NEW YORK — Shares of Cipher Digital Inc. climbed nearly 10% Thursday as the former Bitcoin mining company, now aggressively pivoting to high-performance computing and AI infrastructure, continued to draw bullish bets from investors betting on its long-term hyperscale data center ambitions.

Cipher Digital
Cipher Digital

The stock rose as high as $16.92 midday, up $1.50 or 9.73% from the previous close, on elevated trading volume. The move extended recent gains that have seen the shares rebound from early April levels around $12, fueled by optimism around multi-billion-dollar contracted revenue from AI tenants and upcoming site energizations.

Cipher Digital, which rebranded from Cipher Mining earlier this year, is transforming from a pure-play Bitcoin miner into a developer and operator of industrial-scale data centers tailored for hyperscale AI and high-performance computing workloads. The company has secured approximately $9.3 billion in contracted revenue through long-term leases with major hyperscale tenants, including deals spanning 10 to 15 years with extension options.

In late February, Cipher reported fourth-quarter 2025 results that missed Wall Street expectations — revenue of $60 million versus estimates around $84 million and an adjusted loss of 14 cents per share — yet shares rose more than 6% on the day as investors focused on the forward-looking strategy rather than near-term mining shortfalls.

Management outlined plans to largely exit Bitcoin mining operations by the end of 2026, retaining only the Odessa facility through its power purchase agreement expiration in July 2027 while converting other sites for HPC use. The company has already divested stakes in joint ventures and sold or redeployed mining rigs, reducing its operating hashrate from 23.6 EH/s to about 11.6 EH/s.

The pivot centers on repurposing existing power infrastructure and land holdings for AI-driven demand. Cipher has announced multiple data center campuses, including sites with capacities ranging from 70 MW to a planned 1 GW facility, with energization timelines stretching from late 2026 into 2028. A recent 15-year lease with an unnamed hyperscale tenant for a third campus, paired with $200 million in new financing, sent shares up 9% in a single session in March.

Analysts project significant revenue ramp-up once these facilities come online. Some models forecast average annualized net operating income of around $669 million from October 2026 through September 2036 based on current leases, with blended EBITDA margins potentially reaching 76% as higher-margin HPC hosting replaces volatile mining revenue. Long-term projections include hundreds of millions in annual revenue by 2028 or later, driven by stable, contracted cash flows less exposed to cryptocurrency price swings.

Wall Street sentiment remains largely positive despite execution risks. Consensus ratings hover around Moderate Buy or Strong Buy, with an average 12-month price target near $23 to $25, implying 40% or more upside from current levels. Cantor Fitzgerald maintained an Overweight rating Thursday but trimmed its target slightly to $22 from $24, citing valuation after recent gains. Other firms, including Canaccord Genuity and Rosenblatt, have issued Buy ratings with targets up to $27 or higher.

The company's market capitalization has swelled toward $6 billion or more in recent trading, reflecting its positioning at the intersection of Bitcoin's legacy infrastructure and the exploding demand for AI compute power. Cipher owns or controls hundreds of acres across Texas sites with access to low-cost power, a critical advantage as tech giants scramble for data center capacity amid GPU shortages and grid constraints.

Still, challenges persist. Q1 2026 earnings, expected around May 5, are projected to show continued mining revenue alongside early transition costs, with analysts forecasting a loss per share near 27 cents. Near-term free cash flow remains negative as the company invests in retrofits and new builds, though secured debt and equity financing have bolstered liquidity.

Bitcoin exposure lingers as a double-edged sword. While mining operations at Odessa provide interim cash flow at attractive power rates around 2.8 cents per kWh, the company has signaled it will opportunistically reduce its Bitcoin holdings and avoid new mining capital expenditures. A sustained rally in cryptocurrency prices could provide a tailwind, but Cipher's narrative has clearly shifted toward stable, long-duration HPC leases.

Insider activity has been mixed, with some sales in recent months, yet institutional interest appears robust. The stock's high beta — often moving sharply with both Bitcoin and AI-related sentiment — has made it a favorite among growth-oriented traders.

Broader industry tailwinds support the thesis. Explosive growth in artificial intelligence training and inference has created unprecedented demand for power-hungry data centers. Traditional cloud providers and hyperscalers are signing multi-year deals to secure capacity years in advance, often at premium economics compared to Bitcoin mining.

Cipher's strategy leverages its early mover advantage in securing cheap power and developable land in Texas, a hub for both crypto and emerging AI infrastructure. By repurposing roughly 85% of infrastructure at sites like Black Pearl, the company aims to accelerate timelines and reduce capital intensity versus greenfield projects.

Risks include construction delays, potential power grid bottlenecks, counterparty execution on long-term leases, and competition from better-capitalized players like Core Scientific or traditional data center REITs entering the AI space. Regulatory or environmental hurdles around energy consumption for AI could also emerge, though current contracts provide downside protection through take-or-pay style structures.

For investors, Cipher Digital represents a high-conviction bet on the convergence of digital infrastructure trends. If the company delivers on energization schedules and begins recognizing HPC revenue in the second half of 2026, analysts see a path to re-rating higher as the business transitions from speculative mining plays to a more predictable infrastructure model.

Thursday's surge appeared driven by continued momentum from recent positive coverage framing Cipher as an undervalued AI landlord, with some commentary highlighting a potential $9 billion pivot still trading at a discount. Technical analysts noted the stock breaking key short-term levels, with bullish options activity adding to the upward pressure.

As Cipher prepares for its next earnings report and progresses on site development, market attention will focus on construction milestones, any additional tenant announcements, and updates on the residual mining business. With Bitcoin prices volatile and AI demand seemingly insatiable, the company sits at a strategic inflection point that could define its valuation for years to come.

Whether the current rally sustains will depend on execution in a capital-intensive buildout phase. But for a company once defined solely by hash rate, Cipher Digital's rebrand and contracted backlog have successfully reframed the story around durable, high-margin infrastructure growth in the AI era.