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

HC Wainwright & Co. analysts believe Cipher’s recent acquisition in Texas will strengthen the company’s strategic operations.

Cipher recently announced the purchase of a 300 MW development site in West Texas, bringing its total power pipeline across 10 locations to more than 2.5 GW, according to analysts at HC Wainwright.

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

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

Purchase details

Analysts see the acquisition as a strategic move to secure low-cost energy in the West Texas region, known for its attractive energy prices ranging from 2 to 3 cents per kWh.

It is noted that building the site at full capacity could require an additional $67.5 million, assuming it will be used for BTC mining.

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

At press time, Cipher’s stock was trading at $3.70 under the ticker CIFR.