Riot Blockchain Inc Stock

Hello, and welcome to Riot Platforms, Inc. Third Quarter 2026 Earnings Conference Call. [Operator Instructions] And as a reminder, this call is being recorded.

I would now like to turn the call over to Josh Kane, Head of Investor Relations. You may begin.

Thank you, operator. Good morning, and welcome to Riot Platforms' Third 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 third 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 third quarter 2026 performance. Lease revenue and net operating income figures for our Corsicana lease are management estimates presented before the amortization of tenant reimbursements, which under lease accounting will reduce reported lease revenue over the term. The basis of presentation is described in the footnotes to the presentation.

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 Forms 10-Q, including for the 3 months ended September 30, 2026, which will be filed later today as well as other filings with the Securities and Exchange Commission.

With that, I'll turn the call over to Jason Les, CEO of Riot Platforms.

Thank you, Josh, and good morning, everyone. Today, we are very pleased to announce that Riot has signed the largest lease in our history, a 15-year triple-net powered land lease with a leading Frontier AI Lab for the entirety of our Corsicana campus, representing 910 megawatts of critical IT capacity. This announcement is the clearest demonstration yet of what Riot has become: a leading digital infrastructure developer serving leaders at the forefront of the AI ecosystem.

With this lease, Riot has now contracted 1,151 megawatts across 3 leases with AMD and a leading Frontier AI Lab, all signed this year, representing approximately $38 billion of contracted data center revenue or $72 billion if all extension options are exercised. Upon full deployment, we expect these leases to generate $2.2 billion of average annual net operating income at an unlevered yield on cost across our lease portfolio of approximately 28%.

Four accomplishments define where we stand today. First, at Corsicana, our lease with the Frontier AI Lab is expected to generate approximately $28 billion in total contract revenue over the 15-year initial term and approximately $54 billion if both 5-year extension options are exercised. I will spend most of my time today discussing this transaction because it does more than add scale, it fundamentally changes Riot's business profile. A year ago, our cash flow depended on the price of Bitcoin. And now at full deployment of currently executed deals, nearly all of our expected cash flow will be generated from long-term leases with leading players in the AI ecosystem. Further, the structure roughly halves our capital intensity versus a Tier 3 build, leaves the operating and technology risk with the tenant and has been designed with financing in mind.

Second, at Rockdale, our 191-megawatt Frontier AI Lab deployment is on schedule with construction and long lead procurement underway for delivery of the first phase in December 2027. We are finalizing credit support for the project debt financing with a high investment-grade counterparty and the Morgan Stanley interim facility is funding development costs in the meantime.

Third, we continue to execute for AMD. The 25-megawatt expansion is on time and on budget with the next 10 megawatts delivering this month and the full expansion expected online in May 2027, bringing total capacity online for AMD to 50 megawatts. The bank project finance process on the AMD lease continues to progress and is expected to close shortly.

And fourth, our financial position remains strong. We have sold down the majority of our Bitcoin treasury to fund our data center business, reducing our holdings to just over 2,400 Bitcoin at quarter end. We also fully repaid our $200 million Coinbase credit facility, releasing all collateralized Bitcoin and ended the quarter with $950 million of total liquidity, consisting of $748 million of cash, including restricted cash and $202 million of Bitcoin. We have not raised equity capital in 2026, and Jason Chung will walk through later in this call. We do not currently anticipate issuing equity to fund any of our announced projects.

Taken together, these achievements give Riot a data center portfolio backed by long-term high-margin contracts, multiple non-dilutive ways to fund development and the flexibility to direct future cash flows to whichever use creates the most value per share.

Let's now turn to the Corsicana announcement. From the outset of our evolution into a leading digital infrastructure developer, we have been focused on maximizing the value of our large-scale power portfolio on a risk-adjusted basis. Our lease with a leading Frontier AI Lab delivers on this goal. This deal structure is different from our Rockdale leases and deliberately so as a reflection of the unique value an asset like Corsicana commanded in the market. Through our process, we engaged with multiple counterparties and structures and what we are announcing today is what we believe to be a tremendous outcome on maximizing the value of our crown jewel asset, especially on a risk-adjusted basis.

Rather than Riot designing and developing a Tier 3 data center, the contract signed with the Frontier AI Lab at Corsicana is a triple-net powered land lease. Riot delivers the land, the power infrastructure and the power pads, while the Frontier AI Lab procures, installs, owns and operates a modular compute deployment on those pads using the design the tenant developed and bears all operating costs, including power. This division of responsibility changes the capital equation. We expect total project capital of approximately $6 million per IT megawatt, roughly half the capital intensity of our Tier 3 build at Rockdale. This consists of $2 million per megawatt of site work and electrical infrastructure that Riot will complete and $4 million per megawatt that Riot will reimburse to the tenant for its cost.

Importantly, these reimbursements are paid phase by phase and only after each phase has been delivered and begun paying rent. The structure of this deal also changes the power equation. Under our original Tier 3 basis of design, we expected Corsicana to support up to 756 IT megawatts. Under this lease, the same 1 gigawatt of utility load supports 910 IT megawatts, representing 20% more leasable capacity from power we already own and control.

Finally, the lease was built to be financed with project debt sized to contracted rent, a rent credit mechanism if that debt is not available on comparable market terms and Riot's cash contribution expected to be funded from existing liquidity. Jason Chung will walk through the funding plan in more detail shortly.

Next, I want to talk about the economics of this announcement. Over the 15-year initial term, the lease is expected to generate approximately $28 billion of total contract revenue or approximately $1.8 billion of average annual rent, including escalators and before the lease accounting amortization of tenant reimbursements, as Josh noted. Because the tenant bears substantially all operating costs under the triple-net structure, we estimate an NOI margin of approximately 99% or approximately $1.8 billion of average annual net operating income over the term. Against total capital of $6 million per IT megawatt or approximately $5.5 billion, that is an unlevered yield on cost of approximately 33%. At that yield, the project returns its capital in roughly 3 years before any leverage on a 15-year lease.

Full deployment of the first phase is expected in September 2027, with the campus -- with the full campus delivered by July 2028. And the Frontier AI Lab holds 2 5-year extension options beyond the initial term. For context, this is among the largest single data center leases ever announced in our sector, and it carries the lowest operating and capital risk profile of any lease in our portfolio.

At the bottom of the slide, we can see how the deployment comes together in 3 phases: 400 megawatts in September 2027, roughly 10 months from now; 200 megawatts in January 2028; and the final 310 megawatts in July 2028. A full 910 megawatts will be delivered within 2 years of signing.

Slide 9 sets out who does what under the lease, because that allocation is where the risk reduction comes from. Riot's obligations are in the left column. We build and deliver the power pads with medium voltage power supply, and we own and maintain the high and medium voltage power infrastructure that feeds them. In operations, our role is limited to that of our owned power infrastructure, landscaping and campus level perimeter security.

On the tenant side, the Frontier AI Lab procures, installs and owns the compute modules. It pays 100% of actual utility costs, including demand, capacity and tariff charges as a pure pass-through with no markup. The tenant also pays all operating expenses under a triple-net structure and is responsible for any alterations in life cycle capital expenditures over the term outside of Riot-owned power infrastructure. Rent is paid on the full 910 critical IT megawatts regardless of utilization and rent on each phase commences no later than 60 days after each power pad is delivered.

For Riot, the risks we will not carry include: development risk on the data hall, operating risk on mechanical and cooling systems, SLA exposure across hundreds of megawatts of compute, the cost of redesign as chip generations change, power price risk and utilization risk.

What remains as our responsibility is the part of the value chain where we have the most control, land, power and the infrastructure that delivers it. This is a fundamentally different structure than most comparable data center leases and one that drives significantly more value to Riot shareholders because of the greatly reduced risk associated with construction, procurement, delivery and ongoing operations of data center projects. We have put in place a division of responsibilities that accelerates time to rent being received from the tenant and protect that rent stream over the term.

With that, let me turn it over to Jason Chung to walk through the Corsicana financing plan.

Thank you, Jason. The message on Slide 10 is straightforward. The Corsicana lease structure lowers our capital requirement and gives us multiple paths to fund what remains, none of which depends on issuing equity.

Starting with the capital required, total project costs are approximately $5.5 billion across 910 IT megawatts, $3.6 billion of reimbursement to the tenant at $4 million per IT megawatt and $1.8 billion of site work and infrastructure at $2 million per IT megawatt. As Jason noted, reimbursements are paid only after each phase is delivered and the tenant begins paying rents. So we do not fund reimbursements ahead of contracted cash flow.

Now on to the sources of that capital. Our plan is to fund Corsicana with nonrecourse project debt sized to contracted rent shown as Path A on the slide. An illustrative 80% to 90% loan-to-cost financing ratio results in approximately $4.4 billion to $4.9 billion in nonrecourse project debt drawn as site work is completed and as each phase is delivered and begins paying rents. Riot earns the full contracted rent less debt service and our cash equity covers the balance, approximately $500 million to $1.1 billion against approximately $1.2 billion of near-term liquidity, which I'll come back to on Slide 18. We expect to launch this financing process in 2027 ahead of the first phase delivery.

The lease also protects us if that debt is not available on comparable market terms. In that case, the tenant will initially fund reimbursements and will recover them as credits against rent amortize over the remaining lease term. Under this Path B scenario, there will be no need for external financing to fund reimbursements to the tenant, while Riot will retain flexibility to fund the $1.8 billion of site work costs with cash, debt or some combination of the two based on the rent credit adjusted cash flows. The rent credits will carry an implied interest rate of 12% and Path A remains our base case.

This structure gives Riot 3 non-dilutive layers of funding for Corsicana: nonrecourse project debt; the lease itself; and our own liquidity. This project does not depend on any single source of capital and under either Path, Riot will continue to own the land, the power and the site infrastructure, receiving 15 years of take-or-pay rent on 910 IT megawatts, while the tenant will fund and own the compute.

With that, I'll hand it back to Jason Les for an update on Rockdale and AMD.

Thank you, Jason. Turning to Rockdale. I'd like to walk through updates on both our Frontier AI Lab and AMD development. On the left-hand side, we can see the time line for our 191-megawatt lease with a leading Frontier AI Lab, which we announced last quarter and which is expected to generate approximately $9.1 billion of contract revenue over its initial 20-year term. This is Riot's first full Tier 3 data center project and is on time and on budget for its ready-for-service date.

Two things made this possible. First, we locked the design with the tenant early, which let us conduct advanced discussions and begin procurement with key suppliers for long lead equipment. Second, we are using our own engineering capabilities at ESS Metron and E4A Solutions, alongside many of our tenants preferred vendors, which takes most of the schedule risk off the table. This project is well underway with the first 96 megawatts on track for ready-for-service in December 2027 and the remaining 95 megawatts in June 2028.

On financing, we are finalizing credit support for the project debt from a high investment-grade counterparty with preparation for the project financing progressing in parallel and the launch to follow once it is signed. The Morgan Stanley interim facility is funding procurement and construction in the meantime, so the schedule does not depend on the timing of that close.

Moving on to AMD. We can see the first 25 megawatts were commissioned and fully stabilized in May 2026, and the full 50 megawatts remain on track to be ready-for-service in May 2027. AMD is the proof point for how Riot delivers. In-house manufacturing and the design built around the tenant's requirements enabled us to go from lease signing to a stabilized 25 megawatts in 4 months. AMD continues to hold expansion options for up to an additional 150 megawatts at Rockdale.

Slide 12 brings the 3 leases together. In 2026, Riot has secured approximately $38 billion of contracted data center revenue across 1,151 megawatts of critical IT capacity with leading players in the AI ecosystem. The table shows each lease from which I'd like to highlight 3 main points. First, the total, approximately $2.3 billion of average annual revenue and $2.2 billion of average annual NOI at full deployment on total capital of $7.7 billion to $7.9 billion, representing an unlevered yield on cost of roughly 28%.

Second, the margins. NOI margins run from 80% at AMD to 80% to 90% with the Frontier AI Lab tenant at Rockdale to approximately 99% at Corsicana, where the tenant bears substantially all operating costs under the triple-net structure.

Third, the timing. AMD reaches full deployment in May 2027, the Frontier AI Lab tenant at Rockdale in June 2028 and at Corsicana in July 2028. All 1,151 megawatts are in service within 20 months. With AMD's expansion options for a further 150 megawatts, contract potential reaches approximately 1.3 gigawatts. Contracted revenue, a defined capital budget and a clear funding plan are the fundamentals on which we anticipate Riot will be valued going forward.

Slide 13 shows how lease revenue ramps as each phase comes into service. Today, 25 of our 1,151 leased megawatts are in service. By the end of 2027, that grows to 546 megawatts as AMD's second 25 megawatts, the first 96 megawatts for the Frontier AI Lab at Rockdale and the first 400-megawatt phase at Corsicana all come online. By mid-2028, with Corsicana's second and third phases and Rockdale's second phase delivered, all 1,151 megawatts are in service.

In revenue terms, lease revenue grows from approximately $23 million this year to approximately $250 million in 2027, $1.8 billion in 2028 and $2.3 billion in 2029, the first full year with every phase in service. This ramp is important for 2 reasons. First, it is the revenue base on which Riot will be valued going forward. And second, this represents an important source of funding in its own right as rent from phases delivered first will help fund subsequent phases, which we will discuss further on Slide 18.

Slide 14 shows how we think about capital allocation. With 1,151 megawatts contracted and more than $2 billion of annual NOI from contracted assets upon full deployment, the question has moved from whether Riot can sign leases to how we will deploy the cash flow these leases produce. We apply one test to every dollar we allocate, do it maximize value per share?

There are 3 uses of capital, and we evaluate each against that test. First, growing the power portfolio: building or buying energized megawatts for future data center development, but only when the risk-adjusted return is well above our cost of capital and compares favorably to the portfolio we already own; second, maintain financial flexibility. project debt that is nonrecourse to Riot and capital recycled from one project to the next as we are doing with our AMD financing; and third, returning capital to shareholders when our own shares offer a better return than the next project or when our growth is fully funded. As contracted cash flows come online, return of capital becomes a real and reoccurring part of this evaluation.

Four criteria fit under all 3: returns well above our cost of capital; leverage sized to contracted rent; liquidity sufficient to fund every announced commitment; and equity only where an investment is meaningfully accretive on a per share basis. That is why we have raised no equity in 2026 and why we do not anticipate needing to with the projects we have announced. Our philosophy is simple: the best risk-adjusted portfolio produces the most reliable cash flows, and the most reliable cash flows give us the widest range of choices about how to compound value per share.

Before I hand the call over to Jason Chung, I want to spend a minute discussing our pipeline for future growth. With Corsicana fully leased and Rockdale substantially committed, additional growth will come from new development capacity, which we are pursuing across 5 verticals: expanding capacity at our existing sites through additional acreage and utility relationships; acquiring and developing grid-powered land with near-term approved capacity; self-generation behind-the-meter where grid constraints require it; corporate acquisitions that deepen our engineering, products and services platform; and strategic partnerships and joint ventures.

We will pursue that pipeline with the same discipline that produced the portfolio you see today. We are deeply engaged across each of these avenues today with teams dedicated to forging future growth for Riot. Every opportunity will be measured against the risk-adjusted returns we have already locked in and against every other use of our capital.

With that, I'll turn it over to Jason Chung for the financing update and our quarterly results.

Thank you, Jason. I want to start by revisiting the 4 financing principles we laid out earlier this year, and show how we are executing against each of them in a tighter credit market, characterized by higher interest rate environment, credit-led spread widening since September and lenders doing deeper diligence on tenant credit, power and delivery track record.

First, liquidity. Our response to a more volatile market and Bitcoin drawdown has been to convert Bitcoin to cash ahead of our committed equity needs to hold no pledged collateral and to manage liquidity against each project's equity requirement. Year-to-date, we have sold 20,264 Bitcoin for $1.5 billion, repaid our $200 million Coinbase facility in full and released all 5,821 pledged Bitcoin, ending the quarter with $950 million of liquidity.

Second, access. We lead with the 3 things lenders our diligencing most: tenant credit, power that is already interconnected, and energized and a delivery record supported by our in-house engineering, manufacturing and procurement, and we are building relationships across multiple funding sources to maintain diversification. That includes approximately $750 million of facilities closed or expected to close shortly, the $573 million Morgan Stanley interim facility and the $180 million AMD term loan plus delayed draw facility with the Rockdale and Corsicana project financing in process behind them.

Third, cost. Spreads today are driven by tenant credit and structure, so we match the credit basis to each project. At Rockdale, AMD is an investment-grade tenant with a term loan expected to price at around SOFR plus 250 basis points. Also at Rockdale, our lease with a leading Frontier AI Lab is expected to be supported with high investment-grade credit support, and we are positioning that debt towards bond execution. At Corsicana, the lease is engineered for financeability, significantly reduced capital requirements relative to Tier 3 builds, triple-net lease structure, take-or-pay on delivered capacity and reimbursements funded phase by phase after rent commencement.

And fourth, discipline. Our project financings will be structured as nonrecourse to Riot and sized to contracted rents and spend is released as each financing closes. On cost, we have and will continue to negotiate fixed price and guaranteed maximum price contracts and with added visibility and control through our in-house manufacturing and procurement.

The result of these 4 principles is aligned at the bottom of the slide. No equity raised in 2026 and none currently anticipated to fund any of our announced projects. And the next slide will show the sources of capital that stand ahead of Riot equity.

That brings me to Slide 18, which answers the question we hear often from investors: How does Riot fund all of this without issuing equity? Let's start with the capital uses. Across Corsicana and Rockdale, we expect total project capital of approximately $7.6 billion to $7.8 billion, $5.5 billion at Corsicana and $2.1 billion to $2.3 billion at Rockdale, with additional AMD CapEx expected to be financed through the AMD bank facility we are now finalizing. We expect approximately $6.1 billion to $7 billion of this to be funded with project level debt, nonrecourse to Riot and sized to contracted take-or-pay rent at an illustrative 80% to 90% of project capital. That leaves an illustrative Riot cash equity requirement of approximately $800 million to $1.5 billion deployed alongside development from now through mid-2028 as each financing closes.

Now on to the sources of capital. We have approximately $1.2 billion of near-term liquidity, $950 million of cash and Bitcoin and $110 million of other anticipated near-term inflows, plus $180 million of proceeds from the AMD term loan, which we expect will be available on closing. In addition, contracted rent from Corsicana Phases 1 and 2 and from our Rockdale tenants adds approximately $900 million before debt service by the time Corsicana's final phase is delivered. That brings cumulative sources to approximately $2.1 billion, more than Riot's cash requirement at any leverage level in the illustrative range, $1.5 billion at 80% loan to cost, $1.2 billion at 85% and $800 million at 90%. And the timing works in our favor. Reimbursements are paid only after each phase is delivered and paying rent, so the sources arrive ahead of the uses.

This is also before additional non-dilutive sources of funding that we have not counted in that chart. First, contracted rent from Corsicana Phase 3. Second, the land, substations and power infrastructure we already own at Corsicana, which can potentially be contributed as sponsor equity and count towards lenders' equity requirements, reducing our cash needs further. Third, refinancing of stabilized lease-backed assets, which releases Riot equity from completed projects for the next phase, exactly as we are doing with AMD. And fourth, a future parent level facility such as a corporate revolver to fund early-stage development costs and working capital drawn only if needed.

Put simply, Riot has multiple layers of non-dilutive funding standing ahead of any equity issuance, and we do not currently anticipate issuing equity to fund any announced project.

Let's move to our third quarter financial results on Slide 20. For the third quarter of 2026, Riot reported total revenue of $181 million, up 1% year-over-year as Data Center and Engineering revenue grew by $46 million, which offset lower Bitcoin mining revenue on an average Bitcoin price 38% below last year's third quarter. We reported GAAP net income of $4 million or $0.01 per diluted share and adjusted EBITDA of $191 million. Net income reflects $124 million of depreciation and amortization, $21 million of stock-based compensation and an $18 million noncash impairment, offset by a $172 million gain on the change in fair value of Bitcoin, which is included in adjusted EBITDA.

In our Data Center segment, we exited the quarter with 25 megawatts of critical IT capacity contracted and delivered and generated $18 million of total segment revenue, including $8 million of operating lease revenue at an 80% operating lease gross margin, in line with the economics we underwrote and $10 million of tenant fit-out, which fluctuates with the development cycle. On an annualized basis, the base rent from those first 25 megawatts is roughly $31 million, consistent with the AMD economics on Slide 12, and it steps up as the next 10 megawatts deliver this month.

In our Bitcoin Mining segment, Riot produced 1,637 Bitcoin in the third quarter or 17.8 Bitcoin per day and ended the quarter with a deployed hash rate of 44.9 exahash per second, representing about 4.9% of the global network. Average operating hash rate for the quarter was 36.2 exahash, reflecting summer curtailment under our power strategy, including the 4CP program. This curtailment generated $25 million of power credits equivalent to $15,067 per Bitcoin mined, bringing our net cost of power to $0.032 per kilowatt hour, among the lowest in the industry. As a result, our direct cost to mine, excluding depreciation, was $39,265 per Bitcoin.

We ended the quarter holding 2,418 Bitcoin valued at $202 million at the September 30 closing price of $83,554, down from 11,380 Bitcoin at the end of the second quarter. That reduction is by design. Our Bitcoin treasury has been the primary funding source for data center development, and we expect to continue to sell substantially all of the Bitcoin we mine.

Our Engineering segment delivered $47 million of revenue, more than double a year ago at a 15% gross margin that reflects a large low-margin cable procurement order at E4A. We expect a better mix in the fourth quarter that should flow through to higher margins. Backlog is $142 million, more than 90% of which is data center work with capacity deliberately reserved for Riot's own projects, where ESS Metron supplies a switchgear for Rockdale and is expected to for Corsicana. Segment detail for all of our businesses is in the appendix.

And with that, I'll hand the call back over to Jason Les.

Thank you, Jason. Slide 22 puts our year into perspective. 2026 has been a year of execution. In January, we acquired the land at our Rockdale site and signed our first data center lease with AMD. In May, we delivered AMD's initial 25 megawatts on time and on budget. In the third quarter, we signed a 191-megawatt lease with a leading Frontier AI Lab at Rockdale. And more recently, we signed the 910-megawatt lease at Corsicana with the same Frontier AI lab.

From here, the time line is about delivery. AMD completes in May 2027, Corsicana's first phase and Rockdale's first phase followed by the end of 2027, and every remaining phase is delivered by July 2028. 12 months ago, Riot had no data center lease revenue. By 2029, lease revenue is contracted at approximately $2.3 billion per year, with every megawatt behind it already signed. What remains between here and there is execution, which is what this team has done all year.

At the beginning of this year, when we laid out what we saw as the potential for our power portfolio, we communicated a total portfolio net operating income range of $1.6 billion to $2.1 billion. With leases signed this year, we are now expecting to exceed the top of that range, with average annual NOI of approximately $2.2 billion on contracts already in place. And we have further headroom to grow with the remaining unleased power capacity at our Rockdale and Kentucky sites. Further, a large majority of that NOI is significantly derisked from a delivery and operational standpoint compared to standard data center leases in the market.

With our existing portfolio substantially leased, growth from here comes from the pipeline I described earlier, pursued with the same discipline and measured against every other use of our capital.

Our priorities from here are clear: deliver AMD, Rockdale and Corsicana on schedule and on budget; finalize the Rockdale and Corsicana financing and expand access to additional sources of liquidity and deploy capital where it is the most accretive, whether that is developing our power pipeline or returning capital to shareholders. Riot is a data center infrastructure platform. We own the scarcest inputs in this industry, land, fully approved power and the infrastructure to deliver it. And we have leased that capacity to leaders in the AI ecosystem on long-term contracts with different solutions for different customer needs.

The result is a portfolio optimized for superior risk-adjusted returns with multiple non-dilutive ways to finance development and a company with the cash flow and discipline to put every dollar to its highest and best use. On behalf of our entire management team, I want to thank our shareholders, our tenant partners, the communities we serve and our employees for their continued support.

With that, we will now open the call up for questions. Operator?

[Operator Instructions] And your first question comes from the line of Mike Grondahl with Northland Securities.

Congratulations on Corsicana. It looks like a really nice lease. But I wanted to ask a question about Rockdale. Given the recent cost overruns that we've seen in the industry, what gives you the confidence that $11 million to $12 million a megawatt for the CapEx development costs at Rockdale is going to be sufficient? And as a follow-up, how much of that project cost is currently fixed or contracted? What sort of remains subject to change? And who bears the risk at Rockdale if costs exceed your estimate?

Thanks for that question. Let me -- I'll talk about Rockdale. And then on the theme of your question, I'll talk about Corsicana as well and then address who bears the risk here.

On Rockdale, our confidence comes from the work that we did before signing. Over the past several months, one of our key messages to the market has been that signing a lease isn't just about having power. It's about the product that you're building for the tenant, and that's why we put in substantial design and pricing work before committing to a number. So because of that, our design is sufficiently advanced at this stage, and we're locking in prices and phases with our general contractor.

As each scope matures, the GC competitively bids that trade package and the full scope goes under a guaranteed maximum price, building towards a final GMP for the full project. Today, we're finalizing that GMP with our GC, and we're expecting roughly 70% of the total budget to be under GMP. That's also the key point on when costs get locked in. It isn't when you hire a GC, it's when the scope goes under GMP, and that's where our focus is right now.

The balance of the budget for Rockdale is for OFCI, which we have already begun procuring and we expect to complete ordering of that equipment this month. Therefore, we feel confident maintaining our estimate within the $11 million to $12 million per megawatt range for the Rockdale build.

I know you didn't ask about Corsicana, but on the same thing, I'll talk about Corsicana, which is a different structure. And there, our exposure is significantly smaller. Roughly 70% of our capital there is a capped contribution in the form of the tenant reimbursement for modules they are procuring themselves. So that's a number that doesn't go up. The rest of the balance of spend at Corsicana is a smaller scope. And of that smaller scope, one, our procurement process has already been underway for the OFCI part of that development, and we expect to complete that ordering of the longest lead items by the end of the year. And then outside of OFCI, we'll utilize GMP contracts just as we are at Rockdale.

Now finally, on who bears the risk. In our leases, the lines are drawn clearly. First, as the tenant changes what it wants, the tenant pays. Every lease has a change order process where changes are priced upfront and either reimbursed or built into rent with schedule relief. Second, once a scope is under the GMP that I was speaking about, costs above that price are the contractor's responsibility. And it comes under, we share those savings together. Third, some risks do stay with us. And that includes scope that's not under GMP, expense or site conditions and OFCI equipment that I mentioned that we buy directly. We don't pass those through to tenants. Instead, we manage them by buying our critical equipment early, handling tariff and material escalation through contracts with escalation tables and carve-out contingency we hold and carrying reserves for labor if the market gets tight.

So a GMP doesn't remove every risk, and I won't tell you there's none. But the upfront design, the phased locking of pricing and the clear lease terms or who pays for what are why we're confident in the $11 million to $12 million per megawatt figures for Rockdale that we've given.

And your next question comes from the line of Stephen Byrd with Morgan Stanley.

Congratulations on the Corsicana transaction. I wanted to just get a little more detail on the deal, definitely really interested in the details, and you laid out a lot of great details, quite compelling. And I wonder if you could just maybe first talk through your thought process on how you decided to move forward with a single tenant for the full site and how that process evolved and sort of was ultimately signed.

Yes. Thanks for the question. For us, it was very clear early on that this is going to be a single tenant takedown for the entire site. And it was clear that, that was not only the best outcome for Riot, but also that was going to be the most likely. And there's 2 reasons behind that. First, while it's possible to subdivide the site, it would introduce operating complexity, and it would also reduce leasable space and now there or dampen the overall value creation. And then number two, really all potential tenants that we spoke to expressed interest in the entire site. Such a valuable asset, it makes sense that someone is comfortable with some part of the site in this constrained environment, they're going to want it all.

So with this conclusion made, we then work through a variety of structures and potential tenants before we selected the path that we believe offer the best risk-adjusted returns for shareholders. And if you think back to our Q2 earnings call back in August, on that call, we reported that we had an LOI for the entirety of the Corsicana site, that was for 756 critical IT megawatts. As our discussions with our tenants advanced, things evolved, and we ultimately landed on a structure that got Riot the attractive economics a site like Corsicana demands while delivering to our tenant here what they needed to achieve their accelerated time to compute objectives. So while not a traditional build-to-suit structure, a superb outcome for Riot.

The other thing I'll say about the structure and how we got here is that it allowed us to deliver more capacity than our original 756 megawatts that we expected with that first LOI. Now we're at 910 total critical IT megawatts in a take-or-pay agreement. And the reason for that is our tenant wanted to maximize the total potential capacity of the site, even if that meant certain times of the year at different levels of utilization than other times. But regardless of utilization, once fully delivered, Riot receives rent on that full 910 megawatts. So the result is the tenant gets more usable capacity and we get a greater base of capacity upon which you receive rent.

So altogether, this is a win-win outcome in that we're able to achieve substantial average annual NOI on significantly less capital than a traditional build. And at the same time, our tenant was able to deploy the faster modular solution that they desired.

That's very clear. And I was surprised by a number of parts of this deal, but that 910 megawatts, I was surprised by that as well. And maybe just one follow-up. I wonder if you could talk a little bit more about the actual structure and economics of the deal I think many investors and I was thinking of a more traditional Tier 3 build of Corsicana. Can you just talk a little bit more about sort of what drove your decision to go forward with this structure and how we should think about kind of this deal relative to other deals that we've seen in the market? I think you've laid out a bit about sort of what your view is in terms of why this deal is attractive. I just want to make sure I understand sort of from your perspective, what makes this deal the most attractive from your perspective?

Yes, absolutely. So from the outset of our transformation here, we have said that our goal was to maximize shareholder value on a risk-adjusted basis. And we are incredibly proud of how we accomplished that with this deal. We believe this is a hallmark structure with this combination of best-in-class yield on cost and best-in-class risk profile. The result of this deal is a triple-net rental rate on the high end of the range for Tier 3 data center, while we only need to spend half the CapEx of a typical Tier 3 build, the scope of our CapEx here significantly limits our procurement and construction risk. And when you pair that with our ongoing operation responsibilities, the result you get is substantially reduced risk in execution. So it is truly the best of both worlds here.

Further, we believe that this deal is a direct answer to the risk that investors are focused on in our space. Not only is procurement and development in this deal substantially limited when compared to a traditional Tier 3 build, but that reduced level of CapEx reduces the level of financing required for both equity and debt. So when you pair that with the mechanism in the lease that we spoke about in our prepared remarks, where the reimbursements to the tenant, which is 70% of our capital spend on this deal can be paid through rent credits if reasonable financing terms are available, we have substantially limited our financing risk.

So these 2 domains of risk, delivery and financing, these are 2 areas of investor focus that we have addressed with the structure while still delivering an incredibly attractive rental rate and underlying economics. So the point is we did not have to compromise. And finally, this structure gets us to revenue and starts cash flowing significantly faster than a typical Tier 3 build with the first phase of delivery in September 2027. For a typical Tier 3 deal announced today, that would be an impossible delivery date. So we believe that this is a new milestone in the industry in terms of value creation and on a risk-adjusted basis. So we are incredibly proud of this outcome.

And your next question comes from the line of Paul Golding with Macquarie Group.

Congrats on the deal and all the progress. I wanted to first ask before getting to Corsicana, about Rockdale. Jason, maybe if you could remind us a bit around the AMD options and the structure there of what's pending or what's under exclusivity in terms of incremental capacity and maybe overall incremental capacity left to be leased at Rockdale and maybe whether you would look to do a similar structure as what was done at Corsicana relative to what may be available at Rockdale for future leasing just as we think about capital needs going forward?

Thanks, Paul. So at Rockdale, AMD holds an option for an additional 150 megawatts. We remain very close to them on their capacity needs. Obviously, I can't share anything more than that right now. But if you take those options and then you combine that with the rest of the site capacity, what that leaves you with is about 200 to 250 critical IT megawatts of remaining leasable capacity. Our Frontier AI Lab is interested in additional capacity as well. So I would expect Rockdale's remaining capacity to eventually be taken down by one or both of our existing tenants. And if not, that's okay. We have strong interest on the sidelines. So I'm confident in our path to a full lease of the site. And I think recent events make this capacity even more valuable here.

I would expect the remainder of the build-out of Corsicana to be -- I'm sorry, the remainder of the build-up for Rockdale to be along the lines of the developments you already see there, whether it's expansion of the type of product that AMD has or another deployment of a Tier 3 build like what the Frontier AI Lab has. But we definitely see a path to leasing up the remaining capacity at that site as we continue to progress on our strategy.

And maybe if I could follow up on Corsicana. The time line shows the 400 megawatts to be Phase 1. How should we think about the Bitcoin mining capacity that is up and running relative to that Phase 1 delivery and what decommissioning time line might look like for that given that I think that capacity lines up with what you've been running at the site.

Yes. So we will not need to take down Bitcoin mining to achieve the first 400-megawatt tranche, but we will need to take it down as we prepare for the second phase. So I don't have a schedule for you yet as we advance here, we'll share more details on what you can expect. But you can probably expect Bitcoin mining capacity at the site to begin ramping down sometime in the summer of 2027.

Your next question comes from the line of Richard Choe with JPMorgan.

I wanted to ask about given the uncertainty around the elections last night, just is there any risk to either your Rockdale or Corsicana campus in terms of what you can provide and deliver? And how do you see your capacity going forward given the political results?

Yes. Thanks for that question. I know that's definitely top of mind of investors going into this morning. So I think on this, it's important to be abundantly clear on Riot's position. Our sites with Rockdale and 700 megawatts and Corsicana with 1 gigawatt, these interconnections, this power is already fully improved. And even further, these sites have been in operations for years, pulling hundreds of megawatts each. So we feel very confident in our position on both of those sites. There's not additional approval needed to execute on developments here. And I think the proof point of that is at Rockdale, where you've seen us launch 2 data center developments in just this year.

Furthermore, the benefit of operating for so many years in -- at both of these sites already is we already have a strong in-place relationship with our local communities. We have been -- for Rockdale, for example, we've been present in that community for about 7 years now. We are substantially involved. We engage on a tremendous -- on a regular basis, and we really value those relationships that we have. That is the biggest source of our employee base, is the community surrounding us. So those relationships are important to us. And the fact that these sites are already in operation, they already have the interconnect approved, we feel very confident in our position on these sites.

And I assume that gave you some advantage or some comfort to signing this deal with the leading AI lab that you were already operating and present. Is that fair to say?

Absolutely. The fact that these sites are in operation, and in this case, Corsicana, that is the strongest proof point possible of the power interconnect. And the other thing that helped in executing this deal was proving the time to power that we could accomplish there. There's already a substation on site. We already have a substation expansion underway on site. And that made this site very valuable and allowed this deal to get done on the terms that it did.

That concludes our question-and-answer session. I will now turn the call back over to Jason Les for closing remarks. Jason?

I want to thank you, everyone, for listening in today. We are so proud of what we've accomplished with not only this deal, but all the progress that we have made year-to-date. We have built an incredibly robust portfolio. I want to again thank our employees, our shareholders and the community that we operate in for all their support over the years. And we are just incredibly excited about this next stage of execution for us. So thank you all. We'll see you on our 10-K call in a few months.

That concludes today's call. You may now disconnect.

Thank you for standing by, and welcome to the Riot Platforms Second Quarter 2026 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Josh Kane, Head of Investor Relations. Sir, please go ahead.

Thank you, operator. Good afternoon, and welcome to Riot Platforms Second 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 second 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 second quarter 2026 performance.

During today's call, we will make 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, our comments and responses made during today's call, the Risk Factors section of our Form 10-K and Forms 10-Q, including for the 3 months ended June 30, 2026, which we expect to file later today, and our 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 AI era has 2 binding constraints, power and execution. This quarter demonstrated Riot's answer to both. The second quarter of 2026 marked a decisive step forward in Riot's data center business and represents a clear validation of the assets, team, and strategy we have assembled. Following our first data center lease with AMD earlier this year, demand for large-scale power data center capacity has continued to accelerate, and we have taken a disciplined approach in response, the right transactions with the right partners on the right terms.

I'm pleased to share our progress with you today. Four key accomplishments define this progress. First, at Rockdale, subsequent to quarter end, we executed a data center lease with one of the world's leading frontier AI labs for 191 megawatts of critical IT capacity. This is our second data center lease at Rockdale. Our lease with the AI lab has a 20-year term and is expected to generate approximately $9.1 billion in total contract revenue with two 5-year extension options that, if exercised, would bring total contracted value to approximately $16.1 billion.

Together with the AMD lease, Riot has now secured approximately $9.8 billion of contracted data center revenue with 2 leading companies in the AI ecosystem. Second, at Corsicana, interest in our 1 gigawatt of fully approved utility power has been substantial. From a broad field of prospective tenants, we have narrowed our focus and entered into a nonbinding letter of intent with a single tenant for the entirety of the site, a transaction which we are engaged in advanced commercial and design discussions. A potential deal of this scale demands deep collaboration across design, commercial and legal work streams, and that work is well underway.

In parallel, we continue to progress data center development at the site and critical path procurement of long lead time items to ensure delivery time lines and derisk execution. Third, we continue to deliver on time for AMD as part of our growing partnership. We commissioned and delivered the final phase of the first 25 megawatts of capacity in May to AMD on time and on budget, with AMD operating on the site since January. Following AMD's exercise of its expansion option in April, its contracted capacity now stands at 50 megawatts of critical IT capacity at our Rockdale site, with the 25-megawatt expansion under construction with first phase delivery later this year and full delivery scheduled for May 2027.

And fourth, we secured the funding required for this growth. We continued the sale of Bitcoin from our balance sheet and our mining operations. These proceeds remain our primary source of funding for operations and the equity component of our data center capital expenditures. We ended the quarter with $1.2 billion in total liquidity, consisting of $666 million in Bitcoin and $549 million in cash, giving our partners, tenants, lenders and shareholders confidence in our ability to execute. If 2025 was the year of preparation, 2026 is the year of execution. In the last 7 months, Riot has gone from 0 contracted data center revenue to 241 megawatts of executed capacity with 2 of the highest quality counterparties in the AI ecosystem, AMD and now a leading frontier AI lab.

Beyond that, the entire Corsicana campus is now under a nonbinding LOI to a single tenant. This pace of execution is a direct result of the strategy, the assets and the team we have spent the last 2 years putting in place. The lease we are announcing today is contracted directly with one of the world's leading frontier AI labs for 191 megawatts of critical IT capacity at our Rockdale campus and marks the beginning of what we expect to be a long and significant partnership.

Under the lease, Riot is constructing a custom-built Tier 3 data center based on the tenant's latest design specifications, which has now been finalized. It will be built on land we announced the acquisition of earlier this year, which has already been cleared and graded using in-place power capacity under our active interconnection. Development work is already underway, and we are currently targeting delivery for the first 96 megawatts with rent commencing in December 2027. The 20-year initial term runs from full deployment in June 2028 with annual escalations in base rent. Beyond the initial term, the AI lab holds two 5-year extension options, which, if exercised, would bring total contract revenue to approximately $16.1 billion.

Over the initial term, the lease is expected to generate approximately $9.1 billion in total contract revenue and an estimated $7.3 billion to $8.2 billion in net operating income based on an estimated NOI margin range of 80% to 90%. Illustrative capital expenditures are between $11 million and $12 million per IT megawatt. On financing, we have secured a $573 million interim financing facility from Morgan Stanley, which will cover initial development CapEx while the investment-grade backstop is finalized.

Jason Chung will discuss what this means for our financing strategy later on today's call. Having a frontier partner of this caliber entrusting Riot with 191 megawatts of mission-critical infrastructure on a 20-year commitment is a definitive validation of our team, our sites, and our ability to execute at the highest level. This is precisely the type of durable, high-quality contracted cash flow, which we are building this platform to capture for our shareholders.

Now let's turn to Slide 8 and our delivery schedule. Capacity under the AI lab lease will be delivered in 2 phases. Phase 1 delivers the first 96 megawatts of critical IT capacity in December 2027, a rapid time line from signing to initial delivery and Phase 2 delivers the remaining capacity in June 2028, completing the full 191-megawatt deployment. We are on schedule for that initial delivery and execution has been meaningfully derisked across several fronts. First, design. Our accelerated design strategy incorporates the tenant's basis of design and the complete design and internal architecture have now been finalized, enabling procurement to have already begun.

Second, delivery partners. We have selected Yates Construction as our general contractor, a partner with direct development experience with this tenant, giving us increased visibility into cost and schedule. Third, vertical integration. ESS Metron and E4A are integrated into the delivery plan, accelerating substation development and reducing long lead equipment risk. Fourth, power. The required capacity is secured under our active interconnection and aligned with project milestones. And fifth, financing. The $573 million interim facility from Morgan Stanley allows us to fund long lead procurement immediately, protecting the delivery schedule while credit support is finalized.

Taken together, the combination of in-place power, advanced procurement, coordinated design, our in-house capabilities and financing allows us to deliver at speed and with a high degree of certainty. That derisked rapid execution is precisely what attracted this tenant to Riot and to Rockdale. Now let me turn to AMD, where our deployment progress remains on track. During the quarter, we completed delivery of the initial 25 megawatts of capacity on budget and on schedule. AMD has now commenced operations across this initial footprint and Riot is generating recurring high-margin operating lease revenue from an investment-grade tenant. On the second 25 megawatts, design is nearly complete and construction is underway with the initial 10 megawatts expected this November and the remaining 15 megawatts expected in May 2027.

As with the initial 25-megawatt deployment, ESS Metron's engineering and manufacturing capabilities are embedded in our delivery plan, supporting both schedule certainty and cost discipline. Beyond the contracted 50 megawatts, AMD retains expansion options for up to an additional 150 megawatts at Rockdale, providing a pathway to scaling this relationship to 200 megawatts over time. Slide 10 shows what Rockdale looks like today on a pro forma basis. In 2026, Riot has secured $9.8 billion of contracted data center revenue. With the leading Frontier AI Labs 191 megawatts contracted alongside AMD's 50 megawatts, Rockdale has evolved from a single-use Bitcoin mining site into a diversified data center campus, leased to 2 of the highest quality tenants in the AI ecosystem on long-term high-margin contracts.

Looking at each lease at Rockdale in more detail, AMD will contribute approximately $63.6 million in average annual revenue and $51 million in average annual NOI on 50 megawatts with total capital expenditures of $170.2 million and reaching full deployment in May 2027. The Frontier AI Lab lease will contribute approximately $457 million in average annual revenue and $365 million to $411 million in average annual NOI on illustrative capital expenditures of $2.1 billion to $2.3 billion, reaching full deployment in June 2028.

Combined, the 2 executed leases represent $520 million in average annual revenue and $416 million to $462 million in average annual NOI across 241 megawatts. When we acquired the land underlying the Rockdale facility, we had a vision that it could become one of the country's premier data center development campuses. That vision is now being realized. The tenant that chose Rockdale shared a common set of requirements, certainty of power at scale, access to hundreds of megawatts in a single location and a developer who executes on mission-critical time lines. Riot delivered on all three.

In institutional real estate, the assets that command premium valuations share the same characteristics our portfolio now has, extended lease terms, investment-grade or equivalent tenant credit quality and mission-critical infrastructure. Importantly, we have also diversified our tenant base across 2 independent high-quality counterparties, which meaningfully improves the overall quality of our portfolio. This is the asset profile we are building at Rockdale. Before I hand the call over, I want to talk about Corsicana because the commercial momentum at that campus is significant. We are engaged in advanced commercial and design discussions and the full site is now under LOI to a single tenant. In parallel, we are continuing our development and procurement processes to derisk execution time lines.

Development of our first core and shell building remains underway, and we continue to secure long lead items so that we can deliver full build-to-suit capacity on an accelerated basis once the lease is executed. Corsicana represents 1 gigawatt of fully approved power on Riot owned land, supporting a potential 756 megawatts of critical IT capacity. And we look forward to sharing more on our leasing progress there in the near future. While an LOI is not a signed lease, this milestone reflects the depth of demand for large-scale fully approved power in today's market and the confidence prospective tenants have in Riot's ability to deliver. Taken together, Riot now has approximately 1 gigawatt of capacity across our portfolio that is contracted or in advanced commercial discussions. Now I'd like to turn the call over to Jason Chung to review our financing strategy and the quarterly financial results.

Thank you, Jason. Our financing strategy remains anchored in the framework we've laid out on prior calls, lease to high-quality creditworthy tenants, allocate capital efficiently through the development and execution of our sites and recycle capital into the next wave of development. We match each asset to the right financing at each stage of its life cycle from land and greenfield development through lease-up and pre-lease construction to fully contracted stabilized assets that command the lowest cost of capital.

This quarter, that strategy moved from framework to execution, and it rests on 3 pillars. First, a strong balance sheet. We ended the quarter with over $1.2 billion in total liquidity, $666 million in Bitcoin and $549 million in cash, which includes $77.5 million in restricted cash and 5,821 Bitcoin securing our $200 million credit facility, collateral that will be released as we repay. As we've talked about, we continue to utilize our Bitcoin as the primary source of funding for the equity component of our data center capital expenditures. We continue to sell all of our monthly Bitcoin production and have meaningfully sold down our Bitcoin inventory while increasing our cash on hand.

The shift to a larger cash position on hand has given us an even greater degree of visibility and certainty in our liquidity position and future equity funding requirements. This strategy also reinforces our alignment with shareholders as we have not issued any common equity during the quarter. Second, capital recycling. Last quarter, we discussed the opportunity to extract significant value from the first 25 megawatts of AMD capacity. With that capacity delivered in May, the financing process has advanced to late-stage discussions with multiple banks, and we expect to close before the end of the third quarter. We anticipate debt proceeds to be nearly double our initial equity position, highlighting our disciplined underwriting and value creation.

The facility will also include delayed draw capacity for AMD's second 25 megawatts and future expansion, further diversifying our capital sources while preserving liquidity for additional new investments. And third, capital redeployment. The initial 25-megawatt loan proceeds will be redeployed to fund the equity requirements of the Frontier AI lab lease at Rockdale, recycling lower-cost capital to higher return projects while extending the runway of our balance sheet and reducing reliance on external equity financing.

Slide 13 lays out exactly how this disciplined capital allocation works in practice. And the key message is that Riot's financing strategy drives development growth and creates new funding sources for Riot, reducing the need for external equity financing for current projects. The table on the left illustrates our approach to the AMD financing. On the initial 25 megawatts delivered to AMD, we are nearing finalization of a term loan of approximately $180 million, sized against the stabilized value of the contracted asset.

Against our initial $90 million CapEx budget, which we financed entirely with cash on hand, this new facility will generate approximately $90 million in net new capital for Riot, recapitalizing the deployment at approximately twice our initial equity contribution. On the second 25 megawatts, a $70 million delayed draw term loan at 85% loan to cost will fund $69 million of the expected $81 million in total CapEx, leaving a net equity requirement of only $12 million. This will enable Riot to shift a large majority of CapEx funding towards new sources while preserving our balance sheet liquidity for new projects.

Moving over to the table on the right-hand side of the slide, we intend to recycle and redeploy this funding into our Frontier AI lab build-out, where illustrative capital expenditures range between $2.1 billion to $2.3 billion, anticipated debt financing in the 80% to 90% loan-to-cost range or $1.7 billion to $2.1 billion implies an equity requirement of between $210 million and $460 million. Net of the expected $180 million term loan proceeds from the AMD financing process, net equity required will be reduced to between $30 million and $280 million. That's against $1.2 billion of total liquidity on our balance sheet.

While we finalize this financing process, we have also secured a $573 million interim financing facility from Morgan Stanley, which will be used to fund development costs for the project in the near term. This facility allows Riot to immediately advance the procurement of long lead equipment and fund other initial development costs without added delay or risk to our delivery time lines and while preserving our liquidity. These projects reflect our disciplined capital allocation. By utilizing our existing balance sheet and anticipated AMD financing process proceeds, we expect to fund the vast majority of our net project equity. As we compound through this cycle, we will retain ownership of high-quality cash flowing assets while continuously redeploying capital to fund additional growth and minimizing future external equity needs.

Let's move to the second quarter financial update, key figures for which are outlined on Slide 15. For the second quarter of 2026, Riot reported total revenue of $174 million, a 14% increase year-over-year, driven by growth across our Data Center and Engineering segments. We recorded a GAAP net loss of $237 million or $0.68 per diluted share and an adjusted EBITDA loss of $70 million. As in prior quarters, these results reflect over $240 million in noncash items, chief among them, a $75 million mark-to-market loss on our Bitcoin holdings, $98 million of depreciation and amortization, and a $28 million impairment of mining-related construction items at Rockdale, a direct consequence of our decision to repurpose that capacity for data center development.

In aggregate, these noncash items exceeded the entire net loss for the quarter and do not reflect the underlying economics of our operations. In our Data Center segment, we exited the quarter with 25 megawatts of critical IT capacity online and generated $23 million in total segment revenue, including $4.9 million in operating lease revenue, reflecting delivery of the full 25-megawatt AMD deployment in mid-May at an 84% operating lease gross margin, in line with what we've discussed with the market upon announcement of the deal. From signing in January to fully commissioned revenue-generating capacity in under 5 months represents the execution pace that our platform has been built to achieve.

In our Bitcoin Mining segment, Riot produced 1,587 Bitcoin in the second quarter, equivalent to production of 17.4 Bitcoin per day and ended the quarter with a deployed hash rate of 44.4 exahash per second, accounting for approximately 4.6% of the global network. Bitcoin mining revenue was $113.7 million, with hash rate utilization averaging 87%, partially impacted by minor downtime in Kentucky during the month of May. Our power strategy generated $10 million in power curtailment credits, equivalent of $6,335 per Bitcoin mined, resulting in a net cost of power of $0.036 per kilowatt hour, which remains one of the lowest in the industry.

Our direct cost to mine was $49,912 per Bitcoin this quarter, which continues to represent industry-leading efficiency despite a 9% year-over-year increase in the average global network hash rate. Our power portfolio and power management capabilities remain a fundamental part of the Riot story. We have always said that Riot is a power-first company and our net cost of power as well as our ability to manage our power trading reflect that industry-leading expertise. Finally, we ended the quarter holding 11,380 Bitcoin on our balance sheet with a quarter end value of $666 million based on a closing price of $58,527 on June 30.

This represents a significant reduction in our Bitcoin holdings as we continue to utilize that inventory for data center development. As talked about in our financing strategy, our Bitcoin treasury is a key financial asset that we will continue to leverage in order to fund the development of our data center platform. On Slide 16, we turn to our data center segment results in more detail and present the second quarter results against the first quarter. Even in these early stages of our build-out, we see the beginning of the high-margin recurring revenue ramp that we have been pointing to.

We delivered an 84% operating lease gross margin and grew AMD contracted capacity to 50 megawatts in the quarter. Recurring operating lease revenue grew to $4.9 million in the second quarter, up over 400% from $900,000 in the first quarter, driven by the delivery of the full 25 megawatts to AMD in May. That revenue generated $4.1 million in gross profit at an 84% gross margin. Tenant fit-out services revenue was $18.3 million, down from $32.2 million in the first quarter, generating $2.4 million in gross profit. Now as a reminder, fit-out revenue represents the procurement and installation of customer-specific equipment reimbursed by tenants on a cost-plus basis, and it will naturally fluctuate with the development cycle.

In total, the Data Center segment generated $23.2 million of revenue and $6.5 million of gross profit in the quarter. And while total segment revenue was lower quarter-over-quarter on reduced tenant fit-out activity, gross profit grew 174% on the strength of the recurring lease revenue mix. This is exactly the evolution we've outlined. To put this trajectory in perspective, recurring lease revenue of $4.9 million this quarter builds towards approximately $64 million in average annual revenue and to approximately $520 million in combined average annual revenue after the Frontier AI lab development reaches full deployment, layering highly predictable infrastructure grade cash flows into our consolidated P&L.

Our Engineering segment, ESS Metron and E4A Solutions continues to serve as a key competitive advantage driving our ability to deliver critical data center components and on a timely basis. Engineering revenue was $37.3 million in the quarter, more than triple the $10.6 million from a year ago, while gross margin expanded from approximately 7% to over 27%, with the data center sector representing approximately 90% of our $177.1 million backlog. Importantly, the conversion cycle of backlog into revenue has significantly accelerated as a result of the 25% increase in manufacturing capacity we brought online in 2026. We are also continuing to strategically hold back capacity for Riot's own data center growth.

As a reminder, within our engineering business, ESS Metron manufactures low and medium voltage switchgear and power distribution units, among the most severely constrained long lead components in the data center supply chain. And while we are extremely pleased with the continued improvement in the financial results at ESS, the story has never been one of stand-alone profits. ESS and E4A are key elements of Riot's vertically integrated approach. With the execution of our data center deals, Riot Engineering is playing a key supporting role in the procurement process for our data center strategy. Through this process, we gained greater control over the supply chain, derisk delivery of scheduled critical equipment and generate meaningful CapEx savings, approximately $23.8 million cumulative acquisition of ESS Metron in December 2021 alone.

This vertical integration was a key factor in our on-schedule delivery of the initial AMD capacity, and it is now fully integrated into the delivery plan for the Frontier AI lab build-out. Now I'd like to turn it back over to Jason Les for closing remarks.

Thank you, Jason. I want to close by putting the pace of our execution into perspective. In January, we announced the Rockdale land acquisition and the execution of our first data center lease with AMD. In May, we completed AMD's initial 25 megawatts. Today, we announced a 191-megawatt, $9.1 billion lease with another one of the most consequential AI companies in the world. Looking ahead, AMD's expansion completes in May 2027 and the leading Frontier AI Labs phase deployment begins with 96 megawatts in December 2027 and completes in June 2028, bringing us to 241 megawatts of delivered contracted capacity. Layer in the LOI now signed for the full Corsicana campus, and we have line of sight to approximately 1 gigawatt of leased critical IT capacity across a total power portfolio of more than 2 gigawatts of utility power.

With the AMD and Frontier AI lab lease executed, we have contracted approximately $416 million to $462 million in estimated average annual NOI. The 4 themes that define this quarter are the ones that will define Riot going forward, rapid delivery, derisked execution and a strong balance sheet and disciplined capital allocation. Our priorities for the balance of 2026 directly follow: deliver contracted megawatts to AMD and advance the AI lab build-out on schedule and on budget; convert our Corsicana LOI into an executed lease; close low-cost project financing that reflects the quality of our tenants and our sites.

Beyond that, we remain active in pursuing growth of our power pipeline, and we'll look to make accretive additions that compound value in our portfolio. Riot sits at the intersection of 2 defining constraints of the AI era, power and execution. As we continue converting our power portfolio into contracted data center leases with the highest quality counterparties in the world, we believe the quality, scale and cash flow visibility of our platform will become increasingly evident. We have the assets, over 2 gigawatts of utility power and 2 of the most attractive data center development sites in the United States.

We have the balance sheet to fund development on value-accretive terms, supported by our financial strength, our operating cash flows and access to institutional capital markets. We have the team, a world-class data center organization that is delivering for AMD, building for the leading frontier AI lab and advancing our next wave of leasing discussions. And we have a repeatable approach, lease to creditworthy tenants, finance efficiently, build with discipline and recycle capital, an approach that is designed to compound through multiple deals and multiple sites.

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 exciting opportunity. With that, we will now open the call up for questions. Operator?

[Operator Instructions] Your first question comes from the line of Stephen Byrd with Morgan Stanley.

Congratulations on the deal and the LOI. It's very exciting. That's great news. I wanted to just start on the economics of the deal. And I wondered if you could just maybe speak to the CapEx range, sort of how you arrived at that range for CapEx.

Sure. Thanks for the question, Stephen. So the new lease at Rockdale has a total initial base contract value of $9.1 billion in revenue over the term, which is a little longer than 20 years following the initial deployment. And this lease, like most of the leases we have seen, carries annual escalators that are in line with the market precedents out there. Our NOI margin is expected to be between 80% to 90% over the term of the lease. We have some good experience already operating at Rockdale for AMD, and we have spent a lot of time assembling a very strong operations team that helps formulate this guidance. We have really invested a lot in building out this operations team over the past year or so.

Now to your question on the CapEx side, the illustrative range that we shared benefits from 3 elements. One, we have spent quite a bit of time between our teams as well as the tenants on design work to know exactly what we're building and how what we're building is going to meet that tenant specifications. Two, we have done a fair amount of work on procurement of long lead items because we already have this design outlined. We've been able to make progress on that. So we have strong visibility on what pricing will look like for all of the individual components. And then finally, we have been working collaboratively with a general contractor who has worked on projects for this tenant before and has given us visibility to help firm up these figures.

So this has allowed us to have really good clarity on labor availability and pricing to fully deliver the projects. And when you take all of these factors together, it allows us to have a really good sense of CapEx, which I'll add, includes a healthy contingency reserve because there's already been a good amount of effort on the planning and preparation of this deal over the preceding months by both of our teams. Where all of these combine out on a return on cost perspective is very strong, especially for a customer with both the profile and the trajectory of a leading frontier AI lab. It's also, I think, a reflection of the continued and ever-improving strength of the market and demand for this type of large-scale infrastructure that comes with the level of certainty in power delivery that Riot is able to offer.

That's fantastic. That's really helpful. And I wonder if you could just talk about the bridge financing that you've arranged. And I just wanted to confirm, will that be sufficient to cover sort of the near-term build cost that you're going to be incurring here?

Jason Chung, do you want to take that?

Sure. Thanks, Stephen. On financing, the structure we put in place has deliberately been set up in stages. So the Morgan Stanley interim financing facility immediately funds long lead equipment, procurement and other development costs related to this tenant lease and interestingly, is fully secured by the tenant so that near-term build costs come with that tenant credit support from day 1. Then from there, we plan to execute the takeout financing of this interim facility in the coming months as the investment-grade backstop is completed. And there, we anticipate pricing consistent with the growing number of backstop AI infrastructure deals we've seen in the market.

This lease has been structured with financing in mind from day 1, and we have multiple paths to attractive long-term financing regardless of how the credit support process concludes. That said, we do expect it to conclude in the near term and diligence is well advanced. So I don't want to get ahead of that process by discussing parties or terms just yet. What I'd point to you to is the outcome, which is we are confident in achieving investment-grade level financing economics for this project.

Your next question comes from the line of John Todaro with Needham.

Congrats on the lease there. It looks like a pretty good economics per megawatt. I wanted to ask on Corsicana. Nice to see the LOIs for the full site, and it's going to be with one tenant. That is something you guys have talked quite a bit about in the past that the full site would go to potentially one tenant. I would think that suggests hyperscaler, but any additional color on that and then also how the discussions on Corsicana have evolved over time?

Sure. First off, John, it's funny to think back on previous earnings calls or I've been asked and we've been reticent in disclosing LOIs historically. But I will add that every deal that we've announced previously had an LOI at some point before progressing to a lease, and we chose not to disclose that. As everyone knows, LOIs are subject to uncertainty, but we feel very strongly about our progress here. In this case, we wanted to share with the market that we are under LOI for the entire site with a single tenant to try and give transparency about the process. And I think it's a testament to our progress with the counterparty on working towards a signing completed deal.

Riot has taken a very calculated approach with marketing this asset because it is our most valuable and in-demand asset. I'll remind everyone that it wasn't until the end of 2025 that we had really acquired all the necessary acreage to have the physical footprint in order to build a full cohesive Tier 3 data center campus that utilizes all of the 1 gigawatt power at Corsicana and met the design requirements of today's market. So because of this, we didn't begin fully marketing the site with a comprehensive plan in place until the beginning of this year. We wanted to be sure before getting in front of prospective tenants, and we've spoken about this, that we had a well-thought-out plan in place that could withstand the most rigorous diligence processes that you'll find from the highest quality -- high-quality counterparties out there. This has led to a number of conversations with a variety of parties, and we've been very intentional about focusing our efforts on the right counterparties.

When you're working with a site that is the scale of Corsicana, it is extremely in depth, and it's not a small undertaking for any potential tenant. When you look at what a lease sign for Corsicana could look like for the entire site, you're looking at in excess of $1 billion in annual rent upon full deployment. So you can appreciate that no matter how well positioned the site is, both parties need to be absolutely careful of what the ultimate deal looks like in order to receive the best possible outcomes. That's a 2-way street there. So it's a tremendous investment from both sides. And that process requires an immense amount of technical development, construction, operational, legal and commercial-related discussions, even much more than our previously announced deals at Rockdale.

So we've been deeply engaged in this process. We have a target tenant that we've committed to in the process that we've executed an LOI with. We caution and we're well aware that this process can still take a number of twists and turns, and it's subject to uncertainty. But we want to be transparent about our progress, and we will update the market in the coming months when there's more to share about this process.

That's great. Very helpful and a lot of color there. And then just as a follow-up on the same site, can you just go a little bit more into the current state of development, if there's really kind of anything at the base level that still needs to be done to support the full gigawatt and how that phasing of capacity would look?

Yes. So we are -- while we're in the deep active discussions that we have, we've continued on the development of the site in Corsicana. That's been important in order to advance progress that ultimately results in delivering Tier 3 capacity. Now we're not committing ourselves to designs or decisions or spends that are going to box us into a certain tenant specifications or design. We are proceeding with horizontal work and long lead equipment procurement for items that we're confident will support any eventual tenant's requirements, whether it is for current LOI or otherwise.

I think it's -- as far as the RFS states go, I think it's probably too early to comment on that specifically because Everything is subject to final design choices, specifications and the negotiations that come with that. And as you go through this process and you go through various revisions of a tenant's design, you make trade-off choices between delivery dates and certain features or requirements that may take a little longer to deliver. So there's always this push and pull discussion that we have with our customers that will meet what they need from a time line and technical perspective. These are active discussions. They're happening on a regular basis. And yes, we look forward to continuing progressing them to a lease.

Congrats again on all the progress guys.

Your next question comes from the line of Paul Golding with Macquarie Group.

Echoing the congrats on all the progress. I wanted to ask maybe around Rockdale. Could you remind us of the structure of the remaining AMD options? I know you mentioned, Jason, that you still have 150 megawatts of options outstanding. But maybe in addition to sort of talking through how those are structured, if you could also give some color around whether this incremental AI Frontier lab lease for 191 megawatts impacts those options or the dynamics with AMD at all. Obviously, the pricing is quite strong with this recent announcement and just looking to see how that might impact the AMD options or not.

Thanks, Paul. So first on AMD options. So they have 2 options in their lease. The first of which is an expansion option for an additional 50 megawatts. And that would bring, if exercised, their total IT capacity at Rockdale to 100 megawatts. We signed an initial 25-megawatt lease with them in January. They executed a 25-megawatt amendment to that in April. And now there's 50 megawatts remaining on that original 100-megawatt option. And this additional 50 megawatts would largely be the same type and build-out and economics as their existing 50 megawatts.

AMD's second option is for an additional 100 megawatts of capacity that can be leased only if they fully lease the first 100 megawatts of the lease. And this second 100 megawatts of capacity is subject to a few different restrictions and guardrails that are important for maintaining flexibility for Riot. While on AMD, one thing I do want to highlight is that AMD had a really interesting feature on CNBC recently of all the advancements that they're making in their AI hardware business. And a lot of that interview was done at our Rockdale campus and what they are now referring to as their Megalab.

And what's really exciting for us is that they say in this interview that they are using this Megalab to test and commission their brand-new Helios Rack AI platform. If anyone is interested, we have a slide in our appendix of our presentation. There's a few interesting screenshots from that piece and a link to the interview that shares a lot of good information about what they're doing. But I think the second part of your question was, does this new deal at all impact AMD's position on its expansion options? We can't comment on or speculate on the motivations of our tenants.

However, if you look at what AMD has stated publicly that even if the -- the entire expansion option went to AMD, it would -- based on public statements, it would still not be enough to fulfill their power demand. So we have 700 megawatts of capacity out at Rockdale, and we are progressing with commercial discussions across that site and at Corsicana. And our primary strategic objective is to lease up this full portfolio.

And maybe just a quick follow-on to that. With the 25 megawatts where the design is nearly complete for AMD at Rockdale. Just on that phrasing of the design still being nearly complete, is there -- are there different terms or, I guess, incremental economics from a design being any different than the preceding 50 megawatts? How should we think about that?

I am not sure the exact comments that you're referring to. What I meant to clarify is that the first 100 megawatts are for a certain type of design that we've executed on with them, the one -- it's a lower CapEx, quicker time line deployment. That covers the whole 100 megawatts. The second 100 megawatts has a bit more flexibility to build a new type of capacity, whatever they would be looking for, for their specifications. So if we were -- when we get to the point when they fully execute their -- I should say, if we get to the point where they fully exercise their first 100-megawatt option and then they want to be talking about the 100 megawatts, part of that then would be engaging with them on the design that they're looking for.

Your next question comes from the line of Mike Grondahl with Northland Capital Markets.

This is Logan on for Mike. Congrats on all the progress here. First one from us. With the 2 leases now signed, can you just clarify, what is the remaining capacity at Rockdale that can be leased? And if there is any preference for the existing tenants or new tenants to take down that capacity?

Yes. Logan, thanks for the question. Yes, there's still additional capacity at Rockdale. Right now, we have Bitcoin mining and AMD on that site, and now we're building going to be building development for a new tenant here. We're going to continue to utilize Bitcoin mining to monetize that available capacity until we have the right lease or set of leases to take the balance of that capacity there. As far as preference for tenant goes, we only have a preference to a tenant or tenants that are going to pay the best economics and that have the requisite credit rating or the backstop that allows us to achieve the best possible financing outcome because that is ultimately what's going to translate into delivering the best returns for our shareholders.

So we like the relationships that we have. We hope to grow both of those relationships significantly. But if the right counterparty comes along and wants to move on capacity and the terms are right then, then we'll be looking very seriously at that as well.

Great. Then as a follow-up to that, is there a potential to expand capacity at Rockdale past the current 700 megawatts? And would you need additional land if you could secure that power?

Yes. Look, we believe there is potential at Rockdale for at Rockdale and actually all of our sites to expand the power that's available. And it's something that we keep a close eye on, and we are -- to be clear, we are actively pursuing but it is obviously too early to commit if this is possible, especially with everything that's going on and what extent we may be able to in the future. At Rockdale, our site has 200 buildable acres and we've been very intentional and thoughtful about how we build out this site in order to maximize the availability of the campus as part of a broader strategic plan for the campus.

So we are in a great position, I believe, to have the opportunity to get more power at that site and execute it on that if we get that approved.

Your next question comes from the line of Brett Knoblauch with Cantor Fitzgerald.

Congrats on both delivering AMD and the new lease. On the Corsicana LOI, I guess, how would you describe the gating items on your end or what you and your prospective tenant need to do to convert it from LOI to kind of definitive lease? If you had to kind of for 2 or 3 items, what would they be?

Yes. Thanks for the question, Brett. Obviously, I don't want to get into too many specifics here. But like I kind of mentioned in the remarks, executing on a build of this size, it's substantial. There's a lot of design and legal and commercial work that goes into that. I think the level of intensity from both sides scales with the amount of megawatts that you're executing on. So this is -- when you look at Corsicana, it's a multiyear development. It's 700 -- up to 756 megawatts of development across the acreage that we've acquired there. And that requires us to plan carefully and that requires the tenant to be planning their own capacity carefully and making sure that what we are building us making sure that what we're building can meet the time lines that they're looking for and they want to make sure that what we're building is going to be the type of design both now and on the first phase of delivery and the final phase of delivery.

So it's a big lift, but this is a substantial part of the power assets that we have. This is an agreement that we are going to be living with and performing over in 15, 20 years, whatever the ultimate term of that lease is. And our management team, we're significant shareholders of this company, and we think about how we build out this portfolio over a very long time frame because of that. So it's putting in good work. And moving through a process as quickly as we can, but being diligent to make sure that we're delivering what our tenant looks for and making sure we can deliver for what our tenant wants.

And then on the derisk, it feels like quite derisked build for the AI lab lease. You talked a bit about how kind of the ESS Metron is going to play a role there on some of the electrical equipment. I think you mentioned kind of substation equipment. I guess what electrical work is needed given kind of that site was already kind of live and pulling power for mining?

Good question. So first, with any new development, you're building at the very least, new low-voltage, medium voltage all of the buildings. So you're procuring a ton of equipment, equipment that is supply chain bottleneck right now, which is why our advantage having ESS Metron in-house really derisk this. There's also high-voltage work needed for this new building as well. We've already secured the transformers for that as part of our ongoing kind of long-term campus planning strategy. So we've put ourselves in a very good position because of the decisions that we've made in the past as far as procurement goes. And it's why we're able to sign a lease in -- right now in the summer of 2026 and be able to deliver 96 megawatts in a little over 1 year from now.

Your next question comes from the line of Brian Dobson with Clear Street.

Congrats on the new deal. I'll add my congratulations, I guess. So do you think you can give us a little bit more color on your pipeline and how do you see that developing? And are you -- do you have a preference between, call it, grid connectivity or behind the meter?

Yes. That is a great question, Brian, because it is an area that Riot is really invested in. While we have data center teams devoted design, development and leasing and construction, that results in the lease that we're announcing today. We have a separate team devoted to finding the right future assets in order to continue replicating our successful data center strategy. I've said before, what we are building here at Riot. It's not just a Rockdale and Corsicana project, it is about building a long-term durable data center platforms.

So Corsicana and Rockdale are just the beginning. And from the start, our management team and Board at Riot made the conscious decision to deliver the best returns to our shareholders. We needed to have in-house capabilities for data center design, construction and operations. We have those teams in place now and they're hard at work delivering data centers at Rockdale, Corsicana in Kentucky. However, we made this tremendous investment in order to grow our existing tenant relationships and forge new ones that replicate this business model at new sites that we're able to add to our power portfolio.

So we are -- in order to support that, we're building durable, repeatable business with teams that are highly specialized in delivering data center to demanding tenants. And every week, we evaluate at least 10 new sites and our team spends an incredible amount of time doing that, taking a critical look at what would make strong additions to our power portfolio. but we are very careful not to add assets that just create a strong headline number of the periodical portfolio. We are looking to commit capital to sites that we believe have a strong ability to become premier data center sites that would stand the scrutiny of hyperscaler and enterprise tenants the rigorous diligence process that they have.

So we had a number of very exciting initiatives underway. And to your question, Brian, that includes both grid and behind the meter projects. And we look forward to sharing more about this growth power portfolio at the right time, but it's something we're absolutely involved in, and we fully intend to be delivering on as we execute on our strategic plan.

Yes. Great. That's helpful. And then just one follow-up, if I may. Are you involved in the batch process in Texas?

So first, thank you for asking that because first, I want to clarify for everyone, Riot's existing sites in Texas in Rockdale Corsicana are not subject to the batch process. That's because their existing power allocations are already under existing interconnection agreements for many years. They've been operating for several years now, and we want to make sure that's absolutely clear up front. In Texas and ERCOT, this batch process is an evolving process, and we remain highly engaged with that, with our power teams, our corporate development teams, our public policy teams. ERCOT has really found itself in an unprecedented position with the amount of data center request for interconnection.

And we often like to remind investors that ERCOT's priority, first and foremost, is to ensure reliability for existing customers. And we feel like this is an advantage for sites like our own. Sites like Rockdale Corsicana that already have the in-place power that provides certainty to tenants is not subject to future studies or approvals. We do think that over the next year, there will be new opportunities for either acquisition or expansion from sites that do end up with new allocation from the ERCOT batch process. And like I said, it's an area we are actively monitoring and performing diligence on.

And to provide some more broad commentary on the process and more recently, Governor Abbotts letter we think, all in all, that this is a positive thing to Riot. And yes, the batch process has made it more challenging to get new power, and that's what makes our current sites even more valuable. ERCOT is navigating a difficult situation or they have to deal with a lot of phantom interconnect requests and less reputable developers. And as a -- ERCOT is really trying to set and establish the rules that are going to get rid of that. Now if you look at the comments that Governor Abbott is asking data centers to implement for new data centers, this is in line with Riot is already doing.

We're supportive of being good members of the community whether that's paying for your own infrastructure, paying for transmission upgrades, utilizing closed-loop water cooling for your own water. These are all areas we've been very focused on implementing at our current sites. Anyone who's been to our sites have actually seen this in action. So we want to make sure that we are building projects in a responsible way. So to sum it up, I think this has positioned us to take advantage of new opportunities. and continue to be good partners with ERCOT and our surrounding communities and further enhances the value of the sites that we have.

Your next question comes from the line of Martin Toner with RBC Capital Markets (sic) [ ATB Capital Markets ]

I really appreciate it and wonderful to see these 2 -- well, this great deal and then another potential 1 in the hopper. I think it might be useful for you guys to reiterate how you're going to -- how you take this deal with the AI lab, the bridge financing and then turn it into an investment-grade backstop. Can you kind of just walk us through why you're confident that, that will -- that that's effectively a certainty?

Thanks for that question, Martin. Let me turn that over to Jason Chung.

Martin, so we talk a little bit earlier about the facility itself and how it allows us to fund some of our immediate long-lead equipment procurement as well as additional development costs. And so that's been a really great tool in making sure that we both have the financial resources today to begin procurement immediately and not put our time lines at risk, while also maintaining the liquidity on our balance sheet as we await the investment-grade backstop. And so without getting too much into it at this point, as I mentioned earlier, I don't want to necessarily say too much.

We've spoken across the board with both the tenants and the potential backstop provider. Those negotiations, we expect to conclude fairly quickly. And we feel confident given the level of diligence that both parties on the other side have put into this. And so that's intentionally what the bridge or the sort of interim facility is intended to support. That being said, I mentioned as well earlier, there's additional sort of contractual protections we put in place to make sure that regardless of the outcome, we will be protected and we have secured investment-grade or investment-grade equivalent economics in terms of how that -- takeout financing is going to look like?

That's great. Real quick, what would the cadence of CapEx be for the $2 billion for this 200-megawatt deal?

Sure. So on this particular deal, as we've discussed, Phase 1 is 96 initial megawatts is going to be delivered in December of 2027 and so we've got all the long lead equipment procurement, the transformers, chillers, switchgears, et cetera, underway now, and that's supported by the Morgan Stanley interim financing facility that we have put in place. So we expect that CapEx will really ramp up through the back half of 2026, probably peak in the first half of 2027 and then continue on into early 2028 when that Phase 2 delivery in June 2028 kind of comes in.

So when we pair that alongside the AMD build-out for this additional 25 megawatts in combination, that sort of peak combined project level CapEx is probably going to be around Q2 -- between Q2 and Q3 of 2027. Now that being said, it's important to remember that the substantial majority of the CapEx spend across both of these is going to be funded at the project level, so we'll have the AMD financing facility in place, which will include a delayed draw mechanism to fund additional AMD options as they exercise them.

And then the Morgan Stanley interim financing facility plus the eventual takeout of that. So we feel really good about the financing model that we've put in place and how that positions us to make sure we can hit delivery milestones on time.

That will now conclude the Q&A portion of the call, and we'll turn the call back to Jason Les for final remarks.

Thank you, operator, and thank you, everyone, for joining us on our call today. We're very proud to announce this landmark new deal. We're very excited about the progress that we're making and we look forward to sharing as we continue to hit new milestones on our strategic growth plan. So we will see you all next quarter. Thank you.

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.

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 Platform. Please go ahead.

Thank you, operator. Good afternoon, and welcome to Riot Platform's 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 Jay 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. The 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 15 megawatts for delivery in May of 2027.

As a result of this phase 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 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 dense 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 two 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 two 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 [indiscernible] 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 will recover from either a true-up during the construction period as in our AMD discussions or from refinancing proceeds on completed, stabilized assets close 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 retained 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 noncash 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 scheduled 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 remote 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 two of the most attractive data center sites in the country. But the same study also identified two 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 two 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 right owned land in a connected campus layout. At Rockdale, we converted our interest from the long-term ground lease into a fee simple acquisition of the 200 acres underlying the site. With those two 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 buildout. 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 arrives.

In January of this year, we signed our first Data Center lease at the 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 credential 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 up 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 two 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 powerful strategy, lease to creditworthy tenants, finance efficiently, build a 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 two-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 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 work 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. Do 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 1 quarter to a next as different companies are in different parts of their 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 engaged 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 our 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 two 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 the 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 two 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, what you've seen 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 in 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 one 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 of a single tenant or multi-tenant? And then maybe as a follow-up on the procurement process for the core and shell. I guess, where are you on that as well as the procurement process for what would 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 the 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 [indiscernible] 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.

On 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 right 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 is your broader strategy moving forward?

Let me turn that question, 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 on 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 Harl ] here 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 that's really going to be driven by them. Like I said in the 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 950 megawatts remaining. As far as some of the details 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 lease and the expansion, it clearly goes into these two 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.

Good day, and thank you for standing by. Welcome to Riot Platforms' Fiscal Year 2025 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 Joshua Kane, Head of Investor Relations at Riot Platforms. Please go ahead.

Thank you, operator. Good afternoon, and welcome to Riot Platforms' Fiscal Year 2025 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 fiscal year 2025 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 fiscal year 2025 performance.

Forward-looking statements may include, but are not limited to, statements that predict future events or trends, forecast for performance and may contain words such as believe, expect, intend, project, plan, words or phrases with similar meaning. Actual results be materially different 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 for the year ended December 31, 2025, 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. 2025 was a transformational year for Riot Platforms. It was the year we fundamentally repositioned this company to be at the forefront of the data center industry. Today, I am exceptionally proud to share the significant milestones we have achieved and outline the path forward as we continue executing on our strategy to maximize the value of our power portfolio for shareholders. Riot has evolved from a bitcoin mining company with data center potential into a proven data center developer with a track record of rapid execution. I'd like to take a minute now to walk through some of the key achievements that made 2025 truly transformational for Riot. We completed the fee simple acquisition of our Rockdale site, securing 200 acres of critical land now under our full ownership. We also completed our basis of design platform that positions us to deliver data center capacity at the scale and speed the market demands.

We built substantial internal expertise by recruiting veteran data center talent across every critical function. Our team now includes leadership across product development, construction, engineering, sales and marketing with collective experience completing over 200 data center projects totaling nearly 4.8 gigawatts of design and construction experience. This depth of experience is critical. It's what enabled us to give prospective tenants confidence in our ability to deliver mission-critical infrastructure on aggressive time lines. Data center development talent is in high demand, and we are incredibly proud of the depth of capabilities and experience that we have been able to attract to Riot. The quality of our data center team is a critical advantage in ensuring that potential tenants and partners are confident in our ability to deliver at scale.

We have also significantly expanded our land portfolio to support full utilization of our approved power capacity. We acquired 3 additional parcels adjacent to and near our original Corsicana site, bringing our total land footprint at Corsicana to approximately 900 acres. This acquisition simplifies and expedites the planned development of our full 1 gigawatt of approved power capacity at Corsicana, all on Riot owned land in a connected campus layout.

In the fourth quarter of 2025, we closed on the previously leased 200-acre Rockdale site for a total consideration of $96 million. funded entirely through the sale of approximately 1,080 Bitcoin from our balance sheet. This purchase was a strategic imperative, converting our interest from a ground lease to full ownership unlocked our ability to develop data centers at Rockdale and eliminated approximately $130 million in future rental payments that would have been due over the remaining lease term and extension options. And finally, we completed our standard basis of design, which was a critical step in engaging potential tenants on both technical and commercial discussions.

Together, these achievements have positioned Riot for substantial data center development in 2026 and beyond. On the leasing front, we announced our first lease with AMD in January of 2026, demonstrating Riot's capabilities as a credible developer and operator. When a company of AMD's caliber chooses Riot for mission-critical infrastructure, it sends a clear signal to the market about the strength of our capabilities and our team. Our focus for 2026 is clear: one, the delivery of the full 25 megawatts of compute for our AMD lease; two, executing on additional leases at both Corsicana and Rockdale, beginning with the development of our first core and shell at Corsicana; and three, secure attractive low-cost financing that reflects the quality of our tenants and sites.

We now have active discussions ongoing with multiple high-quality tenants who have expressed strong interest at both our Corsicana and Rockdale sites. The absolute certainty to large-scale power our sites offer is incredibly rare in today's market and has led to numerous interested parties actively engaging. Our sales strategy accommodates leasing outcomes that result in either single tenant or multitenant campuses at both locations, maximizing our flexibility.

On the development front, our execution is already speaking for itself. We delivered the initial phase of power capacity to AMD on time and on budget, and we are already generating revenue. In an industry where delays are common, delivering on time to a world-class tenant is a powerful validation of our execution capabilities. Core and shell development is underway and progressing at Corsicana. Our Corsicana substation expansion remains on schedule with total power capacity reaching 1 gigawatt over the next 12 months.

On capital management, Riot is maintaining a disciplined front framework to efficiently fund our data center business. We are activating our strong balance sheet to fund upfront development costs without relying on dilutive equity financing. We will efficiently access project finance and debt capital markets to deliver on high credit quality leases. Upon stabilization of our assets, we plan to refinance with permanent debt to recycle capital into higher return projects, creating a compounding flywheel of development. Initial work is underway to assess financing options for the AMD lease, including additional capacity for future potential expansions in anticipation of AMD exercising their options.

Moving to Slide 8. I want to underscore the philosophy driving our leasing strategy. We are not simply looking to fill capacity. We are focused on strong high creditworthy tenants to match our high-quality assets. The reason for this focus comes down to capital efficiency and asset valuation. In the digital infrastructure space, cost of capital is highly correlated to the credit quality of the tenant, often pricing off the back of their underlying credit rating. By partnering with highly creditworthy counterparties, we secure the most favorable, lowest-cost financing available in the market. This minimizes our equity investment requirements and maximizes our return on invested capital.

From a capital markets perspective, this also drives premium valuation multiples, leading to significant value creation for our shareholders. The AMD lease serves as a validation of our strategy. AMD is a global leader in the AI ecosystem with an S&P credit rating of A and to have a tenant of AMD's caliber entrust Riot to deliver mission-critical infrastructure sends a definitive message to the broader market. This message is that our team, our sites and our execution strategy are operating at the highest possible level and this paves the way for ongoing discussions with other high-quality partners.

Now I'd like to pause and highlight the importance of the achievement that Riot has made. We have successfully commenced Phase 1 of the AMD lease on schedule in January and remain on track to deliver Phase 2 as planned in May. This execution validates the capabilities of our data center team and demonstrates our ability to meet the demanding time lines of premier technology tenants. The speed of our execution was remarkable. We announced the lease in January and delivered the first phase of capacity within the same month, which is something that traditional greenfield developers simply cannot match.

We are delivering capacity in 2 phases to derisk execution. The first 5-megawatt phase was delivered and commenced rent in January of 2026. The remaining 20 megawatts will follow in May 2026, bringing the total initial deployment to 25 megawatts of critical IT load. The capital required for this initial deployment is approximately $90 million, which translates to roughly $3.6 million for critical IT megawatts. And significantly below what traditional new build projects typically require. The expansion potential is significant. AMD holds an option to expand by an additional 75 megawatts of critical IT load, which can be accommodated within the remainder of Building G and Building F using the same capital-efficient retrofit model. Beyond that, AMD holds a right of first refusal on an additional 100 megawatts of capacity.

If AMD were to fully exercise both the expansion option and the ROFR their total footprint at Rockdale would reach 200 megawatts of critical IT load. This slide reviews the key terms of our previously announced deal. With this lease, we have entered into a 10-year agreement to provide customized data center space at our now fully owned Rockdale site. The lease includes 3 5-year extension options, creating the potential for a 25-year partnership. From a financial perspective, the total contract value for this initial 25-megawatt deployment over the 10-year base term is $311 million.

We expect this to generate average annual net operating income of approximately $25 million, representing highly visible contracted cash flows with an investment-grade counterparty. Our Power First strategy underpins everything we do at Riot. The majority of Riot's operating power capacity is currently monetized through Bitcoin mining, which generates strong cash flows to support our operations and development activities. Going forward, we will continue to convert power capacity and pursue data center leases that maximize value for our shareholders. The AMD lease demonstrates this strategy in action.

We leveraged existing infrastructure to deliver at speed and at scale, translating into highly profitable and predictable long-term contracted cash flows with an investment-grade counterparty. The economic comparison is compelling. The AMD lease generates 2.5x more gross profit per megawatt than Bitcoin mining. This economic framework will guide our capital allocation decisions going forward, where we can generate higher risk-adjusted returns through data center leasing with creditworthy counterparties. We will prioritize data center development, where Bitcoin mining remains the highest and best use of our power, we will continue mining while remaining flexible to convert that capacity to data center use.

Slide 14 highlights the significant scale and quality of Riot's power portfolio in Texas. Riot has 1.7 gigawatts of fully approved [ firm ] power across our Corsicana and Rockdale sites. This is not a prospective pipeline or speculative capacity, but rather power that is in use and available for development and utilization today. At Rockdale, we have 700 megawatts of total approved capacity. This power was originally approved in the fourth quarter of 2019 and energized in the second quarter of 2020. In fiscal year 2025, we had an average load of 351 megawatts at Rockdale. The site features a direct non-interruptible evergreen connection to the grid with no intermediaries between Riot and the utility, supported by a 700-megawatt substation already on site and operating.

At Corsicana, we have 1,000 megawatts or 1 gigawatt of total approved capacity. This power was approved in the fourth quarter of 2022 and energized in the second quarter of 2024. In fiscal year 2025, we had an average load of 335 megawatts at Corsicana. The substation expansion remains on schedule to deliver our full 1 gigawatt of capacity over the next 12 months. Both Rockdale and Corsicana are fully approved sites with firm power located in some of the most attractive data center markets in the country.

This distinction gives us a major competitive advantage in today's power constrained environment. Current time lines to procure new power within the Texas triangle are estimated at 4 or more years. So having large-scale energized power today in the right locations is extraordinarily valuable. This scale of energized Power is an extremely high demand asset and forms the foundation of our financial profile. I will now turn the call over to Jason Chung to present our fiscal year 2025 financial update.

Thank you, Jason. For fiscal year 2025, I am excited to present Riot's financial results, which demonstrate both the strength of our operating model and the significant progress we have made in positioning the company for long-term value creation. For the full year, Riot reported total revenue of $647 million, representing a 72% increase year-over-year. This substantial growth was driven primarily by strong performance in our Bitcoin mining business, which contributed $576 million or 89% of total revenue and supported by our engineering and other revenues, which contributed an additional $71 million or approximately 11% of total revenue. Our Bitcoin mining business achieved its highest annual revenue and gross profit on record with fiscal year 2025 revenue of $576.3 million and gross profit of $294 million when including power curtailment credits. This performance reflects the scale and ongoing efficiency improvements in our operations, including our industry-leading power strategy.

Net loss for the year was $663 million or $1.95 per diluted share. Now it's important for investors to understand the components behind this result. This net loss reflects several significant noncash charges and mark-to-market pricing adjustments on Bitcoin held on our balance sheet, including depreciation and amortization expense of $346.8 million, stock-based compensation expense of $125.7 million, a $158.1 million loss on contract settlement with Rhodium and unrealized mark-to-market adjustments on our Bitcoin holdings of $115.9 million as required by FASB accounting standards. Non-GAAP adjusted EBITDA for the year was $13 million when adjusted for noncash and unusual items. Non-GAAP adjusted EBITDA eliminates the effects of certain noncash and nonrecurring items that do not reflect our ongoing strategic business operations. and provides investors with a clear view of our underlying operational performance. Our net cost of power for 2025 was $0.037 per kilowatt hour, representing one of the lowest power costs in our industry. Our power strategy generated power curtailment credits totaling $56.7 million for the full year, equivalent to nearly $10,000 per Bitcoin mined. This power strategy remains a critical competitive advantage for IoT.

Turning to our Bitcoin mining operational metrics. We produced 5,686 Bitcoin during 2025, equivalent to production of 15.3 points per day on average. This represents an 18% increase compared to the 4,828 Bitcoin we produced in fiscal year 2024. We ended the year with 18,005 bitcoin on our balance sheet with a year-end value of $1.6 billion based on the closing price of $87,498 per Bitcoin on December 31, 2025. Our hash rate deployed reached 38.5 exahash by year-end, accounting for approximately 3.5% of the global network hash rate. This represents a 22% increase from the 31.5 exahash we ended fiscal year 2024 with approximately matching the pace of global network hash rate growth and maintaining our significant share of the overall network. Our cost to mine per bitcoin was $49,645 for 2025. While this increased from $32,216 in 2024, it's important to contextualize this in the broader industry environment. The average global network cash rate increased 47% year-over-year, from 630 exahash to 923 exahash. Despite the significant increase in network difficulty our vertical integration and power strategy continued to drive industry-leading cost efficiency relative to our peers.

Hash rate utilization averaged 87% for the year, a significant improvement from 70% utilization in 2024. This improvement reflects the operational excellence initiatives our teams have implemented across our facilities. Our engineering business continues to demonstrate significant strategic value for Riot and represents a key component of our vertical integration strategy. Engineering backlog reached a record $224.6 million at the end of 2025, up dramatically from $55.9 million at the end of 2024, representing a 302% increase over the course of the year. The data center sector represents 90% of our current backlog, reflecting both the strength of industry demand and the positioning of our engineering business to capture it. ESS Metron manufactures low- and medium-voltage switchgear and power distribution centers. These are components that are essential for data center development and power distribution. As industry analysts have noted, transformer and switchgear lead times have quietly become one of the defining constraints in modern data center development. These are the hidden bottlenecks shaping 2026 project schedules industry-wide. Our engineering business creates significant operational advantages for Riot. By vertically integrating the manufacturing of these critical components, we reduce procurement risk improve speed to market and maintain control over equipment that is in short supply across the industry.

Additionally, our servicing and maintenance expertise improved start-up and commissioning processes enhances uptime and extends the life cycle of our equipment. This work generates significant CapEx savings across Riot platforms development activities. Since our acquisition of ESS Metron in December 2021, Riot has already realized $23.2 million in cumulative CapEx savings on equipment purchases alone. And we expect these synergies to continue to scale as we expand the scope of our data center development further. With that, I will now turn the call back over to Jason Les to discuss how all this translates to Riot's valuation rerating opportunity and our path forward.

Thank you, Jason. Slide 19 presents enterprise value per megawatt multiples across selected peers in our sector, which we view as a useful lens for how the market values power portfolios today. Riot currently trades at approximately $2.2 million for 2027 available megawatt. This represents a significant discount compared to peers with signed data center leases despite us having 1 of the largest fully approved and readily available power portfolios in the industry. We do not just view this as a discount. We view this as a clear road map for shareholder value creation. The signing of our AMD lease is the first milestone towards a rerating of the underlying value of our power portfolio from a data center perspective. As we continue executing our data center strategy and converting additional megawatts into contracted data center leases with creditworthy tenants, we anticipate the market will increasingly rerate the value of our assets leading to multiple expansion on our valuation.

I want to conclude today's call by reinforcing why we believe Riot is uniquely positioned to create substantial long-term value for our shareholders. The opportunity in front of us is significant. Data center demand continues to grow rapidly, driven by the AI revolution and the accelerating need for high-density compute. At the same time, power remains the binding constraint with time lines for new capacity extending further every year. Riot is on the right side of both of these trends. We control one of the most compelling fully approved power portfolios in North America located in exactly the right markets and available for development today. Our Rockdale and Corsicana campuses with a combined 1.7 gigawatts of firm energized power, give us a scalable strategic platform that is exceptionally difficult to replicate. As we execute our strategy, we are aiming to systematically convert that power into long-term contracted data center cash flows with creditworthy tenants.

The AMD lease is an important proof point of this approach. It validates our team, our sights and our development model, and it is the first step in building a diversified portfolio of high-quality leases that can support potential portfolio NOI in the range of $1.6 billion to $2.1 billion upon full buildout. Our focus from here is clear, continue to execute with discipline, deepen and expand our tenant relationships, secure attractive long-term project financing and recycle capital into the next wave of development. As we demonstrate repeatable execution of this model, we expect the market to increasingly recognize the quality and scale of our platform and to rerate Riot valuation to better reflect the strength of our underlying assets and contracted cash flows. We are in the early innings of transforming Riot into one of the most meaningful digital infrastructure platforms in the industry.

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 against this opportunity. Before we open the line for questions, I would like to take a moment to recognize an important leadership transition at Riot: First, I want to sincerely thank [indiscernible] Yi for his leadership and service as our Chief Financial Officer since 2022. Colin has played a vital role in strengthening Riot's financial foundation, building out our internal reporting infrastructure and guiding the company through several key phases of growth. We are grateful that Colin will continue to support Riot as a senior adviser, and we look forward to benefiting from his counsel as we execute on our long-term strategy.

At the same time, I am very pleased to officially welcome Jason Chung as Riot's new Chief Financial Officer. Jason joined Riot in 2022 as our Head of Corporate Development and brings nearly 2 decades of experience in investment banking and corporate finance. And he has already been instrumental in shaping our capital market strategy Corporate Development and Investor Relations efforts. Consolidating our finance and strategy functions under Jason's leadership will further align our capital allocation framework with the growth ambitions of our data center platform. With that, we will now open the call up for questions. Operator?

[Operator Instructions]

Our first question comes from Paul Golding with Macquarie.

Congrats on all the progress with delivering the first 5 megawatts. I wanted to ask, around the AMD lease and how things are progressing there, have you come away with any best practices or interesting takeaways like gating factors on conversion with the first 5 megawatts that you're putting to work on the next phase of delivery. And maybe as part of that question, how conversations may be progressing with the expansion and right of first refusal with AMD? And then I have a follow-up.

Thanks for the question, Paul. So I would say the first key lesson is a validation of our commercial approach where we start the conversation with a discussion and understanding of what our customer is looking for and exactly how we're going to deliver that. We think that is an important foundation for approaching these discussions that we ensure that we can deliver exactly what the customer is looking for on the timeline that they need. So I would say that was the approach that we took with and the fact that we've been able to deliver on such an aggressive timeline is validation of that.

I think another thing it validates is the strategic advantage of our internal engineering capability. a huge part of how we were able to deliver for AMD on such an accelerated timeline the fact that we have the internal capability to engineer and manufacture low medium voltage switchgear and other important power components for data center development. So Riot's ESS Metron was one of the biggest suppliers to the development for the capacity that we are leasing to AMD. So I would say it's more of a validation of our approach than anything. And it is a playbook that we are looking to take for leasing to the rest of our pipeline and employ that same playbook, the same strategy to ensure that we are giving our customers what they want, and we are meeting the timelines that we agreed to.

As far as expansion goes, I don't want to comment on specific discussions, but I would say that we are very encouraged by our partnership. I believe that delivering on the initial 2 phases on our aggressive timeline is an important step in growing that partnership. The way we think about the AMD relationship is not a one-off deal. We are aiming to build a sophisticated long-term infrastructure partnership with a well-capitalized and high creditworthy company, such as AMD, as they build out infrastructure to support their AI road map.

And the only way that we can build that partnership is if we deliver and meet our commitments to our customer AMD. So that's what we're focused on there. And of course, if expansion options are realized in the future, we'll be updating the market on those -- when those announcements can be made.

And then you did mention that you're in discussions on financing. I guess given all the commentary in the marketplace around private credit, how are discussions progressing? Any additional color you could provide would be super helpful on available liquidity in the marketplace, cost of capital or anything around that?

Sure. I'll turn that question over to Jason Chung, our CFO.

Thank you, Jason. We've been actively engaging with a number of different banks across the board and of course, have been keeping a close line on developments in the debt capital markets in parallel. I think when we think about the AMD lease itself, we're really talking about 2 distinct risk profiles within the same lease. There's the initial stabilized portion of the deployment and second to that is the future expansion option itself. And so when it comes to the first portion, that's stabilized deployment, we anticipate that given the highly predictable contracted cash flows of the initial 25-megawatt deployment backed by AMD's strong credit. We think we can get a really low cost of capital that essentially removes the development or execution risk that lenders would typically price in.

Then when it comes to the second portion on the expansion option that could potentially be structured as sort of a separate delayed draw type facility, specifically intended to support AMD's 75-megawatt expansion development. So by separating these 2 distinct credit profiles, what we're able to do is avoid paying a blended sort of construction premium across the entire facility. And so we think that will really result in 3 particular outcomes. The first is we should be able to get a significantly lower overall cost of capital on a facility like this. The second is that it will allow us to pull out our initial equity and the third is that will enable us to efficiently recycle that capital to finance additional growth CapEx in the future.

So when it comes to discussions with the banks right now, this is where our primary focus is on we're seeing an incredible amount of liquidity and depth in the project finance markets. And we think that the interest in exploring an opportunity to partner with Riot on this type of facility is very strong.

Our next question comes from John Todaro with Needham & Company.

Congrats on the progress with AMD and then still the additional stuff going on, of course, at Canada. I was wondering if we could just drill a little bit more into that leasing pipeline, the demand environment, how those conversations have evolved and kind of any timeline guardrails or just how advanced those discussions are? And then I have a follow-up as well.

Sure, John. So kind of set the stage, we have 1.7 gigawatts of approved power capacity in Texas. And as we see the industry develop, that asset becomes more scarce and more appreciating. So our responsibility here to shareholders is to maximize the value of that capacity, and that's what we're focused on. I want to zoom out and take a look -- reflect on the road map that we've been on. On our second quarter '25 earnings call, we outlined that the next step we were doing was completing our basis of design, and that would lead to technical discussions with the market.

And then on our Q3 '25 earnings call, we shared our basis of design that had been completed and that we were initiating type of discussions, engineering discussions with various customer segments out there. We've done that. We've been able to enhance our design as a result of those discussions. And now we are in the commercial phase. We are in active conversations with multiple parties. That's across hyperscaler, enterprise, neocloud and AI customer segments. The AMD deal validated us as a credible counterparty. And I'd say that has materially increased the quality and the serious miss of the inbound interest that we've received. Of course, it's difficult to predict the exact timing for leases. We are preparing these deals can go through different phases. We've heard our peers talk about it's stopping and starting and stopping with various different deals before they got to the final one. But we are absolutely targeting additional announcements in 2026. We believe we are incredibly well positioned to execute on that, and we will disclose more details when we are in a position to do so.

That's great. That's very helpful. And I know from the prepared remarks, you said these sites could go single tenant or multi-tenant, is there a preference from you guys? Do you want to kind of mix in a couple of these different segments or hyperscaler does have demand for the whole thing? Would you prefer that?

Yes. That's a good question. In the prepared remarks, what we wanted to highlight is that we have the flexibility here. The way our campuses are laid out, they can be single tenant or they can be multi-tenant campuses. We have optionality to maximize the value of our assets here. And that being said, our focus is on high creditworthy counterparties. And in Corsicana, for example, while we have the flexibility to accommodate multi-tenant, I can tell you all of the real interest so far from potential customers has been for the entire site. So I tend to believe that is the most likely outcome for a leasing scenario at Corsicana. Perhaps ends up being different in the end. Perhaps there's a mix at Rockdale.

The important thing is getting good quality leases with good quality counterparties and we have flexibility in how we put that together to end the -- to create the final tenant composition of a site, whether it's one or more tenants.

Our next question comes from Reggie Smith with JPMorgan. Reggie, your line might be on mute. Our next question will come from Mike Grondahl with Northland.

With all the questions around ERCOT recently. I believe Riot's Power is approved at Corsicana. But can you confirm that. And then secondly, does ERCOT's batch process affect Ryan in any way going forward sort of positively or negatively?

So the short answer to your question, the power at Corsicana has been completely approved. We received that approval back in the fourth quarter of 2022. So that cited in operation, receive the approvals back then, and we are fully available to scale up to our 1 gigawatt from there when we're ready. The batch process does not impact right. The new ERCOT batch process that was proposed, not implemented, pertained to loads that had been in different stages of the planning or approval process already before final approval and certainly before energization. So that would affect new sites that have not been energized would not impact Riot sites that have been approved for years and have already been in operation. So we think that just further validates the value of these sites, the fact that they're already approved, and we don't have that same level of risk for them.

Our next question comes from Stephen Glagola with KBW.

Just a quick one for me. On the financing side, can you just talk about how Bitcoin sales are going to continue or not continue to play a role in funding the CapEx going forward here.

I'll turn that over to Jason Chung.

On our financing plan, our funding arc, if you will, starts with the Bitcoin treasury. So in addition to selling all of our ongoing Bitcoin monthly production, we have and will continue to sell Bitcoin directly from our balance sheet in order to fund our operational needs and growth CapEx. So one clear example of this was when we announced the acquisition of the Rockdale site, the $96 million consideration was funded entirely through the sale of nearly 1,100 bitcoin off the balance sheet, and we'll continue to do so going forward. That being said, our strategic evolution towards data center development also opens up access to new pools of low-cost capital. So you should expect to see us look to tap into these lower cost non-dilutive debt structures as well to fund our build-out in conjunction with our Bitcoin sales off the balance sheet. We believe this combination is the most accretive financing strategy for our shareholders going forward.

Our next question comes from Nick Giles with B. Riley Securities.

Yes, I want to commend Colin and congratulate you, Jason Chung on your appointment. My question was really just how you're thinking about M&A of new sites and how that could have shifted recently? Have these aircraft developments change things. Some of your peers are either talking about and have already taken action towards adding generation capabilities on site. So is that something you'd consider? Or are you really only interested in opportunities with greater interconnection are ones that really don't require you to operate the generating assets.

Nick. So thanks for the question. As far as developing pipeline goes, there's a question earlier about the ERCOT batch process. Besides that, we've seen it becoming increasingly difficult for new grade interconnections to be approved. So that's to be a double-edged store in our case. And on 1 hand, that makes it harder to get new grade interconnections approved. On the other hand, it makes our massive existing portfolio are already that more valuable. And so when we think about our pipeline, the first thing that we're mindful of is we have a massive pipeline in front of us. We have nearly 2 gigawatts, 1.7 gigawatts just between Rockdale and Corsicana, 2 mega flagship sites that we're able to act on.

That is an enormous value creation opportunity for Riot in and of itself. That being said, we are thinking for the long term. we're not just trying to monetize 2 sites here, we are building a durable platform of durable data center business, and we want to have a repeatable process for future sites. We repeat the process like we've demonstrated with AMD. We have been evaluating an enormous amount of opportunities. You can imagine, there's lots out there. It goes through a very intensive process within our organization, and we filtered down to a few, and we are now involved in several active processes to acquire potential new developments. But I think you raised a really good point on generation. I think the environment that we're in, where it's difficult to procure additional power capacity means that you need to be more creative in how you are solving that problem. It can't just be relying on grid power.

The future of this industry is clearly bringing your own power. That is an area where I think Riot has a tremendous advantage, a lot of our engineering team and operations team come from a generation background. So I can tell you this is something we are looking at very closely and taking very seriously and using all of the resources at our disposal to help build that durable pipeline for us to continue replicating our success on.

Jason, appreciate that perspective. My second question was you've proven your ability to generate revenue very quickly through the AMD contract. That being said, there's still a really high degree of urgency in the market around other megawatts. So my question is really, are there ways that you could accelerate the ultimate energization of data center megawatts in either asset and we kind of have the 112-megawatt target at Corsicana, but can you give us a sense for maybe how many kind of energized data center megawatts could be brought online by '27.

Yes. Nick, the very reason that we initiated on that core and shell development with [indiscernible] in hand was to ensure that we could deliver capacity starting in 2027 and be very competitive with our offering there. Those first 2 buildings, that is just the beginning. We are obviously in a commercial process and we are looking out there marketing and attempting to lease the entire site. And ultimately, we'll have a build strategy reflective of what our customer requirements are. But we have these processes underway to further enhance our ability to deliver timely, we have begun procuring long-lead equipment. In fact, we procured most of the more supply-constrained long-lead equipment that you would need for those first 2 buildings. So when we are having commercial discussions, it's not about 112 megawatts. It's about how we are delivering the full capacity, the 1 gigawatt of utility load available at that site, and those are just the initial parts of that deployment, but we are ensuring we can be very competitive with the delivery time line.

Great. Well, I appreciate all the detail and keep up the good work.

Our next question comes from Reggie Smith with JPMorgan.

My first question is kind of a follow-up to the last point you made, Jason. Obviously, you guys have a massive site that's right outside of Dallas, and your peers have talked about, I guess, contract terms and discussions seem to be getting better where operators are getting better and better economics. A question for you is thinking about that site and something that I've been telling investors for a while now. I kind of want to verify, your proximity to Dallas. Like is there a premium? Or can you extract or get a premium for that proximity, how do you think about valuing that element of it and even the size of the site. There aren't many gigawatt sites for sale or for lease rather out there. So how do you think about those features of your property and how you can price for that. Obviously, you're dealing with top-tier tenants, and there's some negotiation back and forth there. But anything you could share about like how you guys think about that and how it should show up in any deal that you may sign.

Yes, Reggie, thank you for the question. So the attributes of the sites, the sizes, the proximity to Tier 1 markets, Corsicana in particular, it is not as much as an impact on deal economics. Well, I think there's some impact there. The bigger point is the impact it has on the types of tenants that we're able to attract there. The types of tenants that we want to enter into leases with, the types that we can get strong financing and the best valuation multiples off of, they are the tenants that are more selective on location, and they are looking to be placed closer to the Tier 1 markets. That, I think, is the biggest factor there is it's widen the doors of the conversations that we're able to have to the best names out there.

Got it. That makes sense. And then if I could get one quick follow-up. Thinking about kind of milestones, both on the development side and even like contract discussions, what are some of the key things that maybe internally you guys are looking for on the contract side that lets you know that, hey, this is progression maybe educate us on like how those discussions progress and play out. And then again, on the development side, like what should we be looking for over the next couple of quarters to let us know that, hey, the site's being developed on time, et cetera. So anything you can share there would be fantastic.

Yes. So I think that's an important indicator of the serious discussions is how much they end up going to a technical product discussion and how quickly they do. I think that is a strong indicator of how serious the counterparty is with moving forward. That's what we've taken the approach that we have. We wanted to ensure that we had a technically sound offering a product that hyperscaler and high creditworthy investment-grade tenants we're looking for. So the level of technical interest, the level of details that we're getting into for us is a signal of the seriousness of what's going on. But we are very focused on leasing these sites with the right agreements as quickly as we can. So we've been cautious to keep our optionality open. We're engaging, obviously, with multiple counterparties at once to ensure that we can move along in a timely fashion and deliver high-quality outcome for shareholders as quickly as we can.

Our last question comes from the line of Greg Lewis with BTIG.

Thanks for squeezing me in here. I guess, Jason, you mentioned that a few times on the call about the benefit of ESS Metron and that acquisition. I guess I'd be curious, it's clearly good to have that inside the portfolio. But as we try to think about the benefits of ESS Metron, is that -- could -- is that more of a speed to market? Or could we actually also see it potentially make projects more economically compelling, i.e., lower upfront costs maybe than some of your competitors?

That's a good question, Greg. For us, the main benefit has been strategic and supply chain visibility. I touched on it on the earlier question from Paul about delivering from AMD. The only way that we were able to do that to deliver on that timeline that AMD needed was having this internal engineering and manufacturing capability, where we could develop a customized solution and prioritize that overall other work out there. No other third-party OEM would be able to do that for Riot or want to do that for Riot. So it has really changed the way in what we're able to offer solutions for customers. And I'll tell you, from the recruiting standpoint, building a high-quality team here is obviously very important for delivery and execution on the data center strategy, a lot of the talent that we've recruited has been particularly compelled and interested by the capabilities that we have with ESS Metron and E4A. So the people that live and execute this for us, they certainly see the benefit for this as well.

So supply chain strategic, but there is a cost savings there as well. On one of our slides showed that since we've acquired ESS Metron, we've saved approximately $23 million on CapEx since that acquisition. We did that acquisition 4 years ago for approximately $52 million in consideration and we've nearly recouped half of that already just in CapEx savings. And that -- those savings have only been realized on relatively smaller scale Bitcoin mining developments and now the AMD development as well.

When you talk about the broader development in front of us building out 1 gigawatt of utility capacity at Corsicana and eventually, all 700 megawatts of capacity at Rockdale. That's substantially more business than we've done with ESS Metron in the past. So presumably, the CapEx savings would even be more considerable over the term of that larger and longer-term project.

That concludes today's question-and-answer session. I'd like to turn the call back to Jason Les for closing remarks.

I want to thank all of our shareholders, investors, analysts for coming on to our call today. Appreciate all the questions, materials available on our website, and our IR team is available for any follow-up questions. We look forward to continue executing on the incredible opportunity in front of us, and we will speak with you again next quarter.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to Riot Platforms Business Update. [Operator Instructions] Please be advised that today's call is being recorded, and the presentation is also available on the Riot website.

I would now like to hand the conference over to Josh Kane, Vice President of Investor Relations at Riot Platforms. Please go ahead.

Good morning. Thank you for joining us, and welcome to Riot Platform's Business Update Call. At this time all participants are in listen-only mode. We will hold a question-and-answer session following management's prepared remarks.

Please note, this call may contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Such statements may include, but are not limited to, statements that predict future events or trends, forecasts or performance and may contain words such as believe, expect, intend, project, plan or words or phrases with similar meaning. Forward-looking statements are based on management's current expectations, forecasts and assumptions and are subject to risks and uncertainties that may cause actual results to differ significantly. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they were made. For further information, we encourage you to review the risk factors discussed in the company's periodic filings filed with the SEC.

Joining me on the call today are our CEO, Jason Les; our Chief Data Center Officer, Jonathan Gibbs; and Jason Chung, EVP, Head of Corporate Development and Strategy and our next incoming CFO.

We will now begin with remarks from Jason Les.

Thank you. On today's call, we are announcing transformational milestones in Riot's evolution as a leading digital infrastructure platform. I am pleased to share two achievements at Rockdale, firmly establishing it as a premier data center development site alongside Corsicana, giving Riot 1.7 gigawatts of immediately actionable power capacity across both sites.

First, we have completed the fee simple acquisition of 200 acres of land at Rockdale previously leased by Riot. By converting our interest from a ground lease to full ownership, we have unlocked the ability to develop data centers on site. With 700 megawatts of fully approved power already interconnected and contracted, full land ownership allows us to position Rockdale as a premier asset for data center development alongside Corsicana.

Second, we are announcing our first data center lease, a 25-megawatt agreement with AMD, one of the most significant hardware manufacturers in the world and a key leader in the AI ecosystem. This partnership includes multiple options for expansion and represents the beginning of what we expect to be a deep long-term relationship. Our data center team has been designing and customizing this space to meet AMD's specific needs, and we will share more details on the full scope of this lease later during the call.

Taken together, these milestones validate Rockdale as a premier site for data center development, establish Riot as a credible developer and operator for premier technology organizations and create highly visible contracted cash flows with an investment-grade tenant.

More importantly, these transactions demonstrate Riot's disciplined approach to capital allocation as we are strategically deploying capital to build high-quality assets, securing creditworthy tenants and utilizing efficient financing strategies to recycle capital into our next wave of development. This is a major advancement for Riot and vastly improves our position to capitalize on today's lucrative data center market.

I'll now walk through the details of the Rockdale acquisition and our new lease with AMD, following which we will open the line for questions. Turning to Slide 5. I would like to outline the key terms and strategic rationale of the Rockdale land acquisition. Our decision to acquire this site was driven by clear market feedback. In our discussions with potential tenants and lenders, it became evident that a ground lease structure creates unnecessary complexity and risk. To maximize our ability to develop data centers at Rockdale and fully leverage the 700 megawatts of fully approved power on site, we determined that fee simple ownership was essential.

We closed this acquisition in December for a total purchase price of $96 million, funded entirely by the sale of approximately 1,080 Bitcoin from our balance sheet. This allowed us to secure this critical asset using existing liquidity without the need for any equity financing. The acquisition encompasses 200 contiguous acres that are primed for immediate development, and we expect, based on an assumed PUE of 1.5 that Rockdale could eventually support approximately 436 megawatts of critical IT load capacity with potential to expand further.

Importantly, Rockdale has 700 megawatts of fully approved power with an interconnection that is direct to Riot with no intermediaries between us and the utility. This is a direct noninterruptible evergreen connection and is supported by a 700-megawatt substation already on site and operating. In addition, we have secured sufficient water supply with ample capacity to fully support both our existing Bitcoin mining operations and the cooling requirements of future high-density data centers.

Moving to Slide 6. I want to underscore why this acquisition is such a significant value driver for Riot. This was not just a land purchase. It was a strategic imperative to unlock the full potential of the Rockdale site and a critical step in our capital allocation strategy. First and most importantly, this transaction enables us to fully utilize Rockdale's power capacity for data center leasing. As we engage with market participants, it became clear that top-tier tenants and institutional financing partners require absolute certainty regarding land control. By removing the ground lease, we have eliminated the primary barrier to entry, allowing us to market the full 700 megawatts to the world's most demanding tenants.

Second, outright ownership fundamentally changes the risk profile of this asset. Under the previous structure, we face lease expiry risk where ownership of our improvements could eventually revert to the landlord. That risk is now eliminated. Riot owns this site in perpetuity, strengthening our long-term strategic optionality and ensuring that the value we create accretes to our shareholders.

Third, we are looking beyond the current capacity. As part of this acquisition, we have secured easements that provide a pathway to expand power capacity beyond the existing 700 megawatts. In a power-constrained world, having the land and rights to expand capacity at an existing operational substation is a valuable asset. This positions Rockdale not just as a 700-megawatt data center campus, but as a site with a pathway to grow even larger as grid conditions permit.

Finally, there is a substantial and immediate financial benefit to Riot. By acquiring full ownership, we are eliminating approximately $130 million in future rental payments that would have been due over the remaining term and extension options. This immediately improves the operating cost profile of the site and enhances the returns on all future developments.

I would now like to walk through the specific terms of our lease agreement with AMD, an investment-grade tenant with an S&P credit rating of A and highlight why this is such a compelling transaction for Riot, both financially and strategically. We have entered into a 10-year lease to provide customized data center space at our now fully owned Rockdale site. The lease includes three 5-year extension options, giving this partnership a duration of up to 25 years.

Securing the tenant of AMD's caliber, a global leader in the AI ecosystem, validates both our site and our development capabilities. The initial deployment under this lease is 25 megawatts of critical IT load, which will be housed in a retrofit of our existing building G. This allows us to deliver capacity quickly and cost effectively.

We are delivering this in two phases to derisk execution. The first 5-megawatt phase will be ready for occupancy later this month with the remaining 20 megawatts following in May. The capital required for this initial deployment is just under $90 million. This translates to approximately $3.6 million per critical IT megawatt, a fraction of traditional new build cost. By leveraging the power distribution and building envelope already in place at Rockdale, we can deliver uniquely tailored capacity with highly attractive unlevered returns.

From a financial perspective, the total contract value for this initial 25-megawatt deployment over the 10-year base term is $311 million. We expect this to generate average annual net operating income of approximately $25 million, representing highly visible contracted cash flows. Crucially, this 25 megawatts is just the first step. The lease includes an expansion option for AMD to take an additional 75 megawatts of critical IT load, which can be accommodated within the remainder of Building G and Building S using the same capital-efficient retrofit model.

Beyond that, AMD holds a right of first refusal on an additional 100 megawatts of capacity. If AMD were to fully exercise both the expansion option and the ROFR, their total footprint at Rockdale would reach 200 megawatts of critical IT load.

In summary, this lease accomplishes several critical objectives. It establishes Riot as a credible operator for hyperscale tenants. It creates immediate high-margin, long-term contracted cash flows. and it proves that our methodical approach to development can provide unique flexible solutions for the most demanding tenants in the market.

With that, I will hand the call over to Jonathan Gibbs, our Chief Data Center Officer, to explain how we design this deployment to meet AMD's technical requirements while maintaining our capital efficiency advantage.

Thank you, Jason. I want to walk through the time line and the execution milestones for our AMD deployment, which demonstrates both the speed of our data center team and the depth of this partnership.

We signed a lease with AMD earlier this month, and we are moving immediately into delivery. The first phase, 5 megawatts of capacity will be delivered and commenced later this month. The second phase, 20 megawatts of capacity will be delivered in May 2026, bringing the total initial deployment to 25 megawatts of critical IT load. This phased approach allows us to accelerate delivery time lines and lease payments and demonstrates our ability to meet AMD's technical requirements and delivery time lines.

From there, we are positioned to scale immediately. Because we are utilizing the same retrofit model of building F and G, we can execute the expansion options and ROFR capacity with the same speed and capital efficiency as this initial phase. We have the team, the plan and the infrastructure ready to support AMD's growth as fast as they need. The speed, scale and quality of this deployment reflect the strength of the data center team we have assembled and the strategic advantage of our existing infrastructure at Rockdale. We are moving quickly. We are executing efficiently, and we are building a long-term partnership with one of the most important players in the AI ecosystem.

I want to start by emphasizing why AMD chose Riot. While our power and assets were critical, the deciding factor was the strength and credibility of our data center team. AMD needed a partner who didn't just have power and land, but one who had the technical expertise to execute on a complex high-performance requirement. The fact that a world-class technology leader like AMD trusted us with their critical infrastructure is the strongest possible validation of the credible team we have built.

Slide 10 highlights the specific value proposition we delivered. First, this is a bespoke solution. Our engineering team worked hand-in-hand with AMD to design a facility that meets their specific focused redundancy requirements. We did not simply offer a standard off-the-shelf data center product. We collaborated to build exactly what they need for their specific AI workloads, optimizing for both performance and cost.

Second, by retrofitting the second building G, we are leveraging the power distribution and building shell already in place. This is the key driver behind our speed to market and what allows us to deliver the first 5 megawatts later this month, a time line that greenfield developers simply cannot match.

Third, this efficiency translates directly to attractive economics. Because we are repurposing infrastructure and optimizing the design, we have achieved a significantly lower cost of development. This allowed us to pass through those savings to AMD in the form of a highly competitive lease rate while still generating the attractive returns Jason had outlined. This lease is proof that Riot has the technical capability to deliver for the most demanding tenants in the world.

I will now turn the call over to Jason Chung.

Thank you, Jonathan. I want to address how we intend to finance these announcements and demonstrate why Riot is uniquely positioned from a financing perspective. Our approach to capital allocation is methodical, disciplined and designed to maximize returns while minimizing dilution and maintaining financial flexibility.

Riot is exceptionally well capitalized. As of the end of the third quarter of 2025, we held over $2 billion in total liquidity, consisting of approximately $400 million in cash and nearly 20,000 Bitcoin. In addition, our scaled Bitcoin mining operations continue to generate significant monthly cash flows, providing ongoing liquidity to support our business. Our capital allocation strategy follows a disciplined three-phase approach that optimizes our cost of capital and enables efficient scaling.

Phase 1, initial development funding. For the projects we have announced to date, including the Rockdale land acquisition, the AMD 25 IT megawatt build-out and the previously announced initiation of the development of two core and shell buildings, representing a total of 112 IT megawatts at Corsicana, funding for these capital expenditures has and will come through the sale of Bitcoin from Riot's balance sheet.

We anticipate that these initiatives require approximately $400 million in total capital, and we've already begun executing on our Bitcoin sales strategy. In December, the Rockdale land acquisition was funded entirely through the sale of approximately 1,080 Bitcoin. For the AMD 25 IT megawatt build-out and Corsicana 112 IT megawatt Core & Shell development, these initiatives will be funded through the sale of approximately 3,134 Bitcoin based on current market prices. This represents only 17% of the Bitcoin currently on Riot's balance sheet, allowing us to maintain substantial exposure to Bitcoin while funding these important growth initiatives. As our development projects progress, we will continue to strategically liquidate Bitcoin to fund the capital expenditures in a disciplined and measured manner.

Phase 2, tenant acquisition and project financing. As we secure high-quality leases with creditworthy tenants, we intend to utilize nonrecourse project-level debt financing to fund the majority of data center CapEx costs. This approach will allow us to enhance returns on invested capital and preserve balance sheet liquidity by efficiently leveraging the contracted cash flows from our leases. By securing long-term leases with investment-grade tenants like AMD, we create assets that are highly attractive to institutional lenders and which can be financed at favorable rates. We are targeting project financing for new leases at loan-to-cost ratios in the range of 80%, allowing us to externally finance a significant portion of total development CapEx while retaining full ownership of the assets and their ongoing cash flows.

This financing approach serves multiple strategic objectives. First, it optimizes our cost of capital by replacing equity with lower cost debt. Second, it allows us to recycle capital, deploying into our next wave of development projects and therefore, scaling our business in a capital-efficient manner. And third, it allows us to maintain ownership of high-quality cash flowing assets that will generate ongoing high margin and stable returns for years to come.

Phase 3, capital recycling and compounding growth. As we execute this strategy across multiple projects, we create a powerful compounding effect. For projects like AMD, where we will deploy equity first, we can refinance stabilized assets to recover capital. For future projects, we will use project financing upfront to minimize equity deployment. In both cases, the result is the same. We preserve capital for redeployment while retaining ownership of cash flowing assets that generate ongoing operating income to support additional development or be returned to shareholders.

Going forward, our capital allocation priorities are clear. First, deploy capital into high-return data center development projects and secure creditworthy long-term tenants. second, utilize project finance to fund development CapEx in order to optimize our cost of capital and recover equity; third, recycle capital into the next wave of development; and fourth, maintain balance sheet flexibility and strategic optionality.

The ability to fund these critical near-term capital expenditures using our existing balance sheet represents a significant competitive advantage, allowing us to move quickly, capitalize on market opportunities and maintain financial flexibility as we scale our data center platform. More importantly, our methodical approach to capital allocation, lease, finance, build and recycle positions Riot as one of the most efficient capital allocators in the data center industry and ensures that every dollar we deploy generates maximum value for our shareholders.

I will now turn the call back over to Jason Les.

Thank you, Jason. I want to summarize the strategic benefits these transactions deliver to Riot across three key dimensions: our data center team's credibility, the structural advantages of the AMD lease and the validation of Rockdale as a premier development site.

First, the credibility of our data center team demonstrated with AMD and the speed at which we delivered provides clear validation of our operational capabilities and execution discipline. This transaction is the foundation that establishes Riot as the partner of choice for leading data center tenants. The speed, flexibility and capital efficiency we demonstrated with AMD, namely customizing infrastructure to their specific needs, providing a rapid path to quickly energize 25 IT megawatts and providing a clear path to 200 megawatts of expansion makes Riot uniquely attractive to demanding tenants. We have the energized power, the balance sheet to move quickly and the operational expertise to deliver mission-critical infrastructure on aggressive time lines. This positions us as a preferred partner for hyperscalers who need speed, certainty and scale.

Second, the AMD lease significantly derisked our data center strategy. We have secured a 10-year agreement with a top-tier investment-grade tenant rated A by S&P. This lease is highly financeable, meaning we can leverage contracted cash flows to support nonrecourse project debt as we scale our build-out. By securing a blue-chip tenant such as AMD, delivering capacity in phases and generating cash flows within weeks, we are proving our execution capabilities while minimizing capital at risk. AMD's credit quality, the long-term nature of the contract and the high degree of visibility of the cash flows make this an exceptionally attractive asset from a capital markets perspective.

Third, these transactions establish Rockdale as a premier site for data center development. By efficiently converting existing Bitcoin mining infrastructure into a custom data center solution for AMD, we are unlocking the significant value of our underlying assets. More importantly, we are transforming the economics of Rockdale and our entire power portfolio, moving towards long-term contracted cash flows with strong creditworthy counterparties. This will fundamentally improve the profitability and stability of our business, driving higher quality earnings and positioning Riot for a valuation re-rating as we continue our ongoing evolution into a leading digital infrastructure platform.

Collectively, the transactions announced today highlight Riot's focus on efficient capital allocation and financial discipline. We acquired a premier asset using balance sheet liquidity, eliminating future lease obligations and are developing capacity at high investment yields, all at a fraction of greenfield cost. This methodical approach, secure creditworthy tenants, finance efficiently, develop with discipline and recycle capital is how we will scale our platform and maximize value creation for our shareholders.

Taken together, these milestones represent a major inflection point for Riot. We have proven our ability to execute, secured a marquee tenant, validated our development strategy and demonstrated a disciplined, repeatable approach to capital allocation that will drive compounding value creation as we scale.

I'd like to conclude by outlining how the AMD lease fits into our broader pipeline and the significant growth opportunity ahead. The time line on this slide illustrates the rapid progress Riot has made in developing our data center business. Less than 12 months ago, we announced a strategic evolution to explore AI HPC data center development. Last June, we hired Jonathan Gibbs as Chief Data Center Officer.

Today, we are announcing the Rockdale acquisition and our first data center lease with AMD, which will begin generating lease income this month. By May, we will have delivered the full 25 IT megawatts initial deployment. But this is just the beginning. AMD holds an expansion option for an additional 75 IT megawatts and a right of first refusal on another 100 IT megawatts bringing their total potential footprint to 200 IT megawatts at Rockdale. Looking further ahead, our fully approved power portfolio has the potential to support 1.2 gigawatts of critical IT load, which upon full build-out could generate substantial annualized NOI in the range of $1.6 billion to $2.1 billion from long-term contracted leases with creditworthy tenants, cash flows, which command premium valuation multiples in the market.

Before we open the line for questions, I want to step back and put these announcements in context. Today's announcements reflect four critical advantages Riot brought to bear. First, we have the assets, specifically 1.7 gigawatts of fully approved, immediately actionable power at two of the most attractive data center development sites in the United States. Second, we have the balance sheet, including more than $2 billion in liquidity to fund development. Third, we have the team. The AMD lease is a direct result of the quality and speed of execution Jonathan and our team have delivered. And fourth, we have a disciplined methodical approach to capital allocation that sets us apart.

We identify high-quality sites with energized power, immediately monetize with Bitcoin mining where economic, attract financeable investment-grade tenants, develop with capital efficiency and recycle capital to finance the next wave of growth. This approach makes Riot not just a developer, but one of the most efficient capital allocators in the data center industry.

Importantly, our Bitcoin mining expertise provides a unique advantage. It allows us to immediately monetize power capacity while we develop data center infrastructure, generating positive cash flow and derisking our development time line. This optionality is something traditional data center developers simply do not have. The transactions we announced today demonstrate a disciplined, repeatable capital allocation strategy that will enable us to scale efficiently, maximize returns and create substantial shareholder value as we build one of the premier digital infrastructure platforms in the industry.

With that, we will now open the call up for questions.

[Operator Instructions] And our first question comes from John Todaro of Needham.

Congrats on the lease and also unlocking Rockdale. That's huge, represents a lot of immediate power. Question for me. Can you just talk a little bit more about maybe the time line of the AMD deal in terms of how it came about and how you guys approach the opportunity?

And then if I can just get in a follow-up. walk through a little bit more of the economics of the design and then in particular, why you guys found this project attractive. And also maybe on their decision to go with Rockdale in comparison because we know Corsicana is out there as well.

All right. Thank you for the question, John. I will tackle the first part, and then you can remind me of anything I missed in the follow-up.

How the deal came about? This relationship originated from the same -- the sustained interest that we've seen from the Rockdale campus, and that's been driven by the scale of the opportunity there, our power position and our ability to execute on a very quick time line. So -- we've developed a process here, and we approach this opportunity with the same customer-first process that we are using across our pipeline. We first confirm the technical fit, the feasibility of what the customer is looking for. We validate the schedule and delivery certainty. We align with our partner on a commercial structure, and then we move into diligence and finally, documentation.

So from a time line perspective, this has been a process over multiple months that had several clear phases. We had early engagement and technical requirement discovery. We had iterative solutioning and pricing. We had a diligence process on our site and the infrastructure and then [indiscernible] documentation and execution planning.

But the key here is that AMD is a strong validation of our go-to-market strategy. This deal validates the process that we've been talking about. When we see a high-quality demand signal, we can translate that into a structured process, and that process protects the certainty of delivery while still preserving our strategic flexibility for the entire campus here.

So, importantly, what I want to highlight is we are seeing similar momentum across our pipeline. The outcome here with AMD reflects both the attractiveness of our assets and our repeatable approach to converting interest into actual contracted demand without compromising execution rigor.

And then I think one of your follow-up questions was why Rockdale over Corsicana. AMD needed a custom solution. They needed on a client. We were able to work with them leverage infrastructure we already have that could be repurposed for their specific requirements. And that allowed us to move collaborative with them over the process and start delivering revenue this month, obviously a few weeks after deal signing.

And our next question comes from Paul Golding of Macquarie.

Congrats on both deals, big developments here. My first question is around the bigger picture vision for Rockdale. You have 700 gross megawatts at the site, 200 megawatts critical potentially with AMD if all options and the right of first refusal are exercised. Would you look to do something akin to Corsicana and proactively build out Tier 3 cores and shelves? And just thinking about that relative to the efficient retrofit model you're doing for this initial 25-megawatt critical deployment.

And then as a follow-up, just anything that you could speak to in the executed deal or right of first refusal in terms of timing or whether there are any limitations regarding negotiating with other potential tenants on the balance of the site, whether customers or competitors of AMD's.

So, let me first kind of just give you our vision of the layout of our Rockdale campus here. The lease with AMD is just the first step building our data center campus at Rockdale. As we think about the site today, we expect that outside of just the initial 25-megawatt deployment with AMD and the 75-megawatt expansion option that we've announced today, the bulk of the capacity that we have will be delivered in a more traditional Tier 3 format with an eye as always towards maximizing the value of our sites. So think the basis of design that we've talked about, deploying that over the remainder of the capacity. And we'll have some updates on that on our next update call.

But for the avoidance of doubt here, AMD's expansion option for the 75 megawatts of critical IT load capacity is allocated to AMD, and that would not be immediately available to any other customers. With Rockdale, we have 700 megawatts of total capacity. So that gives us a significant amount of runway for future expansion. And we believe that, that capacity is capacity that would interest a lot of hyperscaler and major tenants and the ROFR with AMD does not impact the viability of those discussions, whether or not exercises this ROFR right or not.

I think we've talked about this before, but our campus design, we have the ability, if we wanted, to segment that up and really make customers in distinct areas from each other. So we have a lot of flexibility to maximize value here, whether it's one customer taking all the capacity or we are dividing it up. The lens that we're looking at this is always maximizing the value of our -- the full portfolio that we have.

So I think another part of your question was we are absolutely continuing to have discussions with a variety of customers to lease out our capacity at Rockdale, the full remaining capacity there and of course, our capacity at Corsicana as well.

And our next question comes from Greg Lewis of BTIG.

Obviously, congratulations, guys, on you've been working hard on this for over a year. So it's good to see. I did kind of have a question around -- it was interesting to us when you kind of talked about the press release, you led with the fact that you acquired the land. How important was that to own the land and kind of building this relationship with AMD?

Owning the land was critical. From our engagement with the market, we've got feedback from both potential customers, from financing partners that a ground lease that risk duration, even though we had multiple renewal terms was a real impediment to getting the deal done. So unlocking -- purchasing the Rockdale site and getting out of that lease was really a transformational step here. It's why we're so proud of it today to fully unlocking that 700 megawatts of capacity that we have at Rockdale.

So, yes, Greg, it was very important to -- for Rockdale being a viable site to buy this -- to buy the land, eliminate any lease risk and put it 100% over in Riot ownership.

Okay. Great. And then just the other one for me is -- and I think it's a follow-up to Paul's question around Corsicana. I mean, clearly, that's -- I feel like over the last year, that was viewed as the better site of the two. And so just a couple of questions as we think about Corsicana and the potential to develop both at the same time. Curious how you're thinking about that? Curious -- and then kind of curious, the fact that we have AMD as an anchor, does that at all change how we were thinking about the go-to-market, i.e., customer that we're looking to sign in at Corsicana.

Yes, Greg, this does not change at all how we're thinking about Corsicana. In fact, we view this announcement as just enhancing the attractiveness of Corsicana. We are continuing to engage in commercial discussions for both Corsicana and Rockdale simultaneously, and we're very confident in our ability to develop both sites at the same time.

The fact that we are now a proven developer and that we have signed a lease with an investment-grade tenant, the fact that we are going to demonstrate execution, delivering capacity this month, I believe, only enhances our ability this improves our ability to execute across our whole portfolio.

And our next question comes from Darren Aftahi of ROTH.

I offer my congratulations as well. Just two, if I may. You guys in the release talked about the aggregate build cost. I'm curious if you were to layer on the initial CapEx that you spent on the Rockdale site, what's the aggregate all-in cost per megawatt?

And then as a follow-up, I know Oncor has plans to build a substation in Rockdale, I think, this year. Just any kind of updates there? And then what kind of process would you need to go through with ERCOT in order to potentially expand Rockdale's power capacity?

Absolutely. We laid out the key details for this development possible, the retrofit cost of the building. I want to highlight, we took mining capacity development [indiscernible] at Rockdale in order to support this was equipment that has been deployed for almost five years, so fully depreciated miners, immersion tanks that have been in there for a while. And -- but of course, using the other electric infrastructure at the site.

So even if you are accounting for the existing infrastructure costs in place that have already been spent, this is still a very attractive deal from a yield perspective. But there's a multitude of factors here, right? Like we were -- we were taking off revenue-producing capacity, even though it already older equipment at this point. and there's an opportunity cost to be incurred there. And we were moving rapidly and retrofitting infrastructure that the cost that we've highlighted in the business update.

So, I think you look at all elements combined, it's still a very attractive deal. And that's based on leveraging the existing infrastructure and the retrofit costs that were needed to just change the building we already had.

Great. And then any update on the Oncor substation?

Yes, I'm sorry, second part of your question. So at Rockdale, the first thing I want to emphasize is that we own the land and we control our destiny at that site. And we already have 700-megawatt connection, which is fully approved, and we intend to use that for data center use.

But to your question, as we alluded to we believe expansion to have its power capacity expanded beyond that 700 megawatts. That whole surrounding area is a hot bed for manufacturing. There is a Samsung fabrication plant in Taylor, Texas nearby. There is a Tesla facility nearby. So there's been a significant amount of transmission infrastructure being built up in that area. And the fact that this capacity is directly around our existing site and the fact that we are proven good stewards of the grid and our ability to deploy and operate, we believe puts us in a great position to expand our existing interconnection agreement. And we're in a position to capitalize it on that.

We also highlighted that we have the easements in place in order to bring in new supply lines of power to that site should that be approved. So we will be going through that process. Of course, it's an unpredictable process. A lot of people are, of course, in power capacity. So it's hard to give a time line or much color around that. But the location that we're in and our proven ability to execute and operate positions us very well in that process.

And our next question comes from Mike Grondahl of Northland.

Great progress and very helpful update. Specifically here, this kind of looks like a different design for AMD than maybe what you guys envisioned several months ago. Can you talk about what some of the key differences are?

Yes, absolutely. Let me turn that question over to Jonathan Gibbs.

Thank you, Jason, and thanks for the question, Mike. [indiscernible] there are differences. [indiscernible] is a purpose-built configuration. And it's different than our standard basis of design. that's because we optimized it around AMD's specific high-density liquid cooled compute requirements versus our standard design, which focuses on maximizing the ability to align investment-grade lease-up with design, construction and the associated deployment of capital. It's like the standard.

Maybe to help break this down at a high level, you can think of three differences, cooling and physical layout differences, redundancy philosophy and perhaps delivery-driven choices. From a cooling and physical layout, I would say that Tier 3 design is engineered to serve a broad set of IT loads efficiently. Even so we increased the portion of liquid cooling and adjusted the supporting infrastructure within the white space to match how their equipment is deployed and serviced.

For the redundancy philosophy, which we talked about often here, traditional Tier 3 facility, redundancy is applied in a very standardized way across major systems. AMD's configuration, while the redundancy is still very robust, it's applied more intentionally around specific components and paths that really matter most for their environment. In other words, it's not less redundancy, it's rightsized redundancy design to produce the same outcome. high availability, reliable operations, things that our customers need and in this case, certainly unnecessary complexity and costs that don't add value.

The third I mentioned, another one we speak about often is delivery-driven choices, selections that support a compressed delivery schedule and reduce execution risk, all without comprising reliability. So, for Riot, that includes proven equipment choices, constructability and designs to support repeatable commissioning and operational turnover within a compressed schedule.

I think it would be helpful possibly to also add what I mean by that. In my past nearly two decades of experience in this data center industry, it's told me that it's important to have this flexibility, but it needs to be within a disciplined framework. And what I mean by that is we can tailor the design to meet a customer's requirement but we do it in a way that preserves what we're known for, we know predictable outcomes, safe delivery, schedule certainty, things like that. That said, it's probably important to note too as well that our integrated delivery model matches our customers' buying habits, right? So we have to have sales, delivery operations, all operate as one team from the start in order to be able to deliver this for our customers. At Riot, we treat design as part of execution, not just handoff. And we manage that risk proactively across the areas that are most commonly seen to disrupt projects. So labor availability, supply chain timing, utility coordination, all those types.

With all that said, a significant strength of Riot is our ability to be able to align our product delivery philosophy, which I just outlined with to help drive that execution and certainly maximize returns. And this sort of strategy is what gives Riot where we feel the approach really matters and certainly why we're comfortable delivering a bespoke solution without taking on bespoke risk. I know there's a lot there, but I hope that certainly outlays the differences.

Yes, definitely does. Congrats again, guys.

And our next question comes from Reggie Smith of JPMorgan.

Congrats on the deal. I had one on the financing and listening to you guys, I guess my key takeaway is that project level financing debt, you're using Bitcoin as well to finance it. Importantly, it doesn't sound like equity is in your kind of on your road map at all. I guess my question is thinking about the mix of kind of using cash in Bitcoin. You guys want to say the first Bitcoin operator to talk about selling Bitcoin to build data centers. Maybe talk a little bit about -- am I reading that right in the decision to use Bitcoin rather than cash on the balance sheet or some mixture. And then I have a follow-up on the CapEx side.

Yes. Jason Chung, why don't you take that one?

Sure. Hi, Reggie. So the sale of Bitcoin is a fundamental part of our financing strategy. And to answer your question directly, you should expect to see further Bitcoin sales in the future.

So, from our perspective, we've always focused on having a strong balance sheet with multiple different financing levers, and we continue to have that today. We've got the Bitcoin, whether from our monthly production or on our balance sheet. We have a lot of cash on hand. We've got operating cash flows, access to debt facilities and strong access to capital markets.

But we'll continue to look to Bitcoin sales, both from our monthly Bitcoin production and our balance sheet as our primary funding source for growth. We will be flexible, and we're always weighing the cost of selling Bitcoin versus some of these other financing levers that we have, always with a view towards maximizing shareholder value for the immediate future, utilizing the Bitcoin on our balance sheet for some of these key CapEx spend and key growth initiatives, we see as the most efficient use of our capital. So you should expect in the near term going forward.

Got it. That's good to know. And then just looking at -- you guys had an image in the slide deck. And it looks like from where I said that those two buildings that are allocated for AMD appear to be a little wider than the other ones. I'm not sure if that's just the image or the graphic or whatever, but is there anything unique about those two buildings in particular that made them extra, I guess, ideal for the AMD deal? And then just remind us, if you could, what the general CapEx expectations are for your standard, I guess, kind of you call that prototype build, if you will.

Yes. Thanks for the question, Reggie. I'll -- let me first ask about your CapEx -- answer your CapEx question, and then I'll turn it over to Jonathan to talk about the building designs and why those were chosen here, but -- why they were viable here.

We don't have a full expected schedule or I should say, estimated cost for what the full build-to-suit development would be. I think what we've guided towards is we expect to be within industry norms. Right now, that's around $10 million to $13 million of IT megawatt. Also those costs are driven by the customers. If we talked about here, our effect ultimately that to more than anything. [indiscernible] cost more than anything. But your question on [indiscernible].

Yes, certainly. Certainly, the width, the height of these buildings are exceptionally important for us when we're looking at specific product require ability and our ability to be able to deliver product and mitigate the risk as we go through. But I would not discount the width of the other buildings with -- in the site that they can certainly be applicable as well. A bit more in terms of the logistics of where those are, adjacency to substations, things like that and our ability to be able to derisk the delivery of the product to our customers.

I think we broke up like the last 15 seconds. I don't know if anybody caught that. Maybe you could repeat that the last 15 seconds of what you said.

Yes, no problem. Essentially, [indiscernible] come into play. I wouldn't discount [indiscernible] buildings for future deals. The logistics and the ability for us to be able to derisk delivery for this time line certainly came into play.

And our last question comes from Stephen Byrd of Morgan Stanley.

Congratulations on a great deal. Very exciting to see. One question for me. I guess just given the size and the economics of recent deals that we've been seeing in the market, could you walk us through why you think a 25-megawatt deal with these economics is the best deal that Riot could achieve with one of the premier sites in the country. Could you just sort of walk us through that?

Yes. Thank you for the question, Stephen. So we think this is a fantastic deal for a number of First, we are in the business solutions for our customers. So what we've done here is leverage existing infrastructure, and we're able to meet the needs of our customers revenue from this lease starting this month, this quarter, very quick time line. It's -- I think you have to look at the deal for all the elements combined.

So, yes, on a dollar per kilowatt monthly rate, it is a lower price. However, that is because we had significantly less required spend on CapEx in order to achieve this deal. So, you combine that, and we have a very -- we have demonstrated a very attractive yield on cost for this deal. And of course, the other element is the tenant here. This is an investment-grade tenant. We are demonstrating our ability to execute for an investment-grade tenant. And we think this opens the door for different financing tools that we can use in the future around this deal. And we, as I'm emphasizing, lead to other deals in the future because of what we demonstrated here.

So, in summary, strong economics from a yield on cost basis because the CapEx costs were eliminated and -- I'm sorry, the CapEx costs were less than other deals that we've been seeing out here lately, but also delivering a customer-focused solution to an extremely strong investment-grade tenant. So we're very proud of this deal. This is just the first step that we're taking, and we look forward to executing across the rest of our pipeline here.

Makes sense. Congrats again.

This concludes our question-and-answer session. I would now like to turn it back to Jason Les for closing remarks.

Thank you, everyone, for tuning in today. We are very proud of this deal. I want to thank our full team that came together across the organization to make this possible. You can imagine the amount of effort it takes to deliver capacity on this quick of a time line. I also want to thank all of our stakeholders and partners, now our customer out there for working with Riot to deliver this. And we look forward to sharing more updates on our data center strategy with the rest of the market as we progress. Thank you all.

This concludes today's conference call. Thank you for participating, and you may now disconnect.

Good day, and thank you for standing by. Welcome to Riot Platforms' Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please also be advised that today's call is being recorded.

I would now like to hand the conference call over to Josh Kane, Vice President of Investor Relations at Riot Platforms. Please go ahead.

Thank you, operator. Good afternoon, and welcome to Riot Platforms' Third Quarter Earnings Conference Call. My name is Josh Kane, Vice President of Investor Relations. And joining me on today's call from Riot are Jason Les, CEO; and Benjamin Yee, Executive Chairman; Colin Yee, CFO; and Jason Chung, EVP and Head of Corporate Development and Strategy.

On the Riot Investor Relations website, you can find our third quarter 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 third quarter performance.

During today's call, we will be making forward-looking statements regarding potential key 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 Forms 10-Q, including for the 3 months ended September 30, 2025, 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. Riot is in the process of transforming into 1 of the most meaningful data center developers and operators in the market today. The demand for data center capacity is insatiable and growing, and our unmatched portfolio of large-scale land and power assets positions us to significantly capitalize on this opportunity. I am incredibly excited to announce the completion of several key milestones and additional ongoing strategic initiatives, which we are currently undertaking as part of the development of our data center business. And more broadly as part of the ongoing transformation of Riot.

In particular, I am proud to announce today that we are initiating the core and shell development of the first 2 buildings at our Corsicana data center campus, representing a combined 112 megawatts of critical IT data center capacity. We have already been securing long lead equipment and plan to mobilize construction of these 2 buildings beginning in Q1 2026. This announcement has been enabled by 4 key achievements this quarter. During the quarter, Riot acquired an additional 67 acres of land directly adjacent to our original Corsicana site, greatly simplifying the development of our full 1 gigawatt of approved power capacity and enabling the completion of our campus design at Corsicana, completed the campus design for Corsicana with a plan to transform the entire site into a 1 gigawatt utility load data center campus, completed the basis of design for our standard data center build, which has deepened our technical engagement with hyperscaler, Neo cloud and enterprise customers and continue to build out our in-house data center expertise with veteran data center sales, design, engineering and construction talent.

These achievements further advance the ongoing process of transforming Riot into a large-scale multifaceted data center enterprise. We are investing in building out our data center business in order to enhance our conversations with prospective tenants and leverage competitive tension in our leasing process, all with a view towards maximizing the value generated from our portfolio of land and power assets. We are announcing this development of 112 megawatts of critical IT capacity as just an initial milestone in our development pipeline, which consists of nearly 2 gigawatts of secured utility load power. And we will continue to announce further development plans as we progress on our strategy and advance further on customer discussions.

Riot is transforming into one of the most meaningful data center companies at the center of the Fourth Industrial Revolution. We have a significant portfolio of readily available power, an incredibly strong balance sheet and the world-class talent necessary to deliver on our plans. The demand for data center capacity has never been more robust. And on behalf of all of our shareholders, we are incredibly excited to be executing on the enormous value creation opportunity in front of us.

Riot has a tremendous advantage today in our unmatched portfolio of fully approved power and land, located within highly desirable data center markets. We have made significant progress in establishing our data center business, which serves as the foundation not only for maximizing the value of our power portfolio today, but from which we will also continue to scale and capitalize on new opportunities. Over the course of this year, we have completed third-party expert assessments of our 2 primary sites Corsicana and Rockdale, added data center and real estate development experience to our Board of Directors and engaged financial advisers to assist on discussions with strategic and financial partners and on the broader leasing negotiation process.

Most recently, I am pleased to announce we have completed the basis of design for our data centers. Completion of this basis of design has enabled us to deepen our engagement in technical and engineering level outreach with potential tenants, begin procurement of necessary long lead time equipment and begin construction on our first 2 buildings. We will provide additional information on our basis of design later on today's call.

We have also further progressed on the ongoing infrastructure development at Corsicana, including the 600-megawatt substation expansion with the first 400-megawatt auto transformer of this expansion development is now on site being installed and remains on track for energization in Q1 next year. And the core and shell development of the first 2 buildings of our Phase 1 development plan, which will allow us to deliver full build-to-suit data centers in 2027.

On the hiring front, the build-out of our data center team has continued at an aggressive pace. We have in place key leadership across product development, construction, engineering, sales and marketing, which has allowed us to complete the basis of design and rapidly move towards initiating construction. We will continue to build on this momentum by adding additional positions that underpin our data center business, and support future leasing, operational and growth targets. We have made substantial progress on our design program, which will support Corsicana and other sites and have completed a standardized data center basis of design that meets Tier 3 resiliency and efficiency expectations for prospective tenants in the market.

Advancing our basis of design is critical as we engage prospective tenants on specifications and customization. Our design philosophy emphasizes flexibility to address the needs of a range of potential customers and use cases. That flexibility includes multiple building formats, including single, 2 and 3-story configurations in order to maximize campus capacity.

In addition, our design is centered around a 7 module or 7 mod format. With this format, we are standardizing around a 7-plus-1 component design, 7 components plus 1 additional component of redundancy. Our basis of design can easily be adapted to the requirements of any tenant. Each 7 mod is a data hall, representing 14 megawatts of critical IT load capacity. And there are two 7 mods per floor totaling 28 IT megawatts per floor. Therefore, a 2-story building will have four 7-mod data halls, 2 per floor, representing 56 IT megawatts and a 3-story building, we'll have six 7-mod data halls representing 84 IT megawatts. We are confident that this fits within the range of tenants desired topography and allows us to easily adapt to each of the requirements. If a tenant wants more redundancy, we can easily build that in and vice versa.

Riot's basis of design establishes the foundation for our data center development and has been designed in a manner that is intentionally replicable beyond Corsicana, enabling faster, more efficient equipment procurement and delivery on future development in order to quickly seize upon any market opportunities going forward.

One of the most important differentiators we are developing at Riot is the assembly of an industry-leading in-house data center team, with expertise across design, engineering, sales, procurement, construction, operations, marketing and administration. As highlighted here, our growing team brings deep directly relevant experience in building and delivering mission-critical data centers. We have in place the team to deliver on our first phase of construction and development. with collective experience completing over 200 data center projects, totaling nearly 5 gigawatts of capacity.

Data center development talent is in high demand, and we are incredibly proud of the depth of capabilities and experience that we have already been able to attract to Riot. The quality of the data center team we already have in place today is a critical advantage in ensuring that potential tenants and partners are confident in our ability to deliver at scale. These internal data center team capabilities are further reinforced by our engineering business comprised of ESS Metron and E4A Solutions, which provides integrated manufacturing, commissioning and maintenance expertise. These complement our units create meaningful synergies and strengthen our ability to rapidly execute on an expanding data center development program.

In September, we successfully acquired a collection of parcels that total 67 acres contiguous with our original Corsicana site for a total consideration of $40 million. Early on, Riot identified this part of land as the most ideal site for immediate development of our data centers, and I am excited to share an update on what this acquisition has enabled for us. The new parcels proximity to our Corsicana site enables rapid development as it is immediately adjacent to our existing site and, therefore, will not require additional easements or transmission construction, which could potentially have extended delivery time lines.

The ideal condition, gradient and location of this new parcel will allow us to quickly begin development and strengthen confidence in our delivery time lines. Most importantly, the additional acreage we now own next to our existing Corsicana site ensures the ability to completely utilize our 1 gigawatt of fully approved power on Riot owned land for data center use, all in a connected campus layout.

Together with the previous land acquisitions announced last quarter, Riot now owns 925 acres surrounding the Corsicana area, securing long-term development flexibility and fully completes all necessary land acquisitions for potential build-outs.

Our now expanded footprint at Corsicana has allowed us to complete our campus design for the entire site, which we envision taking place across 2 development phases. Development of Phase 1 will encompass 504 megawatts of critical IT load, consisting of six 56-megawatt buildings and two 84-megawatt buildings, spread across both the excess developable acreage on our original Corsicana site as well as on our newly acquired immediately adjacent parcel. As previously announced, core and shell development on buildings 1 and 2 has already been initiated, and we anticipate the first building to be completed in Q1 2027. The overall pace of development in Phase 1 will be driven by tenant commitments and leasing progress, and we are sequencing capital expenditures to maximize power to value conversion. Phase 2 will be comprised of three 56-megawatt buildings, representing 168 megawatts of critical IT load. And over time will eventually supplant our existing Bitcoin Mining data centers.

The completion of our data center designs has enabled us to take the next steps on delivering full build-to-suit Tier 3 data centers. With our initiation of the development phase of our first two 56-megawatt buildings at our Corsicana site, we will begin construction in Q1 2026 on the core and shell of the first 2 buildings. The core and shell construction will consist of a build-out and enclosure of the main structure of the data center, generator buildings and completed power yards, an open interior with operational elevators, docks, logistics areas, lighting, fire protection and security. It will also include the first steps on electrical, plumbing and HVAC infrastructure, which will support full data center build-out and tenant fit-up.

Construction of core and shell buildings will be completed in phases, with the first building expected to be completed in Q1 2027. And will be followed by full fit-out of the data hall with IT equipment, cooling and power delivery systems. The first phase of construction of the core and shell is the most time-intensive, but capital-light portion of the build-out with total expected development cost of $214 million, representing approximately $1.9 million per IT megawatt for the first 2 buildings. Initiating construction on this time line coupled with procurement of long lead time equipment allows us to provide certainty during leasing discussions of our forecasted energization in 2027.

As we progress further in leasing discussions, we will provide cost estimates and time lines on the build-out and delivery of the complete and full build-to-suit of the first two 56-megawatt data centers.

Riot has long focused on maintaining 3 strategic pillars in relation to our Bitcoin Mining business, significant scale of operations, being a low-cost producer and maintaining a strong balance sheet. These strategic pillars formed the foundation of Riot's vertically integrated approach to Bitcoin Mining and the development of a unique portfolio of large-scale powered sites supported with significant cash and Bitcoin on hand. As our strategy has evolved, so has our approach to our Bitcoin Mining business. We no longer see Bitcoin Mining operations as the end goal, but instead as a means to an end and that end is maximizing the value of our megawatts. Over time, this means transitioning the megawatts in our power portfolio for data center development.

Ready-for-service power in the right locations is increasingly scarce and valuable which in turn, forms the basis for the enormous value creation opportunity ahead of us. Monetizing megawatts is how we translate that advantage directly into shareholder value. Bitcoin Mining continues to be a very valuable tool to monetize Riot's large-scale portfolio of power and our Bitcoin Mining business continues to be highly profitable. We will continue to utilize the opportunity Bitcoin Mining brings to secure power and drive strong cash flow that we will leverage to support the ongoing transformation of our overall business.

We just discussed our powerful strategy, which underpins the evolution of our business. On Slide 15, we wanted to provide some context on the underlying significant size and scale of Riot's power portfolio. While many peers reference pipelines of prospective projects, Riot's portfolio totaling more than 1.8 gigawatts is fully approved and available today. This positions Riot as having one of the largest data center power portfolios in North America.

It's also important to consider location. This slide presents total megawatts, but not all megawatts are the same. Approximately 1.7 gigawatts of our total capacity is located in the Dallas and Austin regions, 2 of the most attractive data center markets in the country, offering compelling proximity to existing hyperscaler and enterprise core architecture and tenant demand.

On Slide 16, we show enterprise value per megawatt across selected peers in the Bitcoin Mining space. We view this as a useful lens on how the market values power portfolios today. Some of the companies to the left of Riot have announced lease arrangements and have seen their valuation multiples rerate significantly. Riot currently trades at a meaningful discount to this peer set despite having one of the largest fully approved and readily available power portfolios in the industry. As we execute our data center strategy and convert megawatts into contracted data center leases, we anticipate the market will increasingly reevaluate the underlying value of our power portfolio from a data center lens, leading to a re-rating and multiple expansion on our valuation as well.

More broadly, as the market matures, we expect investors will increasingly differentiate on the quality of power, meaning location, cost of power, schedule certainty and interconnection and on the credit quality and profitability of underlying projects and leases. Our plan is focused on delivering against these dimensions.

I will now turn the call over to Colin Yee, CFO, to present our third quarter financial update.

Thank you, Jason. For the third quarter of 2025, Riot reported total revenue, which consists of Bitcoin Mining and Engineering revenue of $180.2 million as compared to $153 million for the previous quarter, an 18% increase quarter-over-quarter.

Net income for the third quarter equaled $104.5 million or $0.26 per fully diluted share compared to net income of $219.5 million or $0.58 per fully diluted share for the prior quarter.

Non-GAAP adjusted EBITDA for the third quarter was $197.2 million as compared to non-GAAP adjusted EBITDA of $495.3 million for the prior quarter.

During the third quarter, Riot produced 1,406 Bitcoin as compared to 1,426 Bitcoin in the prior quarter. The slight decline in Bitocin production quarter-over-quarter was driven by growth in the global hash rate of approximately 8%, which exceeded Riot's growth in hash rate deployed of approximately 3%, though partially offset by continued improvements in our operating efficiency and utilization rate, which reached 86% this quarter. This improvement in our utilization rate in the third quarter was achieved despite more active employment of our power strategy in the third quarter, during which we successfully generated $31 million in power credits, lowering our net cost of power to $0.032 per kilowatt hour and further solidifying our position as a low-cost leader in the sector.

Riot ended the third quarter holding 19,287 Bitcoin with a market value at the end of the quarter equal to $2.2 billion.

I will now turn the call over to Jason Chung, Riot's EVP of Corporate Development and Strategy.

Thank you, Colin. During the third quarter, the benefits of Riot's large-scale efficient Bitcoin Mining operations and our unique power strategy were all clearly demonstrated in the overall profitability profile of our Bitcoin Mining business. The highlighted column in green provides a step-by-step block through of the key profitability drivers of our operations in the third quarter of 2025.

Top line revenue drivers for our Bitcoin Mining business include the average global network hash rate, Riot's average operating hash rate, average network hash price and our total Bitcoin production for the quarter, which when taken together, resulted in a reported third quarter Bitcoin Mining revenue of $160.8 million.

Total direct cost per Bitcoin for the third quarter was $46,324 and when applied to the 1,406 Bitcoin we produced during the quarter, results in our reported Bitcoin Mining gross profit of $95.7 million or 59% on a gross profit margin basis.

Total Riot SG&A for the third quarter equaled $69.8 million of which noncash stock-based compensation expense represented $32.9 million, resulting in total Riot cash SG&A of $37 million this quarter. Total Riot cash SG&A also included $7.5 million in temporary litigation-related costs and advisory fees as well as costs associated with our engineering business. By breaking out our total cash and noncash SG&A, our intention is to give investors as much insight as possible into the underlying value of our key operating segments.

Our Bitcoin Mining and Engineering operations demonstrated incredibly strong profitability in this quarter. And going forward, we will continue to leverage the significant cash flow being generated from our efficient scaled operations to support the ongoing rapid development of our data center platform.

Our Engineering business is a core asset that uniquely differentiates Riot as we scale into large-scale data center development. In an environment where long-lead electrical infrastructure represents a major constraint to development, owning the manufacturing set from end-to-end creates powerful strategic advantages for Riot. Built through the acquisitions of ESS Metron in December 2021 and E4A Solutions late last year, our engineering capabilities combine manufacturing, engineering design and servicing into a vertically integrated platform predominantly focused on data center grade power systems. Delivery times in the market for key components have extended, but by directly owning and coordinating these capabilities within Riot, we benefit from direct control over the development of long lead critical items, deep supply chain visibility, longer equipment life cycles and resulting lower total cost of ownership and significant total CapEx savings for Riot.

Wall Street analysts have cited low and medium voltage switch gear as among the most supply-constrained items for data center development, which our Engineering business is a leading provider of. By internalizing these development capabilities, we are able to meaningfully derisk the most constrained elements of the development cycle. This not only lowers unit costs, but also protects time lines and shares design quality and enables predictable on-time development. These synergies translate into directly measurable value and derisk the transition of our megawatts into value-creating data center development.

Since our acquisition of ESS Metron, Riot has realized approximately $23 million in cumulative CapEx savings on equipment purchases to date, and we anticipate ongoing savings and logistical benefits to scale, alongside growth in our data center operations.

Riot's operating model continues to scale efficiently. And as the scale of our operations has grown, we are seeing the results of the work we have been putting in to proportionately reduce SG&A and realize a more durable cost structure as we transition to developing data centers.

SG&A has remained relatively flat over the past 4 quarters, while our revenues have grown by more than 110% year-over-year, demonstrating the significant economies of scale that Riot now enjoys. This reduction in proportionate SG&A has been built on 3 key pillars: each implemented over the last several quarters and which are becoming increasingly visible in our financial results. Number one, rhodium settlement and asset acquisition. In the prior quarter, we successfully settled this legacy-hosting contract, which previously led to ongoing losses and litigation costs. The settlement of litigation and asset acquisition reduced legal costs and eliminate future drag on earnings.

Number two, reduction in stock-based compensation. We have previously highlighted the accounting impact from the onetime special awards granted in 2024. Noncash charges associated with this onetime grant of approximately $25 million per quarter will drop to approximately $8 million in Q3 2026 and thereafter roll off entirely, significantly reducing noncash stock-based compensation expense.

Number three, increasingly disciplined internal budget process. We have enhanced our accountability-based budgeting and tracking systems throughout Riot. Teams now operate against more clear targets with monthly variance reviews driving greater predictability in run rate SG&A, inter-department coordination and a continuous improvement cycle, which will be critical as we onboard new hires and systems in support of our data center business development. Together, the impact is visible in our Q3 results.

Revenue increased to approximately $180 million, up 18% quarter-over-quarter, while total SG&A came down and also improved significantly on a proportionate basis. Importantly, we are pairing cost discipline with selective hiring in core areas where hiring is directly tied to expanding our data center development capabilities. We are simplifying our cost base, reducing nonrecurring drags on earnings and have dramatically improved run rate visibility. The result is a structurally leaner organization that can scale data center development with greater operating leverage and stronger earnings quality over time.

I'll now turn it back over to Jason Les for closing remarks.

Thank you, Jason Chung. Riot is in an incredibly advantageous position today because of our industry-wide unique combination of significant scale of readily available power capacity in key high-demand jurisdictions, experienced credible data center leadership and development capability, strong balance sheet underpinned by more than 19,000 Bitcoin and $400 million in cash on hand and significant access to the capital markets. Large scaled, efficient Bitcoin Mining operations generating hundreds of millions of dollars in revenues and cash flows, which will support the growth of our data center business and battle hardened and experienced management and operations teams.

With this framework and these strengths in place, our mission is clear. Riot will maximize value across our entire Power portfolio with a view to ensuring full utilization of our available power capacity and pipeline, leaving no stranded power capacity behind, progressively shift power capacity towards data centers, strategically expand our power assets, utilizing Bitcoin Mining were advantageous and increase our shareholders' exposure to value-accreting assets.

We are strategically positioned at the confluence of surging compute demand and constraints on availability of power, offering compelling potential for shareholder value creation.

We will now open the call up for questions. Operator?

[Operator Instructions] Our first question comes from John Todaro with Needham.

Congrats on all the progress guys, especially at Corsicana. Great to see. Obviously, there's been a number of leases now signed in the space. Can you just give us an update, in particular, on the discussions you're having with potential tenants for those first few builds and what you need to do from here to get a finalized lease? And then I have a follow-up question.

Sure. Thank you for that question. Now what -- I can't comment specifically on any ongoing discussions. But what I will say is that we are incredibly encouraged by our current position in the market. Of course, it's no secret that there's this explosion in AI going on. And alongside with that, demand for power is insatiable. And it keeps growing amongst all players in the market, hyperscalers, enterprise customers, neo clouds, all of these companies are incredibly power constrained. And just as recently as this week and in particular earnings calls yesterday amongst hyperscale companies, we've heard additional commentary indicating, if anything. The bottleneck is growing for power. Data center infrastructure looks like it's likely to extend for years to come that the demand is increasing for them, and they keep thinking they're going to catch up and they're not catching up. And they have historically tried to build on their own and now they're looking for third parties to lease from in order to meet their data center commands.

Meta commented that they keep thinking that they're being too aggressive or being very aggressive at overbuilding and they keep finding themselves on the short side instead. So a lot of positive commentary that I think validates the strategy that we have going on and validates the value of the assets that we have. What I would say also is, we are very focused on high-quality potential tenants. And that's because we're very focused on building this data center business at Riot off on a strong foundation. And these types of tenants, they have enormous power requirements and CapEx budgets. But they are also very careful to commit to.

The projects that they're looking for, they need a lot of certainty on delivery time lines and those ready-for-service states and have very minimal risk of power approvals and permitting and that sort of thing. And that is why we have worked so hard to have taken the time to take these key steps that derisk our sites and ensure maximum credibility in order to deliver on the time lines that we're looking for. We've done that with the team we put in place, completing our basis of design and now advancing on technical and engineering discussions and now initiating the development of the core and shell buildings at Corsicana.

So what I would say is the steps that we've taken, all have been taken to position Riot in front of top-tier potential tenants and set us up to execute on leasing and then match our ability to deliver with the time lines that. Another thing I'll add is everything that you hear about how short on power the market is for at least the next few years and how frenzy demand is for anyone who can reliably deliver power within that time frame, that is absolutely real. We've consistently heard from the leading industry experts, from partners and potential it has strong validity to the power available. So we continue receive a significant interest in that site. So we feel very good with where we're at right now. We've completed the steps outlined earlier in the year that we believe were necessary to make Corsicana ready and as an attractive development as possible. And we feel like we are just in a great position to move forward. And that is the key driver behind today's announcement on initiating the corn shell builds at Corsicana. And that is it.

That's great. That's super helpful. And then just as a follow-up, you did talk about the constrained power environment, which we're obviously seeing as well. But I guess within that, is there still some additional power out there that you guys could procure? Do you still feel comfortable? Is there just additional capacity out there that maybe you could get to add to the pipeline? I don't know, call it a power that's available before 2028. Just maybe frame up some of that, too, on the supply side of what maybe additionally, you could procure.

Yes. We are very active on working on building out our power pipeline beyond just the 1.7 gigawatts that we had at Corsicana and Rockdale. But let me turn that question over to Jason Chung for some more color.

Thanks, Jason. And thanks, John, for the question. We remain very active in looking at opportunities to expand our power portfolio and a large number of opportunities that continue to come across our plate. And we do spend a lot of time as a team evaluating these opportunities. That being said, we've got a tremendous opportunity for value creation on our plate right now, and that's really the primary focus of the management team here. So we do look at opportunities and will act when there's an opportunity that's compelling enough for us to do so, but with perhaps a bit of a higher threshold in terms of where we allocate our time and resources given what we have in terms of our power portfolio that needs to be developed today.

Our next question comes from Paul Golding with Macquarie.

Congrats on all the progress with the site and the basis of design. I wanted to ask, so it sounds like the proactive construction or commencement of construction of this 112 megawatts of core and shell is not a change in approach, given you're still looking at prospective hyperscale tenants. But I wanted to ask, in terms of maybe, Jason, last, your comments around facilitating the most optimal negotiations and getting leverage in these negotiations, could you give some color or unpack how having these shelves being constructed earlier than signing that deal that may come in the future? How that is factoring into these discussions where it's coming into play? Is that the lead time allows you to take more price? Is it maybe helping you attract higher investment-grade counterparties?

And then a follow-up on the comments around ESS Metron and the Engineering segment. Just in seeing how much revenue has grown there and the backlog that's built up, how are you thinking about measuring out third-party engagements for that segment versus internal, given the project you're undertaking at Corsicana?

Thanks, Paul. So let me answer your question. Well, the first part of your question in 2 parts. The first thing I want to stress is, just to be clear, what we're announcing today with the corn and shell development, it's not a shift in our strategy. What I want the market to understand is this is an unveiling of our strategy and how we know that we can best serve the market here. Our focus is owning and operating build-to-suit data centers and the team that we have in place at Riot has the full ability to deliver on that.

So what we bring to the market, which is so important to all types of customers, but particularly hyperscale customers, is a derisked project. And I think that comes through our power approvals are in place. We have up to 1 gigawatt of utility power at Corsicana. That power is running today. We can demonstrate the validity of that power to customers.

Two, we have a team in place that has deep experience building the type of data centers that we're talking about, build-to-suit Tier 3 data centers in the configurations that hyperscalers are looking for. We also have a balance sheet that's able to support development of this project. And with the announcement today, we're showing that construction of the core and shell is already underway for the data center. So all of these elements allow us to communicate the level of certainty to power and ready for service to date that hyperscaler tenants require.

The other thing I want to say is what we announced today and the development in the core and shell is the first step in the eventual build-out of a full Tier 3 data center. And what we talk to, that's $214 million or $1.9 million per IT megawatt, it's actually a little bit more than just a powered shell. Beyond just the water type building, we are also completing generator buildings, fully operational elevators, fully finished admin area, security, access control system and power distribution. So what we're actually in the way that we are providing the components that we know every hyperscaler will require, and we're positioning these buildings so they can very quickly become Tier 3 data centers when those tenant specifications are finalized.

And also -- so those our teams have deep experience and knowledge in building these types of data centers and understand how to make them usable by any potential tenants while providing the flexibility or the tenant to meet their specific specifications. What we're also doing is procuring equipment and locking in our delivery time lines now. So the finished data center can be in line with the timing that hyperscale and -- the timing of hyperscale and enterprise customer buying habits.

Now I know that is a lot, but let me just summarize by saying this. We are executing on our strategy to position us in front of the highest quality tenants and give us more certainty on how and when we will deliver on them -- deliver on building full build-to-suit data centers. This is all under the framework of maximizing the value of the assets that we have. And ultimately, I believe today's announcement is an indication of our confidence in our strategy and our team's ability to successfully develop the data center business along the time line that we envision.

And then your Engineering question. ESS Metron and E4A Solutions comprising Riot's Engineering business has a lot of strategic benefits. Primary reason that we acquired these companies is for controlling our supply chain and derisking that. We've also, in our presentation, Jason Chung talked about the cost synergies that we're realizing there as well. Riot is actually a small portion of ESS Metron's overall business. 90% of ESS Metron's business are data center projects. In fact, some of the biggest data center projects in the country that I'm certain that you've heard of.

So they have a growing business themselves. And they're able to balance the internal demand from Riot and the growing demand reflected in the growing backlog for all these data center projects all over the country.

Our next question comes from Greg Lewis with BTIG.

Jason, I was hoping you could talk a little bit more about Phase 1 in terms of how you're thinking about the sequencing the decision to go with 2 buildings, not 1 or 3. And just how should we think about the timing of the shells being built? And then is this something where the next phase is really going to just be customer dependent, and we're kind of waiting on a customer to see how we think about advancing the shelves?

Yes. Thanks for the question, Greg. So the quarters -- [Technical Difficulty] We're talking about building the Corsicana, which is already an active site. Substation is already active on that side, of course. We already have the pad ready for these first 2 buildings. So this is a development that's far along, and it's just these buildings themselves that construction will begin on in the first quarter of 2026. And then we expect the first corn and shell to be completed in the first quarter of 2027. And because we're building a little beyond core and shell, what we actually call core and shall plus, we are in a position from that point to very quickly get those into build-to-suit turnkey data centers.

This is just the beginning of what our development plans will be. Obviously, we have a total IT load campus capacity at Corsicana of at least 672 megawatts, and we're announcing just 112 megawatts today. The pace of future announcements will be, I think, guided by industry demand and the pace of customer convert -- we felt it was very important to start development right away based on the demand that we were seeing, based on the types of discussions that we are having. And I think you can expect future developments to be announced as we progress on our strategy and we progress on conversations with potential counterparties.

It is relatively simple for us to continue to add on additional buildings. So what we're talking about these first 2 buildings here. And if we have a conversation with a customer who has been demanding significantly more capacity than that, then we are positioned to rapidly spin up additional developments to support their needs. So we're in a great position to be flexible and be aggressive with meeting time lines.

Okay. Super helpful. And I realize there's probably a lot more that needs to be discussed about Corsicana, but I was hoping to get maybe some thoughts on Rockdale. Just as we think about that, everyone, obviously, Corsican has been talked about as being one of the best data sites in the U.S., given its scope size, proximity to Dallas. But like could you talk a little bit how you're thinking about Rockdale. Is that something where we need to really have Corsicana built out before we kind of dividend start developing, opportunities at Rockdale? Or is this something you think maybe we could do concurrently?

Yes. Thank you for asking about Rockdale, Greg. Rockdale shares many of the same characteristics that make Corsicana a highly attractive site for data center development. Just like Corsicana, Rockdale has large-scale secured power, active and operating today, 700 megawatts fully approved electrical infrastructure already in place. Now keep in mind, we already operate one of the world's largest Bitcoin Mining data center campuses on that site. So it is an active operating site. And it also has ample land, water and fiber that can satisfy management and just looking in close proximity, which is a technology [indiscernible], we think this makes rough a very attractive site. Most importantly, having that power approved and in use today significantly derisked the development execution from a potential tenants perspective, and that gives them greater confidence in the opportunity.

Today, we are working to enhance the attractiveness of Rockdale for high creditworthy prospective tenants. And while we do so, we continue to focus on Corsicana as our near-term development opportunity. So today, Rockdale provides Riot with additional optionality for future development of our data center business. But in the meantime, our mining business there continues to generate strong cash flow and helps finance our growing data center business. So Corsicana is a near-term focus for data centers, but Rockdale is the next logical step in the process.

So I'm emphasizing the discount we're off tale from our development pipeline as we continue to work to make the site tenant ready in the meantime. And I feel confident about our ability to execute there.

Our next question comes from Reggie Smith with JPMorgan.

Congrats on the progress. Two quick questions for me. I love that you guys are thinking about maximizing the electrons at Jet sites. I was curious, like what's your thinking today on NeoCloud? Maybe talk us through with the pros and cons of becoming a NeoCloud like iron or someone else. And how you're thinking about that? And then I have one follow-up.

Yes, Reggie, thanks for the question. We are always looking maximize the value of our megawatts here. So that's something that we are thinking about and evaluating all the time. What we believe is the best first step for Riot to maximize value is to focus on this build-to-suit colocation model. Our sites are in very desirable locations. They have very desirable ready-for-service dates. So we believe the best way that we can unlock value today is by building data centers and getting these leases with high-quality tenants. And that's why we're focused on developments that can serve a wide variety of the market. We're focused on building data centers that can meet the needs of any hyperscalers that can service all types of enterprise customers and has the potential I'm sorry, and conserve NeoClouds as well. And of course, that means it could potentially serve an internal NeoCloud business that we decided that we wanted to go that way.

So it's something that we'll think about and waiting, but build-to-suit is a priority today.

Not closing the door on that, but right now, build-to-suit as where you're going. Perfect. And then I guess second question, we've seen quite a few deals struck in the space the last couple of months. I don't think any of them are as ideally located as you guys are in terms of being close to a major city. Are you talking to clients more or do you think you're getting a higher mix of kind of inference clients? Inquiries for your site, should we expect better pricing when a deal is struck because of where you guys are located versus other sites? Are you pushing for that? Like I would imagine that's a point of negotiation where you guys are thinking like, look, we've got great locations. And so what may have flown in a more remote location, we're going to expect more. Is that the right way to think about it?

Yes. I think the location of our sites, but also the timing of being ready for service is what positions us to get the best possible deal here. We believe what we have that we can command very strong economics. And for us, it's twofold. It's both the types of deal economics that we think we can secure with the assets that we have. But it's also the types of tenants that we believe that we can secure with the assets that we have. I would say that I think we're very confident today based on the level of interest that we've received that we could easily enter into a contract with the NeoCloud. But what we are focused on is building a platform that will be able to service a range of potential tenants, hyperscalers, enterprises, and NeoClouds.

And so our priority is building our data center business on a strong foundation. We think that means that with what we have, we can attract high-quality which, beyond just the name recognition. And beyond just the economic terms we can get in the lease make benefits available to Riot in terms of value creation and access to attractive project financing terms. So it's twofold, Reggie. It's -- our assets, we believe both can command strong economics, but can also command because of the properties can command very high-quality tenants.

Our next question comes from Brett Knoblauch with Cantor Fitzgerald.

I think it was just as recently as June as you guys hired Jonathan is kind of with data center team. I'm curious where else on the -- maybe hiring front, you guys have made hires and to what extent there's more hires that you need to go out and make? Or do you think that team is kind of fully in place at this point?

Yes. Thanks for the question. One of our ongoing priorities is building out our team. And what we're doing is building this team in sequence with the steps that we're at in building the business. So you can kind of think of it as like a pendulum where [Technical Difficulty] as the development and engineering part advances, then it swings into the sales side and then eventually swings into the operations side. So we have made a number of key hires over the third quarter. That position us to execute on the development side of the business. Of course, we're still adding talent there, but we have the talent that we need to proceed.

And very recently, we have hired a sales position, our Senior Vice President of AI and hyperscale sales as that now from the development side, more into the sales side. So we have been, I'll say, very pleased with the level of talent that we have been able to attract to Riot. I think that's a testament to the quality of assets that we have, our power, our capital and all the other capabilities that we have at Riot, it had made Riot a very attractive place for veteran data center talent to build their careers and have the opportunity to be a part of building something very big from the ground up. So I've been very pleased with the rapid pace that we've been able to add some incredible talent to our bench. And as that pendulum swings, you'll continue to see us bring in more of that talent to meet the cycle of the business that we're in.

Awesome. And then maybe just as a follow-up, and I don't know if you guys said this, I might have missed it. The, call it, 400 megawatts being used for Bike mining at Corsicana. Is that maybe like the last source of power that you will draw as you kind of build up more on the AI side, like you'll keep mining Bitcoin and so you need that power, I guess, it's a question.

Yes. So on Slide 11 on our earnings section, we'll have a campus layout, and we're breaking it into 2 phases essentially. The first phase is building out on all the unused land that we have at Corsicana. So that means we continue to benefit from the strong cash flow that comes from that site, which is one of the largest Bitcoin Mining sites in the world right now. That site continues to be productive and generate meaningful cash flow for us while we are building out the other buildings on that site.

Once the available land has been exhausted, that would be on our plans, that would mean building out about 504 megawatts of critical IT load, then the Phase 2 option, part of the plan, would be building over where those existing Bitcoin Mining buildings are and adding the final three 56-megawatt building in all critical IT capacity at the site. So that -- our plans call to eventually supplant that. And the pace of that will be driven by customer demand, driven by the dynamics that we're seeing in the marketplace and how our leasing is progressing.

So it's all under the lens of maximizing the value of all of the megawatts that we have, trying to leave unutilized power while we aggressively build out the data center business. And eventually, we aim to have the entire site be a 1 gigawatt utility load data center campus.

Our next question comes from Mike Grondahl with Northland.

Just following up on the discussion you had on expanding the pipeline, do you have any internal goals what you could expand that pipeline to by year-end 2026 or '27? And then secondly, just what are the key next steps you need to deliver the next 90 to 120 days?

We don't have any goals that we would be publicly disclosing at this point. What I would say is we recognize the value of power, and we also recognize our capabilities of securing power. Riot has a proven capability of securing power at scale as demonstrated on one of the slides in our deck at a scale rivaling the biggest data center companies in the world. So when you have an advantage, you press it, and we are looking to press that advantage and utilize the tools at our disposal to add more power to our pipeline.

So the story ultimately would not end at just, Corsicana or Rockdale, but on additional sites that we bring into our pipeline. So not a -- half for you outside of telling you that it is a strategic priority at Riot to build that pipeline.

Key steps for the next 120 days, I think that will really center around the development progressing at the 2 core and shells that we're announcing today. We expect to break ground on construction in the first quarter of 2026 in order to meet the time lines that we've laid out here. I think internally that will be continuing to be advancing on development and further detailed designs of our development. And what we will be doing internally is continuing the technical outreach that we've had, speaking with potential parties and potential tenants to ensure that we are progressing on a design that meets their specification. That isn't something externally looking in. You'd be able to see progress on, but internally, that is what we for the next 120 days.

And congrats on the progress towards HPC, guys.

Our next question comes from Darren Aftahi with ROTH Capital Partners.

Congrats on the Corsicana progress. First, look, Jason, I know you mentioned that the design for Corsicana could be replicable beyond Corsicana. Does that mean you don't need a separate master site design for Rockdale? Or could you just sort of clarify what you mean by that?

Thank you for that question. Yes. So our basis of design is a design that will ultimately work wherever we have a site where we have power. So we have the basis of design now and then the process of putting that on a site is what we call localizing that standard design to the specific site in question. The land profile, wherever the site would be, that determines what the specific layout would be. But it's the same type of building that's being made.

So the fact that we have a standard design means that we're able to be a lot more efficient in procuring equipment and scheduling of the contractors and those contract -- contracting partners, development partners, construction partners, knowing exactly what we're building. It's the same standard design that is tweaked at the endpoint for specific tenant specifications and then localize on whatever site that it's at.

And then like I said, the campus layout where the buildings are actually placed will depend on the land profile of the site. But this is why this basis of design was so important to us. It's really the foundation of our whole development program at Riot for data center. We're not just making a data center for Corsicana. We are making a design to continue to improve on and apply wherever we're able to get access to a power.

Great. And as a follow-up, like when the first 2 power shells plus are done sometime in Q1 '27, like is that the next step that potential tenants need to see your progress on to advance sort of discussions on the lease? Or are you sort of talking with them throughout the process?

We'd be talking with them throughout the process. I think that's the schedule, that's the time line of when those corn shells will be completed. But one of the purposes of initiating this corn and shell development is it enables a more productive discussion with potential tenants. So we would expect to be farther along in our sales and leasing process before those core and shelves are even completed.

And our final question comes from Nick Giles with B. Riley Securities.

My first question was you have $330 million on the balance sheet today and they see a lot of all the Bitcoin as well. $214 million for the core and shell. But my question is, are there any other major capital outlays we should think about in 2026? Whether it'd be deposits for long lead time items or just any other moving pieces to keep in mind. I think you've pretty much wrapped up the land acquisitions you set up to make, but I appreciate any color there.

We haven't released our full 2026 CapEx budget yet. But I think with the development plans that we announced today, the majority of it at this stage would be the $214 million for these first 2 core and shells. That doesn't mean though that we have -- we are not progressing on all the long lead time equipment as well.

Even without deposits, we have been able to secure most that would be necessary for those first 2 buildings. And then, of course, we have our internal capabilities that we're using to secure supply chain as well. So we are being very capital efficient with how we secure this long lead time equipment all around the state of this [indiscernible] and making sure that those 2 items are synced up closely. And with our development strategy, we are always positioned to rapidly move to the next step, depending on what the tenant is looking for.

I appreciate that, Jason. And one more, if I may. I think you mentioned that 672 megawatts of critical IT is kind of the minimum you could see at Corsicana. I think that most PE just below 1.5. So my question is, is there any work ongoing today to improve that? Or what could be done to ultimately increase critical IT megawatts at Corsicana?

Yes. So before we get that question, I just want to add one more thing to the previous question that you mentioned. In addition to the cash that we have on our balance sheet, we have -- including restricted cash, we have about $400 million today and our large Bitcoin balance. We also have a robust Bitcoin Mining business that is generating strong cash flows, and that really is a very important and valuable tool to funding all the development that we have going on.

Then your more recent question on PUE, what we've laid out is like kind of our base case. That's the base case PUE of what we are setting out to achieve. Now of course, any improvement in PUE is improved economics for us. So approximately $1.49 is what our base case is. And now what we are setting out improve from that and the better PUE we were able to achieve, the better ultimate economics we're getting from our projects.

I would now like to turn the call back over to Jason Les for any closing remarks.

I want to thank everyone for listening in on our earnings call today. We are incredibly excited about the progress we've made and the strategic milestones that we're announcing today. Look forward to sharing more progress as we accomplish it. And getting together again with you all on our next earnings call. Thank you.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.