Cipher Mining - Q4 2025

Transcript

Operator (participant)

day, and welcome to the Fourth Quarter and Full Year 2025 Business Update Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question, please press star one one. As a reminder, this call may be recorded. I would now like to turn the call over to Courtney Knight, Head of Investor Relations. Please go ahead.

Courtney Knight (Head of Investor Relations)

Good morning, thank you for joining us on this conference call to address Cipher Digital's business update for the fourth quarter and full year 2025. Joining me on the call today are Tyler Page, Chief Executive Officer, and Gregory Mumford, Chief Financial Officer. Please note that our press release and presentation can be found on the investor relations section of the company's website, where this conference call will also be simultaneously webcast. Please also note that this conference call is the property of Cipher Digital, and any taping or other reproduction is expressly prohibited without prior consent. Before we start, I'd like to remind you that the following discussion, as well as our press release and presentation, contain forward-looking statements.

These statements include, but are not limited to, Cipher's financial outlook, business plans and objectives, and other future events and developments, including statements about the market potential of our business operations, potential competition, and our goals and strategies. Forward-looking statements and risks in this conference call, including responses to your questions, are based on current expectations as of today, and Cipher assumes no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law. Additionally, the following discussion may contain non-GAAP financial measures. We may use non-GAAP measures to describe the way in which we manage and operate our business. We reconcile non-GAAP measures to the most directly comparable GAAP measures, and you are encouraged to examine those reconciliations, which are filed at the end of our earnings release issued earlier this morning.

I will now turn the call over to our CEO, Tyler Page. Tyler?

Tyler Page (CEO)

Thanks, Courtney. Good morning, everyone, and thank you for joining us today. I'm Tyler Page, CEO of Cipher Digital, and I'm pleased to welcome you to our fourth quarter and full year 2025 business update call. 2025 was a defining year for Cipher. Over the past 12 months, we completed a deliberate and disciplined transformation of the company. From a Bitcoin miner with sourcing and development expertise into a digital infrastructure company, purpose-built to deliver hyperscale compute. During the year, we secured long-term leases with world-class hyperscalers, executed large-scale project financings, and advanced the development and construction of multiple data center projects. We also took decisive steps to simplify the business and focus our capital, our team, and our future squarely on high-performance computing. Today's call reflects that evolution. We're proud to announce today that we are formally rebranding the company as Cipher Digital.

This rebrand reflects what the business has become. This is not an aspirational shift, but a recognition of the work already done and the work we will continue to do. This rebrand represents far more than a new name or visual identity. It marks a complete transition to a business centered on stable, long-duration cash flows and long-term leases with best-in-class hyperscalers. Today's Cipher is a developer of next-generation digital infrastructure, purpose-built to deliver power-dense, large-scale facilities to exacting hyperscaler specifications. While Bitcoin mining played a foundational role in building our power expertise and development capabilities, our identity today is centered on powering next-generation compute at scale. We are taking steps to simplify the company and reallocate capital away from non-core activities, which I will discuss in further depth later on the call.

In addition, we are deepening our bench across construction, engineering, operations, and corporate leadership to ensure our organization is fully aligned with this next chapter. The Cipher Digital brand captures who we are today, a company focused on disciplined execution, precision at pace, and performance proven through delivery. Importantly, this evolution is not a reinvention. It is a natural extension of what we already do exceptionally well. Large scale, energy-intensive infrastructure delivered with speed to market, disciplined capital allocation, and operational rigor. The same capabilities that built our platform are precisely what hyperscalers require today. When we say we are built for hyperscale, we mean more than just building for hyperscalers. We mean that looking forward, Cipher Digital itself is built for hyperscale. We have built a spectacular foundation for growth at speed in our evolving world.

This strategic evolution is the direct result of our team's disciplined execution over the past six months. Slide five shows just how manic the pace of leasing and financing has been over the last six months. Each sequential step on our path has strengthened our relationships, enhanced our credibility, and positioned us for what comes next. We believed, and have now proven, that our first lease at Barber Lake was just the beginning, and have since signed a second lease at Black Pearl and a Barber Lake lease upsize. As important as our success on the leasing side has been, equally valuable has been our transformational capital raising. Most recently, we completed a pioneering and highly successful bond offering for $2 billion.

This offering was met with exceptional investor demand, which allowed us to price it at a yield 1 full percent lower than our previous bond offering at 6.125%, a clear validation of our strategy and a vote of confidence from conservative bond investors in our ability to execute. This issuance secured all the remaining CapEx needed for the build-out of Black Pearl, and it included a reimbursement of approximately $233 million to Cipher for our prior equity contributions to the site. Greg will elaborate on all of our financings in his remarks and provide more detail on how we think about financing our growth going forward. While we build data centers, sign new leases, and complete financings, our outstanding origination team still keeps coming to work every day.

In addition to all of our other activity this quarter, we acquired Ulysses, a 200 MW site in Ohio, with all necessary interconnection approvals to participate in the PJM market. The site is expected to energize in 2027, marks Cipher's first acquisition in PJM, and is well suited for HPC applications. The Ulysses campus takes its name from Ohio native, Ulysses S. Grant, a leader defined by operational discipline, moving the right resources to the right place on time through any conditions. That's the mindset behind our hopes for the future of this site and others in our pipeline. Power forward data center campuses, engineered for reliability today and adaptability tomorrow, with modular designs that can absorb multiple upgrade cycles as compute technology evolves. As I discussed earlier, and as demonstrated by our incredible quarter of momentum, Cipher's rebrand reflects more than a change in name.

It marks a fundamental evolution in our business model. We are now squarely focused on securing durable, long-term cash flows through contracted leases with the world's leading hyperscalers. This model prioritizes visibility, stability, and scale. To date, we've executed two data center campus leases representing 600 MW of gross capacity and approximately $9.3 billion in contracted revenue. These agreements carry initial terms of 10-15 years, with multiple extension options, and translate to approximately $669 million of average annualized NOI over the next 10 years. Our 3.4 GW pipeline, combined with a best-in-class team, positions us to continue to execute on this new business model by securing additional leases across sites. Cipher's future trajectory on slide seven speaks for itself.

Beginning this year, our initial leases commence with rent payments, and from there, you can see a clear and steady ramp in cash flow as additional capacity comes online. Our leases create visible, non-volatile, contractual growth over the balance of the decade. Based solely on the contracts currently executed, we expect our leases to generate $669 million of average annualized net operating income from October 2026 to September 2036. By 2035, we project approximately $754 million in annual net operating income. What's important here is not just the magnitude of growth, but the predictability. These are contracted revenues tied to mission-critical infrastructure with multiyear lease terms and extension options. That level of visibility fundamentally changes the entire profile of this company.

Demand for power-dense, hyperscale infrastructure continues to outpace supply, and we are confident in our ability to execute additional leases for our pipeline sites, positioning us to extend this trajectory much further. We are proud of the foundation we built in Bitcoin mining, which shaped our capabilities. As we look ahead, our direction is clear. We are building a business defined by durable, stable, long-term contracted cash flows. Therefore, we are taking steps to reposition the company away from Bitcoin mining as we continue to transition towards a pure-play digital infrastructure platform. With that focus in mind, last week, we sold our 340 MW joint venture sites, Alborz, Bear, and Chief, where we held 49% interests. Our interests in the sites were acquired in an all-stock transaction by Canaan, a highly reputable manufacturer of industry-leading Bitcoin miners.

Given our desire for no further capital investment into Bitcoin mining, and given Canaan's role as the supplier of mining rigs to the JV sites, Canaan is the most natural buyer to acquire our equity interests. In Bitcoin mining, vertical integration of rig manufacturer and site operator is the way of the future. We believe Canaan's unmatched machine quality, vertical integration, technology leadership, and expanding energy platform make them the right steward for the next phase of growth at the Alborz, Bear, and Chief sites. By receiving Canaan equity in this transaction, we retain exposure to the potential upside of Bitcoin mining through a fully vertically integrated platform. We see significant opportunity ahead for Canaan, who has consistently delivered the best-performing rigs in our fleet.

We also know the team well and have strong conviction in their ability to execute, scale the platform, and drive sustained growth and improved valuation over time. This transaction allows us to simplify our structure, accelerate our strategic transition, and maintain optimized exposure to the industry in a capital-light way. Given our pivot away from Bitcoin mining going forward, it makes less sense to manage a Bitcoin inventory as part of our corporate strategy. In the fourth quarter, with higher Bitcoin prices, we liquidated a substantial portion of our treasury to reinvest in the growth of the HPC hosting business. Due to recent Bitcoin price action, we have been much less aggressive in our selling. We'll continue to manage the sale of the remaining Bitcoin and inventory over the course of the next year. As of February 20th, we held approximately 1,166 Bitcoin.

We plan to opportunistically reduce that position over time and reinvest the proceeds into the HPC hosting business, likely exiting entirely by the end of 2026 as we redeploy capital into contracted infrastructure opportunities. All Bitcoin mining rigs from Black Pearl have been sold, marked for sale, or redeployed to our last remaining Bitcoin mining site at Odessa. Following the sale of our JVs and the retrofitted Black Pearl, our hash rate will be approximately 11.6 exahash per second going forward, driven by our Odessa site. At Odessa, we continue to benefit from our unique fixed price PPA, which has positioned us among the lowest cost producers of Bitcoin in the industry. We are proud of the site's performance and expect it to continue generating meaningful cash flow as our data center leases ramp.

We maintain the flexibility to continue mining at Odessa through the expiration of the PPA in July 2027, while continuing to evaluate a potential conversion of the site to support HPC workloads. Let's now turn to a review of our current portfolio. Slide 10 provides a high-level transaction overview of our lease at Barber Lake, highlighting contracted megawatts and the key economic terms across our first lease. Now that a lease is signed and we've secured financing for the project, the next phase of value creation at Barber Lake is driven by disciplined construction, on-time delivery, and converting contracted capacity into cash flows. Construction at the site is well underway. Concrete foundations have been poured, structural steel is going vertical, interior, mechanical, electrical, and plumbing work has commenced, and utility work continues to progress.

All current design milestones have been achieved, and we have received consistently positive tenant feedback, an important validation as we continue toward full build-out. We have secured approximately 95% of long lead equipment, with delivery schedules aligned to support our completion targets. Additionally, we have secured 100% of the necessary workforce across all critical construction work streams through the duration of the project. On any given workday, there are over 400 personnel on-site, driving progress safely and efficiently. Importantly, the project remains on schedule and is tracking to meet both early access and substantial completion milestones under our contractual timelines. This is where our execution culture truly differentiates us, translating signed leases into delivered infrastructure on time and on budget. We will continue to update the market as we hit key milestones, but we are very pleased with the progress to date.

Slide 12 provides a high-level transaction overview of the key economic terms of our triple net lease with AWS at Black Pearl. Similar to Barber Lake, now that the lease is signed and financing is completed, we are squarely focused on delivery. At Black Pearl, data center development is on track, with engineering, procurement, and construction activities underway. The transition of the site is progressing as planned, with Bitcoin mining decommissioning being completed this week. Importantly, approximately 85% of the infrastructure currently deployed at Black Pearl is expected to be repurposed for the AWS lease. This reuse of existing infrastructure meaningfully reduces execution risk, improves capital efficiency, and accelerates our path to delivery. Overall, Black Pearl reflects the same disciplined execution framework we are applying across the portfolio, locking in supply chain visibility early and advancing toward on-time, on-budget delivery.

Turning to slide 14, Odessa is our last operating Bitcoin mining site. As a reminder, Odessa's fixed price power purchase agreement at approximately $0.028 per kWh continues to position Cipher among the lowest cost Bitcoin producers in the industry. This structural cost advantage, combined with disciplined operations, enables us to generate meaningful cash flow moving forward should we elect to continue mining through the expiration of the PPA in July 2027. Today, we are operating 207 MW of capacity, supporting approximately 11.6 exahash per second of hash rate. Fleet efficiency remains strong at approximately 17.2 joules per terahash. Let's now shift to an update on our development portfolio. Given the recent headlines surrounding ERCOT, we want to take a moment to provide our perspective and address any implications for our development pipeline.

We'll also highlight several sites where we have the highest degree of confidence in securing interconnection approvals based on our ongoing dialogue with ERCOT and the relevant transmission and distribution service providers. This past quarter, we strengthened our regulatory expertise by hiring Lee Bratcher as Head of Policy and Government Affairs. Lee brings to Cipher extensive industry experience, a deep understanding of the Texas and Federal energy regulatory landscape, and strong relationships across ERCOT and the TDSPs. With his extensive understanding of ERCOT's processes and evolving rulemaking, we have a great degree of confidence in our ability to navigate this environment effectively. As a reminder, Cipher welcomes all legislative efforts to clean up the lengthening interconnect queue, and we have been consistent that any new rules requiring posting of deposits and acceleration of serious developers is a good thing for us.

The recent developments represent a positive step forward for the data center industry in Texas. Earlier this month, ERCOT discussed the potential implementation of a batch study process, and that the existing development and stakeholder process is expected to last until June 2026. While the final batch process remains to be determined, we believe we have made enough significant progress at certain development sites to be included in early batches with firm loads. We expect these sites to remain on track for the energizations we have previously communicated. Specifically, the sites on slide 16 are either already interconnection approved or in the final stages of the current approval process. At the top of the slide is Stingray, our 250-acre campus in Andrews, Texas. The site is fully interconnection approved for 100 MW and remains on track to energize in the fourth quarter of this year.

Substation development is already underway, and with interconnection secured, the load is firm. Given the site's approval status, timeline to power, and quality of location, we are increasingly confident in securing a lease in the near term. This confidence stems from having engaged with a broad range of interested tenants and having now identified a preferred partner with whom we are in advanced lease negotiations. As lease pricing continues to move in our favor alongside growing demand, we expect lease economics here to be among the most favorable we've achieved to date. While the site has 100 MW of gross capacity today, we are actively exploring behind-the-meter solutions to expand capacity over time, not only at this location, but across our broader portfolio and pipeline.

Reveille in Cotulla, Texas, is also fully approved for 70 MW and remains on track to energize in the third quarter of 2027. We have already initiated substation development. The project falls below the megawatt threshold that would trigger the batch study process, and its interconnection is already approved. Ulysses, our recently acquired 200 MW site in Ohio, has all necessary approvals to participate in the PJM market, not ERCOT, and is expected to energize in 2027. We are in advanced discussions with potential tenants regarding an HPC lease at that location. Looking to the rest of the pipeline in ERCOT, the McLennan site has all studies approved, deposits have been funded with the TDSP, and the land is secured. The site is undergoing the final interconnection approval processes.

Based on this information, we expect the energization, timeline, and capacity of this site to be unaffected by any new batch processes. For each of Mikeska and Colchis, studies have been submitted, all requested deposits have been funded, and the land has been secured. This makes them likely candidates for an early batch as well. We continue to push all remaining workflows forward and fund all deposits as soon as possible to ensure that the energization timelines are preserved and the loads are firm. This slide provides an overview of our current operating and energized capacity, as well as outlines our full future pipeline. We are very pleased with the composition of the portfolio today. We also remain confident in both our regulatory positioning and the strength of our roughly 3.4 GW development pipeline, all being prioritized for HPC.

Our development pipeline is the result of years of sourcing, permitting, and infrastructure work, and it positions us well to serve the increasing demand we are seeing. We believe the value of this pipeline lies not only in megawatts, but in the credibility Cipher brings to those megawatts, both in our ability to sign leases with the best tenants in the world and in our ability to construct and operate data centers. Our conviction has only strengthened since last quarter. We believe that Cipher is among the best-positioned companies in the world to seize the near-term opportunities emerging from the growing power shortfall. While we've made significant progress to date, we are still in the early innings. We expect our pipeline to expand, additional leases to be executed, and Cipher Digital to further solidify its position as a global leader in data center development and operations.

I'll now turn the call over to our CFO, Gregory Mumford, who will walk through our financing activities, capital strategy, and the financial results in more detail.

Gregory Mumford (CFO)

Thank you, Tyler. Good morning, everyone. Over the past year, Cipher took significant steps to reshape the financial profile of the company. We materially strengthened the financial foundation of the business by securing long-duration, contracted cash flows in HPC hosting, by expanding relationships with investment-grade counterparties, and by broadening our access to capital. Today, we are building a platform designed to support scalable growth while minimizing dilution and maintaining balance sheet discipline. During the fourth quarter, we upsized our lease with Fluidstack, supported by Google. We executed a long-term lease agreement with AWS, and we completed two high-yield bond offerings that fully funded Barber Lake through substantial completion. Subsequent to quarter end, we successfully financed the development at Black Pearl. Importantly, each successive transaction was completed on improved economic terms, reflecting a strengthening credit profile and increasing investor confidence in our long-term strategy.

Before turning to our financial results, I'd like to highlight our project-level financings, which were central to de-risking execution across Barber Lake and Black Pearl. Collectively, these transactions secured long-term, fixed-rate, non-recourse financing that fully funds each project through substantial completion. As a result, we have eliminated construction financing uncertainty, isolated project-specific risks, and reduced reliance on near-term capital markets access. This disciplined financing model creates a repeatable framework for scaling development while protecting corporate liquidity. In our first issuance in November, we raised $1.4 billion by selling five-year senior secured notes at 7.125% to fund the development at Barber Lake. The transaction was met with strong institutional demand, resulting in a multiple times oversubscribed order book and broad participation from high-quality credit investors.

Following the Barber Lake lease upsizing at improved economic terms, we executed a $333 million tack on at the same rate, bringing the total debt financing to $1.73 billion. Together with our previously invested equity and $477 million of additional equity contributed in connection with the financings, Barber Lake is now fully funded through substantial completion. Earlier this month, we completed another project-level financing, raising $2 billion by selling five-year senior secured notes at 6.125%. The transaction was significantly oversubscribed by 6.5 times, with approximately $13 billion in orders and broad institutional participation. We allocated the bonds to over 200 accounts, roughly double the average high-yield transaction. Cipher now has a significant group of institutional credit investors following our story.

More importantly, the financing fully funds Black Pearl through substantial completion and included a $233 million CapEx reimbursement of prior equity contributions, further strengthening corporate liquidity. Since issuance, our bonds have traded at yields below original pricing levels, reflecting improved risk perception and continued investor confidence. Across both projects, we have now secured funding certainty through substantial completion using long-term, fixed-rate, non-recourse debt aligned with contracted lease revenue. As our capital strategy continues to evolve, along with our corporate development efforts, we will remain grounded in core principles. Cipher's approach is built around maintaining a flexible and conservative capital structure, matching contracted cash flows with long-term financing, and protecting the corporate balance sheet. We are currently prioritizing a disciplined approach to consolidated leverage, a preference for non-recourse project-level financing through construction, and staggered debt maturities as we scale.

As additional leases are executed, we expect to continue utilizing project-level, non-recourse financing structures through construction. Our HPC lease structures provide long-term, highly predictable cash flows supported by strong counterparties, which we believe support attractive financing terms and a declining cost of capital as the business matures, as evidenced by the sequential improvement in pricing across our recent issuances. Over time, as projects stabilize, we expect opportunities to refinance and recycle capital into future developments, supporting a self-funding growth model. At the corporate level, we ended the quarter with $754 million of cash equivalents, and Bitcoin, providing significant flexibility to fund equity contributions for future projects. We remain disciplined in prioritizing capital sources that limit shareholder dilution. This includes opportunistically monetizing our Bitcoin inventory as we transition the business, as well as exploring short- and long-term financing arrangements.

As the business continues to mature, we may evaluate additional sources of non-dilutive capital to bolster corporate liquidity. Let's now turn to a review of our financials for the period ended December 31st, 2025. Our financial results reflect the strategic evolution Tyler described, a deliberate repositioning of the company as a leading developer and operator of data centers purpose-built for AI workloads. In the fourth quarter, we earned revenue of $60 million, down from Q3, driven by the difficult Bitcoin mining environment and Bitcoin price decline. We expect revenue from Bitcoin mining to further decrease as we finish decommissioning miners at Black Pearl this month. For the quarter, we reported a GAAP net loss of $734 million.

Importantly, the majority of this reported loss was driven by the change in fair value of certain non-cash items and transition-related impacts rather than core operating cash performance. The largest component was the $450 million non-cash mark-to-market associated with the embedded derivative liability of the 2031 convertible notes we issued in September. As the price of our convertible notes increased following issuance, the liability was revalued, resulting in a non-cash loss. Shortly after issuing the notes, we increased the authorized shares available to the company for issuance, which changed the accounting treatment. The conversion feature now qualifies for equity classification and will no longer be subject to fair value accounting going forward. We impaired various parts of our legacy Bitcoin mining business as we focus on transitioning the company.

As we decommission mining at Black Pearl, we recognized a $96 million write-down that reflects a fair value adjustment on the miners moved from PP&E to assets held for sale. We also recognized a $45 million impairment on the PP&E at the Odessa facility caused by the recent depressed hash price. We recognized an unrealized loss of $39 million on our Bitcoin holdings and a smaller realized loss on our Bitcoin sales. We will continue to opportunistically monetize our remaining Bitcoin, likely exiting the position entirely by the end of 2026. As we reposition toward contracted HPC infrastructure revenue, we expect volatility from Bitcoin-related items to diminish over time. On the balance sheet, the most notable changes this quarter were increases in restricted cash and long-term debt following the successful financing at Barber Lake. Proceeds are classified as restricted cash as they are dedicated to project construction.

As of December 31st, 2025, we had $754 million of unrestricted liquidity, including $628 million in cash and $125 million in Bitcoin. Pro forma for our financings, we maintained substantial liquidity, fully funded construction across both projects, and long-term fixed rate project debt. Cipher is well-positioned with the financial flexibility needed to execute on our next phase of growth. Before I conclude, let me briefly summarize the strength of our overall financial position. Barber Lake and Black Pearl are both fully funded through substantial completion. We have successfully secured long-term, fixed rate, non-recourse, project-level debt, reinforcing the durability of our capital structure. At the corporate level, we ended the year with substantial liquidity, which has further improved following the completion of our Black Pearl financing, including the $233 million CapEx reimbursement.

Importantly, we do not anticipate the need for additional equity to fund our currently contracted developments. As we transition to long-duration, contracted infrastructure cash flows, we believe this disciplined capital structure supports sustainable growth and long-term value creation. Thank you for your continued support. Tyler and I would be happy to take your questions at this time.

Operator (participant)

Thank you. As a reminder, to ask a question, please press star one. If your question has been answered and you'd like to remove yourself from the queue, please press star one one again. Our first question comes from Mike Grondahl with Northland. Your line is open.

Mike Grondahl (Senior Research Analyst)

Hey, thanks for all the details. Tyler, it seems like Stingray and Reveille are pretty much baked for leases, but is there anything else to call out there just in terms of demand? Secondly, could you talk a little bit about the other four and just the demand environment you're seeing for Elise, Ulysses, McLennan, Mikeska, and Colchis, which, have some power coming on in late 2027 or 2028?

Tyler Page (CEO)

Sure. Thanks, Mike, for the question. Yeah, I think it's fair to say, as I mentioned on the call, we are pretty far along with Stingray, and we have a preferred tenant there. We just need to sort of tick and tie the final boxes. I'll remind everyone, because I get lots of questions around the timing of leases, and as we showed in the deck, the pace of what we've been doing around here has been pretty frantic. I would say that level of demand continues, but I remind everyone, if you're talking about a hyperscaler, a company that has hundreds of thousands or even over a million employees, even though they are very large, when you're signing contracts for billions of dollars of payments, the approval of those contracts takes a long time.

It goes through a lot of groups. They get signed off on, sometimes they go all the way to the board to get signed off on, and that process just takes some time. What I'd say is, on Stingray, we are well along in that process. You're never done until you're done, but we do have an anticipated tenant there, and I think that will be done reasonably soon if everything stays on track. Reveille, I would say, is in a little bit different bucket actually. There's a lot of interest in Reveille, but given that it is only 70 MW, as opposed to some of our, like, several hundred-megawatt campuses, that's a little small for them.

What's interesting about Reveille, as the site continues to advance, there is a lot of desire for neoclouds to be successful, both from the equipment providers, the hyperscalers themselves. There's a lot of benefit to using a neocloud. They can often move more quickly, more nimbly. That 70 MW, that's a more interesting site for a different crowd. I'd say there's a lot of interest in that site. We're in process on many discussions of levels of interest, and I think what had slowed us down previously was, you know, we've had a relentless focus on the credit quality of our tenants. As the industry continues to move really quickly, there are many interested investment-grade participants in this ecosystem that are willing to think about things like credit wrappers, sort of prepayments, et cetera.

I think, you know, some combination of that gives us a different opportunity set at Reveille, but still, you know, very active. I'd say that's a little further along in terms of finalizing that is, it will take a little bit longer to finalize something there, but very busy discussions. I'd say Ulysses is the other one I would call out. Ulysses is 200 MW in Ohio, PJM. We have significant interest from multiple hyperscalers in that site. We are in the diligence process on the site, with data rooms and so forth, in advanced discussions with people that we know well, new people, et cetera. I think very good prospects for that site, but, you know, moving quickly, but things take time. The general backdrop for demand still remains high.

I think there was a frantic increase in the pace in the fourth quarter. I'd say that pace continues. I think it's still a very favorable environment to negotiate economics from our side of the table. I'm very bullish about all these sites eventually having tenants. When you move beyond Stingray, Reveille and Ulysses, that's the 370 MW that are currently being marketed for leases. We are in earlier discussions on McLennan, Mikeska, and Colchis. As we discussed on the call, we're very confident about the prospects of those receiving their final interconnects, given where they are in the approval process. We are awaiting that final approval.

Given the shifting sands in ERCOT, we're confident we will either get those approvals or they will be in a, you know, very early first batch, when the batch process is finalized, if that's the case, and that keeps the energization, timelines we had expected previously on track. I think we need to get a final interconnect to advance those discussions beyond the early discussions. Fair to say, on an early basis, given the size and location, there is hyperscaler interest in all three of those sites.

Mike Grondahl (Senior Research Analyst)

Very helpful color. Thanks, and good luck in 2026.

Tyler Page (CEO)

Thanks, Mike.

Operator (participant)

Thank you. Our next question comes from Chris Brendler with Rosenblatt Securities. Your line is open.

Chris Brendler (Senior Research Analyst)

Hey, thanks. Good morning, and congratulations on the progress here. Yes, we're shifting away from mining and towards HPC. I think there's tremendous progress, obviously, in the fourth quarter. I guess we're now, you know, sort of focused on execution. Can you, can you talk about some of the new hires you've made as you try to build out the team and shift, you know, the, the bench more towards HPC and data centers away from Bitcoin mining? You mentioned some hires. I just wanted to get a little more detail there. Thanks.

Tyler Page (CEO)

Sure. Thanks for the question, Chris. Yeah, I'd say we philosophically still take the same approach to hiring, which we always have, which is, if you look at versus most of our competitors, I think we operate a little more leanly. We are trying to hire the very best people in the world at what they do, and have fewer of them, because generally we find those people to be much more productive and have a much deeper impact on the success of the company. What we've really been trying to add is depth. There are some spots where we've plugged some gaps. For example, we highlighted hiring Lee Bratcher.

I think having someone who, you know, is probably more plugged in to the scene in Texas as far as ERCOT, the TDSPs, and the regulatory landscape, that's just been an incredibly helpful hire as we navigate the ongoing sort of interconnect debates in Texas. That is something where, you know, rare spot where we've added something we didn't have before. Beyond that, what we've really been adding is depth of excellence to the team. We have always had a very, very strong construction, engineering, and operations team.

I think as we evolve towards this new model that we want Cipher Digital to become, we wanna be a company where basically, in addition to the very steady cash flows coming in from our already signed leases, we are finding a couple new sites a year, signing a couple new leases a year, and building a couple new data centers per year, to continue to stack up on those recurring cash flows. What we're trying to build the workforce for is to accommodate that world really well. I have 100% faith and confidence in the team we had to execute and build, for example, Barber Lake and Black Pearl on time. What we're trying to build towards is more depth, so that we could build four data centers at once.

Let's say we sign a Stingray lease and a Ulysses lease, and we're managing all four of those projects at the same time because we signed them in the next two months. We needed to add depth. I think the other aspect is we have excellent people, and we get a lot of leverage out of them. You know, if you look at a counterparty like AWS, they may have 50 engineers engaged on their project. It's, it's helpful if we have more than sort of one or two people across the table dealing with all 50. What we've added is a whole bunch of depth to the construction, engineering, operations bench. Typically, ex-hyperscaler, we've continued to tap the very rich vein, we have always had from Google.

That is by far our biggest alumni network we've got at the company. Several new hires from Google. We've hired senior talent from Apple and others. It's really depth at the senior level across those functions.

Chris Brendler (Senior Research Analyst)

That's great. Just one quick follow-up. You mentioned Lee. Congratulations on that hire. It sounds like, and it seems like even though the ERCOT process, the new process, the batch process, hasn't really been totally finalized yet, that it really should increase visibility and potentially reduce some of the headaches that we've had recently with the overwhelming requests they've had at ERCOT, you know, over the past year or two. Is it a fair way of positioning it, that you probably feel a little more confident in your ability to get approval for the interconnections that you have in the queue, or are we still in a period of great uncertainty there?

Tyler Page (CEO)

Yes, it's a great question. I think this advancing scene in Texas is a good thing for us. It's a good thing for serious operators and developers, because at a high level, what they are trying to put in place and finalize is how to navigate this interconnect queue that is stretched out for, you know, hundreds of gigawatts of requests, where everyone in the world knows some of those are duplicative or less serious, et cetera. I think also, just from a technical standpoint, they've got to figure out, you know, evolving to a new world where if so much is coming online, their whole process of conducting studies to understand impact on the grid needs to understand, you know, what other large interconnects happening simultaneously.

Bringing order to that is a fantastic thing for us, and that's because we have a great track record of developing things, being serious people, putting down deposits, delivering when we say we're gonna deliver, et cetera. We are exactly the type of company they are trying to optimize the process for. You know, finalizing the optimization, they had talked about a few weeks ago, that's gonna, this batch process will take until the summer to line up and get finalized. Given where we are, what we have submitted, what the anticipated requirements are, to be to have a firm load in that early batch, we're very confident in the sites we mentioned on the call. Overall, this is a good thing.

Like I mentioned, we're ready to send a deposit as soon as people are ready to accept it, to prove that we are serious, and we've got tenants, interested to build big data centers. It's a good thing going on in Texas. It just takes a while to sort of finalize what it's gonna exactly look like.

Chris Brendler (Senior Research Analyst)

Awesome. Thanks, Tyler. Appreciate it.

Operator (participant)

Thank you. Our next question comes from John Todaro with Needham & Company. Your line is open.

John Todaro (Managing Director)

Hey, thanks for taking the question, and congrats on the progress here. Going to the 207 MW at Odessa that's still currently Bitcoin mining, I guess, just what would the next steps be in determining suitability for HPC? Then, I guess just more color on the kind of the end plans for Odessa?

Tyler Page (CEO)

Sure. Thanks for the question. Odessa is a little bit different than Black Pearl. You know, as we mentioned at Black Pearl, that is a site that was half built for Bitcoin mining, but we always built it with an eye towards being able to sort of upgrade or evolve that data center to HPC. We're able to reuse 85% plus of what's already there. It happened a little bit quicker than we were anticipating, but, you know, all a wonderful thing. I'll contrast that with Odessa, which is a site we built, like, five years ago, with an eye towards having a five-year, PPA at the site, and so it's a containerized data center, that it works fantastically well for Bitcoin mining.

We have an amazing low fixed price there, roughly a little bit less than $0.028 a kWh. Bitcoin mining economics are excellent there. That PPA runs out in July of 2027. Our options are restrike the relationship we have with our counterparty, Luminant, on the PPA and the site there. We also own additional land around that site. We do have a lot of optionality there on what we can do. We're very well positioned. We've been anticipating this for a while.

If we come to an agreement with an interested tenant, there are multiple tenants that are interested in putting an HPC site there, uh, and we come to an agreement with Luminant about how we would recut, uh, the PPA, uh, and sort of ground lease there and how that would be set up, we'll shift it to HPC as soon as there is a lucrative deal on the table. What I'd say is there's not a ton of time pressure for us to do that because the Bitcoin economics there are still really, really strong, giving the low power price. So if we can herd all those cats and make it happen sooner rather than later, that's great.

That also gives us an opportunity to really be picky and choosy about the economics we can get there because we're making great cash flow there with Bitcoin mining. However, as I mentioned, we don't have a desire to put more CapEx into Bitcoin mining. That is not going to happen. The kind of outside date for us to do something there would be July 2027, really.

John Todaro (Managing Director)

Got it. Understood. That's, that's very helpful. Thank you. Then just as we look about some of the additional HPC customers coming in, is there still interest in maybe diversification in the opportunity to get, maybe even sometimes better lease economics with slating in some of the Neoclouds, as you talked about at Reveille? I guess just how are you thinking about, you know, different customers? If you can say, would we be expecting kind of the same customers you signed before as kind of the front runners for some of these sites, or are they newer customers?

Tyler Page (CEO)

I mean, I'd say the customers we have now are the best customers in the world, I would take as many leases as possible from them. I hope we will do more business with them in the future. They are interested in more sites, I hope we can connect the dots on that. That said, we are talking to all the other hyperscalers and pretty much all the neoclouds in some way, shape, or form, as well as equipment manufacturers that are interested in the success of those neoclouds. I do think we have a lot of options. As I've mentioned in the past, in our first sites, we really prioritized the quality of the counterparties because we wanted to debt finance the build costs. Obviously, that has been an overwhelming success.

If you look at where we raised our debt to build those sites and frankly, where it's traded, you know, both of those bonds have traded up in the market. Every time I see nervousness around execution and the equity market swinging around, I laugh because I assure you, bond investors are much more focused on execution risks, and our bonds are trading well above par. I think that as we evolve, now that we've got those sites fully financed and we've got the bedrock foundation of our HPC business set, we can afford to think about diversification. I think we would love to work with the other hyperscalers. As I mentioned, we're in discussion with them. I do think a site like Reveille really lends itself to a different category of tenant.

Again, thinking about how we control whatever risks and exposures we'd have there. I think that opportunity is there, John, you know, listen, our tenants are awesome, and if we end up doing all our leases with them, that's fine. The other thing is. There are some efficiencies working with the same tenants because they tend to have similar design philosophies. A lot of the hard work that goes into execution is the upfront work that has to be done on the engineering side. Having a kind of consistency and sort of having at bats with a particular tenant puts us in a good spot to be efficient on the next build as well.

John Todaro (Managing Director)

That's great. Thanks for that. Congrats on all the success so far. Thank you.

Tyler Page (CEO)

Thank you.

Operator (participant)

Thank you. Our next question comes from Brett Knoblauch with Cantor Fitzgerald. Your line is open.

Brett Knoblauch (Managing Director)

Hi, guys. Thanks for taking my question. Tyler, just on the ERCOT, kind of noise, if you will, over the past few weeks, is that causing maybe the big hyperscaler tenants to, you know, shift their focus from maybe Texas to outside of Texas, or are they still very much, demanding Texas assets? You know, has it caused any increase or, you know, more hesitation to, you know, committing to a specific site if the energization date might be in flux? Just broadly, how would you characterize the impact of what ERCOT is doing on hyperscaler demand in Texas?

Tyler Page (CEO)

It's hard for me to say on a relative basis within the hyperscalers, we now like Texas less versus Ohio or Pennsylvania or Virginia or something like that. What I'd say is I have not seen any decrease in interest. There is a ton of interest. I think the thing to keep in mind that we've been very active on, and we mentioned briefly on the call, is that all of the hyperscalers are also looking at behind-the-meter solutions now as a way to faster power. I've been saying consistently on these calls that West Texas is gonna be the data center capital of the world for over 1 year now. I read a recent JLL report that came out, that they think that might happen, and it might shift from northern Virginia.

I'm excited to see one incumbent bend the knee. I'm sure the rest are going to as well over time, and a lot of that has to do with the fact that if you look at sites like ours at Stingray and Barber Lake, there's a whole ocean of natural gas under our feet there, and we're the ones that can get to it. I think, you know, high level, hyperscalers understand the complexity of the interconnection process. They are focusing very much on behind-the-meter, where Texas is uniquely suited to that, and I have not seen any change in how they have interacted and their interest in Texas.

Brett Knoblauch (Managing Director)

Perfect. Maybe just following up to that, on the co-locating generation with the data center, to what extent have you guys looked into or are expecting to do that, you know, in the foreseeable future?

Tyler Page (CEO)

We have some of our best resources dedicated to investigating it now. We are speaking about it with our counterparties who are also very interested in it. As I'd mentioned, we have access that is somewhat unique to natural gas pipeline capacity, et cetera. There's still a lot of work to do. I think everyone is interested in the timeline potential of that. It is very topical. There remain questions around engineering, financing, et cetera, but we have all the ingredients and our best people working on it. I am personally very bullish that that will be a major part of our portfolio over time. It just may take time.

It's hard for me to give an exact time estimate, but keep in mind, the desire for that springs from a desire to get to markets faster with large quantities. I'm very optimistic on it.

Brett Knoblauch (Managing Director)

Awesome. Thank you, guys.

Operator (participant)

Thank you. Our next question comes from Reggie Smith with JPM. Your line is open.

Reggie Smith (Executive Director of Equity Research)

Good morning, and congrats on all the progress. Hey, Tyler, I think you, I think you categorized Stingray as being in advanced discussions, and I think Ulysses, you used the same term. I believe you said advanced discussions. This, I'm somewhat surprised, given that you just acquired Ulysses in December. Maybe talk about one, do I have that right, and, you know, how do you define advanced? As it relates to Ulysses, are you seeing discussions progress faster than what you have historically seen with new sites that you've acquired? Maybe thinking back to how Barber Lake discussions started post-deal close and compare that to where Ulysses is today. Thank you.

Tyler Page (CEO)

Sure. fair to say we're furthest along with Stingray. Like I mentioned, we have a counterparty we've identified as our preferred counterparty there. I'm optimistic we'll get it finalized. As I have caveated in the past, you know, you're never done until you have a signed lease. You know, I wouldn't be speaking so confidently about that if I weren't so confident in that being done soon. I feel very good about Stingray, and I think that will be forthcoming before too long. Ulysses is not as advanced as that, because given your point, Reggie, we just acquired it recently. That is a site that some hyperscalers were familiar with. I think I mentioned on our.

In the past, that was a site that originally, I think in their databases, had some issues around the land plot. We solved that land plot and found a different spot. I think the fact that it's got near-term energization, and it is near Columbus, Ohio, which is a sought-after data center market, as well as the fact that we have ample land there. And it's also one of the last legacy interconnection agreements in PJM without a large deposit. There's reforms coming to that market as well, all make it very attractive. We are in discussions, but they're not as advanced as Stingray. We have multiple hyperscalers in data rooms doing their diligence, beginning thinking about engineering discussions that we will have to iterate that then get translated into lease terms.

I'm very happy with where it is, and it is further along than other things, not named Stingray in the pipeline, but that's where it is right now.

Reggie Smith (Executive Director of Equity Research)

Got it. If I could sneak one last follow-up in. Just thinking about the ERCOT proposals, I'm thinking about, you know, there's been, I guess, historically, a pretty speculative market of people buying land in Texas and then trying to flip it to larger companies like yourself. I guess, how do you think this will change that dynamic? Does it slow the pace of deals? Might it make people who aren't well-capitalized more incentive to do a deal with you guys? Like, you know, it's obviously down the road, but, like, how do you think this plays out in the market for sites in Texas?

Tyler Page (CEO)

It's gonna be really good for us. I don't know how it'll impact other players in the space. I mean, I think if you look at the history of the sites we have acquired, we've often acquired sites from earlier stage, folks that were kind of making a bet and couldn't do things like put down big deposits to demonstrate how serious they were, and sometimes those timelines got away from them, and we managed to get really attractive deals. Again, increasing the hurdles to demonstrate how serious and non-duplicative, and well-capitalized you are, those are all fantastic things for us because that means the people that would speculate in the past, can't do that as easily, and they're gonna have to make those sites available for us.

Like I said, these kinds of advances that they're talking about in Texas are very good for Cipher. Probably less good for the wildcatter or speculator, you know, grid cowboy, but those guys are also pretty resourceful. I'm sure they'll find ways to adapt.

Reggie Smith (Executive Director of Equity Research)

Yeah. No, that makes sense. Congrats again on all the progress.

Tyler Page (CEO)

Thank you.

Operator (participant)

Thank you. That's all the time we have for questions today. I'd like to turn it back over to Tyler Page, CEO, for closing remarks.

Tyler Page (CEO)

Okay. Thank you very much to everyone for joining our call. The progress is just getting started. We can't wait to tell you what's next for Cipher Digital. Thank you for your time today. Cheers.

Operator (participant)

Thank you for your participation. You may now disconnect. Everyone, have a great day.