Riot Platforms, Bitcoin Miner, Targets of Second Activist Investor
Riot Platforms, a bitcoin miner, has found itself the target of a second activist investor, with D.E. Shaw taking an unspecified stake in the company, according to a Reuters report.
Background
In January, activist investor Starboard Value took a position in Riot, pushing the company to convert some of its bitcoin mining sites into data centers that could host machines for high-performance computing (HPC) for big tech companies.
D.E. Shaw’s Investment
D.E. Shaw, an investment management giant with $70 billion in assets, has reportedly taken a stake in Riot without specifying the terms of the investment. The report noted that the investment firm has been known to pursue an activist strategy, but often prefers to negotiate with companies out of the limelight.
Riot’s Response
Riot has not commented on the investment, but earlier this month, the company announced a formal evaluation of potential artificial intelligence/HPC uses for its remaining 600 megawatts (MW) of power capacity at one of its facilities.
Bitcoin Mining Industry Challenges
The bitcoin mining industry has faced intense pressure following the bitcoin halving earlier this year, which slashed mining profitability. This has led some miners to explore ways to diversify their revenue sources.
Data Centers and High-Performance Computing
Data centers and high-performance computing (HPC) are becoming increasingly important for big tech companies, particularly in the field of artificial intelligence. Riot’s potential conversion of its mining sites into data centers could provide a new revenue stream for the company.
Competitor Core Scientific’s Deal
Core Scientific, a rival bitcoin miner, signed a multi-billion dollar deal with a hyperscaler earlier this year, but the deal was met with skepticism by investors, who questioned the viability of the agreement. Since then, shares of Core Scientific have fallen by about 30%.
Riot’s Share Price
Riot’s share price has been relatively flat on a year-over-year basis, but has fallen by 18% over the past week.
Conclusion
The investment by D.E. Shaw in Riot Platforms highlights the increasing interest in the bitcoin mining industry and the potential for diversification into data centers and high-performance computing. While the terms of the investment have not been disclosed, the report suggests that the investment firm may be looking to push Riot to explore new revenue streams.
FAQs
Q: Who is D.E. Shaw?
A: D.E. Shaw is an investment management giant with $70 billion in assets.
Q: What is the bitcoin halving, and how has it affected the mining industry?
A: The bitcoin halving is a process that reduces the reward for mining bitcoin by half every four years. The halving has had a significant impact on the mining industry, as it has reduced profitability and forced miners to explore new revenue streams.
Q: What is high-performance computing (HPC), and why is it important?
A: High-performance computing is a type of computing that is used to perform complex calculations quickly and efficiently. It is important for big tech companies, particularly in the field of artificial intelligence.
Q: What is a hyperscaler, and how has Core Scientific’s deal with a hyperscaler been received by investors?
A: A hyperscaler is a company that operates large-scale data centers for cloud computing and AI. Core Scientific’s deal with a hyperscaler has been met with skepticism by investors, who question the viability of the agreement.
