Bitcoin mining company Cipher Mining experienced a significant surge, climbing more than 32%, after announcing a new 15-year agreement with technology giant Amazon. This development adds to a growing trend of partnerships between major technology firms and cryptocurrency miners.
The 15-year lease agreement with Amazon Web Services, valued at $5.5 billion, mandates that Cipher provide turnkey space and power for artificial intelligence (AI) workloads. The deal is structured in two phases, with operations set to commence in July and August of the following year, according to the Bitcoin miner's announcement on Monday.
Cipher Mining also reported a substantially narrowed net loss of $3 million for the third quarter, alongside a rise in adjusted earnings to $41 million. This marks an improvement compared to the previous quarter, which saw a net loss of $46 million and adjusted earnings of $30 million.
These positive financial results and the substantial new deal contributed to Cipher's stock performance. The company's shares jumped 32% from an opening price of $18.65 to a high of $24.80 during Monday's trading session, before closing the day at $22.76.
The cryptocurrency mining sector has seen an increasing diversification of income streams. Many miners are shifting their energy capacity towards AI and High-Performance Computing (HPC) hosting services. This pivot comes after the April 2024 halving event, which reduced Bitcoin mining rewards to 3.125 BTC per block, negatively impacting overall profitability for miners.
Cipher Mining's Existing Partnerships with Major Tech Companies
Cipher Mining has already established significant business relationships with other leading technology firms. In September, Google acquired a 5.4% stake in Cipher Mining as part of a $3 billion, multi-year data center agreement with AI data center company Fluidstack.
Cipher CEO Tyler Page stated on Monday that the company "executed a pivotal transaction with Fluidstack and Google, which firmly established our credibility in the HPC space." He further commented, "We are now following that transaction with another major step forward by signing our first direct lease with a Tier 1 hyperscaler."
In addition to the Amazon deal, Cipher announced its majority stake in a joint venture focused on developing a one-gigawatt AI hosting site in West Texas, known as Colchis. Under this arrangement, Cipher will provide the majority of the financing and hold a 95% equity ownership in the venture.
Broader Trend of Tech Giants Partnering with Crypto Miners
Major technology companies have significantly increased their engagement with Bitcoin miners throughout the current year. Notably, Bitcoin mining company IREN signed a multi-year GPU cloud services contract with Microsoft, valued at $9.7 billion, on the same Monday as Cipher's announcement.
Concurrently, TeraWulf announced a substantial $3.7 billion hosting agreement in August with Fluidstack, a company backed by Google's parent company, Alphabet. These deals highlight a growing synergy between the energy-intensive demands of AI infrastructure and the operational capabilities of cryptocurrency mining companies.