Cipher Digital shares fell 15.65% to $20.38 on Tuesday after the company reported a sharply wider second-quarter net loss, placing fresh attention on the cost of its transition from Bitcoin mining toward large-scale data center capacity.
The company posted a net loss of $267.5 million for the quarter, more than five times its loss a year earlier, while revenue declined to $24.8 million from $43.6 million in the second quarter of 2025, according to its earnings release. The market reaction came despite Cipher saying it had delivered its first Black Pearl data center capacity in early August, roughly two months ahead of its previous schedule.
Cipher’s shares had already faced pressure from the capital demands associated with building data center infrastructure. Tuesday’s earnings added a clearer measure of that strain: lower revenue alongside a much larger loss as the company works through a construction-heavy phase of its expansion.
The company also reported holding $37.8 million in Bitcoin at the end of June, down from $125.4 million at the end of 2025. The lower balance reduces one source of liquidity that mining operators can use to fund equipment purchases, debt service, or new construction without raising additional capital.
Black Pearl delivery advances contracted projects
Cipher said its first Black Pearl data center capacity was delivered at the start of August. The project forms part of a pipeline of three contracted data center developments that Bernstein expects to be fully delivered by the first half of 2027.
In a Wednesday note, Bernstein maintained its Outperform rating on Cipher and kept a $32 price target. That target represented about 57% upside from Tuesday’s $20.38 closing price.
The brokerage’s view rests on the execution of Cipher’s contracted data center projects rather than a near-term improvement in the company’s reported mining revenue. Delivering the first Black Pearl capacity ahead of schedule gives the company an operational milestone to point to, but the quarterly figures show that construction progress has yet to translate into stronger income.
Data center contracts can provide a more predictable revenue structure than Bitcoin mining, whose returns vary with Bitcoin’s market price, network difficulty, transaction-fee conditions and power costs. Cipher’s planned shift therefore depends heavily on its ability to connect new facilities to electricity supply on time and within budget.
That dependency has become more complicated in Texas, where state officials are reconsidering how large electricity users move through the grid connection process.
Texas orders review of data center power requests
Texas Governor Greg Abbott on Monday directed the Public Utility Commission of Texas and the Electric Reliability Council of Texas, known as ERCOT, to audit data center projects in the state’s interconnection queue.
ERCOT subsequently paused its “Batch Zero” process, which was scheduled to classify the first group of large-load customers later this month. The process covers projects seeking major power connections, including data centers and other energy-intensive computing facilities.
Bernstein said the governor’s directive could delay conversion of the Batch Zero project pipeline by several months. For companies with projects awaiting classification or interconnection treatment, even a short delay can affect construction timetables, financing schedules and negotiations with power providers.
Abbott’s order reflects the exceptional scale of power demand now being proposed in Texas. ERCOT is tracking more than 1,800 planned sites seeking over 474 gigawatts of total electricity capacity, according to figures cited in the state’s grid-planning process. About 90% of pending interconnection requests are tied to large computing operations, including data centers, according to the supplied ERCOT figures.
The requests greatly exceed the amount of generation that can realistically be connected and supplied in the near term. Texas has become a preferred location for Bitcoin miners and high-performance computing operators because of available land, renewable generation, competitive power markets and an established base of industrial infrastructure. Those advantages have also concentrated new demand on a grid that must balance rapid growth against reliability requirements.
ERCOT data cited in the material showed electricity use from large sites increased 15.5% between January 2025 and January 2026. State utility leaders are due to discuss the timetable for delayed approvals at a public meeting scheduled for August 20.
Approved projects gain an advantage
The review creates a clearer divide between projects that already have progressed through power-connection requirements and those still waiting in ERCOT’s queue. Around 10 gigawatts of planned facilities have already passed required testing and would not be caught in the stalled Batch Zero pipeline, according to the information provided.
For Cipher, the immediate question is whether any part of its contracted development plan depends on approvals now affected by the pause. The company’s early Black Pearl delivery offers some evidence that at least part of its buildout has moved ahead of schedule, though its earnings release did not establish how the Texas review might affect the remaining projects.
The policy action also changes the competitive environment for operators pursuing data center hosting. Companies with secured power arrangements, existing operating sites, or projects outside Texas could face fewer scheduling risks than developers relying on new ERCOT interconnections. Developers without those advantages may need to carry project costs longer before capacity can begin generating revenue.
Cipher’s stock decline therefore reflected more than a single quarter of weaker revenue. The company is attempting to fund and execute a transformation while Texas regulators reassess the power queue that supports a large share of the state’s planned computing capacity. Bernstein’s $32 target assumes Cipher can complete its three contracted projects by the first half of 2027; the next tests will be the company’s project updates and ERCOT’s decisions following the August 20 public meeting.
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