Cipher Mining, a Bitcoin miner operating data centers in Texas, just scored a major boost from Google. This comes as part of a large deal with Fluidstack, an AI cloud platform. Google, which recently invested in TeraWulf, will now own a 5.4% slice of Cipher.
The tech giant Google is busy striking deals with Bitcoin mining companies. This move highlights the intense demand for artificial intelligence (AI) and high-performance computing (HPC) resources.
Cipher Mining, which focuses on Bitcoin mining and has big data centers in the United States, announced a multi-year HPC hosting agreement this Thursday. Their partner, Fluidstack, builds and runs HPC clusters for some of the world’s largest companies. This arrangement means Google will buy a 5.4% stake in Cipher Mining.
This deal is valued at roughly $3 billion in contracted income over an initial 10-year period. It involves bringing 168 megawatts (MW) of critical IT load to Cipher’s Barber Lake center. This center is located in Colorado City, Texas, with operations expected to start in 2026. The agreement also includes two five-year extension options. These could push the total contract value to $7 billion, as stated in an official press release from Fluidstack.
Google will back $1.4 billion of Fluidstack’s lease payments. This helps make project-related debt financing easier. In return, Google will get warrants to buy about 24 million shares of Cipher. These shares represent a 5.4% ownership stake. This stake might change or could be settled in cash under certain conditions.
Cipher, founded in 2021, aims to strengthen the Bitcoin network. It also explores new chances in HPC. The company plans to keep 100% ownership of the project. It will tap into capital markets to help fund the initiative. Cipher noted that its Barber Lake site is well-suited for future computing needs. It currently has energized capacity, potential for 500 MW expansion, and 587 surrounding acres.
The company expects this project to bring in an operating net income margin of 80% to 85%. Estimated costs range from $9 million to $11 million per MW of critical IT load. “We’re excited to work with Fluidstack to develop HPC data centers,” said Tyler Page, Cipher CEO, in the statement. “We also look forward to welcoming Google as an investor in Cipher. This transforming deal strengthens our HPC efforts. It also keeps our growing site portfolio in the spotlight.”
César Maklary, co-founder and president of Fluidstack, added, “Fluidstack understands what it takes to deliver the computing power needed today. Together with Cipher Mining, we are committed to speeding up the critical infrastructure that cutting-edge AI companies rely on.”
News of the deal sent Cipher shares surging on Nasdaq. The stock rose up to 24% in pre-market trading. However, prices later corrected, falling below the previous close of $14.14, according to Google Finance data. Cipher’s shares, trading under the ticker CIFR, have jumped seven times since their low point in April. This shows how Bitcoin miners are shifting towards AI, as noted by CoinDesk.
This agreement marks Google’s second collaboration with Fluidstack in under two months. It clearly shows the growing need for computing resources for AI services. Last month, Bitcoin miner TeraWulf also secured Google’s support. This was part of two long-term hosting deals with Fluidstack. In that earlier deal, Google reportedly backed $1.8 billion of Fluidstack’s lease payments. It also received warrants to acquire about an 8% stake in TeraWulf.
According to Bloomberg, Google is a big investor in Silicon Valley’s computing power. It pours tens of billions of dollars annually into its products and cloud businesses. But with the AI boom, it’s also partnering with companies like Fluidstack to get extra resources.