Key Takeaways
- Cipher Digital shares fell 12% today after it proposed $850 million of zero-interest convertible notes due 2032, with an option for $150 million more.
- The dilution is real, but it’s cheaper than the drop suggests: the notes pay no interest, and a capped call covers the shares behind them up to a cap.
- The dilution that lands now comes from swapping part of the 1.75% 2030 notes for stock, on top of a diluted share count that rose 75% from fiscal 2021 to fiscal 2025.
- Pricing after today’s close sets the conversion price and the cap, which will decide how much dilution holders actually take on.
Cipher Digital (CIFR) shares sank 12% this morning after the company filed, before the open, to sell $850 million of convertible notes that pay no interest at all.
The market’s worry is the share count. Here’s what holders are actually facing…
The details
- $850 million of 0.00% convertible senior notes due November 2032, plus a 13-day option for buyers to take $150 million more
- Holders can sell the notes back to Cipher at face value in November 2030
- The conversion price is set at pricing, expected after today’s close
- Some of the proceeds pay for capped calls, which Cipher expects to reduce dilution on conversion, up to a cap
The dilution hits in two places
The new notes are the slower hit. They turn into stock only if shares climb past a conversion price that hasn’t been set yet, and the capped call covers those shares up to its cap.
The swap hits faster. Cipher plans to exchange part of its 1.75% 2030 convertible notes for common stock, so those shares arrive now. The company also warns that holders taking part may sell stock or unwind hedges in the open market, which likely explains some of today’s selling.
That adds to a long pattern. Cipher’s diluted share count rose 75%, from 218 million in fiscal 2021 to 382 million in fiscal 2025.
Debt has piled up too, mostly last year. Total debt went from $56.4 million at the end of fiscal 2024 to $2.77 billion at the end of fiscal 2025, against $628 million of cash and short-term investments:
Zero-coupon notes at least add to that pile without adding to the interest bill.
Barber Lake gets the money
According to the investor presentation Cipher filed with the deal, an amended lease with a leading AI lab lifts Barber Lake’s contracted revenue from $3.8 billion to over $9 billion and doubles the base term to 20 years. In return, Cipher has to put about $750 million more of equity into the project. Across the company, contracted revenue reached $16.6 billion as of Sept. 30, up 46% from the second quarter.
I think the drop overstates the damage. Cipher is raising up to $1 billion at no interest to fund its share of more than $5 billion in new contracted rent, and the capped call softens the dilution that comes with it. The 2030 swap is the part that dilutes holders today. TIKR looked at why Cipher’s next lease matters on Saturday, and today’s raise puts money behind the one Cipher just expanded.
Of course, the terms aren’t final yet. Tonight’s pricing sets the conversion price and the cap, and those two numbers will decide how much of the company today’s holders keep.
So what is Cipher Digital stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
