Cipher’s $850 Million AI Debt Adds Pressure as Stock Falls

Cipher Digital raised $850 million through a convertible bond offering after issuing 40.7 million shares to retire older debt. The Bitcoin miner is using the proceeds to expand data centers for artificial intelligence and high-performance computing customers.

The company completed both transactions on Oct. 16, according to a securities filing. It exchanged about $165.9 million of convertible notes due in 2030 for newly issued common shares, including shares covering accrued interest. About $6.6 million of that debt remains outstanding.

The share issuance increases the number of outstanding shares and dilutes existing investors. Bondholders who received the shares could add selling pressure if they sell their holdings or unwind hedges linked to the exchanged notes.

Cipher’s stock closed at $8.98 on Oct. 16, down 10.6% during the session and at its lowest level since September 2025. The shares have fallen more than 52% over the past year and about 31% since Oct. 12.

The new convertible notes mature in November 2032 and do not require regular interest payments. Under specified conditions, holders can require Cipher to repay the notes in cash in November 2030, before the scheduled maturity date.

The notes have an initial conversion price of about $15.31 per share, above the latest closing price. Cipher paid about $89.7 million for capped-call transactions designed to reduce potential dilution if investors convert the notes. The protection initially extends to a share price of $28.35.

Cipher expects to receive about $835.1 million after discounts and commissions, before offering expenses. After paying for the capped calls, it plans to use the remaining funds for its Barber Lake project, other high-performance computing facilities and additional development sites.

The two transactions leave Cipher with about $684 million more in outstanding debt principal and expand its equity base through the share exchange. The company is developing data centers that it intends to lease for recurring revenue, reducing its reliance on Bitcoin mining income.

Cipher reported about $25 million in second-quarter revenue and a $30 million adjusted EBITDA loss in its August business update. The results came before the company began receiving initial rental payments from its Black Pearl data center, where capacity was delivered in August, two months ahead of schedule, to a hyperscale customer.

The company is also building facilities at Barber Lake and Stingray and expanding its development pipeline. Holders of the new convertible notes can seek cash repayment in 2030 if the specified conditions are met.