Bitcoin miner turned AI infrastructure builder, Cipher Mining, has announced plans to offer $1.4 billion in senior secured notes to scale its data center expansion in Texas. 

According to a Nov. 4 press release, Cipher intends to raise the capital through a private offering of senior secured notes due 2030, issued by its wholly-owned subsidiary Cipher Compute LLC.

“The Issuer intends to use the net proceeds from the offering to finance a portion of the construction cost of the Barber Lake Facility, a high-performance computing data center near Colorado City, Texas,” the announcement said.

The notes will be fully and unconditionally guaranteed by Cipher Barber Lake LLC, and secured through first-priority liens on most of the Issuer’s and Guarantor’s assets, along with a pledge of the Issuer’s equity interests by its parent entity Cipher Songbird LLC. 

Additional security includes a lockbox account to be set up by Fluidstack, along with a commitment from Google to back the facility with warrants to buy Cipher stock before construction wraps up.

Cipher will also provide a completion guarantee, meaning it will fund the Issuer directly if the proceeds from the offering and other available resources fall short of completing the Barber Lake project. 

Cipher’s ability to secure such complex financial instruments and institutional backers signals growing credibility in its AI infrastructure ambitions, coming just a day after it highlighted its strategic partnerships with Google and Amazon as proof that hyperscalers are willing to bet on its transformation from a Bitcoin miner into a serious player in the AI space.

Cipher mining stocks rally

Despite the backing, however, Cipher’s stock was trading lower early Monday. 

Shares fell 4.33% to $21.78 by 9:45 a.m. ET, paring some of the previous session’s strong gains. 

Today’s dip follows a volatile trading pattern that has dogged the stock in recent months, even amid major AI announcements.

Last month, Cipher saw a steep 10% drop on the day it announced a $3 billion AI hosting deal with Fluidstack, despite financial support from Google.

Markets were likely skeptical over execution risks, especially around Cipher’s ability to retrofit or scale facilities traditionally designed for Bitcoin mining to support high-density AI workloads. 

At that time, shares were also seen as trading at an aggressive premium, with a price-to-sales ratio near 37, outpacing even established AI giants like Nvidia.

Still, over the longer term, Cipher’s stock performance has been nothing short of staggering. The company’s shares have surged by over 630% in the past six months.

Much of that upward momentum has been driven largely by the $5.5 billion agreement with Amazon Web Services to deliver 300 megawatts of AI-focused data center capacity by 2026, and the 10-year $3 billion Fluidstack colocation contract that included support from Google.

With a development pipeline now spanning 3.2 gigawatts of capacity, including a 1 gigawatt “Colchis” site in West Texas, Cipher is angling to secure a sizable share of the AI infrastructure market.

The Colchis site, backed by a Direct Connect agreement with American Electric Power, is expected to be completed by 2028 and represents one of the largest expansion efforts in the sector.

The Artificial Intelligence sector is booming

The rationale for Cipher’s pivot from Bitcoin mining is anchored in a compelling set of economic and structural tailwinds. 

While Bitcoin mining has become increasingly competitive and margin-constrained, the AI and HPC data center market has been booming. 

Industry projections estimate the global AI data center sector will grow from around $168 billion in 2024 to over $933 billion by 2030. 

Power demand is expected to more than double, with a 15% CAGR through the decade, largely fueled by AI.

Compared to the volatility of crypto mining, AI infrastructure offers long-term contracts, more predictable cash flows, and access to institutional financing. 

Companies like Cipher are well-positioned for this shift, given their access to land, abundant renewable energy, and operational experience with large-scale power management.

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