10-Q
Q3--12-31false0001819989http://fasb.org/us-gaap/2023#PropertyPlantAndEquipmentNethttp://fasb.org/us-gaap/2023#PropertyPlantAndEquipmentNethttp://www.ciphermining.com/20230930#ChangeInFairValueOfDerivativeAssethttp://fasb.org/us-gaap/2023#FairValueAdjustmentOfWarrants00018199892023-09-300001819989us-gaap:AdditionalPaidInCapitalMember2023-09-300001819989cifr:SuperacmeTechnologyHongKongLimitedMember2023-03-310001819989cifr:LuminantEtServicesCompanyLLCMembercifr:LuminantPowerAgreementMember2023-08-232023-08-230001819989cifr:DataCenterLlcMember2023-09-300001819989us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001819989us-gaap:CommonStockMember2023-07-012023-09-300001819989us-gaap:TreasuryStockCommonMember2023-09-3000018199892022-06-300001819989us-gaap:TreasuryStockCommonMember2023-06-300001819989us-gaap:TreasuryStockCommonMember2022-12-310001819989cifr:PrivatePlacementWarrantsMember2022-12-310001819989cifr:PrivatePlacementWarrantsMember2023-01-012023-09-300001819989cifr:LuminantPowerPurchaseAgreementMember2022-12-310001819989cifr:LuminantPurchaseAndSaleAgreementMember2022-12-310001819989cifr:BitmainTechnologiesLimitedMembercifr:MinerPurchaseAgreementMember2023-01-012023-09-300001819989us-gaap:SubsequentEventMembercifr:TrinityMiningGroupIncorporationMembercifr:PurchaseAndSaleAgreementMember2023-11-060001819989us-gaap:SoftwareDevelopmentMember2023-09-300001819989cifr:BitfuryUSAIncMember2023-01-012023-09-300001819989us-gaap:DerivativeFinancialInstrumentsAssetsMemberus-gaap:FairValueInputsLevel3Member2023-01-012023-09-300001819989us-gaap:TreasuryStockCommonMember2022-09-300001819989us-gaap:RetainedEarningsMember2022-06-300001819989cifr:AlborzBearLlcAndChiefJointVenturesMembercifr:MinersAndMiningEquipmentMember2023-09-3000018199892022-09-212022-09-210001819989cifr:TermCreditFacilityMember2023-08-1400018199892022-12-310001819989us-gaap:DerivativeFinancialInstrumentsAssetsMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-3000018199892022-09-300001819989us-gaap:RelatedPartyMember2022-12-310001819989us-gaap:GeneralAndAdministrativeExpenseMember2022-07-012022-09-300001819989cifr:OfficeAndComputerEquipmentMember2023-09-300001819989us-gaap:ConstructionInProgressMember2022-12-310001819989cifr:BitmainTechnologiesLimitedMember2023-03-310001819989us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001819989us-gaap:TreasuryStockCommonMember2022-06-300001819989cifr:CommonStockFullyVestedMemberus-gaap:GeneralAndAdministrativeExpenseMember2023-07-012023-09-300001819989cifr:AlborzBearChiefEquityInvesteesMember2022-01-012022-09-300001819989us-gaap:GeneralAndAdministrativeExpenseMembercifr:PerformanceBasedRestrictedStockUnitsMember2022-07-012022-09-300001819989cifr:IncentiveAwardPlanMemberus-gaap:CommonStockMember2023-09-300001819989us-gaap:RetainedEarningsMember2022-01-012022-09-300001819989cifr:TermCreditFacilityMember2023-09-300001819989cifr:SuperacmeTechnologyHongKongLimitedMember2023-01-012023-03-310001819989srt:MinimumMemberus-gaap:SubsequentEventMembercifr:TrinityMiningGroupIncorporationMembercifr:PurchaseAndSaleAgreementMember2023-11-060001819989cifr:CombinedLuminantLeaseAgreementsMember2023-07-110001819989us-gaap:FurnitureAndFixturesMember2022-12-310001819989us-gaap:RetainedEarningsMember2022-09-300001819989cifr:AutosMember2022-12-310001819989us-gaap:GeneralAndAdministrativeExpenseMembercifr:ServiceBasedRestrictedStockUnitsMember2023-07-012023-09-300001819989us-gaap:SoftwareDevelopmentMember2022-12-310001819989us-gaap:CommonStockMember2022-09-300001819989cifr:AffiliatesOfLuminantEtServicesCompanyLlcMember2023-01-012023-09-300001819989cifr:PrivatePlacementWarrantsMember2023-09-300001819989cifr:CombinedLuminantLeaseAgreementsMembercifr:SecondAmendmentAndRestatementMember2023-08-232023-08-230001819989cifr:LuminantPowerAgreementMemberus-gaap:FairValueInputsLevel3Member2022-07-012022-07-010001819989cifr:AlborzBearChiefEquityInvesteesMember2022-07-012022-09-300001819989us-gaap:AccountingStandardsUpdate201613Member2023-09-300001819989us-gaap:DerivativeFinancialInstrumentsAssetsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001819989us-gaap:DerivativeFinancialInstrumentsAssetsMemberus-gaap:FairValueInputsLevel3Member2022-12-310001819989cifr:AffiliatesOfLuminantEtServicesCompanyLlcMembercifr:SecondAmendmentAndRestatementMember2023-01-012023-09-300001819989srt:MaximumMembercifr:AtTheMarketOfferingAgreementMember2023-08-030001819989us-gaap:AdditionalPaidInCapitalMember2022-01-012022-09-300001819989us-gaap:LeaseholdImprovementsMember2023-09-300001819989us-gaap:RetainedEarningsMember2023-01-012023-09-300001819989us-gaap:ScenarioAdjustmentMember2023-01-012023-09-300001819989us-gaap:TreasuryStockCommonMember2023-07-012023-09-300001819989cifr:IncentiveAwardPlanMembercifr:PerformanceBasedRestrictedStockUnitsMemberus-gaap:ShareBasedCompensationAwardTrancheOneMembersrt:ChiefExecutiveOfficerMember2023-01-012023-09-300001819989cifr:AlborzFacilityMember2023-09-300001819989cifr:AutosMember2023-09-300001819989cifr:EquityIncentivePlanMembersrt:MaximumMemberus-gaap:CommonStockMember2021-08-270001819989us-gaap:MeasurementInputExercisePriceMemberus-gaap:WarrantMember2022-12-310001819989us-gaap:RetainedEarningsMember2021-12-310001819989cifr:DataCenterLlcMember2022-12-3100018199892023-07-012023-09-300001819989us-gaap:FairValueMeasurementsRecurringMember2022-12-310001819989cifr:PriorSalesAgreementMember2023-01-012023-09-300001819989cifr:LuminantPowerPurchaseAgreementMember2023-09-300001819989cifr:LuminantPowerAgreementMember2023-01-012023-09-3000018199892023-01-012023-06-300001819989cifr:LuminantEtServicesCompanyLLCMembercifr:LuminantPowerAgreementMember2022-02-272022-02-280001819989us-gaap:RetainedEarningsMember2022-07-012022-09-300001819989us-gaap:MeasurementInputRiskFreeInterestRateMemberus-gaap:WarrantMember2023-09-300001819989us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-09-300001819989cifr:PrivatePlacementWarrantsMember2022-01-012022-09-300001819989us-gaap:GeneralAndAdministrativeExpenseMembercifr:ServiceBasedRestrictedStockUnitsMember2022-01-012022-09-300001819989cifr:AlborzBearChiefEquityInvesteesMember2023-07-012023-09-300001819989cifr:BitmainTechnologiesLimitedMember2023-01-012023-09-300001819989us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-300001819989us-gaap:CommonStockMember2021-12-310001819989us-gaap:SubsequentEventMembercifr:PurchaseAndSaleAgreementMember2023-11-060001819989us-gaap:GeneralAndAdministrativeExpenseMembercifr:ServiceBasedRestrictedStockUnitsMember2022-07-012022-09-300001819989cifr:WindHQMember2022-01-012022-12-310001819989cifr:OdessaFacilityMember2023-09-300001819989cifr:WarrantLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001819989us-gaap:TreasuryStockCommonMember2021-12-310001819989cifr:OdessaMember2023-09-300001819989cifr:BitmainTechnologiesLimitedMember2023-01-012023-03-3100018199892022-07-012022-09-300001819989cifr:LuminantPowerAgreementMember2022-09-292022-09-290001819989us-gaap:GeneralAndAdministrativeExpenseMember2023-07-012023-09-300001819989us-gaap:TreasuryStockCommonMember2023-01-012023-09-300001819989us-gaap:DerivativeFinancialInstrumentsAssetsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001819989cifr:LuminantPowerAgreementMember2023-07-012023-09-300001819989us-gaap:DerivativeFinancialInstrumentsAssetsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001819989us-gaap:DerivativeFinancialInstrumentsAssetsMemberus-gaap:FairValueInputsLevel3Member2023-09-300001819989cifr:IncentiveAwardPlanMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMembercifr:PerformanceBasedRestrictedStockUnitsMembersrt:ChiefExecutiveOfficerMember2023-01-012023-09-300001819989cifr:LuminantPowerAgreementMember2023-04-012023-06-300001819989us-gaap:FurnitureAndFixturesMember2023-09-300001819989cifr:WarrantLiabilityMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001819989us-gaap:FairValueMeasurementsRecurringMember2023-09-300001819989us-gaap:FairValueInputsLevel3Member2023-01-012023-09-300001819989us-gaap:AdditionalPaidInCapitalMember2021-12-310001819989cifr:BitmainTechnologiesLimitedMember2022-11-300001819989us-gaap:FairValueInputsLevel3Member2022-01-012022-12-310001819989cifr:PublicWarrantsMember2022-01-012022-09-300001819989cifr:EquityIncentivePlanMember2021-08-272021-08-270001819989cifr:PerformanceBasedRestrictedStockUnitsMember2023-09-300001819989cifr:LuminantEtServicesCompanyLLCMembercifr:LuminantPowerAgreementMember2023-01-012023-09-300001819989us-gaap:RetainedEarningsMember2023-06-300001819989us-gaap:CommonStockMember2023-01-012023-09-300001819989cifr:LuminantPurchaseAndSaleAgreementMember2023-09-300001819989us-gaap:CommonStockMember2022-01-012022-09-300001819989cifr:MinersAndMiningEquipmentMember2023-09-300001819989us-gaap:ConstructionInProgressMember2023-09-3000018199892023-01-012023-09-300001819989us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300001819989cifr:PerformanceBasedRestrictedStockUnitsMember2022-12-310001819989us-gaap:SubsequentEventMembercifr:TrinityMiningGroupIncorporationMembercifr:PurchaseAndSaleAgreementMember2023-11-062023-11-0600018199892022-01-012022-09-300001819989us-gaap:GeneralAndAdministrativeExpenseMembercifr:ServiceBasedRestrictedStockUnitsMember2023-01-012023-09-300001819989us-gaap:GeneralAndAdministrativeExpenseMembercifr:PerformanceBasedRestrictedStockUnitsMember2023-01-012023-09-300001819989srt:MaximumMembercifr:AtTheMarketOfferingAgreementMember2022-09-212022-09-210001819989cifr:LoanAgreementMembercifr:FederalFundsTargetRateMember2023-08-142023-08-140001819989us-gaap:AdditionalPaidInCapitalMember2022-12-310001819989cifr:BitfuryTopHoldCoMember2023-09-300001819989us-gaap:WarrantMember2022-12-310001819989cifr:CanaanAgreementMember2023-06-012023-06-300001819989us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-300001819989cifr:CanaanAgreementMember2023-01-012023-09-300001819989us-gaap:MeasurementInputExpectedDividendRateMemberus-gaap:WarrantMember2023-09-300001819989us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001819989us-gaap:MeasurementInputExercisePriceMemberus-gaap:WarrantMember2023-09-300001819989us-gaap:AdditionalPaidInCapitalMember2023-06-300001819989us-gaap:CommonStockMember2022-07-012022-09-300001819989us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001819989cifr:ChiefFacilityMember2023-09-300001819989cifr:WindHQMember2022-12-310001819989cifr:WarrantLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001819989us-gaap:PrivatePlacementMember2022-12-310001819989us-gaap:CommonStockMember2022-12-310001819989us-gaap:GeneralAndAdministrativeExpenseMembercifr:PerformanceBasedRestrictedStockUnitsMember2023-07-012023-09-300001819989us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001819989us-gaap:CommonStockMember2023-06-300001819989us-gaap:TreasuryStockCommonMember2022-07-012022-09-300001819989cifr:PriorSalesAgreementMember2023-09-3000018199892023-11-060001819989us-gaap:MeasurementInputExpectedDividendRateMemberus-gaap:WarrantMember2022-12-310001819989cifr:WarrantLiabilityMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001819989us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001819989cifr:CommonStockFullyVestedMemberus-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-09-300001819989cifr:BitfuryTopHoldCoMember2023-08-042023-08-040001819989us-gaap:AdditionalPaidInCapitalMember2023-01-012023-09-300001819989cifr:ServiceBasedRestrictedStockUnitsMember2023-09-300001819989cifr:OfficeAndComputerEquipmentMember2022-12-310001819989us-gaap:WarrantMember2023-09-300001819989cifr:PublicWarrantsMember2023-01-012023-09-300001819989cifr:CombinedLuminantLeaseAgreementsMember2023-01-012023-09-300001819989us-gaap:WarrantMember2023-01-012023-09-300001819989cifr:OfficersDirectorsEmployeesAndConsultantsMemberus-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-300001819989cifr:AlborzBearChiefEquityInvesteesMember2023-01-012023-09-300001819989us-gaap:MeasurementInputPriceVolatilityMemberus-gaap:WarrantMember2022-12-310001819989us-gaap:MeasurementInputRiskFreeInterestRateMemberus-gaap:WarrantMember2022-12-310001819989us-gaap:RetainedEarningsMember2023-09-300001819989cifr:CanaanAgreementMembercifr:CanaanCreativeGlobalPteLtdMember2023-05-040001819989cifr:LuminantEtServicesCompanyLLCMembercifr:LuminantPowerAgreementMember2022-08-262022-08-2600018199892021-12-310001819989cifr:ServiceBasedRestrictedStockUnitsMember2023-01-012023-09-300001819989us-gaap:RelatedPartyMember2023-09-300001819989cifr:InitialDataCenterLLCMember2023-01-012023-09-300001819989cifr:OfficersDirectorsEmployeesAndConsultantsMembercifr:IncentiveAwardPlanMember2023-01-012023-09-300001819989us-gaap:TreasuryStockCommonMember2022-01-012022-09-300001819989us-gaap:AdditionalPaidInCapitalMember2022-06-300001819989cifr:LoanAgreementMember2023-08-140001819989us-gaap:NonrelatedPartyMember2023-09-300001819989cifr:BitmainTechnologiesLimitedMember2023-09-3000018199892023-06-300001819989cifr:PrivatePlacementWarrantsMember2023-01-012023-09-300001819989cifr:WindHQMember2022-12-310001819989cifr:IncentiveAwardPlanMembercifr:PerformanceBasedRestrictedStockUnitsMemberus-gaap:ShareBasedCompensationAwardTrancheThreeMembersrt:ChiefExecutiveOfficerMember2023-01-012023-09-300001819989us-gaap:GeneralAndAdministrativeExpenseMembercifr:PerformanceBasedRestrictedStockUnitsMember2022-01-012022-09-300001819989srt:MaximumMembercifr:AtTheMarketOfferingAgreementMember2023-08-032023-08-030001819989cifr:BitmainTechnologiesLimitedMember2022-12-310001819989us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001819989us-gaap:NonrelatedPartyMember2022-12-310001819989us-gaap:CommonStockMember2022-06-300001819989us-gaap:CommonStockMember2023-09-300001819989us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-09-300001819989cifr:BearFacilityMember2023-09-300001819989cifr:CombinedLuminantLeaseAgreementsMember2023-07-112023-07-110001819989cifr:OdessaFacilityMember2023-01-012023-09-300001819989us-gaap:RetainedEarningsMember2022-12-310001819989us-gaap:AdditionalPaidInCapitalMember2022-09-300001819989us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001819989cifr:BitmainTechnologiesLimitedMemberus-gaap:SubsequentEventMembercifr:MinerPurchaseAgreementMember2023-10-040001819989cifr:MinersAndMiningEquipmentMember2022-12-310001819989cifr:PublicWarrantsMember2023-09-300001819989us-gaap:RetainedEarningsMember2023-07-012023-09-300001819989cifr:ServiceBasedRestrictedStockUnitsMember2022-12-310001819989cifr:IncentiveAwardPlanMembersrt:DirectorMember2023-09-300001819989us-gaap:LeaseholdImprovementsMember2022-12-310001819989us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300001819989cifr:PerformanceBasedRestrictedStockUnitsMember2023-01-012023-09-300001819989cifr:IncentiveAwardPlanMemberus-gaap:CommonStockMember2023-01-010001819989us-gaap:MeasurementInputPriceVolatilityMemberus-gaap:WarrantMember2023-09-30utr:acrecifr:ProMinerxbrli:pureiso4217:USDxbrli:sharesxbrli:sharescifr:DataCenterscifr:Miningiso4217:USDcifr:Miner

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 001-39625

 

CIPHER MINING INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

85-1614529

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

1 Vanderbilt Avenue, Floor 54, Suite C

New York, New York

10017

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (332) 262-2300

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.001 per share

 

CIFR

 

The Nasdaq Stock Market LLC

Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per whole share

 

CIFRW

 

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

 

 

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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of November 6, 2023, the registrant had 254,660,072 shares of Common Stock, $0.001 par value per share, outstanding.

 

 

 

 


 

Table of Contents

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

4

 

 

 

Item 1.

Financial Statements (Unaudited)

4

 

Condensed Consolidated Balance Sheets

4

 

Condensed Consolidated Statements of Operations

5

 

Condensed Consolidated Statement of Changes in Stockholder’s Equity

6

 

Condensed Consolidated Statements of Cash Flows

8

 

Notes to Unaudited Condensed Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

25

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4.

Controls and Procedures

35

 

 

 

PART II.

OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

37

Item 1A.

Risk Factors

37

Item 2.

Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

37

Item 3.

Defaults Upon Senior Securities

37

Item 4.

Mine Safety Disclosures

37

Item 5.

Other Information

37

Item 6.

Exhibits

39

Signatures

40

 

i


 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements contained in this Quarterly Report, other than statements of historical fact, including, without limitation, statements regarding our future results of operations and financial position, business strategy, timing and likelihood of success, potential expansion of or additional bitcoin mining data centers, expectations regarding the operations of mining centers, and management plans and objectives are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements use these words or expressions. The forward-looking statements in this Quarterly Report are only predictions and are largely based on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following:

The further development and acceptance of digital asset networks and other digital assets, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. The slowing or stopping of the development or acceptance of digital asset systems may adversely affect an investment in us.
We may face several risks due to disruptions in the crypto asset markets, including but not limited to, the risk from depreciation in our stock price, financing risk, risk of increased losses or impairments in our investments or other assets, risks of legal proceedings and government investigations, and risks from price declines or price volatility of crypto assets.
Our business and the markets in which we operate are new and rapidly evolving, which makes it difficult to evaluate our future prospects and the risks and challenges we may encounter.
We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability, such as the ongoing military conflict between Russia and Ukraine, and the armed conflict in Israel and its surrounding regions. Our business, financial condition and results of operations may be materially adversely affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine, Israel or any other geopolitical tensions.
If we fail to grow our hashrate, we may be unable to compete, and our results of operations could suffer.
Bitcoin mining activities are energy-intensive, which may restrict the geographic locations of miners and have a negative environmental impact. Government regulators may potentially restrict the ability of electricity suppliers to provide electricity to mining operations, such as ours, increase taxes on the purchase of electricity used to mine bitcoin, or even fully or partially ban mining operations.
We have concentrated our operations in Texas and, thus, are particularly exposed to changes in the regulatory environment, market conditions and natural disasters in this state.
Our operating results may fluctuate due to the highly volatile nature of cryptocurrencies in general and, specifically, bitcoin.
We depend on third parties to provide us with certain critical equipment and may rely on components and raw materials that may be subject to price fluctuations or shortages, including ASIC chips that have been subject to periods of significant shortage and high innovation pace.
We may be affected by price fluctuations in the wholesale and retail power markets.
We are vulnerable to severe weather conditions and natural disasters, including severe heat, winter weather events, earthquakes, fires, floods, hurricanes, as well as power outages and other industrial incidents, which could severely disrupt the normal operation of our business and adversely affect our results of operations.
We are exposed to risks related to disruptions or other failures in the supply chain for bitcoin mining hardware and related data center hardware, and difficulties in obtaining new hardware.
Bitcoin miners and other necessary hardware are subject to malfunction, technological obsolescence and physical degradation.
Our automated processes with respect to curtailment may adversely affect our operations.

1


 

The important factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (the “SEC”) on March 14, 2023 (the “2022 Form 10-K”) and our other reports filed with the SEC.

The forward-looking statements in this Quarterly Report are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report and the documents that we reference in this Quarterly Report and have filed as exhibits to this Quarterly Report with the understanding that our actual future results, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Quarterly Report. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report, whether as a result of any new information, future events or otherwise.

2


 

WHERE YOU CAN FIND MORE INFORMATION

Our corporate website address is https://www.ciphermining.com (“Corporate Website”). The contents of, or information accessible through, our Corporate Website are not part of this Quarterly Report.

The Company maintains a dedicated investor website at https://investors.ciphermining.com/investors (“Investors’ Website”) which is similarly not part of this Quarterly Report. We make our filings with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports, available free of charge on our Investors’ Website as soon as reasonably practicable after we file such reports with, or furnish such reports to, the SEC.

We may use our Investors’ Website as a distribution channel of material information about the Company including through press releases, investor presentations, sustainability reports, and notices of upcoming events. We intend to utilize our Investors’ Website as a channel of distribution to reach public investors and as a means of disclosing material non-public information for complying with disclosure obligations under Regulation FD.

Any reference to our Corporate Website or Investors’ Website addresses do not constitute incorporation by reference of the information contained on or available through those websites, and you should not consider such information to be a part of this Quarterly Report or any other filings we make with the SEC.

3


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

 

CIPHER MINING INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except for share and per share amounts)

 

 

September 30, 2023

 

 

December 31, 2022

 

 

(unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

$

3,342

 

 

$

11,927

 

Accounts receivable

 

360

 

 

 

98

 

Receivables, related party

 

-

 

 

 

1,102

 

Prepaid expenses and other current assets

 

3,962

 

 

 

7,254

 

Bitcoin

 

13,667

 

 

 

6,283

 

Derivative asset

 

33,087

 

 

 

21,071

 

Total current assets

 

54,418

 

 

 

47,735

 

Property and equipment, net

 

258,295

 

 

 

191,784

 

Deposits on equipment

 

1,220

 

 

 

73,018

 

Investment in equity investees

 

33,609

 

 

 

37,478

 

Derivative asset

 

46,963

 

 

 

45,631

 

Operating lease right-of-use asset

 

4,399

 

 

 

5,087

 

Security deposits

 

17,586

 

 

 

17,730

 

Total assets

$

416,490

 

 

$

418,463

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

$

4,604

 

 

$

14,286

 

Accounts payable, related party

 

1,554

 

 

 

3,083

 

Accrued expenses and other current liabilities

 

24,813

 

 

 

19,353

 

Finance lease liability, current portion

 

6,749

 

 

 

2,567

 

Operating lease liability, current portion

 

1,117

 

 

 

1,030

 

Warrant liability

 

56

 

 

 

7

 

Total current liabilities

 

38,893

 

 

 

40,326

 

Asset retirement obligation

 

17,966

 

 

 

16,682

 

Finance lease liability

 

12,014

 

 

 

12,229

 

Operating lease liability

 

3,645

 

 

 

4,494

 

Deferred tax liability

 

1,285

 

 

 

1,840

 

Total liabilities

 

73,803

 

 

 

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 September 30, 2023 and December 31, 2022

 

-

 

 

 

-

 

Common stock, $0.001 par value, 500,000,000 shares authorized, 259,682,742 and 251,095,305 shares issued as of September 30, 2023 and December 31, 2022, respectively, and 254,558,178 and 247,551,958 shares outstanding as of September 30, 2023 and December 31, 2022, respectively

 

259

 

 

 

251

 

Additional paid-in capital

 

490,655

 

 

 

453,854

 

Accumulated deficit

 

(148,222

)

 

 

(111,209

)

Treasury stock, at par, 5,124,564 and 3,543,347 shares at September 30, 2023 and December 31, 2022, respectively

 

(5

)

 

 

(4

)

Total stockholders’ equity

 

342,687

 

 

 

342,892

 

Total liabilities and stockholders’ equity

$

416,490

 

 

$

418,463

 

 

 

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4


 

CIPHER MINING INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for share and per share amounts)

(unaudited)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 Revenue - bitcoin mining

$

30,304

 

 

$

-

 

 

$

83,423

 

 

$

-

 

 Costs and operating expenses (income)

 

 

 

 

 

 

 

 

 

 

 

 Cost of revenue

 

13,008

 

 

 

-

 

 

 

37,017

 

 

 

-

 

 General and administrative

 

23,898

 

 

 

17,755

 

 

 

62,653

 

 

 

51,849

 

 Depreciation

 

16,217

 

 

 

11

 

 

 

42,284

 

 

 

26

 

 Change in fair value of derivative asset

 

(4,744

)

 

 

(85,658

)

 

 

(13,294

)

 

 

(85,658

)

 Power sales

 

(2,720

)

 

 

-

 

 

 

(8,469

)

 

 

-

 

 Equity in losses of equity investees

 

1,998

 

 

 

8,345

 

 

 

4,179

 

 

 

20,577

 

 Realized gain on sale of bitcoin

 

(2,505

)

 

 

(6

)

 

 

(10,711

)

 

 

(6

)

 Impairment of bitcoin

 

3,443

 

 

 

320

 

 

 

8,076

 

 

 

859

 

 Other gains

 

(95

)

 

 

-

 

 

 

(2,355

)

 

 

-

 

 Total costs and operating expenses (income)

 

48,500

 

 

 

(59,233

)

 

 

119,380

 

 

 

(12,353

)

 Operating (loss) income

 

(18,196

)

 

 

59,233

 

 

 

(35,957

)

 

 

12,353

 

 Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 Interest income

 

11

 

 

 

55

 

 

 

112

 

 

 

106

 

 Interest expense

 

(627

)

 

 

-

 

 

 

(1,513

)

 

 

-

 

 Change in fair value of warrant liability

 

10

 

 

 

4

 

 

 

(49

)

 

 

115

 

 Other expense

 

(6

)

 

 

-

 

 

 

(18

)

 

 

-

 

 Total other (expense) income

 

(612

)

 

 

59

 

 

 

(1,468

)

 

 

221

 

 (Loss) income before taxes

 

(18,808

)

 

 

59,292

 

 

 

(37,425

)

 

 

12,574

 

 Current income tax expense

 

(95

)

 

 

-

 

 

 

(143

)

 

 

-

 

 Deferred income tax benefit

 

1,192

 

 

 

-

 

 

 

555

 

 

 

-

 

 Total income tax benefit

 

1,097

 

 

 

-

 

 

 

412

 

 

 

-

 

 Net (loss) income

$

(17,711

)

 

$

59,292

 

 

$

(37,013

)

 

$

12,574

 

 Net (loss) income per share - basic

$

(0.07

)

 

$

0.24

 

 

$

(0.15

)

 

$

0.05

 

 Net (loss) income per share - diluted

$

(0.07

)

 

$

0.24

 

 

$

(0.15

)

 

$

0.05

 

 Weighted average shares outstanding - basic

 

251,789,350

 

 

 

247,508,745

 

 

 

249,858,033

 

 

 

248,461,373

 

 Weighted average shares outstanding - diluted

 

251,789,350

 

 

 

248,342,200

 

 

 

249,858,033

 

 

 

248,782,665

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5


 

CIPHER MINING INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, except for share amounts)

(unaudited)

 

 

Three Months Ended September 30, 2023

 

 

Common Stock

 

 

Additional

 

 

Accumulated

 

 

Treasury Stock

 

 

Total

 

 

Shares

 

 

Amount

 

 

Paid-in Capital

 

 

Deficit

 

 

Shares

 

 

Amount

 

 

Stockholders’ Equity

 

Balance as of June 30, 2023

 

254,795,626

 

 

$

254

 

 

$

473,471

 

 

$

(130,511

)

 

 

(4,381,735

)

 

$

(4

)

 

$

343,210

 

Issuance of common shares, net of offering costs - At-the-market offering

 

2,831,736

 

 

 

4

 

 

 

8,597

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

8,601

 

Delivery of common stock underlying restricted stock units, net of shares settled for tax withholding settlement

 

1,983,952

 

 

 

1

 

 

 

(2,112

)

 

 

-

 

 

 

(742,829

)

 

 

(1

)

 

 

(2,112

)

Share-based compensation

 

71,428

 

 

 

-

 

 

 

10,699

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,699

 

Net loss

 

-

 

 

 

-

 

 

 

-

 

 

 

(17,711

)

 

 

-

 

 

 

-

 

 

 

(17,711

)

Balance as of September 30, 2023

 

259,682,742

 

 

$

259

 

 

$

490,655

 

 

$

(148,222

)

 

 

(5,124,564

)

 

$

(5

)

 

$

342,687

 

 

 

Three Months Ended September 30, 2022

 

 

Common Stock

 

 

Additional

 

 

Accumulated

 

 

Treasury Stock

 

 

Total

 

 

Shares

 

 

Amount

 

 

Paid-in Capital

 

 

Deficit

 

 

Shares

 

 

Amount

 

 

Stockholders’ Equity

 

Balance as of June 30, 2022

 

251,001,072

 

 

$

251

 

 

$

431,966

 

 

$

(118,874

)

 

 

(3,511,490

)

 

$

(4

)

 

$

313,339

 

Delivery of common stock underlying restricted stock units, net of shares settled for tax withholding settlement

 

42,577

 

 

 

-

 

 

 

(25

)

 

 

-

 

 

 

(13,193

)

 

 

-

 

 

 

(25

)

Share-based compensation

 

-

 

 

 

-

 

 

 

10,494

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,494

 

Net income

 

-

 

 

 

-

 

 

 

-

 

 

 

59,292

 

 

 

-

 

 

 

-

 

 

 

59,292

 

Balance as of September 30, 2022

 

251,043,649

 

 

$

251

 

 

$

442,435

 

 

$

(59,582

)

 

 

(3,524,683

)

 

$

(4

)

 

$

383,100

 

 

 

 

 

 

 

 

 

 

 

 

 

6


 

 

 

 

CIPHER MINING INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, except for share amounts)

(unaudited)

 

 

Nine Months Ended September 30, 2023

 

 

Common Stock

 

 

Additional

 

 

Accumulated

 

 

Treasury Stock

 

 

Total

 

 

Shares

 

 

Amount

 

 

Paid-in Capital

 

 

Deficit

 

 

Shares

 

 

Amount

 

 

Stockholders’ Equity

 

Balance as of January 1, 2023

 

251,095,305

 

 

$

251

 

 

$

453,854

 

 

$

(111,209

)

 

 

(3,543,347

)

 

$

(4

)

 

$

342,892

 

Issuance of common shares, net of offering costs - At-the-market offering

 

3,809,943

 

 

 

4

 

 

 

11,341

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

11,345

 

Delivery of common stock underlying restricted stock units, net of shares settled for tax withholding settlement

 

4,457,708

 

 

 

4

 

 

 

(3,227

)

 

 

-

 

 

 

(1,581,217

)

 

 

(1

)

 

 

(3,224

)

Share-based compensation

 

319,786

 

 

 

-

 

 

 

28,687

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

28,687

 

Net loss

 

-

 

 

 

-

 

 

 

-

 

 

 

(37,013

)

 

 

-

 

 

 

-

 

 

 

(37,013

)

Balance as of September 30, 2023

 

259,682,742

 

 

$

259

 

 

$

490,655

 

 

$

(148,222

)

 

 

(5,124,564

)

 

$

(5

)

 

$

342,687

 

 

 

Nine Months Ended September 30, 2022

 

 

Common Stock

 

 

Additional

 

 

Accumulated

 

 

Treasury Stock

 

 

Total

 

 

Shares

 

 

Amount

 

 

Paid-in Capital

 

 

Deficit

 

 

Shares

 

 

Amount

 

 

Stockholders’ Equity

 

Balance as of January 1, 2022

 

252,131,679

 

 

$

252

 

 

$

425,438

 

 

$

(72,156

)

 

 

(2,852,259

)

 

$

(3

)

 

$

353,531

 

Delivery of common stock underlying restricted stock units, net of shares settled for tax withholding settlement

 

1,802,123

 

 

 

2

 

 

 

(3,078

)

 

 

-

 

 

 

(672,424

)

 

 

(1

)

 

 

(3,077

)

Warrants exercised

 

20

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Common stock cancelled

 

(2,890,173

)

 

 

(3

)

 

 

(9,997

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(10,000

)

Share-based compensation

 

-

 

 

 

-

 

 

 

30,072

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

30,072

 

Net income

 

-

 

 

 

-

 

 

 

-

 

 

 

12,574

 

 

 

-

 

 

 

-

 

 

 

12,574

 

Balance as of September 30, 2022

 

251,043,649

 

 

$

251

 

 

$

442,435

 

 

$

(59,582

)

 

 

(3,524,683

)

 

$

(4

)

 

$

383,100

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7


 

CIPHER MINING INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

Nine Months Ended September 30,

 

 

2023

 

 

2022

 

 Cash flows from operating activities

 

 

 

 

 

 Net (loss) income

$

(37,013

)

 

$

12,574

 

 Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

 Depreciation

 

42,284

 

 

 

26

 

 Amortization of operating right-of-use asset

 

688

 

 

 

556

 

 Share-based compensation

 

28,687

 

 

 

30,072

 

 Equity in losses of equity investees

 

4,179

 

 

 

20,577

 

 Impairment of bitcoin

 

8,076

 

 

 

859

 

 Non-cash lease expense

 

1,477

 

 

 

-

 

 Deferred income taxes

 

(555

)

 

 

-

 

 Bitcoin received as payment for services

 

(83,161

)

 

 

-

 

 Change in fair value of derivative asset

 

(13,294

)

 

 

(85,658

)

 Change in fair value of warrant liability

 

49

 

 

 

(115

)

 Realized gain on sale of bitcoin

 

(10,711

)

 

 

(6

)

 Changes in assets and liabilities:

 

 

 

 

 

 Proceeds from sale of bitcoin

 

78,729

 

 

 

23

 

 Proceeds from power sales

 

-

 

 

 

1,722

 

 Proceeds from reduction of scheduled power

 

-

 

 

 

5,056

 

 Accounts receivable

 

(262

)

 

 

-

 

 Receivables, related party

 

(958

)

 

 

(731

)

 Prepaid expenses and other current assets

 

3,238

 

 

 

5,412

 

 Security deposits

 

144

 

 

 

(1,103

)

 Accounts payable

 

2,366

 

 

 

400

 

 Accounts payable, related party

 

(1,529

)

 

 

-

 

 Accrued expenses and other current liabilities

 

10,732

 

 

 

1,408

 

 Lease liabilities

 

(762

)

 

 

37

 

 Net cash provided by (used in) operating activities

 

32,404

 

 

 

(8,891

)

 Cash flows from investing activities

 

 

 

 

 

 Deposits on equipment