Cipher Digital Reports $31.6M Profit Despite Sharp Drop in Bitcoin Mining Revenue
Cipher Digital posted a $31.6 million net profit for the third quarter, even as its revenue declined 63% year over year. The former Bitcoin mining company benefited from a substantial accounting gain linked to warrants issued to Google as it continues shifting its business toward AI-focused data centers.
Revenue totaled $26.7 million for the quarter, down from $71.7 million a year earlier, according to a November 2 filing with the US Securities and Exchange Commission. Bitcoin mining accounted for $20.8 million of the latest figure, marking a 71% decrease as Cipher redirected computing capacity toward data-center leasing for artificial intelligence companies.
The company reported earnings of 8 cents per share, supported by a $127 million non-cash gain from changes in the fair value of its warrants. However, when the potential dilution from those warrants and other securities is taken into account, Cipher’s results translate into a loss of 22 cents per share, according to its SEC business update.
AI Data Centers Begin Generating Revenue
Cipher’s transition beyond Bitcoin mining started producing revenue during the third quarter. Its data-center business generated $5.9 million after the first phase of the Black Pearl facility in Texas became operational in August.
The company had stopped mining Bitcoin at the location in February to prepare the site for its new tenant.
However, the shift has weighed on its operating performance. Cipher recorded an operating loss of $71.9 million, compared with a $37.6 million loss in the corresponding period last year.
Adjusted EBITDA also deteriorated, moving to a loss of $10 million from positive earnings of $40.8 million a year earlier.
Google-Linked Accounting Gain Boosts Reported Earnings
The main contributor to Cipher’s quarterly profit was a $127.2 million non-cash gain from the revaluation of warrants issued to Google.
Google agreed to backstop certain lease-payment obligations connected to Fluidstack, an artificial intelligence infrastructure provider. The resulting accounting adjustment increased Cipher’s reported income but did not provide the company with additional cash.
Despite the decline in its traditional mining business, Cipher is targeting long-term growth through AI infrastructure agreements. The company recently extended its Barber Lake data-center lease to 20 years, increasing the site’s contracted revenue to approximately $9.1 billion.
The development highlights Cipher’s ongoing effort to replace part of its Bitcoin mining operations with long-term data-center leasing, although the financial benefits of that strategy are still emerging.
