TL;DR
Cipher Digital is raising $810 million in 6.25% junk bonds to finance its Stingray data center in West Texas, leased to Amazon under a 15-year contract.
Cipher Digital is raising $810 million from a junk bond sale to finance a data center in West Texas that Amazon will lease for 15 years. according to Bloomberg. The deal, with a yield of about 6.25 percent, will fund the remaining construction costs of Cipher’s Stingray Facility, a 100-megawatt computing campus in Andrews County. Morgan Stanley, Goldman Sachs, Wells Fargo, Banco Santander and SMBC Nikko Securities are executing the offering.
The transaction includes an unusual structural provision. Instead of requiring Cipher to repay a fixed amount of capital each year, the payback schedule is tied to the cash the project generates upon completion. Most high-yield data center financings use fixed payment schedules, making this arrangement a closer relative of project financing than traditional corporate junk debt.
Cipher Digital, formerly known as Cipher Mining, started as a cryptocurrency miner before moving into high-performance computing infrastructure. The company dismantled its bitcoin mining operations in February and now owns approximately 600 megawatts of contracted HPC capacity with Amazon Web Services, Google and Fluidstack. Management has cited approximately $11.4 billion in contracted revenue across its portfolio.
The Stingray offering is Cipher’s third high-yield bond sale in four months. In February, its subsidiary Black Pearl Compute raised $2 billion in deal that attracted more than $13 billion in ordersan oversubscription ratio of 6.5 to one that signaled how aggressively fixed income investors are pursuing exposure to AI infrastructure. Black Pearl is an independent data center campus leased by Amazon in Texas, backed by a 300-megawatt, 15-year AWS lease that Cipher says will generate approximately $5.5 billion in contracted revenue.
The moment is remarkable. The $810 million offering came the same day Amazon began a C$14 billion ($10 billion) investment-grade bond sale, the largest corporate bond offering on record in that currency. Together, the two deals illustrate the two-way debt market that has emerged around AI infrastructure: Hyperscalers borrow at investment-grade rates in global currencies, while smaller companies building their data centers turn to the junk market with yields of between 6 and 8 percent.
That two-way structure has become a defining feature of AI financing in 2026. By signing long-term leases on facilities developed by smaller companies, tech giants like Amazon and Alphabet have effectively turned their creditworthiness into collateral for high-yield borrowers. The hyperscaler’s leasing commitment is what makes a junk-rated issuer like Cipher investable, and investors have responded accordingly. The combined 2026 AI capital spending of the five largest hyperscalers is now on track to surpass $650 billion.and debt markets are absorbing much of the downstream financing.
Cipher is not alone in this wave. CoreWeave, the cloud GPU provider that went public earlier this year, has raised billions in high-yield, asset-backed debt collateralized against its Nvidia GPU inventory. A $5.7 billion junk bond offering backed by Google-leased data centers was priced at 6.25 percent earlier this year. Cambridge Associates noted in a recent report that AI-related high-yield issuances have grown faster than any other sector in credit markets.
The risk profile of these instruments is different from that of traditional junk bonds. The underlying income is contracted, often for a decade or more, with investment-grade counterparties that guarantee cash flows. Cipher’s leases for Amazon are structured as triple-net deals with no termination for convenience clauses, meaning Amazon agrees to pay rent for the entire term, regardless of whether it needs the capacity. That structure is closer to infrastructure financing than to the speculative-grade corporate debt that “trash“The label implies.
The broader market context reinforces the trend. Credit strategists at UBS have estimated that the hyperscaler sector could need to borrow between $230 billion and $240 billion this year alone. Morgan Stanley and JPMorgan have projected that the sector could require up to $1.5 trillion of additional debt in the coming years to sustain AI development at the current pace. Data center development also faces growing community oppositionwhich could limit supply and make existing permitted sites like Cipher’s more valuable.
Cipher’s actions have reflected the transformation. The company’s shares have risen since it announced the AWS lease and completed the Black Pearl bonus, as investors reclassified it from a volatile crypto miner to a contracted infrastructure owner. Whether the junk bond market’s enthusiasm for AI infrastructure proves lasting will depend on whether hyperscalers’ computing demand continues to grow at the pace implied by their capital spending. For now the orders continue to arrive.
