Cipher Mining (CIFR) just delivered one of the most consequential weeks in its history, announcing a major AI hosting deal for its Barber Lake facility and a $1.1 billion convertible note offering, moves that together may redefine the company’s trajectory, broker Canaccord Genuity said in a report on Monday.
Canaccord reiterated its buy rating on the stock and raised its price target to $16 from $12. The shares rose 1.2% in early trading to around $11.60.
While the market had been expecting Cipher to secure an AI data center partner for Barber Lake before year-end, last week’s announcement went further than anticipated, the report said. CIFR inked an agreement with Fluidstack, backed by Google, confirming its place in the “miner pivot-to-AI” trend that is sweeping the industry.
Crucially, the deal arrived in during a flurry of hyperscaler and GPU cloud provider contracts, helping to validate demand for large-scale AI compute and putting to rest some concerns about market size, at least in the near term, analysts led by Joseph Vafi wrote.
The positive sentiment around Cipher’s prospects has been reflected in its share price over the past several months, giving the company a stronger currency for capital raising, the analysts noted.
The $1.1 billion convertible note priced last week at a 0.00% coupon, an unusually attractive cost of capital, and is expected to allow the company to retain 100% ownership of Barber Lake, Canaccord said.
Management had earlier signaled that it might be willing to sell a stake in the project to reduce leverage. With improved equity pricing and stronger market fundamentals, the company appears positioned to fund Barber Lake without giving up equity.
More AI deals are likely. The Barber Lake agreement does not cover the entire facility, leaving meaningful capacity available for future contracts. With a 2.6 gigawatt (GW) development pipeline, energized sites like Odessa and the ramping Black Pearl could also see AI co-location deals in the future, the report added.
Read more: Cipher Mining Prices $1.1B Upsized Convertible Note Offering