By the end of Thursday, Oct. 16, shares of Cipher Mining (CIFR 4.17%) had gained 10.3% from last Friday's closing bell. According to data from S&P Global Market Intelligence, the crypto-mining stock showed a weekly gain of 24.7% earlier in the day.
It should be noted that Bitcoin (BTC +0.35%) fell 7.2% over the same period. Cipher usually moves in tandem with the largest cryptocurrency, because mining new Bitcoins is the company's core business. What's different this week, then?
NASDAQ: CIFR
Key Data Points
When your crypto miner discovers a side hustle in AI
Cipher's recent jump looks like sustained momentum from a larger trend. Cipher's stock has gained a jaw-dropping 282% over the last two months, starting with a strong mining report and boosted by a large contract unrelated to crypto-mining operations.
Image source: Getty Images.
On Sept. 25, Cipher signed a 10-year deal with Fluidstack, an artificial intelligence (AI) system-training specialist that has financial backing from Alphabet's Google division. Cipher's stock soared more than 10% that day and largely continued to rise since then. I guess it takes time to digest news of this beefy caliber.
CRYPTO: BTC
Key Data Points
Three revenue streams are better than one (maybe)
Cipher is diversifying its data center operations, adding AI-training services to its Bitcoin mining systems. The company also resells excess power when that's a more profitable use of these resources than the AI and Bitcoin businesses. Even so, Cipher continues to add hardware to its Bitcoin mining rigs, driving a 51% year-over-year increase in Bitcoin production in August.
I like this flexible business plan, ready to capitalize on two different high-growth operations as market conditions change. At the same time, Cipher's stock is incredibly expensive at 43 times trailing sales. The company remains deeply unprofitable and sells about 16% of its mined Bitcoin in order to pay the bills. It's not my favorite Bitcoin mining stock right now.
