CIFR - Earnings call transcript Q4 2021

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Operator

Good morning. Thank you for standing by and welcome to the Cipher Mining, Inc. Fourth Quarter 2021 Business Update Conference Call. Please be advised today's conference is being recorded and a replay will be available on the company's website after the call. I would now like to hand the conference over to Lori Barker, Investor Relations.

Lori Barker

gentlemen. and ladies morning, Good Thank you discuss conference to on joining Mining's fourth us Cipher update. this quarter call for XXXX business

on will may section website corporate can also investors.ciphermining.com be are of section today our be press This that Please and the call simultaneously Relations Financial the the company's this the on presentation, or other Chief review Please me is which Mining and Officer. you of on Officer; Chief Ed the Tyler that at note call found prohibited release Executive reproduction the Cipher is consent. and website. Farrell, written taping Joining Page, webcast conference Investor call Investor of expressly note property prior without any Relations

remind the and and risks financial start, including, that potential from here. and strategies. business well involve presentation developments, I'd statements discussion as release differ including statements results cause These to Cipher's our forward-looking to statements, objectives contain goals other forward-looking market events we to, potential in actual discussed following our outlook, like as limited the competition materially our press and that and future plans and not you but may operations, uncertainties those business of about Before

could or as today, by update Cipher revise a or result responses including SEC new The call, questions, forward-looking filings. differ as on your Additional as from risks in other otherwise, and required this forward-looking cause conference no to assumes them, that actual results found statements factors are based except periodic to obligation statements expectations developments can Cipher's be to in and and law. current whether of of

found and measures examine comparable are contain the We our of our are non-GAAP directly operate earlier to at most which reconciliations, following to business. GAAP release manage financial we those the non-GAAP you encouraged measure, measures. Additionally, reconcile to earnings the issued morning. the measures We way end describe non-GAAP in use which discussion may may and this

the Tyler. call turn Now, over I Tyler? to will

Tyler Page

CEO Mining. Hello. is Tyler Page, the This of Cipher

thank quarter I say you providing look me Let joining call, our a earnings business forward and for update. to fourth

with start Mining. Cipher overview Let's of an

the in Notably, rigs. with power OpEx We mining, and and power, operations. for a we cost by public of of advantages Bitcoin U.S.-based XXXX. last withstand cyclicality business the progress. large-scale business. profitability. on main equipment the CapEx competitive XXXX mining as cost company, made the the significant key in Bitcoin and third XXXX, dominated in is in We and After we our Bitcoin great We the do miner of CapEx to February this mining build-out by OpEx year commenced of we going Bitcoin positioned a focusing greenfield largely plans mining operations have are have In drivers have a and in is of cost quarter

is $XX.XX price of portfolio are have our We competitive a our power purchase average a mining costs per purchase average long-term these And terahash. hour. rig contracts We price extremely have we with compelling $X.XXX of weighted per a series peers. agreements kilowatt where believe of versus

we am potential we data platform term business our preferred power Bitcoin last deals the have U.S. Mining update. industry As believe forward, since some the And mining. for new to will we signed sheets look for Cipher I access to be center excited that discuss

our mining Cipher Bitcoin last company. achieved at We importantly, Let's since Alborz a began discuss in call. are has milestones late February. Most center data longer no some we pre-revenue our

will time, rigs The Our shipment and The months on wind. the shipped arrived machines for shipments of this has time. by be Alborz receive month. data February powered initial is year. five center the Alborz the is installed and installed XXX% expected continue our to shipment on mining January to was we first anticipate of

will very future of pipeline been deals have I recently data centers. two our busy sheets. we deals for on executed for focus term Additionally, arranging which we

sheet new where a Cipher investor venture XX-megawatt with group private in First, XX% economics. for Texas, a site we signed grid-connected will the joint of a term own

Assuming we we close ready be in that deal, and power the site the will later accept XXXX. infrastructure mining from perspective to anticipate a rigs

as us facilities. prime with agreement from incentives will a connection. a a This Second, supplemented example project longer-term new term we XX-year will economics XXX-megawatt by unlock be Vistra new draw the well affiliate a deal as for a our facility Luminant feature both a agreement Luminant, Bitcoin purchase sourced how that allow and which construction will signed our of that Perhaps power provide sheet this necessary provider. with with most be of of solar will the of renewables for unique and features can the mining to the incentives power an power is will to align grid be second purchase excitingly, power

positioned be to more continue relationship and that we provider in get accessing a innovative structuring ultimately We preferred aligned the the mining. providers Bitcoin in deal power as be for our can closely our with so market

to moment evolving a way we Bitcoin market this take the advantage will mining landscape. take in happening discuss There and are industry, many we changes to think of positioning the Let's are evolve. Cipher the

having for primarily the observation mining, with Bitcoin advantages tremendous that mining negotiating scale to and are power to related of rigs. in better obvious somewhat economies Let's there start pricing

the as shortages. year. observed in dominated world as this market for and and pools mining lead are from at deployment. interest be a would Given of Cipher much to the infrastructure Cipher developing last we public industry the execution, continue will to execution the this challenge infrastructure increasing in up the main capital. going throughout have being year. Today, Cipher continue to access an power providers. When preferred we of believe helped for partner it we level industry anticipate positioning comes companies like from rigs economics that that for mining by benefit as mining. the going larger public we see The scale the main to focus trend today trend to industry we see XXXX power well in that We chip they will positioned securing of of be sites What our the is U.S. Bitcoin was

can Our and unique provide continues in of JV our opportunities. flexibility a platform pipeline benefits us strong deal give structuring to

We are we trend. of be front significant what trying is to in think a

there the in be power U.S. We platform we is the crypto think be to downstream think integration for miners that markets it the from that the Lastly, BXB will Mining financial broader and services will Cipher likely greater industry. future.

into a I future. deploy to we with this will joint joint have WindHQ venture data ventures discussed the that earlier, be series sheets of In addition to year the new new centers online partner term coming and our

will also second incentives XXXX. to new we with large relationship with site aligns at our envisions to an We further build a sheet term continue which in a Vistra innovative our extend look that structure,

these for have for a allows power of a because most in Beyond significant structure handling the building structures the This negotiating. we are the because future will power turnkey joint complexities or deals of incentives These we we opportunities, of a and part competitive markup. is for connections a sense higher variety big JV custom to have potentially address model with believe venture a potential that can PPA time, process margins success. to dollar-based the access them sense wide selling a of Bitcoin. scalable than pipeline we Over can Aligning to Cipher of make power. our ensure prices provider partners makes power we simply be features

Next, implementation let's plan talk our about strategy. updated and

indications their with And since putting update. rigs infrastructure last market a that hosting seems call, Since lost Against to seen have we update with of also November. as our about all-time are Bitcoin inquiries highs volatile First, chokepoint companies. downward. and our X/X be overall miners sites that some prices let's for have moved last have received backdrop, at have begin touching we work been other prices an deployed. deploying to business Bitcoin others mining about they for mining value

of time, signs interest the rig currently on primary at data are reconfirms not the the clear do importance market we deployment we offer to that timely hosting, our have mining At centers. focus evolving. plans is same this seeing our While continued

possibility and may new rigs miners When seeing you prices. we development of delivery flexibility maintaining that be predict, that the is forward. from are competitive on broadly launched to a players. closely. lower news is own traditional of of importance going notably, schedule that there launching in possibility to we being Intel be we And is but future, shorter-term will we increasingly generations the be to for secondary paramount watching hard fixed beginning its we the combine in rig prices opportunities market rumored competitive are environment. are mining the that of be New market, at believe with believe will rig with purchase pricing this a There It the

Let's rig mining site our site availability. Recall schedule phases: readiness think and in forecasted look at of readiness. readiness currently we readiness, that power for infrastructure three

since infrastructure a few There our chart forecast at update. is bar available. for Here centers changes megawatts the last our and a showing our are availability and power data associated being

short we Standard deployment portfolio that line anticipated at and on economics. In that currently infrastructure We third Power. Note Chief we our for anticipate rigs, month up in a sheet first we now end. in ready and we sites and them to XX-megawatt fourth ready by Chief. we seems for JV sizing we site at is be time target sites remains made Alborz on of tweaks track are somewhat a the will are expansions added currently power XXXX. also running quality in Bear have building a the the strong with change now quarter. first some deployment first expecting at which Odessa's with will and anticipate perspective We to its rigs, term small accept site to signed with be a and our with and for marketplace a our deploy of quarter, compelling from have that Bear recently

schedule. about talk minor Let's our anticipated delivery

to when marketplace contractual on be that an of comes with have and placed currently weighted across different to possible looking per anticipated cost for flexible have opportunities relationships We mining portfolio. Bitfury. and we it arise. three our of positions terahash cost may well providers potential the focus that MicroBT Recall and rigs, we average a take as have in $XX.XX rigs, machines as advantage evolving are mining Bitmain, us purchasing of That discipline to

contract when contract. of and refusal rigs hard Bitfury machines that of are to provides right favored pricing structured on market that first lots on a has from available X-year is arrangement we a to Our the to in them marketplace of other and rigs secure source, is demand to we at When a potential can a competitive the price. their much securing Thus, the we nation high prices. have arrangement premium rigs potential as Bitfury others flexibility as and most in at a suppliers, Bitfury and supply, given sell across have there the not has optimize

year capture fast-moving a this conditions flexibility, decided but Cipher. us upcoming at the MicroBT market X.X machines with but anticipate the exahash and provides us are rate push delivery. having accommodate nimble to prices, hash If that XXXX for X.X market to exahash, capacity in mining to belief to opportunities we to may our to to Given amount we expected sites to in that generate contracts, have XXXX be at This warrant baseline potential receive opportunities to Bitmain and continue allows currently additional not premium potentially market. flexibility XXXX attractive with in machines Bitfury's acquire a reduces rig later forward the of our the on an our we for rigs the

Let deployment of me share progress. some pictures our

mining are of center pictures now Here site data that some Alborz at is our Bitcoin.

wind the turbines the You can in big background. see

are our other containers on at perspectives some Here Alborz.

picture the Alborz. a of our at of the at Chief of stacking initial work Here's as and as one containers Construction hot our side rigs hard racking well Officer,

at Odessa. an is the Here's data will our be center area this located cleared picture, now where exciting

in You loads XX cleared about background. has some site the of the generation power had perspective, this see To can facility X,XXX dump dirt give and removed. acres truck

currently We have tracking fabricated are new containers work on-time towards deployment. being and an streams our

statistics Lastly, reiterate some let Cipher. note me key about to

rigs per Our anticipated $XX.XX terahash. mining for cost average weighted is

efficiency rig mining joules terahash. average weighted XX.X anticipated is Our per

$XXX,XXX. $X.XXXX kilowatt Our is infrastructure per our anticipated rigs, price per anticipated is excluding average weighted cost hour. CapEx power megawatt, And mining

Now, I will pass it CFO, off Farrell. Ed Cipher's to

Ed Farrell

Thank everyone the you, call. Tyler, on and hello to

$XX.X operating net our drivers payments December relating fulfilling corporate-related We we progress which energy resulted Tyler a results deposits loss continued agreements periods ended to previously expenses in benefits. electrical to of investors in fourth million. expenses out of since As purchasing XXXX, If comparing XXXX approximately plan. and the which deposits support for mining we million; And rigs are and infrastructure, of and collateral cash the balance plan on as a made XXXX, to to million on August stock-based recorded the $XX.X of prepaid corporate-related that This progress our includes of The closed million and this progresses. $XXX centers. in our immediately, our providers at for included had our and commenced reporting $XX deployment as non-GAAP insurance, on payments deposits employee deployment on professional corporate-related approximately expenses. to our believe of stated, million. quarter On and XX, across switch compensation our scheduled back one million; $X.X $XXX This gears our mining basis. we helpful plan approximately relating in making security business. we $XX of December data consistent capital transformers is GAAP months to XX security in look of had sheet. we significant compensation, announced made XX, approximately financial property then, include commitments we we of primary performance building for also power million our of rigs, and measures merger the and $X equipment, million We machines investing our of We fees loss approximately have include

help warrant share Our per non-GAAP which the and stock compensation items, impact of excludes P&L liability fixed noncash measures recurring manage non-GAAP depreciation our of These understand, and diluted will of change assets, these earnings non-GAAP fair certain financial management make expense. help are not measures business a our include substitute to in operating value GAAP evaluate performance internally for decisions. us to use results, and but and

XX the months million. our So non-GAAP $X.X for ended was approximately XX, loss December

a provided have results. We reconciliation our non-GAAP versus GAAP of

we stop our progress we Finally, progress quarter in the I building plan the your have Tyler with happy our are to to reporting our and related and made Bitcoin business forward our look very are to and first mining pleased I'll questions. there. continue successes take executing and operation.

Operator

Wainwright. [Operator Instructions] Our first with question Dede is from H.C. Kevin

is open. line Your

Kevin Dede

time chipset mind little for onion -- a Tyler question. enter and could Would to situation, your the Thanks back just taking on us market? if read and Ed. much Bitfury the when you morning, Good could have rigs you you my spending think a give so they peel on you just development bit more their the little bit, might

Tyler Page

of second you? the know in have a so think preorder we XXXX. options rigs. and contract SEC, Hey, envisioned the purchase under Sure. I delivery to have are that we are half to allocation, X-year with it's filed Kevin, the how And with know you with XXXX them I that public, their So arrangement a is

we we that purchase, move from as right are they exercising be chips have half XXXX to to of as not in are deploy know, forward second for. And mentioned on received as machines I they contracted XXXX As our their had those on on we flexible the the and track far but Samsung. call,

Kevin Dede

got this grid to I because There's Tyler, you've wind. is again, obviously Alborz, be held I my through driven by well. apologies, Alborz connection but hands before, as And know a

Tyler Page

farm the PPA only question a is thinking from question, purchases actually there's about the I me wind farm. -- No, I And there; not itself really It's than how Alborz center. What know steps the is not. power two think data that? which first you, back-to-back tell much There's there the the is megawatt our wind do let where farm. larger that There's about you behind the wind is blowing? if XXX wind do

with our appropriately sized on Our will less is be there basis, data the anticipate would than center typical megawatts. then we at there an there site XX all time. And be at availability uptime power ongoing

is as used basically well it's a the mid-voltage uptime. there's that as production our a wind being And the the opportunity the look there at fantastic because at point modeled of so there. sizing center the overall we've size historical wind site, when you structure of cost look And connection done and at data Alborz what both in a

present for substation cost needs not have the CapEx. the we so And the are on lowering a power And of also, there. fabulous price a

And about so as think uptime there. about we model it, we XX%

Kevin Dede

to an grid? there the to opportunity access sell Is

Tyler Page

setup. bit a In that little particular complex a of opportunity, it's

So and we power not can connection. grid we draw have do only a

a So Texas. because it's of PPA area back-to-back got in you're a regulated

can we so farm. power the from only wind And draw

Kevin Dede

pictures a thanks includes little very including very, one power just then on you color And Odessa plant? the lot a the the The plant. give That's of for Could that power of helpful. more Okay. type site. us

Tyler Page

and natural facility that's Yes. with Luminant. gas It's our a partner,

so fabricated. tracking of picture there. got deployment our delivery I going look towards sort so being MicroBT you lot the It's there's current a in XX anticipated that containers mentioned, there. large work deliveries components we've our and as acres obviously it's And if That's, the about site. schedule, there. at put a All plan major streams to But is of are

the phasing we arrive. machines be site in so And that effectively will as

X.X in of rest half. course the of starting full over [ph] the the by to year, So size the second coming

Kevin Dede

at helpful. a renewable rough Right, The right. give X.X% year consumption idea end? you That energy you one in total chart XXXX, year, your target on could mix very offered this us for

Tyler Page

Yes.

around in line. of I terms deployment the time know So some shifted we've pieces

and via facility me emissions Odessa. output be in approach back. timing XXXX. XXXX, of on will on by coal So don't the our natural Recall carbon We our largely of to road facilities is neutrality got we've at end emissions overall, I think depending gas if that that driven the you're our by offsets an thinking with work to step ESG about target let map

emissions And half we at in kind typical so what anticipated about we've if got the look come you mix an megawatt an the per of from in hour at of United perspective, States. emissions

we're natural place XXXX end of and grid site the it's Chief, is a this wind Odessa and connection grid targeting connection. is and is at to then Bear a Alborz, at from that sheet new the So at pretty a PBJ think neutrality. we we're offsets by strong, term is starting It's under have gas point power

Kevin Dede

the all Tyler. Thank on you very much, Congrats progress.

Tyler Page

much. you, very Thank Thank you Kevin.

Operator

[Operator you. Wells Rakers next Thank Fargo. with from Instructions] comes Aaron Our question

line Your open. is

Aaron Rakers

I the of for Bitfury contributions of I to change and deployment, want the just rig the back Tyler like taking question. I allocation system to matter done the so Thanks, out it supply guess you've be any go this MicroBT just point? at kind looks Yes. what there timing of is as been just kind the for clear, to the model. deployments as that or far the Has taken or Bitmain can

Tyler Page

first shipments are the from that Bitmain track alterations are No. and to Those schedule. two on no

XX,XXX change contract currently those and from to plans. XX,XXX to XX,XXX there's MicroBT purchase rigs, been So under Bitmain no for and

Aaron Rakers

-- rigs change, mining average in weighted noticed I gone has average cost I XX% of then, but a relative looks anticipated back it's to And your and XX% like about know small up, it or November.

understand, on contractual seeing can help you your of some deployment? commitments, inflationary or are Given costs pricing you us

Tyler Page

we just Bitfury downside and the that's as that weigh cons, that No, is the rigs. removing the pros the of downside -- actual is

at the nation favored Bitfury. arrangement most team with a have we so And pricing

two path it, thing on effect think flexibility removing was forward And important so is number But most priced the by about that to of of again, providers, the the other portfolio to cheaply focusing machines. with you flexibility and the are the the we that as more choosing us. move

Aaron Rakers

curious, been a should probably dynamics, our you a industry perspective But we there -- how this look just as at And kind at tough thinking Anything regulatory is on? to eyes answer. from keeping like you changes? this are of I question any the you are What about know I'm has be watching point?

Tyler Page

It and happen landscape from industry that an somewhat geopolitical a I a front, on lots just the but that got context the me events lot on see over regulatory discussion right? right? debate that I a etcetera, legislative perspective, shifting the Sure. good. heavy Well think front the of Powell's where particular, fact is day, few growing me. So part the the a of a I now. levels testimony crypto conceded a a of standpoint, let That's every about good the we've target we macroeconomic to front, caveat have of from watching And currently, overall about now. to to reason is think months, give and how Bitcoin, having to congressional and a feels stable are be do they even be I Chairman highest that, feel why events we and they crypto say that over seem for in perspective geopolitical yesterday five debate that bring a does are. regulating what broader years as going and I regulators, there coming bad testimony And worked very landscape and macroeconomic to watched to feels last from was the with acknowledgment me, I seems actors, space of very in

we do changes anticipate front place. but a on that was volatile it not So

Aaron Rakers

you. Thank

Tyler Page

Yes.

Operator

Tyler questions like And showing Thank you. remarks. back closing [Operator I'm over I'd to further at the for to turn this Page time, no Instructions] call currently

Tyler Page

everyone to you the could join call. thank Well, Okay. who

way unique about the And way think very continuing are marketplace excited the volatile to conditions our forward. landscape our We strengths. distinguishable in the reinforces shifting and cost I the as world from of and the to that, discipline plays really approach our manage have strategy I frankly, is most long-term our our execution. to think important rest And the

to very keep heads your we're excited for today. down you thank our time continue executing and So and

Operator

for Thank call. conference participating. Thank you This you. today's concludes

disconnect. You may now

Cipher Mining (CIFR) 4 Mar 222021 Q4 Earnings call transcript