By Mackenzie Tatananni

Cipher Mining stock surged in premarket trading Friday on news that the Bitcoin mining company had received a $50 million investment from SoftBank to support the construction of data centers.

Shares rose 12% after Cipher Mining announced that SoftBank, the Japanese tech investment company, would purchase roughly 10.4 million shares of Cipher common stock for $50 million. With the so-called private investment in public equity, SoftBank became a "significant primary investor in Cipher," the company explained.

Cipher also entered into a one-month exclusivity agreement with SoftBank, as indicated in a form 8-K filed on Thursday. Under the terms of the agreement, Cipher won't be able to sell its 300-megawatt Barber Lake site in Colorado City, Texas, to another party.

The investment will support Cipher's data center development business, which focuses on high-powered computing. HPC systems can process large datasets in a fraction of the time required by traditional computer systems.

"This investment comes at a pivotal moment in Cipher's growth trajectory, as the company continues to attract attention for its pipeline of sites and innovative solutions in industrial-scale data centers," said Cipher CEO Tyler Page.

SoftBank's tech-centric focus "aligns well with our vision to establish ourselves as a leader in HPC data center development," Page explained.

The Cipher investment comes days after SoftBank said it would handle the financing for Stargate, a $500 billion initiative to build artificial-intelligence infrastructure in the U.S.

SoftBank CEO Masayoshi Son will join other big names like OpenAI's Sam Altman and Oracle's Larry Ellison to oversee the project over the next four years.

J.P. Morgan analysts on Friday reiterated an Overweight rating on shares of Cipher Mining, arguing that the investment reflects a larger interest in emerging technology.

While $50 million "does not go very far in the context of HPC data structure infrastructure," the analysts wrote, noting that new sites could cost over $10 million per megawatt, "our sense is this could be a sign of things to come."

The analysts noted that shares of Bitcoin miners with HPC exposure saw double-digit percentage declines earlier this week as part of a broad sell-off in tech stocks, which was triggered after Chinese start-up DeepSeek sparked concerns about competition in the AI market.

"This deal was in the works well ahead of the DeepSeek news this week; nonetheless we think it validates continued demand and interest in large sites with power agreements in place," the analysts wrote.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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January 31, 2025 08:06 ET (13:06 GMT)

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