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United States securities and exchange commission logo
April 16, 2021
Cary Grossman
President
GOOD WORKS ACQUISITION CORP.
4265 San Felipe, Suite 603
Houston, TX 77027
Re: GOOD WORKS
ACQUISITION CORP.
Draft Registration
Statement on Form S-4
Submitted March 19,
2021
CIK: 0001819989
Dear Mr. Grossman:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form S-4
Summary of the Proxy Statement/Prospectus, page 22
1. In an appropriate place
in this section please provide a concise summary and table of the
use of funds in this
transaction, to include payments expected to be made to Bitfury and to
affiliates of the
Company.
Our success will be highly dependent upon maintaining a successful
relationship with Bitfury...,
page 44
2. Explain how your
agreement with Bitfury to deliver critical equipment will be maintained
"on an arm's length
basis" in light of Bitfury's control of Cipher.
Cary Grossman
GOOD WORKS ACQUISITION CORP.
April 16, 2021
Page 2
Risk Factors
We are exposed to risks related to disruptions in the global supply chain...,
page 47
3. Please revise this risk factor to include a discussion regarding
limitations of and
competition in microchip manufacturing, including the current shortage
in supply.
Risks Related to Cryptocurrency Mining, page 64
4. Discuss how the limited supply of bitcoins that can be mined (and the
current mining
total) affects your business plan.
Background to the Business Combination, page 112
5. We note your disclosure that Tyler Page worked on a contract basis for
Bitfury
immediately prior to being designated to be CEO of Cipher. We further
note your
disclosure on page 181 that Mr. Page served as Bitfury's Head of
Business Development
for digital asset infrastructure. Please provide a more detailed
discussion regarding Mr.
Page's duties while at Bitfury. As part of your disclosure, discuss
management's determination that Mr. Page, the CEO of a Bitfury
affiliate, and former
employee of Bitfury, could make decisions independently of Bitfury and
conduct
negotiations on an arms-length basis.
6. Define the phrase "greenfield company."
The GWAC Board's Reasons for the Business Combination, page 115
7. In light of the pre-existing relationships between members of the
company's management
and Bitfury, explain how the board determined that the company's
policies did not trigger
the need to obtain a fairness opinion for the transaction.
Certain Cipher Projected Financial Information, page 119
8. We note the assumptions used in preparing your projections through 2025.
Please clarify
the following:
The basis for the 100% linear growth in Bitcoin over the five year
period;
How you determined that the network hashrate will be ~455 Eh/s at
the end of
2025. In that regard, we note that over the last 4 years the
Bitcoin hashrate has
increased by a substantially greater degree than your projections
for hashrate over the
next 4 years;
FirstName
LastNameCary Grossman
Whether you assumed increases in ASIC efficiency in TH per watt,
and, if so, what
Comapany rate
NameGOOD WORKS ACQUISITION
you used for your assumptions; and CORP.
2021
April 16, Whether
Page you
2 considered the block reward halving expected to occur in
2024.
FirstName LastName
Cary Grossman
FirstName LastNameCary Grossman
GOOD WORKS ACQUISITION CORP.
Comapany
April NameGOOD WORKS ACQUISITION CORP.
16, 2021
April 316, 2021 Page 3
Page
FirstName LastName
Business Overview, page 164
9. Please revise to clarify whether Bitfury is the manufacturer and
fabricator of the ASIC
Chips, or whether those chips are sourced from third-party
manufacturers. If so, provide
disclosure regarding any agreements Cipher or Bitfury has with those
manufacturers, and
provide the material terms of the agreement. If Bitfury fabricates and
manufacturers the
ASIC chips, provide a discussion regarding the potential supply
constraints and manufacturing capacity of Bitfury.
Information About Cipher, page 164
10. We note your disclosure here and in the summary that you are a
"technological leader in
the Bitcoin space". Please revise to provide your basis for this
assertion
including whether it is based on objective factors such as market
penetration or revenue,
or if it is a belief of management.
Our Key Strengths, page 166
11. We note that your graph comparing the price of Bitcoin to the hashrate
only reflects
January 2020 through February 2021. However, you provide projections
and assumptions
regarding hashrate and price through 2025. Please revise the graph to
reflect a similar
period of time as your projections to provide greater understanding of
your projections
and assumptions.
12. You indicate that your expected average cost of energy of 2.7c/kWh
will provide you with
a cost leadership advantage over your main competitors and that you
may be able to gain
market share if the Bitcoin price drops because of your low cost
electricity. Please revise
to quantify how Bitfury's electricity costs compare to the electricity
costs of its main
competitors.
13. We note your disclosure that you may have the ability to mine over
21,000 Bitcoin per
annum in December 2025. Please revise to clarify whether this is pre-
or post- halving,
which is expected to occur in 2024. In addition, provide balancing
disclosure regarding
the limitations on the underlying assumptions in determining that you
will be able to mine
21,000 Bitcoin per annum.
Unique access to technology for best-in-class performance, page 166
14. We note your disclosure that New Cipher will benefit from
"most-favored
nation pricing." Please revise to disclose how Bitfury's Bitcoin ASIC
miners will be
allocated between New Cipher's operations and Bitfury's existing
mining operations and
any potential conflict of interest. In addition, disclose the material
terms of the Master
Services and Supply Agreement, including whether Bitfury must provide
a minimum
number of ASIC miners, the model and efficiency of the ASIC models to
be
provided, the time frame for deliver of the ASIC miners, and whether
New Cipher has any
minimum purchase or payment obligations.
Cary Grossman
FirstName LastNameCary Grossman
GOOD WORKS ACQUISITION CORP.
Comapany
April NameGOOD WORKS ACQUISITION CORP.
16, 2021
April 416, 2021 Page 4
Page
FirstName LastName
15. Please tell us whether the Master Services and Supply Agreement
requires that the supply,
maintenance, and/or operation of the ASIC miners is exclusive to
Bitfury ASIC Miners
and products. In that regard, we note there are several substantially
larger ASIC
manufacturers, including Bitmain and Canaan, that may produce more
efficient ASIC
Chips and miners.
Expected Revenue Structure, page 171
16. We note that you expect your revenue to consist of Bitcoin block
rewards and transaction
fees. However, Bitcoin transaction fees are both variable and are
included in the block
rewards. Please tell us why you have disaggregated transaction fees
from block rewards,
and provide a discussion regarding the variability in transaction
fees, including the current
and past average transaction fees per block. In addition, please
expand your disclosure
regarding your expectation that transaction fees will become a larger
proportion of
revenue, your assumptions in that regard and by what proportion you
expect transaction
fees to increase over time.
17. Address how you will determine when to sell Bitcoin for fiat currency
to fund operations
or growth and through what exchange. To the extent you have an
agreement with a third-
party exchange, please disclose the material terms and file the
agreement as an exhibit.
Discuss whether your Bitcoin will be held in digital wallets,
exchanges or hardware
wallet, and the security precautions you will take to keep the mined
Bitcoin secure.
Bitcoin Mining, page 176
18. Please discuss how the company will utilize mining pools and how
mining pools operate.
As part of your discussion, explain whether the company will aggregate
the hashing
power into pools hosted by third-parties, the company or Bitfury, and
the fees that will be
incurred.
Cipher's Management's Discussion and Analysis of Financial Condition and
Results of
Operations, page 178
19. Refer to your disclosure of Expected Revenue Structure on page 171. We
note that
you expect to derive revenues from block rewards and transaction fees
earned for
verifying transactions in support of the blockchain and that a trend
in which transaction
fees will constitute an increasing portion of revenues as the total
number of Bitcoin
available to mine declines over time. Please expand MD&A to include a
discussion of
this trend in known trends or future events, integrating your
discussion with the industry
information discussed on pages 175 and 176.
Unaudited Pro Forma Condensed Combined Financial Information, page 188
20. We note in Risk Factor disclosure on page 34 that Cipher's success
will be highly
dependent upon maintaining a successful relationship with Bitfury
Holding B.V. and upon
the ongoing provision of equipment and services by Bitfury. We note
that Prepaid
Cary Grossman
FirstName LastNameCary Grossman
GOOD WORKS ACQUISITION CORP.
Comapany
April NameGOOD WORKS ACQUISITION CORP.
16, 2021
April 516, 2021 Page 5
Page
FirstName LastName
Services of $50 million is recorded as an asset on the pro forma
balance sheet and
constitutes the majority of non-cash assets. We also note that the
Master Services and
Supply Agreement with Bitfury will cover the first $200 million of
equipment and
services from Bitfury with a 25% discount to Cipher. Due to the
significance of Bitfury to
Cipher for ongoing operations, please provide financial statements for
Bitfury, the
counterparty to the prepaid services and Master Services and Supply
Agreement, pursuant
to Rule 3-13 of Regulation S-X.
21. Refer to Note 3 on page 194. Please expand the disclosure to clarify
that the power
arrangements are based on letters of intent and not definitive
agreements.
Beneficial Ownership of Securities, page 217
22. We note that the Cipher Stockholder will hold 77.66% of the
outstanding New Cipher
stock at the closing of the transaction, and New Cipher will be a
"Controlled Company"
under Nasdaq rules. Explain why the Cipher Stockholder is not listed
in the beneficial
ownership table, and whether there are any natural person(s) who
exercise voting control
over those securities.
Financial Statements - Good Works Acquisition Corp.
Note 10 - Subsequent events, page F-19
23. Please revise the disclosure it include the date that the financial
statements were issued.
24. Please disclose as a subsequent event the Agreement and Plan of Merger
with Cipher and
include the details of the accounting treatment for the transaction.
Financial Statements - Cipher Mining Technologies Inc.
Note 2. Basis of Presentation, Summary of Significant Accounting Policies and
Recent
Accounting Pronouncements, page F-25
25. Please disclose in sufficient detail your revenue recognition
accounting policy.
Note 6. Subsequent Events, page F-27
26. Please expand the disclosure of the proposed business combination to
explain your
accounting treatment to be afforded to the 5 million shares in
exchange for benefits-in-
kind upon consummation of the merger. Please also include disclosure
of the accounting
treatment to be afforded to the business combination.
27. We note that the third power arrangement includes the terms and
conditions for a joint
venture agreement with a counterparty (WindHQ) that was assigned to
the Company by
BHBV. Please expand the disclosure to include the accounting treatment
to be afforded to
the joint venture following the merger and provide financial
statements for the joint
venture pursuant to Rule 3-09 of Regulation S-X or revise the
disclosure to clarify that the
joint venture is in the planning stage, as you disclose on page 173.
Cary Grossman
GOOD WORKS ACQUISITION CORP.
April 16, 2021
Page 6
General
28. We note that throughout the registration statement you associate
Bitfury's
past performance with the potential performance of New Cipher. Please
substantially
revise your disclosure to make clear that Cipher has had limited
operations, that it is a
separate entity from Bitfury and that Bitfury's past performance in
foreign jurisdictions
may not be comparable to Cipher's planned operations in the United
States.
You may contact Claire DeLabar, Senior Staff Accountant, at (202)
551-3349 or Robert
Littlepage, Accounting Branch Chief, at (202) 551-3361 if you have questions
regarding
comments on the financial statements and related matters. Please contact
Matthew Derby, Staff
Attorney, at (202) 551-3334 or Larry Spirgel, Office Chief, at (202) 551-3334
with any other
questions.
FirstName LastNameCary Grossman Sincerely,
Comapany NameGOOD WORKS ACQUISITION CORP.
Division of Corporation Finance
April 16, 2021 Page 6 Office of Technology
FirstName LastName