Cipher Mining: 3 billion USD HPC contracts overshadowed by 1.3 billion USD convertible bonds

Cipher Mining (CIFR) has just announced its first HPC contract worth 3 billion USD with Fluidstack – a partner that has previously collaborated with Google and TeraWulf. However, instead of breaking out, the stock has remained flat due to the attention drawn by the 1.3 billion USD convertible bond issuance deal.

This bond initially intended to raise 800 million USD but was quickly increased to 1.1 billion USD and then finalized at 1.3 billion USD due to strong demand from institutions. With an interest rate of 0% until 2031, this is a cheap capital channel that helps Cipher implement the Barber Lake (168MW project, with an investment capital of 1.5–1.8 billion USD) and expand 2.4 GW capacity in the HPC/AI sector.

Hedge funds prefer the convertible bond structure because it offers bond-like protection while benefiting from stock price fluctuations through arbitrage strategies. In contrast, common shareholders face a dilution of 9–17% if the stock exceeds the conversion threshold.

Key message: The HPC contract reinforces Cipher's new direction, but the market is focused on dilution risks from the 1.3 billion USD bonds. Institutional investors have "insurance tickets with options," while shareholders must bet on Cipher's ability to execute on schedule to convert strategy into actual revenue.