How to finance a data center with a long-term offtake agreement
Introduction: Can a Data Center Be Financed Like a Power Plant?
Consider a developer planning to construct a $2 billion data center.
The developer has identified suitable land, secured electricity-grid capacity and developed the necessary technical specifications. However, it does not wish to finance the entire construction cost from shareholder equity. Instead, it approaches a global technology company with the following proposal:
We will develop a data center according to your technical requirements. You will commit to leasing the infrastructure for 15 years. We will use your contractual payment obligations to obtain long-term financing.
This is not merely a theoretical structure.
In 2025, US data center developer Cipher entered into a long-term agreement to develop the Black Pearl high-performance computing campus in Texas for Amazon Web Services (AWS).
In February 2026, a Cipher subsidiary raised $2 billion through senior secured notes to finance the development and related project requirements.
The transaction provides a practical example of how infrastructure developers can use long- term contracts with creditworthy technology companies to support large-scale capital investment.
The model has important similarities with conventional power-project financing. In a power project, the electricity producer enters into a Power Purchase Agreement (PPA) with an electricity purchaser, or offtaker.
In a data center project, the developer may enter into a long-term lease, colocation agreement or capacity reservation agreement with a technology company.
In both cases, the central financing question is the same:
Can the project's contractual revenue support operating expenses, debt repayment and an acceptable return on equity?
This article examines the Black Pearl transaction, identifies the contractual provisions that make such arrangements bankable and presents a practical risk-allocation matrix for developers, lenders and investors.
PART I — THE REAL TRANSACTION
Black Pearl: A Data Center Developed for Amazon
Black Pearl is a high-performance computing data center campus located near Wink, Texas.
The project is being developed by Cipher, which previously used part of the site for Bitcoin mining operations.
Following its agreement with Amazon, Cipher began adapting and expanding the infrastructure to support artificial intelligence and high-performance computing workloads.
The project illustrates how an existing energy-intensive site can be transformed into a hyperscale computing facility.
