RIOT's AI pivot has significant risks (capex, construction, tenant concentration) and delayed revenue; limit exposure to <=1%.

Any thought on Riot for the AI infrastructure play? They just landed a $9.1 billion data center deal with Enthropic to host AI compute, pivoting heavily away from pure Bitcoin mining.

Curious if you see them revaluing as a multi-deade AI landlord or if the capex requirements and crypto ties make it too risky.

So, let's talk about Riot. Uh Riot is an interesting play. That's a minor I have been in and out of. Uh but as I always say since day one, mining is a cutthroat business and the pivot to HPC high performance compute has been big for some of the miners.

And Riottock has actually done surprisingly well.

But they did do that 191 megawatt deal and it doesn't start delivering full power until 2028. Anyway, a headline contract is not immediate net present value. They still have very a lot of things like heavy capex, heavy construction risk, heavy tenant concentration, what GPUs are they going to use, etc. A lot of questions.

Also, when they got the news, and there was a week or two ago, the stock popped 25%. And immediately retraced, gave it all back. So, there was no rerate per se.

It's kind of exciting when you dig into the weeds. kind of scary as it's far out. So now the good news is energy is scarce. Cheap Texas megawatts is real. That's good. But there is that bridge loan and there's a construction risk.

Uh and you got a whole bunch of things. You got tenant concentration. You got capex as I covered before.

Who knows what could happen to anthropic that could also be a house of cards which could drag these guys down too. And remember 191 megawws is a rounding error compared to the big hyperscalers. That is uh not a lot of power.

So when Jensen looks at customers, is he going to give Riot the time of day or anthropic? I don't know. We'll see. But will people even be able to get their hands on these things?

And if they can't and they have older Nvidia boxes that will suck a lot more power, the cost per token will be a lot higher and they'll be at a competitive disadvantage to Elon Web Services, SpaceX for example.

The other thing too, these are the financials for Riot. The debt is very high at nearly $900 million. The revenue has been flat. Maybe that would change in 2027 2028. The good news is the net income and IBITA is getting less negative over time. So they are definitely making progress.

But you got to watch this very carefully and see exactly when the actual money starts flowing in from anthropic. That's it. If you want to play this game, I wouldn't recommend more than 1% of your portfolio into Riot or any of the Bitcoin miners.

So, be careful. And by the way, I did say as well that Bitcoin mining is a cutthroat business, but AI compute will also be erased to the bottom over time, just like Bitcoin mining was unless you have complete vertical integration and you're not renting somebody else's space.