Google Backs Up Giant AI Deal! Cipher Mining Just Made a HUGE Move

Cipher Mining, a significant player in the Bitcoin mining and burgeoning AI hosting sectors, has substantially increased the size of its planned private offering of convertible senior notes. Initially announced at $800 million, the offering was upsized to $1.1 billion on Thursday. This move follows a landmark 10-year, $3 billion AI hosting agreement with Fluidstack, which received a crucial financial backstop from Google.

Key Details of the Convertible Notes Offering

The private offering consists of convertible senior notes due in 2031. These notes are structured to not bear regular interest and are convertible into shares, cash, or a combination of both under specific conditions.

• Upsized Amount: $1.1 billion (from the initially planned $800 million).
• Purchaser Option: Cipher granted the initial purchasers a 13-day option to buy an additional $200 million in notes.
• Net Proceeds Estimate: Cipher estimates net proceeds of approximately $1.08 billion, or $1.27 billion if the full option is exercised, after standard deductions.
• Eligibility: The offering is limited to qualified institutional buyers.

Funding Strategic Growth and the Fluidstack Deal

The proceeds from the offering are intended for various corporate purposes, notably to help fund the development of the Barber Lake facility in Texas. This facility is the focus of Cipher's recent, transformative agreement with AI cloud infrastructure firm Fluidstack.

The deal details underscore the magnitude of Cipher's strategic pivot into high-performance computing (HPC) and AI hosting:

• Agreement Value and Term: A 10-year, $3 billion hosting deal with Fluidstack.
• Google's Role: Google has agreed to backstop $1.4 billion of Fluidstack's lease obligations, securing a significant partnership. Furthermore, Google obtained warrants equal to a 5.4% equity stake in Cipher Mining, cementing its financial interest.
• Facility Capacity: The Barber Lake site is set to initially deliver 168 megawatts of critical IT load capacity.
• Renewal Potential: The agreement includes options for two five-year renewals, potentially increasing the total value of the deal to approximately $7 billion.

Cipher CEO Tyler Page expressed enthusiasm about the venture, stating, "We are thrilled to be working with Fluidstack to develop HPC data centers, and we look forward to welcoming Google as an investor in Cipher. This transformative transaction reinforces our HPC momentum..."

Market Reaction

Cipher Mining, recognized as the fifth-largest public bitcoin miner of the Bitcoin mining world by market cap, experienced volatility following the announcement. Its shares initially surged by over 20% in pre-market trading. However, the gains were not sustained, and the stock ultimately slumped 17.5% by the day's close, consistent with a broader market selloff.