Great breakdown of the Cipher/Google deal dynamics. The key insight here that I think many investors miss is the margin structure comparison between bitcoin mining and HPC hosting. Bitcoin mining operates with binary returns - when BTC prices surge, margins explode, but when they crash, you're underwater fast. The HPC model trades that volatility for stability through long-term take-or-pay contracts. What's interesting about the $3bn Fluidstack deal is that it's essentially forward-selling compute capacity at fixed rates - which looks brilliant if energy costs stay flat but could become problematic if power prices inflate faster than expected. The Q2 widening losses are concerning on the surface, but they're mostly deployment capex for the Black Pearl buildout. The real test comes in Q3-Q4 when we see whether the 37% HPC allocation can actually stabilize free cash flow. Lisa Shalett's "seventh inning" comment about the AI bubble is spot on - if hyperscaler capex growth decelerates even modestly, the entire HPC leasing model could face serious margin compresion.
Great breakdown of the Cipher/Google deal dynamics. The key insight here that I think many investors miss is the margin structure comparison between bitcoin mining and HPC hosting. Bitcoin mining operates with binary returns - when BTC prices surge, margins explode, but when they crash, you're underwater fast. The HPC model trades that volatility for stability through long-term take-or-pay contracts. What's interesting about the $3bn Fluidstack deal is that it's essentially forward-selling compute capacity at fixed rates - which looks brilliant if energy costs stay flat but could become problematic if power prices inflate faster than expected. The Q2 widening losses are concerning on the surface, but they're mostly deployment capex for the Black Pearl buildout. The real test comes in Q3-Q4 when we see whether the 37% HPC allocation can actually stabilize free cash flow. Lisa Shalett's "seventh inning" comment about the AI bubble is spot on - if hyperscaler capex growth decelerates even modestly, the entire HPC leasing model could face serious margin compresion.