---
title: "Cipher Digital's $850 million convertible pays interest in shares as Barber Lake costs rise about $800 million"
description: "Cipher Digital priced $850 million of zero-coupon convertible notes due 2032 on October 14 at a $15.31 conversion price, 35% above its $11.34 close, with proceeds earmarked for Barber Lake. The Texas campus's budget has swollen by about $800 million, and the interest is being paid in shares."
publisher: "The Inference"
section: "Deals"
published: 2026-10-14T19:11:14.530Z
modified: 2026-10-14T19:11:14.530Z
canonical: https://theinference.org/article/cipher-digital-s-850-million-convertible-pays-interest-in-shares-as-barber-lake-costs-rise-about-800-million
language: en
keywords: "Convertible Notes, Data Centers, Bitcoin Miners, Fundraising, AI Infrastructure"
---

# Cipher Digital's $850 million convertible pays interest in shares as Barber Lake costs rise about $800 million

> Cipher Digital priced $850 million of zero-coupon convertible notes due 2032 on October 14 at a $15.31 conversion price, 35% above its $11.34 close, with proceeds earmarked for Barber Lake. The Texas campus's budget has swollen by about $800 million, and the interest is being paid in shares.

Cipher Digital, a former bitcoin miner turned builder of industrial-scale data centers for AI tenants, [priced $850 million of convertible senior notes on October 14, 2026](https://www.sec.gov/Archives/edgar/data/1819989/000119312526421035/0001193125-26-421035-index.htm), a day after announcing them [1][2]. The notes pay no interest, mature on November 1, 2032, and were sold privately to institutional buyers; after fees, Cipher expects about $835.1 million, or $982.5 million if a 13-day option for $150 million more is exercised [1].

Holders convert at about $15.31 a share, a 35.0% premium to the $11.34 close on October 13 [1]. The stock [hit a 52-week low of $11.21](https://www.investing.com/news/company-news/cipher-digital-inc-stock-hits-52week-low-at-1121-usd-93CH-4946928) that day [3], down from $18.74 on September 25, when the Barber Lake lease extension was announced [2]. It traded 5% lower at $10.72 on pricing day, with the selling concentrated in equity-dilutive AI data center names rather than the sector ETF, which slipped 1% [4].

## The overruns behind the money

Barber Lake, Cipher's 300-megawatt campus in Colorado City, Texas, was budgeted at $2.16 billion and is [now expected to cost $2.94 billion to $2.97 billion](https://blockspace.media/short/cipher-digital-proposes-850m-convertible-note-as-barber-lake-budget-rises/) after design changes the tenant requested [5]. Under the September 25 agreements with its tenant Fluidstack and a leading AI lab, Cipher absorbs the first $359.3 million of overruns, and the tenant reimburses half of anything above that as extra rent over 20 years [6]. Cipher expects to carry $375 million to $400 million net [5].

In return, [the lease doubled to 20 years and contracted revenue rose from $3.8 billion to more than $9 billion](https://markets.financialcontent.com/prnews/article/gnwcq-2026-9-25-cipher-digital-expands-barber-lake-lease-term-to-20-years-increasing-revenue-to-over-9-billion), including about $5.2 billion from a 10-year commitment by the AI lab, which Cipher did not name [6]. First rent starts in the fourth quarter of 2026 [6]. Until then the burn runs: operations used $244 million of cash in the second quarter, negative in seven of the last eight quarters [7].

*Chart: **Cipher's operations used cash in seven of the last eight quarters** Line chart of Cipher's quarterly operating cash flow from Q3 2024 to Q2 2026*

*Quarterly operating cash flow, US$ billions, from Cipher's SEC filings. Negative bars mean operations consumed cash. [7]*

## Existing shareholders carry the cost

Zero percent is not free; Cipher pays the coupon in shares. About $89.7 million of the proceeds funds capped calls, contracts that soften dilution from conversion, but only up to $28.35, 150% of the close [1]. The 40.7 million shares going to holders of $165.9 million of older 1.75% notes due 2030 arrive with no protection [1][4]; at $11.34 they are worth about $462 million, nearly three times the debt they retire. Conversion at the initial rate would add about 55.5 million shares [1].

*Chart: **Certain dilution now, up to 106 million shares if it all converts** Bar chart of committed and contingent new Cipher shares from the 2030 exchange and 2032 convertible notes*

*Millions of common shares. Exchange shares are committed; the other two apply only if holders convert at the initial rate of 65.3211 shares per $1,000 of notes. [1]*

## The rent check decides it

The bull case is real: two decades of contracted rent and $4.0 billion of cash at June 30 [6][7]. [This is still the third raise in thirteen months](https://cryptonews.net/news/finance/33587089/), after $1.1 billion of 0% converts due 2031 and $1.73 billion of 7.125% secured notes [2]. The notes settle October 16; holders can demand cash back on November 1, 2030, two years early [1]. The first Barber Lake rent check, due this quarter, tells whether the new shares were worth issuing [6].

## Takeaway

Cipher's third raise in thirteen months buys Barber Lake time, but shareholders pay twice: once in shares that retire old debt at nearly three times face value, and again if the $15.31 conversion lands while the first rent check is still a promise.

## Sources

1. [Cipher Digital Inc., Form 8-K and Exhibit 99.1: pricing of $850.0 million of 0.00% convertible senior notes due 2032 and concurrent 2030 notes exchange, SEC EDGAR, October 14, 2026](https://www.sec.gov/Archives/edgar/data/1819989/000119312526421035/0001193125-26-421035-index.htm)
2. [Cryptonews.net (syndicating Cryptopolitan), "Cipher's $850M convert follows Barber Lake cost overruns and delays", October 13, 2026](https://cryptonews.net/news/finance/33587089/)
3. [Investing.com, "Cipher Digital Inc stock hits 52-week low at 11.21 USD", October 13, 2026](https://www.investing.com/news/company-news/cipher-digital-inc-stock-hits-52week-low-at-1121-usd-93CH-4946928)
4. [24/7 Wall St., "Cipher Digital Falls 5% as $850M Zero-Coupon Note Pricing Extends Slide; Applied Digital Declines 6%, IREN Drops 4%", October 14, 2026](https://247wallst.com/investing/2026/10/14/cipher-digital-falls-5-as-850m-zero-coupon-note-pricing-extends-slide-applied-digital-declines-6-iren-drops-4/)
5. [Blockspace, "Cipher Digital proposes $850M convertible note as Barber Lake budget rises", October 13, 2026](https://blockspace.media/short/cipher-digital-proposes-850m-convertible-note-as-barber-lake-budget-rises/)
6. [Cipher Digital Inc. press release via GlobeNewswire (FinancialContent), "Cipher Digital Expands Barber Lake Lease Term to 20 Years, Increasing Revenue to Over $9 Billion", September 25, 2026](https://markets.financialcontent.com/prnews/article/gnwcq-2026-9-25-cipher-digital-expands-barber-lake-lease-term-to-20-years-increasing-revenue-to-over-9-billion)
7. [Cipher Mining (Cipher Digital Inc.), quarterly figures from its SEC filings, CIK 0001819989, retrieved October 14, 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001819989)


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Cipher Digital's $850 million convertible pays interest in shares as Barber Lake costs rise about $800 million — The Inference. Canonical: https://theinference.org/article/cipher-digital-s-850-million-convertible-pays-interest-in-shares-as-barber-lake-costs-rise-about-800-million