CIFR - Earnings call 4 2023 | Cipher Mining Inc.

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Operator

Good morning, and thank you for standing by. Welcome to Cipher Mining, Inc. Fourth Quarter and Full Year 2023 Business Update Conference Call. [Operator Instructions]. Please note that today's conference is being recorded. the of to Investor hand Josh speaker now Head Kane, Relations. will conference your over host, I Josh, please go ahead.

Joshua Kane

Full Mining's Good morning, conference Quarter Cipher this us joining business and Fourth and thank call you to for Year-End update. XXXX on discuss

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

and remind financial Cipher start, including, that and business The well to of or presentation our on by I'd goals of discussion result as release to questions, market otherwise, potential the Cipher's our revise as expectations whether or statements, based objectives except in today, responses our contain to strategies. call, required including obligation other law. and forward-looking your forward-looking events we potential business are to, following outlook, like risks statements as operations, limited and the press developments, current and future of as statements a plans as this assumes competition about and no not conference and and including them, update you new but Before developments

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

Rodney Page

CEO of very Cipher our XXXX Page, for joining is quarter This Josh. fourth much you Mining. Tyler Thanks, Thank call. update business

call outstanding summary with public full of the the a fourth during highlight it was of first quarter low-cost since Let his our full full a the wanted me for XXXX. statistics we we producer quarter from during I the of our financial data performance it completed but view numbers a to quarter at of of few progress portion our the In toward sense, begin the have accurate X XXXX capabilities this upfront our call, Ed had will breakdown give our as featured fourth going original have operations that the made of Bitcoin. Cipher's quarter. most of vision provides centers because

for earnings our is Cipher net Bitcoin $XX progress of previous gains Bitcoin quarter. accounting of standard say. that and in have think produced for has been XXXX, something on Bitcoin, I million the the and is competitors quarter, year-over-year, highlight a mining early in inventory. the $XX immense. Our most XXX% revenues under even This of numbers We not million. we By would include increase mark-to-market positive the produced earnings net it important GAAP adopted accounting can of production X,XXX also these our to new But treatment GAAP

which of year-over-year. were produced the earnings over and represents $XX of massive adjusted million $XX for improvement earnings quarter, Our even million stronger. progress We adjusted an

relative that our of only a And they milestones proud strength demonstrate horizon, we increase low-cost competitors. producer advantages having Bitcoin relative outperformance going believe as these the are versus the of being of on the very will upcoming We with and forward.

while $XX X.X our of grown hash exahash second. Bitcoin in cash, X,XXX held million and Cipher to February, per rate of end the self-mining of total As inventory has

us. already know follow For Bitcoin that nearly space, you upon the the is mining those that having

repeatedly spoken how built have thrive is about market throughout to Cipher cycles. We

cut while has for painful decision-making. who thoughtful the halving those the the for it industry, while disciplined have Bitcoin miners supply years. can been miners in very for reward strategic is in While exposing Cipher their planning halving the not from new been disciplined

portfolio succeed to built with are roughly approximately of XX% hour. cost industry at We of an power fixed electricity through energized our of per kilowatt $X.XX low price

Chief As we our our the of Furthermore, and a costs is overall terahash. Black complete Pearl site, full reminder, per Bear of from our joules our and XX our joules economics. to currently rig price key fleet per terahash electricity represents expansions the unit XX.X will as driver operating large majority best-in-class at low a and efficiency improve complete

growth Turning to our plans.

each to complete in capacity joint expect this venture expansions those per the We second X.XX to second Chief for self-mining and and of of XX quarter centers add at Bear megawatt of year our production. to exahash expansions our data

expect of expect second per an We of to the end online also fully fleet to capacity quarter. existing of our X.XX add the self-mining we and exahash software incremental be third that hardware by optimization via

are construction aim of recently our the in and the how Lastly, second Texas. Slide X overview mining box business operate XXXX. most equipment, centers represents is that enormous of energize drawing the business in commenced activity We potential to We to a middle we Bitcoin of we data quarter the which Pearl, about the mining rigs. West quarter and site everyone to Black model a include that excited in high-level each the our our mining XXX-megawatt of like says remind works. site

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We facility. power at have ability sell Odessa grid to to our the back the

as gives combination upside Our Bitcoin doesn't downside exist us power a purchase to revenue most risk optionality streams as our protection agreement well for that of miners.

headlines the The the has SEC's the of seen investment dollars Bitcoin into at products. the and better-than-expected headlines the now in Bitcoin Bitcoin massively Let's January X approval Bitcoin the We recent price some reacted market has business believe a development many our early Since impacting ETFs is to miners. this space of as positive turn look last and events. update, Page dominated pull for inflows ecosystem. to into positive the it additional positively will we've

also accounting Bitcoin sheet. ETFs, transparency few as paid investors transaction miners In we in periods the standard have value held past into the elevated seen addition fees of that a of on to U.S. mark-to-market well balance months, new provides the new to as

steady as to free announced shareholders the ownership and XX, our While good and high for February overall Bitfury, its shares all-time we provided for additional Perhaps economics. network to overall counterbalancing creates investors. Cipher's of most in climb hash our float concentration, move suppresses rate, largest plans miner on greatly we majority our noteworthy sector, to seen shares these a prospective shareholder, distribute both Bitcoin of up Cipher and table. We have an tailwinds On increases concentrated its investors which majority also believe the break forward. have positive position environment our a liquidity cap reducing our developments

new having and head looking on build-out our and is Cipher executing data selectively month, fleet next toward of optimizing expansion the the growth opportunities. focused current production we As centers, for from the

opportunities over We several have and to halving. expect opportunities the many through the past we months improve reviewed as go the acquisition

line We of expansion produced prices. our a cyclically our as always centers. self-mining expansion we we find rate. XXXX, average cost disciplined and all-in options in existing electricity hash X, expected centers give hopefully at Slide the a data paid same and of data an approach Bitcoin per opportunities for time will our In evaluate $X,XXX overview portfolio at these low On with

are it talk the best-in-class proud and these our talk competitors mining include our to they unit of this cost electricity to total our some charges. we when of we electricity made other drives costs, We about transmission only number, deliver contrast, that and economics. very about all-in when rigs. not Please costs, electricity note and In

all numbers charges include and dramatically transmission numbers our advantage. So loan demonstrate and our other competitive our

sense began of third-party quarter as well the additional the in our fully of slide will power at this Bitcoin the to data XXXX. independent the gives represents illustration alone. a graphic growth as picture XX% by the on the with current agreement a left snapshot we power the investors the X-year cost third owned with At you the value of of wholly our for contract see a our as is production price site. current all-in approximately side and valuation some X.X a in represented turn how sites opportunities the purchase most of Bitcoin Odessa On point, years. significant right of a is the of much On our in you cost slide, of hash The coming X, part you the facility production. of Slide give electricity per X the to a centers, along lowest respective Odessa is a chart In can we it the industry. portfolio operational of facility. fixed XXXX, reporting year Cipher have our rate power Odessa

it utilizing about X.X per As always, XXX in talk the second approximately We will remarks. approximately at exahash site, Ed generate his megawatts. more currently

a believe our XX joint unique which We day. Bitcoin share capacity Bitcoin site a approximately site by Cipher. and recent of Alborz center, daily half Slide X, show Roughly maximum exahash currently our energy of Bitcoin roughly February can a megawatts have is when XX.X truly to powered mine venture total from per and highlights is rigs. X.X and a belong Bitcoin mining has XX with site per provider. a Alborz of and that the site. capacity through production megawatts of we Alborz blows. XX approximately total powers year-to-date, that mined had at It wind picture second XX. roughly On through X.X February and roughly operating a we wind day, per is data we XXX maximum capacity the XXX% mined of has That XX the

generate our exahash joint as conditions. ventures generate feature second approximately arrangement to uptime up and in Slide power our have in X.X can XX and other are Chief later location to typically equipment our sites, the connection, grid that Chief front per Bitcoin of Alborz at market production working have roughly we Bear X.X the megawatts, XX and day structured the Bitcoin similar remain site, in will place per are attractive this at Bear us set which centers. confident which behind-the-meter increase Alborz. are highlights and Chief economics current from generate supplement with to Bear operate market existing that allow features Combined, we also data a which and a shows Unlike arrangements, Texas shared and in We more at wind operational the year. sites prices. the that would and meter with can

expansion a work with close at pictures few will the of I underway Finally, Cipher.

working very look future mining forward our months, are the to day on we expand updates coming and every providing progress. in capacity our We busy to

Chief Farrell. it Ed turn Officer, over to I'll Now our Financial

Edward Farrell

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

webcast XXXX. additional I'll some I'll our months results key financial as our referring walk to fourth as through color December results. As year a following I for XX will some reminder, presentation, for of QX. and X full quarter well metrics XX, those discuss be our ending the for the months provide

fair strength quarter positive earnings of This a of centers fully deliver team the testament GAAP X we operations entire is being quarter the dedication for Bitcoin. of before standard related our marked adopting the our the our to accounting able to and new company since first even were and of that of our data deployed to inception value quarter the all with

earnings. line As the industry, observed line translate doesn't across bottom into top always growth

million, line the showcased revenues mined However, an In line. that resulted also at $XX.X impact Cipher even in. take upon numbers top quarter pride our X,XXX strong we this which Yet all bottom quarter, great Bitcoin, in more we positively closer these impressive. examination, achievement of become growth

the those generate at sequentially, power X%, to While we our value only the underscoring revenues up PPA were cost up fixed price revenues get of was our XX% Odessa. from

line the QX by also model. of again, quarter, that talk were $XX PPA but testament team. our period. emphasizes growth increased Despite prior our capabilities business a power in $XX.X We the value the at the of top over to in This million and later, for will from about X% origination potential substantial significant within expenses million, the G&A operational down leverage it

operations scale all this in ahead, anticipate of headwinds Looking we are our of which year about prospects cash significantly industry rising excited up course the competitors face. XXXX. haLving and upcoming our network that challenges as the are encountering as such we over We rates,

by we rally our and through experienced more quarter, a in is emerge Odessa. production third as obstacles our Bitcoin fourth the as Cipher in next talked the favorable business we navigate increase marked we a challenging significant a conditions However, these to that Transitioning well quarter fully update, firmly environment. believe we to energized operating In and cycle. positioned price leader this about much

for improvement mandating As fourth our was the line measure entities characterized that to new the a an at believe year adopt our led looking draw FASB a fiscal a would moment to value. this I by talk on for standard in strong the XX, result, to substantial new important assets positive accounting new position. to liquidity in about is step which ATM to In quarter for take top free to standard, them space. forward flow. like after XXXX. hold also requires our conditions, with our the combined the ability These development invest to industry crypto December, We December institutions and rules released companies fair cash

as option to the realized standard adopt the we the companies our fourth Additionally, quarter a the million. impact new to this guidance this losses fiscal well Bitcoin to transition $X fair The of impact reported process as year. We made gains earnings and compared really impairments. for choice assess previously FASB and the rigorous a of and provided accounting unrealized resulted to net in adjustment for value prior underwent XXXX

of the Now year let's to turn balance attention and sheet consolidated operations. full our statement

million, As stood $XXX XXXX. up current XX, total of year-end assets $XX our at December from at million

December our Our year. accounts to highlighting XXX corporate those million is were of premium which versus Bitcoin net was impairment. is at XXXX, were the at primarily able our Bitcoin I year. because should $X.X to We previous then significantly reduce $XXX,XXX note D&O that $X.X receivable had the had year-end this a XXX recorded prepaid worth expenses treasury year, in expenses up we prepaid of and Bitcoin balance $XX That number which prior versus million, are we due XX,XXX were $X.X on million valued million the from in XX. we representing insurance,

I'd asset. to PPA always, of As a to minutes derivative like our Odessa few dedicate the value

at We highlighted have our previously provided competitive significant contract power by the advantage Odessa.

third asset mark for our of a reflects Essentially, our began we current mark the each on publishing That facility. prices relative derivative this gets quarter to the sheet third-party as forward agreement is XXXX. revalued represented period. that it in-the-money reporting a the a value reminder, of contract As at Odessa balance in the

affect as our on contract earnings, current but The reporting. our components million we noncurrent this It As X an of This a gain increase our is as the excluded which $XX.X value this $XX.X was in from of note that a income is of in December non-GAAP and statement. change is year-over-year. to change fair GAAP represents million asset sheet, on at balance $XX.X asset XX, $XX.X valued this a asset. as million recorded asset million, important will

assets attributed $XXX significant million, figure property primarily improvements $XX.X of to as Odessa leasehold Our equipment and are by These includes miners other our items and equipment accumulated million at related This well as $XXX.X of facility. million include million. offset depreciation. valued of $XXX.X

Alborz and the $X relates equity we The hold which $XX.X remaining million $X.X includes to ERCOT At designated payment addition, Pearl for million, at Black interest In Chief related our site approval. million. of in and software. capitalized Bear assets $X.X investee of stands year-end, its million intangible

estate primarily Our to operating of real is $X.X leases. lease million related

and previously to Pearl of Additionally, of deposit current comprised liquidity data the million per related cash $XX,XXX $XX.X of Encore million $XX.X would worth position million report I Bitcoin reported price Black a million Bitcoin. deposits our XX includes a assuming million, deposit security $XX to that $X.X February on $XXX million like limited center. of $XX and to is in

Now let's GAAP results. look our at operating

Before I'd this operations capacity. X in quarter $XX.X full of fourth the delving mining of revenues quarter, fourth first data with our detail the more million like we $XX.X full Bitcoin, Considering versus to full into our quarter our results. on revenue. in provide X,XXX producing marks quarter million prior year when the resulting all at Bitcoin, mined In mined centers X,XXX we in numbers,

operating We relatively significantly are despite operating and remained flat our amortization particularly including expenses, and proud depreciation G&A that quarter-over-quarter. revenue, higher

million, earlier, a at increase was million, revenue slight previous and X% from includes decrease quarter. a the million over totaled power mentioned direct The quarter. I As Depreciation and $XX.X of a the from X% which Odessa, $XX.X expenses in of last G&A increase came in $XX.X related million, to previous $XX.X cost quarter. our amortization the

see Now turn XX. full let on our Slide me year to which can results, we

count primarily was for versus prior in For year entirely the and prior $XX.X facility. 'XX. for cost was benefits revenue XX increase in million expenses as due employees $XXX,XXX at of versus year. driven in $X.X versus The the our in we at and million was head year generated improvements million was employees. in 'XX million to $XX.X in amortization being year. service for months year mined Odessa $XX.X in This building miner year. from X,XXX in to our compared a only Odessa the of XX revenues $XXX.X XXXX, full previous in by and the $XX.X compensation The X and million the from million team, out our equipment to leasehold year $XX.X we came Bitcoin, primarily invested G&A million increasing resulting Depreciation of increase the full

year, positive at derivative ramp-up earlier, sales mentioned of $X.X XXXX. $XX.X the of course recorded million Power year-over-year. of asset reflecting in we the amounted $XXX,XXX to value a fair XXXX we our the in previous versus the million As in Odessa over change

sites, of equity miners Equity XXXX For line fair to investees titled million $XX the the and the $X.X XXXX. at value much of JVs our XXXX million contribution higher. in was were to noting item in prices is losses our from that losses in when the were primarily compared JV time worth It miners

million, a performance When fixed turn the in the That $XX.X and with now manage of us Let's non-GAAP basis. companies. the financial these and performance fair we the the make comparing I earnings. income similarly adjusted just the performance of depreciation are non-GAAP losses. Allow our slide financial U.S. Management stock across in These assets, GAAP quarter income reporting other $XX.X to that results of and help business quarter measures financial to investors adjusted adjusted other compared may they to on to be $X.X that We and not change in comparable adjust items accordance listed. our evaluate assets, measures expense, of derivative net used understand, earnings expense nonrecurring the reconcile of our titled be net in of to measurements had useful million our GAAP, on change uses decisions. consistent gains market value to measures periods as remind compensation our supplemental to exclude income million not me million our these quarter. those to deferred measures our everyone measures such, non-GAAP for fair value to operating help internally in of previous may GAAP of for liability, brings and to we impact $XX.X fourth tax believe

financial adjusted an of adjusted my previous will earnings adjusted with For the results and saying pleased million of loss $XX.X the XXXX. conclude earnings throughout our in in full $XX.X the extremely by GAAP of million QX entirety our yield gain versus remarks performance I year. year, we an are

be need XXXX to centers. validated we best-in-class Our leader to that We deliver the stated believe a philosophy to having our initial continues relentlessly our ability space, to economics. successfully bringing in our unit data on mining firmly online be, objective focus by X on

will We best-in-class that current of stage to are outlined. cash debt position, lack cycle. excited to expansion now I updating next We the the Tyler unit on pause flow the are positioned economics, should our we with And detail in we of next be financial you we through and to quarter. greater report about happy look generation, questions. your a when forward and believe growth leader our for answer plans first free be well Tyler and I

Operator

[Operator Instructions].

coming the Company. Our of question John Needham first Todaro & from with line

John Todaro

each looks questions, operational quarter, boost, actually accounting Congrats than one pretty about changes. for when well you. estimated maybe the of G&A bit on little solid even we as lower that rule so noticed in for what we leverage talked the a as coming guys, you QX. without the Ed, X

like Is 'XX? G&A exahash that G&A how be to it grow we can to there. flat flat another seems in in 'XX, over boost basically you be big expecting If X-plus should

Edward Farrell

G&A next I would over look X quarters being flat. relatively at as the

out we team. built As we mentioned, the

I get team. a think we'll the lot out from leverage building of

of we too 'XX. not or should when centers, non-GAAP numbers, would and data you to additional As the amortization. our expand reporting But expect exahash be that we much than on some depreciation bring more in we've that the fourth expect greater been and we I quarter neutralize

John Todaro

Bitfury just I that no us, the so lockups, you right still Bitfury then shares on things how And correct? time that line distribution? is there's side has of believe remind Tyler, the more for many can then, And now,

Rodney Page

answer then Ed's to for it's halving. so think I of as asked the Bitfury for I but I John, well. think me you term, let SG&A important as piece and specific actually important I'll answer near differentiated what look because we more as mind The color look at I SG&A, know context, the think way most Bitcoin especially to about we all these to to halving. question that, about about the be investors and from that it's And add one happens in I space companies analysts into think is think in do research come needs pretty post at miners. kept the other SG&A,

relentless so we that post about a really world cheap the And look, X drives economics. often ways for because unit And out bigger, talk power. and the evolves there's search these in power halving get to world that seek as the cheap sites

you Cipher something or Some cheap tax may find there challenges like maybe jurisdictions, folks the us. government after not so have raise or that. risk than or where other that to and risk miner gone don't long they better regulatory as power we the comes to hard that underwrite there underwrite that people And be mining can get are

a it, to a to basic a they in like X you do. average more centers quickly. miner price a way we've the in the And day and we've can That a cost the They they do take ability focused run try a time. if we the this being your back where power talk our model price that the on these grid, is often, real monetize to you where a as curtailability can involved you place for go making can thing in going talked the about of And we way it and did to respond opportunities -- what if data be what of extra that centers. and to do Texas $X.XX is, within like just to in a more signals power more cash up hidden something of providing lot about model I'll to down rigs challenged. power very hour. operating can minute, find And you and shut is really XXX% doing other Texas, The to be is since that data Texas and the call kilowatt can

people be And to you potentially so able way only build that trading. to story own bigger programs, Black part easy, talented response manufacture an price, and centers, a only does do Pearl. cetera. of et is will we really at electricity participate your be not one curtail ops, companies that and to that data your of our demand It's lower stack in of we're scale, have The across to technology, build as the to that even

that's all when SG&A saying scales a building well. that with So people of very by company way it of different and different set is skill a our

SG&A megawatts of we from well. So like Black that rate think I now, Pearl the will scaling. than what half output less than from be a whereas will be and hash a perspective after less very, online, of scales X/X linear is bring perspective very It not a

about or X. quarter was question specific the your Ed, so next And

our mind we in one linear relative with think long in that it's SG&A. data to will large of in bring will keep on growth because greatest centers become the strengths this important term very little I very

and the own to control getting chassis produce our continue just started that we're So in ways power on cheap destiny. to our source own and we're some building

context that's think I for So SG&A. important

exactly me And on question, to specific get and Just term, question. your not on longer you your a to for thank then that. indulging

So put and talked so up of about end Bitfury and is with in at Bitfury overall that shares. the They of distributing release, be to press XX% out process plan below a million XX that they our shares. will this shares those they

bit a to the process. less conversations via that But money complete now. are a on are in with They them even percentage to the little than where distributions. them. in of outside process know that's it's be ATM, some we'll short because I raised process have right they in term. days I basis. that That's We expect be my for very those don't I it exactly know

long from when will our to on we ago were And lockups no are XX% of they so there go that were where And not of table north that. XX%. below more we cap decently

freely they're will be distributed. shares as tradable those So

a model. heard love your the good context to you I Hey, from well. sustainable. create year cheap so, think This Cipher power. love we some I've of very lot cost business the on last Tyler, how give it's We as investors is or over this own

balance an You of sheet. the institutional companies We we like everything clean about have we're buy investor, XX% a it, and don't but an with shareholder. stock

of has for And stock great us day also have central to Cipher a every But want a solve. building on we great so been investment. to We challenge this be focus business. a course,

about is perfect our what we'd very time outcome Bitcoin I table bunch that think have the long-term over in cap about wonderful if think see you on world, would to that this understand investors a thing I mining. of like a

circuit short distributed owns. are Bitfury the that already here. line being we so These that time are And shares

your decade. have been So mining a Bitfury Bitcoin typically it's not going longer sometimes adding existing investors to invested long new for time, and in a shares, than this shares that

from this. about So excited really I think our at perspective Cipher, we're

a just cap based believe I put have to conversations frankly, trade my on a table. we've that I we model we will that, discount I on such think didn't removed premium the with have where discount And concentrated results should we a and investors, if at think based trade at be heard just that, trading business be our should I out.

in distribution that lockups, expect be days. it process, is completed to within no and I So

Operator

coming from is Regee question next Our of with line the JPMorgan.

Reginald Smith

to was the a at but announced think that? costs, get believe option purchase with you joules I power that? but I I December. A the has at look about I'll it is, calculus an -- guys you how to to wanted Odessa And pretty in and do My make your second, for I a in I question does big questions, it very still XXXX. impressive site It Bitmain, have sense think Odessa few included a has doing housekeeping few machines swap What's it maybe follow-ups. for terahash. per a out TXX? for And high those

Rodney Page

$XX TXXs, The of current you not just includes from plan that mentioned, the exercised price. terahash, the is fully which that's exahash if an option put large XX.X and awesome TXX to you up at which a is order to

this, profitability but so It's of I right it, are, keep we to now. think at SXXj look $XXX or right about megawatt with now. it's hour the you a Pro where hard an efficiency per up If call

And drives So of getting knows, rigs. as that everyone more profitable. generally cost more the and

locked price purchase. on an awesome $XX having in that So is just

repaired getting use exahash we the those X.X using machines big order least efficient Our we current both rate replacement and this SXX out swap for projected from for do at the that to have. plan an a not that Odessa. the gets Odessa exercise We part that recall to in generally hash at to of us growth year. upgrade have of of machines we That is are we

of site. and quarter. got this we've and in swapping lowest the our in other exahash even I out Chief then That's like XX efficiency, the at also at but average say the or that a XX and current optimizing efficiency terahash. of X.X is then X.X think third industry exahash rigs quarter I'd The largely joules second So one thing more Bear that's projection the per expansions, is

hardware as plan. And in my get than all prepared lot more current the also of things we I these efficient various environmental mentioned, these but over time, trade the and XX that that hardware out per about plugged the we terahash, be working and on rigs we decently those. software to time operating of extra are we mentioned efficiencies average. remarks there use optimizations. will are a So squeeze and tricks by also various industry specifics, learn we joules the at that's in, we're and Obviously, software already

miner just more are efficient don't So becoming full include even that our out. swapping least a efficient upgrades like machines through

Reginald Smith

to just And there. clarify

there of XXXX. option There in disclosed so and for the out few option? And far XXX last you about that that? is Bitmain was assume it weeks, And for? for one announced can not, XXXX. if for? how is what to what spoken And that does that you option, was are December, So your is beyond tuck-in used last piece what for for that on an Based if it Does figure that XXXX? plan sense? is Or for was is today like 'XX? makes that announcement first a that the And question I'm not, extend the acquisitions? any is appetite thinking you in for option trying accounted it my

Rodney Page

option is out tied of sizing the So with Black Pearl. that

buying Black a So $XX megawatts Pearl we could the of full rig XXX build for TXX terahash.

half we And energized ability so XXXX, the site. the Pearl, in that basically will of be have at first full to which build Black

assumes takes walkout in XX.X it, at exercisable when Slide few keep mind, look exahash is you If to option it But deck, year our the XXXX. months we exercise site. X all those the a to TXX of plug in in that we at deliver. calendar And that

get answer lot tuck-in an we at are looking for to At most well in sale. when known. hosting how CapEx ones. domestic are that already companies the to There There for of it. There's sale. up it want that There's your for well we this out, ones that are if opportunities. do lot do Pearl.The else Black locked Pearl, infrastructure. with baseline, can that ones. folks spending There business. beyond are planning are to also sell the ones of locked And terahash cost option. per less we've in want There are great about exercise can a find time that sites. That known. out we've here's is got There's thinking build XXX%. acquisitions, are we're that There's There international variable a cost time important the and we've laid the with about So expansions about to CapEx. go private option We've thing folks full is second full question nothing that a Black we line we rigs

a So lot. we are at looking

on history has disciplined been a on think an focus return of our investment. hallmark extremely I

positive just the we're because like things. so things stuff to earnings GAAP not ultimately overpay going what And that's not overpay to discipline for is for produces

at option use full minimum, we very is the And option way and Bitmain can it Pearl, the will Pearl. So if we other low we But to we could half of whatever amazing back at away a truly my rigs we then optionality find that with hope right opportunities faster. available new buy has a source use that for then fill better Black to prices Black away. rigs. We can them to build find right are exercise of all that

Reginald Smith

end I point 'XX the exercised means that. and it One not can the option of be in assume that of piece on necessarily point at clarification 'XX? last at of any

Rodney Page

Correct.

Operator

And our line Vafi question Joseph is the next from with coming Canaccord.

Joseph Vafi

that's I in was rapid just thinking here, up we've had precipitous. Bitcoin this run really been and pretty here nice

forward with the Just the to but move now Or maybe them? or have average per Could higher strategy. a having to less Black problem, strategy, hedge selling strategy and price business a wondering make is trying is operating because price faster strategy. price does it hedge you and sense It's affecting higher how your effect perhaps see on the build-out Pearl Bitcoin high-class tweaking do how it's the just the the you high? Bitcoin

Rodney Page

all, of Black is energization which schedule, Pearl quarter has First of second set for an next year. the

unfortunately, up. cannot So we that move

lot to addition their XX-acre logistics, large In being of just we're clearing a fields now.

have that an and install optionality to time line the energization if wanted build even on. there, the have don't really, to, there's We we line everything. we But is, challenge time

committed is Now do We the to how have build. what much half first on of publicly building it. we optionality we

is the I economics it have And the likely build that megawatts more of option opposed it. of we've of optionality of which that greenlight an business, just it, tied way we the the We to Bitcoin think could to we committed price, full do to, the which XXX the half makes second the half as to increasing on. it first frankly, have higher

But I broadly of a in more And over our time. selling and addition with capital. We treasury management, let to we then in to build those it Bitcoin remind been pay to favorable about very Bitcoin. treasury number ways Bitcoin it's regularity fails different need me increasing recently. do to some holding general, about terms. thoughtfully So build an everyone can goal to speaking our think It's of tap in that that treasury that

got We We binary a downside collars approval around a in inventory, months, other date, we that pay market for pickup we've events. example, last costless of that in and was we protected also everyone coming than inventory. bad then that we didn't held put case in because price. into for up big upside these see also that's several did hedging when the Bitcoin anything noticeable well few hedge. week, was the news piece had Things the where like ETF above the it known giving on over we we And

to downside market price selling insurance. So at buy than we're either a better in was the

events may look got if about halving, as It like think hash following at which derivatives to known ways We're We've on look things costless the also the on market closely to rate things space. do well coming me We continue continue as hedging. other ETF like lines approval, to collars. ideas. that we impact the up have to very other at wouldn't but like there's an time do surprise the

Of course, can analysis is lot and to an the protect when do that downside. map keep very of We relative option favorable, upside that to also comes want economics. of to the we down a

much to for have building very only at look, listen, when this we Bitcoin acquisition is But full in dynamic. bucket, helpful put we the bucket just it not nice it's on certainly But our So rising is Black up. optionality, the certainly opportunities, going this that much not it's and this in that price look Pearl.

Joseph Vafi

it. wondering, in I'm to fees was news, to about revenue? I in have if trying then got on just that that. just the material And I And quarter been know post was halving and How the fees, overall any transaction mentioned thoughts think transaction you on you relative

Rodney Page

and sheet. going disciplined also forward you again, of have the But the going space and lot now that as this like ETFs evaluate flash thing of to in upon power But investors really think in was in of we balance GBTC So going history available, you're really keep historically investors nuanced looking ETFs mind a the better have we're to these for microstrategy to I expose you've that I understanding that think these have the I got if frame a a Bitcoin forward, miner. the the bit. And less trading there space, mining the seem lot of same eyeballs And you were of certainly short a historically. Bitcoin clean to out Bitcoin to have with Bitcoin a option, we think us, balances an investing is quite in there those halving trade and a investors had balance. where have their extraordinary models Bitcoin. companies space obviously, moment And been it's draws the a important which in to moves time the companies think

were Bitcoin in quarter, the so that now BRC-XX about it's business business did a and from business of marking And this we GAAP so So sometimes, solid. fees, what's we is about non-treasury options. always fees, need fourth typically operating without see from hot basis, that a to they're the investors. that it's Asian to is from market mining these you piece think to question in we quarter, very that investors And not the token, balance spikes out the important because transaction held get that attractive only sustained, important. important not why operating the an to there's That we're your business, transaction the in other mining break treasury in balance, profitable that's I have treasury last means a are

doubled I driving we're more had sometimes than our the fees. out transaction what's to trying rewards we fees today. from And we saw days the think figure coin-based we periods where

So upside. a is massive it potential

space the in developments see of being valuable. to use as continue We block

buy to think buying ETF on And a I there's you option out you but like, if why company your there? Bitcoin important operating thing business, leveraged fees. the would only call remember, that's a so transaction Not mining are this long an

the spike. we rapidly. with Traditionally, for this the makes more we it And see top space the see other and got Also, for on aggregate, to see reward. that were come the to they're was And or but what know we fees the head, to the We'll XX% the basically that in we demand we've up. had you go continue investors the off that's sustainable, quarter, rewards we generally spike of getting has that uses space my quarter. demand whole business. transaction the coin-based definitely happens And don't where magnitude, was really what I so it to from potential last the is spike of these get XXX% block that magnitude saw days in fees spike sustained more if from extra those

Operator

And our from with next coming BTIG. line the Greg Lewis question of

Gregory Lewis

of for getting I needs hoping is to else terms happen a spending what to Tyler, there and update bit to grid in was and any the on an where of little of status Alborz around make connected lines and thoughts that time happen.

Rodney Page

that is term. We still think it near the in

next soon basically it a I we that as see it's contracts quarter. contracts, negotiating The could are all specific as I date is only the think reason haven't given in motion. those

the the contractual don't contracts, of as to move as Some up connection of types involved necessarily other quick a entities things do negotiations. grid like set

line. reason as I because that time said, we been And specific exact only the so it's can't underwrite in that's That process. haven't

So that's quarter, there. then goal I'll my a remind also that And everyone and would in second XX-megawatt we PPA think achievable. have I technically the optimistic be

roughly Alborz, or expansion we are machines would connection, to The of have add So should choose at we already the to XX% there. megawatts grid you XX would would think potential uptime that that. of do so another for

So it's it would out the be meaningful. shift, It's way not more have. going but to of move what squeeze an to excellent entire we already

Gregory Lewis

realizing in costs trends somewhere electricity in more -- cost the about we wondering PPA, as outstrips I'm obviously, the improvement there far more What probably you electricity. that, the little connection, with thinking marginal higher just line, the bit the that that mentioned maybe electricity maybe then And [Indiscernible]? but places, Is that it pricing, like best think then grid utilization of is up maybe a Odessa the probably more it looks

Rodney Page

right. That's

we're cheapest great. not blows, When Alborz, think it's typically, economics power also so power. market grid wind great. the tends strongest of show first blow, portfolio the -- blowing, wind blows, as in we Texas, the Obviously, lower. the currently drawing of when when is way, at we this power that's When I In doesn't to is that it is wind deck have. price our it so the the in is all, the

be at pay higher curtailment. we the sites, the the we're So that think will will we manage I all what grid. we it drawing as will when meter do But we do than of do from front

closer free time, be hours, it and So be market the it we we will think the Chief. X Xquarter quarters of I price And it avoid most the at that utilization. of time, will increase Bear and as Alborz to cheap will of expensive the will

Operator

Fitzgerald. of our the from Cantor And Joshua line is with coming next Siegler question

Joshua Siegler

love about the First spending the to CapEx head know you're it's of I of pace spending how still I'd and rollout of Pearl early into as the that stages, Black energization. all, but we understand thinking

Edward Farrell

Pearl. we're it's days, the different point we're decisions So Black at and testing at still early where design

So or would hydro favoring We're at cooling. we're haven't ruled it. say at It's more air we completely looking air we're but likely I be not maybe cooled. hydro. out looking immersion, to

look we Odessa. at line As cost projections site, with it's at in that running roughly

So we a there same say Technically, the in for I'll the per Black $XXX,XXX non-rig came thing owning We're Odessa, Pearl. at for Pearl. site. the XXX-megawatt at one though, infrastructure. substation towards above megawatt just and Black building we're tracking difference

to $XXX,XXX paid cost, the choose We there, early. $XXX,XXX if And like all contingencies, megawatt of you take as non-rig include put should and that to well, course, per in at we've for already. got infrastructure. it's TXX that again, forecasting But fixed build price is to cetera. So we the average et partially the then, -- that would we're

so Bitcoin say, between we in a XX-something And to Bitcoin. with mark you about that been the of month, our think of million. CapEx, the has $XXX reported look we've the I you at I end March should value. million market if strong at $XX got paid numbers Bitcoin so obviously, if course that or today, below cash far, we've process, and million far, Thus So February, or that our

to flows, hoping full on certainly and to try the we with push Pearl. $XXX million forward as hand be we're market of expect comfortable ongoing to very day do half Black we'll from we what I'm cash watch X. dynamic, the the the between to that So operating cash And first continue

Joshua Siegler

are an thinking this inherent buy mine you moving in I'm your in on energy And I presentation, very curious, as you energy points it's comes broke Bitcoin per all-in your impact down on helpful, side cost And leverage look, how online, Pearl operating its about cost all-in think business. the your Black basis. really to forward?

Rodney Page

let it. about exactly. on thinking me It's to project color give hard some how So we're

So site, will what so is Black things front manage the is a meter in it like programs services. we demand of do ancillary Pearl is Texas, curtailment, in -- plan we but participate so and response to

you were, machines much if Bitcoin $X.XX of The just higher be that model, like not and mentioned, what of cost kilowatt flips is in call to time. I than color, our which in some would something that on them runs give that XXX% to us, miner spot a per like the hour, the a So basic I'll rest Texas portfolio. attractive

there, at curtailment traded but and baked a then operate manually got and we've mirror fixed trade in Odessa, it as you contract price. to basically into If we've what curtail the

Odessa. X% to down words, something the that in about is at what times That basically think $X.XX the prices do the expensive So for price in we off shut which we other most mid-$X.XX, to floating that. take somewhere $X.XXX, would like like have market,

at will things you If actually kilowatt real-time trading you participating around other a price power so but we for, markets, per and versus we on aim we about perfectly, day-ahead then like think which things could $X.XX if the things the market, not, the make hour. optimization, thinking decisions will other ancillary in we services looking you it below can optimize, like trading congestion did get net all basis

operate net $X.XX site, it forecast to somewhere the $X.XX scaled call the on will and in between, let's I way So reality, we be a basis. would currently fully up

of And so that's depending right on how on basically. top up, ends our that portfolio

Operator

Papanastasiou of Stifel. question coming Bill line Our next from with the

Bill Papanastasiou

on look Congrats [indiscernible]. one you here. see the over could evident the data If time arguably miners, on evolving universe at mining superior scale. respect performance just just thoughts I financial operators have hoping these a have And was Bitcoin building Bitcoin who your of how players it's industry Tyler, achieved number with focus centers. are massive we to I public that purely consolidation. share the and you of on

subscale on diminished the appetite so your that take to Has And at what's acquire peers. all?

Rodney Page

opportunity. look say at everything. always we I'd an We're looking for

for are think are for a reason. sale often distressed or sites sellers I

better not that the things think interested Sometimes I'd large-scale scale. competitive landscape typically, say getting on Alborz screen we through make are out sustainable to larger Bear just larger because power most The in players going-forward a It and we're are sense do prices don't that basis. is does and going we cycle.

being you scale capital the a company gives think people to CapEx, negotiate expansion to registered also U.S. access in I et gives markets fund and great to cetera. lower

at there currently are is not the new AI. your We've like well kinds proposals not out think basically to folks that working are AI shiny that of I is toy eyeballed and is our road something on mining Bitcoin it. looked point, there map. maybe all That and

integrate We into to upward are more industry. in interested power opportunities much the

network price going now. if Bitcoin But increases. Bitcoin your less out. bills the go we at to Maybe knows prices forward noncompletely right Bitcoin But I the we'll large growth guys going price efficient are is to dynamic. halving? some so the price very at cash that. it's with rate forward of parabolic be look assume and you so what think And going Who to question, up continue fast

see going think I to among miners. you're the dispersion

interact looking going trading team, have all I mentioned produce operations market Texas, going in the are in line. just people like seeing we particularly own as places these way as to think grid, thing the more them at ability and we stop same case, its think that's can with companies I our the effectively a from make earlier, to And the company in technology cheap in a us sustainable. free power that to the

out. business either an having challenge from the direction with chipsets don't around is hosting love the So perspective, really we new in M&A coming

that is business going be think challenged. I to

power and there I that on for less sites to contracts pass us Cipher look for is side have or a the think in we're they are There best-in-class have are sometimes and clean make with economics like that so through the those And things for balance and sale the expansion say, that at they that companies sheet. that large that clients scale differentiator clients. general are in unit are and "Wow, obligations hosted necessarily maybe interested can't Overall, have sale. challenges

interesting is we'd the that us So love be interesting biggest effectively There I to that better them valuation between running large and in our miners company, gap player." some an to us. think becomes aggregate become to frankly. could where a we very a something opinion, with think of we're

certainly opportunities if we so there accretive and shareholders, that we're price good think looking. And very to are are very

Operator

Instructions]. [Operator

Our Flynn next the Compass Joe question from coming with Point. line of

Joe Flynn

I my were up at brought that it, that, thing Most earlier through there point it's just record out best-in-class think that but miners walk ultimately you for was economics. process one year of that those of that renegotiating ask maybe questions that? I deal. some a the newer X-year And still But haven't there? was thought are yet? And maybe do deals about You just can risk PPA, us guys demonstrated see have asked, fixed track clearly call regarding you demonstrated the

Rodney Page

from fixed as was up we our part perspective, prices basis, bit over on the was prices, lock think the reason X of years. a those contract forward that market I and set little cheap a could

And so do we to chose that.

relationship contact and constant provider As We're lot X.X-ish is power they're provide years contract. us because in with we're a constant notice in managing you We're of it's We on curtailment. with there mentioned, curtailment that negotiations giving a symbiotic left we've got them. data. our

of provider. amazingly billion So price, to power going $X.XX the something listen, over our contract, pay to that that even cheap life like with we're

every commercial there's think So us for I keep incentive to working.

we're years, their with about but sites that happen also center and things in opportunities, beyond X other potentially negotiations co-located places, expansion with constant are opportunities data et cetera. other them that We and at

in pipeline sites best will more for we've optimistic shareholders, We'll extend as centers with over data whatever alternatively, got time, larger amazing Texas and X street, we come the now find outcome the I'm certainly but or So are a the capability is have there few in down available. hopefully that if they that years.

counterparty, perspective, are door would opportunity. anecdotes contract, the miners about And that for those weren't post for to had think even asked if I new miners their knocked very I million you professionally, showed opportunities old we example, to gave because counterparty miners, collateral a available dollars available could of say they of how on we double-digit support an from to et cetera. lots

you the think And floating results floating less our can far that, built the hard space. tech analysis, through site. stack to price I price. or as deals the we've have from like curtail if own trading how effectively counterparty even go So as from at built Odessa to front-of-the-meter the mentioned Right new I manufacture we now, economics that we doing it's a take through more and replicate ops

many I think years, what of right market for that price seen change happen. fixed course that will we deals. which than now, haven't as floating the cycles means doing over more is price now, been hedges, we've That right attractive why is

think best and to try demand is So those us do way response in manage manually I right programs, to else. to or whether it curtailment participate anyone you're the now,

in and and years those invested I of people think operations of can of economics. manually is team, an a operate difference advantage procedures a produce lot in stack that money the and tech set a take we've

with to do think smaller scale a very different at it's hard I or team.

Operator

Colonnese question from Mike in with is coming the line question last Wainwright. Our H.C.

Michael Colonnese

price range on you'd as cost what to infrastructure consider opportunities a per M&A acquire megawatt some to out basis evaluate of these Curious there? you

Rodney Page

ERCOT I'd going going Black approved paid everything site. got Bitcoin we XXX-megawatt going enthusiasm $X a else, dynamic get think up. up, for price say is for Pearl. We like anyone's to ever it's price don't the million the I is

than and built, far, the megawatts XXX having to far to and not capacity price achieve. it's approval go now is I've but So amazing an less seen anyone

for the paid you And that be things what some on manufacture I think to so on again, contract doing is, there, diligence prices. if what what's It's It it's opportunities the the own are site. that your do buying, we're sites. manage of you're dynamic. like by depends your curtailment there's state cheaper then and site hardware power really the And what hardware? can

Some is sites not. other hardware places, at it's to pristine

so coming are et things And cetera. value is up a rigs containerized, for et if with substations, building, like market cetera, there there, secondary transformers, a

minimum So say them. out for look below a often We bit is unless of reason compelling situation different. at things we XX I'd there's always where we little screen most a scale. start megawatts is But look to a every typically

thing risks might how of a that, beyond the What's sustainable we the then what the could is regime are And price What power, there. equipment it's Et Next look change? cetera. be power at like? that market the is power? evaluation the

stock So with than basically we rigs, that the to it's starts that's company hard a answer that we're buying return with a site. to give or And a power investment capital calculation. other buying buying do whether anything on

return all a we have say can and are And shareholders. is I will so make investments fantastic we very to that to remain think disciplined for going try

Operator

session.I for And Mr. will back closing that's Q&A we Tyler turn Page now all to our remarks. time the for have over the call any

Rodney Page

very to everyone much the call. that Look, participated on thank you

We are really excited.

would We be have space. period this excited earnings transformational for when the talk to the we getting where we this this been and in about positioned thinking really call, built years business about even into going halving

excited months. time, for in you the So give and thank further coming we're to very you updates your

Operator

Ladies and you for today. gentlemen, for participation. the conference conclude that your does Thank

may disconnect. You now

Cipher Mining (CIFR) 5 Mar 242023 Q4 Earnings call transcript