Activist Investors Circle Cryptocurrency Mining Company
A prominent investment firm, D.E. Shaw, has acquired a stake in Riot Platforms, a cryptocurrency mining company, with the potential to push for changes, according to sources familiar with the matter. This move marks the second time an activist shareholder has taken an interest in Riot.
A Growing Trend in Cryptocurrency
Riot, which processes bitcoin transactions and receives the cryptocurrency as payment, has already been approached by Starboard Value, another activist investor, late last year. Starboard has been pushing Riot to consider allocating some of its power capacity to artificial intelligence. In response, Riot recently announced a formal evaluation of potential AI/high-performance computing uses for its remaining power capacity at its Corsicana, Texas facility.
A Billion-Dollar Industry
Riot, valued at approximately $3.8 billion, has been expanding its operations, including a failed attempt to acquire rival miner Bitfarms last year. The company’s shares have seen a 5% increase since the start of the year, closing at $10.95 on Tuesday.
Regulatory Environment
The cryptocurrency industry is optimistic about the potential relaxation of regulations under the current administration, which could benefit companies like Riot. D.E. Shaw, known for its quantitative investment approach, occasionally employs an activist strategy, but tends to negotiate with companies behind the scenes rather than engaging in public boardroom battles.
A History of Activism
D.E. Shaw has a history of taking positions in companies and pushing for change. Last year, the firm took a stake in Air Products and Chemicals and agreed with activist investor Mantle Ridge Capital that the company’s CEO needed to be replaced and its capital allocated differently. Instead of proposing its own board candidates, D.E. Shaw supported Mantle Ridge’s nominees, resulting in three new directors being elected to the nine-member board.
What’s Next for Riot?
As D.E. Shaw’s intentions for Riot become clearer, the cryptocurrency mining company may be forced to adapt to the changing landscape. With two activist investors now involved, Riot may need to consider significant changes to its operations and strategy to appease its shareholders.
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