Skip to content
    CIFR
    Earnings call· Jun 2026(Q2 FY26)

    Cipher Digital Q2 FY26 earnings call CIFR

    Aug 4, 2026 Source

    Executive summary

    Cipher Digital Q2 FY26 — Early Delivery and Expanding Gigawatt Pipeline

    Cipher Digital delivered strong Q2 FY26 results, marked by the early delivery of Black Pearl capacity and successful project financing for Stingray. The company significantly expanded its development pipeline, particularly in Texas, and strengthened its balance sheet. While navigating delays in ERCOT's interconnection process, management remains confident in its strategic positioning and ability to secure favorable deals and execute on its gigawatt-scale HPC development.

    Highlights

    5

    • Achieved early delivery of Black Pearl data center capacity 2 months ahead of schedule, with rent commencement.

    • Successfully completed an $810 million bond offering for the Stingray data center at a 6% coupon, fully funding the project through substantial completion.

    • Expanded the development pipeline by 1.1 gigawatts of potential new capacity in Texas, including the new 900-megawatt Apollo site.

    • Total assets increased by $3.2 billion (75%) to $7.5 billion as of June 30, 2026, reflecting significant capital raised and deployed.

    • Maintained a strong unrestricted liquidity position of $870 million, with no cash borrowings on the revolving credit facility.

    Concerns

    3

    • Reported a GAAP net loss of $268 million ($0.65 per diluted share), an increase from $114 million ($0.28 per diluted share) in the prior quarter, primarily due to a $150.5 million noncash warrant remeasurement loss.

    • Experienced uncertainty and delays in ERCOT's Batch Zero interconnection process following Governor Abbott's letter, pushing back expected clarity on project approvals.

    • Compensation and benefits expenses rose $7.4 million sequentially, driven by higher stock-based compensation and continued investment in team expansion.

    Guidance & targets

    6
    CategoryTargetConfidence
    Barber Lake Phase 1 Rental Commencement
    October 2026
    medium materiality
    High
    Stingray Data Center Delivery
    first half of 2027
    medium materiality
    High
    Reveille and Ulysses Capacity Addition
    270 gross megawatts
    medium materiality
    High
    Colchis, Mikeska and McLennan Capacity Addition
    2 gigawatts
    high materiality
    High
    Future Capacity Addition (Milsing, Apollo, Barber Lake & Stingray Expansions)
    2.1 gigawatts
    high materiality
    Medium
    Equity Requirement
    do not expect to require additional equity
    high materiality
    High

    Segment performance

    10
    SegmentRevenueYoYQoQMargin
    Black Pearl
    Early delivery of initial capacity at tenant's request, with rent commencing in August. The rest of the site is progressing towards original deadlines.
    Initial capacity delivery: 2 months ahead of scheduleRent commencement: August 2026Phase 1 progress: Moving through mechanical, electrical, and plumbing fit-outPhase 2 progress: Advancing with concrete foundations, structural steel, and underground electrical workEquipment secured (Phase 1 & 2): 96%
    		————
    Barber Lake
    Phase 1 is on track for rental payments to begin in October, with the tenant already using the facility. All required equipment has been secured.
    Phase 1 critical IT megawatts: 168 MWRental payments expected: October 2026Tenant beneficial use: CommencedEquipment secured: 100%
    		————
    Stingray
    Construction is moving forward, with key milestones expected in Q3. The project is fully financed, and a significant portion of equipment is secured.
    Construction phase: Early stagesEarthwork, grading, pad preparation: Progressing on scheduleUnderground electrical work: CommencedConcrete foundations and steel erection expected: Q3 FY26Equipment secured: 75%Expected delivery: H1 2027
    		————
    Odessa (Bitcoin Mining)
    Revenue declined due to decommissioning of bitcoin mining at Black Pearl. No additional capital investment planned for this segment. Strong interest in converting to an HPC site, with early-stage discussions underway. PPA runs through July 2027, but HPC conversion would require renegotiation.
    Operating capacity: 207 MWTotal hash rate: 11.6 EH/sFleet efficiency: 17.2 J/THBitcoin mined (Q2 FY26): 346PPA expiration: July 2027
    		$25 million—down from $35 million in Q1—
    Reveille and Ulysses
    These sites are fully interconnection approved and are not part of ERCOT's batch process. Engaged in HPC hosting lease discussions with multiple tenants.
    Interconnection status: Fully approvedGross megawatts expected: 270 MWExpected addition: 2027
    		————
    Colchis, Mikeska and McLennan
    These sites are progressing through ERCOT's interconnection process, with strong conviction for inclusion in Batch Zero. Management is focused on securing the right deals.
    Potential gross capacity: 2 GWERCOT process status: On track through interconnection processDeposits funded: YesLand secured: YesStudies submitted: YesExpected addition: 2028 and 2029
    		————
    Apollo
    New site option acquired, providing significant future capacity in a strategic Texas location. Submitted for Batch Zero approval.
    Potential capacity: 900 MWLocation: Within 25 miles of San Antonio, TexasERCOT process status: Submitted as studied load in Batch ZeroExpected energization: 2030 and beyond
    		————
    Milsing
    Studies are still being finalized for this site, expected in Batch 1 of the ERCOT process.
    ERCOT process status: Expected in Batch 1Expected energization: 2030 and beyond
    		————
    Barber Lake Expansion
    Planned expansion expected to be included in Batch Zero of the ERCOT process.
    Capacity: 500 MWERCOT process status: Expected in Batch ZeroExpected energization: 2030 and beyond
    		————
    Stingray Expansion
    Planned expansion submitted as a studied load for Batch Zero approval.
    Capacity: 200 MWERCOT process status: Submitted as studied load in Batch ZeroExpected energization: 2030 and beyond
    		————

    Operational metrics

    26
    Noncash warrant remeasurement loss
    $150.5 million
    Q2 FY26

    Primary driver for the quarter-over-quarter increase in net loss.

    Noncash warrant remeasurement gain
    $43.6 million
    Q1 FY26

    Reported in the prior quarter, compared to a loss this quarter.

    Compensation and benefits expense increase
    $7.4 millionsequentially
    Q2 FY26

    Primarily reflecting higher stock-based compensation, associated employer payroll taxes, and continued investment in the team.

    Interest income
    $36 million
    Q2 FY26

    Reflecting higher average cash balances following Black Pearl and Stingray financings.

    Interest expense
    $67 millionup from $59 million last quarter
    Q2 FY26

    Reflecting a full quarter of interest on Black Pearl compute notes.

    Total assets
    $7.5 billionup $3.2 billion or roughly 75% from $4.3 billion as of December 31
    as of June 30, 2026

    Increase driven by capital raised and deployed.

    Restricted project cash
    $3.7 billion
    as of June 30, 2026

    Includes funds reserved for construction, DSRA, and interest during construction.

    Reserved for construction (restricted cash)
    $3.2 billion
    as of June 30, 2026

    Portion of restricted project cash allocated for construction.

    DSRA and interest during construction funding (restricted cash)
    $526 million
    as of June 30, 2026

    Portion of restricted project cash allocated for debt service reserve and interest during construction.

    Unrestricted cash
    $832 millionup $204 million
    as of June 30, 2026

    Helped by CapEx reimbursements from Black Pearl and Stingray financings.

    CapEx reimbursements
    $289 million
    Q2 FY26

    Embedded in the Black Pearl and Stingray financings, contributing to unrestricted cash increase.

    Total unrestricted liquidity
    $870 million
    as of June 30, 2026

    Excludes undrawn revolver availability, indicating a strong capital position.

    Property and equipment
    $2.13 billionrose $1.5 billion
    as of June 30, 2026

    Reflecting the build-out of the development platform.

    Construction in progress
    $1.68 billiongrew $1.4 billion
    as of June 30, 2026

    Reflecting simultaneous construction ramp at Barber Lake, Black Pearl, and Stingray.

    Accounts payable
    $289 millionfrom $40 million at year-end
    as of June 30, 2026

    Reflecting the simultaneous construction ramp and timing of project billings and vendor payments.

    Accrued expenses and other current liabilities
    $357 millionfrom $90 million at year-end
    as of June 30, 2026

    Reflecting the simultaneous construction ramp and timing of project billings and vendor payments.

    Project costs funded by Stingray bond
    98%
    Q2 FY26

    The $810 million bond offering funded nearly all project costs through substantial completion.

    Reimbursed project expenditures
    $56.7 million
    Q2 FY26

    Amount reimbursed to Cipher from the Stingray bond offering for previously funded project costs.

    Committed revolving credit facility
    $200 million
    current

    Supports working capital and LC issuance, with no cash borrowings to date.

    Unsecured convertible notes
    $1.47 billion
    current

    Total principal amount of corporate unsecured convertible notes.

    Aggregate principal amount of corporate and project debt outstanding
    just over $6 billion
    as of June 30, 2026

    Total debt across corporate and project levels.

    Odessa operating capacity
    207 megawatts
    Q2 FY26

    Capacity at the last operating bitcoin mining site.

    Odessa total hash rate
    11.6 exahash per second
    Q2 FY26

    Total hash rate generated at the Odessa site.

    Odessa fleet efficiency
    17.2 joules per terahash
    Q2 FY26

    Fleet efficiency at the Odessa site.

    Odessa bitcoin mined
    346
    Q2 FY26

    Number of bitcoin mined at Odessa during the quarter.

    Capital expenditure
    $400 million
    Q2 FY26

    Total CapEx spent in the quarter, with a portion allocated to the development pipeline.

    Industry KPIs

    2
    MetricValueDetails
    Capacity CAPEX$400 millionUSD
    Revenue growth$25 millionUSD

    Orderbook & backlog

    4
    Contracted revenuebillions of dollarsQ2 FY26

    Locked in over the next decade plus from three data center campuses.

    Average annualized net operating income$793 millionQ2 FY26

    Expected from 3 executed data center campus leases from October 2026 through September 2036.

    Future development pipeline capacity4.4 gigawattsQ2 FY26

    Represents expected future developments, providing years of growth visibility.

    Total portfolio capacity5.3 gigawattsQ2 FY26

    Spread across 11 sites, including operating, contracted, and future pipeline developments.

    Deals & partnerships

    1
    UndisclosedAcquired option for new data center sitevery, very, very cheap price

    Option acquired for a new site named Apollo, located within 25 miles of San Antonio, Texas. The site has been submitted as a studied load in Batch Zero under ERCOT's updated interconnection process. Cipher has no money at risk if the process changes.

    Capital programs

    1
    Stingray Data Center Financingclosed$810 million
    Funding: project level senior secured notes offering

    This third successful project financing priced at a 6% coupon, fully funding Stingray through substantial completion and reimbursing $56.7 million of previously funded project expenditures. It has a 5-non-call-2 structure to preserve flexibility.

    Risks & headwinds

    3
    ERCOT Interconnection Process DelaysNear-term

    Not going to get the answers this Friday that we were hoping for

    Mitigation: Cipher is well-positioned at the front of the process due to preparedness and compliance. The demand environment remains strong, increasing the value of near-term megawatts outside the batch process. Behind-the-meter generation solutions are becoming more valuable.

    Credit Market Widening SpreadsOngoing

    Widening spreads

    Mitigation: Existing committed funding is fixed-rate and medium-term. Cipher's project-level non-recourse financing model focuses on counterparty quality, development parameters, and contract risk to ensure attractive risk-adjusted returns for each project.

    Inflation on Labor and EquipmentOngoing

    Inflation across the board

    Mitigation: Current builds have contingencies for inflation. Future build budgets will incorporate higher costs. Some project structures pass this risk to the tenant through CapEx caps.

    What to watch in Q3 FY26

    5

    ERCOT Batch Zero Decision

    Next quarter
    CurrentDelayed by Governor Abbott's letter
    TargetClear direction on Batch Zero inclusion for Colchis, Mikeska, McLennan, Apollo, Stingray expansion, Barber Lake expansion

    Why it matters

    Determines the timeline and certainty for a significant portion of Cipher Digital's pipeline capacity in Texas.

    I'm hoping that we get clear direction in Texas in the near term.

    Q&A highlights

    8

    What are the initial reactions and implications for Cipher Digital following Governor Abbott's letter regarding the ERCOT interconnection process, especially concerning assets across different stages of approval?

    Tyler Page acknowledged the frustration of delayed clarity but emphasized that Cipher is well-positioned due to its preparedness, existing client interest, and the increased value of near-term megawatts outside the batch process. He also highlighted the growing importance and value of behind-the-meter generation solutions.

    “whatever the finalized process and time line looks like here, Cipher is going to be at the front of it, okay?”

    asked by Stephen Byrd · answered by Rodney Page

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Flywheel Effect

    Cipher Digital highlighted a 'flywheel' effect where successful lease signings, project financings, and construction milestones reinforce each other. This compounding momentum is accelerating the company's path to scale, with early delivery at Black Pearl strengthening credibility and successful financings improving capital market standing. This integrated approach allows for rapid execution and expansion in the hyperscale data center market.

    02

    Texas Focus and Pipeline Expansion

    Texas remains the strategic center of gravity for Cipher Digital's portfolio, a deliberate choice validated by its emergence as a prime region for large-scale AI infrastructure. The company added 1.1 gigawatts of potential new capacity in Texas this quarter, including the new 900-megawatt Apollo site and a 200-megawatt expansion at Stingray. This expansion positions Cipher well for future growth through site acquisition, existing site expansion, and behind-the-meter generation.

    03

    Operational Excellence and Early Delivery

    Cipher Digital demonstrated exceptional operational depth by delivering initial data center capacity at Black Pearl two months ahead of its original schedule at the tenant's request. This achievement, without compromising quality, strengthens the company's credibility with existing and prospective hyperscaler tenants. It also serves as a crucial proof point for construction execution, which is expected to benefit future financings and reinforce Cipher's differentiation in the market.

    04

    Capital Structure and Financing Discipline

    The company continues to employ a disciplined capital model, financing contracted projects at the project level to preserve corporate flexibility. The $810 million bond offering for the Stingray data center, priced at a 6% coupon, marked Cipher's third successful project financing. This transaction funded 98% of project costs and reimbursed $56.7 million of prior expenditures, showcasing improving capital efficiency and confidence in the company's model despite widening credit spreads.

    05

    ERCOT Interconnection Process Navigation

    Cipher Digital is actively navigating the evolving ERCOT interconnection process, with key sites like Colchis, Mikeska, and McLennan (totaling 2 gigawatts) on track for Batch Zero inclusion. Despite recent delays and uncertainty caused by Governor Abbott's letter, management expressed strong conviction in its sites' positioning. The company supports measures that differentiate serious developers, believing its preparedness will ensure it remains at the forefront of the process.

    06

    Strategic Talent Acquisition

    To support its ambitious growth trajectory, Cipher Digital made significant additions to its team, including Bill Blevins as Head of Grid Strategies (ex-ERCOT) and Mohammed Abouelella (ex-Google, 11 years data center design). These hires bring critical expertise in large load interconnections and hyperscale data center development, instrumental for executing gigawatts of HPC development and scaling the organization.

    AI-generated summary of the company’s earnings call. Not investment advice.