Cipher Mining Provides Second Quarter 2024 Business Update

Rhea-AI Summary

Cipher Mining Inc. (NASDAQ: CIFR) provided its Q2 2024 business update, highlighting significant growth plans and operational progress. The company currently operates at ~8.7 EH/s of self-mining hashrate and aims to reach ~13.5 EH/s by end of 2024 and ~35.0 EH/s by end of 2025. Cipher is expanding its infrastructure with the construction of a 300 MW facility at Black Pearl and the acquisition of the Reveille data center with up to 200 MW capacity. Additionally, they've secured an option to acquire 1.5 GW of new sites suitable for both bitcoin mining and HPC data centers. The company reported a Q2 2024 GAAP Net Loss of $15m and a Non-GAAP Adjusted Loss of $3m.

Positive

• Hashrate growth from 8.7 EH/s to targeted 13.5 EH/s by end of 2024 and 35.0 EH/s by end of 2025
• Construction of 300 MW facility at Black Pearl underway
• Acquisition of Reveille data center with up to 200 MW capacity
• Executed term sheet for option to acquire 1.5 GW of new sites suitable for HPC or bitcoin mining

Negative

• Q2 2024 GAAP Net Loss of $15 million
• Non-GAAP Adjusted Loss of $3 million
• GAAP diluted net loss of $0.05 per share
• Non-GAAP diluted adjusted loss of $0.01 per share

Insights

Financial Analyst

Cipher Mining's Q2 2024 results show a mixed financial picture. The company reported a GAAP net loss of $15 million and a non-GAAP adjusted loss of $3 million, translating to a diluted loss per share of $0.05 and $0.01 respectively. While losses are concerning, the reduced non-GAAP figure suggests potential underlying operational improvements.

The company's aggressive expansion plans, aiming to increase hashrate from 8.7 EH/s to 35.0 EH/s by end of 2025, indicate a strong growth trajectory. However, this rapid scaling could pressure short-term financials. The diversification into HPC infrastructure alongside bitcoin mining is a strategic move to mitigate risks associated with cryptocurrency volatility. Investors should closely monitor execution of these ambitious plans and their impact on future profitability.

Tech Expert

Cipher's technological strategy is ambitious and forward-thinking. The planned increase from 8.7 EH/s to 35.0 EH/s by 2025 represents a 4x growth in computing power, positioning them as a major player in the mining industry. The company's focus on both bitcoin mining and HPC infrastructure demonstrates adaptability in a rapidly evolving tech landscape.

The acquisition of sites with 1.7 GW total power capacity is significant, as it provides flexibility to pivot between crypto mining and traditional data center operations. This dual-use approach could prove valuable if regulatory or market conditions shift unfavorably for crypto mining. The expertise in HPC data center construction from hyperscalers adds credibility to their expansion plans, potentially giving Cipher a competitive edge in execution and operational efficiency.

Current hashrate of ~8.7 EH/s on target for ~13.5 EH/s by end of 2024 and ~35.0 EH/s by end of 2025

Acquiring additional 1.7 GW of power capacity suitable for HPC infrastructure or bitcoin mining

Second Quarter 2024 GAAP Net Loss of $15m, and Non-GAAP Adjusted Loss of $3m

NEW YORK, Aug. 13, 2024 (GLOBE NEWSWIRE) -- Cipher Mining Inc. (NASDAQ: CIFR) (“Cipher” or the “Company”) today announced results for its second quarter ended June 30, 2024, with an update on its operations and business strategy.

“We currently operate ~8.7 EH/s of self-mining hashrate and are on track to hit ~13.5 EH/s by year-end 2024, and ~35.0 EH/s by year-end 2025,” said Tyler Page, CEO of Cipher.

“In addition to constructing the 300 MW facility at Black Pearl, we are on track to close the acquisition of our new Reveille data center site with up to 200 MW of capacity and are pleased to announce we have executed a term sheet for an option to acquire three new sites with a cumulative power capacity of 1.5 GW. These sites are well-suited for both bitcoin mining and HPC data centers. With our operations and construction teams, which are led by seasoned experts who have built and run HPC data centers for some of the top hyperscalers in the world, we are uniquely positioned to maximize opportunities in both bitcoin mining and HPC infrastructure.”

“We expect developing HPC infrastructure will be complementary to our bitcoin mining business and that we can strike the right balance between the two business lines to drive significant shareholder value for many years,” concluded Mr. Page.

Finance and Operations Highlights

• Upgrade of Odessa site bringing total self-mining hashrate to ~13.5 EH/s on track for Q4 2024
• Construction of 300 MW data center at Black Pearl underway with expected energization in Q2 2025
• Acquisition of Reveille data center site with up to 200 MW of capacity well-suited for HPC data centers expected to close soon
• Executed term sheet for option to acquire 1.5 GW of new sites in North America suitable for both HPC or bitcoin mining data centers
• Q2 2024 GAAP diluted net loss of $0.05 per share, and non-GAAP diluted adjusted loss of $0.01 per share
  

Business Update Call and Webcast

The live webcast and a webcast replay of the conference call can be accessed from the investor relations section of Cipher’s website at https://investors.ciphermining.com. To access this conference call by telephone, register here to receive dial-in numbers and a unique PIN to join the call.

About Cipher

Cipher is an emerging technology company focused on the development and operation of bitcoin mining data centers. Cipher is dedicated to expanding and strengthening the Bitcoin network's critical infrastructure. Together with its diversely talented team and strategic partnerships, Cipher aims to be a market leader in bitcoin mining growth and innovation. To learn more about Cipher, please visit https://www.ciphermining.com/.

Forward Looking Statements

This press release contains certain forward-looking statements within the meaning of the federal securities laws of the United States. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Any statements made in this press release that are not statements of historical fact, including statements about our beliefs and expectations regarding our future results of operations and financial position, business strategy, timing and likelihood of success, potential expansion of 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)
	June 30, 2024				December 31, 2023
	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	122,557			$	86,105
Accounts receivable		286				622
Receivables, related party		176				245
Prepaid expenses and other current assets		3,599				3,670
Bitcoin		138,079				32,978
Derivative asset		44,702				31,878
Total current assets		309,399				155,498
Property and equipment, net		239,075				243,815
Deposits on equipment		58,063				30,812
Intangible assets, net		8,503				8,109
Investment in equity investees		49,949				35,258
Derivative asset		78,228				61,713
Operating lease right-of-use asset		9,926				7,077
Security deposits		22,246				23,855
Other noncurrent assets		203				-
Total assets	$	775,592			$	566,137
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	13,733			$	4,980
Accounts payable, related party		-				1,554
Accrued expenses and other current liabilities		17,855				22,439
Finance lease liability, current portion		3,595				3,404
Operating lease liability, current portion		1,262				1,166
Warrant liability		-				250
Total current liabilities		36,445				33,793
Asset retirement obligation		19,337				18,394
Finance lease liability		9,281				11,128
Operating lease liability		9,181				6,280
Deferred tax liability		10,577				5,206
Total liabilities		84,821				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 June 30, 2024 and December 31, 2023		-				-
Common stock, $0.001 par value, 500,000,000 shares authorized, 335,557,872 and 296,276,536 shares issued as of June 30, 2024 and December 31, 2023, respectively, and 328,616,426 and 290,957,862 shares outstanding as of June 30, 2024, and December 31, 2023, respectively		336				296
Additional paid-in capital		802,610				627,822
Accumulated deficit		(112,168	)			(136,777	)
Treasury stock, at par, 6,941,446 and 5,318,674 shares at June 30, 2024 and December 31, 2023, respectively		(7	)			(5	)
Total stockholders’ equity		690,771				491,336
Total liabilities and stockholders’ equity	$	775,592			$	566,137

CIPHER MINING INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except for share and per share amounts) (unaudited)
	Three months ended June 30,								Six months ended June 30,
	2024				2023				2024				2023
Revenue - bitcoin mining	$	36,808			$	31,224			$	84,945			$	53,119
Costs and operating expenses (income)
Cost of revenue		14,281				15,868				29,101				24,009
Compensation and benefits		16,285				12,668				29,321				24,605
General and administrative		8,365				8,667				14,442				14,150
Depreciation and amortization		20,251				14,412				37,495				26,067
Change in fair value of derivative asset		(21,980	)			(3,222	)			(29,339	)			(8,550	)
Power sales		(1,109	)			(5,651	)			(2,282	)			(5,749	)
Equity in losses (gains) of equity investees		577				1,431				(161	)			2,181
Losses (gains) on fair value of bitcoin		16,309				(860	)			(24,247	)			(5,124	)
Other gains		-				-				-				(2,260	)
Total costs and operating expenses (income)		52,979				43,313				54,330				69,329
Operating (loss) income		(16,171	)			(12,089	)			30,615				(16,210	)
Other income (expense)
Interest income		1,053				25				1,839				101
Interest expense		(372	)			(485	)			(772	)			(886	)
Change in fair value of warrant liability		-				(22	)			250				(59	)
Other income (expense)		727				(12	)			(1,231	)			(12	)
Total other income (expense)		1,408				(494	)			86				(856	)
(Loss) income before taxes		(14,763	)			(12,583	)			30,701				(17,066	)
Current income tax expense		(335	)			(31	)			(721	)			(48	)
Deferred income tax expense		(193	)			(584	)			(5,371	)			(637	)
Total income tax expense		(528	)			(615	)			(6,092	)			(685	)
Net (loss) income	$	(15,291	)		$	(13,198	)		$	24,609			$	(17,751	)
Net (loss) income per share - basic and diluted	$	(0.05	)		$	(0.05	)		$	0.08			$	(0.07	)
Weighted average shares outstanding - basic		314,353,742				249,127,664				305,497,621				248,892,181
Weighted average shares outstanding - diluted		314,353,742				249,127,664				316,652,300				248,892,181

CIPHER MINING INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
	Six months ended June 30,
	2024				2023
Cash flows from operating activities
Net income (loss)	$	24,609			$	(17,751	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation		37,192				26,067
Amortization of intangible assets		303				-
Amortization of operating right-of-use asset		565				452
Share-based compensation		21,654				17,988
Equity in (gains) losses of equity investees		(161	)			2,181
Non-cash lease expense		762				878
Other operating activities		(1,839	)			-
Income taxes		5,371				637
Bitcoin received as payment for services		(85,281	)			(52,836	)
Change in fair value of derivative asset		(29,339	)			(8,550	)
Change in fair value of warrant liability		(250	)			59
Gains on fair value of bitcoin		(24,247	)			(5,124	)
Changes in assets and liabilities:
Accounts receivable		336				(282	)
Receivables, related party		69				(512	)
Prepaid expenses and other current assets		71				4,994
Security deposits		1,609				(12	)
Other non-current assets		(203	)			-
Accounts payable		(47	)			(185	)
Accounts payable, related party		-				(1,529	)
Accrued expenses and other current liabilities		(2,745	)			6,323
Lease liabilities		(417	)			(594	)
Net cash used in operating activities		(51,988	)			(27,796	)
Cash flows from investing activities
Proceeds from sale of bitcoin		10,334				52,475
Deposits on equipment		(35,748	)			(2,932	)
Purchases of property and equipment		(15,766	)			(28,541	)
Purchases and development of software		(698	)			-
Prepayments on financing leases		-				(3,676	)
Capital distributions from equity investees		-				3,807
Investment in equity investees		(20,435	)			(3,095	)
Net cash (used in) provided by investing activities		(62,313	)			18,038
Cash flows from financing activities
Proceeds from the issuance of common stock		163,276				2,821
Offering costs paid for the issuance of common stock		(2,868	)			(76	)
Repurchase of common shares to pay employee withholding taxes		(7,237	)			(1,114	)
Principal payments on financing lease		(2,418	)			(2,059	)
Net cash provided by (used in) financing activities		150,753				(428	)
Net increase (decrease) in cash and cash equivalents		36,452				(10,186	)
Cash and cash equivalents, beginning of the period		86,105				11,927
Cash and cash equivalents, end of the period	$	122,557			$	1,741

	Six months ended June 30,
	2024				2023
Supplemental disclosure of noncash investing and financing activities
Reclassification of deposits on equipment to property and equipment	$	13,799			$	72,130
Bitcoin received from equity investees	$	5,907			$	317
Settlement of related party payable related to master services and supply agreement	$	1,554			$	-
Right-of-use asset obtained in exchange for finance lease liability	$	3,414			$	14,212
Equity method investment acquired for non-cash consideration	$	-			$	1,926
Sales tax accrual on machine purchases	$	-			$	1,837
Finance lease cost in accrued expenses	$	-			$	2,034

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 June 30,								Six months ended June 30,
		2024				2023				2024				2023
Reconciliation of Adjusted Earnings:
Net (loss) income		$	(15,291	)		$	(13,198	)		$	24,609			$	(17,751	)
Change in fair value of derivative asset			(21,980	)			(3,222	)			(29,339	)			(8,550	)
Share-based compensation expense			13,336				9,178				21,654				17,988
Depreciation and amortization			20,251				14,412				37,495				26,067
Deferred income tax expense			193				584				5,371				637
Other gains - nonrecurring			-				-				-				(2,260	)
Change in fair value of warrant liability			-				22				(250	)			59
Adjusted (loss) earnings			(3,491	)			7,776				59,540				16,190

Reconciliation of Adjusted (loss) earnings per share:
Adjusted (loss) earnings		$	(3,491	)		$	7,776				$	59,540				$	16,190
Weighted average shares outstanding - diluted			314,353,742				249,127,664					316,652,300					248,892,181
Adjusted (loss) earnings per share		$	(0.01	)		$	0.03				$	0.19				$	0.07

FAQ

What is Cipher Mining's current hashrate and future targets for 2024 and 2025?

Cipher Mining's current hashrate is ~8.7 EH/s, with targets of ~13.5 EH/s by the end of 2024 and ~35.0 EH/s by the end of 2025.

How much additional power capacity is Cipher Mining (CIFR) acquiring?

Cipher Mining is acquiring an additional 1.7 GW of power capacity, including a 200 MW Reveille data center and an option for 1.5 GW across three new sites.

What was Cipher Mining's (CIFR) financial performance in Q2 2024?

Cipher Mining reported a GAAP Net Loss of $15 million and a Non-GAAP Adjusted Loss of $3 million for Q2 2024.

What new facilities is Cipher Mining (CIFR) developing in 2024?

Cipher Mining is constructing a 300 MW facility at Black Pearl and acquiring the Reveille data center site with up to 200 MW capacity.