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Cipher Digital (CIFR) has signed data center tenants to about $16.6 billion of rent over the next two decades. Its stock still lost about 71% over the past year, while the S&P 500 returned about 15%. The shares fell 58.1% in the past month alone, including 20% on November 4. That is the tension for a holder: the leases run for years, but Cipher is building the sites now and losing money as it does. So what are buyers paying for Cipher Digital today?
Cipher Digital Trades Far Above S&P 500 On Sales
Buyers pay 18.5 times Cipher’s sales over the past twelve months, against 3.2 times for the S&P 500. Those sales hold just one quarter of rent from a data center tenant, because Cipher booked its first lease revenue in the third quarter, at its Black Pearl site. Its bitcoin mining is down to one operating site, Odessa. Cipher’s total third-quarter revenue was $26.7 million, down 62.8% from a year earlier.
Cipher also loses money on its operations. Its operating loss over the past twelve months came to 299% of its revenue, while the S&P 500 earned an operating margin of 18.7%. With a net loss over that period, a price-to-earnings ratio for Cipher is not meaningful. Buyers also take on Cipher’s debt, which equals 208.3% of the stock’s market value, against 19.2% for the S&P 500. While that ratio uses debt as of September 30, management put total debt at about $6.7 billion on the November 2 call. On that figure, debt is about 248% of what Cipher is worth.
What Did Cipher Digital Pay For A Longer Lease?
Cipher agreed to absorb about $359 million of the $409 million in change orders its Barber Lake tenant made during construction, costs the tenant would have reimbursed under the original lease. In return, the tenant added 10 years to the lease, lifting contracted revenue at the site to about $9.1 billion, management said on the November 2, 2026 call.
Management said the extra rent brought the project’s average yield on cost, its yearly income measured against what the project cost to build, back to about 15%. Without the deal, the reimbursed change orders, along with wider changes in scope and inflation, would have cut that yield to about 13%. Under the deal, Cipher and the tenant split higher building costs equally, and Cipher recovers the tenant’s half through rent. To fund its investment in the deal, Cipher used part of the proceeds of $850 million of zero-interest convertible notes due 2032, sold in October.
