Cipher Digital’s Barber Lake deal adds $5.2 billion of rent, but revenue slides (NASDAQ: CIFR)

What happened

Cipher Digital Inc. (NASDAQ: CIFR) doubled its Barber Lake lease to 20 years. That lifts contracted revenue at the site to about $9.1 billion. The amendment adds about $5.2 billion of rent, but reported revenue fell in the quarter as bitcoin mining revenue dropped.

The amendment adds a second 10-year term directly with a leading AI lab. Cipher chose to invest more capital in return for the extension and extra rent, instead of seeking change order reimbursement, according to its presentation. Data halls are due from Q4 2026 through Q1 2027, and construction remains on track against the amended schedule.

Cipher funded the added equity investment with an $850 million offering of 0.000% convertible senior notes due 2032. Capped call transactions raise the effective conversion price to $28.35 per share. Cipher also converted about $165.9 million of its 1.750% convertible notes due 2030 into equity, retiring more than 90% of them.

Key numbers

Metric	Latest	Change	Source
Barber Lake contracted revenue	$9.1 billion	+$5.2 billion	SEC 8-K, Exhibit 99.1
Q3 total revenue	$26.7 million	from $71.7 million, -62.8%	Calculated from SEC 8-K
Q3 HPC leasing revenue	$5.85 million		SEC 8-K, Exhibit 99.1
Q3 Adjusted EBITDA	-$9.96 million	from $40.79 million, -$50.75 million	Calculated from SEC 8-K
Long-term borrowings, net (versus Dec. 31, 2025)	$5.45 billion	from $2.71 billion, +100.9%	Calculated from SEC 8-K

Read more: Cipher Digital (CIFR) company research

What the third quarter shows

Reported results still reflect the shift away from mining. Revenue was $26.7 million in the third quarter. By OptimistFi's calculation, that is down 62.8% from $71.7 million a year earlier.

Bitcoin mining brought in $20.85 million. HPC leasing added $5.85 million, recognized for the first time after rent began at Black Pearl. Adjusted EBITDA was negative $9.96 million, compared with positive $40.79 million in the third quarter of 2025.

Net income of $31.6 million included a $127.18 million non-cash gain from the change in fair value of the warrant liability. Operating loss widened to $71.9 million from $37.6 million a year earlier.

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Debt and funding

Building the data centers has roughly doubled Cipher's debt. By OptimistFi's calculation, long-term borrowings, net, reached $5.45 billion on Sept. 30. That is up 100.9% from $2.71 billion on Dec. 31, 2025.

Net property and equipment rose to $3.90 billion from $633.42 million over the same period. Interest expense was $58.99 million in the quarter, against $1.29 million a year earlier. Cash and cash equivalents were $656.01 million, and current restricted cash was $1.72 billion.

Shares outstanding rose to 415.1 million from 405.0 million at year-end. The nine-month net loss was $350.25 million.

Why it matters

OptimistFi has argued that Cipher's value depends on turning scarce, grid-connected sites into long-term leases before leverage, construction risk and dilution eat the upside. The amendment strengthens the lease side of that argument. By OptimistFi's calculation, Barber Lake now makes up 54.8% of the $16.6 billion contracted portfolio. The portfolio carries a 17.3-year weighted average lease term.

Cipher said the extra capital earns a return. The tenant cost-sharing framework provides for partial rentalization, including a return on invested capital. The presentation puts potential rentalized lease revenue expansion at about $500 million. That depends on final construction costs, so the final rent could differ.

The other side is the balance sheet. With negative Adjusted EBITDA and doubled borrowings, the new rent has to arrive on schedule to justify the financing.

Grid approvals and gas

Cipher's development pipeline totals about 5.9 GW. Through ERCOT's Batch Zero process, it received a conditional base load classification for 1 GW at Colchis. It also received conditional studied load classifications, with Provisional Controllable Load Resource designations, for another 1.6 GW.

Cipher began developing lateral natural gas pipelines that could support up to 2.5 GW of on-site generation. It is targeting gas availability in 2027. It also acquired Horizon, a 70 MW Texas site expected to energize in 2029. Tenant talks continue on 270 MW of capacity available in 2027.

What's next

Final Batch Zero classifications are expected in December after a data center audit. A final base load classification for the full 1 GW at Colchis would turn the pipeline's largest grid item from conditional to final. A different result would weaken the pipeline side of the case.

Barber Lake data halls are due from Q4 2026 through Q1 2027. Cipher has yet to file its quarterly report on Form 10-Q for the period ended Sept. 30.

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