Riot Platforms Faces Pressure From Activist Shareholders

According to Cointelegraph, Riot Platforms is once again under scrutiny from an activist shareholder, as investment firm D.E. Shaw has reportedly acquired a stake in the Bitcoin mining company. The Manhattan-based firm, which manages $70 billion in assets, has taken an undisclosed position in Riot and may push for strategic changes, as reported by Reuters on January 29, citing sources familiar with the situation. D.E. Shaw is known for its expertise in using complex mathematical models to capitalize on financial markets. The firm is reputed for its discreet approach in influencing the companies it targets, often opting for private negotiations with executives to implement desired changes. This marks the second instance of an activist shareholder targeting Riot in recent months. Hedge fund Starboard Value reportedly acquired a significant stake in the crypto miner late last year, advocating for Riot to repurpose some of its Bitcoin mining operations to support large data center users, a sector experiencing growth due to the surge in artificial intelligence applications. Riot has acknowledged engaging in discussions with Starboard. In recent months, several crypto miners have been leasing parts of their operations to support AI ventures, as the difficulty of mining Bitcoin has increased and competition has intensified. Concurrently, AI-related projects have seen a rise in valuation. On January 21, Riot announced plans to formally evaluate the potential of reallocating over 600 megawatts of power at its Corsicana, Texas site to support AI and high-performance computing. Currently, the site utilizes 400 megawatts for Bitcoin mining. Riot Platforms' shares (RIOT) closed with a gain of nearly 2.5% at $11.22 on January 29, ending a two-day losing streak observed among other public crypto miners, according to Google Finance. However, RIOT experienced a slight decline of nearly 0.3% in after-hours trading on the same day. Despite being up nearly 10% this year, the company's shares have fallen nearly 3% over the past 12 months, struggling to achieve net income. The crypto industry remains optimistic about U.S. President Donald Trump's promises to reduce regulatory oversight and enhance local Bitcoin mining, which could provide positive momentum for the sector. Riot has also engaged in its own activist investing, having attempted to acquire rival Bitcoin miner Bitfarms last year by building a substantial stake in the company. However, the two companies mutually agreed to terminate the hostile takeover by the end of last year.