On the board: Cipher reports first computing lease revenue

Data center company Cipher Digital reported its first high-performance computing lease revenue Monday following rent commencement at Black Pearl and said Barber Lake construction remains on track under a previously announced $9.1 billion, 20-year arrangement.

The New York-based developer, owner and operator of industrial-scale data centers recorded $5.9 million in third-quarter computing lease revenue. Its three contracted campuses total 700 megawatts of gross capacity and $16.6 billion in contracted revenue, with a weighted average lease term of 17.3 years.

“Demand for compute is growing, and our relationships with leading hyperscalers and AI labs are deepening,” CEO Tyler Page said in the earnings release. “We are adding new capacity to our pipeline, investing earlier in every project and advancing design work before committing to new leases, so we are well positioned for our next phase of growth.”

Data centers house networked servers for data storage and processing. They need electricity to run that equipment and cooling systems to remove the heat it produces.

Formerly Cipher Mining, the company adopted the Cipher Digital name in February and sold its 49 percent interests in the Alborz, Bear and Chief mining sites. It retained Odessa, Texas, where it mined about 296 bitcoin in the third quarter and is discussing computing uses.

Amazon Web Services leases two of Cipher’s three contracted campuses, accounting for $7.5 billion in contracted revenue. Black Pearl, near Wink, Texas, has a 15-year lease plus three five-year extension options covering 300 megawatts of gross capacity. Stingray in Andrews, Texas, has a 15-year lease plus three five-year extension options for 70 megawatts of critical computing capacity supported by 100 megawatts of gross capacity.

At Barber Lake in Colorado City, Texas, Fluidstack’s 10-year agreements signed in 2025 covered 300 megawatts and about $3.8 billion in contracted revenue. Google’s backstop of Fluidstack lease obligations reached $1.73 billion after a $333 million expansion in November 2025.

A September amendment added a binding commitment from an unnamed leading AI lab for a subsequent 10-year lease and about $5.2 billion in rent. Under a cost-sharing framework, Cipher bears the first $359.3 million above the initial budget. The company said the tenant will reimburse half of costs above that threshold through additional rent over the 20-year term at a contracted return. Delivery is scheduled from the fourth quarter of 2026 through early 2027.

Cipher’s third-quarter investor presentation estimates its net cost at Barber Lake at $13 million per megawatt of critical computing capacity, after $50 million in change-order reimbursements. The original budget was $10.4 million per megawatt. Expected recovery through future rent keeps the projected yield on cost at 15.2 percent. Without the extension, the presentation shows $12.3 million per megawatt and a 12.9 percent yield.

Along with Fluidstack and Anthropic, the company has also committed a combined $10 million to repair and upgrade Colorado City’s water system.

And Cipher completed an $850 million zero-interest convertible note offering due in 2032 to fund additional Barber Lake investment. 

Third-quarter revenue fell to $26.7 million from $71.7 million a year earlier. Net income was $31.6 million, helped by a $127.2 million warrant-valuation gain. Cipher reported a $71.9 million operating loss and negative $10 million in adjusted EBITDA. Interest expense rose to $59 million from $1.3 million a year earlier.

Cipher’s roughly 5.9-gigawatt development pipeline includes potential generation supported by natural gas laterals under development for up to 2.5 gigawatts. It targets gas availability in 2027, with potential generation soon afterward. The Electric Reliability Council of Texas’ Batch Zero process awarded Colchis a conditional 1-gigawatt base load classification and other sites 1.6 gigawatts of conditional studied-load classifications with provisional controllable-load designations. Final classifications are expected in December after an audit. Cipher is advancing tenant discussions and design work for Reveille and Ulysses, with 270 megawatts targeted for energization in 2027. The newly acquired 70-megawatt Horizon site in Texas is expected to energize in 2029.

Black Pearl has delivered 18 megawatts of critical computing capacity since August. Its remaining Phase I halls are undergoing mechanical, electrical and plumbing installation. Phase II foundations and building steel are complete. Barber Lake’s tenant is installing computing equipment. Cipher expects more Black Pearl and Barber Lake halls online through year-end and Stingray’s shell finished in the fourth quarter.