Cipher Digital, which pivoted from Bitcoin mining to AI data centers, reported $31.6 million in net profit, supported by a non-cash accounting gain, as it generated its first revenue from the new business.
According to a CoinDesk report based on the company’s Nov. 2 SEC filing, Cipher Digital’s third-quarter revenue fell to $26.7 million from $71.7 million in the same period last year. The year-over-year decline reached 63% as the company continued shifting capacity from Bitcoin mining to leasing data centers to AI companies.
First revenue from AI business
Bitcoin mining revenue fell 71% year over year to $20.8 million. Meanwhile, the company generated $5.9 million in revenue from its new leasing business after the first phase of its Black Pearl data center in Texas began operating in August.
Cipher had stopped Bitcoin mining at the site in February to prepare it for its new tenant. The third-quarter results show the first revenue from this transition, but also indicate that it has not yet made up for the decline in mining.
Google-related accounting gain supported net profit
The main contributor to the balance sheet’s $31.6 million in net profit was a $127.2 million non-cash gain from the revaluation of warrants issued to Google. Google had agreed to provide a guarantee for certain lease payments by AI infrastructure company Fluidstack.
The change in the warrants’ value was reflected in Cipher’s profit calculation, but it did not bring the company that amount in cash. Operating results worsened: the operating loss grew to $71.9 million from $37.6 million a year earlier.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), which excludes certain accounting items, also swung from a $40.8 million profit to a $10 million loss compared with last year.
$9.1 billion in revenue under 20-year contract
Data center leases are central to the company’s long-term growth plan. Cipher extended the lease agreement at its Barber Lake facility to 20 years, bringing total contracted revenue at the site to approximately $9.1 billion.
This figure covers revenue over the term of the contract and represents a separate long-term outlook from the quarterly revenue the company has begun generating from its new business.
Not investment advice.