Summary Cipher Mining reported Q2 2025 results with strong revenue growth and expanding cash reserves, but escalating losses raise profitability concerns. CIFR's investments in infrastructure, notably the operational Black Pearl data center, are expected to boost hashrate and future revenue. Despite a solid balance sheet, rising depreciation, financial costs, and shareholder dilution from equity issuances pose significant risks for CIFR. Given the leveraged, volatile nature of CIFR as a Bitcoin proxy and ongoing losses, I maintain a Hold rating on the stock. I wrote about Cipher Mining ( CIFR ) a while back , and it always looked like a leveraged play on BTC. Q2 2025 earnings just proved this – revenue from mining is growing, but losses are increasing even faster. This seems like the cost structure is becoming problematic and revenue is not catching up. The balance seems to be strong – cash is growing, and equity as well. This gives financial reserves runway to survive bad quarters. Still, profitability is a risk. Until the company solves their losses, it's unclear how long this runway will last. Q2 Financial Results CIFR reported their Q2 results , and still they show signs of strong balance and growing revenue, but at the same time, losses are making it risky. Revenue from BTC mining was $43.6 million, compared to $36.8 million a year ago. This is 18% growth, which shows that operations are growing. Problem is that at the same time, the loss grew as well, almost 3 times, from -$15.3 million to -$45.8 million. Half-year results show it even worse; in 2024 H1, the company had a net income of $24.6 million, but in 2025 H1, it had an -$84.8 million loss. Revenue in H1 was $92.5 million, compared to $84.9 million a year ago. To be fair, it signals to me that costs are increasing and revenue is not catching up. Seeking Alpha Balance is good; cash reserves jumped to $62.7 million, compared to $5.6 million in 2024. This means that the company has reserves to continue operating even in bad quarters. Total assets increased to $1.02 billion (from $855 million). This seems to me like a strong foundation, which gives some security for investors. The biggest problem, in my opinion, is lack of profitability. If Q2 loss was lower, I could even say that the quarter was 'investing into growth.' But -$45.8 million per quarter when revenue is $43.6 million shows that the structure is not good. This also does not give much security, as the cash reserves might run out as well. Seeking Alpha Good News Bitcoin reserve increased. Current worth is somewhere around $112.1 million, when it was $92.7 a year back. This means that CIFR has a bigger reserve for the future, which could be a financial amortization when markets fluctuate. They had an ATM emission as well, where they raised around $85.7 million and took a loan of $172.5 million by issuing convertible bonds with a 1.75% coupon until 2030. This is quite cheap financing if you ask me, which gives them some runway money. Infrastructure got investments too. Company invested $164.4 million into new equipment and $55.9 million into Black Pearl. This means that they are increasing hash rate potential and strengthening their position before next cycles. Black Pearl One of the biggest catalysts I believe happened in Q2 2025 is new data center construction in Texas. The project is called Black Pearl , and it should generate 300 MW. Good news, it's already connected to the grid. First phase has started with 150 MW power. The rest of it should be turned on in the following quarters. Investments into the project were somewhat more than $126 million; most of it went to construction, infrastructure, and equipment. CIFR expects that Black Pearl will increase hashrate and will become main revenue source. This project showed that CIFR not only talks but at the same time builds. And that they can coordinate such projects. The difference from competitors is that they already have a working data center. Only one thing I noticed is that Black Pearl does not have fixed electricity pricing. So that means that costs can vary depending on the electricity market and spot prices. From one side, this means they can sell excess power and get some revenue; from the other, that means they can get some pressure on their revenue as well. Black Pearl (Cipher Mining Announces August 2025 Operational Update) Risks I have told about the losses, but let's dive deeper into them. The depreciation in Q2 2025 was $44 million, almost double compared to $20 million a year ago. And as I said, infrastructure is growing; that is good, but depreciation will increase with it as well, so we might see pressure on results. Derivatives brought losses as well. Luminant Power Agreement value fell and cost -$15.5 million. This is a good reminder that financial instruments are risky to everyone and especially to the company that relies on them. So, the worst thing is that the company's equity is growing not through profits, but through emissions, which dilutes current shareholders and increases risk, while ROI stays low. At the same time, issuing bonds is just increasing burden. Another thing is cash flow. Part of the revenue comes from selling BTC, which is considered an investment. This means that operational results are weaker. Seeking Alpha For Portfolio Building I have taken a look at CIFR and BTC from econometric perspective. And the image is quite interesting. CIFR is like a leveraged play on BTC. When BTC goes up, CIFR goes higher even more, but it has the same effect when going down. When BTC goes down, so does CIFR, sometimes even more. Correlation is another interesting part. If you look at the chart, from first sight it would look like they are correlating one to one, but in reality, the correlation is around 0.27-0.36. This means that the connection exists, but it's not perfect. Why? Because daily numbers are noisy – CIFR has its own additional risks, like operations, electricity pricing, and so on. So this is why, even though the direction of BTC and CIFR is the same, daily fluctuations may differ. I took weekly numbers, and the correlation immediately looks better because the noise is fading. But risk is daily, not weekly; this means that when retail investors spot that they 'move together,' CIFR might have already made a move. Daily Chart of CIFR and BTC (Pink) Price Action (TradingView) Granger causality and VAR models showed that BTC does not statistically predict CIFR. In other words, there is no model that shows that 'BTC makes a move and CIFR follows.' Most of the time, they move together at the same time. VAR model showed instability, so that means that they both together make up a really unstable system. Volatility here shows the most interesting part. BTC volatility movements per day are somewhere between 3-5%; at the same time, CIFR might be moving 20-40%. This does not mean that we might see the price increasing or decreasing in such numbers; this means that we might get days where this happens. So holding CIFR means you take more risk than holding BTC at this point. What should you take from my rant? That CIFR is a leveraged play on BTC; it may move and give you really big profits on bull markets or give you a lot of losses on bear markets. The charts and econometrics show the same: correlation exists, but causality doesn't, but the risk is a few times higher. So, investing in CIFR means that you take the possibility of watching the stock move irrationally and volatilely. CAN Analyst model Summary Cipher Mining's Q2 2025 results show two sides. Revenue is increasing, the balance is strong, and cash reserves are growing. The company is investing in infrastructure for new projects like Black Pearl (which, as mentioned, is already operational and should become a catalyst). All this shows good direction. But at the same time, the losses are risky. The company recorded quite large losses in H1 2025, when in H1 2024 they had profits. Rising depreciation and financial costs make profitability questionable. Furthermore, part of the revenue is coming from BTC selling, not from operations, and share issuance dilutes current shareholders. This is why I am ranking it hold ; it's now just speculation on BTC, and I see too many risks. Previously, I was bullish; now, it is time to take profits and wait for new entries if they come.
