Key Takeaways
- Cipher Digital fell 20% in the week to Nov. 10, alongside CleanSpark and IREN, after Texas elected a governor who wants to pause new data centers.
- A pause threatens unsigned Texas sites far more than Cipher’s leased Black Pearl and Barber Lake campuses.
- Funding the next lease is the bigger risk: Cipher carried $5.62 billion of debt against $656 million of cash at Sept. 30.
Every Cipher Digital (CIFR) campus is in Texas, and on Nov. 3 Texas elected a governor who wants to pause new data centers. Cipher closed at $6.53 on Nov. 10, down 20% from its Nov. 3 close.
CleanSpark (CLSK), downgraded in the same analyst note, fell 19% over the same stretch, and IREN (IREN), which also builds in Texas, lost 19%.
A governor who wants to hit pause
Gina Hinojosa beat Greg Abbott on Nov. 3 after campaigning on halting new data centers until lawmakers pass protections. Keefe Bruyette downgraded Cipher and CleanSpark to Market Perform on Nov. 4, and Bernstein cut its Cipher target to $15 from $23 the same day, citing Texas uncertainty and costlier capital.
Hinojosa told CNN on Nov. 5: “It is not that I hate data centers. I hate the way they are taking advantage of Texas, and that stops when I’m governor.” She takes office in January.
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The signed campuses are the safer part
A pause threatens sites still awaiting approval far more than leased ones. Black Pearl has paid rent since August, and Barber Lake’s 20-year lease, worth about $9.1 billion, is scheduled to start paying between the fourth quarter and early 2027. What Texas can slow is the rest of Cipher’s 5.9-gigawatt pipeline, some of it already slowed by the grid-connection audit Abbott ordered in August. CleanSpark’s Texas growth is all unsigned: its Georgia tenant holds exclusivity over up to 885 megawatts there.
That rent is why analysts see Cipher’s revenue jumping from $159 million this year to $828 million in 2027:
Funding is the real worry
Bernstein counts Cipher’s signed projects as fully funded, so the pressure falls on the next one. At Sept. 30, Cipher owed $5.62 billion against $656 million of cash, and it added $850 million of zero-coupon convertible notes in October. Rivals face the same test. IREN said on Nov. 5 that the program behind its more than $4 billion annualized revenue target is fully contracted and funded, but it pushed that target to January from year-end, and its plan still leaves $6 billion of capex to fund.
Is it a buy at under 5x sales?
Cipher traded at 4.9x forward sales on Nov. 9, less than half its three-year average of 11.4x:
Jefferies cut its target to $10 from $12 on Nov. 10 but kept its Buy, and Morgan Stanley kept its Overweight on Nov. 9 while cutting its target to $27.50 from $51.50. The market is pricing Cipher’s signed rent as if a governor could cancel it, which looks too harsh. A next lease funded mostly with project debt would make a stronger case for buying. Stingray’s shell is due in the fourth quarter, and Cipher reports early next year.
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!
