Cipher Mining (NASDAQ: CIFR) announced a landmark 10-year colocation agreement with AI cloud platform Fluidstack worth roughly $3 billion in contracted revenue.
The agreement will see Cipher deliver 168 megawatts (MW) of critical IT load at its Barber Lake site in Colorado City, Texas by September 2026, with capacity expandable up to 500 MW. Including two optional five-year extensions, the deal could generate up to $7 billion in total revenue. Cipher said the project will operate at an estimated 80% to 85% NOI margin.
“This transformative transaction reinforces our HPC momentum as we continue to attract attention for our large and growing pipeline of sites,” Cipher CEO Tyler Page said.
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“Together with Cipher Mining, we’re committed to accelerating the development of critical infrastructure on which frontier AI companies depend,” added Fluidstack president César Maklary.
The deal positions Cipher as a major new entrant in the AI data center race, with a pipeline of about 2.4 gigawatts (GW) of potential capacity.
Interestingly, Cipher Mining shares closed at $14.14 on Sept. 23 but slid over 4% in premarket trading today despite announcing the deal. However, the stock is still up nearly 12% in the past five days, reflecting optimism around its AI expansion.
For novice investors, it is worth noting that Cipher Mining, best known as a Bitcoin mining and data center operator, has signed a 10-year hosting contract with Fluidstack, a cloud company that builds high-performance AI infrastructure. Hosting, in this context, means Cipher provides the physical data centers, power, and cooling, while Fluidstack brings in its own customers and workloads (AI firms that need compute).
The deal guarantees Cipher about $3 billion in revenue over a decade, with the chance to extend that to $7 billion if the two five-year extensions are used.
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Google is not directly paying Cipher. Instead, Google is “backstopping” $1.4 billion of Fluidstack’s obligations. That means if Fluidstack cannot meet its lease payments, Google is on the hook. This makes banks and lenders comfortable financing the project, since a tech giant is effectively guaranteeing a big part of the rent.
In exchange, Google receives warrants, the right to buy about 24 million Cipher shares, equal to a 5.4% stake. So yes, Google becomes a minority investor in Cipher, but only if it exercises the warrants.
