Good day, and thank you for standing by. Welcome to Riot Platforms' first quarter 2026 earnings conference call. Please note that all participants have been placed in a listen-only mode until the question and answer session begins following the company's presentation of its prepared remarks. 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. Welcome to Riot Platforms' first quarter 2026 earnings conference call. My name is Joshua Kane, Head of Investor Relations. 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 press 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, in comments and responses made during today's call, in the Risk Factors section of our Form 10-K and Forms 10-Q, including for the three months ended March 31st, 2026, which will be filed later today, as well as other filings with the Securities and Exchange Commission. With that, I will turn the call over to Jason Les, CEO of Riot Platforms.
Thank you, Joshua, 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 MW expansion option, bringing their total contracted footprint at our Rockdale facility to 50 MW 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 MW AMD lease, we delivered the first 5 MW of critical IT capacity right on schedule in January, with the remaining 20 MW 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 MW standard design, which efficiently consolidates our previous two 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 MW 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 MW, totaling $83.2 million. A significant reduction from the initial 25 MW CapEx of $3.6 million per MW, 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 MW of capacity for AMD, highlighted in yellow.
We are already delivering five megawatts for AMD, with the remaining 20 megawatts firmly on schedule for full delivery next month in May 2026. AMD's 25 megawatt expansion will be developed directly adjacent to the initial AMD footprint in building G and will be constructed in 2 phases. Phase 3, highlighted in blue, will deliver 10 megawatts in November 2026, while Phase 4, highlighted in orange, represents the remaining 15 megawatts for delivery in May 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 an additional 50 megawatt expansion option, and furthermore, they now hold an additional 100 megawatt option, which replaces their prior right of first refusal. Together, this provides a highly visible, de-risked pathway to potentially scale our partnership with AMD to up to 200 megawatts of critical IT capacity at Rockdale. 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 the 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 MW critical IT building engineered to support densities beyond 1,000 watts per sq ft. The design is configurable as a 2-story standard or a single-story high-density format with oversized galleries to accept 100% liquid cooling and the densest next generation equipment without retrofit. We are using prefabricated skids and vendor-agnostic equipment specifications to further compress our schedule and de-risk 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 capital spend. This meaningfully improves our capital efficiency at the core and shell level. Development is underway today, and we have a clear line of sight to 168 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 timeline. 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 four 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 these strong credit characteristics and funding profiles into accretive low cost capital. Fourth, we maintain prudent ongoing balance sheet management. This requires active debt management 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 MW AMD deployment, the just announced additional 25 MW 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 leveraged 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 as a long-term, high-margin lease with an investment-grade leader in the AI ecosystem makes this the type of asset that project finance markets are designed to finance efficiently. We continue to target attractive loan-to-cost ratios in the range of 80% in these structures. Once we close funding, we will be in a position to recover a substantial portion of the equity we deployed into this first set of projects. Phase 3 is the capital recycling phase, where equity we recover from either a true-up during the construction period, as in our AMD discussions, or from refinancing proceeds on completed, stabilized assets, flows directly back into the next wave of data center development. The cycle is to lease, finance, build, and recycle. As we compound through this cycle, we retain ownership of high-quality, cash-flowing assets while continuously redeploying capital to finance additional growth.
Let's move on to the 1st quarter financial update on slide 14. For the 1st quarter of 2026, Riot reported total revenue of $167 million. Notably, with the delivery of our 1st 5 MW to AMD this quarter, Riot is now an active data center operator. For the 1st time, our top line now includes contracted lease revenue from an investment-grade tenant. We recorded a GAAP net loss of $500 million, or $1.44 per diluted share, and an adjusted EBITDA loss of $311 million. This loss was driven by non-cash mark-to-market accounting adjustments on our Bitcoin holdings of $326.7 million and non-cash depreciation and amortization expense of $97.7 million, which do not reflect the underlying strong fundamental economics of our operations.
Diving into these operations, our Bitcoin mining segment performance remained robust. Riot produced 1,473 Bitcoin in the 1st 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 4th 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 to naturally increase, which will normalize this margin towards our previously stated run rate target of 80% plus. 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 de-risk the schedule-critical equipment required to bring a data center online. This vertical integration was a key factor supporting our ability to deliver phase one of the AMD lease on an accelerated timeline. Looking ahead, we'll continue to invest in this strategically important business.
In 2026, we expect to increase ESS Metron's total engineering capacity by approximately 25%, and we will be strategically allocating that incremental capacity to support Riot's own data center growth. Further, because we manufacture these components in-house, we design them in parallel with our data center engineering team, allowing us to move faster and reducing redesign risk. Just as importantly, the same teams that manufacture this equipment also provide maintenance in the field, which will drive long-term operational efficiencies as our data centers are energized and stabilized. Taken together, our engineering business is a core engine of our competitive moat in a market where time to power is the single most valuable commodity. Now, I'd like to turn it back over to Jason Les.
Thank you, Jason. I want to frame one of our key competitive advantages in the broader data center development market: secured power. Today, access to power is a key bottleneck to data center development globally. This makes our large portfolio of 2 gigawatts of fully approved power a strong competitive advantage, giving us one of the most significant development pipelines in our industry. 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 approved 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.
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 four avenues. We have the team, the capital, and the strategy to continuously source the highest quality power assets required to fuel our development pipeline. 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.
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. The conclusion was unambiguous. We had two of the most attractive data center sites in the country. 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 solved both of these constraints, we were not in a position to meaningfully advance design, development, or leasing at either site. Solving these two constraints required patient, disciplined execution, and that is what we did. Over the course of 2025, we successfully navigated a series of obstacles to acquire land adjacent to our original Corsicana site, unlocking the ability to develop the full 1 gigawatt of approved power on Riot-owned land in a connected campus layout. At Rockdale, we converted our interest from a long-term ground lease into a fee simple acquisition of the 200 acres underlying the site. With those two transactions closed, we own the land, we took control over our own destiny at both sites. We removed the most significant barriers between our power portfolio and high quality contracted leases.
Critically, we did not wait for one work stream to finish before beginning the next. In parallel with the land work, we systematically built out the organization starting in the second quarter of 2025 with veteran product design and engineering talent. With the Corsicana land situation on track, we completed the initial basis of design for our standard data center product and initial campus design for the full Corsicana build-out. Through the end of 2025, we took those designs to market for direct technical and commercial feedback from prospective tenants, initiated core and shell development at Corsicana, and brought on senior commercial leadership to drive leasing execution. That disciplined sequenced groundwork is exactly what allowed us to move decisively when the opportunity arrived. In January of this year, we signed our first data center lease with AMD and delivered the initial phase of capacity within the same month.
Since that initial lease, we have expanded the AMD relationship to 50 MW, enhanced 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 timeline 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. I want to zoom in on part of that timeline 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 four pillars. Commercial sales, critical operations, project execution, and design and construction. Each of these functions is led by experienced, credentialed leadership with direct track records of delivering mission-critical infrastructure at hyperscale grade platforms. On the commercial side, our sales organization is led by Rhea Williams, our Senior Vice President of AI and Hyperscale Sales.
Rhea joined us following previous sales roles at Oracle, Compass Datacenters, and Digital Realty. 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. Having sales report directly to the CEO ensures that I am directly engaged in every major commercial discussion. I am also very pleased to announce today a significant addition to our leadership team. Adam is a proven infrastructure executive with more than 15 years of experience leading hyperscale and AI data center development at multi-gigawatt scale.
He comes to us most recently from TA Digital Group, where he served as Senior Vice President of Design and Construction, and prior to that, he held leadership positions at both Google and Meta. Adam is exactly the caliber of leader we need at this stage of our development, and we are thrilled to have him at the helm of our design, construction, and procurement teams as we scale Corsicana, Rockdale, and our broader data center platform. Rounding out the organization, our critical operations leadership brings deep experience running mission-critical environments to hyperscale SLA standards. Our project execution team combines in-house high voltage and procurement expertise with integrated program management across our development pipeline. 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 GW of utility power, including 1.7 GW of fully approved energized capacity at two of the most attractive data center development sites in the U.S. 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. We have a repeatable approach. Our power first strategy, lease to credit-worthy tenants, finance efficiently, build with discipline, recycle capital, is designed to compound through multiple deals and multiple sites. Our priorities for the balance of 2026 are clear. First, deliver contract and 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, advance core and shell development to support delivery of tier- 3 built-to-suit data center capacity. Fourth, secure attractive low-cost financing that reflects the quality of our tenants and sites. 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 timelines 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. 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.
Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Due to time restraints, we ask that you please limit yourself to one question and one follow-up question. Please stand by while we compile the Q&A roster. Our first question will come from the line of Paul Golding with Macquarie.
Thanks so much, congrats on all the progress this quarter. I just wanted to ask a couple 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 per for 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 TC-- TCR, TCV versus a leaner build-out and better CapEx profile. Then I have a follow-up. Thank you so much.
Sure. Thanks, Paul. This expansion falls under the original lease that we executed with AMD earlier this year. It is the same rental rate in terms. I think the only reason you may be seeing a difference there is that there is an escalator clause in our agreement, and this new agreement, you know, runs after over the course of those escalators occurring. It is otherwise, like, substantially the similar terms, similar rates, 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. When we did the first 25 MW, we had to prepare that full building, and that had some additional expense.
Now when we exercise, execute on the next 25 MW expansion, completing that building out, we don't have to do that work over again. Lower cost by leveraging additional work and substantially the same better terms. As you see in our slide, you combine all of these factors together and you're having a lower build cost, a slightly higher contract value, and altogether an actual even improved yield from our original deal.
Great. Thanks, Jason. 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 MW 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 MW in that original option, as well as the 100 MW ROFR, but just to understand how that converted as well as some of the time considerations with the expansion. Thanks so much.
This is a pretty fast timeline to deliver capacity. You know, you see we're signing this deal, we're announcing this deal here in April, we're delivering this at the end of October, beginning of November. Pretty quick timeline 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 risks, to be prepared and to get that first lease off the ground. With this expansion, you're really seeing the whole process from the beginning. What that means is this schedule is really broadly in line with the build schedule that you saw in the first phase. Difference being we just weren't able to announce that until farther 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. The best way that we at Riot can achieve that is by being a consistent and reliable partner for AMD. In doing so, we position ourselves as their preferred supplier of choice. By continuing to doing what we're doing, we believe that we are positioned to continue to grow that relationship. 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. More specifically on the ROFR here.
We converted the ROFR to an option really just to simplify the pathway of expansion of the lease with AMD. We want to advance this relationship, AMD wants to advance this relationship, and we want to have a simple pathway to do that. Having an option instead of a ROFR really gives them what they really wanted, and that worked better for us. With the pace of interest at Rockdale, and in addition to Corsicana, it was better for us to have a defined mechanism for what AMD is looking for instead of having to call that ROFR on terms or on a design that's different than what AMD's needs are. We simplify our discussions with other potential tenants while also simplifying the pathway for expanding the relationship with AMD.
That's how we were thinking about changing this ROFR to this option.
Got it. All very clear. Thank you so much. Congrats again.
One moment for our next question. That will come from the line of John Todaro with Needham. Your line is open.
Hey, guys. Thanks for taking my question, and congrats on the additional capacity with AMD. 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. I have a follow-up.
Yeah. Thank you for the question. Over the past few quarters, we've laid out the roadmap that we've been on to execute a commercial process. 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 timeline slide, 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. 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. 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 timeline. We've seen some of our peers comment on having multiple deals start or stop or fall through before 1 got to the finish line.
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. 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 roadmap that we've laid out, ultimately culminating in a full lease-up of our capacity.
That's great. Thanks for that. If I could just get a follow-up on maybe, kinda just, I guess, more broadly kinda demand signals. Do you think we've kinda seen fewer leases in the public market so far than I think maybe some investors expected in 2026? I guess, is there anything maybe beyond your conversations where there is changes in demand signals or something of that nature in the last, you know, 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. I think that theme was evident on all of the hyperscale hyperscaler earnings calls yesterday, where hyperscalers are growing CapEx, and they are all short on compute and capacity, and identified as a key thing that's keeping some CEOs up at night. That theme remains intact. 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.
You can imagine, in this rapidly changing environment that AI is driving, this cycle is running through much quicker than it has historically. You're always going to be seeing the same level of urgency, across the field, that field will kind of just completely change from one quarter to the 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 engage as customer interest comes forward. That means that we are positioned to respond and work with what the market is bringing us, whether it's a reliance on our standard design or specific requirements that our design can easily accommodate. Our preparation is paying off, we are in the right market at the right time.
That's very helpful. Thanks for taking my questions, and congrats again.
Yeah.
Thank you. One moment for our next question. That will come from the line of Mike Grondahl with Northland. Your line is open.
Hey, thanks, guys. 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?
Hey, Mike, thanks for the question. This is Jason Chung. Maybe I'll take a stab at that one. 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. 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 two months of revenue from that initial 5-MW delivery to AMD, which occurred in late January. Regarding your question on margins, the margin on that core operating lease component for this quarter was 91%. 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 two 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. That'll drive NOI margins towards that targeted 80% range that we put out there publicly before. We think that'll happen as we close out Q3 and head into Q4.
Got it. Then maybe one more for you, Jason. Can you talk a little bit about the financing structure you envision for AMD and I don't know, initial conversations you've had with lenders?
Absolutely. 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. 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.
Got it. Thank you, guys.
Thank you. One moment for our next question. That will come from the line of Stephen Glagola with KBW. Your line is open.
Hey, thanks for the questions. Just two parts from 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? Second, I guess sitting here today, do you feel you've got the team in place to simultaneously advance leasing efforts at both Rockdale and Corsicana? Thank you.
Thanks for the question, Stephen. 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. 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. You can imagine this is not something that happened overnight. It was some time in the making, and it was the right move in order to enhance our leadership structure. These changes have had absolutely no impact on development or commercial discussions, and I think our continued rapid delivery for AMD and them deciding to exercise part of their option is a perfect example of that.
I think, further as we continue to make progress, that will become even more clear. 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. 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, they are all working hand in hand to advance on our strategy, we're very, very proud of that. You can, you know, definitely expect some incremental hiring for support roles in those different departments in the future.
You know, our team is gonna continue to scale as our business does, but the core leadership structure has been built, and that's the team that's executing today.
Thank you.
One moment for our next question. That will come from the line of Brett Knoblauch with Cantor Fitzgerald. Your line is open.
Hi, guys. Thanks for taking my question. I know last quarterly you talked about conversations or customer conversations for taking down the entire site. I'm curious if that is still the case. Do you have a preference if it's single tenant or multi-tenant? Maybe as a follow-up on the procurement process for the core and shell, you know, I guess, power where you at on that as well as the procurement process for what would come after the core and shell.
Sure. Thanks, Brett. your question on the majority of the conversation still around the entire site, yes, that still remains the case. That is probably our preference. I wanna emphasize that we still have the ability to accommodate multi-tenant if that is the way that things go. 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. That is the opportunity for us. That's a fantastic asset for us. It also means that is a big bite to chew for tenants who would be committing to a multi-year deployment schedule at a huge scale. 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. To that effect, I'm very happy to share that we've secured a general contractor for this phase of 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 timeline, so we feel great about this partnership. Beyond core and shell, talking about the tier- 3 eventual build-out of the site, yes, we have been securing long lead equipment for that. When I say long lead equipment, I'm talking about backup generators, chillers, and as Jason mentioned in the prepared remarks, ESS Metron scaling up and preparing capacity for Riot use. All of this procurement is a result of our confidence in how our strategy is progressing. We're doing all of this to ensure that we have an attractive offering on an attractive timeline. 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.
Awesome. Thank you so much, guys. Congrats on the quarter.
Thank you. One moment for our next question. That will come from the line of Brian Dobson with Clear Street.
Hey, thanks so much. Just one more follow-up on financing in general. You know, Bitcoin sales have been a big part of your upfront financing. Do you expect that to continue? Would you elaborate on your view of, call it long-term debt financing and how that fits into your broader strategy moving forward?
Let me turn that question to Jason Chung.
Sure. Hey, Brian. That's correct. Right now, our Bitcoin treasury and operating cash flows remain the most capital efficient, non-dilutive sources of funding available to us. As a reminder, we executed our Q1 development entirely without issuing any common equity. I think looking ahead to our broader financing philosophy as our leasing pipeline scales, we recognize that establishing deep, diversified access to capital is critical. 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. 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. The specific path we take for any given project is going to be completely dependent on the dynamics of that particular underlying lease, the credit profile of the tenant, prevailing market conditions at the time, and Riot's own needs. I think regardless of whether a specific project is funded through project finance or capital markets or otherwise, the mechanics are gonna 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. 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.
Yeah. Thanks so much for the color.
Thank you. One moment for our next question. That will come from the line of Nick Giles with B. Riley Securities. Your line is open.
Thank you, operator, and good afternoon, everyone. This is Henry Hurll on for Nick Giles. I wanted to ask about the potential cadence of AMD's remaining 150 MW expansion option. Is there a date where the options expire? I see the illustrative chart on slide 22, which shows that the 2nd 100 MW tranche is contingent on power availability, what does that exactly mean? Thanks.
The cadence of expansion with the AMD lease, that's really going to be driven by them. You know, 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, the new 100 MW option is conditional on them first utilizing all of the first option, which now is 50 MW remaining. You know, as far as some of the details of when that of how that option works, you know, there's some confidentiality to this agreement, so I don't want to elaborate too much more than that.
You know, one thing I'll comment on is this original lease in the expansion, you know, it clearly goes into these two buildings that we already have there, buildings F and G. For the next 100 MW, that would require a new building or capacity being developed. You know, I would say just stay tuned as, you know, we work on those plans and that development pipeline comes together.
Got it. Then, for my follow-up, in regards to your pipeline and the four different growth options, which one do you guys favor most? Out of the 100+ 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. 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. 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.
Got it. Thanks for the color, and continue best of luck.
Thank you. 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 wanna thank everyone for tuning in to 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. 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.