Presentation for Business Update May 7, 2024
Forward-Looking Statements This communication contains certain forward-looking statements within the meaning of the federal securities laws of the United States. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Any statements made in this communication that are not statements of historical fact, including statements about our beliefs and expectations regarding our future results of operations and financial position, business strategy, timing and likelihood of success, potential expansion of bitcoin mining data centers, and management plans and objectives, are forward-looking statements and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan and strategies. These forward-looking statements generally are identified by the words “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “seeks,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” and similar expressions (including the negative versions of such words or expressions). These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Cipher and our management, are inherently uncertain. Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied by such forward looking statements. New risks and uncertainties may emerge from time to time, and it is not possible to predict all risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this communication, including but not limited to: volatility in the price of Cipher's securities due to a variety of factors, including changes in the competitive and regulated industry in which Cipher operates, variations in performance across competitors, changes in laws and regulations affecting Cipher's business, and the ability to implement business plans, forecasts, and other expectations and to identify and realize additional opportunities. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2023, and in Cipher's subsequent filings with the Securities and Exchange Commission. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Cipher assumes no obligation and, except as required by law, does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. Non-GAAP Financial Measures We use non-GAAP financial measures to assess and analyze our operational results and trends and to make financial and operational decisions. We believe these non-GAAP financial measures are useful to investors because they provide greater transparency regarding our operating performance. The non-GAAP financial measures included in this presentation should not be considered alternatives to measurements required by GAAP, and should not be considered measures of liquidity. These non-GAAP financial measures are unlikely to be comparable with non-GAAP information provided by other companies. Reconciliation of non-GAAP financial measures and GAAP financial measures are included in the tables accompanying this presentation. Reported results are presented in accordance with GAAP, whereas adjusted results are GAAP results adjusted to exclude the impact of (i) the non-cash change in fair value of derivative asset, (ii) share-based compensation expense, (iii) depreciation and amortization, (iv) deferred income tax expense, (v) nonrecurring gains and losses and (vi) the non-cash change in fair value of warrant liability. The contents and appearance of this presentation is copyrighted and the trademarks and service marks are owned by Cipher Mining Inc. All rights reserved.
First Quarter 2024 Update $96m Cash(1) 2,033 BTC BTC Held(1) 7.7 EH/s Self-Mining Hash Rate (1) $43m Q4 2023 $48m Q1 2024 revenues $11m Q4 2023 $40m Q1 2024 GAAP Net Earnings $28m Q4 2023 $63m Q1 2024 Adjusted Earnings Note: Values represented are approximations As of April 30, 2024
Built to Succeed and Positioned to Win Post-Halving ~2.7c Anticipated Weighted Average Power Price (c/kWh)(1) of Cipher’s Portfolio Energized Through Fixed Price Power Current Operating Fleet Efficiency 2025 Expected Fleet Efficiency(2) 96% ~29.0 J/TH ~22.0 J/TH Represents the expected weighted average power price at Cipher’s current sites Reflects Cipher’s expected fleet efficiency with the current operating fleet, energization of contracted rigs / hardware, implementation of software, and energization of the full Bitmain T21 purchase option
Bear & Chief Expansions 30 MW Expansion at Each of Bear and Chief JV Data Centers Delivering ~1.25 EH/s of self-mining hash rate for Cipher Full energization on track for Q2 2024
Odessa Timeline Comparison Odessa Data Center Pre-Construction Odessa Data Center November 2022 14 Months 6
Black Pearl Expansion Black Pearl Data Center Construction Commenced Delivering 300 MW of total capacity Full energization expected in 2025
Black Pearl Facility 3D Rendering
Bitcoin Mining Business Model POWER SOURCE MINING EQUIPMENT BITCOIN NETWORK Data center revenue includes a reward for the block mined, transaction fees, and potential power sales(1) Average block time is 10 minutes Time for Bitcoin system to mine a new block Block reward based on ratio of data center’s computing power to that of entire Bitcoin network Current block reward amounts to 3.125 bitcoins per block(2) Transaction fees are additional bitcoin paid to miners for confirming transactions Bitcoin Mining Dynamics Electricity Electricity Cost Computing Power Transaction Fees Bitcoin Reward Transaction Processing Assignment of Rewards 9 At certain sites, Cipher can opportunistically elect to use power at data center or sell to the market The block reward is cut in half after every 210,000 blocks are mined (~every 4 years); the latest revision was in April 2024
Execute Data Center Build-Outs Focus on Long-Term Expansion Goals Select Best M&A Opportunities Represents average USD market price across major bitcoin exchanges from March 1, 2024, to April 30, 2024, per blockchain.com Reflects Bitcoin network hash rate from March 1, 2024, to April 30, 2024, per blockchain.com BTC Price & Network Hash rate(1,2) Market Update Current emphasis Bitcoin Surpasses Silver’s Market Cap $69,027 | Mar. 11 All-Time High Hash Rate $63,824 | Apr. 20 All-Time High Bitcoin Price $73,094 | Mar. 14 All-Time High Transaction Fees $63,508 | Apr. 19 4th Bitcoin Halving Event $63,508 | Apr. 19 The Halving has Passed Supply/Demand Imbalance Incoming? Wave of M&A? 1 2 3
Data Centers Update ~$11,912 All-in Electricity Cost per BTC in Q1 ‘24 Odessa ~$11,892 all-in electricity cost per BTC(1) ~90% of Q1 ‘24 BTC production Alborz ~$11,234 all-in electricity cost per BTC(2) ~6% of Q1 ‘24 BTC production Bear & Chief ~$13,546 all-in electricity cost per BTC(3) ~4% of Q1 ‘24 BTC production Steady Scaling Reflects electricity cost from Q1 ‘24, including TDU charges and net of revenue generated from opportunistic power sales Reflects electricity cost from Q1 ‘24, including taxes, customer charges, and 2021 storm surcharge Reflects combined electricity cost from Q1 ‘24, including taxes, settlement charges, and TSDP charges Assumes 3Q24E hash rate plus the energization of contracted Bitmain T21 rigs and the full Bitmain T21 purchase option 11 Anticipated Power Capacity & Hash Rate Growth (4) KEY UPDATES
Operational Highlights Reflects approximate percentage of Cipher’s April 2024 BTC production Reflects electricity cost from Q1 ‘24, including TDU charges and net of revenue generated from opportunistic power sales YTD through April 2024 Odessa ~$11,892 All-in Electricity Cost per BTC(2) ~6.7 EH/s Operating Hash Rate 207 MW Operating Power Capacity Odessa – 90% of BTC Production(1) BTC Mined YTD(3) ~1,183 BTC
Operational Highlights Reflects approximate percentage of Cipher’s April 2024 BTC production Joint venture with WindHQ LLC, of which Cipher owns ~0.64 EH/s Reflects electricity cost from Q1 ‘24, including taxes, customer charges, and 2021 storm surcharge YTD through April 2024; joint venture with WindHQ LLC, of which Cipher owns ~82 BTC Alborz Alborz – 7% of BTC Production(1) ~$11,234 All-in Electricity Cost per BTC(3) ~1.3 EH/s Operating Hash Rate(2) 40 MW Operating Power Capacity BTC Mined YTD(4) ~168 BTC
Operational Highlights Bear & Chief Reflects approximate percentage of Cipher’s April 2024 BTC production Joint venture with WindHQ LLC, of which Cipher owns ~0.32 EH/s Reflects combined electricity cost from Q1 ‘24, including taxes, settlement charges, and TSDP charges YTD through April 2024; joint venture with WindHQ LLC, of which Cipher owns ~47 BTC Bear & Chief – 3% of BTC Production(1) ~$13,546 All-in Electricity Cost per BTC(3) ~0.7 EH/s Operating Hash Rate(2) 20 MW Operating Power Capacity BTC Mined YTD(4) ~96 BTC
Financial Update
$11m Q4 2023 $40m Q1 2024 gaap NET earnings $0.04 Q4 2023 $0.13 Q1 2024 Gaap net earnings per share $43m Q4 2023 $48m Q1 2024 revenues $23m Q4 2023 $19m Q1 2024 Compensation & Benefits + G&A Financial Highlights – Quarter Over Quarter Note: Values represented are approximations $28m Q4 2023 $63m Q1 2024 Adjusted Earnings $0.11 Q4 2023 $0.21 Q1 2024 Adjusted earnings per Share
($5m) Q1 2023 $40m Q1 2024 gaap NET earnings ($0.02) Q1 2023 $0.13 Q1 2024 Gaap net earnings per share $22m Q1 2023 $48m Q1 2024 revenues $17m Q1 2023 $19m Q1 2024 Compensation & Benefits + G&A Financial Highlights – Year Over Year Note: Values represented are approximations $8m Q1 2023 $63m Q1 2024 Adjusted Earnings $0.03 Q1 2023 $0.21 Q1 2024 Adjusted earnings per Share
Three Months Ended Three Months Ended March 31, 2024 December 31, 2023 % Change March 31, 2024 March 31, 2023 % Change Revenue - bitcoin mining $ 48,137 $ 43,419 11% $ 48,137 $ 21,895 120% Costs and operating expenses (income) Cost of revenue 14,820 13,292 11% 14,820 8,141 82% Compensation and benefits 13,036 15,723 (17)% 13,036 11,937 9% General and administrative 6,077 6,819 (11)% 6,077 5,483 11% Depreciation and amortization 17,244 16,809 3% 17,244 11,655 48% Change in fair value of derivative asset (7,359) (13,542) 46% (7,359) (5,328) (38)% Power sales (1,173) (1,472) 20% (1,173) (98) (1,097)% Equity in losses of equity investees (738) (1,649) 55% (738) 750 (198)% Gains on fair value of bitcoin (40,556) (7,762) (422)% (40,556) (4,264) (851)% Other gains - - 0% - (2,260) 100% Total costs and operating expenses (income) 1,351 28,218 (95)% 1,351 26,016 (95)% Operating income (loss) 46,786 15,201 208% 46,786 (4,121) 1,235% Other income (expense) Interest income 786 52 1,412% 786 76 934% Interest expense (400) (486) 18% (400) (401) 0% Change in fair value of warrant liability 250 (194) 229% 250 (37) 776% Other expense (1,958) 1 (195,900)% (1,958) - 0% Total other income (expense) (1,322) (627) (111)% (1,322) (362) (265)% Income (loss) before taxes 45,464 14,574 212% 45,464 (4,483) 1,114% Current income tax expense (386) (58) (566)% (386) (17) (2,171)% Deferred income tax expense (5,178) (3,921) (32)% (5,178) (53) (9,670)% Total income tax expense (5,564) (3,979) (40)% (5,564) (70) (7,849)% Net income (loss) $ 39,900 $ 10,595 277% $ 39,900 $ (4,553) 976% Results of Operations QoQ and YoY Comparison Note: In thousands
Three Months Ended Three Months Ended March 31, 2024 December 31, 2023 % Change March 31, 2024 March 31, 2023 % Change Reconciliation of Adjusted Earnings: Net income (loss) $ 39,900 $ 10,595 277 % $ 39,900 $ (4,553) (976)% Change in fair value of derivative asset (7,359) (13,542) (46)% (7,359) (5,328) 38% Share-based compensation expense 8,317 9,783 (15)% 8,317 8,810 (6)% Depreciation and amortization 17,244 16,809 3 % 17,244 11,655 48% Deferred income tax expense 5,178 3,921 32 % 5,178 53 9,670% Other gains - nonrecurring - - 0 % - (2,260) (100)% Change in fair value of warrant liability (250) 194 (229)% (250) 37 (776)% Adjusted earnings 63,030 27,760 127 % 63,030 8,414 649% Non-GAAP Adjusted Earnings QoQ and YoY Comparison Note: In thousands
March 31, 2024 December 31, 2023 (unaudited) ASSETS Current assets Cash and cash equivalents $ 88,675 $ 86,105 Accounts receivable 680 622 Receivables, related party 430 245 Prepaid expenses and other current assets 2,910 3,670 Bitcoin 123,307 32,978 Derivative asset 34,228 31,878 Total current assets 250,230 155,498 Property and equipment, net 238,541 243,815 Deposits on equipment 30,187 30,812 Intangible assets, net 8,162 8,109 Investment in equity investees 52,621 35,258 Derivative asset 66,722 61,713 Operating lease right-of-use asset 6,823 7,077 Security deposits 23,855 23,855 Total assets $ 677,141 $ 566,137 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 7,520 $ 4,980 Accounts payable, related party - 1,554 Accrued expenses and other current liabilities 18,661 22,439 Finance lease liability, current portion 3,595 3,404 Operating lease liability, current portion 1,204 1,166 Warrant liability - 250 Total current liabilities 30,980 33,793 Asset retirement obligation 18,708 18,394 Finance lease liability 10,121 11,128 Operating lease liability 6,025 6,280 Deferred tax liability 10,383 5,206 Total liabilities 76,217 74,801 Commitments and contingencies (Note 13) Stockholders’ equity Preferred stock, $0.001 par value; 10,000,000 shares authorized, none issued and outstanding as of March 31, 2024 and December 31, 2023 - - Common stock, $0.001 par value, 500,000,000 shares authorized, 312,649,102 and 296,276,536 shares issued as of March 31, 2024 and December 31, 2023, respectively, and 306,543,330 and 290,957,862 shares outstanding as of March 31, 2024, and December 31, 2023, respectively 313 296 Additional paid-in capital 697,494 627,822 Accumulated deficit (96,877 ) (136,777 ) Treasury stock, at par, 6,105,772 and 5,318,674 shares at March 31, 2024 and December 31, 2023, respectively (6 ) (5 ) Total stockholders’ equity 600,924 491,336 Total liabilities and stockholders’ equity $ 677,141 $ 566,137 Consolidated Balance Sheets Note: In thousands, except for share and per share amounts
Appendix
Common Stock Additional Accumulated Treasury Stock Total Shares Amount Paid-in Capital Deficit Shares Amount Stockholders’ Equity Balance as of December 31, 2022 251,095,305 $ 251 $ 453,854 $ (111,209 ) (3,543,347 ) $ (4 ) $ 342,892 Cumulative effect upon adoption of ASU 2023-08 - - - 209 - - 209 Delivery of common stock underlying restricted stock units, net of shares settled for tax withholding settlement 1,954,783 2 (483 ) - (600,734 ) - (481 ) Share-based compensation - - 8,810 - - - 8,810 Net loss - - - (4,553 ) - - (4,553 ) Balance as of March 31, 2023 253,050,088 $ 253 $ 462,181 $ (115,553 ) (4,144,081 ) $ (4 ) $ 346,877 Common Stock Additional Accumulated Treasury Stock Total Shares Amount Paid-in Capital Deficit Shares Amount Stockholders’ Equity Balance as of December 31, 2023 296,276,536 $ 296 $ 627,822 $ (136,777 ) (5,318,674 ) $ (5 ) $ 491,336 Issuance of common shares, net of offering costs - At-the-market offering 14,246,235 14 64,532 - - - 64,546 Delivery of common stock underlying restricted stock units, net of shares settled for tax withholding settlement 2,059,390 3 (3,177 ) - (787,098 ) (1 ) (3,175 ) Share-based compensation 66,941 - 8,317 - - - 8,317 Net income - - - 39,900 - - 39,900 Balance as of March 31, 2024 312,649,102 $ 313 $ 697,494 $ (96,877 ) (6,105,772 ) $ (6 ) $ 600,924 Statements of Changes in Stockholders’ Equity (Deficit) Note: In thousands, except for share amounts Three Months Ended March 31, 2024 Three Months Ended March 31, 2023
Supplemental disclosure of noncash investing and financing activities Reclassification of deposits on equipment to property and equipment $ 5,161 $ 71,533 Bitcoin received from equity investees $ 1,694 $ 317 Settlement of related party payable related to master services and supply agreement $ 1,554 $ - Equity method investment acquired for non-cash consideration $ - $ 1,925 Property and equipment purchases in accounts payable, accounts payable, related party and accrued expenses $ - $ 5,940 Deposits on equipment in accounts payable, accounts payable, related party and accrued expenses $ - $ 691 Finance lease cost in accrued expenses $ - $ 1,017 Three months ended March 31, 2024 2023 Cash flows from operating activities Net income (loss) $ 39,900 $ (4,553 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation 17,097 11,655 Amortization of intangible assets 147 - Amortization of operating right-of-use asset 254 222 Share-based compensation 8,317 8,810 Equity in (gains) losses of equity investees (738 ) 750 Non-cash lease expense 392 401 Other operating activities 1,958 - Income taxes 5,564 53 Bitcoin received as payment for services (48,079 ) (21,717 ) Change in fair value of derivative asset (7,359 ) (5,328 ) Change in fair value of warrant liability (250 ) 37 Gains on fair value of bitcoin (40,556 ) (4,264 ) Changes in assets and liabilities: Accounts receivable (58 ) (183 ) Receivables, related party (185 ) (189 ) Prepaid expenses and other current assets 760 2,975 Security deposits - (12 ) Accounts payable 2,540 2,913 Accounts payable, related party - (1,529 ) Accrued expenses and other current liabilities (6,123 ) 65 Lease liabilities (217 ) (248 ) Net cash used in operating activities (26,636 ) (10,142 ) Cash flows from investing activities Proceeds from sale of bitcoin - 20,958 Deposits on equipment (4,536 ) (1,106 ) Purchases of property and equipment (7,902 ) (17,947 ) Purchases and development of software (200 ) - Capital distributions from equity investees - 3,807 Investment in equity investees (18,319 ) (3,094 ) Net cash (used in) provided by investing activities (30,957 ) 2,618 Cash flows from financing activities Proceeds from the issuance of common stock 66,171 - Offering costs paid for the issuance of common stock (1,623 ) - Repurchase of common shares to pay employee withholding taxes (3,177 ) (481 ) Principal payments on financing lease (1,208 ) - Net cash provided by (used in) financing activities 60,163 (481 ) Net increase (decrease) in cash and cash equivalents 2,570 (8,005 ) Cash and cash equivalents, beginning of the period 86,105 11,927 Cash and cash equivalents, end of the period $ 88,675 $ 3,922 Consolidated Statement of Cash Flows Note: In thousands
