Cipher Digital secures $810 million through junk bonds to construct an additional Amazon data center in Texas.

      TL;DR: Cipher Digital is raising $810 million in junk bonds at a 6.25% interest rate to finance its Stingray data center in West Texas, which will be leased to Amazon under a 15-year agreement.

      Cipher Digital is raising $810 million through a junk-bond sale to support the development of a data center in West Texas that Amazon will lease for 15 years, as reported by Bloomberg. The bond is expected to yield around 6.25% and will cover the remaining costs for Cipher’s Stingray Facility, a 100-megawatt computing campus located in Andrews County. The offering is being managed by Morgan Stanley, Goldman Sachs, Wells Fargo, Banco Santander, and SMBC Nikko Securities.

      This deal features an unconventional structural term: instead of requiring Cipher to pay back a fixed principal amount each year, the amortization schedule is linked to the cash flow generated by the project once it is completed. Unlike typical high-yield data center financing, which usually has fixed repayment schedules, this arrangement resembles project financing more closely than traditional corporate junk debt.

      Cipher Digital, previously known as Cipher Mining, originally started as a cryptocurrency miner but shifted focus to high-performance computing infrastructure. The company ended its bitcoin mining activities in February and currently has around 600 megawatts of contracted HPC capacity with Amazon Web Services, Google, and Fluidstack. Management has mentioned approximately $11.4 billion in contracted revenue across its portfolio.

      The Stingray offering marks Cipher’s third high-yield bond sale within four months. In February, its Black Pearl Compute subsidiary secured $2 billion in a deal that attracted over $13 billion in orders, resulting in a 6.5-to-one oversubscription ratio, indicating strong interest from fixed-income investors in AI infrastructure. Black Pearl is a separate data center campus leased to Amazon in Texas, supported by a 15-year, 300-megawatt AWS lease that Cipher expects will yield approximately $5.5 billion in contracted revenue.

      This timing is significant. The $810 million offering coincided with Amazon’s initiation of a C$14 billion ($10 billion) investment-grade bond sale in Canadian dollars, which is the largest corporate bond issuance on record in that currency. Together, these deals illustrate the dual-track debt market emerging around AI infrastructure: major companies taking loans at investment-grade rates in global currencies while smaller firms funding their data centers via the junk market, attracting yields between 6% and 8%.

      This dual-track structure has become a hallmark of AI financing in 2026. By entering long-term leases with smaller firms, tech giants like Amazon and Alphabet have turned their creditworthiness into collateral for high-yield borrowers. The lease commitments from hyperscalers make junk-rated issuers like Cipher appealing to investors. Total AI capital expenditure for the five largest hyperscalers is projected to surpass $650 billion in 2026, with the debt markets accommodating much of this financing.

      Cipher is not the only company benefitting from this trend. CoreWeave, a GPU cloud provider that went public earlier this year, has raised billions through high-yield and asset-backed debt, secured against its Nvidia GPU inventory. A $5.7 billion junk-bond issuance supported by Google-leased data centers was priced at 6.25% earlier this year. A recent report from Cambridge Associates highlighted that AI-related high-yield issuance is increasing faster than any other sector in the credit markets.

      The risk profile for these instruments differs from traditional junk bonds. Their revenue streams are often contracted for ten years or more, backed by investment-grade counterparties that guarantee cash flows. Cipher's leases with Amazon are structured as triple-net agreements, ensuring Amazon's commitment to pay rent for the full term without any termination-for-convenience clauses. This framework is more akin to infrastructure financing than the speculative-grade corporate debt typically associated with junk bonds.

      The wider market environment reinforces this trend. UBS credit strategists estimate that the hyperscaler sector may require between $230 billion and $240 billion in borrowings this year. Morgan Stanley and JPMorgan predict that the sector might need up to $1.5 trillion in additional debt over the coming years to maintain the current pace of AI development. Furthermore, increasing community resistance to data center projects may limit supply, enhancing the value of existing permitted sites like Cipher’s.

      Cipher’s stock reflects this shift. Following the announcement of its AWS lease and the completion of the Black Pearl bond, the company's shares have risen as investors have redefined it from a volatile crypto miner to a contracted infrastructure landlord. The sustainability of the junk-bond market's positivity towards AI infrastructure will depend on whether hyperscalers continue to demand compute at the rate implied by their capital expenditures. For now, demand remains strong.