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): |
(Exact name of Registrant as Specified in Its Charter)
(State or Other Jurisdiction |
(Commission File Number) |
(IRS Employer |
||
|
|
|
|
|
|
||||
|
||||
(Address of Principal Executive Offices) |
|
(Zip Code) |
||
Registrant’s Telephone Number, Including Area Code: |
(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:
|
|
Trading |
|
|
|
|
|||
|
|
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 March 5, 2024, Cipher Mining Inc. (the “Company”) announced its results for the fourth quarter and year ended December 31, 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 7.01 Regulation FD Disclosure.
On March 5, 2024, 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 |
|
Description |
99.1 |
|
|
99.2 |
|
|
104 |
|
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.
|
|
|
Cipher Mining Inc. |
|
|
|
|
Date: |
March 5, 2024 |
By: |
/s/ Tyler Page |
|
|
|
Tyler Page |
Exhibit 99.1
Cipher Mining Provides Fourth Quarter and Full Year 2023 Business Update
Fourth Quarter GAAP Earnings of $10.6m and Non-GAAP Earnings of $27.8m
Full Year 2023 Revenues of $126.8m
Increased Hash Rate to 7.4 EH/s in First Quarter 2024 and on track to reach 9.3 EH/s by end of Third Quarter 2024, with potential to grow to 25 EH/s by the end of 2025
NEW YORK—March 5, 2024—Cipher Mining Inc. (NASDAQ: CIFR) ("Cipher" or the "Company") today announced results for its fourth quarter and full year ended December 31, 2023, with an update on its operations and deployment strategy.
"We are delighted to announce our fourth quarter 2023 results, which reflect our first full quarter in which all four of our data centers were operating at full capacity. We delivered a quarter with strong positive net income on both a GAAP and Non-GAAP basis. And while recent FASB accounting changes have been a tailwind for all the miners’ earnings, Cipher was net positive for the quarter even without those accounting changes,” said Tyler Page, CEO of Cipher. “These record results are driven by our best-in-class unit economics.”
“We are particularly excited about our expansion plans for 2024 and 2025. We expect to be at 9.3 EH/s by the end of Q3 2024 via the fully funded expansions at our Bear and Chief data centers and over 16 EH/s in the first half of 2025 via the fully funded phase one build of our Black Pearl data center. We have the potential to grow to 25 EH/s by the end of 2025 with the eventual completion of Black Pearl. We have already seen the results we can achieve with our operational leverage. With the strength of our balance sheet, our expansion plans and proven track record on execution, we expect to be a clear winner through the halving and into the next cycle.”
Finance and Operations Highlights
Business Update Call and Webcast
Cipher will host a conference call and webcast today at 8:00 a.m. Eastern Time to discuss the fourth quarter and full year results for 2023 and management’s outlook for operations and growth plans. 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 and additional 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 for the year ended December 31, 2023, 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.
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.
CONSOLIDATED BALANCE SHEETS
(in thousands, except for share and per share amounts)
|
December 31, 2023 |
|
|
December 31, 2022 |
|
||
ASSETS |
|
|
|
|
|
||
Current assets |
|
|
|
|
|
||
Cash and cash equivalents |
$ |
86,105 |
|
|
$ |
11,927 |
|
Accounts receivable |
|
622 |
|
|
|
98 |
|
Receivables, related party |
|
245 |
|
|
|
1,102 |
|
Prepaid expenses and other current assets |
|
3,670 |
|
|
|
7,254 |
|
Bitcoin |
|
32,978 |
|
|
|
6,283 |
|
Derivative asset |
|
31,878 |
|
|
|
21,071 |
|
Total current assets |
|
155,498 |
|
|
|
47,735 |
|
Property and equipment, net |
|
243,815 |
|
|
|
191,188 |
|
Deposits on equipment |
|
30,812 |
|
|
|
73,018 |
|
Intangible assets, net |
|
8,109 |
|
|
|
596 |
|
Investment in equity investees |
|
35,258 |
|
|
|
37,478 |
|
Derivative asset |
|
61,713 |
|
|
|
45,631 |
|
Operating lease right-of-use asset |
|
7,077 |
|
|
|
5,087 |
|
Security deposits |
|
23,855 |
|
|
|
17,730 |
|
Total assets |
$ |
566,137 |
|
|
$ |
418,463 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
||
Accounts payable |
$ |
4,980 |
|
|
$ |
14,286 |
|
Accounts payable, related party |
|
1,554 |
|
|
|
3,083 |
|
Accrued expenses and other current liabilities |
|
22,439 |
|
|
|
19,353 |
|
Finance lease liability, current portion |
|
3,404 |
|
|
|
2,567 |
|
Operating lease liability, current portion |
|
1,166 |
|
|
|
1,030 |
|
Warrant liability |
|
250 |
|
|
|
7 |
|
Total current liabilities |
|
33,793 |
|
|
|
40,326 |
|
Asset retirement obligation |
|
18,394 |
|
|
|
16,682 |
|
Finance lease liability |
|
11,128 |
|
|
|
12,229 |
|
Operating lease liability |
|
6,280 |
|
|
|
4,494 |
|
Deferred tax liability |
|
5,206 |
|
|
|
1,840 |
|
Total liabilities |
|
74,801 |
|
|
|
75,571 |
|
Commitments and contingencies (Note 14) |
|
|
|
|
|
||
Stockholders’ equity |
|
|
|
|
|
||
Preferred stock, $0.001 par value; 10,000,000 shares authorized, none issued and outstanding as of December 31, 2023 and December 31, 2022 |
|
- |
|
|
|
- |
|
Common stock, $0.001 par value, 500,000,000 shares authorized, 296,276,536 and 251,095,305 shares issued as of December 31, 2023 and December 31, 2022, respectively, and 290,957,862 and 247,551,958 shares outstanding as of December 31, 2023, and December 31, 2022, respectively |
|
296 |
|
|
|
251 |
|
Additional paid-in capital |
|
627,822 |
|
|
|
453,854 |
|
Accumulated deficit |
|
(136,777 |
) |
|
|
(111,209 |
) |
Treasury stock, at par, 5,318,674 and 3,543,347 shares at December 31, 2023 and December 31, 2022, respectively |
|
(5 |
) |
|
|
(4 |
) |
Total stockholders’ equity |
|
491,336 |
|
|
|
342,892 |
|
Total liabilities and stockholders’ equity |
$ |
566,137 |
|
|
$ |
418,463 |
|
|
|
|
|
|
|
||
CIPHER MINING INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for share and per share amounts)
|
Years ended December 31, |
|
|||||
|
2023 |
|
|
2022 |
|
||
Revenue - bitcoin mining |
$ |
126,842 |
|
|
$ |
3,037 |
|
Costs and operating expenses (income) |
|
|
|
|
|
||
Cost of revenue |
|
50,309 |
|
|
|
748 |
|
General and administrative |
|
85,195 |
|
|
|
70,836 |
|
Depreciation and amortization |
|
59,093 |
|
|
|
4,378 |
|
Change in fair value of derivative asset |
|
(26,836 |
) |
|
|
(73,479 |
) |
Power sales |
|
(9,941 |
) |
|
|
(458 |
) |
Equity in losses of equity investees |
|
2,530 |
|
|
|
36,972 |
|
Gains on fair value of bitcoin |
|
(11,038 |
) |
|
|
(6 |
) |
Impairment of bitcoin |
|
- |
|
|
|
1,467 |
|
Other gains |
|
(2,355 |
) |
|
|
- |
|
Total costs and operating expenses (income) |
|
146,957 |
|
|
|
40,458 |
|
Operating loss |
|
(20,115 |
) |
|
|
(37,421 |
) |
Other income (expense) |
|
|
|
|
|
||
Interest income |
|
164 |
|
|
|
215 |
|
Interest expense |
|
(1,999 |
) |
|
|
(137 |
) |
Change in fair value of warrant liability |
|
(243 |
) |
|
|
130 |
|
Other expense |
|
(17 |
) |
|
|
- |
|
Total other (expense) income |
|
(2,095 |
) |
|
|
208 |
|
Loss before taxes |
|
(22,210 |
) |
|
|
(37,213 |
) |
Current income tax expense |
|
(201 |
) |
|
|
- |
|
Deferred income tax expense |
|
(3,366 |
) |
|
|
(1,840 |
) |
Total income tax expense |
|
(3,567 |
) |
|
|
(1,840 |
) |
Net loss |
$ |
(25,777 |
) |
|
$ |
(39,053 |
) |
Net loss per share - basic and diluted |
$ |
(0.10 |
) |
|
$ |
(0.16 |
) |
Weighted average shares outstanding - basic and diluted |
|
252,439,461 |
|
|
|
248,227,458 |
|
CIPHER MINING INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
|
Years ended December 31, |
|
|||||
|
2023 |
|
|
2022 |
|
||
Cash flows from operating activities |
|
|
|
|
|
||
Net loss |
$ |
(25,777 |
) |
|
$ |
(39,053 |
) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|
|
|
|
|
||
Depreciation |
|
58,972 |
|
|
|
4,378 |
|
Amortization of intangible assets |
|
121 |
|
|
|
- |
|
Amortization of operating right-of-use asset |
|
822 |
|
|
|
772 |
|
Share-based compensation |
|
38,470 |
|
|
|
41,504 |
|
Equity in losses of equity investees |
|
2,530 |
|
|
|
36,972 |
|
Impairment of bitcoin |
|
- |
|
|
|
1,467 |
|
Non-cash lease expense |
|
1,940 |
|
|
|
137 |
|
Deferred income taxes |
|
3,366 |
|
|
|
1,840 |
|
Bitcoin received as payment for services |
|
(126,319 |
) |
|
|
(2,939 |
) |
Change in fair value of derivative asset |
|
(26,836 |
) |
|
|
(73,479 |
) |
Change in fair value of warrant liability |
|
243 |
|
|
|
(130 |
) |
Gains on fair value of bitcoin |
|
(11,038 |
) |
|
|
(6 |
) |
Changes in assets and liabilities: |
|
|
|
|
|
||
Accounts receivable |
|
(524 |
) |
|
|
(98 |
) |
Receivables, related party |
|
(1,203 |
) |
|
|
(1,102 |
) |
Prepaid expenses and other current assets |
|
3,531 |
|
|
|
6,433 |
|
Security deposits |
|
(6,125 |
) |
|
|
(7,378 |
) |
Accounts payable |
|
(9,306 |
) |
|
|
892 |
|
Accounts payable, related party |
|
(1,529 |
) |
|
|
1,530 |
|
Accrued expenses and other current liabilities |
|
5,311 |
|
|
|
748 |
|
Lease liabilities |
|
(890 |
) |
|
|
(203 |
) |
Proceeds from power sales |
|
- |
|
|
|
1,721 |
|
Proceeds from reduction of scheduled power |
|
- |
|
|
|
5,056 |
|
Proceeds from sale of Bitcoin |
|
- |
|
|
|
23 |
|
Net cash used in operating activities |
|
(94,241 |
) |
|
|
(20,915 |
) |
Cash flows from investing activities |
|
|
|
|
|
||
Proceeds from sale of bitcoin |
|
111,188 |
|
|
|
- |
|
Deposits on equipment |
|
(33,906 |
) |
|
|
(188,103 |
) |
Purchases of property and equipment |
|
(20,480 |
) |
|
|
(39,219 |
) |
Purchases and development of software |
|
(634 |
) |
|
|
(596 |
) |
Capital distributions from equity investees |
|
3,808 |
|
|
|
54,009 |
|
Investment in equity investees |
|
(3,545 |
) |
|
|
- |
|
Prepayments on financing lease |
|
(3,676 |
) |
|
|
- |
|
Net cash provided by (used in) investing activities |
|
52,755 |
|
|
|
(173,909 |
) |
Cash flows from financing activities |
|
|
|
|
|
||
Proceeds from the issuance of common stock |
|
135,848 |
|
|
|
- |
|
Offering costs paid for the issuance of common stock |
|
(3,404 |
) |
|
|
- |
|
Repurchase of common shares to pay employee withholding taxes |
|
(3,902 |
) |
|
|
(3,090 |
) |
Principal payments on financing lease |
|
(12,878 |
) |
|
|
- |
|
Net cash provided by (used in) financing activities |
|
115,664 |
|
|
|
(3,090 |
) |
Net increase (decrease) in cash and cash equivalents |
|
74,178 |
|
|
|
(197,914 |
) |
Cash and cash equivalents, beginning of the period |
|
11,927 |
|
|
|
209,841 |
|
Cash and cash equivalents, end of the period |
$ |
86,105 |
|
|
$ |
11,927 |
|
CIPHER MINING INC.
CONSOLIDATED STATEMENT OF CASH FLOWS - CONTINUED
(in thousands)
|
Years ended December 31, |
|
|||||
|
2023 |
|
|
2022 |
|
||
Supplemental disclosure of noncash investing and financing activities |
|
|
|
|
|
||
Reclassification of deposits on equipment to property and equipment |
$ |
74,186 |
|
|
$ |
105,904 |
|
Right-of-use asset obtained in exchange for finance lease liability |
$ |
14,212 |
|
|
$ |
14,998 |
|
Issuance of common stock in exchange for intangible assets |
$ |
7,000 |
|
|
$ |
- |
|
Right-of-use asset obtained in exchange for operating lease liability |
$ |
2,812 |
|
|
$ |
- |
|
Reclassification of receivables, related party to investment in equity investees |
$ |
2,060 |
|
|
$ |
- |
|
Equity method investment acquired for non-cash consideration |
$ |
1,926 |
|
|
$ |
127,796 |
|
Sales tax accrual on machine purchases |
$ |
1,209 |
|
|
$ |
- |
|
Bitcoin received from equity investees |
$ |
317 |
|
|
$ |
4,828 |
|
Common stock cancelled |
$ |
- |
|
|
$ |
10,000 |
|
Property and equipment purchases in accounts payable, accounts payable, related party and accrued expenses |
$ |
- |
|
|
$ |
13,994 |
|
Right-of-use asset obtained in exchange for operating lease liability |
$ |
- |
|
|
$ |
5,859 |
|
Investment in equity investees in accrued expenses |
$ |
- |
|
|
$ |
5,316 |
|
Deposits on equipment in accounts payable, accounts payable, related party and accrued expenses |
$ |
- |
|
|
$ |
13,403 |
|
Initial estimate of asset retirement obligation and related capitalized costs |
$ |
- |
|
|
$ |
16,509 |
|
Reclassification of deferred investment costs to investment in equity investees |
$ |
- |
|
|
$ |
174 |
|
Finance lease cost in accrued expenses |
$ |
- |
|
|
$ |
339 |
|
Prepaid rent reclassified to operating lease liability |
$ |
- |
|
|
$ |
132 |
|
Non-GAAP Financial Measures
The following are reconciliations of our Adjusted Earnings, in each case excluding the impact of (i) the non-cash change in fair value of derivative asset, (ii) share-based compensation expense, (iii) depreciation and amortization, (iv) deferred income tax expense, (v) nonrecurring gains and losses and (vi) the non-cash change in fair value of warrant liability, to the most directly comparable GAAP measures for the periods indicated (in thousands):
|
|
Years ended December 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Reconciliation of Adjusted Earnings: |
|
|
|
|
|
|
||
Net loss |
|
$ |
(25,777 |
) |
|
$ |
(39,053 |
) |
Change in fair value of derivative asset |
|
|
(26,836 |
) |
|
|
(73,479 |
) |
Share-based compensation expense |
|
|
38,470 |
|
|
|
41,504 |
|
Depreciation and amortization |
|
|
59,093 |
|
|
|
4,378 |
|
Deferred income tax expense |
|
|
3,366 |
|
|
|
1,840 |
|
Other gains - nonrecurring |
|
|
(2,355 |
) |
|
|
- |
|
Change in fair value of warrant liability |
|
|
243 |
|
|
|
(130 |
) |
Adjusted earnings |
|
|
46,204 |
|
|
|
(64,940 |
) |
Presentation for Business Update March 5, 2024
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, 2023, 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) the non-cash change in fair value of derivative asset, (ii) share-based compensation expense, (iii) depreciation and amortization, (iv) deferred income tax expense, (v) nonrecurring gains and losses and (vi) the non-cash change in fair value of warrant liability. The contents and appearance of this presentation is copyrighted and the trademarks and service marks are owned by Cipher Mining Inc. All rights reserved.
($51.6m) Q4 2022 $10.6m Q4 2023 gaap NET earnings ($22.8m) Q4 2022 $27.8m Q4 2023 Adjusted earnings $3.0m Q4 2022 $43.4m Q4 2023 revenues 377 BTC Q4 2022 1,327 BTC Q4 2023 Btc mined(1) 1,433 BTC As of February 29, 2024 BTC Held $69.4m As of February 29, 2024 cash 7.4 EH/s As of February 29, 2024 Self-mining hashrate Financial Highlights Note: Values represented are approximations Bitcoin mined figure represents bitcoin mined at Odessa as well as the share of bitcoin mined at JV sites
Positioned to Win Through the Halving 30 MW expansion at each of Bear and Chief JV data centers delivering ~1.25 EH/s of self-mining capacity on track for Q2 2024 deployment Hardware and software optimization expected to add an incremental ~0.62 EH/s, expected by Q3 2024 300 MW Black Pearl data center construction commenced with expected energization in Q2 2025 ~2.7c Anticipated Weighted Average Power Price (c/kWh)(1) Represents the expected weighted average power price at Cipher’s current sites Reflects Cipher’s expected fleet efficiency with the current operating fleet, energization of contracted rigs / hardware, implementation of software, and energization of the full Bitmain T21 purchase option GROWTH UPDATES BUILT TO SUCCEED ~96% of Portfolio Energized Through Fixed Price Power ~29.9 J/TH Current Operating Fleet Efficiency ~22.0 J/TH 2025 Expected Fleet Efficiency(2)
Bitcoin Mining Business Model 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 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
11 Spot Bitcoin ETFs Approved by SEC $46,143 | Jan. 10 All-Time High Hash Rate $44,319 | Feb. 8 Represents average USD market price across major bitcoin exchanges from November 1, 2023, to February 29, 2024, per blockchain.com Reflects Bitcoin network hash rate from November 1, 2023, to February 29, 2024, per blockchain.com BTC Price & Network Hash rate(1,2) Market Update Maturation of the Industry with BTC Spot ETF Approved BTC Halving Approaching Relentless Growth in Hash Rate 1 2 3 Current emphasis Execute Data Center Build-Outs Prudently Manage / Maximize Growth Through Next Cycle Optimize Production Pre-Halving FASB Digital Assets Ruling Live $43,023 | Dec. 15 Bitcoin Transaction Fees Spike (Ordinals) $42,237 | Dec. 17 Bitfury Announces Share Distribution Plan $51,728 | Feb. 26
Data Centers Update ~$8,626 All-in Electricity Cost per BTC in 2023 Odessa ~$8,579 all-in electricity cost per BTC(1) ~88% of 2023 BTC production Alborz ~$7,237 all-in electricity cost per BTC(2) ~7% of 2023 BTC production Bear & Chief ~$11,531 all-in electricity cost per BTC(3) ~5% of 2023 BTC production Steady Scaling KEY UPDATES Reflects electricity cost from 2023, including TDU charges and net of revenue generated from opportunistic power sales Reflects electricity cost from 2023, including taxes, customer charges, and 2021 storm surcharge Reflects combined electricity cost from 2023, including taxes, settlement charges, and TSDP charges Assumes 3Q24E hash rate plus the energization of contracted Bitmain T21 rigs and the full Bitmain T21 purchase option 7 Hash Rate Growth (4)
Operational Highlights Reflects approximate percentage of Cipher’s February 2024 BTC production YTD through February 2024 Reflects electricity cost from 2023, including TDU charges and net of revenue generated from opportunistic power sales Assumes full up-time, February 2024 average network hashrate of 569 EH/s & 951 bitcoins mined per day Odessa ~$8,579 All-in Electricity Cost per BTC(3) ~10.8 Daily BTC Mining Capacity(4) ~6.4 EH/s 207 MW Operating Capacity ~635 BTC Mined YTD(2) Odessa – 89% of BTC Production(1)
Operational Highlights Reflects approximate percentage of Cipher’s February 2024 BTC production Joint venture with WindHQ LLC, of which Cipher owns ~0.64 EH/s YTD through February 2024; joint venture with WindHQ LLC, of which Cipher owns ~43 BTC Reflects electricity cost from 2023, including taxes, customer charges, and 2021 storm surcharge Assumes full up-time, February 2024 average network hashrate of 569 EH/s & 951 bitcoins mined per day Alborz ~$7,237 All-in Electricity Cost per BTC(4) ~2.2 Daily BTC Mining Capacity(5) ~1.3 EH/s 40 MW Operating Capacity(2) ~88 BTC Mined YTD(3) Alborz – 7% of BTC Production(1)
Operational Highlights Bear & Chief Reflects approximate percentage of Cipher’s February 2024 BTC production Joint venture with WindHQ LLC, of which Cipher owns ~0.32 EH/s YTD through February 2024; joint venture with WindHQ LLC, of which Cipher owns ~26 BTC Reflects combined electricity cost from 2023, including taxes, settlement charges, and TSDP charges Assumes full up-time, February 2024 average network hashrate of 569 EH/s & 951 bitcoins mined per day ~$11,531 All-in Electricity Cost per BTC(4) ~1.1 Daily BTC Mining Capacity(5) ~0.7 EH/s 20 MW Operating Capacity(2) ~54 BTC Mined YTD(3) Bear & Chief – 4% of BTC Production(1)
2024 Expansion To add S21 photo
Financial Update
$10.6m Q4 2023 ($25.8m) 2023 gaap NET earnings $0.04 Q4 2023 ($0.10) 2023 Gaap net earnings per share $43.4m Q4 2023 $126.8m 2023 revenues 1,195 BTC Q4 2023 4,334 BTC 2023 Btc mined(1) Fourth Quarter and Full Year 2023 Update Note: Values represented are approximations Bitcoin mined figure represents bitcoin mined at Odessa and excludes the share of bitcoin mined at JV sites $27.8m Q4 2023 $46.2m 2023 Adjusted Earnings $0.11 Q4 2023 $0.18 2023 Adjusted earnings per Share
December 31, 2023 December 31, 2022 ASSETS Current assets Cash and cash equivalents $ 86,105 $ 11,927 Accounts receivable 622 98 Receivables, related party 245 1,102 Prepaid expenses and other current assets 3,670 7,254 Bitcoin 32,978 6,283 Derivative asset 31,878 21,071 Total current assets 155,498 47,735 Property and equipment, net 243,815 191,188 Deposits on equipment 30,812 73,018 Intangible assets, net 8,109 596 Investment in equity investees 35,258 37,478 Derivative asset 61,713 45,631 Operating lease right-of-use asset 7,077 5,087 Security deposits 23,855 17,730 Total assets $ 566,137 $ 418,463 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 4,980 $ 14,286 Accounts payable, related party 1,554 3,083 Accrued expenses and other current liabilities 22,439 19,353 Finance lease liability, current portion 3,404 2,567 Operating lease liability, current portion 1,166 1,030 Warrant liability 250 7 Total current liabilities 33,793 40,326 Asset retirement obligation 18,394 16,682 Finance lease liability 11,128 12,229 Operating lease liability 6,280 4,494 Deferred tax liability 5,206 1,840 Total liabilities 74,801 75,571 Commitments and contingencies (Note 14) Stockholders’ equity Preferred stock, $0.001 par value; 10,000,000 shares authorized, none issued and outstanding as of December 31, 2023 and December 31, 2022 - - Common stock, $0.001 par value, 500,000,000 shares authorized, 296,276,536 and 251,095,305 shares issued as of December 31, 2023 and December 31, 2022, respectively, and 290,957,862 and 247,551,958 shares outstanding as of December 31, 2023, and December 31, 2022, respectively 296 251 Additional paid-in capital 627,822 453,854 Accumulated deficit (136,777 ) (111,209 ) Treasury stock, at par, 5,318,674 and 3,543,347 shares at December 31, 2023 and December 31, 2022, respectively (5 ) (4 ) Total stockholders’ equity 491,336 342,892 Total liabilities and stockholders’ equity $ 566,137 $ 418,463 Consolidated Balance Sheets Note: In thousands, except for share and per share amounts
Years ended December 31, 2023 2022 Revenue - bitcoin mining $ 126,842 $ 3,037 Costs and operating expenses (income) Cost of revenue 50,309 748 General and administrative 85,195 70,836 Depreciation and amortization 59,093 4,378 Change in fair value of derivative asset (26,836 ) (73,479 ) Power sales (9,941 ) (458 ) Equity in losses of equity investees 2,530 36,972 Gains on fair value of bitcoin (11,038 ) (6 ) Impairment of bitcoin - 1,467 Other gains (2,355 ) - Total costs and operating expenses (income) 146,957 40,458 Operating loss (20,115 ) (37,421 ) Other income (expense) Interest income 164 215 Interest expense (1,999 ) (137 ) Change in fair value of warrant liability (243 ) 130 Other expense (17 ) - Total other (expense) income (2,095 ) 208 Loss before taxes (22,210 ) (37,213 ) Current income tax expense (201 ) - Deferred income tax expense (3,366 ) (1,840 ) Total income tax expense (3,567 ) (1,840 ) Net loss $ (25,777 ) $ (39,053 ) Net loss per share - basic and diluted $ (0.10 ) $ (0.16 ) Weighted average shares outstanding - basic and diluted 252,439,461 248,227,458 Consolidated Statement of Operations Note: In thousands, except for share and per share amounts
Years ended December 31, 2023 2022 Reconciliation of Adjusted Earnings: Net loss $ (25,777 ) $ (39,053 ) Change in fair value of derivative asset (26,836 ) (73,479 ) Share-based compensation expense 38,470 41,504 Depreciation and amortization 59,093 4,378 Deferred income tax expense 3,366 1,840 Other gains - nonrecurring (2,355 ) - Change in fair value of warrant liability 243 (130 ) Adjusted earnings 46,204 (64,940 ) Non-GAAP Measures Note: In thousands The following are reconciliations of our Adjusted Earnings, in each case excluding the impact of (i) the non-cash change in fair value of derivative asset, (ii) share-based compensation expense, (iii) depreciation and amortization, (iv) deferred income tax expense, (v) nonrecurring gains and losses and (vi) the non-cash change in fair value of warrant liability, to the most directly comparable GAAP measures for the periods indicated:
Appendix
Common Stock Treasury Stock Shares Amount Additional Paid-in Capital Accumulated Deficit Shares Amount Total 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 1,853,779 2 (3,091 ) - (691,088 ) (1 ) (3,090 ) Warrants exercised 20 - - - - - - Common stock cancelled (2,890,173 ) (3 ) (9,997 ) - - - (10,000 ) Share-based compensation - - 41,504 - - - 41,504 Net loss - - - (39,053 ) - - (39,053 ) Balance as of December 31, 2022 251,095,305 $ 251 $ 453,854 $ (111,209 ) (3,543,347 ) $ (4 ) $ 342,892 Common Stock Treasury Stock Shares Amount Additional Paid-in Capital Accumulated Deficit Shares Amount Total Stockholders’ Equity Balance as of January 1, 2023 251,095,305 $ 251 $ 453,854 $ (111,209 ) (3,543,347 ) $ (4 ) $ 342,892 Cumulative effect upon adoption of ASU 2023-08 - - - 209 - - 209 Issuance of common shares, net of offering costs - At-the-market offering 37,433,923 37 132,406 - - - 132,443 Issuance of common shares - Black Pearl asset acquisition 2,397,424 2 6,998 - - - 7,000 Delivery of common stock underlying restricted stock units, net of shares settled for tax withholding settlement 4,942,906 5 (3,906 ) - (1,775,327 ) (1 ) (3,902 ) Share-based compensation 406,978 1 38,470 - - - 38,471 Net loss - - - (25,777 ) - - (25,777 ) Balance as of December 31, 2023 296,276,536 $ 296 $ 627,822 $ (136,777 ) (5,318,674 ) $ (5 ) $ 491,336 Statements of Changes in Stockholders’ Equity (Deficit) Note: In thousands, except for share amounts Year Ended December 31, 2023 Year Ended December 31, 2022
Supplemental disclosure of noncash investing and financing activities Reclassification of deposits on equipment to property and equipment $ 74,186 $ 105,904 Right-of-use asset obtained in exchange for finance lease liability $ 14,212 $ 14,998 Issuance of common stock in exchange for intangible assets $ 7,000 $ - Right-of-use asset obtained in exchange for operating lease liability $ 2,812 $ - Reclassification of receivables, related party to investment in equity investees $ 2,060 $ - Equity method investment acquired for non-cash consideration $ 1,926 $ 127,796 Sales tax accrual on machine purchases $ 1,209 $ - Bitcoin received from equity investees $ 317 $ 4,828 Common stock cancelled $ - $ 10,000 Property and equipment purchases in accounts payable, accounts payable, related party and accrued expenses $ - $ 13,994 Right-of-use asset obtained in exchange for operating lease liability $ - $ 5,859 Investment in equity investees in accrued expenses $ - $ 5,316 Deposits on equipment in accounts payable, accounts payable, related party and accrued expenses $ - $ 13,403 Initial estimate of asset retirement obligation and related capitalized costs $ - $ 16,509 Reclassification of deferred investment costs to investment in equity investees $ - $ 174 Finance lease cost in accrued expenses $ - $ 339 Prepaid rent reclassified to operating lease liability $ - $ 132 Years ended December 31, 2023 2022 Cash flows from operating activities Net loss $ (25,777 ) $ (39,053 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation 58,972 4,378 Amortization of intangible assets 121 - Amortization of operating right-of-use asset 822 772 Share-based compensation 38,470 41,504 Equity in losses of equity investees 2,530 36,972 Impairment of bitcoin - 1,467 Non-cash lease expense 1,940 137 Deferred income taxes 3,366 1,840 Bitcoin received as payment for services (126,319 ) (2,939 ) Change in fair value of derivative asset (26,836 ) (73,479 ) Change in fair value of warrant liability 243 (130 ) Gains on fair value of bitcoin (11,038 ) (6 ) Changes in assets and liabilities: Accounts receivable (524 ) (98 ) Receivables, related party (1,203 ) (1,102 ) Prepaid expenses and other current assets 3,531 6,433 Security deposits (6,125 ) (7,378 ) Accounts payable (9,306 ) 892 Accounts payable, related party (1,529 ) 1,530 Accrued expenses and other current liabilities 5,311 748 Lease liabilities (890 ) (203 ) Proceeds from power sales - 1,721 Proceeds from reduction of scheduled power - 5,056 Proceeds from sale of Bitcoin - 23 Net cash used in operating activities (94,241 ) (20,915 ) Cash flows from investing activities Proceeds from sale of bitcoin 111,188 - Deposits on equipment (33,906 ) (188,103 ) Purchases of property and equipment (20,480 ) (39,219 ) Purchases and development of software (634 ) (596 ) Capital distributions from equity investees 3,808 54,009 Investment in equity investees (3,545 ) - Prepayments on financing lease (3,676 ) - Net cash provided by (used in) investing activities 52,755 (173,909 ) Cash flows from financing activities Proceeds from the issuance of common stock 135,848 - Offering costs paid for the issuance of common stock (3,404 ) - Repurchase of common shares to pay employee withholding taxes (3,902 ) (3,090 ) Principal payments on financing lease (12,878 ) - Net cash provided by (used in) financing activities 115,664 (3,090 ) Net increase (decrease) in cash and cash equivalents 74,178 (197,914 ) Cash and cash equivalents, beginning of the period 11,927 209,841 Cash and cash equivalents, end of the period $ 86,105 $ 11,927 Consolidated Statement of Cash Flows Note: In thousands