A model of the TeV flare of Cygnus X-1: electron acceleration and   extended pair cascades
  We consider theoretical models of emission of TeV photons by Cyg X-1 during a flare discovered by the MAGIC detector. We study acceleration of electrons to energies sufficient for TeV emission, and find the emission site is allowed to be close to the black hole. We then consider pair absorption in the photon field of the central X-ray source and a surrounding accretion disc, and find its optical depth is <1, allowing emission close to the black hole. On the other hand, the optical depth in the stellar field is about 10 at 1 TeV. However, the optical depth drops with increasing energy, allowing a model with the initial energy of >3 TeV, in which photons travel far away from the star, initiating a spatially extended pair cascade. This qualitatively explains the observed TeV spectrum, though still not its exact shape. 
A. A. Zdziarski, J. Malzac and W. Bednarek