Cipher Digital said on Thursday that it has begun building lateral pipelines at several of its sites to bring natural gas in for on-site power generation, enough to support up to 2.5 gigawatts. The company says the new electricity should be available before the end of 2027, and that it will use the capacity to lease more data center space to high-performance computing tenants.
The arrangement is known as bring-your-own-generation, and its appeal is that it does not require a utility’s permission. Cipher will work with power providers to build and run the generating plant at each site; the pipelines connect those sites to gas supplies already nearby.
“Securing and delivering power is the foundation of everything we do, and bringing our own electricity generation allows us to unlock significant new capacity quickly,” chief executive Tyler Page said. He added that the company still intends to seek grid connection for the new generation, framing it as a contribution to grid stability in the communities where it builds.
The queue is what makes this worth doing. ERCOT’s interconnection queue holds more than 1,800 proposed projects requesting 474 gigawatts, over five times the Texas grid’s record peak demand, and Governor Greg Abbott paused new grid connections for large power users on August 3 pending a project-by-project audit. Elsewhere the friction has taken a financial form: utilities have started demanding bank letters of credit before they will even study a proposed connection, and New York paused large data center permits statewide in July. Generating behind the meter routes around all of it.
Cipher is not a newcomer to the pattern of converting one kind of power-hungry facility into another. It was Cipher Mining until May, when it renamed itself to match a business now built on leasing rather than bitcoin. It signed a 15-year, $5.5 billion lease with Amazon Web Services covering 300 megawatts at its Barber Lake site, with rent starting in August, and its hosting agreements with AWS, Google and Fluidstack total about $8.5 billion in lease payments against a project pipeline of 3.2 gigawatts. A separate West Texas joint venture, Colchis, is a 1-gigawatt site with a direct connect agreement with American Electric Power, targeted for energization in 2028.
The new generation would be close to Cipher’s entire existing pipeline, added without a utility deciding when it arrives. It is also 2.5 gigawatts of gas built for data centers, at a point when what these facilities draw has become a live political question in several states.
Sources: Cipher Digital, Yahoo Finance
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By the Control Plane Editorial Team