Riot shares surge on $28B AI lease as Hut 8 sinks on revenue miss

Riot Platforms announced its largest agreement yet: a 15-year AI data center lease worth $28 billion. It covers 910 megawatts at the company’s Corsicana, Texas, facility. The announcement matters because Riot is shifting from Bitcoin mining toward infrastructure leased to major AI companies. Investors responded strongly, sending shares up more than 13% Wednesday.

The agreement uses land and power infrastructure Riot originally developed for Bitcoin mining. The AI tenant, identified as Paradox in Riot’s filing, will own and operate the computing equipment and pay operating expenses. Riot estimates total project costs at $5.5 billion and expects to finance them mainly with debt backed by lease payments.

The deal lifts Riot’s total future contracted data center revenue to about $38 billion across three leases signed this year. However, the first phase is not expected until September 2027, and rent starts within 60 days after delivery. Riot still reported third-quarter revenue of $181.4 million and sold 10,599 BTC to fund expansion.

An AI data center lease is a long-term contract in which an AI company rents access to data center infrastructure for its computing operations. It matters because the owner can turn facilities into recurring rental income instead of relying mainly on unpredictable Bitcoin mining revenue. Riot’s new agreement runs for 15 years and is valued at $28 billion.

Under the deal, Riot will provide land and power infrastructure at its Corsicana, Texas, site. That infrastructure was originally developed for Bitcoin mining. The tenant, identified as Paradox in Riot’s quarterly filing, will own and operate the computing equipment. It will also cover operating expenses, separating Riot from much of the equipment and day-to-day operating burden.

Riot estimates the project will require $5.5 billion in capital costs. It plans to finance the work primarily with debt backed by lease payments, though that financing has not been secured. The first phase is expected in September 2027, with rent beginning within 60 days of delivery.

Riot’s new lease is large in three ways: it carries a stated value of $28 billion, lasts 15 years, and covers 910 megawatts of capacity. Together, those figures show a substantial, long-duration commitment to AI infrastructure at Riot’s Corsicana, Texas, facility. The scale helped convince investors that the company’s business model is changing.

The lease is not Riot’s only AI infrastructure contract. With this agreement included, Riot says its total future contracted data center revenue is approximately $38 billion across three leases signed this year. That means the new contract represents most of the total value disclosed for those three agreements, although the article does not provide the individual values of the other two leases.

The headline value does not mean Riot is receiving all the money immediately. The project’s first phase is expected to be delivered in September 2027, and rental payments begin within 60 days after delivery. Riot must also finance an estimated $5.5 billion in capital costs, mainly through debt that has not yet been secured.

Riot expects its cash-flow mix to change sharply as AI infrastructure leases come online. CEO Jason Les said that, at full deployment of currently executed deals, nearly all expected cash flow will come from long-term leases with leading AI ecosystem players. This would reduce Riot’s reliance on Bitcoin prices and mining revenue as its main financial engine.

The mechanism is simple: Riot supplies land and power infrastructure, while tenants operate the computing equipment and pay rent after delivery. Riot’s three signed leases are expected to produce approximately $38 billion in future contracted data center revenue. The company is therefore moving toward longer-term contractual income rather than depending primarily on selling mined Bitcoin.

The change is not immediate. Riot sold 10,599 BTC in the third quarter to help finance expansion, and Bitcoin mining at Corsicana could begin winding down in summer 2027. The first AI phase is expected in September 2027, with payments starting within 60 days of delivery. Financing and construction remain important conditions.

Hut 8’s shares fell because its existing revenue weakened while its AI transition had not yet started paying rent. Third-quarter revenue dropped 15% to $71.1 million, below analysts’ $75.8 million estimate. Shares fell more than 22% at one point, showing how sharply investors reacted to the earnings miss and the timing gap.

CFO Sean Glennan attributed part of the decline to asset sales and lower revenue per Bitcoin mined. Cash administrative expenses also increased year over year. The company described its legacy revenue base as no longer the main growth driver, while its larger contracted infrastructure revenues remain tied to delivery milestones.

Hut 8 has secured $7.5 billion in project bonds to fully finance two major AI data center developments. However, neither project has begun generating lease revenue. CEO Asher Genoot also emphasized that traditional AI data centers can be complex, expensive, and slow to deliver. Hut 8 therefore faces weaker current revenue and higher costs before its planned AI income arrives.

Data center projects can be financially committed without being revenue-producing assets. A lease records a future agreement, while financing supplies money for construction. Neither automatically means the facility is ready for use. The infrastructure must reach required delivery milestones before the tenant can begin operating there and paying rent.

Riot’s agreement shows the timing clearly. Its first phase is expected to be delivered in September 2027, and rental payments are scheduled to begin within 60 days of delivery. Until then, Riot must develop the project and arrange financing, including an estimated $5.5 billion in capital costs. The future contract therefore does not equal immediate reported revenue.

Hut 8 faces the same gap. It has secured $7.5 billion in project bonds for two major AI data center developments, but neither has started generating lease revenue. The company said larger contracted infrastructure revenues remain tied to delivery milestones. This explains why revenue can fall during construction even as future contracts appear large.

Bitcoin miners make money by producing Bitcoin through mining and selling it for cash or other funding needs. Their revenue therefore depends partly on how much Bitcoin they mine and the price it commands. The article highlights this model through Riot’s third-quarter revenue and its sale of 10,599 BTC to help finance expansion.

Converting a mining site into AI infrastructure requires substantial spending. Riot will provide land and power infrastructure, but the project is expected to cost $5.5 billion. Selling mined Bitcoin can provide cash for that transition. Debt can add another source of capital, especially when lenders can look to future lease payments as backing for borrowing.

Riot plans to finance the project mainly with debt backed by lease payments, although financing has not been secured. The shift may eventually reduce dependence on Bitcoin prices, because long-term AI leases could generate contracted cash flow. But construction must come first, and Riot’s mining operations at Corsicana could begin winding down in summer 2027.