Cipher Mining Stock Soars 30%. Amazon Is Boosting It.

Bitcoin miners are increasingly transforming their operations into AI data centers. (Courtesy Meta)

Key Points

• Cipher Mining secured a $5.5 billion, 15-year lease agreement with Amazon Web Services for 300 megawatts of AI computing capacity.
• Cipher Mining shares rose 24% in premarket trading following the Amazon deal announcement.
• Cipher Mining reported a third-quarter net loss of $3 million on $72 million in revenue.

Cipher Mining stock took off on Monday on an artificial-intelligence computing deal with Amazon.com that overshadowed the Bitcoin mining company’s earnings.

Cipher said it would provide space and power for AI workloads to Amazon Web Services, Amazon’s cloud-computing business, in a $5.5 billion, 15-year lease agreement. It covers 300 megawatts of computing capacity, to be delivered next year. Rent payments begin in August.

Cipher shares were up 31% at $24.35 in early trading.

Cryptocurrency mining companies are increasingly renting out their infrastructure to meet booming demand for AI computing. Fellow crypto miner IREN was up 20% on Monday after announcing an AI computing deal with Microsoft.

In addition to the Amazon deal, Cipher said it is participating in a joint venture to develop a one-gigawatt site in West Texas suited for development of a data center. Cipher is expected to provide the majority of the financing and assume 95% ownership. It didn’t identify its partners.

Cipher shares have already more than quadrupled this year so far through to Friday’s close. Before the Amazon announcement, its biggest move in AI computing was a 10-year hosting agreement with Fluidstack, an AI cloud-platform backed by Alphabet’s Google. As part of that deal, Google received warrants to acquire approximately 24 million shares of Cipher.

“After ~18 months of waiting for hyperscalers to come into the arena, they are now here,” wrote Cantor analyst Brett Knoblauch. “When combined with Cipher having one of the largest power pipelines, we would not be surprised to see Cipher continue to announce additional deals.”

Knoblauch raised his target price on Cipher to $26 from $16; his rating is Overweight.

Excitement over future AI business has largely reduced Cipher’s existing operations to a sideshow. For the third quarter, Cipher reported a net loss of $3 million on revenue of $72 million, driven by Bitcoin mining.

Write to Adam Clark at adam.clark@barrons.com