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

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As a seasoned crypto investor with a knack for spotting promising opportunities, this latest move by Cipher caught my attention. With over two decades of investing under my belt, I can tell you that strategic acquisitions like this one are often indicative of a company’s growth potential.

Experts from H.C. Wainwright & Co. think that Cipher’s latest Texas acquisition is expected to boost its strategic business activities.

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 agreement, worth approximately $67.5 million or $225,000 per megawatt (MW), also features a variable fee of $3 per megawatt hour (MWh) for the initial five years following activation. This purchase is significant due to its ability to generate power at the front of the electricity grid, a fully operational substation, and ownership of 250 acres of adjacent land.

Although the management team didn’t disclose specific dates for construction and power-up, they emphasized the site’s suitability for advanced computing systems and Bitcoin mining operations.

Acquisition details

As a researcher, I perceive this acquisition as a strategic maneuver aimed at locking down affordable power sources in the West Texas region, renowned for its competitive energy rates, typically falling within the range of 2 to 3 cents per kilowatt-hour.

The total development of the site might necessitate an extra $67.5 million if it’s intended for Bitcoin mining.

As an analyst, I’m reiterating my Buy recommendation for Cipher’s stock, with a projected price point of $7. This valuation is based on a 7.0x market cap-to-revenue multiple, considering our estimated revenue for 2025 at $313.5 million.

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

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2024-08-28 18:41