Cipher Digital Inc.
11/02/2026 | Press release | Distributed by Public on 11/02/2026 08:14
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report. This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in Part II, Item 1A, "Risk Factors" and other factors set forth in other parts of this Quarterly Report.
Unless the context otherwise requires, references in this Quarterly Report to the "Company," "Cipher," "Cipher Digital," "we," "us" or "our" refers to Cipher Digital Inc. and its consolidated subsidiaries, unless otherwise indicated.
Overview
We are dedicated to developing and operating industrial-scale data centers engineered for next-generation computing at the highest standards of innovation, precision, and excellence. Over the past several years, we have intentionally evolved from a pure-play bitcoin miner into a vertically integrated data center development and operations platform focused on energy-intensive compute infrastructure. Our vertical integration spans critical stages of the data center value chain, including land and power origination and interconnection, site development, data center design and construction, oversight and ongoing facility operations.
Fundamentally, we bring together construction, engineering, operations, power, real estate and technology expertise to deliver high quality, purpose-built data centers that meet tenants' needs. Our in-house teams source and control industrial-scale sites with access to substantial electric power capacity, advance grid interconnection and substation development, and manage the design and construction of data center campuses. We also operate and maintain energy-intensive data center facilities, leveraging operational expertise developed through our employees' extensive experience managing Tier III HPC data centers and large, flexible electrical loads. Against a backdrop of increasing demand for AI technology and access to energized HPC data centers to meet consumers' demands for such technology, we believe we play an important part of the AI economy and we expect to benefit from powerful, long-term growth drivers.
While bitcoin mining has been an important component of our business model in prior years, our strategy increasingly emphasizes the development of industrial-scale data centers that can be leased to hyperscalers and other HPC customers under long-term contracts, while retaining the flexibility to deploy bitcoin mining as an interim or complementary use of power.
On February 20, 2026, we changed our name to "Cipher Digital Inc." Rebranding to "Cipher Digital" aligns with our corporate strategy to scale into a leading HPC data center developer and operator, as we leverage our existing site pipeline and source additional sites, partnering with premier tenants, and developing and operating industry-leading data centers purpose-built for HPC. Our goal is to monetize our power assets and manage capital efficiently through market cycles in order to align our infrastructure with the growing global demand for AI-driven compute capacity.
Our data center portfolio consists of approximately 4.3 gigawatts ("GW") of grid capacity across 11 sites, at various stages of interconnection, as well as on-site generation capacity from the development of lateral pipelines capable of delivering natural gas sufficient to support up to 2.5 gigawatts of generation across multiple sites. We are currently developing 700 MW of HPC data center facilities across three sites for hyperscaler tenants, and we currently operate approximately 207 MW of capacity at one bitcoin mining data center in Texas. We also maintain a grid pipeline of approximately 3.4 GW across six sites in Texas and one additional site in Ohio.
We have executed HPC leases at three of our data centers and are currently marketing potential leases at others of our pipeline sites. We believe we have a demonstrated ability to source high-quality sites suitable for HPC tenants, with characteristics like proximity to major metropolitan areas, ample acreage, diverse fiber routes, and available interconnection infrastructure. We have experienced in-house construction, engineering and operations teams and project management competencies. We have demonstrated an ability to access and manage capital in a disciplined manner.
A significant component of our current and future growth is expected to be generated through the development of our existing portfolio and acquisition of new sites. We are focused on developing the remaining sites in our pipeline for future HPC tenants, and evaluating additional sites, locations, and partnerships to expand our pipeline that are suitable for HPC tenants. From time to time, we may also look to sell individual assets that we do not consider to be core to our
business and growth strategy. For further details on our pipeline of future sites that we expect to be suitable for HPC, see "Business-Site Pipeline" of our 2025 Form 10-K.
Recent Developments
On October 16, 2026, we exchanged approximately $165.9 million of principal amount of the 1.75% Convertible Senior Notes due 2030 (the "2030 Convertible Notes") for approximately 40.7 million shares of common stock. Following this exchange, approximately $6.6 million aggregate principal amount of the 2030 Convertible Notes remains outstanding.
On October 16, 2026, we issued $850.0 million aggregate principal of 0.00% Convertible Senior Notes due 2032 (the "2032 Convertible Notes"). The 2032 Convertible Notes will mature on November 1, 2032, and have an initial conversion price of approximately $15.31 per share of our common stock. In connection with the pricing of the 2032 Convertible Notes, we entered into privately negotiated capped call transactions (the "Capped Call Transactions"). The Capped Call Transactions cover, subject to customary anti-dilution adjustments, the number of shares of our common stock that initially underlie the 2032 Convertible Notes. The Capped Call Transactions are generally expected to reduce the potential dilution to our common stock upon any conversion of the 2032 Convertible Notes, and/or offset any potential cash payments we are required to make in excess of the principal amount of converted 2032 Convertible Notes, as the case may be with such reduction and/or offset subject to a cap. The cost of the Capped Call Transactions was approximately $89.7 million. With the net proceeds of the 2032 Convertible Notes, we funded capped call transactions, and expect to use the remaining proceeds to fund the additional equity investment at Barber Lake, continue to develop our sites, and for general corporate purposes.
Factors Affecting Our Results of Operations
There have been no material changes to the "Factors Affecting Our Results of Operations" in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of our 2025 Form 10-K. Our financial position and results of operations depend to a significant extent on those factors.
Summary of Bitcoin Inventory
The following table presents information about our Bitcoin inventory for the nine months ended September 30, 2026, including bitcoin production and sales of bitcoin (dollar amounts in thousands):
|
Quantity
|
Amounts
|
||||||||||
| Opening balance | 1,433 | $ | 125,400 | ||||||||
| Bitcoin received from equity investees | 34 | 2,772 | |||||||||
| Bitcoin received from mining activities | 1,095 | 80,908 | |||||||||
| Proceeds from sales of bitcoin | (2,252) | (168,941) | |||||||||
| Realized losses on sale of bitcoin | - | (47,251) | |||||||||
| Unrealized gains on fair value of bitcoin | - | 33,055 | |||||||||
| Ending balance | 310 | $ | 25,943 | ||||||||
Components of Our Results of Operations
Bitcoin Mining Revenue
Our bitcoin mining revenue consists of bitcoin earned through mining activities at the Odessa and Black Pearl Facilities. We currently participate in third-party mining pools to mine bitcoin. The provision of computing power in accordance with the mining pool operator's terms of service is the only performance obligation in our contract with the mining pool operator. We are entitled to a fractional share of the set cryptocurrency award from the mining pool operator (referred to as a "block reward") and potentially transaction fees generated from blockchain users and distributed to individual miners by the mining pool operator.
Our fractional share of the block reward is based on the proportion of computing power we contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm, over the contract term. The block reward is pre-determined in the protocol governing the relevant blockchain. Our proportionate share of transaction fees is based on our contributed share of hashrate as a percentage of total network hashrate during the contract term. The transaction fees are the aggregate fees paid by parties whose transactions are included in the block. Bitcoin earned is measured at fair value at contract inception and is recognized in revenue over the contract term as hashrate is provided.
HPC Leasing Revenue
HPC leasing revenue is generated by leasing data center capacity and providing related services to our tenants. These lease arrangements contain fixed payments for base rent of the data center, as well as variable components for certain operating expenses, primarily power, which are provided to tenants at cost and are recorded on a gross basis in HPC leasing revenue and Cost of revenue - HPC leasing.
Cost of revenue - bitcoin mining
Cost of revenue for bitcoin mining consists of direct production costs for our bitcoin mining data centers, primarily electricity expenses, as well as other facilities costs, but excludes depreciation which is separately stated.
Cost of revenue - HPC leasing
Cost of revenue for HPC leasing consists of direct production costs for our HPC data centers, primarily electricity expenses, as well as other facilities costs, but excludes depreciation which is separately stated. As part of our lease arrangements, certain operating expenses, primarily power, which are provided to tenants at cost and are recorded on a gross basis in HPC leasing revenue and Cost of revenue - HPC leasing.
Compensation and benefits
Compensation and benefits includes payroll and payroll-related expenses, as well as stock based compensation awarded to employees of the Company.
General and administrative expenses
General and administrative expenses represent insurance expense, rent expense, professional fees, including accounting and audit, consulting, legal, public relations and/or investor relations expenses, non-income taxes and licenses, travel, and other expenses.
Depreciation and amortization
Our Depreciation and amortization expense consists primarily of depreciation on our miners and mining equipment, and other capitalized assets placed into service related to construction of our data centers. We record depreciation expense on a straight-line basis over the estimated useful lives of the equipment.
Change in fair value of derivative asset and power sales
The change in fair value of derivative asset represents the changes in fair value of the Luminant Power Agreement recorded during the reporting period.
Equity in losses of equity investees
Equity in losses of equity investees includes our share of the losses recorded by Alborz LLC, Bear LLC and Chief Mountain LLC prior to February 19, 2026, when we sold our interests in these joint ventures.
Changes in fair value of bitcoin and realized gain/loss on sale of bitcoin
All of our bitcoin is recorded as a current asset on our condensed consolidated balance sheet as we expect to regularly exchange our bitcoin held for fiat currency to fund our operating expenses. We adopted ASU 2023-08 Accounting for and Disclosure of Crypto Assets ("ASU 2023-08") effective January 1, 2023, which requires cryptocurrencies to be measured at fair value each reporting period with changes in fair value being reported in net income.
The fair value of bitcoin has been highly volatile since we began to obtain bitcoin through our operating activities, which has impacted our operating results and we expect volatility in the fair value of bitcoin to continue for the foreseeable future.
Provision for income taxes
Our provision for income taxes primarily consists of state income taxes. A valuation allowance is recorded against substantially all of our net deferred tax assets, which are composed primarily of federal and state net operating loss carryforwards, stock-based compensation, intangible assets other than goodwill, investments in joint ventures and lease liabilities; in addition, we have deferred tax liabilities resulting from our derivative and right-to-use assets. Our ability to offset our deferred tax liabilities with our deferred tax assets is limited due to restrictions on the ability to offset taxable income by more than eighty percent with federal net operating losses. As a result, we have recorded a deferred tax liability for the amount of future taxable income that is not expected to be covered by net operating losses. We evaluate our ability to recognize our deferred tax assets annually by considering all positive and negative evidence available as prescribed by the Financial Accounting Standards Board ("FASB") under its general principles of Accounting Standards Codification ("ASC") 740, Income Taxes.
Results of Operations
The following table sets forth our results of operations for the periods indicated (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenue - bitcoin mining | $ | 20,849 | $ | 71,707 | $ | 80,524 | $ | 164,231 | |||||||||||||||
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Revenue - HPC leasing
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5,852 | $ | - | 5,852 | $ | - | |||||||||||||||||
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Total revenue
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26,701 | 71,707 | 86,376 | 164,231 | |||||||||||||||||||
| Costs and operating (expenses) income | |||||||||||||||||||||||
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Cost of revenue - bitcoin mining
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(14,638) | (26,733) | (46,487) | (56,957) | |||||||||||||||||||
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Cost of revenue - HPC leasing
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(726) | - | (1,629) | - | |||||||||||||||||||
| Compensation and benefits | (38,555) | (14,445) | (115,917) | (44,407) | |||||||||||||||||||
| General and administrative | (26,359) | (8,167) | (54,578) | (26,196) | |||||||||||||||||||
| Depreciation and amortization | (18,821) | (59,549) | (57,200) | (147,102) | |||||||||||||||||||
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Change in fair value of power purchase agreement
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(13,910) | (9,030) | (48,040) | (17,180) | |||||||||||||||||||
| Power sales | 4,251 | 2,335 | 8,684 | 4,702 | |||||||||||||||||||
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Equity in losses of equity investees
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- | (1,479) | (1,601) | (8,472) | |||||||||||||||||||
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Unrealized gains (losses) on fair value of bitcoin
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12,394 | 108 | 33,055 | (2,927) | |||||||||||||||||||
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Realized gains (losses) on sale of bitcoin
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481 | 7,535 | (47,251) | 16,092 | |||||||||||||||||||
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Other operating income (losses)
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(2,733) | 101 | (20,432) | (2,732) | |||||||||||||||||||
| Total costs and operating expenses | (98,616) | (109,324) | (351,396) | (285,179) | |||||||||||||||||||
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Operating loss
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(71,915) | (37,617) | (265,020) | (120,948) | |||||||||||||||||||
| Other income (expense) | |||||||||||||||||||||||
| Interest income | 32,684 | 457 | 100,135 | 943 | |||||||||||||||||||
| Interest expense | (58,994) | (1,286) | (184,888) | (3,200) | |||||||||||||||||||
| Change in fair value of warrant liability | 127,180 | 31,860 | 20,280 | 31,860 | |||||||||||||||||||
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Other income (expenses)
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2,587 | 3,000 | (20,036) | 4,064 | |||||||||||||||||||
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Total other income (expense)
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103,457 | 34,031 | (84,509) | 33,667 | |||||||||||||||||||
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Income (loss) before taxes
|
31,542 | (3,586) | (349,529) | (87,281) | |||||||||||||||||||
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Current income tax benefit (expense)
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54 | 767 | (720) | (1,157) | |||||||||||||||||||
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Deferred income tax (expense) benefit
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- | (464) | - | 399 | |||||||||||||||||||
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Total income tax benefit (expense)
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54 | 303 | (720) | (758) | |||||||||||||||||||
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Net income (loss)
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31,596 | (3,283) | (350,249) | (88,039) | |||||||||||||||||||
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Less: Net loss attributable to redeemable noncontrolling interest
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9 | $ | - | 9 | $ | - | |||||||||||||||||
|
Net income (loss) available for common stockholders
|
$ | 31,605 | $ | (3,283) | $ | (350,240) | $ | (88,039) | |||||||||||||||
Comparative Results for the Three Months Ended September 30, 2026 and 2025
Total Revenue
Total revenue for the three months ended September 30, 2026 was $26.7 million compared to $71.7 million for the three months ended September 30, 2025.
Bitcoin mining revenue was $20.8 million, a decrease of $50.9 million, and was generated from bitcoin mining operations at the Odessa Facility. The decrease was primarily driven by a decrease in bitcoin mined following the cessation of mining operations at the Black Pearl Facility in February 2026 in connection with its conversion into an HPC data center
HPC leasing revenue was $5.9 million following commencement of the initial phase of the Black Pearl Facility Lease in August 2026. HPC leasing revenue consisted primarily of $5.2 million of fixed lease payments recognized on a straight-line basis. There was no HPC leasing revenue in the prior year period.
Cost of revenue - bitcoin mining
Bitcoin mining cost of revenue for the three months ended September 30, 2026 was $14.6 million, compared with $26.7 million for the three months ended September 30, 2025, and consisted primarily of power costs at our Odessa data center, which has a fixed power cost. The decrease was primarily due to lower power costs following the cessation of mining at the Black Pearl Facility.
Cost of revenue - HPC Leasing
HPC leasing cost of revenue for the three months ended September 30, 2026 was $0.7 million. Included in HPC leasing cost of revenue are costs passed on to our tenants, which are recognized as revenue.
Compensation and benefits
Compensation and benefits for the three months ended September 30, 2026 was $38.6 million, compared to $14.4 million for the three months ended September 30, 2025. The increase is primarily due to stock-based compensation.
General and administrative
General and administrative expenses increased by $18.2 million to $26.4 million during the three months ended September 30, 2026 from $8.2 million for the three months ended September 30, 2025. The increase was primarily driven by increased charitable contributions, and legal fees in the current quarter related to strategic initiatives, as well as insurance related to construction.
Depreciation and amortization
Depreciation and amortization for the three months ended September 30, 2026 was $18.8 million, a decrease of $40.7 million compared to Depreciation and amortization of $59.5 million for the three months ended September 30, 2025. The decrease was primarily due to asset write-downs related to our mining business, and fewer assets in service in the current year due to sales of mining rigs.
Change in fair value of power purchase agreement
Change in fair value of power purchase agreement was a $13.9 million loss for the three months ended September 30, 2026 and was driven by the fair value of the Luminant Power Agreement. The estimated fair value of power purchase agreement was derived from Level 2 and Level 3 inputs, and, due to a lack of quoted prices for similar type assets, is classified in Level 3 of the fair value hierarchy. Specifically, the discounted cash flow estimation models contain quoted spot and forward prices for electricity, as well as estimated usage rates consistent with the terms of the Luminant Power Agreement, the initial term of which is five years. The loss was driven by a decrease in the forward curve for power prices as well as less time remaining on the contract.
Power sales
At the Odessa Facility we sold excess electricity that was available under the Luminant Power Agreement back to the ERCOT market through Luminant. We sold power for proceeds of $4.3 million and $2.3 million for the three months ended September 30, 2026, and 2025, respectively. Power sales fluctuate each period based on power and bitcoin prices which are both volatile.
Equity in losses of equity investees
There were no Equity in losses of equity investees for the three months ended September 30, 2026 compared to $1.5 million for the three months ended September 30, 2025. Equity in losses of equity investees consisted of our 49% share in the losses generated by our three partially-owned mining sites prior to selling our interests in February 2026.
Unrealized gains on fair value of bitcoin
Unrealized gains on fair value of bitcoin totaled $12.4 million for the three months ended September 30, 2026, compared to $0.1 million for the three months ended September 30, 2025. Unrealized gains on fair value of bitcoin is driven by the cost of bitcoin mined compared to the price of bitcoin at the end of the period.
Realized gains (losses) on sale of bitcoin
Realized gains on sale of bitcoin totaled $0.5 million for the three months ended September 30, 2026 compared to $7.5 million for the three months ended September 30, 2025. Realized gains on sale of bitcoin is a result of selling bitcoin at prices different from the cost basis.
Other operating (losses) income
Other operating losses were $2.7 million for the three months ended September 30, 2026, compared to other operating income of $0.1 million for the three months ended September 30, 2025. The current period primarily consisted of costs incurred at the Barber Lake Facility prior to lease commencement.
Other income (losses)
Other income totaled $103.5 million for the three months ended September 30, 2026, compared to Other income of $34.0 million for three months ended September 30, 2025.The increase was primarily driven by a $127.2 million gain on the change in fair value of our warrant liability, compared to a gain of $31.9 million in the prior year period, and interest income of $32.7 million earned on cash and restricted cash raised from our debt financings. These were partially offset by interest expense of $59.0 million, net of capitalized interest, on our senior secured notes and convertible notes, compared to $1.3 million in the prior year period.
Provision for income taxes
For the three months ended September 30, 2026, we recorded a benefit for income taxes of $0.1 million. For the three months ended September 30, 2025, we recorded a benefit for income taxes of $0.3 million.
Comparative Results for the Nine Months Ended September 30, 2026 and 2025
Revenue
Total revenue for the nine months ended September 30, 2026 was $86.4 million, compared to $164.2 million for the nine months ended September 30, 2025.
Bitcoin mining revenue was $80.5 million, a decrease of $83.7 million, and was generated from bitcoin mining operations at the Odessa Facility and, through February 2026, the Black Pearl Facility. The decrease was primarily driven by fewer bitcoin mined following the cessation of mining at the Black Pearl Facility.
HPC leasing revenue was $5.9 million following commencement of the initial phase of the Black Pearl Facility Lease in August 2026. HPC leasing revenue consisted primarily of $5.2 million of fixed lease payments recognized on a straight-line basis. There was no HPC leasing revenue in the prior year period.
Cost of revenue - bitcoin mining
Cost of revenue for the nine months ended September 30, 2026 was $46.5 million, compared with $57.0 million for the nine months ended September 30, 2025, and consisted primarily of power costs at our data centers. The decrease is primarily due to decreased power costs as the Black Pearl Facility was being retrofit for HPC.
Cost of revenue - HPC Leasing
HPC leasing cost of revenue for the nine months ended September 30, 2026 was $1.6 million. Included in HPC leasing cost of revenue are costs passed on to our tenants, which are recognized as revenue.
Compensation and benefits
Compensation and benefits for the nine months ended September 30, 2026 was $115.9 million, an increase from $44.4 million for the nine months ended September 30, 2025, driven by an increase in headcount, and higher valuation on performance based stock compensation in the year.
General and administrative
General and administrative expenses for the nine months ended September 30, 2026 was $54.6 million, an increase of $28.4 million compared to $26.2 million for the nine months ended September 30, 2025. The increase was primarily driven by an increase in charitable contributions, and consulting and legal fees related to strategic initiatives, including our lease negotiations and other transactions, as well as insurance related to construction.
Depreciation and amortization
Depreciation and amortization for the nine months ended September 30, 2026 was $57.2 million, a decrease of $89.9 million compared to Depreciation and amortization of $147.1 million for the nine months ended September 30, 2025. The decrease was primarily due to asset write-downs and sales related to our mining business resulting in fewer assets in service in the current year.
Change in fair value of power purchase agreement
Change in fair value of power purchase agreement was a $48.0 million decrease for the nine months ended September 30, 2026 and was driven by the fair value of the Luminant Power Agreement. The estimated fair value of our power purchase agreement was derived from Level 2 and Level 3 inputs, and, due to a lack of quoted prices for similar type assets, is classified in Level 3 of the fair value hierarchy. Specifically, the discounted cash flow estimation models contain quoted spot and forward prices for electricity, as well as estimated usage rates consistent with the terms of the Luminant Power Agreement. The loss was driven by a decrease in the forward curve for power prices as well as less time remaining on the contract.
Power sales
At our Odessa Facility, we sell excess electricity that is available under the Luminant Power Agreement, but not needed in our mining operations, back to the ERCOT market through Luminant. We sold power for proceeds of $8.7 million and $4.7 million for the nine months ended September 30, 2026, and 2025, respectively. Power sales fluctuate each period based on power and bitcoin prices, which are volatile.
Equity in losses of equity investees
Equity in losses of equity investees totaled $1.6 million for the nine months ended September 30, 2026 compared to $8.5 million for the nine months ended September 30, 2025. Equity in losses of equity investees consists of our 49% share in the losses generated by our three partially-owned bitcoin mining sites, and the accretion of the basis differences in our investments in the equity investees. These interests were sold in February 2026.
Unrealized (losses) gains on fair value of bitcoin
Unrealized gains on fair value of bitcoin totaled $33.1 million for the nine months ended September 30, 2026, compared to immaterial unrealized losses on fair value of bitcoin for the nine months ended September 30, 2025. Unrealized (losses) gains on fair value of bitcoin is driven by the cost of bitcoin mined compared to the price of bitcoin at the end of the period.
Realized gains and losses on sale of bitcoin
Realized losses on sale of bitcoin totaled $47.3 million for the nine months ended September 30, 2026 compared to gains of $16.1 million in the prior year period. In both periods, this is driven by selling bitcoin at prices differing from our cost basis.
Other operating (losses) income
Other operating losses were $20.4 million for the nine months ended September 30, 2026, compared to $2.7 million for the nine months ended September 30, 2025. The increase was primarily driven by a $10.4 million loss on disposal of assets and a $7.4 million loss on miners reclassified as held for sale, both related to our bitcoin mining business.
Other expense
Other expense totaled $84.5 million for the nine months ended September 30, 2026, compared to other income of $33.7 million for the nine months ended September 30, 2025. The change was primarily driven by interest expense of $184.9 million, net of capitalized interest, on our senior secured notes and convertible notes, compared to $3.2 million in the prior year period, and a $21.2 million unrealized loss on our investment in Canaan common stock. These were partially offset by interest income of $100.1 million on cash and restricted cash balances and a $20.3 million gain on the change in fair value of our warrant liability.
Income tax benefit (expense)
For the nine months ended September 30, 2026, we recorded a provision for income taxes of $0.7 million as a result of projected taxable income for the current year in the jurisdictions which we operate. For the nine months ended September 30, 2025, we recorded a provision for income taxes of $0.8 million.
Liquidity and Capital Resources
Cash used in operations was $283.2 million for the nine months ended September 30, 2026. As of September 30, 2026, we had cash and cash equivalents of $656.0 million, total stockholders' equity of $600.3 million and an accumulated deficit of $1,353.9 million. We fund operations primarily through a combination of at-the-market stock issuances, short-term and long-term financing arrangements, and bitcoin sales.
We have established an at-the-market sales agreement (as amended and restated, the "Amended and Restated Sales Agreement") with Cantor Fitzgerald & Co., Canaccord Genuity LLC, Needham & Company, LLC, Compass Point Research & Trading, LLC, Keefe, Bruyette & Woods, Inc., Virtu Americas LLC, and BTIG, LLC (each, an "Agent" and, together, the "Agents"), pursuant to which we may, from time to time, sell shares of our common stock having an aggregate offering price of up to $725.7 million. For the nine months ended September 30, 2026, we received net proceeds on sales of 5.5 million shares of common stock under the Amended and Restated Sales Agreement of approximately $129.2 million (net of commissions and expenses) at an average net selling price of $23.50 per share. For more information on our at-the-market sales agreement and our at-the-market offerings, see Note 15. Stockholders' Equity.
On March 23, 2026, we entered into a $200.0 million Revolving Credit Facility with Morgan Stanley Senior Funding, Inc. as administrative agent and collateral agent, and a syndicate of lenders, which matures on March 23, 2030 (subject to a potential Springing Maturity Date tied to the 2030 Convertible Notes). The Revolving Credit Facility also provides for additional accordion option of up to $50.0 million. During the Pre-Completion Availability Period, the period prior to the earlier of the completion of the Barber Lake Facility or the Black Pearl Facility, aggregate borrowings under the Revolving Credit Facility are limited to $50.0 million. The Revolving Credit Facility includes a $50.0 million letter of credit sublimit. Borrowings bear interest at Term SOFR plus an initial applicable margin of 1.75% (or ABR plus 0.75%), with the margin adjustable thereafter based on our Consolidated Total Debt to Market Capitalization Ratio. We are also required to pay a commitment fee of 0.50% per annum on unfunded commitments. The Revolving Credit Facility is secured on a first-priority basis by substantially all of the assets of the Borrower and the guarantors. The Revolving Credit Facility contains a financial maintenance covenant requiring us to maintain minimum Liquidity of $100.0 million, increasing to $150.0 million after the first, and $200.0 million after both, of the Barber Lake Facility and the Black Pearl Facility commence operations. As of September 30, 2026, we had no outstanding borrowings under the Revolving Credit Facility and were in compliance with all covenants. For more information on the Revolving Credit Facility, see Note 14. Debt.
We have a master loan agreement with Coinbase Credit, Inc., as lender, and Coinbase, Inc., as lending service provider. Pursuant to the master loan agreement, we currently have a secured line with capacity to be determined, (the
"Coinbase Overnight Credit Facility"), subject to credit review. We will not incur commitment fees for unused portions of the Coinbase Overnight Credit Facility. The borrowing rate on amounts drawn against the Coinbase Overnight Credit Facility is determined on the basis of the Federal Funds Target Rate - Upper Bound, plus 2.5%, calculated daily based on a 365-day year and payable monthly for the duration of the loan. Borrowings under the Coinbase Overnight Credit Facility are available on demand, open term, and collateralized by bitcoin transferred to the lending service provider's platform. As of September 30, 2026, we had nothing drawn on the Coinbase Overnight Credit Facility.
On May 22, 2025, we issued $172.5 million principal amount of the 2030 Convertible Notes. The 2030 Convertible Notes are senior, unsecured obligations with interest due semiannually on May 15 and November 15 each year beginning on November 15, 2025.
On September 30, 2025, we issued an aggregate principal amount of $1,300.0 million of 0.00% Convertible Senior Notes due 2031 (the "2031 Convertible Notes" and together with the 2030 Convertible Notes and the 2032 Convertible Notes, the "Convertible Notes"). With the net proceeds of the 2031 Convertible Notes, we funded capped call transactions which are generally expected to reduce the potential dilution of the Company's common stock that will initially underlie the 2031 Convertible Notes, and expect to use the remaining proceeds to finance a portion of the construction at the Barber Lake Facility, continue to develop our sites, and for general corporate purposes.
For more information on our Convertible Notes, and the Revolving Credit Facility see Note 14. Debt.
Management believes that our existing financial resources, combined with projected cash and bitcoin inflows from our data centers, our intent and ability to sell bitcoin received or earned, and our intent and ability to sell common stock through at-the-market offerings will be sufficient to enable us to meet our operating and capital requirements for at least 12 months from the date the condensed consolidated financial statements included in this Quarterly Report are issued and the foreseeable future.
Cash Flows
The following table summarizes our sources and uses of cash for the periods indicated (in thousands):
| Nine Months Ended September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
|
Net cash used in operating activities
|
$ | (283,194) | $ | (153,506) | ||||||||||
|
Net cash used in investing activities
|
(2,352,910) | (131,454) | ||||||||||||
| Net cash provided by financing activities | 2,824,067 | 1,486,202 | ||||||||||||
|
Net increase in cash and cash equivalents, and restricted cash
|
$ | 187,963 | $ | 1,201,242 | ||||||||||
Operating Activities
Net cash used in operating activities was $283.2 million for the nine months ended September 30, 2026 compared to net cash used in operating activities of $153.5 million for the nine months ended September 30, 2025. We incurred a net loss of $350.2 million for the nine months ended September 30, 2026, compared to a net loss of $88.0 million for the nine months ended September 30, 2025, representing an increase of $262.2 million. Cash flows from operating activities was impacted by a $132.5 million increase in non-cash items, primarily driven by the increase in amortization of debt discount and issuance costs of $184.9 million, change in fair value of derivative assets of $38.1 million, and change in fair value of warrant liability of $11.6 million, partially offset by a $36.0 million decrease in unrealized losses on fair value of bitcoin, a decrease of $89.9 million in depreciation. Additionally, changes in assets and liabilities resulted in an increase in cash used of $215.7 million between the nine months ended September 30, 2026 and 2025.
Investing Activities
Cash used in investing activities increased to $2,352.9 million for the nine months ended September 30, 2026 compared to $131.5 million for the nine months ended September 30, 2025. This change primarily related to an increase of $2,254.3 million in purchases of property and equipment related to building out various facilities, partially offset by an increase of $18.7 million in proceeds from the sale of bitcoin, partially offset by $52.8 million of proceeds from disposal of assets.
Financing Activities
Cash flows provided by financing activities increased by $1,337.9 million to $2,824.1 million net cash provided by financing activities for the nine months ended September 30, 2026 from $1,486.2 million net cash provided by financing activities for the nine months ended September 30, 2025. This change was primarily driven by $1,329.0 million of proceeds from the issuance of notes, net of issuance costs, increase of $11.8 million of proceeds from issuance of common stock, net of offering costs, partially offset by a $61.5 million increase in cash used to repurchase common shares to pay employee withholding taxes during the nine months ended September 30, 2026.
Contractual Obligations and Other Commitments
We have leases for corporate office space with monthly rent payments of approximately $0.2 million. In April 2026, we entered into a lease for a new office in New York, with monthly rent payments of approximately $0.4 million starting in June 2027. In September 2026, we entered into an agreement to terminate our existing New York office at One Vanderbilt Avenue, effective January 30, 2027.
In August 2026, one component of the Black Pearl Facility Lease commenced. For scheduled principal payments on our long-term borrowings, including the Black Pearl 2031 Senior Secured Notes, see Note 14. Debt.
In the normal course of business, we enter into contracts with suppliers, primarily related to construction, and have commitments of approximately $1,610.1 million as of September 30, 2026. The majority of commitments relate to construction at sites with leases to HPC tenants.
We also entered into a series of agreements with affiliates of Luminant ET Services Company LLC ("Luminant"), including the Lease Agreement dated June 29, 2021, as amended on July 9, 2021 and August 23, 2023 (as amended, the "Luminant Lease Agreement"). The Luminant Lease Agreement leases a plot of land to us where our data center, ancillary infrastructure and electrical system (the "Interconnection Electrical Facilities" or "substation") have been set up for our Odessa Facility. We entered into the Luminant Lease Agreement and the Luminant Purchase and Sale Agreement to build the infrastructure necessary to support our planned operations. Management determined that the Luminant Lease Agreement and the Luminant Purchase and Sale Agreement should be combined for accounting purposes under ASC 842, Leases (collectively, the "Combined Luminant Lease Agreement") and that amounts exchanged under the combined contract should be allocated to the various components of the overall transaction based on relative fair values.
Our management determined that the Combined Luminant Lease Agreement contains two lease components; and the components should be accounted for together as a single lease component, because the effect of accounting for the land lease separately would be insignificant.
The Combined Luminant Lease Agreement commenced on November 22, 2022 and has an initial term of approximately five years, with renewal provisions that are aligned with the Luminant Power Agreement. Financing for use of the land and substation is provided by Luminant affiliates. Despite lease commencement in November 2022, we had not been required by Luminant to make any lease payments for the substation prior to July 2023, therefore we accrued amounts due under the Combined Luminant Lease Agreement in accrued expenses and other current liabilities on our condensed consolidated balance sheet.
On August 23, 2023, we entered into a second amendment of the Luminant Lease Agreement, the terms of which included an amended payment schedule, reflecting monthly installments of principal and interest totaling $19.7 million on an undiscounted basis, due over the remaining four-year period starting in July 2023. This amendment did not have a material impact on our condensed consolidated financial statements.
At the end of the lease term for the Interconnection Electrical Facilities, the substation will be sold back to Luminant's affiliate, Vistra Operations Company, LLC, at a price to be determined based upon bids obtained in the secondary market.
Non-GAAP Financial Measures
We are providing supplemental financial measures for Adjusted EBITDA, that excludes the impact of (i) interest income, (ii) interest expense, (iii) income taxes, (iv) depreciation and amortization, (v) the non-cash change in fair value of derivative asset, (vi) share-based compensation expense, (vii) nonrecurring gains and losses, (viii) the non-cash change in fair value of warrant liability, (ix) non-cash losses related to miners reclassified as held for sale, (x) impairment of long-lived assets, and (xi) non-cash disposal of miners.
Beginning with the three months ended March 31, 2026, we changed our primary non-GAAP performance measure from "Adjusted Earnings (Loss)", to Adjusted EBITDA. Adjusted EBITDA differs from Adjusted Earnings (Loss) only in that, in addition to the adjustments previously made to compute Adjusted Earnings (Loss), Adjusted EBITDA also excludes interest expense, interest income, and current income tax expense. We believe Adjusted EBITDA is more representative of our core operating performance, more comparable to measures used by industry peers, and more useful to investors evaluating our underlying business. The reconciliation table below presents Adjusted EBITDA for both periods presented under our new methodology. We do not intend to report Adjusted Earnings (Loss) in future periods.
These supplemental financial measures are not measurements of financial performance under GAAP accounting principles and, as a result, these supplemental financial measures may not be comparable to similarly titled measures of other companies. Management uses these non-GAAP financial measures internally to help understand, manage, and evaluate our business performance and to help make operating decisions. We believe the use of these non-GAAP financial measures can also facilitate comparison of our operating results to those of our competitors by excluding certain items that vary in our industry based on company policy.
Non-GAAP financial measures are subject to material limitations as they are not in accordance with, or a substitute for, measurements prepared in accordance with GAAP. For example, we expect that share-based compensation expense, which is excluded from the non-GAAP financial measure, will continue to be a significant recurring expense over the coming years and is an important part of the compensation provided to certain employees, officers and directors. Similarly, we expect that depreciation and amortization will continue to be a recurring expense over the term of the useful life of the related assets. Our non-GAAP financial measures are not meant to be considered in isolation and should be read only in conjunction with our condensed consolidated financial statements included elsewhere in this Quarterly Report, which have been prepared in accordance with GAAP. We rely primarily on such condensed consolidated financial statements to understand, manage and evaluate our business performance and use the non-GAAP financial measures only supplementally.
The following is a reconciliation of our Adjusted EBITDA to the most directly comparable GAAP measure for the periods indicated (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Reconciliation of Adjusted EBITDA: | |||||||||||||||||||||||
| Net income (loss) | $ | 31,596 | $ | (3,283) | $ | (350,249) | $ | (88,039) | |||||||||||||||
| Interest income | (32,684) | (457) | (100,135) | (943) | |||||||||||||||||||
| Interest expense | 58,994 | 1,286 | 184,888 | 3,200 | |||||||||||||||||||
| Total income tax expense | (54) | (303) | 720 | 758 | |||||||||||||||||||
| Depreciation and amortization | 18,821 | 59,549 | 57,200 | 147,102 | |||||||||||||||||||
| EBITDA | $ | 76,673 | $ | 56,792 | $ | (207,576) | $ | 62,078 | |||||||||||||||
| Change in fair value of power purchase agreement | 13,910 | 9,030 | 48,040 | 17,180 | |||||||||||||||||||
| Share-based compensation expense | 26,634 | 9,074 | 84,208 | 28,736 | |||||||||||||||||||
| Other (gains) losses - nonrecurring | - | (2,246) | - | 4,049 | |||||||||||||||||||
| Change in fair value of warrant liability | (127,180) | (31,860) | (20,280) | (31,860) | |||||||||||||||||||
| Loss on miners held for sale | - | - | 7,437 | - | |||||||||||||||||||
| Adjusted EBITDA | $ | (9,963) | $ | 40,790 | $ | (88,171) | $ | 80,183 | |||||||||||||||
Critical Accounting Policies, and Use of Estimates
For a description of our policies regarding our critical accounting estimates, see "Critical Accounting Policies and Estimates" of Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2025 Form 10-K. As of September 30, 2026, there were no significant changes in our critical accounting policies and estimates or the application or the results of the application of those policies to our unaudited condensed consolidated financial statements from those previously disclosed in our 2025 Form 10-K except for the addition of our HPC leasing described in Note 2 to our condensed consolidated financial statements located in "Part I - Financial Information, Item 1. Financial Statements" in this Quarterly Report.
Recent Accounting Pronouncements
Information regarding recent accounting pronouncements applicable to us, adopted and not yet adopted as of the date of this report, is included in Note 2 to our condensed consolidated financial statements located in "Part I - Financial Information, Item 1. Financial Statements" in this Quarterly Report.
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