Cipher Digital (CIFR) shares fell 15.7% Tuesday after the company reported a second-quarter net loss of $267.5 million. That is more than five times the loss it booked a year earlier, according to The Block.
The red ink spread even as Cipher pivoted away from pure-play bitcoin mining toward leasing data center capacity to AI and cloud providers. The company delivered its first Black Pearl data center capacity at the start of August. That was roughly two months ahead of schedule. Revenue, though, dropped to $24.8 million in Q2 from $43.6 million a year earlier.
Bitcoin holdings shrank as well. Cipher held $37.8 million worth of bitcoin at the end of June. At the end of last year, that figure stood at $125.4 million.
CEO Tyler Page framed the quarter as proof the strategy works at scale. “A core strength of our strategy is its repeatability, and in the second quarter, we demonstrated that once again,” Page said in the earnings release linked Tuesday on investors.cipherdigital.com. “We accessed capital markets to fund another one of our leases, secured an option on a new site, and delivered accelerated capacity to our tenant, further building our position as a leading HPC development platform.”
The stock closed at $20.38 on Tuesday, the same day the earnings landed.
Bernstein analysts reiterated an “Outperform” rating and a $32 price target in a note to clients Wednesday. At Tuesday’s close, that implied roughly 57% upside. The catalyst they flagged was an audit directive from Texas Governor Greg Abbott.
Abbott on Monday directed the Public Utility Commission of Texas and grid operator ERCOT to audit all data center projects in the state’s interconnection queue. ERCOT paused its “Batch Zero” process, which had been set to classify the first group of large electricity users later this month.
The move is likely to curb speculative data center development and increase the scarcity value of already-approved power capacity, Bernstein said. That would benefit existing bitcoin miners and AI operators. “We believe the new Texas directive could push out the Batch Zero pipeline conversion by a few months, however it ultimately benefits credible developers like Cipher by decongesting the grid queue from speculative burden,” the analysts wrote.
Execution across the company’s three contracted data center projects remains on track, Bernstein said, with full delivery expected by the first half of 2027.
The market’s verdict on Tuesday was blunt. The quarter’s losses outweighed any forward-looking upside narrative. A wider net loss, lower revenue, a shrinking bitcoin treasury. Set against an audit whose benefits remain, for now, an analyst’s projection rather than a booked number.
The stock has not recovered as of the close. Bernstein’s $32 target rests on the view that decongesting the Texas grid queue will reward developers with approved capacity. Traders, as ever, disagree.
