty to say how much power you will be hunting in addition to Rockdale, or can you not talk about that right now?
What I — I mean, the way I would answer it is: we are trying to get as much power as possible. What ultimately is allocated or allowed, that's up to grid operators. But we are demonstrating a strong capability here. This AMD lease is just, you know, a small part of the overall story. We demonstrate that we can sign deals and deliver solutions for investment-grade tenants, and we demonstrate that we can execute on that. That is a formula we want to keep repeating over and over — not just at Rockdale, not just at Corsicana, but our operations in Kentucky and new sites or additional capacity that we aim to acquire beyond that.
