$9.1 Billion AI Lease Drives RIOT Target Price Increase to $35

Overview

The report focuses on RIOT's transition from a Bitcoin miner to an AI data center infrastructure operator. At Rockdale, the company signed a 191 IT-MW long-term lease with a frontier AI lab reportedly identified as Anthropic, and it also signed a non-binding letter of intent with a single tenant for the 1GW Corsicana site. Bernstein believes that scarce grid-approved power assets, low-latency advantages from proximity to cities, and recent increases in lease pricing together strengthen RIOT's bargaining power and revenue visibility.

Core views

The unit revenue yield and margins of the new 191 IT-MW lease are both above Bernstein's previous assumptions, prompting it to raise its 2030 AI compute hosting revenue forecast to approximately $900 million, related EBITDA to approximately $700 million, and its steady-state EBITDA margin assumption to 84%. By 2030, the model expects RIOT to deliver 391 IT-MW of billable capacity, of which 241 IT-MW has already been contracted, and further assumes an additional 150 IT-MW will be contracted on economics similar to the new agreement. Based on a sum-of-the-parts valuation, AI compute hosting, Bitcoin mining, and Bitcoin holdings contribute 84%, 11%, and 5% of target enterprise value, respectively.

Analysis framework

The report first updates business forecasts based on the latest operating results, the terms of the 191 IT-MW lease, construction progress, and financing arrangements, then uses a sum-of-the-parts valuation method to separately assess AI compute hosting, Bitcoin mining, and Bitcoin holdings. The AI business is valued using a one-year forward enterprise value multiple based on 2030 steady-state EBITDA and discounted back to a 12-month target value; the mining business uses a 2027 expected enterprise value multiple; Bitcoin holdings are valued at current net asset value.

Methodology notes

• Corporate valuationSum-of-the-parts valuation (SOTP)

  Estimate the value of different businesses and assets separately, then subtract net debt and divide by shares outstanding.

  AI compute hosting, Bitcoin mining, and Bitcoin holdings are valued separately, resulting in a combined target enterprise value of approximately $14.73 billion; after subtracting approximately $1.58 billion of net debt, this implies a target market capitalization of approximately $13.15 billion and a target price of $35 per share.

• Relative valuationEnterprise value multiple method

  Estimate business value by multiplying expected EBITDA by the applicable enterprise value multiple.

  The AI compute hosting business uses a 21x one-year forward enterprise value to EBITDA multiple, based on 2030 steady-state performance and discounted; the Bitcoin mining business uses a 5x 2027 expected enterprise value to EBITDA multiple.

• Asset valuationNet asset value method (NAV)

  Calculate the value of digital asset holdings based on the number of Bitcoins and an assumed market price.

  RIOT holds 11,380 Bitcoins, which the report values at $65,000 per Bitcoin, corresponding to approximately $740 million in asset value.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• RIOT.US

  Core covered name, directly affected by AI compute hosting expansion, Bitcoin mining profitability, and the value of Bitcoin holdings.

  Strengths

  Owns two power asset sites, Rockdale and Corsicana, totaling approximately 1.7GW, with grid approval and proximity to cities; the 191 IT-MW long-term lease improves revenue visibility, with unit revenue and margins better than previously expected; cash and Bitcoin assets provide liquidity for equity contributions to construction.

  Weaknesses

  AI project construction is capital intensive and is expected to require approximately $3.7 billion of new secured financing; operations and power assets are concentrated in Texas; in the near term, the company remains exposed to Bitcoin prices, mining economics, and asset sales.

  Comparison

  Compared with the old model, the new model adjusts the 2030 contracted capacity assumption from 400 IT-MW to 391 IT-MW, while increasing average annual revenue yield from $1.5 million per IT-MW to $2.2 million and EBITDA margin from 80% to 84%, raising the target price from $30 to $35.

  Risks

  Key risks include worsening financing terms, construction delays or cost overruns, customer concentration, failure to convert the Corsicana LOI into a definitive contract, regulatory and tax changes in Texas, environmental controversy, and Bitcoin price volatility.

Key data

• RatingOutperformBernstein maintains its prior rating, with an evaluation period of the next 12 months.
• Target price$35.00Raised from $30.00.
• Closing price$19.40As of August 10, 2026.
• Potential upside80%Calculated based on the report's target price and closing price.
• Frontier AI lab lease191 IT-MW, total contract value of $9.1 billionBase term of 20 years, with two additional 5-year extension options.
• Annualized recurring revenue from new lease$457 millionExpected average annual net operating income is $365 million to $411 million.
• Capital expenditure for new lease$2.1 billion to $2.3 billionEquivalent to approximately $11 million to $12 million per IT-MW.
• Project financing$1.7 billion to $2.1 billion of debt financingExpected loan-to-value ratio of 80% to 90%; Morgan Stanley has approved $573 million of bridge financing.
• Delivery scheduleInitial 96 IT-MW in December 2027, full capacity in June 2028Construction progress is a key prerequisite for revenue realization.
• Total signed Rockdale leases241 IT-MW, total contract value of $9.8 billionIncludes AMD's 50 IT-MW and the frontier AI lab's 191 IT-MW.
• 2030 AI compute hosting forecastRevenue of approximately $900 million, EBITDA of approximately $700 millionSteady-state EBITDA margin is expected to be approximately 84%.
• Target enterprise value compositionAI compute hosting 84%, Bitcoin mining 11%, Bitcoin holdings 5%AI compute hosting has become the main source of valuation.

Impact & implications

The new lease provides RIOT with long-term, predictable, high-margin cash flows, shifting the market's valuation logic for the company from cyclical Bitcoin mining toward AI infrastructure. Large-scale grid-approved power assets are becoming scarcer amid tightening regulation, which is favorable for rents and contract terms. However, the transition also significantly increases capital expenditure, debt financing, and project delivery requirements, and realization of the target price depends on financing execution, on-schedule construction, and whether the Corsicana LOI can be converted into a definitive lease.

Risks

• RIOT's operations are concentrated in Texas, and new taxes, power-use rules, or operational restrictions targeting mining or data centers could affect project economics.
• AI projects depend on procurement of land, equipment, and long-lead-time components; supply chain delays, cost overruns, or construction delays could postpone revenue recognition.
• Large-scale construction requires significant new debt financing, and higher financing costs or failure to secure financing as planned would increase equity financing and dilution risk.
• The 1GW Corsicana LOI is non-binding, and the final tenant, contract size, pricing, and signing timeline remain uncertain.
• Long-term revenue depends heavily on a small number of large customers, and customer credit, changes in demand, or contract execution issues could affect cash flow.
• Energy consumption and environmental impact could trigger opposition from communities, environmental organizations, and regulators.
• Volatility in Bitcoin prices and mining economics will affect mining cash flow, the value of holdings, and the company's ability to fund AI construction.

What to watch

• Drawdown progress on the $573 million bridge financing and the final terms of the $1.7 billion to $2.1 billion in long-term project debt.
• Whether the initial 96 IT-MW can be delivered in December 2027 and whether the full 191 IT-MW capacity can come online in June 2028.
• Whether construction delivery for AMD's additional 25 IT-MW can begin by the end of 2026 and be completed in May 2027.
• Whether Corsicana's 1GW non-binding LOI can be converted into a definitive lease and its unit yield.
• Whether Rockdale's additional 150 IT-MW capacity can be contracted on economic terms similar to the new lease.
• Whether AI compute hosting revenue and EBITDA can ramp toward the 2030 forecasts of approximately $900 million and approximately $700 million.
• The scale of the company's sales of Bitcoin production and reserves, and the impact on liquidity, holdings value, and equity financing needs.