Cipher Mining Inc., a key player in the industrial-scale data center industry, has announced a significant 10-year high-performance computing colocation agreement with Fluidstack, a premier AI cloud platform. This agreement guarantees approximately $3 billion in contracted revenue over the decade. Furthermore, if Fluidstack chooses to exercise the two five-year extension options included in the deal, the total contract value could rise to $7 billion.
As part of the agreement, Cipher will deliver 168 MW of critical IT load at its extensive Barber Lake site in Colorado City, Texas, which boasts potential for a 500 MW capacity expansion. This site, spread over 587 acres, is positioned to cater to the next generation of computing demands.
The financial backbone of this transaction is strongly supported by Google, which is backing $1.4 billion of Fluidstack’s obligations. In return, Google is set to receive warrants amounting to an approximately 5.4% equity stake in Cipher, reinforcing its confidence in the project.
Tyler Page, CEO of Cipher, expressed enthusiasm about the partnership with Fluidstack and the investment from Google, highlighting the transformational potential of the project. This agreement underlines Cipher’s strengthening position in the rapidly growing high-performance computing space.
Fluidstack’s Co-Founder and President, César Maklary, echoed this optimism, stating that their collaboration with Cipher aims to accelerate the development of crucial infrastructure required by leading AI companies.
This development is a testament to Cipher’s robust pipeline, which includes a potential 2.4 GW capacity for high-performance computing, positioning the company as a major AI data center developer.
In terms of financial mechanics, the agreement is structured as a modified gross lease with annual escalators and an expected Net Operating Income margin between 80% to 85%. Estimated project costs are between $9 million and $11 million per MW of critical IT load.
Investment and advisory roles were covered by major names, such as Morgan Stanley & Co. LLC, and law firms Davis Polk & Wardwell LLP and Cooley LLP.
Cipher Mining continues to focus on the development and operation of data centers, both for Bitcoin mining and high-performance computing hosting, striving to lead in innovation across these sectors.