Last month, TeraWulf (WULF) announced that it had signed two 10-year high-performance computing (HPC) colocation contracts with AI cloud platform Fluidstack, with Google (GOOG) agreeing to backtop $1.8 billion of Fluidstack’s lease obligations to support project-related debt financing.
In return for Google’s funding, it was granted warrants to acquire approximately 41 million shares of TeraWulf common stock, giving the tech giant an 8% stake in the bitcoin mining and data center infrastructure company.
It turns out this wasn't a one-off deal for Google.
Cipher Mining (CIFR), which develops and owns industrial-scale data centers for bitcoin mining and high-performance computing (HPC) hosting, said on Thursday that it has signed its own 10-year HPC contract with Fluidstack worth up to $3 billion.
The agreement includes two five-year extension options. If Fluidstack exercises these options, it would bring the total revenue for Cipher up to $7 billion.
And just as it did with TeraWulf’s deal, Google will backstop $1.4 billion of Fluidstack’s lease obligations to support project-related debt financing, furthering its push into the AI infrastructure market.
In exchange for the financing, Google will receive warrants to acquire approximately 24 million shares of Cipher common stock, giving it an approximately 5.4% ownership stake.
HPC expected to fuel future growth
The agreement calls for Cipher to deliver 168 MW of critical IT load, supported by a maximum of 244 MW of gross capacity at its Barber Lake site in Colorado City, Texas.
Cipher said that its data center has the potential for 500 MW capacity expansion – and it owns 587 acres of surrounding land to support further growth.
The company will retain full ownership of the project and intends to seek further funding through the capital markets.
“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,” Cipher CEO Tyler Page said in a statement. “This transformative transaction reinforces our HPC momentum as we continue to attract attention for our large and growing pipeline of sites.”
Page noted that the company sees its deal with Fluidstack as “the first of several in the HPC space as we continue to scale our capabilities and strengthen our position in this rapidly growing sector.”
Cipher announced in August a “new strategic plan” with the Phase II buildout for its Black Pearl site in Texas that “bridges the needs of both AI compute and hydro-bitcoin mining.” However, the company’s long-term strategic focus for the site seems to be more anchored toward HPC customers than bitcoin mining.
“In the long run, we expect this site to be fully leased by HPC tenants,” Page said. “By taking this approach to building infrastructure today, we will be prepared to sign tenants when they are ready, while also preserving our flexibility to use the space for bitcoin mining in the near term, if preferred.”
Although Cipher’s stock gained as much as 20% during the morning on news of the deal, it ended up plummeting on Thursday to close down 17.5%. It’s unclear what drove the precipitous drop.
Arete analysts launched coverage of three bitcoin miners on Wednesday – Cipher, IREN (IREN) and Riot Platforms (RIOT) – giving all of them a Buy rating. Arete cited the demand for AI computing services as offering further revenue drivers for all three.
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