Cipher Mining: A Solid Bitcoin Play, Though Not Without Risks

Summary Cipher Mining (NASDAQ:CIFR) has surged 236% in 12 months, driven by Bitcoin gains and a strategic pivot to AI high-performance ￰0￱ the AI HPC shift, CIFR remains highly dependent on Bitcoin, and its valuation appears stretched compared to peers with larger operations and treasuries. A $20 price target and Hold rating reflect concerns that the market has priced in too much premium too early, with better-valued alternatives available. Long-term prospects are compelling due to AI HPC growth and major contracts, but near-term performance may lag as fundamentals catch up to ￰1￱ Mining Inc. (NASDAQ: CIFR ) is a Bitcoin mining and AI high-performance computing technology ￰2￱ is a dual, well-diversified business model that uses large-scale data centers for both Bitcoin mining operations and HPC ￰3￱ CIFR stock price appreciated by roughly 236% over the past 12 months and significantly outperformed the ￰4￱ resulted from Bitcoin appreciation and a pivot to a high-demand artificial intelligence ￰5￱ company has become less dependent on Bitcoin volatility, which the market has rewarded with a stock price ￰6￱ I think that the decision to pivot to AI HPC has been the right one, I believe the CIFR stock price may have run ahead of its ￰7￱ the pivot to AI hosting, the company remains highly dependent on BTC, and with the current volatility, sentiment may ￰8￱ seasonality could still be in play, but I think investors may shift to other legacy miners who have decided to pursue this high-demand landscape, too, but have not been rewarded with a premium ￰9￱ is why I think Cipher Mining is a Hold with a $20 price target over the next 12 months.

I believe this company may be a compelling opportunity for long-term investors who seek data center and Bitcoin exposure via the equity market, but I also think that investors could choose other alternatives available on the market, which could weigh on the stock price in the near term. A Pivot To AI HPC Is A Game-Changer, But I Argue The Market Priced In Too High A Premium, Too Early Cipher Mining is one of a few legacy Bitcoin miners that have decided to shift and diversify its business to AI HPC operations. However, CIFR and Iren Limited (NASDAQ: IREN ) were the ones that aggressively shifted to this landscape, and the market has rewarded them with a significant premium.

However, I think that investors may have priced in too much, slightly too early, and that could weigh on the stock price. CIFR: Stock Price Performance Versus Peers (Seeking Alpha) The chart above indicates that Cipher Mining has been the second-best performing legacy Bitcoin ￰10￱ with IREN, they have significantly outperformed CleanSpark and MARA Holdings , mainly due to an early shift to the AI HPC ￰11￱ does not necessarily mean that CIFR or IREN need to come down, but there appears to be a gap in valuations, which supports my thesis that the stock market may have run ahead of its ￰12￱ chart below reveals the comparison of the following in terms of the total market ￰13￱ appears to be interesting, highlighting that CIFR has roughly $7.11 billion in market cap, which is slightly below MARA Holdings, and about 30% above CLSK.

CIFR: Market Cap Comparison Versus Peers (Seeking Alpha) In terms of revenue (TTM) , Cipher Mining appears to be the smallest Bitcoin and AI HPC ￰14￱ generated roughly $159 million over the past 12 months, which is nearly 3x below CleanSpark's approximately $632 million and more than 4x lower than MARA Holdings of nearly $799 ￰15￱ indicates that there appears to be a gap in valuations, which does not necessarily result in CIFR stock decline, but may indicate that there are better alternatives in the market, which could weigh on the stock price. CIFR: Revenue (TTM) Versus Peers (Seeking Alpha) Furthermore, MARA Holdings is the second-largest publicly listed Bitcoin treasury in the world with more than 53k ￰16￱ equals about $5.7 billion in cash at the Bitcoin price of $108,000.

CLSK has more than 13k coins, and CIFR holds roughly 1.5k Bitcoins in its ￰17￱ supports my thesis of a significant gap in ￰18￱ Mining produced 251 Bitcoin in September, while MARA produced 736 BTC and CLSK 629 BTC , highlighting a massive underperformance in terms of its mining operations and smaller scale versus its peers. CIFR: Bitcoin Treasury Companies (Bitcointreasuries. net) This is why I think that investors may shift to other alternatives in the market, which have not appreciated that significantly in their stock price, although following the same playbook, highlighting a pivot to the AI HPC ￰19￱ is also a possibility that if AI HPC demand continues, Cipher Mining may continue to appreciate in the stock ￰20￱ instance, the high-performance computing market for AI was valued at about $112 billion in 2024 , and is expected to triple in size over the next 4 years and reach roughly $360 billion by ￰21￱ highlights a 26.3% ￰22￱ this materializes, then one could argue that CIFR remains cheap at the current ￰23￱ the upside, on September 25, the company announced a long-term agreement with Fluidstack, underscoring nearly $3 billion in contracted revenue over the next 10 ￰24￱ backstopped this and acquired nearly a 5.4% stake in the legacy Bitcoin miner.

I think this deserves a higher premium, but based on my comparison, I believe it may be too ￰25￱ is why I think that in the near-term it could underperform its peers, as I argue that the market may have run ahead of its ￰26￱ Remains A Bitcoin Miner, And That Could Spark End-Of-Year Rally, If BTC Seasonality Plays Out Although Cipher Mining pivoted to the artificial intelligence landscape, I think the market may continue to view it as a Bitcoin miner, and the stock price could be significantly impacted by the underlying volatility of the ￰27￱ the upside, this could turn out to be favorable for CIFR, highlighting that the last quarter of the year historically has been a bullish period for the crypto environment in general, and BTC in particular.

CIFR: Bitcoin Seasonality (Coinglass. com) The table above indicates that Bitcoin throughout the last 3 months of the year appreciated by 78% on average, and reflected nearly 48% median ￰28￱ far, Bitcoin is down by 5% since the beginning of October, which may highlight that if favorable seasonality plays out, the cryptocurrency environment, including equities with crypto exposure, may experience significant upside. I also think that the current crypto environment has additional tailwinds that fuel the bullish outlook and could spark an end-of-year ￰29￱ current administration appears to be pro-crypto, which improves the investing landscape and encourages the adoption of digital ￰30￱ instance, on July 18, President Trump signed the Genius Act , which establishes a framework for clearer stablecoin ￰31￱ is significantly important and also contributes heavily to the narrative of institutional adoption of the digital assets.

Furthermore, there are more publicly listed companies that are adopting the Bitcoin HODL strategy. Currently, Strategy (NASDAQ: MSTR ) is leading with a massive amount of more than 640k BTC on its balance sheet. However, I think this substantially supports the bullish outlook for Bitcoin, as these companies may provide a floor price for the underlying by not selling their Bitcoin and continuing to accumulate coins as time passes by. I think that although the cryptocurrency landscape currently experiences fairly negative sentiment supported by a roughly 5% Bitcoin decline, it remains a volatile industry, and with a significant and favorable shift, the seasonality could still be in ￰32￱ that materializes, I think Cipher Mining could continue appreciating in the stock price.

However, if the crypto industry remains weak, this could meaningfully impact the stock price, and it could correct from these ￰33￱ Mining Appears To Be Expensive, And I Am Not Sure Whether Fundamentals Justify It CIFR currently trades at a forward P/E of 50.21 , which highlights roughly a 2x premium versus the sector median of 25.49, and more than 2x overvaluation compared to the average company in the S&P500 at about 23.10x earnings multiple. CIFR: Forward P/E (YCharts) The chart above indicates that the current valuation also highlights a multi-year high, which supports a negative outlook for the ￰34￱ does not mean that CIFR can not trade at the current levels, but it signals that upside may be capped in the near ￰35￱ company trades at forward EV/Sales and Price/Sales of 27.19 and 26.72 , respectively, which underscores a 7x premium valuation compared to peers of 3.63 and ￰36￱ implies that the market has priced in the future growth, and supports my thesis that investors may have run ahead of its fundamentals.

CIFR: Capital Structure (Seeking Alpha) Cipher Mining appears to be a medium-leveraged business with total obligations of $189 ￰37￱ company has about $63 million in cash that partially offsets its debt, but leverage remains ￰38￱ highlight, this does not reflect its recent upsized private offering , which should translate to an estimate of $1.08 billion, which is expected to be used for data center expansion. Therefore, this underscores that CIFR may continue trading alongside other interest rate-sensitive ￰39￱ Fed anticipates reducing interest rates over the next two meetings by 0.25% each, and such a dovish monetary policy could be favorable for ￰40￱ legacy Bitcoin miner barely grew its revenue over the past 12 months, indicating a 0.11% increase and massive underperformance versus the sector median of 7.12%.

Although the market anticipates double-digit growth , fueled by a pivot to AI hosting in the years ahead, this also supports my thesis that the market may have priced a significant premium slightly too early, limiting upside in the short term. Nevertheless, the company grew Capex by 530% over the past 12 months, and that highlights substantial focus on a high-demand AI landscape. CIFR: Capital Expenditures (TTM) (YCharts) The company operates at below-market margins, and that is another argument for short-term ￰41￱ gross profit margin (TTM) of 21.36% indicates more than 2x underperformance versus peers at 49.98%. The EBIT margin (TTM) of negative 69% underscores the disadvantage versus the sector median of 6.45% growth.

I believe margins may improve with successful scale in the AI HPC landscape, but it also comes with execution ￰42￱ AI demand weakens or does not translate into significant top and bottom-line growth, then current valuations may appear to be too ￰43￱ Street forecasts a $0.36 in diluted EPS for FY2025, and $0.66 for ￰44￱ would put CIFR at about 27x earnings multiple for the FY2026 figure. I think that the company should be able to achieve these results, especially if BTC seasonality plays out, or at least it continues trading at above the 100k mark over the next ￰45￱ recent agreement with Fluidstack appears to be promising and supports a bullish stance for the company.

I think that AI demand may continue further, but I also believe that the current forward P/E of more than 50x for FY2025 appears to be too ￰46￱ we take a $0.66 EPS estimate for FY2026, and apply a roughly 30x earnings multiple, we come in at my price target of nearly $20 over the next 12 ￰47￱ would signal 10% upside, but would likely underperform peers and reflect the benchmark performance. Conclusion: Cipher Mining Appears Compelling, But I Think There May Be Better Alternatives In The Market I think that Cipher Mining may appear to be a compelling opportunity for long-term investors who favor a high-growth AI landscape of data centers and crypto exposure via the equity market.

However, based on my analysis, I would argue there may be better alternatives among legacy Bitcoin miners, which have also pivoted to AI HPC, but have not experienced a massive surge in the stock ￰48￱ is also tied to execution risk, remains highly dependent on Bitcoin volatility, and future AI ￰49￱ the current valuations, and after a massive triple-digit surge over the past 12 months, I think it may be extremely vulnerable if sentiment dramatically ￰50￱ the other hand, if AI-related demand continues, and BTC seasonality plays out, I believe CIFR could continue trading at an elevated multiple, especially if scaling in AI data centers plays out ￰51￱ is why I think Cipher Mining is a Hold with a $20 price target over the next 12 ￰52￱ indicates 10% upside possibility, yet in line with the benchmark. 13 Wall Street analysts forecast a $19 price target over the next year, which presents a 5% upside opportunity.

I feel more bullish, as I think that AI appears to be revolutionary, and data center services play a crucial role in the ￰53￱ will tell, but after significant performance, I would not be surprised if the stock consolidates from here.