Cipher Digital Posts $31.6M Quarterly Profit as AI Data-Center Strategy Gains Traction

Cipher Digital reported a $31.6 million profit for the third quarter, even as its revenue dropped sharply amid a shift away from Bitcoin mining. The company’s earnings received a significant boost from a $127.2 million non-cash accounting gain related to warrants issued to Google.

Revenue declined 63% to $26.7 million from $71.7 million in the same quarter last year, according to a November 2 filing with the US Securities and Exchange Commission.

Bitcoin mining remained the company’s largest revenue source, contributing $20.8 million. However, that figure was 71% lower than a year earlier as Cipher continued reallocating computing capacity toward data-center services for artificial intelligence businesses.

Cipher’s reported net income translated into earnings of 8 cents per share. Without the impact of potential dilution from its warrants and other securities, the company’s business update showed a loss of 22 cents per share.

Black Pearl Facility Marks AI Business Milestone

Cipher’s expansion into data-center infrastructure began generating revenue in the latest quarter. The company collected $5.9 million after the first phase of its Black Pearl facility in Texas started operating in August.

The site previously supported Bitcoin mining, but Cipher stopped those operations in February to prepare the property for its new tenant.

The business transition has affected the company’s operating figures. Cipher recorded a $71.9 million operating loss, compared with a loss of $37.6 million during the same period last year.

Adjusted EBITDA also weakened considerably, falling from a positive $40.8 million to a negative $10 million.

Non-Cash Gain Lifts Bottom Line

The reported profit was primarily driven by a $127.2 million gain from the increased fair value of warrants issued to Google.

Google agreed to guarantee certain lease-payment obligations connected to Fluidstack, an artificial intelligence infrastructure provider. The resulting warrant revaluation boosted Cipher’s accounting income, although it did not generate additional cash for the company.

Cipher is also securing longer-term commitments as it develops its data-center business. Its recent decision to extend the Barber Lake lease to 20 years raised the site’s contracted revenue to approximately $9.1 billion.

The agreement reflects the company’s growing focus on AI infrastructure and long-duration leasing contracts as it reduces its dependence on Bitcoin mining. However, the latest results show that the transition is still accompanied by declining mining revenue and significant operating losses.