Cipher Digital Inc.

Cipher Digital Inc. (formerly Cipher Mining Inc.) is an evolving company focused on developing and operating industrial-scale data centers for next-generation computing, with a strategic pivot from pure-play bitcoin mining to high-performance computing (HPC) data centers. The company's business model is vertically integrated, encompassing land and power origination, site development, data center design and construction, and ongoing facility operations. This shift is driven by increasing demand for artificial intelligence (AI) technology and the need for energized HPC data centers. Cipher Digital aims to monetize its power assets and manage capital efficiently to align its infrastructure with the growing global demand for AI-driven compute capacity ¹.

The company's data center portfolio comprises 4.2 gigawatts (GW) ² of capacity across 10 sites at various stages of interconnection. Currently, 600 megawatts (MW) ³ of HPC data center facilities are under development across two sites for hyperscaler tenants, while approximately 207 MW ⁴ of power is operated at one bitcoin mining data center in Texas. A pipeline of approximately 3.4 GW ⁵ across seven sites in Texas and one additional site in Ohio is also maintained. Cipher Digital believes its strengths lie in sourcing high-quality sites suitable for HPC tenants, experienced in-house construction, engineering, and operations teams, and disciplined capital management ⁶.

In 2025, Cipher Digital entered into two significant HPC leases. Through its wholly-owned subsidiary Cipher Barber Lake LLC, the company secured long-term HPC leases with Fluidstack USA II Inc. to construct a data center at its Barber Lake site near Colorado City, Texas. This facility, on 250 acres ⁷ of land, will have a gross capacity of 300 MW ⁸, with 244 MW ⁹ allocated to Fluidstack in Phase I and 56 MW ¹⁰ in Phase II. Google LLC has agreed to backstop certain obligations of Fluidstack under these leases. Cipher Barber Lake has received approvals for 300 MW ¹¹ of interconnection without load profile restrictions and targets delivery of Phase I by September 30, 2026 ¹², and Phase II by January 31, 2027 ¹³. Additionally, in October 2025, Cipher Black Pearl LLC, a wholly-owned subsidiary, entered into a 15-year lease agreement with Amazon Web Services, Inc. to deliver approximately 300 gross MW ¹⁴ of turnkey data center capacity at the Black Pearl Facility near Wink, Texas, with phased delivery expected to commence in 2026 ¹⁵.

The company's site pipeline, totaling 3.4 GW ¹⁶ of capacity, is anticipated to energize between 2026 and 2030. This includes the Colchis Site in West Texas, a joint venture capable of providing 1-GW ¹⁷ with targeted energization in 2028 ¹⁸, and the Ulysses Site in Ohio, a 200 MW ¹⁹ data center site acquired in December 2025, expected to energize in the fourth quarter of 2027 ²⁰. Other sites include Stingray (100 MW ²¹, energization in H1 2026 ²²), Reveille (70 MW ²³, energization in 2027 ²⁴), McLennan (up to 500 MW ²⁵, energization in 2028 ²⁶), and Mikeska (up to 500 MW ²⁷, energization in 2028 ²⁸), and Milsing (up to 500 MW ²⁹, energization between 2028 and 2029 ³⁰).

For the fiscal year ended December 31, 2025, Cipher Digital reported total revenue from bitcoin mining of $223,942 thousand ³¹, an increase from $151,270 thousand ³² in 2024. The company incurred a net loss of $822,244 thousand ³³ for 2025, significantly higher than the $44,635 thousand ³⁴ net loss in 2024. Basic and diluted EPS was a loss of $2.15 ³⁵ per share in 2025, compared to a loss of $0.14 ³⁶ per share in 2024. Cash and cash equivalents stood at $628,263 thousand ³⁷ as of December 31, 2025, with total debt (long-term borrowings, net) of $2,711,648 thousand ³⁸.

Year-over-year, revenue increased by approximately 48.0% ³⁹ from 2024 to 2025, primarily due to an increase in the average bitcoin price, partially offset by the bitcoin halving in April 2024. Cost of revenue increased to $81,216 thousand ⁴⁰ in 2025 from $62,364 thousand ⁴¹ in 2024, driven by increased power costs at the Black Pearl Facility. Compensation and benefits rose to $79,129 thousand ⁴² from $60,796 thousand ⁴³, reflecting an increase in headcount. Depreciation and amortization nearly doubled to $198,973 thousand ⁴⁴ from $102,448 thousand ⁴⁵, mainly due to the Odessa fleet upgrade, Black Pearl Facility operations commencement, and a change in the estimated useful life of miners from five to three years ⁴⁶. The change in fair value of the power purchase agreement resulted in a $28,860 thousand ⁴⁷ decrease in 2025, compared to a $7,921 thousand ⁴⁸ decrease in 2024. Power sales increased to $7,870 thousand ⁴⁹ from $5,405 thousand ⁵⁰. Equity in losses of equity investees significantly increased to $20,822 thousand ⁵¹ in 2025 from $384 thousand ⁵² in 2024, including a $4,000 thousand ⁵³ impairment charge on miners at Alborz LLC. Unrealized losses on fair value of bitcoin were $41,603 thousand ⁵⁴ in 2025, a reversal from $11,313 thousand ⁵⁵ in gains in 2024. Realized gains on sale of bitcoin decreased to $7,126 thousand ⁵⁶ from $51,548 thousand ⁵⁷. Other expense surged to $404,000 thousand ⁵⁸ in 2025, primarily due to a $450,400 thousand ⁵⁹ loss on the fair value of the embedded derivative component of the 2031 Convertible Notes, partially offset by a $45,100 thousand ⁶⁰ gain on capped calls and a $19,300 thousand ⁶¹ gain on warrant liability.

During the reported period, Cipher Digital made several significant operational developments. The company rebranded to "Cipher Digital Inc." on February 20, 2026 ⁶², aligning with its HPC data center strategy. It entered into long-term HPC leases with Fluidstack (backed by Google) for the Barber Lake Facility (300 MW ⁶³) and with Amazon for the Black Pearl Facility (300 MW ⁶⁴), with construction commencing in 2025 for both. The company acquired a majority interest in a joint venture for the 1-GW ⁶⁵ Colchis Site in November 2025 and the 200 MW ⁶⁶ Ulysses Site in Ohio in December 2025, marking its first acquisition outside Texas. Bitcoin mining operations ceased at the Black Pearl Facility in February 2026 ⁶⁷ to facilitate its retrofit for an HPC tenant. Additionally, the company sold its 49% ⁶⁸ interests in the WindHQ JV sites to Canaan U.S. Inc. on February 19, 2026 ⁶⁹.

Cipher Digital Inc. is strategically shifting its focus from bitcoin mining to the development and operation of industrial-scale data centers for high-performance computing (HPC) and artificial intelligence (AI) applications. The company anticipates that HPC-related contracts will represent a significant portion of its expected future revenues, with 600 MW ⁷⁰ of HPC data center facilities currently under development for hyperscaler tenants. The Barber Lake Facility, with a gross capacity of 300 MW ⁷¹, is targeting delivery of Phase I by September 30, 2026 ⁷², and Phase II by January 31, 2027 ⁷³. The Black Pearl Facility, also with approximately 300 gross MW ⁷⁴ of turnkey data center capacity, expects phased delivery to commence in 2026 ⁷⁵, with rent for the lease expected to fully ramp by the first quarter of 2027 ⁷⁶. This transition is expected to make bitcoin mining dynamics play a lesser role in future operations, with revenue and operating results becoming more influenced by long-term leases with hyperscaler tenants, power procurement strategies, and broader data center market conditions.

The company's primary growth areas are centered on expanding its HPC data center portfolio. The existing pipeline includes approximately 3.4 GW ⁷⁷ across seven sites in Texas and one additional site in Ohio, which are anticipated to energize between 2026 and 2030. Key projects include the Colchis Site, a joint venture in West Texas capable of providing 1-GW ⁷⁸, targeting energization in 2028 ⁷⁹, and the Ulysses Site in Ohio, a 200 MW ⁸⁰ data center site expected to energize in the fourth quarter of 2027 ⁸¹. The Ulysses Site represents a strategic geographic diversification outside of Texas, offering direct access to PJM Interconnection L.L.C. The Stingray site (100 MW ⁸²) is expected to energize in the first half of 2026 ⁸³, and the Reveille site (70 MW ⁸⁴) in 2027 ⁸⁵. Additionally, the McLennan and Mikeska sites, each with targeted capacities of up to 500 MW ⁸⁶, are estimated to energize in 2028 ⁸⁷, while the Milsing site, also with up to 500 MW ⁸⁸, is estimated to energize between 2028 and 2029 ⁸⁹. The company plans to continue evaluating additional sites, locations, and partnerships to expand its pipeline suitable for HPC tenants.

Operationally, Cipher Digital is focused on maintaining cost leadership and operational excellence. The company's Odessa Facility, a 207 MW ⁹⁰ bitcoin mining data center, has access to electricity at a cost of approximately 2.8 c/kWh ⁹¹ until at least July 2027 ⁹², subject to certain increases related to tariffs. The company may opportunistically sell excess electricity back to the ERCOT market. The retrofit and development of the 300 MW ⁹³ Black Pearl data center for Amazon Web Services commenced in 2025 and is proceeding under a structured delivery framework emphasizing off-site manufacturing, modular construction, and early procurement of long-lead equipment. The company's operational model emphasizes disciplined processes, data-driven decision-making, and continuous optimization, supported by proprietary software for data center management.

Cipher Digital maintains a disciplined approach to capital allocation, aiming to support scalable growth while managing balance sheet risk. In 2025, the company raised approximately $3.2 billion ⁹⁴ of gross proceeds through convertible notes offerings and senior secured notes offerings. This includes $172.5 million ⁹⁵ principal amount of 1.75% ⁹⁶ convertible notes due in 2030 ⁹⁷, and $1.3 billion ⁹⁸ principal amount of 0.00% ⁹⁹ convertible senior notes due 2031 ¹⁰⁰. Additionally, Cipher Compute LLC issued $1.733 billion ¹⁰¹ of 7.125% ¹⁰² senior secured notes due 2030 ¹⁰³. Subsequent to December 31, 2025, Black Pearl Compute LLC incurred $2.0 billion ¹⁰⁴ of 6.125% ¹⁰⁵ senior secured notes due 2031 ¹⁰⁶. The company also has an at-the-market sales agreement to sell shares of common stock with an aggregate offering price of up to $725.7 million ¹⁰⁷. Management believes existing financial resources, project-level financing, bitcoin sales, and at-the-market offerings will be sufficient to meet operating and capital requirements for at least 12 months ¹⁰⁸ and the foreseeable future.

The company explicitly flags several structural headwinds and execution risks to its growth plan. Delays in completing HPC data center construction within anticipated cost estimates could materially adversely affect business, results of operations, and liquidity, potentially leading to lease terminations if significant delays occur. Construction risks include lack of parts/labor, increased prices due to inflation, labor disputes, environmental issues, and permitting delays. The success of the HPC business strategy is not guaranteed and may be affected by power supply reliability, supply chain disruptions, new tariffs, and changes in specialized expertise. The business depends on demand for data centers, and a reduction in demand or customers choosing to develop their own facilities could adversely affect the company. Constructing HPC data centers requires significant capital expenditures, and the inability to secure sufficient capital or financing on favorable terms could delay projects and impact competitiveness.

Geographic, regulatory, and macro factors are also identified as constraints. The company's concentration of operations in Texas, including its two leased sites and pipeline, exposes it to changes in the regulatory environment, market conditions, and natural disasters in the state. New legislation in Texas, such as Senate Bill 6 (SB 6) in 2025 ¹⁰⁹, and ERCOT amendments to large load interconnection processes, could increase costs, delay project timelines, or impose operational constraints. Operating HPC data centers is energy-intensive, which may attract increased scrutiny and potential regulation regarding environmental impact and energy policy, potentially leading to higher costs or reduced competitiveness. The evolving regulatory landscape surrounding AI technology also poses risks, with potential restrictions on AI products or obligations on infrastructure providers to oversee AI system use, which could reduce demand or increase compliance costs.

Cipher Digital Inc. faces material risks across macroeconomic, competitive, regulatory, and operational dimensions. Macroeconomic risks include unfavorable global economic, business, or political conditions, such as geopolitical tensions, military conflicts, acts of terrorism, natural disasters, pandemics, trade restrictions, and tariffs, which could adversely impact supply chains, increase costs, or reduce demand for HPC data centers. Operationally, the company is exposed to significant construction risks for its HPC data centers, including delays, lack of parts/labor, increased prices due to inflation, labor disputes, environmental issues, and permitting delays, which could prevent the realization of projected revenue and impact liquidity. The business is highly dependent on the demand for data centers, and a reduction in this demand or customers developing their own facilities could materially adversely affect financial condition. Furthermore, the company's operations are concentrated in Texas, making it particularly vulnerable to changes in the regulatory environment, market conditions, and natural disasters in that state. Dependence on third parties for power and critical equipment, coupled with potential price fluctuations or shortages, poses additional operational risks. Cybersecurity incidents or failures to protect IT systems, digital assets, or confidential information could lead to significant costs, disruptions, reputational harm, and litigation. The company's historical reliance on bitcoin mining exposes it to bitcoin price volatility, which can adversely affect operating results, and the risk that bitcoin held in custody could be deemed property of a bankruptcy estate in a custodian's insolvency, making the company an unsecured creditor. Regulatory risks are significant, particularly in Texas, where new legislation like Senate Bill 6 (SB 6) in 2025 ¹¹⁰ and ERCOT amendments to large load interconnection processes could increase costs, delay projects, or impose operational constraints. The energy-intensive nature of HPC data centers also exposes the company to changing environmental regulations and public energy policy, potentially leading to increased costs or competitive disadvantages. The evolving regulatory landscape surrounding AI technology, including potential restrictions on AI products or obligations on infrastructure providers, could reduce demand for services or increase compliance costs. The company's substantial indebtedness of $3,206 million ¹¹¹ as of December 31, 2025, including $172.5 million ¹¹² of 2030 Convertible Notes, $1.3 billion ¹¹³ of 2031 Convertible Notes, and $1.733 billion ¹¹⁴ of 2030 Senior Secured Notes, limits cash flow for operations, exposes it to adverse economic conditions, and could impair its ability to satisfy obligations. Subsequent to year-end, Black Pearl Compute LLC incurred an additional $2.0 billion ¹¹⁵ of 6.125% ¹¹⁶ senior secured notes due 2031 ¹¹⁷.

Management's message to shareholders emphasizes a strategic evolution from a pure-play bitcoin miner to a vertically integrated data center development and operations platform focused on energy-intensive compute infrastructure, particularly for high-performance computing (HPC) and artificial intelligence (AI) applications. The company, recently rebranded as "Cipher Digital Inc." on February 20, 2026 ¹¹⁸, aims to monetize its power assets and manage capital efficiently to align its infrastructure with the growing global demand for AI-driven compute capacity. Key strategic priorities include leveraging a "power-first" site sourcing approach to address the growing power shortfall facing hyperscalers, developing and constructing industrial-scale, turnkey HPC data centers, building relationships with credit-worthy tenants and negotiating economically-attractive long-term leases, sourcing efficient capital for development, maintaining cost leadership, operational excellence, and balance sheet discipline through market cycles, and expanding the portfolio through strategic acquisitions and increasing capacity at existing sites. Management believes that existing financial resources, combined with projected cash and bitcoin inflows from its data centers, the ability to sell bitcoin, and at-the-market offerings, will be sufficient to meet operating and capital requirements for at least 12 months ¹¹⁹ from the date of the financial statements and for the foreseeable future.