This earnings season, one of the most revealing numbers sits in a lease footnote: $359.3 million.
That is the first layer of costs above the original Barber Lake budget that Cipher has agreed to bear under its amended lease arrangements. Above that threshold, the tenant will reimburse half of the additional costs through extra rent over the combined 20-year contracted term, with a contracted return on those reimbursed amounts.
The figure is a contractual threshold, rather than a final tally of the project’s overrun. But it puts a useful number against a broader question: once an AI lease is signed, who pays when delivering the facility becomes more expensive?
Cipher’s call offered a candid explanation of how that happens.
Management said both the company and its tenants had been eager to move quickly. Leases were signed before designs were far advanced, and more change orders followed than expected. Changes to cooling infrastructure, for example, can require additional crews and disrupt work elsewhere.
Cipher also described lower-than-expected productivity, late equipment deliveries and crews waiting for them. A tight labor market compounds the problem. Equipment-price inflation itself, he said, was not a major driver.
A project can become more expensive even when equipment prices barely change. Deliveries, crews and designs still need to line up.
Cipher says it is responding by doing more engineering earlier. For its next generation of leases, management has held off on signing until it has agreed design sets that are 30%–60% developed. The Barber Lake amendment also adds another ten-year lease term and additional rent, so its cost exposure needs to be assessed alongside what Cipher receives for taking it on.
Riot’s call on Wednesday picked up almost exactly where Cipher’s left off.
Asked about industry overruns and its Rockdale budget, management explained that construction prices become binding as defined work packages enter guaranteed maximum-price contracts. Appointing a general contractor does not, by itself, lock the whole bill.
Riot said it was finalizing its contractor arrangement and expected roughly 70% of Rockdale’s total budget to fall under that framework. The balance covers equipment Riot purchases directly. Management maintained its estimate of $11 million–$12 million per critical IT megawatt.
That protection is still being finalized, and some risks remain. Tenant-requested changes are reimbursed or incorporated into rent. Contractors bear costs above the agreed maximum for covered scope. Riot retains exposure to uncovered scope, site conditions and equipment it buys itself, with reserves and contractual provisions addressing labor, tariffs and material escalation.
Those details tell investors more than a headline capex estimate. How developed was the design at signing? Which prices are binding? And does the developer recover extra spending immediately, or finance it until future rent arrives?
The last question becomes more pressing when credit tightens.
Riot’s CFO described wider credit spreads since September and deeper lender diligence on tenant credit, power already interconnected and energized, and a demonstrated delivery record. Construction uncertainty affects both the capital a project needs and lenders’ willingness to provide it.
Riot’s illustrative funding model shows the sensitivity. At 90% loan-to-cost, management estimated a cash-equity requirement of about $800 million. At 80%, it rises to roughly $1.5 billion—a $700 million difference.
That is a scenario range, not evidence lenders have cut Riot’s leverage. It shows why the share of a project lenders will finance can matter as much as the interest rate.
Core Scientific shows how that exposure can differ even within one company. Its filing says tariffs raised costs for certain equipment and materials purchased directly for non-customer-funded projects. Some equipment has lead times exceeding 12 months. Its CoreWeave conversions are almost entirely customer-funded, with Core’s contribution capped; the AMD and Neocloud buildout does not have the same protection.
Core disclosed $4.4 billion in outstanding purchase and construction commitments, substantially all expected within 24 months, and plans additional project-level bond financing. That commitment figure is not a financing shortfall. But Core says unavailable financing could force spending changes, and its existing secured-note financing includes an uncapped completion guarantee for specified projects. Raising project debt can still leave the parent carrying construction risk.
Riot’s new Corsicana arrangement is worth watching in that context.
The tenant will procure and own the modular deployment, while Riot provides powered pads and power infrastructure. Riot estimates approximately $6 million per critical IT MW, including tenant reimbursements and site work, and says the structure reduces procurement and delivery exposure. Its responsibilities differ from a traditional turnkey development, which matters when comparing costs per megawatt.
Missing the schedule still has consequences. The lease provides escalating rent credits for capacity delivered more than 60 days late, and potential termination rights for an undelivered phase after 270 days, subject to contractual protections and extensions.
These were already live issues at our Energy Investors Forum 2026 in July. LU-VE Group’s Giovanni Mariani warned that equipment demand was growing faster than manufacturers could keep up. William Hossain, representing Project Vanguard, discussed the time needed to develop experienced workers and the risk of losing them to competitors. Galaxy’s Blake King highlighted the sequencing challenges of developing generation alongside data centers.
The latest earnings commentary shows how those constraints feed into budgets, rental terms and financing. After the lease announcement, the question becomes how much uncertainty remains—and who has agreed to carry it.
We’ll continue that conversation at Energy Investors Forum 2027, June 15–16 in Dallas. If you are building, financing or supplying these projects, join us. And if you have firsthand experience managing construction costs, securing equipment or structuring project finance, we’d welcome your perspective on stage.
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