Analyst remains bullish on Cipher after 2.5 GW energy expansion in Texas

Analysts at H.C. Wainwright & Co. believe Cipher’s recent acquisition in Texas will enhance its strategic operations.

Cipher recently announced the acquisition of a 300 MW development site in West Texas, increasing its total energy pipeline to over 2.5 GW across 10 locations, according to analysts at H.C. Wainwright.

The deal, valued at $67.5 million or $225,000 per MW, also includes a $3 per MWh variable fee for the first five years post-energization. This acquisition is notable for its front-of-the-meter capacity, a fully energized substation, and 250 acres of surrounding land.

While the company’s management did not provide details on construction and energization timelines, they highlighted the site’s potential for high-performance computing infrastructure and Bitcoin (BTC) mining.

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Acquisition details

The analysts view the acquisition as a strategic move to secure low-cost power in West Texas, a region known for its attractive energy pricing, likely ranging between 2 and 3 cents per kWh.

The full build-out of the site could require an additional $67.5 million, assuming its use for BTC mining.

The research firm reiterated their Buy rating of Cipher’s stock, with a $7 price target, reflecting a 7.0x market cap-to-revenue multiple on their 2025 revenue estimate of $313.5 million. However, risks include BTC price volatility, increasing network hash rates, and potential shareholder dilution.

At the time of writing, Cipher’s stock, ticker CIFR, is trading at $3.70.

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