Cipher Digital is looking to raise $850 million to help fund its growing AI data center business, including its Barber Lake project in Texas.
The company announced Tuesday that it plans to sell convertible notes due in 2032. Buyers would also have the option to purchase another $150 million, potentially bringing the offering to the $1 billion mark. The notes are essentially debt that buyers can later exchange for stock.
Cipher shares (CIFR) fell as much as 17.6% to $10.71, their lowest level in more than a year, before recovering slightly to $11.10.
The company also plans to swap some of its debt due in 2030 for stock, which would increase the total number of shares. However, the release states it will use part of the new funding to buy protections that could reduce shareholder dilution if the new notes later get swapped into shares.
Cipher plans to put the rest of the proceeds towards Barber Lake and other AI data center projects in the pipeline.
This follows Cipher's September announcement that an unnamed AI lab agreed to lease Barber Lake for 10 years after Fluidstack's current 10-year lease runs out. Cipher said the two agreements would generate more than $9 billion in contracted revenue.
The first hall is slated for delivery before the end of this year, with the remaining halls expected through the first quarter of 2027.
VanEck head of digital asset research Matthew Sigel was critical of the timing of the proposed raise. "Why didn't they do this when the stock was $17?" he wrote on X.
Cipher started out as a bitcoin miner, but has been pivoting toward building and operating data centers for AI customers.