Cipher Digital plans to issue USD 810 million in junk bonds to build an Amazon AI data center project

According to Zhitong Finance APP, Cipher Digital (CIFR.US) is planning to raise funds by issuing $810 million in high-yield bonds for the construction of an artificial intelligence data center project in collaboration with Amazon (AMZN.US).

According to insiders, the funds raised from this bond issuance will primarily be used to cover the remaining construction costs of the Stingray data center project. This project is located in western Texas, and once completed, it will be leased to Amazon under a 15-year long-term lease agreement.

This financing again highlights that the high-yield bond market is becoming an important source of funding for artificial intelligence infrastructure construction. As large-scale cloud service providers like Amazon and Google's parent company Alphabet (GOOG.US, GOOGL.US) continue to expand their AI computing power needs, these tech giants are providing stable cash flow expectations for small and medium-sized developers by signing long-term data center lease agreements, which also helps related companies obtain billions of dollars in financing support from the debt market.

Cipher Digital, formerly known as Cipher Mining, is a Bitcoin mining company. With the rise of AI data center construction, the company has actively transformed into high-performance computing and data center business in recent years.

In February of this year, Cipher raised $2 billion through the bond market for the construction of the Black Pearl data center project located in Texas. This transaction was met with enthusiastic market response, with subscriptions exceeding $13 billion, demonstrating strong investor interest in AI infrastructure assets.

Compared to traditional cryptocurrency mining businesses, data center projects leased long-term to large tech companies like Amazon have more stable revenue sources and higher valuation premiums, which is also an important reason why the capital market is willing to continue providing financing support.

This bond issuance is jointly underwritten by Morgan Stanley, Goldman Sachs Group, Wells Fargo, Banco Santander Spain, and SMBC Nikko Securities.

It is worth noting that on the same day Cipher initiated its financing, Amazon was also promoting a bond issuance plan in the Canadian bond market with a scale of at least CAD 7 billion, indicating that tech giants' capital expenditures in the AI infrastructure sector continue to expand