Cipher Digital reports third quarter 2026 results
Analysis
Good news: Cipher recognized its first HPC lease revenue and expanded the Barber Lake lease to a 20-year term, lifting contracted revenue there by $5.2 billion to $9.1 billion, while also gaining a conditional ERCOT base load classification for Colchis and growing its development pipeline to roughly 5.9 GW. The $31.6 million GAAP net income was driven mainly by a non-cash $127.2 million warrant fair-value gain, and Adjusted EBITDA remained negative (-$10.0 million), so underlying operating profitability has not yet caught up with the HPC buildout.
Key points
- Q3 2026 revenue of $26.7 million and Adjusted EBITDA of negative $10.0 million, as the company recognized its first HPC lease revenue following rent commencement at Black Pearl.
- Net income available to common stockholders was $31.6 million ($0.08 basic, $(0.22) diluted per share), driven largely by a $127.2 million gain on the fair value of warrant liabilities.
- Expanded the Barber Lake lease to a 20-year term with a leading AI lab, lifting total contracted revenue at the site to approximately $9.1 billion (previously announced in September).
- Delivered first capacity at Black Pearl, with 18 MW of critical IT capacity handed to the tenant to date; Stingray shell construction remains on track for completion in Q4 2026.
- Received ERCOT Batch Zero conditional classifications, including a base load designation for 1 GW at Colchis, with final classifications expected in December 2026.
- Began development of lateral natural gas pipelines to support up to 2.5 GW of on-site generation, and acquired Horizon, a 70 MW Texas site expected to energize in 2029.
- Development pipeline now totals approximately 5.9 GW across 11 sites.
- Completed the previously announced $850 million convertible notes offering (0.000% due 2032) to fund the Barber Lake lease expansion, with capped calls raising the effective conversion price to $28.35/share; equitized $165.9 million of 2030 convertible notes.
Site updates (8)
| Site | Status | Active | In build | Theoretical |
|---|---|---|---|---|
ColchisTexas Received conditional base load classification from ERCOT's Batch Zero process (1 GW); final classification expected December 2026. In discussions for an HPC hosting lease; target energization 2028. | Disclosed | — | — | 1,000 MWgross |
UlyssesCotulla, OH Interconnection approved for 200 gross MW; substation development initiated. In discussions for an HPC hosting lease; target energization Q4 2027. | Disclosed | — | — | 200 MWgross |
ReveilleTexas ERCOT interconnection approved for 70 gross MW; substation development initiated. In discussions for an HPC hosting lease; target energization Q3 2027. | Disclosed | — | — | 70 MWgross |
OdessaOdessa, TX ~296 BTC mined in Q3 2026 on a fixed-price PPA; ~11.6 EH/s total hashrate, ~17.2 J/TH fleet efficiency, ~$0.028/kWh power cost. Active discussions on HPC monetization continue. | Active | — | — | 207 MWgross |
StingrayAndrews County, TX Steel erection progressing on schedule; shell construction expected complete in Q4 2026. Included in ERCOT's May 2026 Quarterly Stability Assessment, qualifying as base load with capacity not subject to further study or reallocation. | Under construction | — | — | — |
Black PearlWink, TX First data center capacity delivered in August, ahead of schedule; 18 MW of critical IT capacity delivered to the tenant to date. Remaining Phase I data halls in MEP fit-out; Phase II foundations and building steel complete, electrical work in progress. ~256 additional acres acquired for expansion. | ActiveUnder construction | 18 MWIT | — | — |
Barber LakeColorado City, TX First HPC capacity expected at Barber Lake in Q4 2026; construction on track to meet amended delivery milestones; tenant deploying compute throughout the facility; ~685 additional acres acquired for expansion. | Under construction | — | — | — |
| Disclosed | — | — | 70 MWgross |