Riot Platforms: A Huge Opportunity for Shareholder Value Creation
Riot Platforms is a bitcoin mining and digital infrastructure company with two business segments: Bitcoin Mining and Engineering. The company operates a bitcoin-driven infrastructure platform and has a market value of $3.97 billion. Despite a significant increase in the value of bitcoin this year, Riot’s stock price has declined by 24%.
Starboard, a successful activist investor, has acquired a position in Riot Platforms and sees opportunities for operational and strategic value creation. The company’s management has been criticized for its high spending on selling, general and administrative expenses, as well as its high stock-based compensation to executives. Riot’s corporate governance track record has also been poor, with a five-person staggered board and instances of nepotism.
Starboard’s plan for Riot involves reducing the company’s unnecessary expenses and right-sizing its executive compensation. The company also has the opportunity to capitalize on the massive demand from hyperscalers and large-scale cloud computing companies that operate data centers. Riot’s facilities in Texas and Kentucky have characteristics that are favorable to hyperscalers, including access to energy, low latency, and controlled natural disaster risk.
By leasing capacity to hyperscalers, Riot could generate significant cash flow and increase its value to shareholders. The company has already spoken with Starboard and welcomes its input to create value for all shareholders. With Starboard’s expertise in corporate governance and operational improvement, Riot is well-positioned to achieve significant shareholder value creation.
