Riot Platforms' 15-Year Powered Land Lease in Texas Reduces Costs, Election Adds Risk

Riot Platforms has signed a powered land lease for 15 years at the company's Corsicana site in Texas. Chardan analyst Bill Papanastasiou said the arrangement lowers Riot's construction funding needs and transfers operating risk to the tenant. However, Needham analyst John Todaro said the Texas election result creates uncertainty over the project's schedule. Needham identified Anthropic as the tenant, noting that the artificial intelligence lab also leases space at Riot's Rockdale site.

Under a powered land lease, Riot supplies land equipped with electrical infrastructure. The tenant installs and operates the computing equipment. Papanastasiou said the agreement's terms demonstrate that Corsicana strengthened Riot's bargaining position. Papanastasiou said the tenant assumes substantially all technology and operating risk. Papanastasiou said Riot has no development exposure for data halls or cooling systems.

Todaro said the agreement covers 910 megawatts of computing capacity. Todaro said the rent is comparable to rent for traditional Tier-3 leases covering fully constructed data centers. Needham estimates capital spending by Riot at about $6 million per megawatt, versus $11 million to $12 million for Tier-3 construction. Needham calculates a 33% yield on that spending.

Chardan estimates the project's total capital spending at $5.5 billion. Chardan said Riot would initially fund one-third through cash, borrowing or a combination of both. Chardan said the tenant would reimburse the balance in stages after each phase is delivered and begins generating rent. Chardan's discounted cash flow model assigns the contract a value of $17.25 per share. Needham said management favors project debt and intends to begin arranging financing in 2027. Needham said Anthropic would advance the reimbursements and recoup the money through rent credits if financing on comparable terms is unavailable.

Papanastasiou said Riot shares performed differently from peers after the midterm elections. Papanastasiou said investors reduced holdings in companies with large power pipelines because Governor-Elect Gina Hinojosa may put pressure on new data center construction. Papanastasiou said every power allocation in Riot's portfolio is fully approved. Papanastasiou said management anticipates no environmental permitting difficulties. Todaro said management believes no additional approvals are needed. Todaro said Corsicana has no air permits and management believes air permits are unnecessary. Needham's base case assumes the project proceeds, but Needham warned that the governor-elect could slow projects through permitting. Todaro said the election increased the risk of delays and postponements across the Texas data center market.

Chardan increased Riot's price target from $27.50 to $32 while retaining a Buy rating. Needham maintained a Buy rating and increased Riot's price target from $30 to $31. However, Needham reduced the valuation multiple, citing Texas risk and an expected market preference for Tier-3 facilities rather than powered land sites. Chardan said the firm may select a different top pick if Riot shares near Chardan's target or regulatory pressure turns out to be minimal.

Riot shares traded lower on Thursday alongside broader losses among crypto-linked stocks while Bitcoin fell and investors evaluated the midterm election results. Benzinga Pro data showed Riot shares down 3.16% at $14.89 at publication on Thursday.