Cipher Digital Tumbles 6% as Data Center Names Sell Off With Yields Higher; TeraWulf Falls 5%, Applied Digital Pulls Back

Data center and artificial intelligence infrastructure names are being sold together as long-term Treasury yields push higher, and the pressure is landing hardest on the most financing-dependent builders. Cipher Digital (NASDAQ:CIFR) stock trades at $13.68, down 6% this morning, the largest drop of the three operators.

Meanwhile, TeraWulf (NASDAQ:WULF) stock is at $13.70, down 5% as the same rate pressure hits a fellow converted mining operator. Applied Digital (NASDAQ:APLD) stock trades at $23.48, down 1%, a much softer pullback than its two peers are posting. TeraWulf and Applied Digital shares trade alongside Cipher Digital stock as long-duration infrastructure plays, so a shift in rates tends to move all three together.

The CoinShares Bitcoin Mining and Digital Power ETF (NASDAQ:WGMI), a gauge of the wider group, is at $41.24, down 4%. For a broad-market read, the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is at $775.84, down 0.2%. That gap points to a sector-specific selloff, with Cipher Digital stock down more than both peers and the WGMI ETF.

Higher Yields Squeeze Capital-Hungry Builders

Long-term Treasury yields have been climbing, and that lifts the discount rate applied to lease income arriving years from now. Cipher Digital, TeraWulf and Applied Digital are such builders.

They rely on outside capital to finish their campuses (we featured seven of the picks-and-shovels suppliers behind this AI expansion, from power to cooling, in a free report you can grab here), so a higher cost of money raises the price of every project still in the pipeline. A contract signed at fixed terms keeps its face value while the present value of those future payments shrinks as rates rise.

Wells Fargo maintained Overweight ratings on five artificial intelligence and high-performance computing operators in an earnings preview published this week, and said Cipher Digital has fully funded its initial three tenant leases. Applied Digital stock and TeraWulf stock landed among the note’s top picks. Analyst support for these operators arrives just as rising yields are repricing what their buildouts cost.

Signed Leases Meet Execution Risk

Cipher Digital converts former cryptocurrency mining sites into hosting capacity for artificial intelligence and high-performance computing tenants under long-term leases, and TeraWulf and Applied Digital are running the same conversion, which is why the three can move together on a sector day.

The bull case for Cipher Digital rests on the leases already signed, which represent contracted revenue that arrives regardless of where Cipher Digital stock trades. Financing for the company’s first round is in place, which removes one layer of execution risk.

The bear case points to the absence of a fresh lease announcement from Cipher Digital recently. Building out the company’s remaining capacity has to happen on schedule, and a higher cost of capital raises the price of every megawatt still to come. Within a group moving in the same direction, Cipher Digital stock is taking the hardest hit.

What to Watch Next

Shareholders can watch for a fresh lease announcement from Cipher Digital, which would extend the company’s contracted base beyond its initial three tenant leases. One new tenant would give Cipher Digital more locked-in income to set against a rising cost of capital. Treasury yields remain the other swing factor, since each move higher lifts the cost of the secured debt the group still needs to raise.

Investors can check to see if TeraWulf and Applied Digital shares continue to hold up better than Cipher Digital stock as the group’s financing needs come into focus.

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