The saying that “good things come to those who wait,” is what Riot Platforms is banking on. The company is taking its time in preparing its two major sites for AI data center customers. Meanwhile, Bitcoin mining peers seem to be rushing toward deals, and their stocks have been popping off over the past few weeks as a result.

When asked in the earnings call what the hold up is, Riot explained they are looking to maximize the deal terms as they have one of the most attractive sites in the country (an analyst’s words regarding the Corsicana site, not theirs). Corsicana is especially attractive as it’s located near the Tier 1 market of Dallas and has ample power and water for liquid cooling. The Rockdale site is the second priority for securing a lease and will be used for Bitcoin mining in the interim.

Overall, Riot has stated they have “over 1.7 gigawatts of power immediately available near major markets.” Riot’s balance sheet also stands out with $2.4 billion in liquidity due to having $330 million in cash and 19,000 Bitcoin.

However, what investors are up against is navigating near-term volatility while a deal announcement could be another quarter (or two) away. This is because Riot is going through a master site design this quarter (ending now in Q3), which helps to start the discussions for a deal. It was stated the site design is what would kick off discussions with customers: “And if you're talking about engaging with serious counterparties, this is the type of information that they [want] you to come to the table with in order to advance discussions substantially.”

While Riot is currently in the final stages of designing the data center and working to secure a lease, it may be Q4 or later before a firm deal is announced. On the revenue side, if a deal is done in Q4, it will likely be more geared toward mid-year 2026 or the second half based on current timing for substation development at Corsicana.

In the opening remarks, Riot explained they are in no rush: “To be clear, we are not pursuing a so-called pivot into AI HPC initiatives with a view of doing a "deal.” Rather, we have added a new data center development capability, which we will apply to as much of our power portfolio as possible and which will transform our company in the years to come.”

Riot’s 8-Step Process for AI Data Center Pivot

Riot has outlined its eight step process behind its AI data center pivot, with the company now focusing fully on the sixth, seventh and eight steps:

Engage consultants: Riot tapped data center industry consultant Altman Solon in January to explore feasibility of AI/HPC pivot at Corsicana
Add experience to board: Riot added three new board members in February with relevant data center experience
Engage financial advisors: Riot tapped Evercore as a financial advisors and Northland as a co-placement agent to lead discussions with possible AI customers
Continue infrastructure development: Pertains to the development of the 600MW substation at Corsicana
Build internal expertise: Riot stated it is making key hires to build out its internal data center expertise
Complete basis of design: Riot is leveraging new hires and external consultants to best design data centers that fit its available infrastructure
Secure lease with tenant: Riot says it is “actively progressing” towards securing a lease with a “high-quality” tenant and collaborating on final design iterations
Build future pipeline: Pertains to further expanding its AI data center footprint in the future with powered land acquisitions and development

While Riot is currently in the final stages of designing the data center and working to secure a lease, it may be Q4 before a firm deal is announced. On the revenue side, it will likely be more geared toward mid-year 2026 or the second half based on current timing for substation development at Corsicana.

Riot’s Corsicana Data Center Can Offer 600MW for AI Data Centers

Riot is working to expand its Corsicana data center, purchasing 355 acres of land in May and an additional 238 acres in July, taking its total acreage to 858 and allowing it to “accommodate various data center designs and development plans.”

Corsicana has 1 GW of power capacity, with 400 MW currently operational and earmarked for Bitcoin mining, with the additional 600MW of power capacity for AI/HPC hosting is expected to be ready in early 2026. The facility also has two fiber providers on-site, offering ample connectivity and low latency to major hubs Dallas and Austin. Riot also disclosed that its all-in power costs at Corsicana (for BTC mining) were ~$0.035/kWh, matching IREN with industry-low power prices.

The entire 1GW is expected to be available sometime over the next 4-5 quarters: “So first, for some of the critical infrastructure that's needed to build this capacity, we have already secured. I'm referring to the 600-megawatt substation that's being built that's expanding the site to 1 gigawatt. We have already procured that equipment. That equipment is already arriving, and that is going to take our Corsicana site to 1 gigawatt in 2026.”

What’s unique about Riot is they already have approval for power to both sites, whereas newer sites are subject to legislation like Texas Senate Bill 6, which requires Bitcoin miners to cover some of the costs of expanding the grid. There are also curtailments to where miners/HPC operators have to reduce usage when the grid is maxed out and are required to have backup power. The company stated they will be able to power the pivot to AI without any further steps: “This power isn't pending certain steps happening. This power is coming in the next 6 months and scaling up from there.”

In Q4 FY24, Riot estimated it would spend ~$65 million in capex on developing the 600MW substation and acquiring other long-lead items required to energize this phase. Through the first half of FY25, Riot spent $51.3 million in capex related to the substation, and projected an additional $17.9 million in spending through Q4, or ~$69.2 million in total capex, a 6.5% overrun. Riot’s Q4 acquisition of E4A likely plays a critical role as the company is engaged in substation equipment, transformer assembly and power plant servicing. Additionally, the mid-year land purchases, water lines and other site costs are expected to total approximately $77 million this year.

The company is evaluating more expansion opportunities for AI/HPC, and assessing feasibility for developing further power capacity, but has not made any strides outside of Corsicana yet. Combined with its 700MW Rockdale facility, Riot can offer 1.7GW of power in close proximity to Tier 1 Dallas and also Austin, though Corsicana’s first 400MW phase and Rockdale are presently fully outfitted for Bitcoin mining and will be retrofitted in phases when management believes the timing is right.

How Much Could Corsicana be Worth?

Riot is well aware of the opportunities in pivoting to AI data center hosting, more so now considering the flurry of AI deals that have been signed with miners recently. As we pointed out in our Advanced analysis in January, Marathon Digital and Riot Platforms: Leveraged Bitcoin Bets, Riot’s management had said in Q3 2024 that there is “notable sense of urgency for power access in 2025 with AI HPC companies willing to pay a premium for timely access at attractive sites.” Riot also stated at the time that it was in preliminary discussions with AI HPC firms over some level of capacity, and it would see if there are deals to monetize capacity at a better rate than mining.

As of now, Riot has yet to sign an AI hosting deal, though analysts from Needham expect the company to be in advanced discussions by Q4 and sign a lease agreement as early as Q1 2026. This would be a few quarters behind some of the earlier movers in the industry, but this hinges on its Corsicana facility, with its AI side still under development. Notably, Riot likely will not transition its entire footprint over to AI hosting, stating in its 10-Q that is in developing a “scalable data center platform designed to allocate a portion of our power capacity toward supporting AI/HPC workloads.”

Despite the lack of a deal, allocating 600 MW of power capacity to AI (assuming ~440 MW of critical IT load as Needham estimates) allows a reasonable projection for what Corsicana could be worth under similar terms as other miners.

Assuming a deal structured around $1.8 million in average annual revenue per MW of critical IT load, Corsicana’s AI data center side could fetch a deal worth ~$8 billion over ten years, or ~$792 million in average annual revenue. Other miners have outlined targeted net operating income or adjusted EBITDA margins on these deals of >85%, suggesting that Corsicana could deliver adjusted EBITDA or net operating income of ~$673 million annually on average. As a reminder, these are average annual figures, meaning that revenue in the initial stages will begin at a much smaller size as capacity ramps and end much larger than these stated figures.

For Riot’s combined Corsicana and Rockdale facilities offering 1.7GW of available power, and assuming both are fully converted to AI with a 1.3 PUE for ~1.3GW of critical IT load, the two could be worth more than $23 billion for a 10-year deal structured at similar terms, or average annual revenue of $2.34 billion.

Bitcoin Mining Expansion Remains on Track

On the flip side, Riot is still committed to expanding its Bitcoin mining fleet and hash rate, even though the Corsicana pivot reduced its 2025 deployed hash rate target by 8 EH/s.

In Q2, Riot updated its year-end hash rate target to 40 EH/s, up from 38.4 EH/s, likely driven by its recent addition of 125 MW of capacity for Rockdale by acquiring additional assets from Rhodium and closing pending litigations. This represents ~26% YoY growth in Riot’s deployed hash rate, aligning with Riot’s target to maintain ~4% of the global network, currently at ~984 EH/s. By Q1 2026, Riot is aiming to bring its hash rate up to 45 EH/s, what would represent its largest sequential expansion in hash rate since Q3 2024 as it works to double its power in Kentucky to 127 MW.

Rockdale will remain a Bitcoin mining operation until Corsicana finds a customer. Riot positioned it as a strength to keep Rockdale as Bitcoin mining operations for now, stating: “So you can think of our strategy as using Bitcoin mining at sites like Rockdale to monetize that power to ensure that no power stranded and wasted, turning that into meaningful cash flows for the company and then ultimately looking to transition that capacity to data center leases when the time is right.”

Financials

Bitcoin Mining Remains RIOT’s Core Revenue Driver

Riot’s Q2’25 results reaffirm its position as one of the largest self-mining operators in the world. The Company reported total revenue of $153 million, more than doubling from $70 million in the year ago quarter. Most of this revenue came from Bitcoin Mining segment, which contributed $140.9 million, up 152% year-over-year. The drivers here are straightforward: Riot produced significantly more Bitcoin, at higher prices. On top of that, Bitcoin itself averaged roughly $98.8k during the quarter compared to $66k last year. The combination of higher volume and higher pricing powered a sharp rise in top-line contribution.

Average operating hash rate increased from 11.3 EH/s last quarter to 31.7 EH/s this quarter, while deployed hash rate reached 35.4 EH/s by quarter-end. Think of hash rate as Riot’s “factory horsepower”. The more horsepower it has online, the larger its share of Bitcoin production – but it also burns more energy which makes power contracts and efficiency just as critical.

Engineering revenue, though a fraction of mining, also provided a small boost. The segment generated $10.6 million in revenues, up modestly from $9.6 million last year. This now includes contributions from December 2024 acquisition of E4A Solutions, which expanded Riot’s capabilities in custom electrical and fabrication work. Engineering also carries $22.7 million of contract liabilities, suggesting a healthy pipeline of projects yet to be recognized.

“Other’” Revenue totaled just $1.5 million, largely residual income from legacy hosting contracts that have since been terminated. Importantly, Riot no longer reports hosting a standalone segment, underscoring the Company’s shift to pure self-mining plus a smaller engineering team.

Looking forward, consensus expects continued topline growth through FY25 and into FY26, albeit at a decelerating pace. Seen in the chart above, analysts expect 99.6% and 30.47% YoY growth in Q3 and Q4 to round out FY25. Estimates moderate looking further into FY26 with growth drifting off to mid-teens (17.6%) by Q4’26.

For investors looking at AI upside, there are no contracts signed and no AI revenue recognized in Q2. The AI narrative remains aspirational, not actual. Compared to peers like Applied Digital and Terawulf, both having already signed multi-year, multi-billion dollar hosting agreements with hyperscalers, Riot is behind on the diversification curve. At this point, AI should be viewed as upside optionality embedded in Riot’s power infrastructure, rather than a near-term driver of financial results.

Key Metrics:

Total Revenue: $153.0M (+119% YoY)
Bitcoin Mining: $140.90 (+152% YoY)
Engineering: $10.6M (+10% YoY)
Other: $1.5M (hosting residual)
Avg. BTC price: $98.8k (vs ~$66.6k YoY)

Gross Margin Expansion Driven by Healthy Mining Economics, Operating and Net Margins Inflated by Crypto Gains

Mining economics remained healthy. Cost of revenue in the Bitcoin Mining segment of $78.2 million implying mining gross profit of $62.7M and margin of 44.5%. Power accounted for the majority of costs at $62.2M, 79% of total segment costs. Other items included $5.7M in taxes and fees, $4.7M in compensation, $4.1M in miscellaneous operating expenses, and $1.5M in insurance.

All-in power costs rose from 2.1 cents /kWh last year to 3.5 this quarter as Riot added Corsicana and Kentucky to its portfolio. Even with this increase, Riot remains one of the lowest-cost operators in the sector. Rockdale’s 345 MW PPA remains a key differentiator, locking in fixed-price power through 2030 with the ability to resell curtailed load back into ERCOT during peak demand.

On a GAAP basis, Riot’s margins were eye-popping. Operating income was $216.1 million, translating to an operating margin of 141% compared to negative 167% last year. Net income of $219.5 million equated to a net margin of 143%, compared to negative 121% a year ago. As always, context matters. Riot’s operating and net margins reflect the heavy influence of new Bitcoin accounting rules.

Prior to 2025, Bitcoin and other digital assets were classified as “indefinite-lived intangible assets” under US GAAP, meaning that Company’s had to carry them at cost on the balance sheet and test annually for impairment. If BTC prices dropped below carrying value, an impairment charge was booked. If BTC prices recovered later, you could not mark the assets back up, leading to asymmetric accounting – lots of impairments, but no mark-ups.

Effective January 2025, the Financial Accounting Standards Board (FASB) implemented a new rule which requires digital assets like Bitcoin to be carried at fair value, with changes flowing through net income. This means that each quarter, Company ‘s must revalue their BTC to market prices as of balance sheet data, causing non-cash gains / losses that distort operating income and GAAP figures.

In Q2, this resulted in a $262.8 million “Change in fair value of Bitcoin” gain flowing directly through the income statement. This single item more than explains the swing to profitability. Without it, Riot’s core operating performance looks much thinner. Further, operating profitability was also pressured by Depreciation and amortization ($83.2M), stock-based compensation ($59.7M), and unrealized losses on securities reached ($57.1M).

GAAP EPS came in at $0.65 basic and $0.58 diluted, versus ($0.32) loss in Q2’24. Looking forward, analysts do not expect annual improvement toward profitability in FY25 or FY26, as EPS estimates are ($0.35) and ($0.48) in FY25 and FY26 respectively. GAAP EPS is not a reliable measure of Riot’s underlying profitability. Investors should instead focus on cash operating margins and Adjusted EBITDA to understand the true economics of the mining business.

Key Metrics:

Mining gross profit: $62.7M
Mining gross margin: 44.5%
Operating income: $216.1M
Operating margin: 141% (vs – 167 YoY)
Net Income: $219.5M
Net Margin: 143% (vs –121 YoY)
Basic EPS $0.65
Diluted EPS: $0.58

Cash Flow and Balance Sheet

Despite reporting net income, Riot’s operating cash flow was sharply negative at ($231.3 million), compared to ($122.1 million) in the prior quarter and ($42.5 million) in the prior year. That equates to an OCF margin of (151%). That disconnect again stems from the way Bitcoin revenue is recognized. Riot books revenue at the fair value of BTC when mined, but no cash is received unless those coins are sold. In Q2, Riot mined about $283.7 million worth of BTC, inflating revenue and net income, but none of that translated into cash inflow.

Working capital shifts added further drag. Accounts Payable fell by ~$78M, deferred revenue declined ~$34M, and accrued liabilities decreased ~$12M, all of which consumed cash, resulting in negative OCF even as GAAP profits surged.

On the balance sheet, Riot remains well capitalized but increasingly levered. As of June 30, 2025, the Company held $255.4 million in cash, plus $74.9 million in restricted cash. Bitcoin holdings amounted to $1.71 billion unrestricted and $353.7 million restricted, giving Riot one of the largest corporate Bitcoin treasuries globally. Total assets stood at $4.29 billion, offset by $838.4 million in debt and equity of $3.30 billion.

While liquidity is ample, leverage has crept higher as Riot continues to finance its large-scale buildouts in Corsicana and Kentucky. ATM equity issuances also remain part of the funding toolkit, with share count rising in the quarter form new issuances and an acquisition-related issuance. The trade-off here is clear: Riot has the liquidity to scale, but at the costs of higher leverage and dilution.

Capital intensity remains high. Riot has $83.5 million in remaining commitments to MicroBT for miner purchases, expected to be paid in 2025. During the first half of the year, the Company placed $86.4 million in deposits on new equipment and added $93.2 million of property and equipment. These figures highlight the scale of ongoing investment required to maintain Riot’s leadership in hash rate capacity:

Key metrics:

Cash and cash equivalents: $255.4M
Restricted Cash: $74.9M
Bitcoin Holdings: $1.71B Unrestricted + $353.7M restricted
Debt: $838.4M (current $252.6M, non-current $585.8M)
Equity: $3.30B
Miner purchase commitments: $83.5M (MicroBT)
Deposits on equipment (H1’25): $86.4M
Property & Equipment additions (H1’25): $93.2M

Litigation Risks

Litigation is a non-trivial overhang. Riot is facing a lawsuit seeking nearly $500 million from GMO, a Japanese IT and mining company, related to termination colocation agreement. GMO alleges that Riot wrongfully terminated the agreement and is seeking damages. Riot disclosed the case it’s in legal proceeding footnote but stated it cannot reasonably estimate the outcome or probability of loss at this time.

This claim is significant: ~$500M represents almost 15% of total assets ($4.29B) and is more than double the Company’s quarterly income. While Riot has a strong equity base and deep liquidity, an adverse ruling would be material. Notably, peers like APLD or IREN don’t face comparable litigation exposure, making Riot’s risk profile a bit heavier by comparison. Investors should treat this as a tail risk that could swing sentiment if unfavorable developments occur.

Bulls vs Bears

The Bull Case:

Scale and Cost Advantage: Riot operates one of the largest fleets in North America with over 35 EH/s deployed and maintains a competitive power cost of ~$3.5 cents per kWh, keeping it at the low end of the industry cost curve.
Balance Sheet Optionality: With $255 million in cash and $1.7 bitcoin of Bitcoin holdings, Riot has liquidity unmatched by most peers, providing downside cushion and upside leverage to BTC prices.
AI / HPC Upside: While not yet monetized, Riot is positioning its multi-gigawatt power platform for future AI/HPC hosting, offering optionality that could re-rate the stock if contracts materialize.

The Bear Case:

Accounting Noise: GAAP earnings are dominated by Bitcoin fair-value revaluations, making reported profitability a less useful metric that is volatile and disconnected from underlying cash economics.
Litigation and Leverage: The $496 GMO lawsuit and rising debt levels ($838M) create potential balance sheet and legal overhangs, especially if BTC retraces.
Lagging AI Execution: Unlike peers APLD and WULF, RIOT has yet to sign meaningful AI/HPC deals, leaving it more exposed to Bitcoin cycles with less diversification.

Conclusion:

Analysts have called Riot’s Corsicana data center site one of the most attractive in the country, as it’s located near the Tier 1 market of Dallas with ample power and water for liquid cooling. Riot is taking its time in preparing the 600 MW site for AI data center customers, and it may be Q4 or later before a firm deal is announced. This timing dynamic, possibly months behind other mining peers who have already secured deals, opens the door for potential near-term volatility.

Damien Robbins, Equity Analyst at I/O Fund contributed to this analysis.

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