Cipher Digital posts quarterly profit as AI data center shift offsets mining revenue slump
Cipher Digital reports a quarterly profit as it redirects computing capacity from bitcoin mining to data center leasing for artificial intelligence customers. The result comes despite a sharp revenue decline and reflects a large noncash accounting gain linked to warrants issued to Google.
Highlights
- Cipher Digital Q3 revenue drops to $26.7 million from $71.7 million as it shifts from bitcoin mining to AI data center leasing.
- Noncash $127.2 million warrant revaluation gain related to Google drives net profit of $31.6 million despite $71.9 million operating loss.
- Barber Lake data center lease extended to 20 years, raising contracted site revenue to approximately $9.1 billion.
Third-quarter results and transition costs
As reported by CoinDesk, citing Cipher Digital's November 2 SEC filing, revenue falls to $26.7 million in the third quarter from $71.7 million a year earlier as the company shifts capacity away from bitcoin mining and toward leasing data centers to AI companies.Bitcoin mining contributes $20.8 million, down 71%. Cipher also records its first revenue from the new business line during the quarter, collecting $5.9 million after the initial phase of its Black Pearl data center in Texas begins operations in August.
Cipher stops mining bitcoin at the facility in February to prepare it for the new tenant. The transition carries significant costs, with the company reporting a $71.9 million operating loss, compared with $37.6 million a year earlier, while adjusted EBITDA declines to negative $10 million from positive $40.8 million.
Accounting gain and long-term data center bet
The reported net profit of $31.6 million is largely driven by a $127.2 million noncash gain from revaluing warrants issued to Google. Google agrees to backstop certain lease payments from AI infrastructure company Fluidstack, but the accounting adjustment does not represent cash received by Cipher.The company is positioning the data center business as a larger long-term growth driver. It recently expands its Barber Lake data center lease to 20 years, bringing contracted revenue at the site to about $9.1 billion.
Our earlier analysis of the U.S. AI data center boom highlighted how higher financing costs, construction delays, and power constraints are putting growing pressure on new projects. We noted that only a fraction of planned builds look truly credible and pointed to Cipher Digital as an example of how cost overruns and funding needs can test investor confidence.
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