Cipher Digital CEO on powering data centers and the company's growth strategy

[00:00:00] Speaker 1: Let's welcome back in Tyler Page, CEO of Cypher Digital in a CNBC exclusive. Tyler, good to have you back on. Part of Bird's note here is that a lot of these what they call Bitcoin to data center conversions, which you guys are, like a HUD-8, kind of like a Tara Wolf, are going to rely on big deals from the biggest hyperscalers, the Googles, the Amazons, the Metas of the world. You have visibility into your pipeline. Is that pipeline robust? [00:00:28] Tyler Page: It's extraordinarily robust. So, yeah, I mean, I think that the market is catching up with our story. For years, initially as a Bitcoin miner, we developed a lot of expertise on finding places that were naturally suited for large power interconnects. With the growth in AI and the continued desire for larger campuses to do more complex compute functions, more power is needed, more land is needed. That's turned what were traditionally what might be teamed like tier three locations, independently tier one locations for AI data centers. We've spent years developing the team and the expertise to build data centers in those locations. We're ahead of the curve. Now that everyone is moving to places like West Texas, we have a very deep land portfolio. [00:01:18] Speaker 1: So what did you see? And I've asked the same question, by the way, of some of your competitors. What did you see that got that right to go from tier one or tier three to tier one? It's like somebody owns a plot of land. It's worth whatever. Then all of a sudden they find out a Walmart is going in next door and the land value goes up by 500 percent. That's kind of what you're talking about, right? [00:01:42] Tyler Page: Well, what's interesting is to make Bitcoin mining work, you have to have really cheap power. So where is there cheap power in locations where there's an abundance of generation and not a lot of demand? And so what made us see the potential for this trend to change was we saw the explosive growth in AI. I mean, a completely convex adoption curve. And suddenly people wanting 200, 300, 500 megawatts at a single campus. And we started asking the question as a non-incumbent, where are you going to find that in Northern Virginia? Like there's not enough power there. So what's going to happen? And so we naturally thought the only conclusion, if you believe in the continued adoption of AI, is to go to places that were considered tier three. And I think the whole market is starting to realize that maybe that was actually backwards. [00:02:35] Speaker 3: Is there any latency or like, so the farther away these data centers are, does that affect how quickly Gemini gives me an answer or help someone at work? [00:02:44] Tyler Page: So, you know, initially that was the pushback from the incumbents. And so what we, the questions we asked were like, well, let me ask you this. If a massive fiber line runs east to west across Texas under I-20 and we can get access to that fiber line, data travels at the speed of light. So I think we're not close enough necessarily to do like traditional cloud services, which require really low latency. Or inference, we're sub 10 milliseconds to the major metros in Texas. [00:03:15] Speaker 3: Is that how it works? Did you literally run a fiber under that? [00:03:17] Tyler Page: It already was sitting there. Wow. It was built out 25 years ago. And we had to find unoccupied capacity in those fiber lines. But when the data goes at the speed of light, I think initially everyone thought, oh, this is going to be like search. No one's going to wait. Right, exactly. What happens now if you do a search? You wait. It's thinking. It's thinking about it. It's looking for compute resources sometimes. That's why our portfolio has a lot of potential. [00:03:38] Speaker 1: But you also, like the fiber line under I-20, you also need to tap into an actual pipeline of natural gas. And basically imagine a pipeline. You guys put kind of a straw in it. It's called a lateral. You go out. You build a new power plant. That's kind of what you're doing, right? And the idea is there needs to be not only the – you need to be able to have access to the gas itself. So the gas owner needs to say, all right, Tyler, you can have some of my gas. But the pipeline owner also has to say, okay, Tyler, you guys can also add on to our pipeline. Sounds like they are willing and able to do that right now. [00:04:12] Tyler Page: Well, I mean, as always, power launch is one step ahead of the curve. So our 4.2 gigawatt pipeline is just grid connections. Separately, probably the hottest trend right now is that in this quest for faster access to power, hyperscalers and neoclouds are looking for other ways to get the power faster. The easiest way in a lot of cases is what if we tapped the pipeline that's right by our property and we generated our own electricity and we built our own generation, how long would it take to get the gas molecules and the pipeline access and the necessary permits to just have our own electricity? And rather than getting in the queue for a grid connection, you can potentially have that in 18 months. And so – If you build your own. If you build your own and all of our – BYOP, bring your own power. It's true. All of our major properties literally sit adjacent to an endless ocean of natural gas.