Late Stage Capitalism
Physician, Long-Term Stock Investor with 30 Years of Experience
Cipher Mining's convertible notes cap intermediate-term upside at around $22. Raising $775M through an ATM while shares were in the $20s would have caused less dilution and avoided forward share-price risk; doing this deal at $11 instead was terribly timed. The stock is not worth touching here. x.com x.comÂ
Cipher Mining's $850M convertible financing for Barber Lake could significantly dilute shareholders at a depressed share price, compounding its weak colocation economics. Issuing around $11 rather than $20 roughly doubles the dilution; even with a capped call near twice the share price, the potential dilution is estimated at 6-12%. The higher Cipher shares go, the more costly the convertibles become, limiting upside. x.com x.com x.com x.com x.com x.comÂ
Cipher Mining's proposed convertible notes make shareholder dilution a more concrete risk. It intends to offer $850 million of notes to fund Barber Lake and its HPC pipeline; conversion can be settled in cash, shares or both, with final terms pending. Stock-based compensation was $57 million last quarter against $24 million in revenue, raising the question of whether management rather than shareholders captures the upside. x.com x.comÂ
Cipher Mining faces likely dilution from its proposed zero-interest debt given its cash flow. The $850m financing would spare cash coupons but leave repayment obligations. x.com x.comÂ
Jan Zuazo Pfingsten
Thematic Investor, Physical Scarcity & AI Infrastructure, Primary-Source Research
Cipher Mining's powered land can attract interest-free capital even when its shares fall. Its $1B 0% convert gives buyers the right to convert above today's price, while convert-arbitrage hedges explain most of the day's 12% drop. Holders can demand par in 2030, so if the stock stalls, free money becomes real debt. x.comÂ
Debt access for Nebius and Cipher Mining has to be judged against borrowing rates and broader credit conditions. In a reply, mcF_dan says both took on new debt last week; whether they paid higher rates or the debt market is loosening remains open. Their stocks still look set to plunge despite having already sunk hard. x.comÂ
Cipher Digital's AI hosting expansion is a leveraged bet on finishing the buildings on time and collecting rent from tenants. After an earlier $3 billion hosting deal was followed by a $1.1 billion convert, it is proposing another $850 million convert alongside a 20-year lease. The market is repricing the heavier balance sheet before it sees execution. x.comÂ
Cipher's extra Barber Lake spend should earn a double-digit unlevered yield on current estimates. The convertible pays for overruns shared with the tenant; capex has reached $14M/MW amid labor and supply-chain inflation. The stock should not rise on the financing news, but will be much higher once the site is leased. Book value is historical cost and does not capture contracted lease cash flows, so 9x book cannot tell whether the stock is expensive. x.com x.com x.com x.com x.com x.com x.comÂ
Cipher Digital still looks expensive on forecast earnings, with estimated EPS cut from $0.23 to $0.17 since the earlier screen. At 79x earnings against roughly 32x for data-center operators, its estimate-based fair range falls to $4.74-$6.04 versus $13.27. This remains levels-only work, not fundamental diligence. x.comÂ
Cipher Mining's chart may be forming a double top, and unprofitable AI-infrastructure names like it remain hard to own. Pending the monthly close, the candle looks like a spinning top with a bearish RSI divergence brewing. Like many peers, Cipher is not yet profitable, carries heavy capex and debt, has run hard and is still proving its business model in its financials. It could still go higher if macro pushes up and the fundamentals prove strong. x.comÂ
Cipher Mining's data-center landlord model looks safer than operators relying on short-term contracts because its tenant pays most of the costs. The stock is back in single digits at about a $4B market cap after falling 30.53% in five days. x.comÂ
Neoclouds' commodity economics and reliance on repeated debt and equity issuance could turn lost market confidence into a rapid financing collapse. If Nebius shares stay below $180.31 at maturity, two 2031 and 2033 converts could require about $4.3 billion in cash repayment or refinancing at higher rates; the underlying ChatGPT debt table was not checked. CoreWeave's 9.625% July 2032 bond yields about 14.3% in the chart. IREN faces the same capital-dependent risk. This won't end well. x.com … Show more
