Cipher Digital Inc. Common Stock KBW Virtual AI Summit

Thanks for having me. Appreciate it.

Yeah. Look, great question. I think it's no secret that stocks have traded down since June. I think we're at a really interesting point of the cycle for an infrastructure developer, where we've gone out and signed a bunch of leases, we've financed those projects, and now we're firmly in the physical execution stage of multiple projects, but prior to actually seeing any cash flow start being turned through the income statement. So that's a challenging time, where investors are really more focused on execution and everything between signing the lease through delivering the data center, as opposed to historically, when they were more focused on, can you sign the next deal, and when is that coming?

It is an interesting point in time. I think to your question, there are certainly a bunch of risks, some of them real and that deserve a healthy amount of respect, and some of them that are maybe a little bit overdone. As I think about the risks, one, the financing environment is more challenging than it has been historically. That is just true. The rates are up. Base rates are up. There is more supply from issuers. There is a huge amount of capital that is required to build out the AI infrastructure that we are talking about when we talk about deficits in the market. You are seeing that through various S-1s and things like that in the news. There is a lot of capital that needs to come, and investors are more focused on the execution.

Another risk, physical execution at this scale, it is huge, it is challenging. Then add into the equation that craft labor is being pulled in every different direction. The supply chain is being pulled in every direction. It is a challenging market. I think what is overdone is the thought that because of these risks and because of where we are at in this point of time, that demand is collapsing and that the fundamental underlying demand is slowing down. I think it is actually very much the opposite. We are continuing to see, and as you have seen in the market, lease terms improving despite the backdrop in equity markets. We are seeing definitely great alignment from our tenants and from conversations we are having across the board. I still think scarce power is the constraint and demand is not changing from what we can see.

I am glad you brought this up. This, to me, is the best proof point that we have in the market to date of the fact that there is strong amounts of terminal value in these assets. There is a discussion since our first deal that we signed, which was 10 years, and it is at this Barber Lake site, about what is the terminal value of these sites that are being built in West Texas and other parts of the country that weren't built traditionally for cloud data centers. I think fundamentally, cloud data centers and AI campuses are two different beasts, and they require different things. The tier 1 or primary locations for them will be different. Fundamentally, you need less latency, lower proximity, more land, and more power. There will be tier 1 locations that are not traditional cloud 1 locations.

This is the best proof point in the market, I think, to date, of the fact that we are signing a lease 10 years from now, adding $5.2 billion of contracted revenue 10 years from now. It really validates the fact that we are building long-lived critical infrastructure assets to these tenants and counterparties that are using them.

Yeah. When I think about the deal that we announced at Barber Lake, it makes sense to break it down into two different decades. The first decade is a lease facing Fluidstack with a Google backstop that fully supports our debt over the first 10-year term. Nothing has changed about that first 10 years, and the way that we have structured our debt over that first 10 years is to fully amortize within that first 10 years. If you think 10 years down the road as we are starting the second binding lease for 10 years directly facing the lab, our data center will be substantially delevered at that point. That is $5.2 of additional contracted revenue on a data center that is fully paid off.

It is a very different underwriting decision when you think about credit support or quality of the counterparty than something that we were going to do today, and we would need to finance through construction.

Yeah. Again, I think this goes back to the idea that tier 1 locations for AI campuses are just fundamentally different than tier 1 locations for cloud data centers. When you think about that, and I mentioned a little bit earlier, AI campuses require things that cloud campuses do not. So you require way more land, huge amounts of power, and ability to scale. Almost every tenant wants the ability to scale and grow at the site. You need skilled labor in large amounts. When you think about places like West Texas or Louisiana or Indiana, North Dakota, there is really an investment from all of the major hyperscalers into these locations to build these large campuses. So you're seeing large amount of tax dollars flow into these communities. You're seeing a huge amount of labor flow in. There's going to be permanent jobs.