Cipher Digital Posts First HPC Lease Revenue, Expands Barber Lake Contract

Cipher Digital Inc. (Nasdaq: CIFR) reported its first high-performance computing leasing revenue in the third quarter of 2026, marking an initial contribution from its shift toward long-term data-center infrastructure contracts. The company also expanded its Barber Lake lease to 20 years, lifting contracted revenue at that campus to $9.1 billion, while quarterly revenue remained well below the prior-year level as bitcoin mining revenue declined.

Total third-quarter revenue was $26.7 million, up from $24.8 million in the second quarter but down from $71.7 million a year earlier. HPC leasing contributed $5.9 million, compared with no revenue in either comparison period. Bitcoin mining revenue fell to $20.8 million from $24.8 million in the previous quarter and $71.7 million a year earlier.

Cipher recorded an operating loss of $71.9 million, compared with operating losses of $78.5 million in the second quarter and $37.6 million in the year-earlier period. Compensation and benefits totaled $38.6 million, while general and administrative expenses were $26.4 million.

Net income available to common stockholders was $31.6 million, or $0.08 per basic share, compared with a net loss of $267.5 million in the second quarter and a $3.3 million loss a year earlier. The quarterly result included a $127.2 million non-cash gain from the change in the fair value of warrant liabilities, partially offset by $59.0 million of interest expense. Diluted loss per share was $0.22.

Adjusted EBITDA, a non-GAAP measure, was negative $10.0 million, compared with negative $30.0 million in the second quarter and positive $40.8 million in the third quarter of 2025. Beginning in the first quarter of 2026, Cipher adopted Adjusted EBITDA as its primary non-GAAP performance measure, replacing Adjusted Earnings or Loss.

HPC portfolio expands

Cipher’s contracted HPC portfolio now comprises 700 gross megawatts across Barber Lake, Black Pearl and Stingray. The leases represent $16.6 billion of contracted revenue over their base terms, a weighted-average lease term of 17.3 years and projected average annualized net operating income of $864 million.

At Barber Lake, Cipher agreed to invest additional capital rather than receive full reimbursement through change orders. In exchange, the tenant extended the lease by 10 years and agreed to incremental rent, adding $5.2 billion of contracted revenue and bringing the base lease term to 20 years. The company said the cost-sharing structure provides for partial recovery of additional investment through rent, including a return on invested capital. Potential rentalized lease revenue of about $500 million remains subject to final construction costs.

Barber Lake is expected to deliver its first HPC capacity in the fourth quarter of 2026, with individual data halls scheduled to begin rent commencement from the fourth quarter through the first quarter of 2027. Cipher said construction remained on track against the amended milestones. It also acquired about 685 adjacent acres for potential campus expansion.

Black Pearl delivered its first data-center capacity in August, ahead of schedule, with 18 MW of critical IT capacity provided to the tenant by the date of the presentation. Remaining Phase I data halls were undergoing mechanical, electrical and plumbing fit-out, while foundations and structural steel for Phase II had been completed. Cipher also acquired approximately 256 adjacent acres at the site.

At Stingray, earthwork, grading and pad preparation were nearing completion. Steel erection was progressing on schedule, and shell construction was expected to be completed in the fourth quarter. Both Black Pearl and Stingray are operating under updated phased-delivery schedules agreed with their tenants.

Mining and development pipeline

Cipher mined approximately 296 bitcoin at its 207 MW Odessa site during the quarter. The operation had total hashrate of about 11.6 exahashes per second, fleet efficiency of roughly 17.2 joules per terahash and a power cost of approximately 2.8 cents per kilowatt-hour. The company said it was holding discussions about potential HPC monetization of the site.

Across its broader platform, Cipher reported about 6.8 GW of operating, contracted and pipeline capacity at 11 sites, including potential on-site generation. Its near-term pipeline includes the 70 MW Reveille project, targeted for energization in the third quarter of 2027, and the 200 MW Ulysses project, targeted for the fourth quarter of that year. Both have approved grid interconnections and are under discussion for HPC hosting leases.

The 1,000 MW Colchis project received a conditional base-load classification, with a final classification expected in December 2026 after completion of a data-center audit. Target energization is in 2028 and remains subject to the ERCOT batch-study process.

Cipher has also begun developing lateral natural-gas pipelines capable of supporting up to 2.5 GW of on-site generation across multiple locations. It is discussing opportunities for up to 1,000 MW of capacity powered by on-site generation, with target energization indicated for 2027 to 2028.

Capital and execution risks

Cipher reported $656.0 million of cash and cash equivalents at September 30, along with $2.20 billion of current and non-current restricted cash. Total assets were $7.67 billion, while long-term borrowings, net, stood at $5.45 billion.

After the quarter ended, the company issued $850 million of zero-coupon convertible notes due in November 2032 to fund completion of Barber Lake and support future growth. It also converted approximately $165.9 million of 1.75% notes due in 2030 into equity. On a pro forma basis for the new issuance, Cipher reported total debt of $6.7 billion and net debt of $3.08 billion.

The company’s plans remain exposed to construction timing and cost risks, access to capital, customer and tenant performance, changes in market demand, regulatory developments and the completion of grid studies and classifications. Projected rental income tied to additional Barber Lake costs also depends on final construction spending, while pipeline projects and on-site generation remain subject to development and execution uncertainties.