Cipher Digital shares fell 14% after it announced an $850M convertible note offering and share exchange, while Applied Digital dropped 5%.

Cipher Digital shares fell 12% and Applied Digital shares fell 5% after Cipher Digital (NASDAQ: CIFR) announced an $850 million convertible note offering paired with a debt-for-shares exchange.

The SPDR S&P 500 ETF Trust (NYSEARCA: SPY) slipped just 0.1%, and the Global X Data Center & Digital Infrastructure ETF (NASDAQ: DTCR) fell 0.6%, suggesting the sell-off is company-specific rather than sector-wide.

Cipher Digital's Black Pearl campus began delivering rent ahead of schedule, with Barber Lake expected to follow in October. Those milestones anchor the bull case for the stock.

A fresh financing package is weighing heavily on Cipher Digital, a data center developer building campuses for hyperscale tenants. Cipher Digital stock is down 14% to $11.20 in morning trading after the company paired a new convertible debt raise with an exchange of older notes for shares.

Applied Digital (NASDAQ: APLD) is down 5% to $22.11, a smaller drop than Cipher Digital's but still a heavy one for a fellow landlord to hyperscale tenants. Both companies share a corner of the market with Core Scientific (NASDAQ: CORZ), another developer that has shifted from digital-asset mining toward AI data center leasing.

Two funds show how contained the damage is. The SPDR S&P 500 ETF Trust is down 0.1% to $777.59, a nearly flat reading for the broad market. Sector exposure looks only a little weaker, with the Global X Data Center & Digital Infrastructure ETF down 0.6% to $27.57.

Cipher Digital announced a proposed private offering of $850 million of convertible senior notes, together with a concurrent exchange of existing debt securities for common shares.

The second piece matters more for shareholders. The exchange moves debt onto the equity side right away, ahead of the securities' maturity, and every share issued in the swap expands the base across which future earnings must be spread.