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

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

~~(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)~~

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

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 ☐ ☒

~~The~~As of August 4, 2023, the registrant had ~~21,478,000~~250,955,743 shares of ~~common stock outstanding at December 1, 2020.~~Common Stock, $0.001 par value per share, outstanding.

~~PART I - FINANCIAL INFORMATION~~CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

~~(1) Includes 562,500 shares subject~~This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains forward-looking statements. We intend such forward-looking statements to ~~forfeiture if the over-allotment option is not exercised in full or in part~~be covered by the ~~underwriters (see Notes 4 and 6).~~

~~(1) Includes 562,500 shares subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters (see Notes 4 and 6).~~

~~GOOD WORKS ACQUISITION CORP.~~
~~CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY~~

~~For the Three Months Ended September 30, 2020 (unaudited) and the~~
~~Period From June 24, 2020 (inception) ended September 30, 2020~~

~~(1) Includes 562,500 shares subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters (see Notes 4 and 6).~~

~~Good Works Acquisition Corp. (the “Company”) was incorporated in Delaware on June 24, 2020. The Company is a blank check company formed~~safe harbor provisions for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities (the “Business Combination”).

~~The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.~~

As of September 30, 2020, the Company had not commenced any operations. All activity for the period from June 24, 2020 (inception) through September 30, 2020 relates to the Company’s formation and initial public offering (“Public Offering” of “IPO”), which is described below. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Public Offering and placed in the Trust Account (defined below). The Company has selected December 31 as its fiscal year end.

The Company completed the sale of 15,000,000 units (the “Units” and, with respect to the shares of common stock included in the Units being offered, the “Public Shares”) at $10.00 per Unit on October 22, 2020. Simultaneous with the closing of the Public Offering, the Company completed the sale of 228,000 Private Units (the “Private Units”) at a price of $10.00 per Private Unit in a private placement to certain funds and accounts managed by Magnetar Financial LLC, Mint Tower Capital Management B.V., Periscope Capital Inc., and Polar Asset Management Partners Inc. (collectively, the “Anchor Investors”).

In connection with the IPO, the underwriters were granted a 45-day option from the date of the prospectus (the “Over-Allotment Option”) to purchase up to 2,250,000 additional units to cover over-allotments (the “Over-Allotment Units”), if any. On October 26, 2020, the underwriters purchased an additional 1,500,000 Over-Allotment Units pursuant to the partial exercise of the Over-Allotment Option. On November 17, 2020, the underwriters purchased an additional 500,000 Over-Allotment Units pursuant to the partial exercise of the Over-Allotment Option. The Over-Allotment Units were sold at an offering price of $10.00 per Over-Allotment Unit, generating aggregate additional gross proceeds of $20,000,000 to the Company. On November 17, 2020, the underwriters canceled the remainder of the Over-Allotment Option. In connection with the cancellation of the remainder of the Over-Allotment Option, on November 17, 2020, the Company cancelled an aggregate of 62,500 shares of common stock issued to I-B Good Works LLC, the Company’s sponsor (“Sponsor”).

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering and the sale of the Private Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete a Business Combination having an aggregate fair market value of at least 80% of the assets held in the Trust Account (as defined below) (excluding taxes payable on income earned on the Trust Account) at the time of the agreement to enter into an initial Business Combination. The Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act 1940, as amended (the “Investment Company Act”). Management agreed that an amount equal to at least $10.00 per Unit sold in the Public Offering will be held in a trust account (“Trust Account”), located in the United States and invested only in U.S. government securities, within the meaning set forthforward-looking statements contained in Section ~~2(a)(16)~~27A of the Investment Company Act, with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account, as described below.

The Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations. In the event of a complete liquidation of the Company, the Trust Account could be further reduced by up to $100,000 for expenses of the liquidation). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.

The Public Shares subject to redemption will be recorded at redemption value and classified as temporary equity upon the completion of the Public Offering in accordance with the Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 immediately before or after such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC containing substantially the same information as would be included in a proxy statement prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor, an affiliate of I-Bankers Securities, Inc.(“I-Bankers Securities”), the representative of the underwriters for the Company’s Public Offering, and the Company’s management and directors have agreed to vote their Founder Shares and any Public Shares purchased during or after the Public Offering (a) in favor of approving a Business Combination and (b) not to convert any shares in connection with a stockholder vote to approve a Business Combination or sell any shares to the Company in a tender offer in connection with a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction or don’t vote at all.

Sponsor and the Company’s management and Directors have agreed (a) to waive their redemption rights with respect to their Founder Shares and any Public Shares held by them in connection with the completion of a Business Combination, (b) to waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if the Company fails to consummate a Business Combination and (c) not to propose an amendment to the Amended and Restated Certificate of Incorporation that would affect a public stockholders’ ability to convert or sell their shares to the Company in connection with a Business Combination or affect the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the Company provides the public stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.

The Company will have until 21 months from the closing of the Public Offering to complete a Business Combination (the “Combination Period”). If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company to pay taxes, divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

In order to protect the amounts held in the Trust Account, Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below $10.00 per Public Share, except as to any claims by a third party who executed an agreement with the Company waiving any right, title, interest or claim of any kind they may have in or to any monies held in the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of Public Offering against certain liabilities, including liabilities under 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”). ~~Moreover,~~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 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 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 ~~executed waiver~~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.

Our corporate website address is ~~deemed~~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 ~~unenforceable against~~ a ~~third party,~~part of this Quarterly Report or any other filings we make with the ~~Sponsor will not be responsible~~SEC.

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

NOTE 1. ORGANIZATION

Nature of operations

Cipher Mining Inc. (“Cipher” or the “Company”) is an emerging technology company that develops and operates industrial scale bitcoin mining data centers. The Company operates or jointly operates four bitcoin mining data centers in Texas including one wholly-owned data center and three partially-owned data centers that were acquired through investments in joint ventures. Bitcoin mining is the Company’s principal revenue generating business activity. The Company began deployment of capacity in the first quarter of 2022, with mining operations beginning at the partially-owned Alborz facility in February 2022 (the “Alborz Facility”). In August 2022, installation of the last mining rigs delivered to the ~~extent~~Alborz Facility was completed. In October 2022, installation at the partially-owned Bear facility (the “Bear Facility”) and the partially-owned Chief facility (the “Chief Facility”) was also completed. In November 2022, the Company began bitcoin mining operations at the wholly-owned Odessa facility (the “Odessa Facility”) and is continuing to expand those operations.

Cipher Mining Technologies Inc. (“CMTI”) was established on January 7, 2021, in Delaware, by Bitfury Top HoldCo B.V. and its subsidiaries (“Bitfury Top HoldCo” and, with its subsidiaries, the “Bitfury Group”). Bitfury Top HoldCo (together with Bitfury Holding B.V., a subsidiary of Bitfury Top HoldCo, and referred to herein as “Bitfury Holding”) beneficially owned approximately 80.6% of the Company’s common stock, $0.001 par value per share (“Common Stock”), as of June 30, 2023, with sole voting and sole dispositive power over those shares and, as a result, Bitfury Top HoldCo has control of the Company as defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation (“ASC 810”). As of August 4, 2023, pursuant to that certain Lock-up Agreement, dated as of August 26, 2021, by and between GWAC and Bitfury Top HoldCo, 129,017,513 of Bitfury Top HoldCo’s shares of the Company’s Common Stock remain subject to lock-up which, subject to any ~~liability~~potential modifications under the waiver agreement with Bitfury Top HoldCo entered into on April 8, 2022, is expected to expire on August 27, 2023.

Out-of-period-adjustments

Cost of revenue and power sales for ~~such third-party claims.~~ the six months ended June 30, 2023 included out-of-period adjustments of approximately $2.0 million and $1.6 million, respectively, that increased both cost of revenue and power sales on the unaudited condensed consolidated statements of operations for the six months ended June 30, 2023, and resulted in net increases to operating loss and loss before taxes of approximately $0.4 million during the same period. These out-of-period adjustments related to power costs and power sales for the year ended December 31, 2022 at the Company’s Odessa Facility, which are invoiced on a net basis by the Company’s power provider. Management evaluated the impact of this error on the Company’s previously issued audited consolidated financial statements for the year ended December 31, 2022, as well as on its unaudited condensed consolidated financial statements for the six months ended June 30, 2023, assessing the error both quantitatively and qualitatively, and concluded that the error was not material to the financial statements for either period.

Risks and uncertainties

Liquidity, capital resources and limited business history

The Company ~~will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims~~has historically experienced net losses and negative cash flows from operations. As of ~~creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which~~June 30, 2023, the Company ~~does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.~~

~~Liquidity and Capital Resources~~

~~As of September 30, 2020, we~~ had ~~$61,815~~approximate balances of cash and cash equivalents ~~and a~~of $1.7 million, working capital of $3.6 million, total stockholders’ equity of $343.2 million and an accumulated deficit of $130.5 million. For fiscal years ended December 31, 2022 and 2021, the Company, in large part, relied on proceeds from the consummation of its business combination with Good Works Acquisition Corp. (“GWAC”) to fund its operations; however, during the six months ended June 30, 2023, the Company utilized proceeds from sales of bitcoin earned by or received from its bitcoin mining data centers to support its operating expenses. During the six months ended June 30, 2023, the Company sold 2,063 bitcoin for proceeds of approximately ~~$198,000.~~$52.5 million. Additionally, in January 2023, the Company was approached by a third party that offered to purchase coupons that the Company had received from Bitmain Technologies Limited (“Bitmain”) during fiscal year 2022. These transferrable coupons provided the Company with potential discounts of approximately $10.9 million that could only be redeemed with the purchase of additional miners from Bitmain prior to the coupons’ April 2023 expiration date. As the Company did not intend to purchase additional Bitmain miners prior to the expiration date of the coupons, it sold the coupons to the interested third party for proceeds of approximately $2.3 million, which it recorded in other gains within costs and operating expenses (income) on its unaudited condensed consolidated statement of operations during the six months ended June 30, 2023.

CIPHER MINING INC.

~~We do~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The Company monitors its balance sheet on an ongoing basis to determine the proper mix of bitcoin retention and bitcoin sales to support its cash requirements and ongoing operations. Bitcoin is classified as a current asset on the Company’s balance sheets due to its intent and ability to sell bitcoin to support operations when needed. Operating activities provided approximately $24.7 million of cash during the six months ended June 30, 2023.

During the six months ended June 30, 2023, the Company paid approximately $2.9 million of deposits for mining equipment and reclassified approximately $72.1 million to property and equipment in connection with the receipt of miners and other equipment at the Odessa Facility. As of June 30, 2023, the Company had 61,024 miners located at the Odessa Facility and had 12,953, 3,254 and 3,254 contributed miners at its partially-owned Alborz Facility, Bear Facility and Chief Facility, respectively.

As of June 30, 2023, the Company had approximately $1.7 million of deposits on equipment on its unaudited condensed consolidated balance sheet, primarily related to shipping costs associated with miners to be delivered under the Canaan Agreement (defined below). On May 4, 2023, the Company entered into an agreement with Canaan Creative Global Pte. Ltd. (“Canaan”) to purchase 11,000 new A1346 model miners (the “Canaan Agreement”), all of which were delivered prior to June 30, 2023 and have been installed at the Odessa Facility. Because the Company is paying for the Canaan miners over time, the Company does not ~~believe we~~yet hold title to the miners. The Company paid an initial 10% deposit plus 18% of the total purchase price prior to delivery, and is required to pay monthly installment payments for the Canaan miners through November 2023, at which time title to the miners will ~~need~~transfer to ~~raise~~the Company. The Company expects to fund its ongoing payment obligations for the purchase through its ongoing operations, including by selling bitcoin generated at its data centers.

Management intends to continue with the infrastructure buildout at the Odessa Facility to get the site to full capacity in support of the Company’s current business plans. Management believes that the Company’s existing financial resources, combined with projected cash and bitcoin inflows from its data centers and its intent and ability to sell bitcoin received or earned, will be sufficient to enable the Company to meet its operating and capital requirements for at least 12 months from the date these unaudited condensed consolidated financial statements are issued.

There is limited historical financial information about the Company upon which to base an evaluation of its performance. The business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in exploration and/or development, and possible cost overruns due to price and cost increases in services. The Company’s management has no current intention of entering into a merger or acquisition within the next 12 months. The Company may require additional capital to pursue certain business opportunities or respond to technological advancements, competitive dynamics or technologies, challenges, acquisitions or unforeseen circumstances. Additionally, the Company has incurred and expects to continue to incur significant costs related to operating as a public company. Accordingly, the Company may engage in equity or debt financings or enter into credit facilities for the above-mentioned or other reasons; however, the Company may not be able to timely secure additional debt or equity financings on favorable terms, if at all. If the Company raises additional funds through equity financing, its existing stockholders could experience significant dilution. Furthermore, any debt financing obtained by the Company in ~~order~~the future could involve restrictive covenants relating to ~~meet~~ the ~~expenditures required~~Company’s capital raising activities and other financial and operational matters, which may make it more difficult for ~~operating our business. However, if our estimate of~~ the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may needCompany to obtain additional ~~financing either~~capital and to complete our Business Combination or because we become obligated to redeem a significant number of our public shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously withpursue business opportunities. If the ~~completion of our Business Combination. If we are~~Company is unable to ~~complete our Business Combination because we do not have sufficient funds available~~obtain adequate financing on terms that are satisfactory to ~~us, we will~~the Company, when the Company requires it, the Company’s ability to continue to grow or support the business and to respond to business challenges could be ~~forced to cease~~significantly limited, which may adversely affect the Company’s business plan.

Macroeconomic conditions: COVID-19 and other economic, business and political conditions

The Company’s results of operations could be adversely affected by general conditions in the global economy and ~~liquidate~~in the ~~Trust Account. In addition, following our Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.~~

~~Risks and Uncertainties~~

~~Management continues to evaluate~~global financial markets, including conditions that are outside of the ~~impact of~~Company’s control, such as any epidemics, pandemics or disease outbreaks or other public health conditions. For example, the COVID-19 pandemic (“COVID-19”) that was declared on March 11, 2020 has caused significant economic dislocation in the United States (“U.S.”) and ~~has concluded that while it is reasonably possible that~~globally as governments across the ~~virus could~~world, including the U.S., introduced measures aimed at preventing the spread of COVID-19. While most policies and regulations implemented by governments in response to COVID-19 have been lifted, they have had a ~~negative effect~~significant impact, both directly and indirectly, on global business and commerce.

The Company may experience disruptions to its business operations resulting from supply interruptions, quarantines, self-isolations, or other movement and restrictions on the ~~Company’s financial position, results~~ability of its ~~operations and/~~employees or ~~search for~~its counterparties to perform their jobs. The Company may also experience delays in construction and obtaining necessary equipment in a ~~target company,~~timely fashion. If the ~~specific impact~~Company is unable to effectively set up and service its miners, its ability to mine bitcoin will be adversely affected. There is no assurance that COVID-19 or any other pandemic, or other unfavorable global economic, business or political conditions, such as a rise in energy prices, a slowdown in the

CIPHER MINING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

U.S. or international economy, high inflation rates or other factors, will not ~~readily determinable as~~materially and adversely affect the Company’s business, prospects, financial condition and operating results.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of ~~the date~~presentation and principles of ~~the financial statements.~~ consolidation

The Company prepares its unaudited condensed consolidated financial statements ~~do not include any adjustments that might result from the outcome of this uncertainty.~~

~~Note 2 – Summary of Significant Accounting Policies~~

~~Basis of Presentation~~

~~The accompanying financial statements are presented~~ in ~~in conformity~~accordance with accounting principles generally accepted in the ~~United States of America~~U.S. (“GAAP”) as determined by the FASB and pursuant to the accounting and disclosure rules and regulations of the ~~SEC,~~Securities and ~~reflect all adjustments, consisting only of normal recurring adjustments, which are, in~~Exchange Commission (“SEC”).

The unaudited condensed consolidated financial statements include the ~~opinion of management, necessary for the fair presentation~~accounts of the ~~financial position as of September 30, 2020~~Company and ~~the results of operations~~its controlled subsidiary, CMTI. All intercompany transactions and cash flows for the period presented and should be read in conjunction with the Company’s final prospectus for its Initial Public Offering as filed with the SEC on October 20, 2020, as well as the Company’s Current Reports on Form 8-K, as filed with the SEC on October 28, 2020. The interim results for the period from June 24, 2020 (inception) through September 30, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 or for any future periods.

~~Emerging Growth Company~~

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those thatbalances have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. been eliminated.

Use of ~~Estimates~~estimates

The preparation of financial statements in conformity with GAAP requires ~~the Company’s~~ management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of ~~revenues and~~ expenses during the reporting period.

The most significant estimates inherent in the preparation of the Company’s financial statements include, but are not limited to, those related to equity instruments issued in share-based compensation arrangements, valuations of its derivative asset and warrant liability under Level 3 of the fair value hierarchy, useful lives of property and equipment, the asset retirement obligation and the valuation allowance associated with the Company’s deferred tax assets, among others. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.

Unaudited condensed consolidated financial statements

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of the Company’s management, these unaudited condensed consolidated financial statements reflect all adjustments, which consist of only normal recurring adjustments necessary for the fair presentation of the balances and results for the periods presented. These unaudited condensed consolidated financial statement results are not necessarily indicative of results to be expected for the full fiscal year or any future period.

~~Cash~~A description of the Company’s significant accounting policies is included in the Company’s 2022 Form 10-K. You should read the unaudited condensed consolidated financial statements in conjunction with the Company’s audited consolidated financial statements and ~~cash equivalents~~accompanying notes in the Company’s 2022 Form 10-K. Except as disclosed herein, there has been no material change in the information disclosed in the notes to the Company’s audited consolidated financial statements included in the Company’s 2022 Form 10-K.

Segment information

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is comprised of several members of its executive management team. The Company ~~considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company~~ ~~did not have any cash equivalents~~ ~~as of September 30, 2020.~~views its operations and manages its business in one segment.

Net loss per share

~~Deferred Offering Costs~~

Deferred offering costs consist of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that are directly related to the Public Offering and that will be charged to stockholder’s equity upon the completion of the Public Offering.

~~Income Taxes~~

The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

~~The provision for income taxes was deemed to be immaterial for the three month period ended September 30, 2020 and for the period from June 24, 2020 (inception) to September 30, 2020.~~

~~Net Loss Per Common Share~~

~~Net~~Basic net loss per share is computed by dividing net loss allocated to common shareholders by the weighted average number of ~~shares of~~ common ~~stock~~shares outstanding during the ~~period, excluding shares of~~period. Diluted net loss per common ~~stock subject to forfeiture by the Sponsor. Weighted average shares were reduced~~share adjusts net loss and net loss per common share for the effect of ~~an aggregate of 562,500~~all potentially dilutive shares of Common Stock. Potential common ~~stock that are subject to forfeiture if the over-allotment option is not exercised by the underwriters.~~

~~At September 30, 2020, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into~~ shares ~~of common stock and then share in the earnings~~consist of the ~~Company. As a result, diluted~~Company’s outstanding public and private placement warrants to purchase Common Stock, as well as unvested restricted stock units (“RSUs”). Basic net loss per common share is the same as ~~basic~~dilutive net loss per common share for all periods presented as the ~~periods presented.~~inclusion of all potential common shares would have been antidilutive.

CIPHER MINING INC.

~~Concentration~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The following table presents the common shares that are excluded from the computation of diluted net loss per common share at June 30, 2023 and 2022, because including them would have been antidilutive.


	June 30,
	2023		2022
Public warrants		8,499,980		8,499,980
Private placement warrants		114,000		114,000
Unvested RSUs		23,134,869		12,975,614
		31,748,849		21,589,594

Recently issued and adopted accounting pronouncements

In June 2016, the FASB issued Accounting Standards Update ASU No. 2016‑13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit ~~Risk~~Losses on Financial Instruments, which was codified with its subsequent amendments as ASC Topic 326, Financial Instruments – Credit Losses (“ASC 326”). ASC 326 seeks to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments, including trade receivables, and other commitments to extend credit held by a reporting entity at each reporting date. The amendments require an entity to replace the incurred loss impairment methodology in other GAAP with a methodology that reflects current expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The adoption of this guidance on January 1, 2023 did not have a material impact on the Company’s unaudited condensed consolidated financial statements and disclosures.

~~Financial instruments~~The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that ~~potentially subject~~a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes to ~~concentrations~~determine the consequences of ~~credit risk consist of~~the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financial statements properly reflect the change. The Company reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a ~~cash account in a~~significant impact on its condensed consolidated financial ~~institution, which, at times, may exceed~~statements.

NOTE 3. BITCOIN

The following table presents information about the Federal Depository Insurance Coverage of $250,000. At September 30, 2020, the Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.Company’s bitcoin (in thousands):


Balance as of January 1, 2023	$	6,283
Bitcoin received from equity investees		317
Revenue recognized from bitcoin mined, net of receivable		52,836
Proceeds from sale of bitcoin, net of realized gain		(44,267	)
Impairment of bitcoin		(4,633	)
Balance as of June 30, 2023	$	10,536

~~Fair Value of Financial Instruments~~

The fair value of the Company’s ~~assets~~bitcoin as of June 30, 2023 was approximately $12.3 million and ~~liabilities,~~was estimated using the closing price of bitcoin, which ~~qualify~~is a Level 1 input (i.e., an observable input such as ~~financial instruments~~a quoted price in an active market for an identical asset).

During the three and six months ended June 30, 2023, the Company recorded impairment charges on its bitcoin holdings of approximately $2.8 million and $4.6 million, respectively. Impairment charges were approximately $0.5 million for both the three and six months ended June 30, 2022.

NOTE 4. DERIVATIVE ASSET

Luminant Power Agreement

On June 23, 2021, the Company entered into a power purchase agreement with Luminant ET Services Company LLC (“Luminant”), which was subsequently amended and restated on July 9, 2021, and further amended on February 28, 2022 and August 26, 2022 (as amended, the “Luminant Power Agreement”), for the supply of a fixed amount of electric power to the Odessa Facility at a fixed price for a term of five years, subject to certain early termination exemptions. The Luminant Power Agreement provides for a subsequent automatic annual renewal unless either party provides written notice to the other party of its intent to terminate the agreement at least six months prior to the expiration of the then current term. Starting from July 1, 2022, and prior to the receipt of interconnection

CIPHER MINING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

approval from the Electric Reliability Council of Texas (“ERCOT”), under the take or pay framework of the Luminant Power Agreement and pursuant to the ramp-up schedule agreed to between Luminant and Cipher, Luminant began sales of the scheduled energy in the ERCOT market.

Because ERCOT allows for net settlement, the Company’s management determined that, as of July 1, 2022, the Luminant Power Agreement met the definition of a derivative under ASC ~~820, “Fair~~815, Derivatives and Hedging (“ASC 815”). Because the Company has the ability to sell its electricity in the ERCOT market rather than take physical delivery, physical delivery is not probable through the entirety of the contract and therefore, the Company’s management does not believe the normal purchases and normal sales scope exception applies to the Luminant Power Agreement. Accordingly, the Luminant Power Agreement (the non-hedging derivative contract) is recorded at its estimated fair value each reporting period with the change in the fair value recorded in change in fair value of derivative asset in the consolidated statements of operations. See additional information regarding valuation of the Luminant Power Agreement derivative in Note 16. Fair Value Measurements.

Depending on the spot market price of electricity, the Company may opportunistically sell electricity in the ERCOT market in exchange for cash payments, rather than utilizing the power to mine for bitcoin at the Odessa Facility during peak times in order to most efficiently manage the Company’s operating costs. The Company earned approximately $5.7 million and ~~Disclosures,” approximates~~$5.7 million, respectively from power sales for the ~~carrying~~three and six months ended June 30, 2023, and recorded this amount in power sales within costs and operating expenses (income) on the unaudited condensed consolidated statement of operations, with the corresponding cost of the power sold recorded in cost of revenue. See Note 1. Organization for information regarding the out-of-period adjustments recorded during the six months ended June 30, 2023, which affected cost of power, power sales, net operating loss and net loss on the Company’s unaudited condensed consolidated statement of operations.

NOTE 5. PROPERTY AND EQUIPMENT

Property and equipment, net consisted of the following (in thousands):


	June 30, 2023			December 31, 2022
Miners and mining equipment	$	158,318		$	79,909
Leasehold improvements		135,209			94,807
Software		1,054			596
Office and computer equipment		279			88
Autos		73			73
Furniture and fixtures		88			69
Construction-in-progress		2,167			20,437
Total cost of property and equipment		297,188			195,979
Less: accumulated depreciation		(29,398	)		(4,195	)
Property and equipment, net	$	267,790		$	191,784

During the six months ended June 30, 2023 and 2022, the Company placed approximately $34.4 million and nil, respectively, of construction-in-progress into service at the Odessa Facility. Depreciation expense was approximately $14.4 million and $26.1 million, respectively, for the three and six months ended June 30, 2023 and included approximately $0.4 million and $0.9 million, respectively, of accretion expense related to the Company’s asset retirement obligation. Depreciation expense was immaterial for the three and six months ended June 30, 2022.

During the first quarter of fiscal 2023, the Company received the remaining 17,094 MicroBT M30S, M30S+ and M30S++ miners (“MicroBT miners”) related to the framework agreement of September 2021 with SuperAcme Technology (Hong Kong) Limited (“SuperAcme”), which was amended and restated by the Amended and Restated Framework Agreement on Supply of Blockchain Servers (the “Amended and Restated Framework Agreement”), dated as of May 6, 2022, and subject to the Supplementary Agreement of the Framework Agreement on Supply of Blockchain Servers (the “Supplementary Agreement). These MicroBT miners received during the first quarter of fiscal 2023 had an aggregate cost of approximately $50.7 million and were purchased by the Company at the new fixed and floating price terms set forth in the Supplementary Agreement. The Company also received 4,622 Antminer S19j Pro (100 TH/s) (“S19j Pro”) miners from Bitmain with a cost basis of approximately $1.6 million during the first quarter of fiscal 2023. As of June 30, 2023, the Company had a total of 35,117 MicroBT miners, 14,907 S19j Pro miners and 11,000 Canaan A1346 model miners for a total of 61,024 miners at its Odessa Facility. See additional information regarding the Canaan miners in Note 1. Organization and Note 11. Leases.

NOTE 6. DEPOSITS ON EQUIPMENT

In November and December 2022, the Company agreed to purchase 5,000 and 2,200, respectively, S19j Pro miners from Bitmain. The Company utilized accumulated Bitmain credits and coupons for the majority of the purchase price for these miners and has no further payments due in respect of these orders. Information regarding the quantity of Bitmain miners received pursuant to these agreements during the six months ended June 30, 2023 is disclosed in Note 5. Property and Equipment. As of June 30, 2023, the Company did not have material open purchase agreement commitments.

As of June 30, 2023, deposits on equipment was $1.7 million, primarily related to shipping costs and peripheral cables associated with the equipment from the Canaan Agreement described in Note 1. Organization and further in Note 11. Leases.

NOTE 7. INVESTMENTS IN EQUITY INVESTEES

The Company uses the equity method of accounting to account for its 49% equity interest in its partially owned mining operations Alborz LLC, Bear LLC and Chief, LLC (the “Data Center LLCs”). The Company recognized a total of approximately $1.4 million and $2.2 million of net losses in equity in losses of equity investees within the condensed consolidated statements of operations during the three and six months ended June 30, 2023, respectively, and $12.1 million and $12.2 million of net losses in equity in losses of equity investees during the three and six months ended June 30, 2022, respectively. Cryptocurrency mining operations for the Data Center LLCs consisted only of minimal activity at the Alborz Facility for the six months ended June 30, 2022.

During fiscal year 2022, the Company contributed miners and mining equipment to the Alborz, Bear and Chief Facilities. The majority of these contributed miners had a fair value that was lower than the cost paid by the Company to obtain them, and the Company recognized losses at the time of the contributions, resulting in basis differences related to the Company’s investments in Alborz LLC, Bear LLC and Chief LLC, all of which recorded the contributions of equipment from the Company at the historical cost paid by the Company to obtain the equipment. As Alborz LLC, Bear LLC and Chief LLC depreciate the historical cost of these miners on their respective financial statements over the expected depreciation period of five years, the Company accretes these basis differences over the same period and records the accretion amount for each reporting period within equity in losses of equity investees on its statements of operations until these miners are fully depreciated and the corresponding basis differences are fully accreted. As of June 30, 2023, the Company had remaining basis differences totaling approximately $28.1 million that have not yet been accreted. Accretion recorded by the Company during the six months ended June 30, 2023 is shown in the table below and was recorded within equity in losses of equity investees on the statement of operations.

Activity in the Company’s investments in equity investees during the six months ended June 30, 2023 consisted of the following (in thousands):


Balance as of January 1, 2023	$	37,478
Cost of miners and mining equipment contributed		1,925
Accretion of basis differences related to miner contributions		3,340
Capital distributions		(3,807	)
Bitcoin received from equity investees		(317	)
Equity in net losses of equity investees		(5,521	)
Balance as of June 30, 2023	$	33,098

NOTE 8. SECURITY DEPOSITS

The Company’s security deposits consisted of the following (in thousands):


	June 30, 2023		December 31, 2022
Luminant Power Purchase Agreement Independent Collateral Amount	$	12,554	$	12,554
Luminant Purchase and Sale Agreement collateral		3,063		3,063
Operating lease security deposits		967		960
Other deposits		1,158		1,153
Total security deposits	$	17,742	$	17,730

CIPHER MINING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 9. SUPPLEMENTAL FINANCIAL INFORMATION

As of June 30, 2023 and December 31, 2022, the Company had approximately $2.3 million and $7.3 million, respectively, of prepaid expenses and other current assets, which was primarily related to prepaid insurance other than approximately $1.2 million of bitcoin temporarily held for the Company’s joint venture partner, WindHQ LLC (“WindHQ”), as of December 31, 2022.

The Company’s accrued expenses and other current liabilities consisted of the following (in thousands):


	June 30, 2023		December 31, 2022
Taxes (primarily sales tax)	$	12,929	$	18,798
Power costs		3,374		-
Finance lease (1)		2,373		339
Legal settlement (2)		2,000		-
Employee compensation		1,045		-
Legal fees		376		215
Other		649		1
Total accrued expenses and other current liabilities	$	22,746	$	19,353

__________

(1) See Note 11. Leases for additional information regarding the Company’s finance leases.

(2) See Note 12. Commitments and Contingencies for additional information regarding the legal settlement accrual as of June 30, 2023.

NOTE 10. RELATED PARTY TRANSACTIONS

Related party receivables

The Company recorded related party receivables of approximately $1.6 million and $1.1 million as of June 30, 2023 and December 31, 2022, respectively, related to expenses paid on behalf of the Data Center LLCs for which it expects to be reimbursed.

Purchase commitments, deposits on equipment and related party payables

The Company entered into two agreements with Bitfury USA Inc. (“Bitfury USA”), made under, and as a part of, the Master Services and Supply Agreement to purchase BBACs. Additionally, Bitfury USA contracted with third-party vendors for the purchase of equipment and the receipt of services related to Cipher’s future mining operations. Pursuant to one of these arrangements between Bitfury USA and a third-party vendor, Paradigm Controls of Texas, LLC (“Paradigm”), the Company made payments directly to Paradigm in place of Bitfury USA, in respect of manufacturing services for BBACs, totaling approximately $5.8 million during the six months ended June 30, 2023 and the Company’s obligations to Bitfury USA under the Master Services and Supply Agreement were reduced by the same amount.

As of December 31, 2022, in relation to the Company assisting WindHQ with the liquidation of some of WindHQ’s bitcoin holdings, the Company had approximately $1.2 million of bitcoin and approximately $0.3 million of proceeds received, but not yet transferred to WindHQ, respectively, recorded in accounts payable, related party on its consolidated balance sheet. During the six months ended June 30, 2023, all of the bitcoin held by the Company on behalf of WindHQ was liquidated and all proceeds received from the liquidation were forwarded to WindHQ, leaving no remaining amount payable to WindHQ in accounts payable, related party as of June 30, 2023 on the Company’s unaudited condensed consolidated balance sheet.

NOTE 11. LEASES

Combined Luminant Lease Agreement

The Company entered into a series of agreements with affiliates of Luminant, including the Lease Agreement dated June 29, 2021, with amendment and restatement on July 9, 2021 (as amended and restated, the “Luminant Lease Agreement”). The Luminant Lease Agreement leases a plot of land to the Company for the data center, ancillary infrastructure and electrical system (the “Interconnection Electrical Facilities” or “substation”) of the Odessa Facility. The Company entered into the Luminant Lease Agreement and the

CIPHER MINING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Luminant Purchase and Sale Agreement to build the infrastructure necessary to support its Odessa Facility operations. The Company determined that the Luminant Lease Agreement and the Luminant Purchase and Sale Agreement should be combined for accounting purposes under ASC 842 (collectively, the “Combined Luminant Lease Agreement”) and that amounts ~~represented~~exchanged under the combined contract should be allocated to the various components of the overall transaction based on relative fair values.

The Company’s management determined that the Combined Luminant Lease Agreement contains two lease components; and the components should be accounted for together as a single lease component, because the effect of accounting for the land lease separately would be insignificant. Financing for use of the land and substation is provided by Luminant affiliates, with monthly installments of principal and interest due over a five-year period starting upon transfer of legal title of the substation to the Company (estimated total undiscounted principal payments of $15.0 million).

The Combined Luminant Lease Agreement commenced on November 22, 2022 and has an initial term of five years, with renewal provisions that are aligned with the Luminant Power Agreement. Despite lease commencement in November 2022, the Company has not been required by Luminant to make any lease payments for the substation, therefore the Company is continuing to accrue amounts due under the Combined Luminant Lease Agreement in accrued expenses and other current liabilities on its unaudited condensed consolidated balance sheet. The Company expects to begin making monthly lease payments in August 2023. At the end of the lease term for the Interconnection Electrical Facilities, the substation will be sold back to Luminant’s affiliate, Vistra Operations Company, LLC at a price to be determined based upon bids obtained in the secondary market.

Canaan Agreement

As described in Note 1. Organization, the Company entered into the Canaan Agreement to purchase 11,000 new A1346 model miners, all of which were received prior to June 30, 2023 and have been installed at the Odessa Facility. The Company was required to pay a total of approximately $4.1 million prior to delivery of the miners. The Company will also make six monthly installment payments of approximately $1.7 million each month, through November 2023, at which time the Company will obtain title to the miners. The Company determined that the Canaan Agreement contains embedded leases as defined in ASC 842, one for each batch of miners delivered. Based on the terms of the arrangement and intent of the parties, the Company has classified the leases of the Canaan miners as finance leases. Each lease commences upon delivery of the associated batch, as the delivery date represents the date upon which the Company obtains the right to use the assets for a period of time in exchange for consideration. As a result of all 11,000 miners being delivered to the Company in June 2023, the Company determined there will effectively be a single lease commencement date for all of the underlying right-of-use assets. The lease term for the Canaan miners will be six months, aligning with the final payment and title transfer date. Upon title transfer, the Company will continue depreciating the residual value of the miners over their remaining useful life.

Office headquarters lease

The Company entered into an operating lease for office space located in New York. The lease has an initial term of 64 months and commenced on February 1, 2022. The lease does not provide the Company with renewal options.

Additional lease information

Components of the Company’s lease expenses are as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Finance leases:
Amortization of ROU assets (1)	$	1,027	$	-	$	1,816	$	-
Interest on lease liability		477		-		878		-
Total finance lease expense		1,504		-		2,694		-
Operating leases:
Operating lease expense		467		371		921		618
Variable lease cost		-		-		-		-
Total operating lease expense		467		371		921		618
Total lease expense	$	1,971	$	371	$	3,615	$	618

__________

(1) Amortization of finance lease ROU assets is included within depreciation expense.

CIPHER MINING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The Company did not incur any variable lease costs during any of the periods presented.

Other information related to the Company’s leases is shown below (dollar amounts in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Operating cash flows - operating lease	$	396	$	-	$	791	$	-
Right-of-use assets obtained in exchange for operating lease liabilities	$	-	$	-	$	-	$	5,859


	June 30, 2023			December 31, 2022
Weighted-average remaining lease term – finance lease (in years)		2.7			4.7
Weighted-average remaining lease term – operating lease (in years)		3.9			4.4
Weighted-average discount rate – finance lease		11.0	%		11.0	%
Weighted-average discount rate – operating lease		10.9	%		10.9	%
Finance lease ROU assets (1)	$	26,868		$	14,471

__________

(1) As of June 30, 2023 and December 31, 2022, the Company had recorded accumulated amortization of approximately $2.3 million and $0.5 million, respectively, for the finance lease ROU assets. Finance lease ROU assets are recorded within property and equipment, net on the Company’s consolidated balance sheets.

As of June 30, 2023, future minimum lease payments during the next five years are as follows (in thousands):


	Finance Lease			Operating Lease			Total
Remaining Period Ended December 31, 2023	$	10,511		$	790		$	11,301
Year Ended December 31, 2024		4,068			1,581			5,649
Year Ended December 31, 2025		4,068			1,581			5,649
Year Ended December 31, 2026		4,068			1,581			5,649
Year Ended December 31, 2027		2,712			659			3,371
Total lease payments		25,427			6,192			31,619
Less present value discount		(3,402	)		(1,169	)		(4,571	)
Total	$	22,025		$	5,023		$	27,048

NOTE 12. COMMITMENTS AND CONTINGENCIES

Commitments

In the normal course of business, the Company enters into contracts that contain a variety of indemnifications with its employees, licensors, suppliers and service providers. The Company’s maximum exposure under these arrangements, if any, is unknown as of June 30, 2023. The Company does not anticipate recognizing any significant losses relating to these arrangements.

Contingencies

The Company, and its subsidiaries, are subject at times to various claims, lawsuits and governmental proceedings relating to the Company’s business and transactions arising in the ordinary course of business. The Company cannot predict the final outcome of such proceedings. Where appropriate, the Company vigorously defends such claims, lawsuits and proceedings. Some of these claims, lawsuits and proceedings seek damages, including consequential, exemplary or punitive damages, in amounts that could, if awarded, be significant. Certain of the claims, lawsuits and proceedings arising in the ordinary course of business are covered by the Company’s insurance program. The Company maintains property and various types of liability insurance in an effort to protect the Company from such claims. In terms of any matters where there is no insurance coverage available to the Company, or where coverage is available and the Company maintains a retention or deductible associated with such insurance, the Company may establish an accrual for such loss, retention or deductible based on current available information. In accordance with accounting guidance, if it is probable that an asset has been impaired or a liability has been incurred as of the date of the financial statements, and the amount of loss is reasonably

CIPHER MINING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

estimable, then an accrual for the cost to resolve or settle these claims is recorded by the Company in the accompanying unaudited condensed consolidated balance ~~sheet, primarily due~~sheets. If it is reasonably possible that an asset may be impaired as of the date of the financial statements, then the Company discloses the range of possible loss. Expenses related to ~~their short-term nature.~~

~~Recent Accounting Pronouncements~~

the defense of such claims are recorded by the Company as incurred and included in the accompanying unaudited condensed consolidated statements of operations. Management, with the assistance of outside counsel, may from time to time adjust such accruals according to new developments in the matter, court rulings, or changes in the strategy affecting the Company’s defense of such matters. On the basis of current information, the Company does not believe there is a reasonable possibility that a material loss, if any, ~~recently issued, but~~will result from any claims, lawsuits and proceedings to which the Company is subject to either individually, or in the aggregate.

Luminant Power Agreement

On November 18, 2022, Luminant filed suit against CMTI in the 95th District Court of Dallas County, Texas, asserting Texas state law claims for declaratory judgment and “money had and received”, seeking recoupment and return of money previously paid by Luminant to CMTI in connection with Luminant’s (and its affiliates’) construction and energization of Cipher’s bitcoin mining data center in Odessa, Texas. These prior payments were (i) the sum of $5.1 million paid to CMTI in September 2022 pursuant to a contractual provision requiring such payment in the parties’ written and executed August 25, 2022 Third Amendment to the Luminant Power Agreement, and (ii) the sum of $1.7 million also paid to CMTI in September 2022, as agreed by the parties, for electrical power sold by Luminant for CMTI’s benefit into the open market prior to the final energization of the Company’s facility. Luminant contends that such payments were mistaken because, although voluntarily made by Luminant, they were not actually due under the terms of the Luminant Power Agreement, as amended. The Company filed its answer on January 17, 2023, denying any liability to Luminant. Cipher has not received payment from Luminant for electricity sold in the ERCOT market in September 2022 and October 2022.

The Company wholly disputes the claims made by Luminant and intends to contest the case vigorously. The parties have exchanged basic discovery disclosures, and discovery and motion practice have not substantively commenced. An initial trial date has been set. The parties continue to discuss a potential resolution and, while the Company does not yet ~~effective, accounting pronouncements,~~know how or when this matter will be resolved, it has established a $2.0 million accrual for the cost of resolving the claims.

NOTE 13. STOCKHOLDERS’ EQUITY

As of June 30, 2023, 510,000,000 shares with a par value of $0.001 per share are authorized, of which, 500,000,000 shares are designated as Common Stock and 10,000,000 shares are designated as preferred stock (“Preferred Stock”).

Common Stock

Holders of each share of Common Stock are entitled to dividends when, as and if declared by the Board. As of the issuance of these unaudited condensed consolidated financial statements, the Company had not declared any dividends. The holder of each share of Common Stock is entitled to one vote. The voting, dividend, liquidation and other rights and powers of the Common Stock are subject to and qualified by the rights, powers and preferences of any outstanding series of Preferred Stock, for which there currently ~~adopted, would have~~are none outstanding.

During the six months ended June 30, 2023, the Company issued 2,473,759 shares of Common Stock to officers, employees and consultants in settlement of an equal number of fully vested RSUs awarded to these individuals, and 248,358 shares of Common Stock to directors, pursuant to grants made under the Cipher Mining Inc. 2021 Incentive Award Plan (the “Incentive Award Plan”). The Company immediately repurchased 838,388 of these shares of Common Stock from officers and employees, with a ~~material effect on~~fair value of approximately $1.1 million, to cover taxes related to the ~~Company’s financial statements.~~settlement of vested RSUs, as permitted by the Incentive Award Plan. The Company placed the repurchased shares in treasury stock.

At-the-Market Sales Agreement

~~Note 3 – Private Placement~~

On ~~October 22, 2020, simultaneously~~September 21, 2022, the Company filed with the ~~closing~~SEC a shelf registration statement on Form S-3, which was declared effective on October 6, 2022 (the “Registration Statement”). In connection with the filing of the ~~Public Offering,~~Registration Statement, the ~~Anchor Investors purchased~~Company also entered into an at the market offering agreement (the “Prior Sales Agreement”) with H.C. Wainwright & Co., LLC (the “Prior Agent”), under which the Company may, from time to time, sell shares of its Common Stock having an aggregate ~~of 228,000 Private Units at a~~offering price of ~~$10.00~~up to $250.0 million in “at the market” offerings through the Prior Agent. During the six months ended June 30, 2023, in connection with the Prior Sales Agreement, the Company received proceeds of approximately $2.7 million, net of issuance costs, from the sale of

CIPHER MINING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

978,207 shares of common stock, with an average fair value of $2.78 per ~~Private Unit,~~share. Effective August 1, 2023, the Company terminated the Prior Sales Agreement. On August 3, 2023, the Company entered into a Controlled Equity OfferingSM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co., Canaccord Genuity LLC, Needham & Company, LLC and Compass Point Research & Trading, LLC. See Note 18. Subsequent Events for ~~an aggregate purchase price~~additional information related to the Sales Agreement.

NOTE 14. WARRANTS

Upon consummation of ~~$2,280,000,~~the business combination, the Company assumed Common Stock warrants that were originally issued in GWAC’s initial public offering (the “Public Warrants”), as well as warrants that were issued in a private placement that ~~occurred simultaneously~~closed concurrently with GWAC’s initial public offering (the “Private Placement Warrants”). The Public and Private Placement Warrants entitle the ~~closing of the Public Offering. Each Private Unit consists of~~ holder to purchase one share of ~~common stock (“Private Share”) and one-half of one warrant (“Private Warrant”). Each whole Private Warrant is exercisable to purchase one share of common stock~~Common Stock at an exercise price of ~~$11.50~~$11.50 per share, subject to adjustment. ~~The proceeds from the~~There were 8,499,980 Public Warrants and 114,000 Private Units were added to the proceeds from the Public Offering to be held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the salePlacement Warrants outstanding as of ~~the Private Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law).~~

~~Note 4 – Related Party Transactions~~

~~Founder Shares~~

In July 2020, Sponsor, and our officers and directors (collectively, the “Founders”) purchased an aggregate of 4,312,500 shares (the “Founder Shares”) of the Company’s common stock for an aggregate price of $25,000. In August 2020, certain of our initial stockholders forfeited 1,355,000 Founder Shares and the Anchor Investors purchased 1,355,000 Founder Shares for an aggregate purchase price of approximately $7,855, or approximately $0.006 per share. In October 2020, Sponsor forfeited an aggregate of 562,500 founder shares for no consideration, and GW Sponsor 2, LLC, an entity managed by Management, purchased from the Company 562,500 shares for a purchase price of $163,125. The Founder Shares include an aggregate of up to 562,500 shares subject to forfeiture by Sponsor to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the Founders and Anchor Investors will collectively own 20% of the Company’s issued and outstanding shares after the Public Offering (assuming the Founders or Anchor Investors do not purchase any Public Shares in the Public Offering). On November 17, 2020, the underwriters canceled the remainder of the Over-Allotment Option. In connection with the cancellation of the remainder of the Over-Allotment Option, the Company cancelled an aggregate of 62,500 shares of common stock issued to Sponsor.

Of the Founder Shares, several of the Founders are holding an aggregate of 750,000 shares which they have agreed to contribute to a not-for-profit organization that is mutually acceptable to them and the Company’s board of directors within six months after the Public Offering or such shares will be forfeited and cancelled.

The Founders and Anchor Investor have agreed, subject to certain limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier of earlier of (1) one year after the completion of the Business Combination and (2) the date on which the Company consummates a liquidation, merger, capital stock exchange, reorganization, or other similar transaction after the Business Combination that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property. Notwithstanding the foregoing, if the last sale price of our common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Business Combination, the Founder Shares will be released from the lock-up.

~~Promissory Note — Related Party~~

Onboth June 30, 2020, the Company issued an unsecured promissory note to IBS Holding Corporation (the “Promissory Note”), an affiliate of the Sponsor, pursuant to which the Company may borrow up to an aggregate principal amount of $432,500, of which $135,000 was outstanding under the Promissory Note as of September 30, 2020. The Promissory Note was non-interest bearing2023 and was payable on the earlier of (i) the consummation of the Public Offering or (ii) the date on which the Company determined not to proceed with the Public Offering. On October 22, 2020, the Company repaid the outstanding borrowings under the Promissory Note amounting to $135,000 from the proceeds of the IPO not being placed in the Trust Account.

~~Related Party Loans~~

In addition, in order to finance transaction costs in connection with a Business Combination, Sponsor and its designees may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into Private Units of the post Business Combination entity at a price of $10.00 per Private Unit. The Private Units would be identical to the Private Units issued in the Private Placement. At September 30, 2020, no Working Capital Loans have been issued.

~~Administrative Support Agreement~~

The Company has agreed, commencing on the effective date of the Public Offering through the earlier of the Company’s consummation of a Business Combination and the liquidation of the Trust Account, to pay an affiliate of one of the Company’s executive officers $5,000 per month for office space, utilities and secretarial and administrative support. At September 30, 2020, the Company has accrued no such expenses.

~~Note 5 – Commitments~~

~~Registration Rights~~

The holders of the Founder Shares, as well as the holders of the Private Units and any Private Warrants or Private Units that may be issued in payment of Working Capital Loans made to the Company (and all underlying securities), are entitled to registration rights pursuant to an agreement that was signed on the effective date of Public Offering. The holders of a majority of these securities are entitled to make up to two demands that the Company register such securities. The holders of the majority of the Founders Shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these shares of common stock are to be released from escrow. The holders of a majority of the Founder Shares, Private Units and Private Warrants or Private Units issued in payment of Working Capital Loans (or underlying securities) can elect to exercise these registration rights at any time after the Company consummates a Business Combination. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

~~Underwriting Agreement~~

The Company granted the underwriters a 45-day option from the date of Public Offering to purchase up to 2,250,000 additional Units to cover over-allotments, if any, at the Public Offering price less the underwriting discounts and commissions.

On October 26, 2020, the underwriters purchased an additional 1,500,000 Over-Allotment Units pursuant to the partial exercise of the Over-Allotment Option. On November 17, 2020, the underwriters purchased an additional 500,000 Over-Allotment Units pursuant to the partial exercise of the Over-Allotment Option. The Over-Allotment Units were sold at an offering price of $10.00 per Over-Allotment Unit, generating aggregate additional gross proceeds of $20,000,000 to the Company. On November 17, 2020, the underwriters canceled the remainder of the Over-Allotment Option.

~~The Company paid a fixed underwriting discount of $450,000 to the underwriters at the closing of the Public Offering.~~

~~Business Combination Marketing Agreement~~

The Company engaged I-Bankers Securities, Inc. as an advisor in connection with a Business Combination to assist the Company in holding meetings with its stockholders to discuss the potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing the Company’s securities in connection with a Business Combination, assist the Company in obtaining stockholder approval for the Business Combination and assist the Company with its press releases and public filings in connection with the Business Combination. The Company will pay I-Bankers Securities, Inc. a cash fee for such services upon the consummation of a Business Combination in an amount equal to 4.5% of the gross proceeds of Public Offering (exclusive of any applicable finders’ fees which might become payable).

~~Note 6 – Stockholders’ Equity~~

~~Common Stock~~ — The Company is authorized to issue 100,000,000 shares of common stock with a par value of $0.001 per share. At September 30, 2020, there were 4,312,500 shares of common stock issued and outstanding, of which an aggregate of up to 562,500 shares are subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full or in part, so that the Founders and Anchor Investors will collectively own 20% of the Company’s issued and outstanding common stock after the Public Offering (assuming no purchases of any Public Shares in the Public Offering and excluding the Private Units).

~~Warrants~~ — The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Public Offering. No warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to such shares of common stock. Notwithstanding the foregoing, if a registration statement covering the shares of common stock issuable upon exercise of the Public Warrants is not effective within a specified period following the consummation of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.

~~Once the warrants become exercisable, the Company may redeem the Public Warrants:~~

●

~~in whole and not in part;~~

●

~~at a price of $0.01 per warrant;~~

●

~~upon not less than 30 days’ prior written notice of redemption;~~

●

if, and only if, the reported last sale price of the shares of common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30 trading day period commencing at any time after the warrants become exercisable and ending on the third business day prior to the notice of redemption to warrant holders; and

●

~~if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying the warrants.~~

If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.

The Private Warrants are identical to the Public Warrants underlying the Units sold in the Public Offering, except that the Private Warrants and the shares of common stock issuable upon the exercise of the Private Warrants will not be transferable, assignable or salable until after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Warrants will be exercisable for cash or on a cashless basis, at the holder’s option, and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

December 31, 2022. The exercise price and number of shares of ~~common stock~~Common Stock issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or ~~our~~the Company’s recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of shares of ~~common stock~~Common Stock at a price below their respective exercise prices. Additionally, in no event will the Company be required to net cash settle the warrants. If

NOTE 15. SHARE-BASED COMPENSATION

The Incentive Award Plan provides for the grant of stock options, including incentive stock options and nonqualified stock options, stock appreciation rights, RSUs and other stock or cash-based awards to employees, consultants and directors. Upon vesting of an award, the Company may either issue new shares or reissue treasury shares.

Initially, up to 19,869,312 shares of Common Stock were available for issuance under awards granted pursuant to the Incentive Award Plan. In addition, the number of shares of Common Stock available for issuance under the Incentive Equity Plan is ~~unable~~increased on January 1 of each calendar year beginning in 2022 and ending in 2031 by an amount equal to ~~complete~~the lesser of (a) three percent (3%) of the total number of shares of Common Stock outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of shares determined by the Board. On January 1, 2023, this resulted in an increase of 7,426,559 shares of Common Stock available for issuance under the Incentive Award Plan. As of June 30, 2023, 5,694,657 shares of Common Stock were available for issuance under the Incentive Award Plan.

The Company recognized total share-based compensation expense in general and administrative expenses on the unaudited condensed consolidated statements of operations for the following categories of awards as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Service-based RSUs	$	5,580	$	6,685	$	10,827	$	12,858
Performance-based RSUs		3,378		3,379		6,720		6,720
Common stock, fully-vested		220		-		441		-
Total share-based compensation expense	$	9,178	$	10,064	$	17,988	$	19,578

Service-based RSUs

A summary of the Company’s unvested Service-based RSU activity for the six months ended June 30, 2023 is shown below:


	Number of Shares			Weighted Average Grant Date Fair Value
Unvested at January 1, 2023		14,441,044		$	3.96
Granted		6,909,873		$	2.25
Vested		(2,473,758	)	$	5.91
Unvested at June 30, 2023		18,877,159		$	3.08

As of June 30, 2023, there was approximately $32.7 million of unrecognized compensation expense related to unvested Service-based RSUs, which is expected to be recognized over a ~~Business Combination~~weighted-average vesting period of approximately 1.6 years.

CIPHER MINING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

If not fully vested upon grant, Service-based RSUs awarded generally vest over a period ranging from two to four years in equal installments on the award’s anniversary of the vesting commencement date, which will generally coincide with the timing when the employee or consultant began to provide services to the Company, as determined by the Board, and which may precede the grant date. Vesting is subject to the award recipient’s continuous service on the applicable vesting date; provided, that if the award recipient’s employment is terminated by the Company without “cause”, by award recipient for “good reason” (if applicable, as such term or similar term may be defined in any employment, consulting or similar service agreement between award recipient and the Company) or due to award recipient’s death or permanent disability, all unvested Service-based RSUs will vest in full. In addition, in the event of a change in control, any unvested Service-based RSUs will vest subject to the award recipient’s continuous service to the Company through such change in control. In addition, if the Company achieves a $10 billion market capitalization milestone (described further below) and the Chief Executive Officer (“CEO”) remains in continuous service through such achievement, any then-unvested Service-based RSUs awarded to the CEO will also vest.

Performance-based RSUs

There was no new activity for unvested Performance-based RSUs during the six months ended June 30, 2023 There were 4,257,710 unvested Performance-based RSUs with a weighted average grant date fair value of $7.76 as of both June 30, 2023 and December 31, 2022. As of June 30, 2023, there was approximately $11.1 million of unrecognized compensation expense related to unvested Performance-based RSUs, which is expected to be recognized over a weighted-average derived service period of approximately 0.9 years.

One-third of the outstanding Performance-based RSUs will vest upon the Company achieving a market capitalization equal to or exceeding $5 billion, $7.5 billion and $10 billion, in each case over a 30-day lookback period and subject to the CEO’s continuous service through the end of the applicable 30-day period. In the event of a change in control and CEO’s continuous service through such change in control, the per share price (plus the per share value of any other consideration) received by the Company’s stockholders in such change in control will be used to determine whether any of the market capitalization milestones are achieved (without regard to the 30-day lookback period). Any Performance-based RSUs that do not vest prior to the CEO’s termination of service or, if earlier, in connection with a change in control will be forfeited for no consideration.

NOTE 16. FAIR VALUE MEASUREMENTS

The Company’s financial assets and liabilities subject to fair value measurement on a recurring basis and the level of inputs used for such measurements were as follows as of the dates indicated (in thousands):


	Fair Value Measured as of June 30, 2023
	Level 1		Level 2		Level 3		Total
Assets included in:
Cash and cash equivalents
Money market securities	$	175	$	-	$	-	$	175
Accounts receivable		380		-		-		380
Derivative asset		-		-		75,252		75,252
	$	555	$	-	$	75,252	$	75,807
Liabilities included in:
Warrant liability	$	-	$	-	$	66	$	66
	$	-	$	-	$	66	$	66

CIPHER MINING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


	Fair Value Measured as of December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets included in:
Cash and cash equivalents
Money market securities	$	10,943	$	-	$	-	$	10,943
Accounts receivable		98		-		-		98
Derivative asset		-		-		66,702		66,702
	$	11,041	$	-	$	66,702	$	77,743
Liabilities included in:
Warrant liability	$	-	$	-	$	7	$	7
	$	-	$	-	$	7	$	7

The carrying values reported in the Company’s consolidated balance sheets for cash (excluding cash equivalents which are recorded at fair value on a recurring basis), accounts payable and accrued expenses and other current liabilities are reasonable estimates of their fair values due to the short-term nature of these items.

There were no transfers of financial instruments between Level 1, Level 2 and Level 3 during the periods presented.

Level 3 asset

The Company’s derivative asset, related to the Luminant Power Agreement, is divided between current and noncurrent assets, and was initially recorded on its unaudited condensed consolidated balance sheets on the derivative asset’s effective date of July 1, 2022, with an offsetting amount recorded to change in fair value of derivative asset in costs and operating expenses on the unaudited condensed consolidated statements of operations. Subsequent changes in fair value are also recorded to change in fair value of derivative asset. The Luminant Power Agreement was not designated as a hedging instrument. The estimated fair value of the Company’s derivative asset was derived from Level 2 and Level 3 inputs (i.e., unobservable inputs) due to a lack of quoted prices for similar type assets and as such, is classified in Level 3 of the fair value hierarchy. Specifically, the discounted cash flow estimation models contain quoted spot and forward prices for electricity, as well as estimated usage rates consistent with the terms of the Luminant Power Agreement, which has a remaining term of approximately 4.0 years. The valuations performed by the third-party valuation firm engaged by the Company utilized pre-tax discount rates of 6.94% and 6.83% as of June 30, 2023 and December 31, 2022, respectively, and include observable market inputs, but also include unobservable inputs based on qualitative judgment related to company-specific risk factors. Unrealized gains associated with the derivative asset within the ~~Combination Period~~Level 3 category include changes in fair value that were attributable to changes to the quoted forward electricity rates, as well as unobservable inputs (e.g., changes in estimated usage rates and discount rate assumptions).

The following table presents the changes in the estimated fair value of the derivative asset measured using significant unobservable inputs (Level 3) for the six months ended June 30, 2023 (in thousands):


Balance as of January 1, 2023	$	66,702
Change in fair value		8,549
Balance as of June 30, 2023	$	75,251

Level 3 liability

The Company’s Private Placement Warrants (as defined in Note 14. Warrants) are its only liability classified within Level 3 of the fair value hierarchy because the fair value is based on significant inputs that are unobservable in the market. The valuation of the Private Placement Warrants uses assumptions and estimates the Company believes would be made by a market participant in making the same valuation. The Company assesses these assumptions and estimates on an on-going basis as additional data impacting the assumptions and estimates are obtained.

CIPHER MINING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The Company engaged a valuation firm to determine the fair value of the Private Placement Warrants using a Black-Scholes option-pricing model and the ~~Company liquidates the funds held~~quoted price of its Common Stock. The following table presents significant assumptions utilized in the ~~Trust Account, holders~~valuations of ~~warrants will not receive~~the Private Placement Warrants as of the dates indicated:



	June 30, 2023			December 31, 2022
Risk-free rate		4.36	%		4.06	%
Dividend yield rate		0.00	%		0.00	%
Volatility		74.7	%		90.0	%
Contractual term (in years)		3.2			3.7
Exercise price	$	11.50		$	11.50

The following table presents changes in the estimated fair value of the Private Placement Warrants for the six months ended June 30, 2023 (in thousands):


Balance as of January 1, 2023	$	7
Change in fair value		59
Balance as of June 30, 2023	$	66

NOTE 17. INCOME TAXES

The determination of income tax expense in the unaudited condensed consolidated statements of operations is based upon the estimated effective tax rate for the year, adjusted for the impact of any discrete items which are accounted for in the period in which they occur. The Company recorded income tax expense of approximately 3.7% and nil of loss before taxes for each of the six months ended June 30, 2023 and 2022, respectively.

NOTE 18. SUBSEQUENT EVENTS

At-the-Market Sales Agreement

On August 3, 2023, the Company entered into a Controlled Equity OfferingSM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co., Canaccord Genuity LLC, Needham & Company, LLC and Compass Point Research & Trading, LLC (each, an “Agent” and, together, the “Agents”), pursuant to which the Company may offer and sell, from time to time through or to the Agents, shares of its Common Stock, for aggregate gross proceeds of up to $250.0 million (the “Shares”). The offering and sale of up to $250.0 million of the Shares has been registered under the Registration Statement, the base prospectus contained within the Registration Statement, and a prospectus supplement that was filed with the SEC on August 4, 2023 (the “Prospectus Supplement”).

Pursuant to the Sales Agreement, the Agent selected by the Company (such Agent, the “Designated Agent”) may sell the Shares in sales deemed to be “at the market offerings” as defined in Rule 415(a)(4) promulgated under the Securities Act. The Company has no obligation to sell any of ~~such funds with respect~~the Shares under the Sales Agreement and may at any time suspend or terminate the offering of the Shares pursuant to ~~their warrants, nor~~the Sales Agreement upon notice and subject to other conditions. The Agents will ~~they receive any distribution from~~act as sales agents and will use commercially reasonable efforts to sell on the Company’s ~~assets held outside~~behalf all of the ~~Trust Account~~Shares requested to be sold by it, on mutually agreed terms between the Agents and the Company. Under the terms of the Sales Agreement, the Company agreed to pay the Designated Agent a commission up to 3.0% of the aggregate gross proceeds from any Shares sold through such Designated Agent pursuant to the Sales Agreement. In addition, the Company agreed to reimburse certain expenses incurred by the Agents in connection with the ~~respect to such warrants. Accordingly,~~Sales Agreement.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

~~The Company evaluated subsequent events~~following discussion and ~~transactions that occurred after the balance sheet date up the date that the~~analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements ~~were issued. Other than~~and related notes included elsewhere in this Quarterly Report, as ~~described below and in these unaudited condensed~~well as our audited consolidated financial statements ~~in relation to the Public Offering (Note 1), Private Placement (Note 3), and forfeiture of founder shares (Notes 1 and 4)~~ and related ~~transactions, the Company did not identify any subsequent events that would have required adjustment or disclosure~~notes disclosed in ~~the financial statements.~~

In October 2020, Sponsor forfeited an aggregate of 562,500 founder shares for no consideration, and GW Sponsor 2, LLC, an entity managed by Management, purchased from the Company 562,500 shares for a purchase price of $163,125, which was payable on or before the closing of the Public Offering.

our 2022 Form 10-K. This ~~Quarterly Report on Form 10-Q includes forward-looking statements. These~~discussion contains forward-looking statements ~~are~~ based ~~on our~~upon current plans, expectations and beliefs ~~concerning future developments~~involving risks and ~~their potential effects on us. There can be no assurance that future developments affecting us will be~~uncertainties. Our actual results may differ materially from those ~~that we have anticipated. These~~anticipated in these forward-looking statements ~~involve~~as a ~~number~~result of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances,various factors, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Factors that might cause or contribute to such forward-looking statements include, but are not limited to, those set forth in the ~~Risk Factors section~~“Risk Factors” sections of our 2022 Form 10-K and this Quarterly Report and other factors set forth in other parts of this Quarterly Report.

Unless the context otherwise requires, references in this Quarterly Report to the “Company,” “Cipher,” “Cipher Mining,” “we,” “us” or “our” refers to Cipher Mining Inc. and its consolidated subsidiaries, unless otherwise indicated.

We are an emerging technology company that develops and operates industrial scale bitcoin mining data centers. Cipher Mining Inc., through itself and its consolidated subsidiaries, including Cipher Mining Technologies Inc. (“CMTI”), currently operates four bitcoin mining data centers in Texas. Bitcoin mining is our principal revenue generating business activity.

Our current intention is to continue to expand our bitcoin mining business by developing additional data centers, expanding capacity at our current data centers and entering into other arrangements, such as joint ventures or data center hosting agreements.

Our key mission is to expand and strengthen the Bitcoin network’s critical infrastructure. As of July 31, 2023, we operated approximately 76,322 miners, with an aggregate hashrate capacity of approximately 7.8 EH/s, deploying approximately 253 MW of electricity, of which we owned approximately 66,397 miners, with an aggregate hashrate capacity of approximately 6.8 EH/s, deploying approximately 222 MW of electricity.

We operate four bitcoin mining data centers in Texas, including one wholly-owned and three partially-owned data centers acquired through investments in joint ventures. Our largest data center is our Odessa data center (the “Odessa Facility”), which is our wholly-owned 207 MW facility located in Odessa, Texas. We also operate our Alborz data center (the “Alborz Facility”), which is located near Happy, Texas and is partially-owned through a joint venture with WindHQ LLC (“WindHQ”). Our Bear data center (the “Bear Facility”) and our Chief data center (the “Chief Facility”) are both located near Andrews, Texas and are also partially-owned through separate joint ventures with WindHQ. We have a 49% membership interest in Alborz LLC, Bear LLC and Chief LLC, which own the Alborz Facility, the Bear Facility and the Chief Facility, respectively. By the end of the ~~Company’s registration statement and prospectus for the Company’s initial public offering~~third quarter 2023, we anticipate operating approximately 80,500 miners, capable of generating approximately 8.2 EH/s across our sites, of which we will own approximately 70,500 miners, representing approximately 7.2 EH/s.

On September 21, 2022, we filed with the ~~SEC.~~ SEC a shelf registration statement on Form S-3, which was declared effective on October 6, 2022 (the “Registration Statement”). In connection with the filing of the Registration Statement, we also entered into an at-the-market offering agreement (the “Prior Sales Agreement”) with H.C. Wainwright & Co., LLC (the “Prior Agent”), under which we may, from time to time, sell shares of our Common Stock having an aggregate offering price of up to $250.0 million in “at-the-market” offerings through the Prior Agent. During the six months ended June 30, 2023, in connection with the Prior Sales Agreement, we received proceeds of approximately $2.7 million, net of issuance costs, from the sale of 978,207 shares of common stock, with an average fair value of $2.78 per share. Effective August 1, 2023, we terminated the Prior Sales Agreement.

On August 3, 2023, we entered into a Controlled Equity OfferingSM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co., Canaccord Genuity LLC, Needham & Company, LLC and Compass Point Research & Trading, LLC (each, an “Agent” and, together, the “Agents”), pursuant to which we may offer and sell, from time to time through or to the Agents, shares of our Common Stock, for aggregate gross proceeds of up to $250.0 million (the “Shares”). The offering and sale of up to $250.0 million of the Shares has been registered under the Registration Statement, the base prospectus contained within the Registration Statement, and a prospectus supplement that was filed with the SEC on August 4, 2023 (the “Prospectus Supplement”).

Pursuant to the Sales Agreement, the Agent selected by us (such Agent, the “Designated Agent”) may sell the Shares in sales deemed to be “at the market offerings” as defined in Rule 415(a)(4) promulgated under the Securities Act. We have no obligation to sell any of the Shares under the Sales Agreement and may at any time suspend or terminate the offering of the Shares pursuant to the Sales

Agreement upon notice and subject to other conditions. The Agents will act as sales agents and will use commercially reasonable efforts to sell on our behalf all of the Shares requested to be sold by us, on mutually agreed terms between the Agents and us. Under the terms of the Sales Agreement, we agreed to pay the Designated Agent a commission up to 3.0% of the aggregate gross proceeds from any Shares sold through such Designated Agent pursuant to the Sales Agreement. In addition, we agreed to reimburse certain expenses incurred by the Agents in connection with the Sales Agreement.

There have been no material changes to the “Factors Affecting Our Results of Operations” in the Management’s Discussion and Analysis section of our 2022 Form 10-K. Our financial position and results of operations depend to a significant extent on those factors.

The following ~~discussion should be read~~table presents information about our Bitcoin mining activities, including bitcoin production and sales of bitcoin (dollar amounts in ~~conjunction~~thousands):

Bitcoin mining operations at our Odessa Facility mined 1,112 bitcoin and generated revenue of $31.2 million for the three months ended June 30, 2023, at an average price per bitcoin of $28,009. The Odessa Facility began mining operations in mid-November 2022, therefore, we did not earn revenue from bitcoin mining during the three months ended June 30, 2022.

Cost of revenue for the three months ended June 30, 2023 was $15.9 million and consisted primarily of power costs at the Odessa Facility as delivered under our power purchase agreement with Luminant ET Services Company LLC (the “Luminant Power Agreement”), as well as maintenance expenses for mining equipment. We incurred no costs of revenue during the three months ended June 30, 2022 as the Odessa Facility did not begin its bitcoin mining operations until mid-November 2022.

General and administrative expenses were $21.3 million for the three months ended June 30, 2023, compared to $16.7 million for the three months ended June 30, 2022. The increase was primarily driven by increases of $2.5 million for payroll and payroll-related benefits due to increasing headcount, a $2.0 million accrual for the cost of resolving legal claims, and a $0.8 million increase in office supplies and software costs, partially offset by a decrease of $0.9 million for share-based compensation costs.

Depreciation for the three months ended June 30, 2023 was $14.4 million, primarily related to miners, mining equipment and leasehold improvements at the Odessa Facility being placed into service beginning in November 2022, with additional miners and mining-related assets placed into service during the three months ended June 30, 2023 as we continued to expand capacity at the Odessa Facility. Also included in depreciation is the amortization of our ~~financial statements~~finance lease right-of-use asset for our Interconnection Electrical Facilities (as defined below) that provides power to the Odessa Facility, amortization of our finance lease right-of-use assets representing mining equipment from the Canaan Agreement (as defined below), and accretion of our estimated asset retirement obligation related ~~notes thereto included elsewhere~~to the Odessa Facility and depreciation of the associated capitalized costs. Depreciation for the three months ended June 30, 2022 was immaterial.

The change in the fair value of our derivative asset related to the Luminant Power Agreement resulted in a gain of $3.2 million during the three months ended June 30, 2023. The gain was primarily due to the change in the power market forward curve as compared to the curve as of March 31, 2023. The Luminant Power Agreement was not in effect during the three months ended June 30, 2022.

Equity in losses of equity investees totaled approximately $1.4 million for the three months ended June 30, 2023, a decrease of $10.7 million from approximately $12.1 million for the three months ended June 30, 2022. Equity in losses of equity investees consists of our 49% share in the earnings (losses) generated by our three partially-owned mining sites and also includes accretion of the basis differences in our investments in the equity investees that resulted from contributions of miners during the year ended December 31, 2022 with values at the time of the contributions that were less than the costs we paid to obtain the miners. We are ~~a blank check company incorporated on June 24, 2020 as a Delaware corporation~~accreting these basis differences over the five-year useful life of the miners. Our share of the losses in the mining operations of Alborz LLC, Bear LLC and ~~formed~~Chief LLC increased to approximately $3.1 million for the ~~purpose~~three months ended June 30, 2023 from approximately $0.5 million for the three months ended June 30, 2022. During the current three month period, all three sites were fully operational, whereas in the prior year period, only Alborz LLC had begun mining operations with a limited number of ~~effecting~~miners prior to June 30, 2022. We recognized approximately $1.7 million and nil for the three months ended June 30, 2023 and 2022, respectively, for the accretion of basis differences.

Realized gain on sale of bitcoin was $4.2 million during the three months ended June 30, 2023. We began selling a ~~merger, capital stock exchange,~~portion of our bitcoin holdings at the start of 2023 to support our operations and cash requirements. We did not sell any bitcoin during the three months ended June 30, 2022.

We recognized a total of approximately $2.8 million of impairment on our bitcoin holdings during the three months ended June 30, 2023, compared to $0.5 million for the three months ended June 30, 2022.

Other expense totaled $0.5 million for the three months ended June 30, 2023, consisting primarily of $0.5 million of interest expense recognized related to our finance leases for the Interconnection Electrical Facilities and Canaan Agreement. Other income and expense for the three months ended June 30, 2022 was not significant.

Income tax expense totaled $0.6 million, or -5.1% of loss before taxes, and nil for the three months ended June 30, 2023 and 2022, respectively, and was determined using the estimated effective tax rate for the year, adjusted for the impact of any discrete items which are accounted for in the period in which they occur.

Bitcoin mining operations at our Odessa Facility mined 2,055 bitcoin and generated revenue of $53.1 million for the six months ended June 30, 2023, at an average price per bitcoin of $25,390. The Odessa Facility began mining operations in mid-November 2022, therefore, we did not earn revenue from bitcoin mining during the six months ended June 30, 2022.

Cost of revenue for the six months ended June 30, 2023 was $24.0 million and consisted primarily of power costs at the Odessa Facility as delivered under our power purchase agreement with Luminant ET Services Company LLC (the “Luminant Power Agreement”), as well as maintenance expenses for mining equipment. Power costs for the six months ended June 30, 2023 included $2.1 million of power costs related to the year ended December 31, 2022 that were recorded as an out-of-period adjustment during the current reporting period. We incurred no costs of revenue during the six months ended June 30, 2022 as the Odessa Facility did not begin its bitcoin mining operations until mid-November 2022.

General and administrative expenses were $38.8 million for the six months ended June 30, 2023 compared to $34.1 million for the six months ended June 30, 2022. The increase was primarily driven by increases of $4.8 million for payroll and payroll-related benefits due to increasing headcount, a $2.0 million accrual for the cost of resolving legal claims, and a $1.4 million increase in office supplies and software costs. These increases were partially offset by decreases of $1.6 million for state and franchise taxes, $1.6 million for share-based compensation costs, $0.8 million for legal expenses, and $0.4 million for business insurance. Legal and consulting expenses were higher during the six months ended June 30, 2022 in part due to legal expenses associated with the waiver, lock-up and board observer agreements that we entered into in early April 2022.

Depreciation for the six months ended June 30, 2023 was $26.1 million, primarily related to miners, mining equipment and leasehold improvements at the Odessa Facility being placed into service beginning in November 2022, with additional miners and mining-related assets placed into service during the six months ended June 30, 2023 as we continued to expand capacity at the Odessa Facility. Also included in depreciation is the amortization of our finance lease right-of-use asset ~~acquisition, stock~~for our Interconnection Electrical Facilities (as defined below) that provides power to the Odessa Facility, amortization of our finance lease right-of-use assets representing mining equipment from the Canaan Agreement, and accretion of our estimated asset retirement obligation related to the Odessa Facility and depreciation of the associated capitalized costs. Depreciation for the six months ended June 30, 2022 was immaterial.

The change in the fair value of our derivative asset related to the Luminant Power Agreement resulted in a gain of $8.6 million during the six months ended June 30, 2023. The gain was primarily due to the change in the power market forward curve as compared to the curve as of December 31, 2022. The Luminant Power Agreement was not effective during the six months ended June 30, 2022.

In accordance with the Luminant Power Agreement, we sold excess electricity that is available under the Luminant Power Agreement, but not needed in our mining operations at the Odessa Facility, back to the ERCOT market through Luminant for which we received proceeds of $5.7 million for the six months ended June 30, 2023. Power sales for the six months ended June 30, 2023 included $1.6 million for sales of power that occurred during the year ended December 31, 2022 that were recorded as an out-of-period adjustment during the current reporting period.

Equity in losses of equity investees totaled approximately $2.2 million for the six months ended June 30, 2023, a decrease of $10.0 million from approximately $12.2 million for the six months ended June 30, 2022. Equity in losses of equity investees consists of our 49% share in the earnings (losses) generated by our three partially-owned mining sites and also includes accretion of the basis differences in our investments in the equity investees that resulted from contributions of miners during the year ended December 31, 2022 with values at the time of the contributions that were less than the costs we paid to obtain the miners. We are accreting these basis differences over the five-year useful life of the miners. Our share of the losses in the mining operations of Alborz LLC, Bear LLC and Chief LLC increased to approximately $5.5 million for the six months ended June 30, 2023 from approximately $0.6 million for the six months ended June 30, 2022. During the current six month period, all three sites were fully operational, whereas in the prior year period, only Alborz LLC had begun mining operations with a limited number of miners prior to June 30, 2022. We recognized approximately $3.3 million and nil for the six months ended June 30, 2023 and 2022, respectively, for the accretion of basis differences.

Realized gain on sale of bitcoin was $8.2 million during the six months ended June 30, 2023. We began selling a portion of our bitcoin holdings at the start of 2023 to support our operations and cash requirements. We did not sell any bitcoin during the six months ended June 30, 2022.

We recognized a total of approximately $4.6 million of impairment on our bitcoin holdings during the six months ended June 30, 2023, compared to $0.5 million for the six months ended June 30, 2022.

We recognized proceeds of approximately $2.3 million during the six months ended June 30, 2023 related to the sale of transferrable coupons received from Bitmain Technologies Limited (“Bitmain”) during fiscal year 2022. These coupons could be redeemed by us only through the purchase ~~reorganization~~of additional miners from Bitmain prior to the April 2023 expiration date, however, we did not expect to use them and instead sold the coupons to a third party that approached us with interest to purchase them.

Other expense totaled $0.9 million for the six months ended June 30, 2023, consisting mainly of $0.9 million of interest expense recognized related to our finance lease for the Interconnection Electrical Facilities. Other income for the six months ended June 30, 2023 was not significant.

Income tax expense totaled $0.7 million, or ~~similar~~-3.7% of loss before taxes, and nil for the six months ended June 30, 2023 and 2022, respectively, and was determined using the estimated effective tax rate for the year, adjusted for the impact of any discrete items which are accounted for in the period in which they occur.

We generated cash flows from operations of $24.7 million for the six months ended June 30, 2023. As of June 30, 2023, we had cash and cash equivalents of $1.7 million, total stockholders’ equity of $343.2 million and an accumulated deficit of $130.5 million. For our fiscal years ended December 31, 2022 and 2021, in large part, we relied on proceeds from the consummation of our business combination with ~~one~~Good Works Acquisition Corp. (“GWAC’) to fund our operations; however, during the six months ended June 30, 2023, we utilized proceeds from sales of bitcoin earned by or ~~more businesses (a “Business Combination”~~received from its bitcoin mining data centers to support operating expenses. During the six months ended June 30, 2023, we sold 2,063 bitcoin for proceeds of approximately $52.5 million. On May 4, 2023, we entered into an agreement with Canaan Creative Global Pte. Ltd. (“Canaan”). to purchase 11,000 new A1346 model miners (the “Canaan Agreement”), all of which were delivered prior to June 30, 2023 and have been installed at the Odessa Facility. Because we are paying for the Canaan miners over time, we do not yet hold title to the miners. We ~~consummated~~paid an initial 10% deposit plus 18% of the total purchase price prior to delivery, and are required to pay monthly installment payments for the Canaan miners through November 2023, at which time title to the miners will transfer to us. We expect to fund our ~~Public Offering (as defined below)~~ongoing payment obligations for the purchase through our ongoing operations, including by selling bitcoin generated at our data centers.

Management intends to continue with the infrastructure buildout at the Odessa Facility to get the site to full capacity in support of our current business plans. Management believes that our existing financial resources, combined with projected cash and bitcoin inflows from its data centers and its intent and ability to sell bitcoin received or earned, will be sufficient to enable us to meet our operating and capital requirements for at least 12 months from the date these unaudited condensed consolidated financial statements are issued.

On September 21, 2022, the Company filed with the SEC a shelf registration statement on Form S-3, which was declared effective on October ~~22, 2020 and are currently~~6, 2022 (the “Registration Statement”). In connection with the filing of the Registration Statement, the Company also entered into an at-the market offering agreement (the “Sales Agreement”) with H.C. Wainwright & Co., LLC (the “Agent”), under which the Company may, from time to time, sell shares of its Common Stock having an aggregate offering price of up to $250.0 million in “at-the-market” offerings through the Agent, which is included in the ~~process~~$500.0 million of ~~locating suitable targets~~securities that may be offered pursuant to the Registration Statement. As of June 30, 2023, the Company had received net proceeds on sales of 1.0 million shares of common stock under the Prior Sales Agreement of approximately $2.7 million (net of commissions and expenses) at a weighted average price of $2.78.

Net cash provided by operating activities increased by $34.6 million to $24.7 million for the six months ended June 30, 2023 from net cash used of $9.9 million for the six months ended June 30, 2022. Net loss improved by $27.4 million to $19.3 million for the six months ended June 30, 2023 from $46.7 million for the six months ended June 30, 2022. Net loss impact to cash flows was affected by a $49.2 million decrease in non-cash items, primarily driven by $52.8 million for bitcoin received as payment from our ~~business combination. We intend~~mining pool operator (with no comparable activity in the prior year period), a $10.1 million decrease in equity in losses of equity investees, $8.6 million change in fair value of the Luminant Power Agreement derivative asset, $8.2 million realized gain on the sale of bitcoin (with no comparable activity in the prior year period), partially offset by an increase of $26.1 million of depreciation and $4.1 million increase in the impairment of bitcoin. Additionally, changes in assets and liabilities resulted in an increase in cash provided of $56.4 million between the six months ended June 30, 2023 and 2022. This increase in cash provided was due primarily to ~~use~~proceeds of $52.5 million from the sale of bitcoin, and a $5.1 million increase in accrued expenses and other current liabilities, partially offset by the $1.5 million decrease in accounts payable to related parties.

Net cash used in investing activities decreased by $125.4 million to $34.4 million for the six months ended June 30, 2023 from $159.8 million for the six months ended June 30, 2022, primarily related to a $153.9 million decrease of deposits for miners and mining equipment, partially offset by a $15.5 million increase in purchases of property and equipment related to our continued build out of the infrastructure at our Odessa Facility, $6.3 million decrease in capital distributions from equitee investees.

Net cash used in financing activities decreased to $0.4 million for the six months ended June 30, 2023 from $3.1 million for the six months ended June 30, 2022, primarily driven by $2.8 million of proceeds from ~~our Public Offering and~~ the ~~Private Placement described below as well as additional issuances, if any,~~issuance of common stock (with no comparable activity in the prior year period), a $1.9 million decrease in the repurchase of shares to cover tax obligations of employees resulting from the vesting of RSUs during the respective periods, partially offset by $2.1 million in principal payments on finance leases.

There is limited historical financial information about us upon which to base an evaluation of our performance. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital ~~stock, debt~~ resources, possible delays in exploration and/or development, and possible cost overruns due to price and cost increases in services. We have no current intention of entering into a ~~combination of cash, stock~~merger or acquisition within the next 12 months. We may require additional capital to pursue certain business opportunities or respond to technological advancements, competitive dynamics or technologies, customer demands, challenges, acquisitions or unforeseen circumstances. Additionally, we have incurred and ~~debt~~expect to ~~complete the Business Combination.~~

~~We expect~~continue to incur significant costs ~~in the pursuit of our initial Business Combination. We cannot assure you that our plans~~related to ~~raise capital or to complete our initial Business Combination will be successful.~~

We have neither engaged in any significant business operations nor generated any revenues to date. All activities to date relate to the Company’s formation and the Public Offering. We expect to generate non-operating income in the form of interest income on cash, cash equivalents, and marketable securities that are held in the Trust Account (as defined below). We expect to incur increased expenses as a result of beingbecoming a public ~~company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses as we locate a suitable Business Combination.~~

~~For the three months ended September 30, 2020, we had a net loss of $3,576 which consisted of formation and operating costs.~~

~~For the period from June 24, 2020 (Inception) to September 30, 2020, we had a net loss of $3,576 which consisted of formation and operating costs.~~

On October 22, 2020, we consummated a $150,000,000 initial public offering (the “Public Offering”) consisting of 15,000,000 units at a price of $10.00 per unit (“Unit”). Each Unit consists of one share of the Company’s common stock, $0.001 par value (the “Common Stock”), and one-half of one redeemable warrant (each, a “Public Warrant”). Simultaneously with the closing of the Public Offering, we consummated a $2,228,000 private placement (“Private Placement”) of an aggregate of 228,000 private placement units (the “Private Placement Units”). Upon closing of the Public Offering and the Private Placement on October 22, 2020, $150,000,000 in proceeds from the Public Offering and Private Placement was placed in a U.S.-based trust account maintained by Continental Stock Transfer & Trust Company, acting as trustee (the “Trust Account”).

We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account (excluding the business combination marketing fees payable to I-Bankers) to complete our initial Business Combination. We may withdraw interest to pay our taxes and liquidation expenses if we are unsuccessful in completing a Business Combination. We estimate our annual franchise tax obligations to be $200,000, which is the maximum amount of annual franchise taxes payable by us as a Delaware corporation per annum, whichcompany. Accordingly, we may ~~pay from funds from the Public Offering held outside of the trust account or from interest earned on the funds held~~engage in the trust account and released to us for this purpose. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the trust account reduced by our operating expense and franchise taxes. We expect the interest earned on the amount in the trust account will be sufficient to pay our income taxes. To the extent that our equity or debt ~~is used, in whole~~financings or ~~in part, as consideration to complete our initial Business Combination,~~enter into credit facilities for the ~~remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business~~above-mentioned or ~~businesses, make~~ other ~~acquisitions and pursue our growth strategies.~~

Further, our Sponsor, officers and directors or their respective affiliates may, but are not obligated to, loan us funds as may be required (the “Working Capital Loans”). If we complete a Business Combination, we would repay the Working Capital Loans. In the event that a Business Combination does not close,reasons; however, we may ~~use a portion of proceeds held outside the Trust Account~~not be able to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Such Working Capital Loans would be evidenced by promissory notes. The notes would either be repaid upon consummation of a Business Combination, without interest,timely secure additional debt or equity financings on favorable terms, if at the lender’s discretion, or converted upon consummation of a Business Combination into additional Private Placement Units at a price of $10.00 per Unit (the “Working Capital Units”). As of September 30, 2020, no Working Capital Loans have been issued.

~~We do not believe~~all. If we ~~will need to~~ raise additional funds through equity financing, our existing stockholders could experience significant dilution. Furthermore, any debt financing obtained by us in ~~order to meet~~ the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business priorfuture could involve restrictive covenants relating to our ~~Business Combination. Moreover, we~~capital raising activities and other financial and operational matters, which may ~~need~~make it more difficult for us to obtain additional ~~financing either~~capital and to complete our Business Combination or because we become obligated to redeem a significant number of our public shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our Business Combination.pursue business opportunities. If we are unable to ~~complete our Business Combination because we do not have sufficient funds available~~obtain adequate financing on terms that are satisfactory to us, when we ~~will~~require it, our ability to continue to grow or support the business and to respond to business challenges could be ~~forced~~significantly limited, which may adversely affect our business plan. For risks associated with this, see “Risks Factors—Risks Related to ~~cease operations~~Our Business, Industry and ~~liquidate the Trust Account. In addition, following our Business Combination, if cash on hand is insufficient, we~~Operations—We may need to ~~obtain~~raise additional ~~financing~~capital, which may not be available on terms acceptable to us, or at all” in ~~order~~our 2022 Form 10-K.

On December 17, 2021, we entered into a lease agreement for executive office space, with an effective term that commenced on February 1, 2022 and monthly rent payments of approximately $0.1 million. The initial lease term is for a period of five years and four months.

We also entered into a series of agreements with affiliates of Luminant ET Services Company LLC ( “Luminant”), including the Lease Agreement dated June 29, 2021, with amendment and restatement on July 9, 2021 (as amended and restated, the “Luminant Lease Agreement”). The Luminant Lease Agreement leases a plot of land to ~~meet~~us where our ~~obligations.~~

~~We did not~~data center, ancillary infrastructure and electrical system (the “Interconnection Electrical Facilities” or “substation”) have ~~any off-balance sheet arrangement as of September 30, 2020.~~

~~As of September 30, 2020, we did not have any long-term debt, capital or operating lease obligations.~~

been set up for our Odessa Facility. We entered into the Luminant Lease Agreement and the Luminant Purchase and Sale Agreement to build the infrastructure necessary to support our planned operations. Management determined that the Luminant Lease Agreement and the Luminant Purchase and Sale Agreement should be combined for accounting purposes under ASC 842 (collectively, the “Combined Luminant Lease Agreement”) and that amounts exchanged under the combined contract should be allocated to the various components of the overall transaction based on relative fair values.

Our management determined that the Combined Luminant Lease Agreement contains two lease components; and the components should be accounted for together as a single lease component, because the effect of accounting for the land lease separately would be insignificant. Financing for use of the land and substation is provided by Luminant affiliates, with monthly installments of principal and interest due over a five-year period starting upon transfer of legal title of the substation to us (estimated total undiscounted principal payments of approximately $15.0 million).

The Combined Luminant Lease Agreement commenced on November 22, 2022 and has an ~~administrative services agreement pursuant~~initial term of five years, with renewal provisions that are aligned with the Luminant Power Agreement. Since commencement, we have not made any payments for rent of the Interconnection Electrical Facilities, but we have recorded an accrual of approximately $2.4 million for the estimated payments due under the Luminant Lease Agreement. The Company expects to begin making monthly lease payments in August 2023. At the end of the lease term for the Interconnection Electrical Facilities, the substation will be sold back to Luminant’s affiliate, Vistra Operations Company, LLC at a price to be determined based upon bids obtained in the secondary market.

In November and December 2022, we agreed to purchase 5,000 and 2,200, respectively, Antminer S19j Pro (100 TH/s) (“S19j Pro”) miners from Bitmain. For these miners, we paid an average price of $2.35 per terahash, covering the majority of the purchase price by using accumulated Bitmain coupons from previous orders. We have no further payments due in respect of those orders. As of April 2023, all of those miners have been delivered to us in Texas.

On May 4, 2023, we entered into the Canaan Agreement with Canaan to purchase 11,000 new A1346 model miners, all of which were delivered prior to June 30, 2023 and have been installed at the Odessa Facility. Because the Company is paying for the Canaan miners over time, the Company does not yet hold title to the miners. We paid an initial 10% deposit plus 18% of the total purchase price prior to delivery, and we are required to pay monthly installment payments for the Canaan miners through November 2023, at which time title to the miners will ~~pay an affiliate~~transfer to us. We expect to fund our ongoing payment obligations for the purchase through our ongoing operations, including by selling bitcoin generated at our data centers.

We are providing supplemental financial measures for (i) non-GAAP loss from operations that excludes the impact of ~~one~~depreciation and amortization, the non-cash change in the fair value of our ~~directors~~derivative asset, share-based compensation expense and nonrecurring gains, which in the six months ended June 30, 2023 were associated with the sale of Bitmain coupons and (ii) non-GAAP net income (loss) and non-GAAP basic and diluted income (loss) per share that exclude the impact of depreciation and amortization, the non-cash change in the fair value of our derivative asset, share-based compensation expense, nonrecurring gains, the change in the fair value of the warrant liability and deferred income tax expense. These supplemental financial measures are not measurements of financial performance under accounting principles generally accepted in the United States (“GAAP”) and, as a result, these supplemental financial measures may not be comparable to similarly titled measures of other companies. Management uses these non-GAAP financial measures internally to help understand, manage, and evaluate our business performance and to help make operating decisions.

We believe that these non-GAAP financial measures are also useful to investors in comparing our performance across reporting periods on a consistent basis. Non-GAAP loss from operations excludes non-cash operational expenses that we believe are not reflective of our general business performance such as (i) depreciation and amortization, (ii) the non-cash change in the fair value of our derivative asset (iii) share-based compensation expense and (iv) nonrecurring gains, which could vary significantly in comparison to other companies.

Non-GAAP net income (loss) and non-GAAP basic and diluted income (loss) per share exclude the impact of (i) depreciation and amortization, (ii) the non-cash change in the fair value of our derivative asset, (iii) share-based compensation expense, (iv) nonrecurring gains, (v) the non-cash change in the fair value of our warrant liability and (vi) deferred income tax expense. We believe the use of these non-GAAP financial measures can also facilitate comparison of our operating results to those of our competitors.

Non-GAAP financial measures are subject to material limitations as they are not in accordance with, or a substitute for, ~~office space~~measurements prepared in accordance with GAAP. For example, we expect that share-based compensation expense, which is excluded from the non-GAAP financial measures, will continue to be a significant recurring expense over the coming years and ~~secretarial and administrative services~~is an important part of the compensation provided to ~~members~~certain employees, officers and directors. Similarly, we expect that depreciation and amortization will continue to be a recurring expense over the useful lives of ~~our management team,~~the related assets. Our non-GAAP financial measures are not meant to be considered in ~~an amount not to exceed $5,000 per month.~~

~~We have engaged I-Bankers as an advisor~~isolation and should be read only in ~~connection~~conjunction with our acquiring, engaging in a share exchange, share reconstruction and amalgamation with, purchasing all or substantially all of the assets of, entering into contractual arrangements with, or engaging in any other similar Business Combination with one or more businesses or entities. We will pay I-Bankers for such services a fee equal to 4.5% of the gross proceeds of the Public Offering.

~~Management’s discussion and analysis of our results of operations and liquidity and capital resources are based on our~~ unaudited condensed consolidated financial ~~information. We describe our significant accounting policies in Note 2 – Summary of Significant Accounting Policies, of the Notes to Financial Statements~~statements included elsewhere in this ~~report. Our unaudited financial statements~~Quarterly Report, which have been prepared in accordance with ~~U.S.~~ GAAP. ~~Certain~~We rely primarily on such unaudited condensed consolidated financial statements to understand, manage and evaluate our business performance and use the non-GAAP financial measures only supplementally.

The following is a reconciliation of our non-GAAP loss from operations, which excludes the impact of (i) depreciation and amortization, (ii) the non-cash change in the fair value of our derivative asset (iii) share-based compensation expense and (iv) nonrecurring gains, to its most directly comparable GAAP measure for the periods indicated (in thousands):

The following are reconciliations of our non-GAAP net income (loss) and non-GAAP basic and diluted net income (loss) per share, in each case excluding the impact of (i) depreciation and amortization (ii) the non-cash change in the fair value of our derivative asset,

(iii) share-based compensation expense, (iv) nonrecurring gains, (v) the non-cash change in the fair value of our warrant liability and (vi) deferred income tax expense, to the most directly comparable GAAP measures for the periods indicated:

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of expenses during the reporting period. A description of our significant accounting policies ~~require that management apply significant judgments~~ in ~~defining~~included in our 2022 Form 10-K. You should read the ~~appropriate assumptions integral to financial estimates. On an ongoing basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our~~accompanying unaudited condensed consolidated financial statements ~~are presented fairly~~in conjunction with our audited consolidated financial statements and accompanying notes in ~~accordance with U.S. GAAP. Judgments are based on historical experience, terms of existing contracts, industry trends~~our 2022 Form 10-K. There have been no material changes in the information disclosed in the notes to our audited consolidated financial statements included in our 2022 Form 10-K.

Information regarding recent accounting pronouncements applicable to us, adopted and information available from outside sources, as appropriate. However, by their nature, judgments are subject to an inherent degree of uncertainty, and, therefore, actual results could differ from our estimates.

~~Our management does not believe that any recently issued, but~~ not yet ~~effective, accounting standards if currently~~ adopted ~~would have~~as of the date of this report, is included in Note 2 to our unaudited condensed consolidated financial statements located in “Part I - Financial Information, Item 1. Financial Statements” in this Quarterly Report.

We are a ~~material effect on~~smaller reporting company as defined by Rule 12b-2 of the ~~accompanying financial statements.~~

~~The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” under the JOBS~~Exchange Act and are ~~allowed~~not required to ~~comply with new or revised accounting pronouncements based~~provide the information under this item.

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the ~~effective date for private (not publicly traded) companies. We~~desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are ~~electing to delay the adoption of new or revised accounting standards,~~resource constraints and ~~as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards~~that management is required ~~for non-emerging growth companies. As a result, our financial statements may not be comparable~~ to ~~companies that comply with new or revised accounting pronouncements as of public company effective dates.~~

~~Additionally, we are~~apply judgment in ~~the process of~~ evaluating the benefits of ~~relying on the other reduced reporting requirements provided by the JOBS Act. Subject~~possible controls and procedures relative to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an independent registered public accounting firm’s attestation report on our systemtheir costs.

Evaluation of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street ReformDisclosure Controls and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the independent registered public accounting firm’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of this offering or until we are no longer an “emerging growth company,” whichever is earlier.Procedures

As of September 30, 2020, we were not subject to any material market or interest rate risk. Following the consummation of our Public Offering, the net proceeds of the Public Offering and the Private Placement, including amounts in the Trust Account, were invested in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there was no associated material exposure to interest rate risk.

We ~~have not engaged in any hedging activities since our inception. We do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.~~

~~Under the supervision and with the participation of our management we~~ conducted an evaluation of the effectiveness of our ~~disclosure~~“disclosure controls and ~~procedures~~procedures” (“Disclosure Controls”), as defined by Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of June 30, 2023, the end of the ~~fiscal quarter ended September 30, 2020, as such term is defined in Rules 13a-15(e) and 15d-15(e)~~period covered by this Quarterly Report. The Disclosure Controls evaluation was done under the ~~Exchange Act. Based on this evaluation,~~supervision and with the participation of management, including our ~~principal executive officer~~Chief Executive Officer and ~~principal financial and accounting officer have concluded~~Chief Financial Officer, with the goal being that ~~as of~~ the ~~evaluation date, our disclosure controls and procedures were effective.~~

~~Disclosure controls and procedures are designed to ensure that~~ information required to be disclosed by us in ~~our~~reports filed under the Exchange Act ~~reports~~ is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and ~~that such information is~~(ii) accumulated and communicated to our management, including our principal executive ~~officer~~ and principal financial ~~and accounting officer~~officers, or persons performing similar functions, as appropriate to allow timely decisions regarding disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, our disclosure controls and procedures were not effective at the reasonable assurance level as of June 30, 2023.

As noted in the 2022 Form 10-K, during management’s assessment of internal controls over financial reporting, a material weakness was identified related to certain Information Technology General Controls over user access, segregation of duties and change management controls.

As management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, we understand the importance of developing a resolution plan aligned with management and overseen by the Audit Committee of our Board of Directors. Our plan includes the following:

~~During~~We recognize that the ~~most recently completed fiscal quarter, there has been no change~~material weaknesses in our internal control over financial reporting will not be considered remediated until the remediated controls operate for a sufficient period of time and can be tested and concluded by management to be designed and operating effectively. Because our remediation efforts involve our outsourced service providers, we cannot provide any assurance that ~~has~~these remediation efforts will be successful or that our internal control over financial reporting will be effective as a result of these efforts.

We continue to evaluate and work to improve our internal control over financial reporting related to the identified material weaknesses and management may determine to take additional measures to address control deficiencies or determine to modify the remediation plan described above. In addition, we report the progress and status of the above remediation efforts to the Audit Committee on a periodic basis.

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended June 30, 2023 that have materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

~~None.~~We are not a party to any material pending legal proceedings. From time to time, we may be subject to legal proceedings and claims arising in the ordinary course of business. There have been no material changes to such proceedings previously disclosed in our 2022 Form 10-K.

Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to ~~differ materially from those in this report include~~ the risk factors ~~described~~as previously disclosed in Part I, Item 1A, “Risk Factors” of our ~~final prospectus filed with the SEC on October 20, 2020. As of the date of this report, there~~2022 Form 10-K, which is incorporated herein by reference. There have been no material changes to the risk factors previously disclosed in our ~~final prospectus filed with~~2022 Form 10-K.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.

In July 2020, certain of our initial stockholders purchased 4,312,500 founder shares for an aggregate purchase price of $25,000 (up to 562,500 of which are subject to forfeiture). In August 2020, certain of our initial stockholders forfeited 1,355,000 founder shares andthree months ended June 30, 2023, no director or “officer” (as defined in Rule 16a-1(f) under the Anchor Investors purchased 1,355,000 founder shares for an aggregate purchase price of approximately $7,855, or approximately $0.006 per share. In October 2020, our Sponsor forfeited an aggregate of 562,500 founder shares for no consideration, and GW Sponsor 2, LLC, an entity managed by our management, purchased from us 562,500 shares for a purchase price of $163,125. Simultaneously with the closingExchange Act) of the ~~Public Offering, our Anchor Investors purchased an aggregate~~Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of ~~228,000 private placement units at~~Regulation S-K.

† Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish a ~~price~~copy of ~~$10.00 per unit, for an aggregate purchase price of $2,280,000, in a private placement. The private placement units are identical~~all omitted exhibits and schedules to the units sold in the Public Offering except that the private placement warrants included in the private placement units: (i) will not be redeemable by us and (ii) may be exercised for cash or on a cashless basis, in each case so long as they are held by the initial purchasers or any of their permitted transferees. If the private placement warrants are held by holders other than the initial purchasers or any of their permitted transferees, the private placement warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in the Public Offering. The proceeds from the private placement units were added to the proceeds from the Public Offering held in the Trust Account. No underwriting discounts or commissions were paid with respect to such sales. The issuance of the founder shares and the private placement units was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.SEC upon its request.

On October 22, 2020, we consummated the Public Offering of 15,000,000 Units. The Units were sold at a price of $10.00 per unit, generating gross proceeds to the Company of $150,000,000. In connection with the IPO, the underwriters were granted a 45-day option from the date of the prospectus (the “Over-Allotment Option”) to purchase up to 2,250,000 additional units to cover over-allotments (the “Over-Allotment Units”), if any. On October 26, 2020, the underwriters purchased an additional 1,500,000 Over-Allotment Units pursuant to the partial exercise of the Over-Allotment Option. On November 17, 2020, the underwriters purchased an additional 500,000 Over-Allotment Units pursuant to the partial exercise of the Over-Allotment Option. The Over-Allotment Units were sold at an offering price of $10.00 per Over-Allotment Unit, generating aggregate additional gross proceeds of $20,000,000 to the Company.35

I-Bankers was representative of the several underwriters. The securities sold in the Public Offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-248333). The SEC declared the registration statement effective on October 19, 2020.

We paid a total of $450,000 in underwriting discounts and commissions and $420,120 for other costs and expenses related to the Public Offering. I-Bankers, representative of the several underwriters in the Public Offering, received a portion of the underwriting discounts and commissions related to the Public Offering. We also repaid the promissory note to an affiliate of our Sponsor from the proceeds of the Public Offering. After deducting the underwriting discounts and commissions and incurred offering costs, the total net proceeds from our Public Offering (including the Units sold in the Over-Allotment Option) and the sale of the private placement units was $171,409,880, of which $170,000,000 (or $10.00 per unit sold in the Public Offering) was placed in the Trust Account. Other than as described above, no payments were made by us to directors, officers or persons owning ten percent or more of our common stock or to their associates, or to our affiliates.

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 thereunto duly authorized.

~~Delaware~~		~~85-1614529~~
Delaware	85-1614529
(State or ~~Other Jurisdiction~~other jurisdiction of ~~Incorporation~~incorporation or ~~Organization)~~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)


Title of each class	Trading ~~Symbol (s)~~ Symbol(s)	Name of each exchange on which registered
~~Units, each consisting of one share of common stock, $0.001 par value and one-half of one redeemable warrant~~	~~GWACU~~	~~The NASDAQ Stock Market LLC~~
Common Stock, par value $0.001 per share	~~GWAC~~ CIFR	The ~~NASDAQ~~Nasdaq Stock Market LLC
Warrants, each whole warrant exercisable for one share of ~~common stock~~Common Stock at an exercise price of $11.50 per whole share	~~GWACW~~ CIFRW	The ~~NASDAQ~~Nasdaq Stock Market LLC

~~Large Accelerated Filer ☐~~	~~Accelerated Filer ☐~~
~~Non-Accelerated Filer ☒~~ Large accelerated filer	~~Smaller Reporting Company ☒~~	☐	Accelerated filer	☐
Non-accelerated filer		☒	Smaller reporting company	☒
			Emerging ~~Growth Company~~ growth company	☒

		~~Page~~
~~PART I FINANCIAL INFORMATION~~

~~Item 1.~~	~~Financial Statements~~
	~~Condensed Balance Sheet as of September 30, 2020 (unaudited)~~	1 Page

PART I.	FINANCIAL INFORMATION	4

Item 1.	Financial Statements (Unaudited)	4
	Condensed ~~Statement~~Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations ~~for the three months ended September 30, 2020 (unaudited) and the period from June 24, 2020 (inception) to September 30, 2020 (unaudited)~~	2 5
	Condensed Consolidated Statement of Changes in ~~Stockholders’~~Stockholder’s Equity ~~for the three months ended September 30, 2020 (unaudited) and the period from June 24, 2020 (inception) to September 30, 2020 (unaudited)~~	3 6
	Condensed Consolidated Statements of Cash Flows ~~for the three months ended September 30, 2020 (unaudited) and the period from June 24, 2020 (inception) to September 30, 2020 (unaudited)~~	4 8
	Notes to ~~the~~Unaudited Condensed Consolidated Financial Statements ~~(unaudited)~~	5 9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12 23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	14 32
Item 4.	Controls and Procedures	14 32

PART II II.	OTHER INFORMATION

Item 1.	Legal Proceedings	15 34
Item 1A.	Risk Factors	15 34
Item 2.	Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities	15 34
Item 3.	Defaults Upon Senior Securities	16 34
Item 4.	Mine Safety Disclosures	16 34
Item 5.	Other Information	16 34
Item 6.	Exhibits	16 35
Signatures		17 36

Assets
Cash	$	61,815
Deferred offering costs		219,609
Total Assets	$	281,424

Liabilities and Stockholders’ Equity
Accrued expenses	$	125,000
Note payable - related party		135,000
Total current liabilities		260,000

Commitments

Stockholders’ Equity:
Preferred stock, $0.001 par value; 1,000,000 shares authorized; none issued and outstanding		-
Common stock, $0.001 par value; 100,000,000 shares authorized; 4,312,500 shares issued and outstanding at September 30, 2020		4,312
Additional paid-in capital		20,688
Accumulated deficit		(3,576	)
Total stockholders’ equity		21,424

Total Liabilities and Stockholders’ Equity	$	281,424


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


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

	For the Three Months Ended September 30, 2020			For the Period From June 24, 2020 (Inception) Through September 30, 2020

Formation and operating costs	$	3,576		$	3,576

Net loss	$	(3,576	)	$	(3,576	)

Basic and diluted weighted average shares outstanding		3,750,000			3,750,000
Basic and diluted net loss per share	$	(0.00	)	$	(0.00	)

					Additional					Total
	Common Stock				Paid-in		Accumulated			Shareholders’
	Shares (1)		Amount		Capital		Deficit			Equity

Balance as of June 24, 2020 (inception)		-	$	-	$	-	$	-		$	-
Net loss		-		-		-		-			-
Balance as of June 30, 2020		-		-		-		-			-
Issuance of common stock to founders (1)		4,312,500		4,312		20,688		-			25,000
Net loss		-		-		-		(3,576	)		(3,576	)
Balance as of September 30, 2020		4,312,500	$	4,312	$	20,688	$	(3,576	)	$	21,424

	For the Three Months Ended September 30, 2020			For the Period From June 24, 2020 (Inception) Through September 30, 2020
Cash flows from operating activities:
Net loss	$	(3,576	)	$	(3,576	)
Net cash used in operating activities		(3,576	)		(3,576	)

Cash flows from financing activities:
Proceeds from sale of common stock to initial stockholders					25,000
Proceeds from note payable-related party		85,000			135,000
Payments of offering costs		(44,609	)		(94,609	)
Net cash provided by financing activities		40,391			65,391

Net change in cash		36,815			61,815
Cash, beginning of the period		25,000			-
Cash, end of period	$	61,815		$	61,815
Supplemental disclosure of cash flow information:
Non-cash financing transactions:
Accrued deferred offering costs	$	125,000		$	125,000


	Quantity			Amounts
Balance as of January 1, 2023		394		$	6,283
Bitcoin received from equity investees		18			317
Revenue recognized from bitcoin mined, net of receivable		2,055			52,836
Proceeds from sale of bitcoin, net of realized gain		(2,063	)		(44,267	)
Impairment of bitcoin		-			(4,633	)
Balance as of June 30, 2023		404		$	10,536

~~Exhibit~~ ~~Number~~		~~Description~~

31.1*		~~Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.~~
31.2*		~~Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.~~
~~32.1*(1)~~		~~Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~
~~32.2*(1)~~		~~Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

101.INS*		~~XBRL Instance Document~~
101.SCH*		~~XBRL Taxonomy Extension Schema Document~~
101.CAL*		~~SXRL Taxonomy Extension Calculation Linkbase Document~~
101.DEF*		~~XBRL Taxonomy Extension Definition Linkbase Document~~
101.LAB*		~~XBRL Taxonomy Extension Label Linkbase Document~~
101.PRE*		~~XBRL Taxonomy Extension Presentation Linkbase Document~~

*	~~Filed herewith.~~
**	~~Management contract or compensatory plan, contract or arrangement.~~

~~SIGNATURE~~	~~TITLE~~	~~DATE~~
				CIPHER MINING INC.

Date: August 8, 2023	By:	/s/ ~~Fred Zeidman~~Tyler Page
		Tyler Page
		Chief Executive Officer		~~December 3, 2020~~
~~Fred Zeidman~~	~~(principal executive officer)~~		(Principal Executive Officer)

~~/s/ Cary Grossman~~	~~President~~		~~December 3, 2020~~
~~Cary Grossman~~	~~(principal financial and accounting officer)~~
Date: August 8, 2023	By:	/s/ Edward Farrell
		Edward Farrell
		Chief Financial Officer
		(Principal Financial Officer)