Crypto stocks gained in morning trading on Thursday. Riot Platforms rose 7%; Canaan rose 5%; CleanSpark, Coinbase rose 2%; MARA Holdings rose 2%.
Activist investor Starboard Value has built a significant position in Riot Platforms and is pushing for changes at the bitcoin-mining operator, according to people familiar with the matter.
The details
Riot, based in Castle Rock, Colo., has a market value of nearly $4 billion, with its stock price down almost 25% year to date, even during a broad cryptocurrency rally.
The exact size of Starboard’s position couldn’t be learned.
As a crypto miner, Riot uses high-powered computers to process bitcoin transactions by solving complex mathematical problems, receiving bitcoin as payment.
Starboard has been in discussions with Riot’s management team to push the company to convert some of its bitcoin-mining facilities into capacity for so-called hyperscalers, or large data-center users, the people said.
Hyperscalers are companies that operate large-scale data centers designed to handle massive amounts of computing power and storage capacity. Data centers operated by companies such as Amazon Web Services and Alphabet’s Google Cloud have grown increasingly important as the artificial-intelligence boom gobbles up even more computing power and resources.
In a statement Thursday, Riot said it had spoken with Starboard on several occasions and welcomed its input, as well as the views of other shareholders.
“We are committed to creating value for all shareholders, and we look forward to constructive dialogue with Starboard on ways to achieve this shared goal,” the company said.
The context
Riot’s share price came under pressure this year while the company was pursuing a merger with another bitcoin miner, Bitfarms. Riot built a nearly 20% stake in its rival in hopes of forming the largest publicly traded bitcoin miner, but talks for a full sale didn’t result in a deal. Riot later struck a settlement with Bitfarms in September for a spot on the board.
Crypto companies have rallied since the November presidential election, fueled by hopes for more friendly regulations under the incoming Trump administration. Riot shares still have trailed the massive gains at others in the sector, including MicroStrategy and Coinbase Global, Inc..
Starboard would like to see Riot take a similar path as bitcoin miner Core Scientific, which has been working with CoreWeave—an Nvidia-backed startup—to supply power infrastructure for the cloud-computing company’s operations, the people said.
A flurry of other bitcoin miners have been vying to take advantage of the lack of data-center space and the need for large amounts of power amid the AI craze. Riot Chief Executive Jason Les has said the company would be open to those deals if the right one came along.
Starboard has had a busy few months. The firm, run by Jeff Smith, invests across many sectors but is especially active in technology, including its recent efforts at Autodesk and Tinder parent Match Group. Starboard also recently revealed stakes in Pfizer and Tylenol-maker Kenvue.
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