The crypto sector is positioned for dramatic growth with the anticipated shift in policy due to President Donald Trump’s re-election. Bitcoin mining heavyweight Cipher Mining (CIFR) plans to capitalize on this trend, orchestrating large-scale expansions and upgrades to its pre-existing facilities. However, despite Cipher’s remarkable expansion efforts, which include acquiring new sites and enhancing its mining capacity, the company’s Q3 2024 financial results highlighted an $87 million net loss.
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Yet, the outlook remains bullish due to accelerating demand for high-performance computing and artificial intelligence, suggesting a shift towards a further expansion of the earnings profile. It is a potentially compelling option for investors interested in the crypto-mining space.
Cipher’s Aggressively Growing its Capacity
Cipher Mining develops and manages high-performance computing (HPC) data centers and Bitcoin mining ventures. The company operates 9.3 exahash per second of self-mining capacity. An upcoming rig upgrade in Odessa within the next two months will further enhance its efficiency and is expected to push the hash rate to approximately 13.5 EH/s by the fourth quarter of 2024.
The company has acquired two data centers – Barber Lake, with a capacity of 300 MW, and Reveille, with a 70 MW, expandable capacity to 200 MW. Three potential purchase sites in Texas, each with 500 MW, are in the pipeline. Moreover, the 300 MW Black Pearl data center is currently under construction and is set to be energized by the second quarter of 2025.
After all the acquisitions, Cipher’s portfolio is poised to grow over 2.5 GW across ten sites. This strategic move coincides with an anticipated 23% annual data center industry demand growth through 2030.
Analysis of Cipher’s Recent Financial Results
The company recently announced results for the third quarter of 2024. Revenue was $24.10 million, driven by the mining of 396 Bitcoin at an average price of $61,000 each. This marked a 35% decrease from Q2 2024, which saw 563 Bitcoin mined at an average price of $65,000, generating a revenue of $37 million.
The drop in Bitcoin’s price resulted in an unrealized loss of $22 million. However, this loss was primarily offset by the $20 million realized gains from Bitcoin sales, bringing the net loss down to $2 million. Overall, the company posted a net loss of $87 million, or $0.26 per diluted share, and an adjusted loss of $3 million, or $0.01 per diluted share.
As of the quarter’s end, total current assets were reported to be $152 million, with the cash position falling by $97 million to $25 million. Despite this, significant investments were made during the quarter, including purchasing Barber Lake for $67.5 million, $94 million in deposits for miners, and $36 million for the development of Black Pearl.
What Is the Price Target for CIFR Stock?
The stock is extremely volatile, sporting a beta of 3.59. It has been upward, climbing over 81% in the past 90 days. It trades near the higher end of its 52-week price range of $2.16 – $7.99 and demonstrates ongoing positive price momentum as it trades above all major moving averages.
Analysts following the company have been bullish on CIFR stock. For instance, Macquarie analyst Paul Golding, a five-star analyst according to Tipranks’ ratings, recently reiterated an Outperform rating on the shares and raised the price target from $6 to $7.25, noting the company’s high-performance computing and artificial intelligence discussions are accelerating, which should de-risk its earnings profile over time.
Cipher Mining is rated a Strong Buy overall, based on the recent recommendations of eight analysts. The average price target for CIFR stock is $7.72, representing a potential upside of 16.62% from current levels.
CIFR in Summary
Cipher Mining’s ambitious strategy and accelerating demand in the crypto sector paint an optimistic future picture. Despite a challenging third quarter in 2024, with an $87 million net loss, the company’s aggressive expansion and upgrade plans signal a thrust towards improved earnings. As Cipher increases its capacity and continues to capitalize on industry growth, it looks to be a possibly rewarding journey, making it an intriguing option for investors eyeing the crypto-mining arena.
