Author: Zhou, ChainCatcher
On September 25, U.S. Bitcoin mining company Cipher Mining signed a 10-year high-performance computing (HPC) hosting agreement with AI cloud service provider Fluidstack, with initial contract revenue of approximately $3 billion and two options for five-year renewals each, potentially bringing total revenue to $7 billion if fully exercised.
According to the agreement, Cipher will provide 168 megawatts of critical IT load at its Barber Lake data center in Colorado City, Texas, with a maximum total capacity expandable to 244 megawatts, leveraging existing power generation capabilities, a 500-megawatt expansion potential, and 587 acres of land to meet next-generation computing demands.
Google is providing a backstop for Fluidstack's $1.4 billion leasing obligation, supporting project-related debt financing, and has received approximately 24 million shares of Cipher common stock warrants, equivalent to about 5.4% of the pro forma equity (assuming the inclusion of newly issued shares and dilution factors). Cipher stated it will retain 100% ownership of the project and flexibly supplement funding through capital markets.
Cipher Mining is a Nasdaq-listed company that started in Bitcoin mining and is now transforming into an AI data center developer. Its stock price has recently shown significant volatility. According to the latest data, Cipher's stock price has surged from $1.86 to over $15 this year, but the announcement of the $3 billion contract on September 25 led to a decline of over 17%, with a current market capitalization of approximately $4.586 billion.
Additionally, Cipher announced an increase in its zero-coupon convertible bond size from $800 million to $1.1 billion, with a zero coupon rate, maturing in 2031. The funds will be used for project construction and general corporate purposes.
It is noteworthy that this is not Google's first time supporting mining companies in their transition to AI infrastructure in a similar manner. On August 18, TeraWulf expanded its cooperation with Fluidstack, adding a 160-megawatt critical IT load to the new CB-5 building at the Lake Mariner campus in New York, increasing the total contract capacity to 360 megawatts, with plans to commence operations in the second half of 2026.
Google's additional $1.4 billion credit support has raised its total guarantee scale for related projects to approximately $3.2 billion, and it has received 32.5 million shares of TeraWulf common stock warrants, increasing the pro forma holding ratio from 8% to about 14%.
TeraWulf is a digital asset technology company engaged in digital infrastructure and sustainable energy development, with its main revenue source coming from Bitcoin mining conducted at its facilities, and it is also listed on Nasdaq. Data shows that TeraWulf's stock price has risen over 100% since announcing its partnership with Fluidstack, with a current market capitalization of approximately $4.475 billion.
Furthermore, its management has revealed plans to raise about $3 billion for the construction of its data centers. This transaction is led by Morgan Stanley and could start as early as October, taking place in the high-yield bond or leveraged loan market.
Through its collaborations with Bitcoin mining companies Cipher Mining and TeraWulf, Google has cumulatively provided $4.6 billion in credit guarantees and has become a significant shareholder in them. However, this does not mean that Google intends to enter the Bitcoin mining industry; rather, it aims to help Cipher Mining and TeraWulf transition to AI infrastructure with these funds.
As AI development requires substantial computing power, GPUs, stable electricity, and large data centers have become sought-after resources, making data centers increasingly scarce. Therefore, many AI companies are directly seeking partnerships with mining companies that have advantages in power and facilities, with TeraWulf and Cipher being typical representatives.
Thus, through these actions, Google is both consolidating its layout in AI data centers and promoting a closer integration of traditional mining companies with the cloud AI industry chain.
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