Q1 2026 Earnings Call Transcript

Good day, and thank you for standing by. Welcome to Riot Platforms' First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please also be advised that today's call is being recorded. I would now like to hand the conference over to Josh Kane, Head of Investor Relations at Riot Platforms. Please go ahead.

Thank you, operator. Good afternoon, and welcome to Riot Platforms' First Quarter 2026 Earnings Conference Call. My name is Josh Kane, Head of Investor Relations. And joining me on today's call from Riot are Jason Les, Chief Executive Officer; and Jason Chung, Chief Financial Officer.

On the Riot Investor Relations website, you can find our first quarter 2026 earnings press release and accompanying earnings presentation, which are intended to supplement today's prepared remarks and which include a discussion of certain non-GAAP items. Non-GAAP financial measures provided should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP and are included as additional clarifying items to aid investors in further understanding the company's first quarter 2026 performance. During today's call, we will be making forward-looking statements regarding potential future events.

These statements are based on management's current expectations and assumptions and are subject to risks and uncertainties. Actual results could materially differ due to factors discussed in today's earnings press release and comments and responses made during today's call and in the Risk Factors section of our Form 10-K and Form 10-Q, including for the 3 months ended March 31, 2026, which will be filed later today as well as other filings with the Securities and Exchange Commission. With that, I will turn the call over to Jason Les, CEO of Riot Platforms.

Thank you, Josh, and good afternoon, everyone. The first quarter of 2026 was a definitive inflection point in Riot's transition into one of the most significant and capable data center operators in the industry. Looking at our key milestones for the quarter. First, AMD officially exercised a 25-megawatt expansion option, bringing their total contracted footprint at our Rockdale facility to 50 megawatts and validating our ability to execute at institutional scale.

Initial data center capacity for this expansion will be delivered beginning in November of this year. Second, on the initial 25-megawatt AMD lease, we delivered the first 5 megawatts of critical IT capacity right on schedule in January, with the remaining 20 megawatts on track for delivery this May. Third, we continue to make significant progress at our Corsicana facility. We have initiated development of our first core and shell building using our enhanced 168-megawatt standard design, which efficiently consolidates our previous 2 building design, which will now be connected by expanded administrative capacity.

Concurrently, we are also securing long lead items to ensure timely delivery of full build-to-suit capacity after the core and shell is complete. Finally, we achieved this infrastructure growth while maintaining strong capital discipline, proactively funding our data center initiatives entirely through operating cash flow and disciplined Bitcoin sales, allowing us to execute on these key growth initiatives without issuing a single share of equity. Let's dive right into the AMD expansion. When we announced the initial AMD lease in January, we signed a 10-year agreement to deliver 25 megawatts of critical IT capacity at our Rockdale facility with extension options that created a partnership pathway of up to 25 years.

That original lease included a 75-megawatt expansion option and a right of first refusal on an additional 100 megawatts. More recently, our partnership with AMD has expanded, as they worked with our team to exercise an additional 25 megawatts of their expansion option capacity. AMD now has 50 megawatts of critical IT capacity under contract with Riot at the Rockdale facility. This expansion reflects AMD's ongoing confidence in our ability to deliver and is a clear indicator that Riot is delivering exactly as promised, on time and on budget.

To summarize the economics of our expanded AMD lease today, we are delivering an additional 25 megawatts of critical IT capacity, bringing the total lease to 50 megawatts. Total revenue of $636 million during the primary 10-year period. $51 million in average annual NOI over the course of the contract, which, when combined with the reduced CapEx spend, will drive an even more attractive development yield relative to the initial AMD lease. The total CapEx required for the expansion is approximately $3.3 million per megawatt, totaling $83.2 million, a significant reduction from the initial 25-megawatt CapEx of $3.6 million per megawatt, driven by a leaner build-out scope following building preparation in the initial phase.

Slide 8 presents a clear visual of exactly how this expansion is taking shape on the ground at our Rockdale facility. On the top half of the slide, you can see the physical layout of buildings F and G. We are currently finalizing the initial 25 megawatts of capacity for AMD highlighted in yellow. We are already delivering 5 megawatts for AMD with the remaining 20 megawatts firmly on schedule for full delivery next month in May 2026. AMD's 25-megawatt expansion will be developed directly adjacent to the initial AMD footprint in Building G and will be constructed in 2 phases.

Phase 3 highlighted in blue will deliver 10 megawatts in November of 2026. While Phase 4 highlighted in orange represents the remaining 15 megawatts for delivery in May of 2027. As a result of this phased delivery, we anticipate exiting 2026 with an annualized operating lease revenue run rate of $37.8 million, scaling to a run rate of $55.6 million as we exit 2027 and AMD's full 50-megawatt footprint comes online. Importantly, this provides a highly visible, high-margin baseline that has the potential to scale up even further if AMD exercises its remaining expansion options. You can see the physical footprint of those additional options mapped out in green on the site plan.

AMD retains an additional 50-megawatt expansion option, and furthermore, they now hold an additional 100-megawatt option, which replaces their prior right of first refusal. Together, this provides a highly visible de-risked pathway to potentially scale our partnership with AMD to up to 200 megawatts of critical IT capacity at Rockdale. Now I want to provide an update on the development activity underway at our Corsicana campus. As a reminder, at the end of last year, we announced our plan to initiate core and shell development at Corsicana.

I am pleased to report that development is actively underway and tracking on schedule. This marks the transition of Corsicana from a site with approved power into an active data center development site. Since that announcement, our team has continued to refine our standard basis of design based on market engagement and feedback. The result is a meaningful enhancement to both the density and the flexibility of what we can deliver.

Our updated standard is a 168-megawatt critical IT building engineered to support densities beyond 1,000 watts per square foot. The design is configurable as a 2-story standard or a single-story high-density format with oversized galleries to accept 100% liquid cooling and the densest next-generation equipment without retrofit. We are using prefabricated skids and vendor-agnostic equipment specifications to further compress our schedule and derisk procurement. This is a design built for repeatability, speed to market and the requirements of the most sophisticated AI and HPC tenants in the market today.

Reflecting this enhancement, we have consolidated the 2 buildings we previously announced into a single larger building with 168 megawatts of critical IT capacity, up from the 112 megawatts we originally planned across 2 buildings. The core and shell CapEx is unchanged from our prior guidance, which means we are now delivering 50% more critical IT capacity for the same capital spend. This meaningfully improves our capital efficiency at the core and shell level. Development is underway today, and we have a clear line of sight to 160 megawatts of completed core and shell in the second quarter of 2027. Applying the updated design across the full Corsicana site, our total planned campus capacity now stands at 756 megawatts of critical IT capacity, an increase over our prior plan on the same approved power, the same land and the same development time line.

Put simply, we are extracting more capacity and more value from the infrastructure we have already secured, and we are doing so on a timeline that matches the urgency of today's market. Now I'd like to turn it over to Jason Chung to outline our financing strategy and review the quarterly financial results.

Thank you, Jason. Turning to how we are funding this growth on Slide 11. There are 4 primary principles that guide our approach to financing: First, we carefully manage our current liquidity. This involves the strategic management of cash and Bitcoin holdings to finance initial equity requirements for data center development. Second, we seek to broaden capital availability.

By leveraging the credit profiles of our tenants and our highly visible, long-term contracted cash flows, we're establishing new institutional financing and capital sources for Riot. Third, we look to systematically lower our cost of capital. As our asset base matures, we are able to translate the strong credit characteristics and funding profiles into accretive low-cost capital. And fourth, we maintain prudent ongoing balance sheet management.

This requires active debt measurement throughout market cycles in order to cleanly recycle capital, preserve our liquidity profile and support long-term growth. Slide 12 illustrates how these principles work in practice. Our funding strategy utilizes a sequential capital cycle to fund our data center development. In Phase 1, initial development funding, we use our balance sheet to advance development as seen with the initial 25-megawatt AMD deployment to just an additional 25-megawatt AMD option and the core and shell development at Corsicana.

During the quarter, we funded this CapEx through a disciplined sale of a portion of our Bitcoin holdings, the most-capital efficient source of funding currently available to us. Importantly, we did not issue any common equity during the quarter. Instead, we leverage our Bitcoin treasury and our operating cash flows to fund this development. In Phase 2, tenant-backed project financing.

We actively engage with multiple institutional lenders on project level, non-recourse financing structures for the AMD lease. The quality of the AMD lease has a long-term, high-margin lease with an investment-grade leader in the AI ecosystem makes this the type of asset that project finance markets are designed to finance efficiently. We continue to target attractive loan-to-cost ratios in the range of 80% in these structures. Once we close funding, we will be in a position to recover a substantial portion of the equity we deployed into this first set of projects.

Phase 3 is the capital recycling phase, where equity we recover from either a true-up during the construction period as in our AMD discussions or from refinancing proceeds on completed stabilized assets flows directly back into the next wave of data center development. The cycle is to lease, finance, build and recycle. And as we compound through the cycle, we retain ownership of high-quality cash flowing assets while continuously redeploying capital to finance additional growth. Let's move on to the first quarter financial update on Slide 14. For the first quarter of 2026, Riot reported total revenue of $167 million.

Notably, with the delivery of our first 5 megawatts to AMD this quarter, Riot is now an active data center operator. And for the first time, our top line now includes contracted lease revenue from an investment-grade tenant. We recorded a GAAP net loss of $500 million, or $1.44 per diluted share and an adjusted EBITDA loss of $311 million. This loss was driven by non-cash mark-to-market accounting adjustments on our Bitcoin holdings of $326.7 million and non-cash depreciation and amortization expense of $97.7 million, which do not reflect the underlying strong fundamental economics of our operations.

Diving into these operations, our Bitcoin Mining segment performance remained robust. Riot produced 1,473 Bitcoin in the first quarter and ended the quarter with a deployed hash rate of 42.5 exahash. We generated $21 million in power curtailment credits, driving our net cost of power down to $0.03 per kilowatt hour, thereby lowering our direct cost to mine Bitcoin to $44,629 per Bitcoin, a 26% reduction compared to the fourth quarter of 2025. In our newly added Data Center segment, we successfully exited the quarter with 5 megawatts of critical IT capacity fully online and generated $33.2 million in total revenue, consisting of $900,000 in operating lease revenue and $32.2 million in tenant fit-out services revenue.

Finally, we ended the quarter holding 15,679 Bitcoin on our balance sheet, valued at approximately $1.1 billion, which we will continue to leverage in order to finance the ongoing development of our Data Center business. Turning to Slide 15. I'm proud to present the inaugural financial results of our Data Center segment. In the first quarter, this segment generated $33.2 million in total revenue. As we introduce this new reporting line, it is important to understand the composition of this revenue and how it will evolve as our footprint scales.

The majority of our first quarter revenue, $32.2 million, was driven by tenant fit-out services. This represents the procurement and installation of customer-specific equipment, which is reimbursed by tenants on a cost-plus basis. While this revenue naturally carries a lower margin, it requires no capital risk from Riot and accelerates our tenants' ultimate speed to market. The fundamental value of this segment, however, is reflected in the operating lease income.

We recognized roughly $900,000 in recurring lease revenue, driven by the initial 5-megawatt delivery to AMD in January, which generated a 91% gross margin this quarter. As AMD scales its operations, we expect associated operations and maintenance costs naturally increase, which will normalize this margin towards our previously stated run rate target of 80% plus. As we look ahead, you will see a natural evolution in this revenue mix. While tenant fit-out revenue is elevated today during the development phase as the remaining megawatts for AMD come fully online, our high-margin operating lease revenue will scale dramatically.

This will layer highly predictable infrastructure-grade cash flows into our consolidated P&L, driving significant margin expansion over time. Turning to Slide 16. Our Engineering segment comprised of ESS Metron and E4A Solutions serves as a key pillar of our execution strategy. The financial metrics for Engineering remain exceptionally strong. Engineering backlog stood at $193.4 million during the quarter, with approximately 90% of backlog continuing to be driven by Data Center sector demand.

Most importantly, the apparent decline in backlog for this quarter was entirely driven by our decision to strategically hold back manufacturing capacity for deployment towards our own Data Center business. Since acquiring ESS Metron in December 2021, Riot has realized approximately $24 million in cumulative CapEx savings across our development footprint, and these savings will continue to compound as we further scale up. While this compounding cost advantage is accretive, the true strategic value of our Engineering business is control over procurement. Low- and medium-voltage switchgear, transformers and power distribution centers are among the most severely constrained components in the data center supply chain.

For developers relying on third-party manufacturers, lead times are lengthening, and these lead times have become a binding constraint on delivery schedules across the industry. Because Riot owns a dedicated switchgear and power distribution manufacturer, we can sequence, prioritize and derisk the schedule critical equipment required to bring a data center online. This vertical integration was a key factor supporting our ability to deliver Phase 1 of the AMD lease on an accelerated time line. Looking ahead, we'll continue to invest in the strategically important business.

In 2026, we expect to increase ESS Metron's total engineering capacity by approximately 25%, and we will be strategically allocating that incremental capacity to support Riot's own data center growth. Further, because we manufacture these components in-house, we design them in parallel with our data center engineering team, allowing us to move faster and reducing redesign risk. Just as importantly, the same teams that manufacture this equipment also provide maintenance in the field, which will drive long-term operational efficiencies as our data centers are energized and stabilized. Taken together, our Engineering business is a core engine of our competitive moat in a market where time to power is the single most valuable commodity.

Now I'd like to turn it back over to Jason Les.

Thank you, Jason. I want to frame one of our key competitive advantages in the broader data center development market, secured power. Today, access to power is a key bottleneck to data center development globally. This makes our large portfolio of 2 gigawatts of fully approved power, a strong competitive advantage, giving us one of the most significant development pipelines in our industry.

However, we are not stopping here. We recognize that the market demand for power is strong, and we are aggressively pursuing growth in our Power portfolio across 4 distinct avenues: First, through greenfield and brownfield development, securing and developing new land assets that offer immediate or near-term proof power capacity. Second, through behind-the-meter self-generation, allowing us to strategically co-locate our own power production directly with our critical load. Third, through inorganic M&A actively targeting and acquiring portfolios or organizations that already possess established access to power.

And fourth, through strategic partnerships, forming joint ventures to expand our geographic footprint, rapidly grow our pipeline and explore next-generation technologies. To put the scale and rigor of this effort into perspective, our corporate development team has already evaluated over 100 distinct opportunities across these 4 avenues. We have the team, the capital and the strategy to continuously source the highest quality power assets required to fuel our development pipeline. However, let me be clear.

While we are aggressively pursuing these opportunities, we maintain rigorous capital discipline. We will only execute on transactions that are highly accretive, financially responsible and strictly aligned with our target return thresholds. Now I want to walk through the path we have taken to get to where we are today and provide investors with a clear picture of some of the obstacles Riot has navigated in order to best position our power portfolio for maximum value creation. At the start of 2025, we engaged Altman Solon to conduct a formal feasibility study on both Corsicana and Rockdale, and the conclusion was unambiguous.

We had 2 of the most attractive data center sites in the country. But the same study also identified 2 very specific constraints that left unresolved would have prevented us from leasing that power to high-quality tenants at any meaningful scale. The first was land at Corsicana, where our original footprint was insufficient to accommodate the full 1-gigawatt campus development we wanted to deliver. The second was our ground lease at Rockdale.

Until we solve both of these constraints, we were not in a position to meaningfully advance design, development or leasing at either site. Solving these 2 constraints require patient, disciplined execution, and that is what we did. Over the course of 2025, we successfully navigated a series of obstacles to acquire land adjacent to our original Corsicana site, unlocking the ability to develop the full 1-gigawatt of approved power on Riot-owned land in a connected campus layout. At Rockdale, we converted our interest from a long-term ground lease into a fee simple acquisition of the 200 acres underlying the site.

With those 2 transactions closed, we own the land, we took control over our own destiny at both sites and we removed the most significant barriers between our power portfolio and high-quality contracted leases. Critically, we did not wait for one work stream to finish before beginning the next. In parallel with the land work, we systematically built out the organization starting in the second quarter of 2025 with veteran product, design and engineering talent. With the Corsicana land situation on track, we completed the initial basis of design for our standard data center product and initial campus design for the full Corsicana build-out.

Through the end of 2025, we took those designs to market for direct technical and commercial feedback from prospective tenants, initiated core and shell development at Corsicana and brought on senior commercial leadership to drive leasing execution. That disciplined sequenced groundwork is exactly what allowed us to move decisively when the opportunity arrived. In January of this year, we signed our first data center lease with AMD and delivered the initial phase of capacity within the same month. Since that initial lease, we have expanded the AMD relationship to 50 megawatts, enhance our standard design to increase density and flexibility and are now actively engaged in commercial discussions at both of our sites.

Every one of the steps on this time line was necessary in order to maximize our value creation opportunity. Every one of them has been completed on an accelerated schedule. And the result is that we now have an active commercial pipeline underpinned by secured land, a proven design, committed capital and a tenant relationship that is already generating revenue today. This is an excellent position to be in, and we are confident in our ability to continue to execute from here.

Now I want to zoom in on part of that time line and take a moment to elaborate on the team we have built to execute on this opportunity. Over the past year, building out a world-class data center organization has been one of our highest priorities because we knew from the start that the quality of our team would be every bit as important as the quality of our assets. What you see on this slide is the depth and breadth of the capabilities we have now assembled across 4 pillars: commercial sales; critical operations; project execution; and design and construction. Each of these functions is led by experienced credentialed leadership with direct track records of delivering mission-critical infrastructure at hyperscale grade platforms.

On the commercial side, our sales organization is led by Rhea Williams, our Senior Vice President of AI & Hyperscale Sales. Rhea joined us following previous sales roles at Oracle, Compass Data Centers and Digital Realty. And she brings both the relationships and the credibility necessary to engage hyperscalers and other top-tier tenants at the highest level. Rhea directly reports to me.

That reporting structure is deliberate. Our leasing strategy is the single most important driver of long-term shareholder value at Riot, and having sales report directly to the CEO ensures that I am directly engaged in every major commercial discussion. I am also very pleased to announce today a significant addition to our leadership team. Adam is a proven infrastructure executive with more than 15 years of experience leading hyperscale and AI data center development at multi-gigawatt scale.

He comes to us most recently from TA Digital Group, where he served as Senior Vice President of Design and Construction. And prior to that, he held leadership positions at both Google and Meta. Adam is exactly the caliber of leader we need at this stage of our development, and we are thrilled to have him at the helm of our design, construction and procurement teams as we scale Corsicana, Rockdale and our broader data center platform. Rounding out the organization, our critical operations leadership brings deep experience running mission-critical environments to hyperscale SLA standards.

Our project execution team combines in-house high voltage and procurement expertise with integrated program management across our development pipeline. And every one of these functions is supported by Riot's broader enterprise platform, including our vertically integrated engineering capabilities at ESS Metron and E4A Solutions. The result is a data center organization that is experienced, credentialed and deep. This is a team that is already delivering for AMD at Corsicana and across the leasing discussions underway today.

We have the right people in the right seats to execute on the opportunity in front of us. And our confidence in this team is reflected in the pace of progress you are seeing across our business. I want to close by putting this quarter into perspective. Riot has 4 things that, in combination, are extraordinarily difficult to replicate.

We have the assets. 2 gigawatts of utility power, including 1.7 gigawatts of fully approved energized capacity at 2 of the most attractive data center development sites in the United States. We have the balance sheet. A 15,679 Bitcoin treasury worth roughly $1.1 billion at quarter end, significant cash on hand, operating cash flow from efficient, low-cost mining operations, and strong capital markets relationships give us the ability to fund our growth on value-accretive terms. We have the team.

Our in-house data center organization includes veteran leadership across product design, construction, engineering, sales and operations, and they are delivering on the AMD lease, developing our data center product, building Corsicana and advancing our next wave of leasing discussions. And we have a repeatable approach. Our power first strategy, lease to creditworthy tenants, finance efficiently, build with discipline, recycle capital is designed to compound through multiple deals and multiple sites. Our priorities for the balance of 2026 are clear.

First, deliver contracted megawatts to AMD on schedule and on budget; second, execute on additional leases at both Rockdale and Corsicana, with active discussions underway across hyperscale and other high-quality tenants; third, advanced core and shell development to support delivery of Tier 3 build-to-suit data center capacity; fourth, secure attractive, low-cost financing that reflects the quality of our tenants and sites; and fifth, continue to selectively grow our power pipeline through greenfield and brownfield development, self-generation, partnerships and targeted acquisitions. The opportunity in front of us is significant.

Data center demand continues to grow rapidly, driven by the commercialization of AI and the accelerating need for high-density compute. Power, execution talent, supply chain access and capital discipline remain the binding constraints and time lines for new capacity continue to extend. Riot sits on the right side of both of these trends with energized, fully approved power in exactly the right markets, and with a built-out operating model that is delivering. The AMD expansion is a direct reflection of that position, and it is, we believe, just the beginning.

As we continue to convert megawatts into contracted data center leases with creditworthy tenants, we expect the market to increasingly recognize the quality, scale and cash flow visibility of our platform and to rerate Riot's valuation accordingly. On behalf of our entire management team, I want to thank our shareholders, our partners and our employees for their continued support as we execute on this opportunity. With that, we will now open the call up for questions. Operator?

[Operator Instructions] Our first question will come from the line of Paul Golding with Macquarie.

Congrats on all the progress this quarter. I just wanted to ask a couple of questions. First question, on the 25-megawatt expansion with AMD. I was just hoping you could talk through some of the puts and takes.

It looks like the total contract value across the 25 megawatts is up versus the initial lease, while, as you noted, the CapEx per megawatt is down due to a leaner build-out. I was wondering if you could just give some color on those puts and takes on how you were able to realize a better TCR -- TCV versus a leaner build-out and better CapEx profile? And then I have a follow-up.

Sure. Thanks, Paul. This expansion falls under the original lease that we executed with AMD earlier this year. So it is the same rental rate in terms.

I think the only reason you may be seeing the difference there is that there is an escalator clause in our agreement and this new agreement runs after -- over the course of those escalators occurring. But it is otherwise like substantially the similar terms, similar rate, all of that. The only economic difference really is that lower build-out cost that you mentioned, and we're able to achieve that lower build-out cost because we're leveraging the full building preparation that was already done in the original phase. So when we did the first 25 megawatts, we had to prepare that full building, and that had some additional expense.

And now when we exercise -- execute on the next 25-megawatt expansion, completing that building out, we don't have to do that work over again. So lower cost by leveraging additional work and substantially the same better terms. But as you see on our slide, you combine all of these factors together, and you're having a lower build costs, a slightly higher contract value and altogether, an actual even improved yields from our original deal.

Great. And maybe a 2-part follow-up. Just on the back of those comments, it does look like it may be a bit of a longer build-out period for that 25-megawatt expansion. Can you talk to that and also the ROFR piece that was converted to an option just as a follow-up to that.

I know there's another 50 megawatts in that original option as well as the 100-megawatt ROFR, but just to understand how that converted as well as some of the time considerations with the expansion?

Yes. So this is a pretty fast time line to deliver capacity. You see we're signing this deal. We're announcing this deal here in April, and then we're delivering this at the end of October, beginning of November.

So a pretty quick time line here. To give you some color, when we did the first 25 megawatts for AMD, we were making progress on that schedule before the lease was signed. We were taking some calculated risks, manageable risk to be prepared and to get that first lease off the ground. Now with this expansion, you're really seeing the whole process from the beginning.

And what that means is this schedule is really broadly in line with the build schedule that you saw in the first phase. Difference being just, we just weren't able to announce that until further along in the process. As far as the expansion option and the ROFR goes, from the very beginning here, we said that we viewed our initial deal with AMD to be the beginning of a larger partnership. And the best way that we at Riot can achieve that is by being a consistent and reliable partner for AMD.

And in doing so, we position ourselves as their preferred supplier of choice. So by continuing to do what we're doing, we believe that we are positioned to continue to grow that relationship. And I think the fact that AMD has exercised part of its option so quickly, just a few months after the initial deal, I think that demonstrates that we are succeeding at our goal with growing this relationship. Now more specifically on the ROFR here.

We converted the ROFR to an option really just to simplify the pathway of expansion of the lease of AMD. We want to advance this relationship. AMD wants to advance this relationship, and we want to have a simple pathway to do that. And having an option instead of ROFR really gives them what they really wanted and that worked better for us.

With the pace of interest at Rockdale and in addition to Corsicana, it was better for us to have a defined mechanism for what AMD is looking for instead of having to call that ROFR on terms or on a design that's different than what AMD's needs are. So we simplify our discussions with other potential tenants while also simplifying the pathway for expanding the relationship with AMD. And that's how we were thinking about changing this ROFR to this option.

And that will come from the line of John Todaro with Needham.

Congrats on the additional capacity with AMD. I was wondering if we could get an update on current lease discussions maybe beyond AMD on Rockdale and Corsicana, how you would characterize how those have progressed since last quarter, if there's been any kind of sticking points or gating factors in those conversations? And then I have a follow-up.

Yes. Thank you for the question. So over the past few quarters, we laid out the road map that we've been on to execute a commercial process. And what we've done is completed the foundational work that we needed to fill the gaps that we had.

We talked about that on the time line side and bring a strong offering to the types of counterparties that we want to lease to. As a result of this preparation, we are able to act on the substantial interest that I kind of got into on our last earnings call. And those discussions have advanced considerably since then. So we're in a great spot.

There are no gating items or issues here. We are moving forward. We have interest for capacity across both Corsicana and Rockdale, and we are pursuing those opportunities in parallel. On leasing, our philosophy has always been to focus on high-quality tenants that can drive the financing terms that maximize value.

And the feedback that I can give you is the type of engagement that we're getting has really validated the methodical approach that we've taken. Our ability to succeed in this commercial process is really enhanced when we're going through an onboarding process with a hyperscaler and we can check the box affirmatively on the vast majority of the hundreds of requirements that they have. That is the result of preparation. Leasing this type of capacity to top-tier tenants, that is an enormous lift.

And that can have an unpredictable time line. We've seen some of our peers comment on having multiple deals start to stop or fall through before one got to the finish line. So while it's an unpredictable process, I can tell you that I am more confident than ever at our ability to succeed here based on the progress we've made and based on the type of engagement that we're getting. So all of this to say, I can't tell you when our next lease will be signed, but I can tell you that I believe you will continue to see us make progress over the road map that we've laid out ultimately culminating in a full lease-up of our capacity.

That's great. And if I could just get a follow-up on maybe kind of just, I guess, more broadly kind of demand signals. You think we've kind of seen fewer leases in the public market so far that I think maybe some investors expected in '26. I guess is there anything beyond your conversations where there is changes in demand signals or something of that nature in the last several weeks or months or anything that we could call out?

We see the broader theme of data center demand outpacing supply continuing, and we see that theme continuing for the foreseeable future. The fact is that the commercialization of AI is rapidly advancing and everyone is going to continue to be short on compute because of the data center capacity that's required to support that. And I think that theme was evident on all of the hyperscaler earnings calls yesterday where hyperscalers are growing CapEx and they are all short on compute and capacity, identified as a key thing that's keeping some CEOs up at night. So that theme remains intact.

But each buyer is always in a different phase of their own buying cycle. And at different times, different companies are in a more urgent state than others. And you can imagine, in this rapidly changing environment that AI is driving, this cycle is running through much quicker than it has historically. But you're always going to be seeing the same level of urgency across the field and then that field will kind of just completely change from one quarter to the next as different companies are in different parts of the buying cycle.

The important thing is that we, at Riot, we've built a structure where we can come fully prepared and rapidly respond and engage as customer interest comes forward. And that means that we are positioned to respond and work with what the market is bringing us, whether it's a reliance on our standard design or specific requirements that our design can easily accommodate. Our preparation is paying off, and we are in the right market at the right time.

And that will come from the line of Mike Grondahl with Northland.

Can you talk about some of the initial data center revenue this quarter, how that related to the initial 25 megawatts you're delivering? And how to think about margins this quarter and going forward?

Mike, thanks for the question. This is Jason Chung. Maybe I'll take a stab at that one. So to get a clear picture of our initial data center financials, it's important to break down the total segment revenues that we reported of $33.2 million for the quarter because there's really 2 distinct revenue streams at play here.

First, the vast majority of that total top line, $32.2 million relates directly to tenant fit-out services, which we execute on a cost-plus basis. And this generated $1.4 million in gross profit at about a 5% margin. That being said, I think the remaining and more interesting data point is really around the core operating lease revenue, which came in at $900,000 for the quarter. This reflects a little over 2 months of revenue from that initial 5-megawatt delivery to AMD, which occurred in late January.

And so regarding your question on margins. So the margin on the core operating lease component for this quarter was 91%. However, that 91% is a function of being in the early stages of AMD's ramp-up at Rockdale. And that means there's relatively lighter operating costs during those initial 2 and a bit months.

As AMD scales into their full capacity and site operations mature, we expect that O&M costs will naturally scale in line with that ramp-up. And that will drive NOI margins towards that targeted 80% range that we put out there publicly before. And we think that will happen as we close out Q3 and head into Q4.

Got it. And then maybe one more for you, Jason. Can you talk a little bit about the financing structure you envisioned for AMD? And I don't know, initial conversations you've had with lenders.

Absolutely. So initial feedback has been really positive on the AMD financing, and that's really based on the strong cash flow profile of the lease, the attractive and high development yield as well as just the overall strength of having AMD as an investment-grade tenant there on site. So while I can't really comment on the specific spreads at this point, we believe that the overall structure of the deal and the combination of the relative lack of supply of AMD debt in the market today support spreads that will be highly competitive with what we're seeing across the broader financing markets.

One moment for our next question, and that will come from the line of Stephen Glagola with KBW.

Just 2 parts for me also. With the recent changes in leadership on the Data Center side, has that had any impact on lease discussions you're having with hyperscalers or potential tenants in general? And second, I guess, sitting here today, do you feel you've got the team in place to simultaneously advance leasing efforts at both Rockdale and Corsicana?

Thanks for the question, Stephen. So one of my ongoing responsibilities as CEO is to ensure that we have the right leadership structure and right team in place to execute on our strategy. So to do that, we are constantly looking at how we are organized, and where additional talent can enhance our ability to succeed. Bringing in leaders like Adam Black to lead design and construction is a perfect example of that philosophy in action.

And you can imagine, this is not something that happened overnight. It was sometime in the making, and it was the right move in order to enhance our leadership structure. These changes have had absolutely no impact on development or commercial discussions. And I think our continued rapid delivery for AMD and them deciding to exercise part of their option is a perfect example of that.

And I think further as we continue to make progress, that will become even more clear. And for the second part of your question, do we feel that we have the right team in place right now? I believe we have an extremely strong team in place to execute at both Rockdale and Corsicana concurrently. And the reason I say that is because we're doing that right now.

From a design, construction, commercial sales, critical operations, project execution perspective, we have an incredibly strong leadership team assembled, and they are all working hand-in-hand to advance on our strategy, and we're very, very proud of that. You can definitely expect some incremental hiring for support roles in those different departments in the future. Our team is going to continue to scale as our business does, but the core leadership structure has been built, and that's the team that's executing today.

One moment for our next question. And that will come from the line of Brett Knoblauch with Cantor Fitzgerald.

Maybe just want to double click on Corsicana. It seems like there's a lot of momentum there. In the last quarter, we talked about conversations or customer conversations for taking down the entire site. I'm curious if that is still the case.

Do you have a preference if it's a single tenant or multi-tenant? And then maybe as a follow-up on the procurement process for the core and shell. I guess, how are -- where are you on that as well as the procurement process for what would come after the core and shell?

Sure. Thanks, Brett. Your question on the majority of the conversations still around the entire site, yes, that still remains the case. And that is probably our preference.

But I want to emphasize that we still have the ability to accommodate multi-tenant if that is the way things go. And the only reason I say that is because at a potential of 756 megawatts of leasable capacity, Corsicana is a huge deal. We have not seen any deals signed by our peers at that scale. Now that is the opportunity for us.

That's a fantastic asset for us, but it also means that is a big bite to chew for tenants who would be committing to a multiyear deployment schedule at a huge scale. So I think that still remains the case. The majority of the interest is for the full site. That's the same as the commentary I gave on our prior call.

I'm just giving you some color on the multiple potential outcomes that this can still take. Still substantial amount of interest, and we're very excited about that. To your question about procurement, we previously secured and have actually already begun receiving the necessary substation equipment. So we are in a terrific position on the long-lead equipment for core and shell.

At this point on the core and shell development, it's largely an exercise in mobilizing labor. And to that effect, I'm very happy to share that we've secured a general contractor for this space in the development, and they are executing. In fact, this is the same general contractor who executed and is executing for us with AMD on a very accelerated time line. So we feel great about this partnership.

Beyond core and shell, talking about the Tier 3 eventual buildout of the site. Yes, we have been securing long-lead equipment for that. So when I say long-lead equipment, I'm talking about backup generators, chillers. And as Jason mentioned in the prepared remarks, ESS Metron scaling up and preparing capacity for Riot use.

All of this procurement is a result of our confidence in how our strategy is progressing. We're doing all of this to ensure that we have an attractive offering on an attractive time line. So you can read into why we are making the moves that we are about this procurement. We feel good about the progress that we're making with procurement and development remains on schedule.

One moment for our next question. And that will come from the line of Brian Dobson with Clear Street.

So just one more follow-up on financing in general. Bitcoin sales have been a big part of your upfront financing. Do you expect that to continue? And would you elaborate on your view of, call it, long-term debt financing and how that fits into your broader strategy moving forward?

Let me turn that question to Jason Chung.

Brian, so that's correct. So right now, our Bitcoin treasury and operating cash flows remain the most capital-efficient, non-dilutive sources of funding available to us. And as a reminder, we executed our Q1 development entirely without issuing any common equity. Looking ahead to our broader financing philosophy as our leasing pipeline scales, we recognize that establishing deep diversified access to capital is critical.

And so we're in active discussions with capital markets participants, and we're evaluating a wide spectrum of debt options ranging from asset-specific project financing to broader corporate debt markets. And so to be clear, we're not looking to push all of our future growth through a single financing channel. We fully expect our long-term capital structure is going to utilize a mix of different instruments. And the specific path we take for any given project is going to be completely dependent on the dynamics of that particular underlying lease, the credit profile of the tenant, prevailing market conditions at the time and Riot's own needs.

I think regardless of whether a specific project is funded through project finance or capital markets or otherwise, the mechanics are going to remain the same in that the debt is going to be supported by long duration, highly visible cash flows from investment-grade tenants in line with our leasing strategy. And so by maintaining a strong balance sheet today, what we're trying to do is preserve the optionality to tap into the right market with the right instrument at the right cost of capital for every future lease.

One moment for our next question. And that will come from the line of Nick Giles with B. Riley Securities.

This is Henry Hearle on for Nick Giles. I wanted to ask about the potential cadence of AMD's remaining 150-megawatt expansion option. And is there a date where the options expire? So I see the illustrative chart on Slide 22, which shows that the second 100-megawatt tranche is contingent on power availability? And what does that exactly mean?

So the cadence of expansion with the AMD lease, that's really going to be driven by them. Like I said in an earlier question, what we are going to do is continue to be good partners, deliver capacity and ensure that we are the first call that they make when they are looking to expand capacity. As far as the mechanics of the options, so the new 100-megawatt option is conditional on them first utilizing all of the first option, which now has 50 megawatts remaining. As far as some of the details of when -- of how that option works.

There's some confidentiality to this agreement. So I don't want to elaborate too much more than that. But one thing I'll comment on is this original leasing expansion, it clearly goes into these 2 buildings that we already have there, Buildings F and G for the next 100 megawatts that would require new building or capacity being developed. So I would say just stay tuned as we work on those plans and that development pipeline comes together.

Got it. And then for my follow-up. In regards to your pipeline and the 4 different growth options, which one do you guys favor most? And out of the 100-plus opportunities referenced in your prepared remarks, were those mostly greenfield and brownfield, behind the meter, M&A or JVs?

I think in this environment, where power is so constrained, I don't think you can have a preference. We laid out that slide because we are pulling on every lever possible to build our pipeline. And as we advance our commercial discussions at Rockdale and Corsicana, this pipeline becomes even more important because that means we've built the base of our business with these huge core assets. And now we're thinking about how we are continuing the story and the strategy from there.

So our philosophy is, in this environment, it's going to require creativity, and it's going to require being open-minded to all sorts of those options. I think they all have merit. They all have the pros and cons. And I think you can expect to see a little bit of everything as we progress in building our pipeline.

That is all the time we have today for our question-and-answer session. I would now like to turn the call back over to Mr. Jason Les for any closing remarks.

I want to thank everyone for tuning into our call today, investors, shareholders, analysts and partners. We are incredibly excited about the progress we've made and the position that we're at today. I think we can say we have more confidence than ever right now, and we are very excited to continue sharing progress as we make it, and we will see you on our next earnings call, if not before.

This concludes today's program. Thank you all for participating. You may now disconnect.