Cipher Mining $CIFR ( ▲ 0.96% ) jumped early Thursday after sealing a new agreement that fully leases its Barber Lake data center in Colorado City, Texas. The deal is an expansion of its existing partnership with Fluidstack, a UK cloud provider focused on GPU networks, and will bring in roughly $830 million over the next decade. The news also lifted IREN $IREN ( ▲ 0.28% ) , another bitcoin miner making the pivot into AI compute.
The market is clearly impressed. But the structure behind the deal shows how tangled AI infrastructure financing is becoming as companies race to build capacity. Cipher also revealed that it is borrowing $333 million through a private debt placement to expand the Barber Lake site. That financing is secured partly by the warrants Google $GOOGL ( ▼ 0.65% )
received to buy about 5.4 percent of Cipher’s stock. With Cipher up double digits, those warrants suddenly look a lot more valuable.
Google is doing more than holding warrants. It is also backstopping Fluidstack’s borrowing with a $1.4 billion commitment, essentially cosigning the loans needed to build out the hardware Google will later rely on. Alphabet needs compute, and the fastest way to get it is to help smaller players scale by lowering their financing costs.
The result is a relationship where Alphabet becomes the primary customer, a major guarantor, and potentially a meaningful owner of Cipher once those warrants convert. It is not unprecedented. Circular financing popped up in aerospace as the industry scaled in the mid-20th century.
The complexity does raise questions though. These structures can accelerate growth, but they can also blur where financial risk truly sits. In a moment of intense AI optimism, that is something investors will want to keep a close eye on.