Cipher Mining Provides First Quarter 2024 Business Update

Rhea-AI Summary

Cipher Mining Inc. (NASDAQ: CIFR) reported strong financial results for the first quarter of 2024, with a GAAP net income of $40 million and non-GAAP adjusted earnings of $63 million. The company is expanding its self-mining hash rate from ~7.7 EH/s to ~9.3 EH/s by the end of the third quarter of 2024 and aims to reach ~25.1 EH/s by the end of 2025. Cipher is investing in a new 300 MW data center at Black Pearl, accelerating its construction plans to complete the facility in 2025.

Positive

• Cipher Mining Inc. achieved a record net income on both GAAP and non-GAAP basis for the first quarter of 2024.

• The company is on track to increase its self-mining hash rate to ~9.3 EH/s by the end of the third quarter of 2024, with plans to reach ~25.1 EH/s by the end of 2025.

• Cipher's construction progress on the new 300 MW data center at Black Pearl is substantial, with over 50 acres cleared and leveled for construction, aiming for energization in 2025.

Negative

• None.

Financial Analyst

Cipher Mining's report of a $40 million GAAP net income coupled with $63 million non-GAAP adjusted earnings on $48 million in revenues reflects a robust operational efficiency. The distinction between GAAP and non-GAAP figures often includes the removal of one-time expenses or non-cash items, indicating a strong underlying performance, possibly exceeding industry standards. Their investment in expansion, notably the 300 MW Black Pearl data center, signifies aggressive growth plans. This aligns with their hash rate trajectory, which is a critical metric in the cryptocurrency mining industry, as it quantifies the mining power and potential revenue. The target hash rate of ~25.1 EH/s by 2025 projects a sizable increase in operational capacity. Investors should note the substantial capital expenditures required for such expansion, assessing the potential return against the inherent volatility of the crypto market. The post-halving context mentioned implies reduced mining rewards, placing efficiency and scale at a premium.

Tech Industry Analyst

The strategic focus on scaling self-mining capacity with additional hash rate is a clear indicator of Cipher Mining's commitment to cementing its position in the mining sector. Typically, higher hash rates improve a miner's chances of verifying transactions and receiving mining rewards. Their current and projected hash rate growth suggests that Cipher is not only keeping pace with the technological growth curve but is planning to outstrip it. The deployment strategy, including the energization timeline for the Black Pearl data center, is important for investors to monitor, as it can signal future profitability and market competitiveness. The progress in constructing the data center also suggests a well-managed operational timeline, with potential to capitalize on the increasing demand for mining infrastructure.

Market Research Analyst

Cipher Mining's ambitious growth targets might have a broader implication on the cryptocurrency mining industry, especially in the context of supply chain disruptions and energy cost concerns. Their forward-looking statements about construction progress and hash rate goals exhibit a company betting on the long-term sustainability of crypto mining. The financial results are a testament to not just the company's current health but its potential trajectory. However, investors should also weigh the risks associated with the volatility of cryptocurrency prices and regulatory changes. The market's reception to Cipher's expansion will depend on these external factors too. Keeping abreast of the company's operational milestones will be important in understanding how these investments translate into sustained earnings.

First Quarter 2024 GAAP Net Income of $40m, and Non-GAAP Adjusted Earnings of $63m

First Quarter 2024 Revenues of $48m

Current Self-Mining Hash Rate of ~7.7 EH/s and on track to reach ~9.3 EH/s by end of Third Quarter 2024, with plans to grow to ~25.1 EH/s by end of 2025

NEW YORK, May 07, 2024 (GLOBE NEWSWIRE) -- Cipher Mining Inc. (NASDAQ: CIFR) (“Cipher” or the “Company”) today announced results for its first quarter ended March 31, 2024, with an update on its operations and deployment strategy.

“We are delighted to announce results for the first quarter of 2024 in which we delivered another quarter of record net income on both a GAAP and Non-GAAP basis,” said Tyler Page, CEO of Cipher.

“We continue to invest heavily in our expansion, and the early stages of construction at our new Black Pearl data center are well underway. We’ve already cleared and leveled over 50 acres, and we will start laying concrete foundations this month. Because of this progress, and our strong financial position, we have decided to accelerate our plans and build the entire 300 MW data center in 2025. We expect to be at ~9.3 EH/s by the end of Q3 2024, and at least ~25.1 EH/s by the end of 2025.”

“We are confident our team’s proven execution and the Company’s best-in-class unit economics will continue to position Cipher as a top miner in this new post-halving environment.”

Finance and Operations Highlights

• Produced first quarter 2024 GAAP net income of $40 million, and non-GAAP adjusted earnings of $63 million
• 30 MW expansion at each of Bear and Chief JV data centers, delivering an additional ~1.25 EH/s of self-mining capacity, on track for completion in second quarter 2024
• 300 MW data center at Black Pearl on track for energization in 2025 with land cleared and leveled for construction
  

Business Update Call and Webcast

Cipher will host a conference call and webcast today at 8:00 a.m. Eastern Time to discuss the first quarter 2024 results 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 filed with the Securities and Exchange Commission (“SEC”) on March 5, 2024, 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. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except for share and per share amounts)
	March 31, 2024				December 31, 2023
	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	88,675			$	86,105
Accounts receivable		680				622
Receivables, related party		430				245
Prepaid expenses and other current assets		2,910				3,670
Bitcoin		123,307				32,978
Derivative asset		34,228				31,878
Total current assets		250,230				155,498
Property and equipment, net		238,541				243,815
Deposits on equipment		30,187				30,812
Intangible assets, net		8,162				8,109
Investment in equity investees		52,621				35,258
Derivative asset		66,722				61,713
Operating lease right-of-use asset		6,823				7,077
Security deposits		23,855				23,855
Total assets	$	677,141			$	566,137
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	7,520			$	4,980
Accounts payable, related party		-				1,554
Accrued expenses and other current liabilities		18,661				22,439
Finance lease liability, current portion		3,595				3,404
Operating lease liability, current portion		1,204				1,166
Warrant liability		-				250
Total current liabilities		30,980				33,793
Asset retirement obligation		18,708				18,394
Finance lease liability		10,121				11,128
Operating lease liability		6,025				6,280
Deferred tax liability		10,383				5,206
Total liabilities		76,217				74,801
Commitments and contingencies (Note 13)
Stockholders’ equity
Preferred stock, $0.001 par value; 10,000,000 shares authorized, none issued and outstanding as of March 31, 2024 and December 31, 2023		-				-
Common stock, $0.001 par value, 500,000,000 shares authorized, 312,649,102 and 296,276,536 shares issued as of March 31, 2024 and December 31, 2023, respectively, and 306,543,330 and 290,957,862 shares outstanding as of March 31, 2024, and December 31, 2023, respectively		313				296
Additional paid-in capital		697,494				627,822
Accumulated deficit		(96,877	)			(136,777	)
Treasury stock, at par, 6,105,772 and 5,318,674 shares at March 31, 2024 and December 31, 2023, respectively		(6	)			(5	)
Total stockholders’ equity		600,924				491,336
Total liabilities and stockholders’ equity	$	677,141			$	566,137

CIPHER MINING INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except for share and per share amounts) (unaudited)
	Three months ended March 31,
	2024				2023
Revenue - bitcoin mining	$	48,137			$	21,895
Costs and operating expenses (income)
Cost of revenue		14,820				8,141
Compensation and benefits		13,036				11,937
General and administrative		6,077				5,483
Depreciation and amortization		17,244				11,655
Change in fair value of derivative asset		(7,359	)			(5,328	)
Power sales		(1,173	)			(98	)
Equity in (gains) losses of equity investees		(738	)			750
Gains on fair value of bitcoin		(40,556	)			(4,264	)
Other gains		-				(2,260	)
Total costs and operating expenses (income)		1,351				26,016
Operating income (loss)		46,786				(4,121	)
Other income (expense)
Interest income		786				76
Interest expense		(400	)			(401	)
Change in fair value of warrant liability		250				(37	)
Other expense		(1,958	)			-
Total other income (expense)		(1,322	)			(362	)
Income (loss) before taxes		45,464				(4,483	)
Current income tax expense		(386	)			(17	)
Deferred income tax expense		(5,178	)			(53	)
Total income tax expense		(5,564	)			(70	)
Net income (loss)	$	39,900			$	(4,553	)
Net income (loss) per share - basic and diluted	$	0.13			$	(0.02	)
Weighted average shares outstanding - basic		296,641,499				248,654,082
Weighted average shares outstanding - diluted		304,397,979				248,654,082

CIPHER MINING INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
	Three months ended March 31,
	2024				2023
Cash flows from operating activities
Net income (loss)	$	39,900			$	(4,553	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation		17,097				11,655
Amortization of intangible assets		147				-
Amortization of operating right-of-use asset		254				222
Share-based compensation		8,317				8,810
Equity in (gains) losses of equity investees		(738	)			750
Non-cash lease expense		392				401
Other operating activities		1,958				-
Income taxes		5,564				53
Bitcoin received as payment for services		(48,079	)			(21,717	)
Change in fair value of derivative asset		(7,359	)			(5,328	)
Change in fair value of warrant liability		(250	)			37
Gains on fair value of bitcoin		(40,556	)			(4,264	)
Changes in assets and liabilities:
Accounts receivable		(58	)			(183	)
Receivables, related party		(185	)			(189	)
Prepaid expenses and other current assets		760				2,975
Security deposits		-				(12	)
Accounts payable		2,540				2,913
Accounts payable, related party		-				(1,529	)
Accrued expenses and other current liabilities		(6,123	)			65
Lease liabilities		(217	)			(248	)
Net cash used in operating activities		(26,636	)			(10,142	)
Cash flows from investing activities
Proceeds from sale of bitcoin		-				20,958
Deposits on equipment		(4,536	)			(1,106	)
Purchases of property and equipment		(7,902	)			(17,947	)
Purchases and development of software		(200	)			-
Capital distributions from equity investees		-				3,807
Investment in equity investees		(18,319	)			(3,094	)
Net cash (used in) provided by investing activities		(30,957	)			2,618
Cash flows from financing activities
Proceeds from the issuance of common stock		66,171				-
Offering costs paid for the issuance of common stock		(1,623	)			-
Repurchase of common shares to pay employee withholding taxes		(3,177	)			(481	)
Principal payments on financing lease		(1,208	)			-
Net cash provided by (used in) financing activities		60,163				(481	)
Net increase (decrease) in cash and cash equivalents		2,570				(8,005	)
Cash and cash equivalents, beginning of the period		86,105				11,927
Cash and cash equivalents, end of the period	$	88,675			$	3,922
Supplemental disclosure of noncash investing and financing activities
Reclassification of deposits on equipment to property and equipment	$	5,161			$	71,533
Bitcoin received from equity investees	$	1,694			$	317
Settlement of related party payable related to master services and supply agreement	$	1,554			$	-
Equity method investment acquired for non-cash consideration	$	-			$	1,925
Property and equipment purchases in accounts payable, accounts payable, related party and accrued expenses	$	-			$	5,940
Deposits on equipment in accounts payable, accounts payable, related party and accrued expenses	$	-			$	691
Finance lease cost in accrued expenses	$	-			$	1,017

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):

		Three months ended March 31,
		2024				2023
Reconciliation of Adjusted Earnings:
Net income (loss)		$	39,900			$	(4,553	)
Change in fair value of derivative asset			(7,359	)			(5,328	)
Share-based compensation expense			8,317				8,810
Depreciation and amortization			17,244				11,655
Deferred income tax expense			5,178				53
Other gains - nonrecurring			-				(2,260	)
Change in fair value of warrant liability			(250	)			37
Adjusted earnings			63,030				8,414

FAQ

What were Cipher Mining's GAAP net income and non-GAAP adjusted earnings for the first quarter of 2024?

Cipher Mining reported a GAAP net income of $40 million and non-GAAP adjusted earnings of $63 million for the first quarter of 2024.

What is Cipher Mining's self-mining hash rate expected to be by the end of the third quarter of 2024?

Cipher Mining's self-mining hash rate is projected to reach ~9.3 EH/s by the end of the third quarter of 2024.

What are Cipher Mining's plans for its self-mining hash rate by the end of 2025?

Cipher Mining aims to grow its self-mining hash rate to ~25.1 EH/s by the end of 2025.

What is the status of Cipher Mining's new 300 MW data center at Black Pearl?

Cipher Mining has cleared and leveled over 50 acres for the construction of the 300 MW data center at Black Pearl, with plans for energization in 2025.