UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): |
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 2.02 Results of Operations and Financial Condition.
On August 8, 2023, Cipher Mining Inc. (the “Company”) announced its results for the second quarter ended June 30, 2023. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K (the “Report”).
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On August 3, 2023, the Board of Directors of the Company (the “Board”) increased the size of the Board from seven to eight directors and elected Robert Flatley as a director of the Company, effective immediately. Mr. Flatley will serve on the Audit Committee and the Compensation Committee.
Mr. Flatley's compensation will be consistent with that provided to all non-employee directors in accordance with the Company’s amended and restated non-employee director compensation practices described in “Executive and Director Compensation” of the Company’s Proxy Statement filed with the Securities and Exchange Commission on March 23, 2023.
The Company’s Nominating and Corporate Governance Committee had recommended and nominated Mr. Flatley as a director candidate. There is no arrangement or understanding pursuant to which Mr. Flatley was appointed to the Board. There are no family relationships between Mr. Flatley and any director or executive officer of the Company as defined in Item 401(d) of Regulation S-K, and Mr. Flatley has no direct or indirect material interest in any transaction or proposed transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Item 7.01 Regulation FD Disclosure.
On August 8, 2023, the Company issued a press release announcing the appointment of Mr. Flatley to the Board. A copy of the press release is furnished in Exhibit 99.1 hereto and is incorporated by reference herein.
On August 8, 2023, the Company posted a presentation to its website at https://investors.ciphermining.com (the “Presentation”). A copy of the Presentation is furnished as Exhibit 99.2 to this Report. The Company expects to use the Presentation, in whole or in part, and possibly with modifications, in connection with the earnings call with investors, analysts and others.
The information contained in the Presentation is summary information that is intended to be considered in the context of the Company’s Securities and Exchange Commission (“SEC”) filings and other public announcements that the Company may make, by press release or otherwise, from time to time. The Presentation speaks only as of the date of this Report. The Company undertakes no duty or obligation to publicly update or revise the information contained in the Presentation, although it may do so from time to time. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure. In addition, the exhibit furnished herewith contains statements intended as “forward-looking statements” that are subject to the cautionary statements about forward-looking statements set forth in such exhibit. By furnishing the information contained in the Presentation, the Company makes no admission as to the materiality of any information in the Presentation that is required to be disclosed solely by reason of Regulation FD.
The information in Items 2.02 and 7.01 of this Report (including Exhibits 99.1 and 99.2 attached hereto) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly provided by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits related to Item 2.02 and Item 7.01 shall be deemed to be furnished, and not filed:
Exhibit Number |
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Description |
99.1 |
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99.2 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Cipher Mining Inc. |
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Date: |
August 8, 2023 |
By: |
/s/ Tyler Page |
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Tyler Page |
Exhibit 99.1
Cipher Mining Provides Second Quarter 2023 Business Update
Achieved All-Time High Self-Mining Hash Rate Capacity of 6.8 Exahash per Second (“EH/s”) and on Track to Achieve 7.2 EH/s in Q3 2023
GAAP Diluted Net Loss of $0.05 per Share (Non-GAAP Diluted Net Income of $0.04 per Share)
Welcomes Robert Flatley to the Company’s Board of Directors
NEW YORK—August 8, 2023—Cipher Mining Inc. (NASDAQ: CIFR) ("Cipher" or the "Company"), a leading developer and operator of bitcoin mining data centers, today announced results for its second quarter 2023, with an update on its operations and deployment strategy.
"As we finalize the buildout of our Odessa facility, we are pleased to announce that we have achieved a self-mining capacity of 6.8 EH/s across our portfolio,” said Tyler Page, CEO of Cipher. "We are on track to complete Odessa in Q3 and bring our total self-mining capacity to 7.2 EH/s. As we complete the first phase of our build-out, we are exploring a growing list of expansion opportunities. With a strong balance sheet and best-in-class unit economics, we are well-positioned to move on to our next stage of growth, weather challenging markets, and come out a clear winner on the other side of the halving.”
Cipher also welcomes Robert Flatley, founder and Chief Executive Officer of TS Imagine, to the Company’s board of directors. “We are thrilled that Rob has agreed to serve on our board of directors,” said Mr. Page. “He brings over 30 years of experience in regulated financial services institutions and as a founder of four successful fintech companies. His leadership and guidance on our board will be invaluable as we continue to develop our best-in-class operations, trading and treasury management platform.”
Robert Flatley brings over 30 years of career experience that includes roles as Chief Executive Officer, founder, Managing Director, and board member of regulated financial services institutions and financial technology companies. Since 2021, Mr. Flatley has served as a director, the Chief Executive Officer and founder of TS Imagine, which was formed following the merger of Trading Screen and Imagine Software. From 2018 to 2019, Mr. Flatley served as a director and as President, Chief Financial Officer and Chief Operating Officer at New York Digital Investment Group (NYDIG). From 2010 to 2018, he served as a director and Chief Executive Officer of CoreOne Technologies. Earlier in his career, Mr. Flatley was a Managing Director at both Deutsche Bank Securities, and at Banc of America Securities. He has hands-on experience in various capital markets roles, including trading, securities and prime finance, building SaaS business models, market structure, quantitative trading, software development, and software M&A. He founded successful companies as a technology entrepreneur using both software and data-as-a-service models, and he was a founding employee of two statistically driven trading businesses at bulge bracket financial institutions. He earned a B.B.A. in Accounting from the University of Iowa in 1985.
Finance and Operations Updates
Business Update Call and Webcast
The live webcast and a webcast replay of the conference call can be accessed from the investor relations section of Cipher’s website at https://investors.ciphermining.com. To access this conference call by telephone, register here to receive dial-in numbers and a unique PIN to join the call.
About Cipher
Cipher is an emerging technology company focused on the development and operation of bitcoin mining data centers. Cipher is dedicated to expanding and strengthening the Bitcoin network's critical infrastructure. Together with its diversely talented team and strategic partnerships, Cipher aims to be a market leader in bitcoin mining growth and innovation. To learn more about Cipher, please visit https://www.ciphermining.com/.
Forward Looking Statements
This press release contains certain forward-looking statements within the meaning of the federal securities laws of the United States. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Any statements made in this press release that are not statements of historical fact, including statements about our beliefs and expectations regarding our future results of operations and financial position, business strategy, timing and likelihood of success, potential expansion of bitcoin mining data centers, expectations regarding the operations of mining centers, and management plans and objectives, are forward-looking statements and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan and strategies. These forward-looking statements generally are identified by the words “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “seeks,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “strategy,” “future,” “forecasts,” “opportunity,” “predicts,” “potential,” “would,” “will likely result,” “continue,” and similar expressions (including the negative versions of such words or expressions).
These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Cipher and our management, are inherently uncertain. Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied by such forward looking statements. New risks and uncertainties may emerge from time
to time, and it is not possible to predict all risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to: volatility in the price of Cipher's securities due to a variety of factors, including changes in the competitive and regulated industry in which Cipher operates, variations in performance across competitors, changes in laws and regulations affecting Cipher's business, and the ability to implement business plans, forecasts, and other expectations and to identify and realize additional opportunities. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the "Risk Factors" section of our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 14, 2023, and in Cipher's subsequent filings with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Cipher assumes no obligation and, except as required by law, does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise.
Contacts:
Investor Contact:
Josh Kane
Head of Investor Relations at Cipher Mining
josh.kane@ciphermining.com
Media Contact:
Ryan Dicovitsky / Kendal Till
Dukas Linden Public Relations
CipherMining@DLPR.com
CIPHER MINING INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for share and per share amounts)
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June 30, 2023 |
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December 31, 2022 |
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(unaudited) |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
$ |
1,741 |
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$ |
11,927 |
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Accounts receivable |
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380 |
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98 |
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Receivables, related party |
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1,614 |
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1,102 |
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Prepaid expenses and other current assets |
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2,260 |
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7,254 |
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Bitcoin |
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10,536 |
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6,283 |
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Derivative asset |
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25,786 |
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21,071 |
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Total current assets |
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42,317 |
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47,735 |
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Property and equipment, net |
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267,790 |
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191,784 |
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Deposits on equipment |
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1,675 |
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73,018 |
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Investment in equity investees |
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33,098 |
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37,478 |
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Derivative asset |
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49,466 |
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45,631 |
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Operating lease right-of-use asset |
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4,635 |
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5,087 |
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Security deposits |
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17,742 |
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17,730 |
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Total assets |
$ |
416,723 |
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$ |
418,463 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities |
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Accounts payable |
$ |
2,053 |
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$ |
14,286 |
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Accounts payable, related party |
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1,554 |
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3,083 |
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Accrued expenses and other current liabilities |
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22,746 |
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19,353 |
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Finance lease liability, current portion |
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11,189 |
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2,567 |
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Operating lease liability, current portion |
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1,087 |
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1,030 |
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Warrant liability |
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66 |
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7 |
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Total current liabilities |
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38,695 |
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40,326 |
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Asset retirement obligation |
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17,538 |
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16,682 |
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Finance lease liability |
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10,836 |
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12,229 |
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Operating lease liability |
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3,936 |
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4,494 |
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Deferred tax liability |
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2,508 |
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1,840 |
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Total liabilities |
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73,513 |
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75,571 |
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Commitments and contingencies (Note 12) |
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Stockholders’ equity |
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Preferred stock, $0.001 par value; 10,000,000 shares authorized, none issued and outstanding as of June 30, 2023 and December 31, 2022 |
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- |
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- |
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Common stock, $0.001 par value, 500,000,000 shares authorized, 254,795,626 and 251,095,305 shares issued as of June 30, 2023 and December 31, 2022, respectively, and 250,413,891 and 247,551,958 shares outstanding as of June 30, 2023 and December 31, 2022, respectively |
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254 |
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251 |
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Additional paid-in capital |
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473,471 |
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453,854 |
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Accumulated deficit |
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(130,511 |
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(111,209 |
) |
Treasury stock, at par, 4,381,735 and 3,543,347 shares at June 30, 2023 and December 31, 2022, respectively |
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(4 |
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(4 |
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Total stockholders’ equity |
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343,210 |
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342,892 |
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Total liabilities and stockholders’ equity |
$ |
416,723 |
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$ |
418,463 |
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CIPHER MINING INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for share and per share amounts)
(unaudited)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2023 |
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2022 |
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2023 |
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2022 |
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Revenue - bitcoin mining |
$ |
31,224 |
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|
$ |
- |
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$ |
53,119 |
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$ |
- |
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Costs and operating expenses (income) |
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Cost of revenue |
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15,868 |
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|
|
- |
|
|
|
24,009 |
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|
|
- |
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General and administrative |
|
21,335 |
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|
|
16,704 |
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|
|
38,755 |
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|
|
34,094 |
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Depreciation |
|
14,412 |
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|
8 |
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26,067 |
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|
15 |
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Change in fair value of derivative asset |
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(3,222 |
) |
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|
- |
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|
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(8,550 |
) |
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|
- |
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Power sales |
|
(5,651 |
) |
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|
- |
|
|
|
(5,749 |
) |
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|
- |
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Equity in losses of equity investees |
|
1,431 |
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|
|
12,079 |
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|
|
2,181 |
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|
|
12,232 |
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Realized gain on sale of bitcoin |
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(4,185 |
) |
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|
- |
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|
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(8,206 |
) |
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|
- |
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Impairment of bitcoin |
|
2,828 |
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|
|
535 |
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|
|
4,633 |
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|
|
539 |
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Other gains |
|
- |
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|
|
- |
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|
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(2,260 |
) |
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|
- |
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Total costs and operating expenses |
|
42,816 |
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|
|
29,326 |
|
|
|
70,880 |
|
|
|
46,880 |
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Operating loss |
|
(11,592 |
) |
|
|
(29,326 |
) |
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|
(17,761 |
) |
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|
(46,880 |
) |
Other income (expense) |
|
|
|
|
|
|
|
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Interest income |
|
25 |
|
|
|
44 |
|
|
|
101 |
|
|
|
51 |
|
Interest expense |
|
(485 |
) |
|
|
- |
|
|
|
(886 |
) |
|
|
- |
|
Change in fair value of warrant liability |
|
(22 |
) |
|
|
63 |
|
|
|
(59 |
) |
|
|
111 |
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Other expense |
|
(12 |
) |
|
|
- |
|
|
|
(12 |
) |
|
|
- |
|
Total other income (expense) |
|
(494 |
) |
|
|
107 |
|
|
|
(856 |
) |
|
|
162 |
|
Loss before taxes |
|
(12,086 |
) |
|
|
(29,219 |
) |
|
|
(18,617 |
) |
|
|
(46,718 |
) |
Current income tax expense |
|
(31 |
) |
|
|
- |
|
|
|
(48 |
) |
|
|
- |
|
Deferred income tax expense |
|
(584 |
) |
|
|
- |
|
|
|
(637 |
) |
|
|
- |
|
Total income tax expense |
|
(615 |
) |
|
|
- |
|
|
|
(685 |
) |
|
|
- |
|
Net loss |
$ |
(12,701 |
) |
|
$ |
(29,219 |
) |
|
$ |
(19,302 |
) |
|
$ |
(46,718 |
) |
Net loss per share - basic and diluted |
$ |
(0.05 |
) |
|
$ |
(0.12 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.19 |
) |
Weighted average shares outstanding - basic and diluted |
|
249,127,664 |
|
|
|
247,730,410 |
|
|
|
248,892,181 |
|
|
|
248,945,581 |
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CIPHER MINING INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
|
Six Months Ended June 30, |
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|||||
|
2023 |
|
|
2022 |
|
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Cash flows from operating activities |
|
|
|
|
|
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Net loss |
$ |
(19,302 |
) |
|
$ |
(46,718 |
) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|
|
|
|
|
||
Depreciation |
|
26,067 |
|
|
|
15 |
|
Amortization of operating right-of-use asset |
|
452 |
|
|
|
347 |
|
Share-based compensation |
|
17,988 |
|
|
|
19,578 |
|
Equity in losses of equity investees |
|
2,181 |
|
|
|
12,232 |
|
Impairment of bitcoin |
|
4,633 |
|
|
|
539 |
|
Non-cash lease expense |
|
878 |
|
|
|
- |
|
Deferred income taxes |
|
637 |
|
|
|
- |
|
Bitcoin received as payment for services |
|
(52,836 |
) |
|
|
- |
|
Change in fair value of derivative asset |
|
(8,550 |
) |
|
|
- |
|
Change in fair value of warrant liability |
|
59 |
|
|
|
(111 |
) |
Realized gain on sale of bitcoin |
|
(8,206 |
) |
|
|
- |
|
Changes in assets and liabilities: |
|
|
|
|
|
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Proceeds from sale of bitcoin |
|
52,474 |
|
|
|
- |
|
Accounts receivable |
|
(282 |
) |
|
|
- |
|
Receivables, related party |
|
(512 |
) |
|
|
(467 |
) |
Prepaid expenses and other current assets |
|
4,994 |
|
|
|
4,134 |
|
Security deposits |
|
(12 |
) |
|
|
(1,065 |
) |
Accounts payable |
|
(184 |
) |
|
|
104 |
|
Accounts payable, related party |
|
(1,529 |
) |
|
|
- |
|
Accrued expenses and other current liabilities |
|
6,323 |
|
|
|
1,209 |
|
Lease liabilities |
|
(594 |
) |
|
|
271 |
|
Net cash provided by (used in) operating activities |
|
24,679 |
|
|
|
(9,932 |
) |
Cash flows from investing activities |
|
|
|
|
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Deposits on equipment |
|
(2,932 |
) |
|
|
(156,811 |
) |
Purchases of property and equipment |
|
(28,541 |
) |
|
|
(13,069 |
) |
Capital distributions from equity investees |
|
3,807 |
|
|
|
10,065 |
|
Investment in equity investees |
|
(3,095 |
) |
|
|
- |
|
Prepayments on financing lease |
|
(3,676 |
) |
|
|
- |
|
Net cash used in investing activities |
|
(34,437 |
) |
|
|
(159,815 |
) |
Cash flows from financing activities |
|
|
|
|
|
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Proceeds from the issuance of common stock |
|
2,821 |
|
|
|
- |
|
Offering costs paid for the issuance of common stock |
|
(76 |
) |
|
|
- |
|
Repurchase of common shares to pay employee withholding taxes |
|
(1,114 |
) |
|
|
(3,052 |
) |
Principal payments on financing lease |
|
(2,059 |
) |
|
|
- |
|
Net cash used in financing activities |
|
(428 |
) |
|
|
(3,052 |
) |
Net decrease in cash and cash equivalents |
|
(10,186 |
) |
|
|
(172,799 |
) |
Cash and cash equivalents, beginning of the period |
|
11,927 |
|
|
|
209,841 |
|
Cash and cash equivalents, end of the period |
$ |
1,741 |
|
|
$ |
37,042 |
|
Supplemental disclosure of noncash investing and financing activities |
|
|
|
|
|
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Reclassification of deposits on equipment to property and equipment |
$ |
72,130 |
|
|
|
- |
|
Right-of-use asset obtained in exchange for finance lease liability |
$ |
14,212 |
|
|
|
- |
|
Finance lease costs in accrued expenses |
$ |
2,034 |
|
|
|
- |
|
Equity method investment acquired for non-cash consideration |
$ |
1,926 |
|
|
|
75,933 |
|
Sales tax accruals reversed due to exemption |
$ |
1,837 |
|
|
|
- |
|
Bitcoin received from equity investees |
$ |
317 |
|
|
|
1,326 |
|
Property and equipment purchases in accounts payable, accounts payable, related party and accrued expenses |
$ |
- |
|
|
|
5,459 |
|
Deposits on equipment in accounts payable and accounts payable, related party |
$ |
- |
|
|
|
10,972 |
|
Common stock cancelled |
$ |
- |
|
|
|
10,000 |
|
Right-of-use asset obtained in exchange for operating lease liability |
$ |
- |
|
|
|
5,859 |
|
Investment in equity investees in accrued expenses |
$ |
- |
|
|
|
4,345 |
|
Reclassification of deferred investment costs to investment in equity investees |
$ |
- |
|
|
|
174 |
|
Non-GAAP Financial Measures
The following is a reconciliation of our non-GAAP loss from operations, which excludes the impact of (i) depreciation and amortization, (ii) the non-cash change in the fair value of our derivative asset (iii) share-based compensation expense and (iv) nonrecurring gains, to its most directly comparable GAAP measure for the periods indicated (in thousands):
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Reconciliation of non-GAAP income (loss) from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating loss |
|
$ |
(11,592 |
) |
|
$ |
(29,326 |
) |
|
$ |
(17,761 |
) |
|
$ |
(46,880 |
) |
Depreciation and amortization |
|
|
14,642 |
|
|
|
8 |
|
|
|
26,519 |
|
|
|
15 |
|
Change in fair value of derivative asset |
|
|
(3,222 |
) |
|
|
- |
|
|
|
(8,550 |
) |
|
|
- |
|
Share-based compensation expense |
|
|
9,178 |
|
|
|
10,064 |
|
|
|
17,988 |
|
|
|
19,578 |
|
Other gains - nonrecurring |
|
|
- |
|
|
|
- |
|
|
|
(2,255 |
) |
|
|
- |
|
Non-GAAP income (loss) from operations |
|
$ |
9,006 |
|
|
$ |
(19,254 |
) |
|
$ |
15,941 |
|
|
$ |
(27,287 |
) |
The following are reconciliations of our non-GAAP net income (loss) and non-GAAP basic and diluted net income (loss) per share, in each case excluding the impact of (i) depreciation and amortization (ii) the non-cash change in the fair value of our derivative asset, (iii) share-based compensation expense, (iv) nonrecurring gains, (v) the non-cash change in the fair value of our warrant liability and (vi) deferred income tax expense, to the most directly comparable GAAP measures for the periods indicated:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Reconciliation of non-GAAP net income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
|
$ |
(12,701 |
) |
|
$ |
(29,219 |
) |
|
$ |
(19,302 |
) |
|
$ |
(46,718 |
) |
Non-cash adjustments to net loss: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
14,642 |
|
|
|
8 |
|
|
|
26,519 |
|
|
|
15 |
|
Change in fair value of derivative asset |
|
|
(3,222 |
) |
|
|
- |
|
|
|
(8,550 |
) |
|
|
- |
|
Share-based compensation expense |
|
|
9,178 |
|
|
|
10,064 |
|
|
|
17,988 |
|
|
|
19,578 |
|
Other gains - nonrecurring |
|
|
- |
|
|
|
- |
|
|
|
(2,255 |
) |
|
|
- |
|
Change in fair value of warrant liability |
|
|
(22 |
) |
|
|
63 |
|
|
|
(59 |
) |
|
|
111 |
|
Deferred income tax expense |
|
|
(584 |
) |
|
|
- |
|
|
|
(637 |
) |
|
|
- |
|
Total non-cash adjustments to net loss |
|
|
19,992 |
|
|
|
10,135 |
|
|
|
33,006 |
|
|
|
19,704 |
|
Non-GAAP net income (loss) |
|
$ |
7,291 |
|
|
$ |
(19,084 |
) |
|
$ |
13,704 |
|
|
$ |
(27,014 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Reconciliation of non-GAAP basic and diluted net income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted net loss per share |
|
$ |
(0.05 |
) |
|
$ |
(0.12 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.19 |
) |
Depreciation and amortization (per share) |
|
$ |
0.06 |
|
|
|
- |
|
|
|
0.11 |
|
|
|
- |
|
Change in fair value of derivative asset (per share) |
|
$ |
(0.01 |
) |
|
|
- |
|
|
|
(0.03 |
) |
|
|
- |
|
Share-based compensation expense (per share) |
|
$ |
0.04 |
|
|
|
0.04 |
|
|
|
0.07 |
|
|
|
0.08 |
|
Other gains - nonrecurring (per share) |
|
$ |
- |
|
|
|
- |
|
|
|
(0.01 |
) |
|
|
- |
|
Change in fair value of warrant liability (per share) |
|
$ |
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Deferred income tax expense (per share) |
|
$ |
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Non-GAAP basic and diluted net income (loss) per share |
|
$ |
0.04 |
|
|
$ |
(0.08 |
) |
|
$ |
0.06 |
|
|
$ |
(0.11 |
) |
###
Presentation for Business Update August 8, 2023
Forward-Looking Statements This communication contains certain forward-looking statements within the meaning of the federal securities laws of the United States. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Any statements made in this communication that are not statements of historical fact, including statements about our beliefs and expectations regarding our future results of operations and financial position, business strategy, timing and likelihood of success, potential expansion of bitcoin mining data centers, and management plans and objectives, are forward-looking statements and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan and strategies. These forward-looking statements generally are identified by the words “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “seeks,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” and similar expressions (including the negative versions of such words or expressions). These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Cipher and our management, are inherently uncertain. Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied by such forward looking statements. New risks and uncertainties may emerge from time to time, and it is not possible to predict all risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this communication, including but not limited to: volatility in the price of Cipher's securities due to a variety of factors, including changes in the competitive and regulated industry in which Cipher operates, variations in performance across competitors, changes in laws and regulations affecting Cipher's business, and the ability to implement business plans, forecasts, and other expectations and to identify and realize additional opportunities. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2022, and in Cipher's subsequent filings with the Securities and Exchange Commission. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Cipher assumes no obligation and, except as required by law, does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. Non-GAAP Financial Measures We use non-GAAP financial measures to assess and analyze our operational results and trends and to make financial and operational decisions. We believe these non-GAAP financial measures are useful to investors because they provide greater transparency regarding our operating performance. The non-GAAP financial measures included in this presentation should not be considered alternatives to measurements required by GAAP, and should not be considered measures of liquidity. These non-GAAP financial measures are unlikely to be comparable with non-GAAP information provided by other companies. Reconciliation of non-GAAP financial measures and GAAP financial measures are included in the tables accompanying this presentation. Reported results are presented in accordance with GAAP, whereas adjusted results are GAAP results adjusted to exclude the impact of (i) depreciation of fixed assets, (ii) change in fair value of warrant liability, (iii) non-cash change in fair value of our derivative asset and (iv) stock compensation expense. The contents and appearance of this presentation is copyrighted and the trademarks and service marks are owned by Cipher Mining Inc. All rights reserved.
Positioned to Win – The Halving is Coming Long lead time items acquired for 30 MW expansions at Bear & Chief data centers ERCOT approval for supplemental grid connection at Alborz 117 MW capacity at new JV data centers slated for 2024 Potential acquisition opportunities likely to build ahead of the 2024 halving ~2.7c Anticipated Weighted Avg. Power Price (c/kWh)(1) 70k+ Owned Rigs Represents the expected weighted average power price at Cipher’s current sites GROWTH UPDATES BUILT TO SUCCEED ~96% of Portfolio Energized Through Fixed Price Power 32 Cipher Employees
Key Indicators as of July 31, 2023 16.5 BTC Production Capacity(2) 518 BTC BTC Held 2,831 BTC Year to Date Production 418 BTC Monthly Production July 6.8 EH/s Current 8.7 EH/s Near-Term Expansion Potential(1) Self-Mining Hash rate Note: Values represented are approximations Assumes an efficiency of 21.5 J/TH/s per rig for 30 MW expansion at Bear, 30 MW expansion at Chief and 10 MW expansion at Alborz data centers Assumes network hash rate of 378 EH/s and 921 bitcoins mined per day 7.2 EH/s Q3 2023E
Cipher Mining’s Business Model At certain sites, Cipher can opportunistically elect to use power at data center or sell to the market The block reward is cut in half after every 210,000 blocks are mined (~every 4 years); the latest revision was in May 2020 POWER SOURCE MINING EQUIPMENT BITCOIN NETWORK Data center revenue includes a reward for the block mined, transaction fees, and potential power sales(1) Average block time is 10 minutes Time for Bitcoin system to mine a new block Block reward based on ratio of data center’s computing power to that of entire Bitcoin network Current block reward amounts to 6.25 bitcoins per block(2) Transaction fees are additional bitcoin paid to miners for confirming transactions Bitcoin Mining Dynamics Electricity Electricity Cost Computing Power Transaction Fees Bitcoin Reward Transaction Processing Assignment of Rewards 5
BlackRock Files Bitcoin Spot ETF $25,127 | June 15 Market Update Represents average USD market price across major Bitcoin exchanges from June 1, 2023, to July 31, 2023, per data.nasdaq.com Bitcoin price $USD(1) Implications Increasing Institutional Involvement in BTC Range-Bound BTC and Rising Network Hash Rate Stresses Competitors Ahead of Halving M&A Opportunities Current emphasis SEC Sues Coinbase $25,747 | June 6 1 2 3 SEC Sues Binance $27,125 | June 5 Fidelity Refiles Bitcoin Spot ETF $30,084 | June 29 VanEck Refiles Bitcoin Spot ETF $30,449 | June 30 Optimize Production SEC v. Ripple Initial Ruling $30,392 | July 13 EDX Markets Launches Crypto Exchange $26,849 | June 20 WisdomTree & Invesco Refiles Bitcoin Spot ETF $26,849 | June 20 Deutsche Bank Applies for Digital Asset License $26,849 | June 20 Find Cyclical Opportunities Expansion Planning FIT Bill Passes House Committees $29,345 | July 27
Data Centers Update ~$8,034 Weighted Avg. Electricity Cost per BTC(1) Odessa ~$8,308 all-in electricity cost per BTC(2) 90.0% of BTC production(3) Alborz ~$6,312 all-in electricity cost per BTC(4) 5.7% of BTC production(3) Bear & Chief ~$6,511 all-in electricity cost per BTC(5) 4.3% of BTC production(3) Steady Scaling KEY UPDATES Reflects weighted average all-in electricity cost from January to June 2023; June 2023 represents the latest electricity bills received Reflects electricity cost from January to June 2023, including TDU charges and net of revenue generated from opportunistic power sales; June 2023 represents the latest electricity bill received Reflects percentage of Cipher’s July BTC production Reflects electricity cost from January to June 2023, including taxes, customer charges, and 2021 storm surcharge; June 2023 represents the latest electricity bill received Reflects combined electricity cost from January to June 2023, including taxes, settlement charges, TSDP charges, and assumes the continued avoidance of material 4CP charges through August & September; June 2023 represents the latest electricity bills received 7 Hash Rate Growth
Operational Highlights Reflects percentage of Cipher’s July BTC production As of July 31, 2023 Reflects electricity cost from January to June 2023, including TDU charges and net of revenue generated from opportunistic power sales; June 2023 represents the latest electricity bill received Estimated for July 2023; assumes full up-time, network hash rate of 378 EH/s and 921 bitcoins mined per day odessa All-in Electricity Cost per BTC(3) ~14.2 Daily BTC Mining Capacity(4) ~5.8 EH/s 193 MW Operating Capacity(2) ~2,443 BTC Mined YTD(2) Odessa – 90.0% of BTC Production(1) ~$8,308 Hash Rate Deployed (EH/s) Odessa Growth Timeline ~6.2 EH/s Q3 2023 ~4.7 EH/s March ~5.7 EH/s June April ~5.0 EH/s May ~5.0 EH/s July ~5.8 EH/s
Operational Highlights Reflects percentage of Cipher’s July BTC production Joint venture with WindHQ LLC, of which Cipher owns ~0.64 EH/s YTD through July 2023; joint venture with WindHQ LLC, of which Cipher owns ~227 BTC Reflects electricity cost from January to June 2023, including taxes, customer charges, and 2021 storm surcharge; June 2023 represents the latest electricity bill received Estimated for July 2023; assumes full up-time, network hash rate of 378 EH/s and 921 bitcoins mined per day Alborz ~$6,312 All-in Electricity Cost per BTC(4) ~3.17 Daily BTC Mining Capacity(5) ~1.3 EH/s 40 MW Operating Capacity(2) ~464 BTC Mined YTD(3) Alborz – 5.7% of BTC Production(1)
Operational Highlights Bear & Chief Reflects percentage of Cipher’s July BTC production Joint venture with WindHQ LLC, of which Cipher owns ~0.32 EH/s YTD through July 2023; joint venture with WindHQ LLC, of which Cipher owns ~160 BTC Represents expansion capacity up to 135 MW at each site; expansion capacity above 75 MW at each site is subject to ERCOT approval Reflects combined electricity cost from January to June 2023, including taxes, settlement charges, TSDP charges, and assumes the continued avoidance of material 4CP charges through August & September; June 2023 represents the latest electricity bills received Estimated for July 2023; assumes full up-time, network hash rate of 378 EH/s and 921 bitcoins mined per day ~$6,511 All-in Electricity Cost per BTC(5) ~1.58 Daily BTC Mining Capacity(6) ~0.65 EH/s 20 MW Operating Capacity(2) ~327 BTC Mined YTD(3) Bear & Chief – 4.3% of BTC Production(1) Expansion Capacity up to 270 MW(4)
Financial Update
June 30, 2023 December 31, 2022 (unaudited) ASSETS Current assets Cash and cash equivalents $ 1,741 $ 11,927 Accounts receivable 380 98 Receivables, related party 1,614 1,102 Prepaid expenses and other current assets 2,260 7,254 Bitcoin 10,536 6,283 Derivative asset 25,786 21,071 Total current assets 42,317 47,735 Property and equipment, net 267,790 191,784 Deposits on equipment 1,675 73,018 Investment in equity investees 33,098 37,478 Derivative asset 49,466 45,631 Operating lease right-of-use asset 4,635 5,087 Security deposits 17,742 17,730 Total assets $ 416,723 $ 418,463 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 2,053 $ 14,286 Accounts payable, related party 1,554 3,083 Accrued expenses and other current liabilities 22,746 19,353 Finance lease liability, current portion 11,189 2,567 Operating lease liability, current portion 1,087 1,030 Warrant liability 66 7 Total current liabilities 38,695 40,326 Asset retirement obligation 17,538 16,682 Finance lease liability 10,836 12,229 Operating lease liability 3,936 4,494 Deferred tax liability 2,508 1,840 Total liabilities 73,513 75,571 Commitments and contingencies (Note 12) Stockholders’ equity Preferred stock, $0.001 par value; 10,000,000 shares authorized, none issued and outstanding as of June 30, 2023 and December 31, 2022 - - Common stock, $0.001 par value, 500,000,000 shares authorized, 254,795,626 and 251,095,305 shares issued as of June 30, 2023 and December 31, 2022, respectively, and 250,413,891 and 247,551,958 shares outstanding as of June 30, 2023 and December 31, 2022, respectively 254 251 Additional paid-in capital 473,471 453,854 Accumulated deficit (130,511 ) (111,209 ) Treasury stock, at par, 4,381,735 and 3,543,347 shares at June 30, 2023 and December 31, 2022, respectively (4 ) (4 ) Total stockholders’ equity 343,210 342,892 Total liabilities and stockholders’ equity $ 416,723 $ 418,463 Consolidated Balance Sheets Note: In thousands, except for share and per share amounts
Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Revenue - bitcoin mining $ 31,224 $ - $ 53,119 $ - Costs and operating expenses (income) Cost of revenue 15,868 - 24,009 - General and administrative 21,335 16,704 38,755 34,094 Depreciation 14,412 8 26,067 15 Change in fair value of derivative asset (3,222 ) - (8,550 ) - Power sales (5,651 ) - (5,749 ) - Equity in losses of equity investees 1,431 12,079 2,181 12,232 Realized gain on sale of bitcoin (4,185 ) - (8,206 ) - Impairment of bitcoin 2,828 535 4,633 539 Other gains - - (2,260 ) - Total costs and operating expenses 42,816 29,326 70,880 46,880 Operating loss (11,592 ) (29,326 ) (17,761 ) (46,880 ) Other income (expense) Interest income 25 44 101 51 Interest expense (485 ) - (886 ) - Change in fair value of warrant liability (22 ) 63 (59 ) 111 Other expense (12 ) - (12 ) - Total other income (expense) (494 ) 107 (856 ) 162 Loss before taxes (12,086 ) (29,219 ) (18,617 ) (46,718 ) Current income tax expense (31 ) - (48 ) - Deferred income tax expense (584 ) - (637 ) - Total income tax expense (615 ) - (685 ) - Net loss $ (12,701 ) $ (29,219 ) $ (19,302 ) $ (46,718 ) Net loss per share - basic and diluted $ (0.05 ) $ (0.12 ) $ (0.08 ) $ (0.19 ) Weighted average shares outstanding - basic and diluted 249,127,664 247,730,410 248,892,181 248,945,581 Consolidated Statement of Operations Note: In thousands, except for share and per share amounts
Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Reconciliation of non-GAAP income (loss) from operations: Operating loss $ (11,592 ) $ (29,326 ) $ (17,761 ) $ (46,880 ) Depreciation and amortization 14,642 8 26,519 15 Change in fair value of derivative asset (3,222 ) - (8,550 ) - Share-based compensation expense 9,178 10,064 17,988 19,578 Other gains - nonrecurring - - (2,255 ) - Non-GAAP income (loss) from operations $ 9,006 $ (19,254 ) $ 15,941 $ (27,287 ) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Reconciliation of non-GAAP net income (loss): Net loss $ (12,701 ) $ (29,219 ) $ (19,302 ) $ (46,718 ) Non-cash adjustments to net loss: Depreciation and amortization 14,642 8 26,519 15 Change in fair value of derivative asset (3,222 ) - (8,550 ) - Share-based compensation expense 9,178 10,064 17,988 19,578 Other gains - nonrecurring - - (2,255 ) - Change in fair value of warrant liability (22 ) 63 (59 ) 111 Deferred income tax expense (584 ) - (637 ) - Total non-cash adjustments to net loss 19,992 10,135 33,006 19,704 Non-GAAP net income (loss) $ 7,291 $ (19,084 ) $ 13,704 $ (27,014 ) Reconciliation of non-GAAP basic and diluted net income (loss) per share: Basic and diluted net loss per share $ (0.05 ) $ (0.12 ) $ (0.08 ) $ (0.19 ) Depreciation and amortization (per share) $ 0.06 - 0.11 - Change in fair value of derivative asset (per share) $ (0.01 ) - (0.03 ) - Share-based compensation expense (per share) $ 0.04 0.04 0.07 0.08 Other gains - nonrecurring (per share) $ - - (0.01 ) - Change in fair value of warrant liability (per share) $ - - - - Deferred income tax expense (per share) $ - - - - Non-GAAP basic and diluted net income (loss) per share $ 0.04 $ (0.08 ) $ 0.06 $ (0.11 ) Non-GAAP Measures Note: In thousands, except for per share amounts The following is a reconciliation of our non-GAAP loss from operations, which excludes the impact of depreciation and amortization non-cash change in fair value of our derivative asset share-based compensation expense nonrecurring gains, to its most directly comparable GAAP measure for the periods indicated: The following are reconciliations of our non-GAAP net income (loss) and non-GAAP basic and diluted net income (loss) per share, in each case excluding the impact of (i) depreciation and amortization, (ii) the non-cash change in the fair value of our derivative asset, (iii) share-based compensation expense, (iv) nonrecurring gains, (v) the non-cash change in the fair value of our warrant liability and (vi) deferred income tax expense, to the most directly comparable GAAP measures for the periods indicated:
Appendix
Common Stock Additional Accumulated Treasury Stock Total Shares Amount Paid-in Capital Deficit Shares Amount Stockholders’ Equity Balance as of March 31, 2022 253,685,763 $ 254 $ 431,899 $ (89,655 ) (3,511,490 ) $ (4 ) $ 342,494 Common stock cancelled (2,890,173 ) (3 ) (9,997 ) - - - (10,000 ) Delivery of common stock underlying restricted stock units 205,482 - - - - - - Share-based compensation - - 10,064 - - - 10,064 Net loss - - - (29,219 ) - - (29,219 ) Balance as of June 30, 2022 251,001,072 $ 251 $ 431,966 $ (118,874 ) $ (3,511,490 ) $ (4 ) $ 313,339 Common Stock Additional Accumulated Treasury Stock Total Shares Amount Paid-in Capital Deficit Shares Amount Stockholders’ Equity Balance as of March 31, 2023 253,050,088 $ 253 $ 462,181 $ (117,810 ) (4,144,081 ) $ (4 ) $ 344,620 Issuance of common shares, net of offering costs - At-the-market offering 978,207 1 2,744 - - - 2,745 Delivery of common stock underlying restricted stock units, net of shares settled for tax withholding settlement 674,817 - (632 ) - (237,654 ) - (632 ) Share-based compensation 92,514 - 9,178 - - - 9,178 Net loss - - - (12,701 ) - - (12,701 ) Balance as of June 30, 2023 254,795,626 $ 254 $ 473,471 $ (130,511 ) (4,381,735 ) $ (4 ) $ 343,210 Statements of Changes in Stockholders’ Equity (Deficit) Note: In thousands, except for share amounts Three Months Ended June 30, 2023 Three Months Ended June 30, 2022
Six Months Ended June 30, 2023 2022 Cash flows from operating activities Net loss $ (19,302 ) $ (46,718 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation 26,067 15 Amortization of operating right-of-use asset 452 347 Share-based compensation 17,988 19,578 Equity in losses of equity investees 2,181 12,232 Impairment of bitcoin 4,633 539 Non-cash lease expense 878 - Deferred income taxes 637 - Bitcoin received as payment for services (52,836 ) - Change in fair value of derivative asset (8,550 ) - Change in fair value of warrant liability 59 (111 ) Realized gain on sale of bitcoin (8,206 ) - Changes in assets and liabilities: Proceeds from sale of bitcoin 52,474 - Accounts receivable (282 ) - Receivables, related party (512 ) (467 ) Prepaid expenses and other current assets 4,994 4,134 Security deposits (12 ) (1,065 ) Accounts payable (184 ) 104 Accounts payable, related party (1,529 ) - Accrued expenses and other current liabilities 6,323 1,209 Lease liabilities (594 ) 271 Net cash provided by (used in) operating activities 24,679 (9,932 ) Cash flows from investing activities Deposits on equipment (2,932 ) (156,811 ) Purchases of property and equipment (28,541 ) (13,069 ) Capital distributions from equity investees 3,807 10,065 Investment in equity investees (3,095 ) - Prepayments on financing lease (3,676 ) - Net cash used in investing activities (34,437 ) (159,815 ) Cash flows from financing activities Proceeds from the issuance of common stock 2,821 - Offering costs paid for the issuance of common stock (76 ) - Repurchase of common shares to pay employee withholding taxes (1,114 ) (3,052 ) Principal payments on financing lease (2,059 ) - Net cash used in financing activities (428 ) (3,052 ) Net decrease in cash and cash equivalents (10,186 ) (172,799 ) Cash and cash equivalents, beginning of the period 11,927 209,841 Cash and cash equivalents, end of the period $ 1,741 $ 37,042 Supplemental disclosure of noncash investing and financing activities Reclassification of deposits on equipment to property and equipment $ 72,130 - Right-of-use asset obtained in exchange for finance lease liability $ 14,212 - Finance lease costs in accrued expenses $ 2,034 - Equity method investment acquired for non-cash consideration $ 1,926 75,933 Sales tax accruals reversed due to exemption $ 1,837 - Bitcoin received from equity investees $ 317 1,326 Property and equipment purchases in accounts payable, accounts payable, related party and accrued expenses $ - 5,459 Deposits on equipment in accounts payable and accounts payable, related party $ - 10,972 Common stock cancelled $ - 10,000 Right-of-use asset obtained in exchange for operating lease liability $ - 5,859 Investment in equity investees in accrued expenses $ - 4,345 Reclassification of deferred investment costs to investment in equity investees $ - 174 Consolidated Statement of Cash Flows Note: In thousands