Cipher Digital has started collecting rent as a data center landlord. In its third-quarter 2026 business update, filed with the Securities and Exchange Commission on Nov. 2 as an exhibit to a Form 8-K, the company said it recognized its first high-performance computing (HPC) lease revenue after rent commenced at its Black Pearl campus. Most of the update, though, is about what comes after the leases already signed: a development pipeline the company puts at about 5.9 GW, a set of conditional grid classifications from the Electric Reliability Council of Texas (ERCOT), and lateral gas pipelines meant to support up to 2.5 GW of on-site generation.

DataCenterFeed has already covered the Barber Lake lease and Cipher's $850 million convertible note offering. This article covers the company's operating status at the end of the quarter and how it plans to power the next phase of growth.

The Quarter in Numbers

Cipher reported third-quarter revenue of $27 million and adjusted EBITDA of about negative $10 million, according to the 8-K exhibit. The headline revenue figure can be misread. As Mugglehead pointed out, the $27 million is company-wide revenue and does not measure quarterly HPC rent. Mugglehead also reported that revenue came in below the $40.63 million consensus estimate it attributed to Zacks Investment Research.

On the earnings call, as transcribed by Motley Fool, management put HPC leasing revenue for the quarter at $5.9 million. That is the first reported figure for the business Cipher is building toward, and it reflects only a partial period of rent at a single campus.

The contracted backlog is much larger. On the call, management said total contracted revenue is $16.6 billion over two decades, across three campuses totaling 700 gross MW, with a weighted average lease term of 17.3 years. The 8-K says the Barber Lake lease has been extended to a 20-year term. That brings contracted revenue at that campus to about $9.1 billion, which the company says adds about $5.2 billion in incremental rent.

Construction Status: Black Pearl, Barber Lake and Stingray

On the call, management said Cipher delivered first capacity at Black Pearl in August, ahead of schedule, and has delivered 18 MW of critical IT capacity to date, with the remaining phase 1 data halls in fit-out. The 8-K says multiple data halls across Black Pearl and Barber Lake are scheduled to come online through year-end. Mugglehead called delivery of those halls by the end of 2026 the immediate test of the contracted income.

Barber Lake is also getting more expensive. On the call, management said Cipher agreed to invest $359 million in the project in exchange for the lease extension, and the unit cost is now $13 million per IT MW, up from the $10.4 million per IT MW level used when the project was financed. Management said the additional rent restored the project's average yield on cost to approximately 15%.

The 8-K says shell construction at the Stingray site is expected to be complete in the fourth quarter. The filing also refers to 270 MW of capacity available in 2027, for which the company says it continues to advance tenant discussions and design work.

What Batch Zero Classifications Mean, and What They Don't

Much of Cipher's update concerns ERCOT's Batch Zero process. In the 8-K, the company highlighted a conditional base-load classification for its 1-GW Colchis site. It also reported conditional studied-load classifications covering 1.6 GW with Provisional Controllable Load Resource (PCLR) designations.

Readers should keep two caveats in mind. First, every one of these classifications is conditional. Second, a classification does not authorize interconnection. Proactive Investors made the same point in September, when Cipher first disclosed the designations and its shares rose 13%. That outlet reported that the designations "stop short of authorizing power connections." Mugglehead repeated in its Q3 coverage that the classifications remain conditional.

The September disclosure, as Proactive Investors reported it, covered 3.2 GW of conditional designations in total:

  • Conditional base load (1.1 GW): Stingray (100 MW) and Colchis (1 GW).
  • Conditional studied load (2.1 GW): Mikeska (500 MW, PCLR qualified), Apollo (900 MW), Stingray Phase II (200 MW) and McLennan (500 MW).

The Q3 filing describes the studied-load group as 1.6 GW with PCLR designations. Cipher has not published a site-by-site reconciliation of that figure against the September breakdown in the sources reviewed, and readers should not assume one.

Proactive Investors also reported that the September classifications followed Texas Governor Greg Abbott's August order to audit data-center projects involved in ERCOT's interconnection process. Management acknowledged the policy backdrop on the Q3 call: according to the Motley Fool transcript, CEO Tyler Page said the Texas regulatory environment is evolving and drawing scrutiny from investors. He did not say how any rule change might affect the company's specific classifications, and the sources do not either.

Gas Laterals and On-Site Generation

The update's second power strategy is on-site generation. According to the 8-K, Cipher has begun developing lateral gas pipelines to support up to 2.5 GW of potential on-site generation across multiple sites. The filing describes this as development work, not completed infrastructure. "Up to 2.5 GW" is a ceiling for the generation the pipelines could support, not installed capacity.

Taken together, the update points to two power paths: grid interconnection through ERCOT's large-load process, and pipeline-fed on-site generation. The sources do not identify which sites the laterals will serve, the pipeline routes, the generation technology, or any permits filed.

A Larger Footprint: Horizon and the 5.9-GW Pipeline

The 8-K says Cipher acquired Horizon, a 70-MW site in Texas, with energization expected in 2029. The company puts its development pipeline at about 5.9 GW. On the call, management described a total portfolio of about 6.8 GW across operating, contracted and future sites, including potential on-site generation.

Those figures cover land and power positions at very different stages. Some sites have leases and steel going up. Others have only conditional grid classifications or an expected energization date several years away.

How It Is Being Financed

According to the call transcript, Cipher's total debt is about $6.7 billion. That consists of $4.5 billion in nonrecourse project-level secured notes and $2.2 billion in convertible notes. Management put pro forma unrestricted cash at approximately $724 million.

The 8-K lists the $850 million offering of 0.000% convertible senior notes due 2032, with capped call transactions that raise the effective conversion price to $28.35 per share. It also says about $165.9 million of the company's 1.750% convertible notes due 2030 were equitized, meaning exchanged for stock rather than repaid in cash, retiring more than 90% of those notes.

What Happens Next

Cipher has stated several milestones. Multiple data halls across Black Pearl and Barber Lake are scheduled to come online through the end of 2026. Shell construction at Stingray is expected to be complete in the fourth quarter. The newly acquired 70-MW Horizon site in Texas has expected energization in 2029. On the grid side, the ERCOT Batch Zero classifications for Colchis and the 1.6 GW of studied load remain conditional and do not authorize interconnection. In September, as Proactive Investors reported, Cipher said it would release final designations in December following the state audit. The Q3 sources reviewed do not restate that timing.

Sources