CIFR - Earnings call transcript Q1 2024

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Operator

Good day and thank you for standing by. Welcome to the Cipher Mining First Quarter 2024 Business Update Call. [Operator Instructions] Please be advised that today's conference is being recorded.I would now like to hand the conference over to your speaker today, Josh Kane, Head of Investor Relations. Please go ahead.

Joshua Kane

Good morning. joining first this quarter for discuss call you Mining's Cipher XXXX thank us conference on to And business update.

release press the the of simultaneously Ed the Please call business market and Officer.Please that found on on developments, to reconciliations, filed the business. Executive encouraged the earlier and and conference expressly we business operations, company's release The this statements to will call, statements use and We and call also you turn website. describe to future potential comparable GAAP are revise or me start, whether call earnings and plans statements, over investor manage our today, webcast forward-looking is measures, developments otherwise issued morning.I outlook, Page. of risk Cipher the obligation can not update operate of Tyler the presentation press also at reproduction investor our in are consent.Before potential the events goals non-GAAP company's other like will examine and no Joining other may to be forward-looking I'd which taping the way Page, based review is conference following directly Officer; to Tyler property which measures relations to your contain non-GAAP without those following our as our and financial we release by prior Cipher's or and this may new law.Additionally, that but including contain end relations Tyler? Farrell, Mining, them, note This note Financial expectations in strategies. financial our this are the We most the on including, questions, discussion measures. that except reconcile to presentation, of of as competition, Chief and any and section be now discussion, you remind the responses a are our which may today or current Chief non-GAAP website. of section measures as of limited you on including required and and as to objectives, Cipher the prohibited as result assumes well about call

Rodney Page

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

first with call statistics of the summary a outstanding our XXXX. from begin me Let quarter financial few

to that a the growth look are and to validate $XX $XX earnings that to earnings million, we million GAAP full from adjusted revenues adjusted our during second operating Our best numbers $XX our $XX second revenues, initial the our the continue CFO, and portfolio, from continues performance $XX data million Ed in Quarter-over-quarter of numbers Farrell upfront, story.Cipher's from at the because improved of pace. million to net to center million, progress our way of million. $XX his key and but ultimately, quarter highlight full earnings.We the not sequential call. first There is breakdown net and it's SEC. public mining at But indicators portion our I that financials during will earnings, represents Bitcoin encapsulated full are is wanted it important numbers, quarter the strong of with give positive a GAAP the believe performance to company the evaluate company quarter growth it backward-looking narrative in of always success continued to the files

million Bitcoin of being relative while April, end of X.X X,XXX only of low-cost the record-breaking We believe a of our our rate forward.As are very of hash proud producer inventory, Bitcoin we and to Cipher the grown the advantages $XX and EH/s. behind fourth total with numbers, Bitcoin now increase us, continued held has cash, will Halving self-mining of going that in

Eliot speaking is rewards the that X.XXX reduced For in block. you low recall impact will kilowatt Bitcoin that of shared XXXX, an power, is hour. succeed this through of well you, In to April been about have $X.XXX Cipher block per of our to among cost the approximately built halving Bitcoin bitcoin the revenues, miners per he address fixed new to the cruelest order minded as literary T.S. price Bitcoin to with energized may month, of XX% as roughly electricity and known portfolio industry and

driver our we price Black represents reminder, we at J/TH. efficient from to low XXXX, fleet operational our of Chief an rig majority online leverage electricity in a Bear complete survive economics.As a a our benefiting improve fleet best-in-class to Pearl site plan costs, key environments. from of while unit and expect full overall model hedged our expansions has & our XX J/TH and efficiency data positioned power is downturns sustainable bring rising a that With currently As the the is in will large business profitability cheap operating of centers, of combination costs and our XX Cipher site rigs,

as began and to completion our Black progress and with we the to last past the few our just attention Take how Chief Pearl are We expected X end and into center. two have Center our construction. first is be Bear's Pearl, data will of of we are and Centers. Black our X.XX detour capacity showed Data different June, is dirt infrastructure Odessa previous construction mosquito a be the our over with operations the that delivered a data year's time But life two Odessa onsite want a our the on construction year at Black Black XXXX. now site full Chief between the expect late been full in this of of of a pictures Black quarter some the difference time. to completed of I and into it roughly finished the we a new began at add full to site The expansions transformed rendering site on-time later, & Data time of take infrastructure be on constructing of XX beginning expansion pictures at a will Data before and is team while Pearl, to this can & energization total difference Odessa the the XXXX, our work experts between Bear in of completed acres a months.Slide scheduled Pearl.The Center. from made like. in completed the With to turn update operate now next shows June. the flagship let's look slides with in by mind, Remember a Pearl. our very month. Chief's we rigs and be expected to portfolio.Once the as our the and expect Bear same expansions, progress These EH/s energize that will scheduled what of week, in self-mining look the production the energization of busy progress we at complete, expanding at about slide second center look we

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differentiate approach, the ability greenfield is clear. the and value on model since attractive We In identify the decision-making manage long-term believe post our and unique. low-cost strategic day evolution state-of-the-art halving locations, operate have a been to focused electrical at all interconnection We we company of data to success our us environment, X, the our producer their disciplined way to continues us. centers opportunities makes

have are is point, our to And in We Officer, turn to investing celebrate it thrilled GAAP we to Ed going business.At profits. quarters over Chief are of Farrell. this X the of the keep to the Financial expansion way consecutive I'll

Edward Farrell

already discussed call. to for quarter. first and has Tyler the you, some key the financial metrics Thank of hello on Tyler, everyone the

a XX favorable basis, some and in I'd we of prices.Slide quarter, continuation X of Bitcoin context. a the the our we sheet Last to of tailwind and the business. earnings.In XX and of we we highlighting saw of beneficial and of both proceed centers quarter, all observed and insights our many these operations, from fully higher sequential further statement add having some the deployed, on first by financial and amplified like reflected balance effects with our underlying this performance the of emphasized of trends, year-over-year strength Before metrics importance our data the are walk-through

the top translated down comparisons, Slide XX see are significant the on the In move line detail. can trends favorable.Let's which we to more in growth, for on quarter, results. first both line drill and experienced numbers you As bottom into

comparing XXX% $XX.X reported loss reporting we For increased sequential conversion resulting XXX million, costs, million to the you current a $XX.X current discussed increase power the consecutive bitcoin, in to same quarter, this noting the of quarter when the efficiency of A increased included power in it's purchase in which was revenues. inherent miners.When sequential that primarily we and upgrade to mined to of previously our prior nonrecurring of cost we our this year, revenue worth basis current In fixed XXX% quarter percentage $XX.X critical cost is second our the revenues current costs contract in from at The the a prior million.In $XX.X can had at the of the versus increase in quarter parts quarter, is power in increase we of a $X.X revenues. quarter, XXX% this alone, the income growth see value million revenues below net in that with the to net Odessa. the GAAP a $X.X quarter quarter, year million million of $X.X step price underscoring increase a well arrangement on revenues increase revenues, rose to Odessa. of the over by our value quarter increase. the attributable a power profit Year-over-year, million the XX%. contract in contributor This of the from secured

year top let's growth non-GAAP line.Now turn liquidity to again, growth year's to brings our and into $XX and due income industry-leading and $XX balance costs. $XXX expenses showcased That and on quarter, quarter flow. $X.X top first investments cash and reduced costs manage. to adjusted of used and such, this other use stock on performance and of XXXX not us mining to those rigs, We occupancy, decisions.When to We may both funding bit net to the due they our amount benefits, U.S. were increased aggregate had We XXXX. compared about placed future and discipline the compared of starting were first decrease costs we full bottom or ability We comparing of internally slide improvement business million line to quarter $XXX,XXX exclude financial through our Comparing nonrecurring fair help from and depreciation compensation administrative asset, these of philosophy data our are financial megawatts companies. centers to compensation $X.X primarily not as periods our of phase quarter the GAAP best-in-class expenses. our bolstered in as, on our the we we strong derivative for that liquidity in quarter performance quarter, recall, to for these XX% other turn These arrangements, comparable income we accordance bitcoin in benefits sheet company as sites to well just you access turn the XX% crypto non-GAAP other in the and rigs our and These on in on corporate the the of adjusted XXXX, ATM earliest best uses we our $XX.X and financials, or $XXX,XXX the items Allow some Thanks by to free the XXXX, measures significant run. in prior general quarter contributed million remind early for measures flow $XX.X find public quarter To and to first adjusted business. from for to in as may net new useful further warrant the differentiating our from the of and to days, reporting fixed measurements representing Tyler inventory and closed understand, losses. up first of to and we change into quarter our or expansion a measures investment rise of to consolidated that in and of down for value in million to evaluate income, was tax our G&A power in conditions, the we of the prior of expense provide strategic of change quickly consistent a which million I technology was of XXXX, personnel we and expenses million against be talk our drive XXXX expand of XXXX.As assets, GAAP, the will we we our scales, standard our in comparing $XX.X fair G&A adjusted the and over have in and net them service our turn me in we our fair is greenfield model quarter and managing and return XX% those long Depreciation mentioned, quarter quarter believe opportunities earnings. infrastructure, expense, the quarter Bitcoin to the X% increased the the of $XX.X listed. investors our operating financial of driven let's value administrative liability, first accounting expense balance first through our accretive outlook. last the new fair capital transparency everyone invested reconcile professional insurance, fees, in Cipher's up XXXX, into make both of attention broken Right company versus the statement with gain million impact manage last the earnings our As help of shelf XXXX. our an deferred our service by grew prior of the gains on our some and be $XXX,XXX on that That expenses, costs, include the similarly value $X.X in view in general amortization these quarter greater performance XXXX.Now to measurements because supplemental IT, believe first operations. of and quarter. of non-GAAP had and line along think the and the we income million our in first compensation our quarter headcount titled first measures first these further sheet. XXXX, million, value In Management benefit million, a to to growth, basis. across a compensation million.I'd to with adopted Holdings.Now into of with adjust quarter a cash the position like the our

of As XX, assets million, to an March end million amounted XXXX. of from total $XX our $XXX of the $XXX at million increase

$XX funding our of inquiry million. X,XXX XXX maintain held reported our balance at D&O This remained XXXX We a the marks treasury insurance to position $X.X and million flat items. a March bitcoin at bit increase figure stance $XXX,XXX from as touch the bitcoin compared are treasury approach We prepaid frequent XXXX.I'll cash as $XX.X relatively Our of at sell quarter.Our $XX.X balance assessing premiums. the for million, million, philosophy remains avenues during last XX. $XXX,XXX remains sheet we quickly did able the amounted up a related to close year-end corporate expenses some the an from $X.X totaled mentioning our million, most various Accounts of bitcoin worth end prepaid management valued the on quarter, of bitcoin of while not reduce of year-end, insurance. expenses to held in We at our million little growth were significantly continually initiatives. that XXX.X down from these reflecting It's And consistent. XXXX. at opportunistic an line at to of receivable topic discussed any

the strategy. quarter, size available, through guided and markets cash bitcoin assess pros attractive markets in for our this Through most While constant we we or over our decisions estimated of capital our holdings of shift substantial expansion like focus sell of to plans our contract, of be cons derivative we of capital our power Bitcoin We our and be our power and weigh Odessa. the a various by manage Bitcoin we ways try reserves, determine holdings Odessa We accretive be contract Bitcoin our efficiently.This when the plans.Now advantage as recorded issuing equity. We competitive the our the generally we the dynamically. I'd we to there to which forms cost not consistently capital looking fund process, to may at more times emphasized and business dogmatic, all growth evaluation are fund treasury overarching of the the time, aim this may asset. value increase allocation inventory afforded by sold our our though constantly to the to

to at contract we of As our is This Essentially, quarter third each our for relation third-party the balance reflects power value agreement refresher, and a and Odessa the balance asset sheet, this XX, million mark It in began components as subject publishing as the into March to is the forward XXXX. XXXX. a statement categorized a period. of in-the-money facility.As increase on million mark recorded asset of of revaluation a current the derivative operations. the highlight this valued prevailing change asset. end the a depicted million, of as $XX.X since $X.X contract is $XXX was a prices sheet, X gain a it asset on noncurrent of the on asset in this at important that reporting reflecting to as $XX.X million time This is value

contract GAAP million, our significant of and from of totaling $XXX.X we in fluctuations of for figure, related and of are facility. assets this fair property it other earnings.Our earnings, mining our comprised are the equipment Within value primarily impact adjusted account always, will exclude but As this attributable amounts while These million equipment accumulated $XX.X leasehold Odessa our depreciation. rigs $XXX.X improvements valued million, to at net million. $XXX.X

amounting Black the of amounts These had related no and million an net quarter, the we $X.X Chief $X.X attributable side the $X.X power to and collateral construction million, significant also of operating obligations the $XXX,XXX to million Alborz, which no Pearl ERCOT liability capital million. $XX.X Center. first $XX.X lease changes debt end our deposit We Pearl software. amortization.At and approval million to hinders $XX.X security we are to of new We relating had a our $X in million capitalized posted the our our to interest of that and the equity the Odessa and on-core balance & million, to investee have at of include There Data of in stand Bear JVs the hold million from were associated provider the year-end, deposits assets structure. remaining sheet $X.X Black totaling intangible to site with

million this in of Our million current pleased is and position comprised my we're excited bitcoin.I cash our by and as in liquidity we we have of disciplined the focused performance a financial will million value X, decisions made. strategy. new delivering position prudent our we $XX These of as and been reflect close worth QX, April saying enter day about on careful extremely while results also $XXX financial XX our have growth relentlessly with unit From economics $XXX remarks all of halving epoch. the

Cipher us, we'll we Now built that is halving be markets the have different from I deliberately other hope to see recognize that the behind miners.

and detail we to is look and over growth coming operational from profitability plans questions. Cipher I to I downturns market always, quarters. on Tyler rising Tyler you forward As survive environments.As to happy now, and updating pause your leverage in built will greater stated, the benefit and answer our are to

Operator

Cantor. first Our from comes Instructions] Josh Siegler [Operator question of

Joshua Siegler

execution and here. see. Great continued good to results Great

Or that some on that helpful. to deals the if question, you could first any I regards post-halving are your any competitors you? to being comment change my of types on be currently presented giving dynamics. color -- Have wondering are how seen in For you would was

Rodney Page

Kong. here evening, with rig Hong and I'm over Co-President, meeting investors. the doing our call Josh, Thanks, I'm good should from I with manufacturers actually and Will, say

deliberate I'll slight there's Yes, dynamics. been delay my a try It's line, apologies, post-halving my great to if on answers. So to be question. in watch interesting

all-time it per So if miners the was to after like has contributes if is miner It economics all-time of halving, settle the in a of actually the where there huge bounced. the we basically look or that kind about it's halving. an fees the hung -- price, at we seen made low after immediately that to, network. expected.We put daily explosion aside And as unit the in X there day hash high an exactly, daily so what a revenue for week measures metric compute around USD a paid we've and transaction

bounced per touched it it's and $X.XXX So back. terahash, about

I think per another dollars all-time an above revenue for that of terahash compute. XX,XXX, is in $X.XX That's what squeeze folks. But low at per means bitcoin paid above it's day. it's in terms is going that to

producers, dynamic cost raise miner and even cost seems the growth et among And to ability to getting a price has of you for it's cetera, the squeezed to squeezed.So negative harder. low-cost if that has like hash has hash getting at are since definitely markets, seen, cost are lowest produce tap is and or getting halving. pretty into have that expand, a hash zone what you lot based positive the stayed producer where capital are tight or or update be the if really the so look there fleets, be between miners. could it we capital or Cipher you others plan, that the a But the the on we have

say miners.I seen, pickup as a think, we say So fair it's in specifically But economics company can't I have to seen up this. with strategic is plan. post-halving, that with dealing historically happens as immediately are the squeezed needing a miners other I expected, have come to and how each or for

don't power cheaper -- things figure and you by negative, those So out. And to is need obviously could much power have of cash that your you costs, be flow costs. driven if you

So bitcoin becomes I the it post-halving, I thinking plan to if them activity, see.I price later. expect because I to down all-time miners going see maybe a tougher think forward. the question earlier to lot come will as remarks, withstand But And And maybe are could the how batten a normally worse would help think in what we highs historically So see with makes miners also appreciation be economics. of long acquisition probably about hatches. a think that this I I few Bitcoin is otherwise, the do happens, and alluded months you will going have in pain? think, of a mean, my just we we'll can pickup with I economics

Joshua Siegler

capital talk that for thinking at you could of little full building fund more sell on the help raising to now if And for delivered a I [indiscernible] guess expansion? how about wondering essentially as if -- was bitcoin how balance, a about I Black follow-up, perhaps to kind 'XX bit you're Pearl. much you've up the be you'd that looking

Rodney Page

what Pearl past. in we've Black are projections in line with about talk pretty and the said me much let So

that cost purchase figure at with you site, that And in forecasted purchase that's about buy contract we I'm million million for roughly -- XXX megawatt $XXX purchase that's the we $XXX megawatts figure the of $XXX for non-rig have in we a a about -- infrastructure a $XXX cheap. option rigs. to If look it's using about in we million $XXX have recall total to build. pretty million for XXX and And rigs the option million. contracted Bitmain, have and That's to total

paid we've on for that, cetera. the of payments et work of paid the for down site. deposits We've the So substations, at rigs. already We've some or put

on So $XX liquidity at about balance hand price I or bitcoin look and that.If or paid on cash been there sitting think just give $XXX you in take, of of of reported, million today's this as Bitcoin about, so as million we we're our has morning.

to gap quarters million. And over so next about X leave $XXX so that would a pay the or

and either remainder if in between positive between debt here comfortable any bitcoin we our or equity balance to we in very feel operations, there. we and of so have, flow And need cash to markets the the fill tap

that it. plenty if I an shelf we reminder, to equity chose a on of have has mean, we it tap As capacity

for that's -- of been increases Pearl data a about -- philosophy do that why We full Bitcoin so think build as thinking we we're be over I spend feel change we'll always as bad debt up as will we about it's so stay that bitcoin that indicate manage trying so hedge the think versus and the times that's should we sell Ed also how equity expect long-term means a capital, Bitcoin one any that's other thing in of we to much as think overall we're described will markets, no that and at very we Bitcoin, time. our in described the build bitcoin if time, heart we not So consistent, It just, our track and comfortable There go at with the the the can goal treasury spend our it's of doesn't that relative Black way center.As to ways linear. do. be spending a to where or sometimes to given we we business to the past. capital.And optimal options in a and looking and far we've bitcoin time price lot of source come

bitcoin month. very the treasury. last at I comfortable certainly, bitcoin which currently, would with we hedges, the manage the we've in to come at XXXX where and But end was, over expect actively positioned And we're of on So treasury, cost got of Black we've Pearl, from putting where again, some what that been we're time.

Operator

from next Colonnese Wainright. question next our H.C. Our comes -- Mike and question of

Michael Colonnese

to Nice see. quarter great here,

full And Bitmain? how your of full to under by thought at question you deciding purchase do of order process the year? decision your in part the build the the or if Odessa Tyler, TXXs purchase your could all First through to end me, build-out for us your with influences just next XXX-megawatt for exercise infrastructure walk options

Rodney Page

to to to So preserve our -- shareholders. there find opportunities always, as try for flexibility the best we look

of a So a these megawatts. rigs do Hong fill week I in have kind all contract we market for it's meetings our to purchase But higher. pencil dynamics the rig in after checked, manufacturers, I'll Kong it's that to forward. a XX% And for you have $XX all now, of TXX of enough at with the going the terahash. sense better from what to easy just purchase it's And contract, if about the last that and we going rate for I look a that think is XXX about

is So in that money. the contract

locked a have We in price. cheaper

We most we through to compared ability source better. entire require our our and other one don't factor. think to good a we there's of very then competitors that's of it power not price.The about And believe these structure long data chain ones so of at greenfield I relative -- do arrangements, that our miners, to all fully construction to the value. is have And rigs sites, second opportunity. active -- management. And a centers know go is them do, timing process don't any that the I I greatest and way favorable strength power thing believe, very that operate do thinking access

think build strengths. those out there, to Black And opportunities so opportunity we are that when about the the leverages really Pearl

timing, be decision it's waiting the in various time costs year.I that's when And to rigs. sitting exercised energize scheduled for the of the second at there, are because them. infrastructure quarter so we really want buy build to infrastructure looking the is, the rigs lead mentioned again, longer next everything begins that The to to with in items

in industry interconnection It's of infrastructure. some ready the of to and assets few been large decision the written thinking been popular the that research I know pieces approvals having is weeks. the electricity about about the with loads the for value having so with there's valuable. past those go value -- And begins a for theme very of

another site see like And most upgrading that side, earlier. that and choose alternatively, a better something be those the to exercise or Say the use may rigs be there we'll we needs or to we the option And forward rigs move purchase those another that. Or that to that decision, so market no-brainer We sort earlier? acquire option. that our is there, us it about, fall to decision-making gives it this back side, which infrastructure Pearl, dynamics opportunities the seems kind plays is to on and but to lots market, what value.On framing that the are that's dynamic. months happens the and strengths.So so exercising X think to rig will -- have on us Black final moving the like us greatest produces optionality of gives of of

tried we've be coming, think and it, squeeze I economics to earnings is all how build to talked this, our about that an this reacts. cash ready in exciting flow to on it's we'll We've our time. for see feel calls business I and of have everyone like,

to in and going year is all next if strategically see And Pearl.Alternatively, out it. upgrade to for option we'll make we'll get we towards that purchase things over network using by that we then. than that Pearl then of time as months see rate what this X sites amazing the in could think if to we our I decision Black X up long and more process figure have scoop cash to bitcoin and do how built, opportunities buy building cheaper rigs are are we purchase want the see option, price we value X, Black or others

we we've sort optionality, it, of that best. that's but we So most for framework the how on unlock focusing what got about do can we think the

Michael Colonnese

over side be continue And just the on to quarters, the well? CapEx to a the should CapEx-related for out me. million out number again, Bitmain, $XXX about appreciate follow-up but how Pearl. infrastructure of build Black as we fully the you the rig obviously, cadence I it spend between But as the of Black And build coming payments Pearl think remaining

Rodney Page

color you some steady color, if we're any to jump pass. in Ed, drumbeat then and But have So now free or of the other feel if in let construction. me give

Chief Black Pearl. & You full Bear with saw we capabilities are there. to bringing the done will build the pictures our brunt Also that now be just about

month And different paying month schedule X you're rigs.And payments biggest for out out because are made payment delivery. Bitmain and by so the The delivery labor so contracts, payment, stages X to within from payments the month, where from is construction. are of cost at chunkiest right, is months there a there the large related

the we stages rigs having work build towards because, we again, to of last the general, a is greenfield, sequencing year make show step in just-in-time on-site pretty the try end installed. with So site payments the there up when much and will made then the various a from be to be then a

we being of chunkier so those anticipate year. next quarter And which are the later those would payments means in the year, in second delivered

and the XX%. the put down And each are XX% X on then on XX% payments we Specifically, Bitmain contract. contracts, remaining

Operator

question Company. comes And our & Needham from next John Todaro of

John Todaro

specific One, a broader. more here. kind one little bit and Two of then

you're It's could of come the down is just rate. seems then almost question saying second my change would be that. year like that this. the of more Ed, down wondering on 'XX. this of should kind of of of is the -- rate? Tyler, the But that that?And on Or going But bit just we innings flushing new it some driving for call I specific you top not early one, dynamics the color kind out? second with maybe versus, hash so -- do So flush out dynamics the remainder guess, I on any a be X% a here. or guess, rate wondering network the from kind understood came was kind G&A appreciate that hash half it I of think it on quarterly just first drawdown this the you're

Edward Farrell

that Ed it's we'll G&A. With John, we to and to break -- what is you see G&A, continue quarter benefits here. and and can question this do on out regard compensation your

number year in company. greenfield or continue with that build stuff keep third-party bringing other additional have Pearl. to of or would down our Pearl. out true Black quarter, at But to to leverage I we'll think have providers, ago lot some year that have that we things they of from that we're a it's were now gives is staffing few Maybe help I cost, had true the up the we're been we it's looking Black a we constant. expense We more bringing to Black because out fully as this our build some more we service within some a mind, on bit we expect team, to which Pearl, it a XXXX of G&A. and that Yes, which everybody maybe -- we relied expect build great, a up expenses, in-house. out X ago, items remain as insight strategic more and and relatively little a hires X in

significantly or see, over the long X expect really to move short, quarters. story So wouldn't long expect I I X to a G&A wouldn't story -- see next make

Rodney Page

can hash I on And in then rate. jump

do, a companies I this because and had of lot way different it of and the discussion these question the mentioning thinking about over broader gives few SG&A, asked. with before halving, going that's last Bitcoin I through about you the rate actually companies. hash Although the worthwhile think it there's mining M&A And the landscape I've thinking -- investors it's months, about kinds

we pretty over believe a this so on becomes that and it squeeze hash pursuing not expanding, look that in the hanging minor megawatt paying sites being is kind those overall, cetera. sites people and economics. you difference more interconnection cheap is belief is is than internally that of And and I where the and see where different of that X a to sites, is important increases, that about cases, we a build think, development if of can't opportunities, we or potential a and really you we big network have can bullish We just supply acquire that megawatt time, opportunities a sort outlook. prices signs one these both are with per we lot are feel but can so to still we a for growth that bitcoin I metric like still growth build we important very So structure and that tell we is for and X has as and the that development I up go right? industry. SG&A, with building think SG&A contracts, et this under source construction as because lots more KPI industry, have will site per find operate, on adoption contextualizing believe, company, that.And demand our very overall, SG&A these as there's these really trying keep we a that's because at power company, spend when, important of wonderful a on.And imbalance, that's that's power our And operated the is minds company to X between those SG&A running growth is a In company is rate and our And sites. and

and perspective, we're SG&A an related look way efficiency, as the at from so And happens, rate what the and on self-mining. of XXX but megawatts appropriately basis, a being about megawatt I to these going questions obviously, hash analyzed to it's per bigger

an let's well.On how a it investments tech so important, dynamic I lot rate got scale And call think for will longer-term and a our it, time specifically, SG&A of it's contextualizing that's stays John, for does. price think Hash very long I where hash where

So -- and gets. magnitude the low of how it

bitcoin the $X.XXX. rate but about there $X.XX X of few the very to say price explosion I that. for revenue maybe would when minor days to after it right? we those will hash funny dipped produce where flow So week. months big in the it I them had again, today, companies starts Lots what effects revenue was That where we of last take I withstand had cash think, it's are the You of is come dynamics offline.So that, happen, majority adjustments were miners, you It that difficulty most could the lingering still was halving bitcoin above ever. here of look, or checked. the in a more that would think this year, in and are a is later different grinding I last squeeze that zone to the after down the day a months, after That adjustment, get day definitely large decent. And the then goes it still really If that may result day zone where a the levels. the even the down timing can could get the of stays further highest And a about economics. difficulty negative

And so making looking minor people were at they adjustment, more economics difficulty like day than lot. before look great, a immediate the felt the

first X.X% So or of people that difficulty We downward one we another really reflecting think lower seeing in the of so. was in last trending question, adjustment so X.X of difficulty, will an hash adjustment. lot And another answer be one rate where your not about off easier day we're -- turned this network.I a the that's looking looked now the is adjustment. I that towards that advance have to directly difficulty next at on

miner's you'll a start XX of I you'll days to truer reflection the now get sustained dynamics, hash about and from real-time to So because see start think reactions. then price

that's hard rate where to to think on think But of price is tough, call, -- we I we'll X%, frankly, we about squeeze didn't even may last think hash also now. and I that's hash up, off. rate have come have the hash summer said other of is measure and we so coming I in lot are thing a going And got lot Texas. to a think, see.This much now was I be our the said you've miners going on we and

direction. adjustment X see could hash next very difficulty of that towards so moderate months. weeks I in couple the next further But telling will think And the we over rate be

Operator

next Lewis of And our BTIG. question Greg from comes

Gregory Lewis

question on rig a had I pricing. Tyler, quick

month been But the ago. delivered less that a not around are maybe XX those? of newer rigs. that bid from the purchases J/TH. kind What older since for pricing that that rig Is a You -- how for reaction response early I'm pricing and more I maybe generation a basis up market mentioned in for that to kind too XX%. mean, just for the developing? was rigs on generation has curious has the necessarily these of post there And than your been halving going be are terahash is it's

Rodney Page

efficiencies, is the question $X.XXX really make secondary $X.XX get that less start or that market various worse or I environment. players where you they're especially markets operate if to some low at an looking curve by are made or have efficiency price think because there in you be prices again, because, power efficiency have there where is to $X.XXX efficient rigs hash down even see deep for obviously that secondary if profitably how at it's would the you at different prices, real rigs

get could them, if had to question probably probably. it you how be I'm could you than So I so sell the high mean, per early sell? digits single a would sure those price say to much say is could of still moving know I the been, J/TH? rigs.And that could it's anyone rig XXX guess. lower the with XX I be question of probably terahash you you would Absolutely. too that's But but dollars, because had to The large hard mid- sell would quantities I don't

hash sell try it could trying XX,XXX like, is to difficulty.A them, think If you to change on lower, everyone but I the would of price probably next, is also go quickly that really of part this predict say, depending to Is questions happen this about a that come it or that. to just going more question rate? going going lot there's to to what's it's off? go And of to so to hard

easy difficulty to a depending two. or terahash, in it's next It's say it dollars or the than it's single-digit So month less lot on probably dollars I'd say a adjustment was. high per could mid-single-digit and that change

Gregory Lewis

to space. guess -- a company become for calls what that -- around across kind any centers them And talk the of energy interesting, just about and has years.Really, has others somewhere because that major are we on power. looking simply up wants starting topical industry -- industrial AI are I somebody everyone access Cipher tech maybe have for U.S., takes competitive years the finish couple AI coming because center working meant data mean, like some a kind from I'm of potential there's then these that all you it we're to from actually is, my like running. At at it's on Pearl, wondering inflation and it or been else? in bid Black sites to of a data least start with everyone data question into aware I earnings in center are of get the to companies forward to is and moving on Obviously, right? run price is

Rodney Page

great a That's question.

month we've or centers, last in listen, data particularly the discussions think, X. I around AI-related had many

at asking We have Black for been people for capacity Pearl. approached by AI

do We have no to plans that.

where operating AI like with which a market. -- a no-brainer I that growth data is have think still always we are centers, seems been we it's huge

you're GPUs it having our of AI-related at -- very the the do approached purpose and matures us starts trying interesting up prominent that about interconnection such a also set more this on may over would the portfolio least to approvals someone to up, could could we long make just us we'll are like opportunities sites more take spending people It that an time. Wall the cost think on get it out vehicle I do. is stratification think basically, within analyst question, things great, to the get develops, center sort and have we off -- you're ask at highly like an market just so sites. challenge where if I data is But to and that's certainly pulse.It questions that us. option finger much ago where that to or on keep trying there we special get to market time ready on call interesting a really approvals that rigs.And been take debt expensive, was general, of that it curtailment be capital attractive ways, ready AI. in to advantage when question some buy we're time to That's as on on have CapEx extremely funding be be be which to AI and in said, play Nothing to depends the market saying There something. managing be interconnections but a and speculative a point sort is side, for access -- set some set in there to of center centers, a see time will up it lag extra by data for for does we valuable, and to cheap speculating chips of that in over that there it's piece part a in, could these a week expensive just some are to and data of interconnection. put crunch progress research to build seems those Street there's about our about, That a for to that some and to themselves for

that the point, if So becomes lot a having in value that. of there is choke

Operator

question And Genuity. Canaccord our of comes Vafi next from Joseph

Joseph Vafi

results. Nice

know than past. that I M&A -- could of a Maybe you potentially your here see with I extra with some you just may squeeze looking have And is on operators call, think more a costs?Or how think a you incrementally work rate given merge. would it kind cetera. a have M&A to is and et you've at hash halving market the attractive at mining that the some the hinted mentioned you've may few on to other what power what just which work? Just, for I profitably time is mentioned lot Maybe need increase Tyler, here in thoughts you sites be where might how it times you're And follow-up. here more -- really -- Would on I rig do -- your it you. little contracts, of a

Rodney Page

Sure.

like feel this say develop. time a we, broad because are and again, net so for to excited period we've casting things been I I'd planning we while a for see So

buckets got set the don't they're and didn't the we time, So are, in so of interconnection through a X everything, at greatest we I'd approvals are that out really maybe come look greenfield the capital, to there where access general, plays and have basically strength. our say if running or their developer they see forth, but financing sites opportunities of is they've and to up,

return we'll Again, produce in the those think over what investment I the highest longer-term on that's call probably value most we Now story. the and time, situations.

debt, setup might but maybe as private to their older. operators said, whatever. the So our more to again, they're and is where, And they or you getting existing and alluded on is a from to be don't for there's maybe what those have whatever bucket, much mining rigs the site which shorter-term tend bit they're crunch little a reason, challenges, second maybe, point, more capital, starting access the decent, favorites.That a have power they have related to be they having

access to could where generation And site, we we so a there rigs. do find situations new be have

because current We cannot. profitable we that maybe site And environment, capital. in win-win they it's upgrade have a make access and and to can get we very the can

say to second in weeks months, say little I'd few been the more bit opportunities.But move Maybe of those become opportunities I'd so past see. months. have interesting and to the that's and they more bucket have coming And reluctant we'll a the over

Joseph Vafi

opportunities then organic Would kind thinking Pearl up about M&A, move commitments, both And M&A kind if Black -- wanted overall just timeline came to it Pearl affect follow-up's of the capital that. you inorganic? that and affect in and could on related the right to Black potentially could time of line,

Rodney Page

So about possible. Pearl I guess excited very anything that. proceeding is on Black pace and We're at full

exercising happens, their a happens that, we has purchase that by how planning add a way impacted cost an of squeezed and or think we strategic then see where machines, Black Pearl.I value it one this rigs perspective of opportunities that how half set to back the profitability with interesting more mining. be we have whole based current one what a could with buy Bitmain manufacturers is could what That think lot the on create again, hash up rigs the maybe of will the think because been of find price option price to if upgrade of would the did rig we be the about historically to would those I from opportunity be site.

So stays a could may we attractive open prices. -- to have window that get rig

the not that of if rigs on it. the if or might when with anything which we possible I where, do the reshuffling Black something planning and our look guess now build case and certainly, base have depending like perhaps there's order. plan is is a to the what But deal all we we rigs Pearl on and so do go And of and

Operator

And our next question comes JPMorgan. Smith from Regi of

Reginald Smith

wave the a AI -- will curious investment call, the industry access does wanted from brief. you to you'll to how so could follow-up this the AI. down things how you get still approvals? perspective tower long you Do to bit, sites? little And think, I you I'll it -- talked build able about of, need it is megawatt impact think get and mining keep guess, about Bitcoin XXX a but scale this does I impact the and be impact I'm being to how able just a Like ask the This to done?

Rodney Page

think question, be a and great It's might it I to too say. early

looking a one the at opportunities. bunch hand, interesting we're of On

somewhere. of And know a they being least and If wants hosting people source might them mining it greenfield end for everyone were about like the so to the It now site. there's I an spectrum can do there's if within business feels talk operate you to at exist find AI. I harder hosted in Bitcoin that build -- that's that think from

spend squeezed -- Susquehanna gigantic and And you got someone much find a billion. think might Certainly, squeeze access you I kind data build purchase Microsoft to to hyperscalers, opportunities the if so know if And think a them at site.I it CapEx. of you're that it like I deal, combine these of I of if look harder and -- I end. rigs to is spectrum. think do they've you $XX think again, centers, as a source might CapEx that they to thing Bitcoin also for be requires else's to mining into when quarter. big announced larger it the company mean, for I sites, to a the our was know funding at site anything, capabilities set one last of I larger the with AI, buy lot a the so from to favorable -- AWS that just place, plug could Brookfield I of a beginning plans a it's end just rates the with But amount if and business process manage

lot a it puts more value as what we a if business. think anything, on I do

we don't how anything see to be. large have other see I squeezed at we'll will suggests but So much out sites, today that we get

Reginald Smith

quick, you of the like real a -- of terms into the a Would your are the to sites, those like industry XXX future what's you it just is it, put do how megawatts? -- see maybe size minimum just And point move finer of kind dose, where place in be on megawatts, effective XXX

Rodney Page

cetera. typically. flexibility XX our I we where a generally at people Also get where we the in et load. places around with Is to, minimum Is our questions operationally, are? would think And synergies. then can of it it it of and easy monetize to trade there's does look operational power work

to So dynamic matrix. start say where is little But of XX it's get megawatts I'd a a bit we general, in interested.

Operator

today comes And Papanastasiou from our last Stifel. question Bill of

Bill Papanastasiou

where my subscale Congrats any Tyler, guys appetite today? target how to on the to connected attractive once in still uptick first would Texas some be main quarter an Is that Or and geographies? the there's priority? I'm unit been whether most ERCOT? opportunities on for hear other or economics there their opportunities plans. it need again. to you the and the peers question, are for operations to spoke And is are your curious M&A -- appealing re-strategize

Rodney Page

lot Bitcoin have very upside instantly unique has in monetizing we curtailable. a of obviously that Texas that we mining, is in us which believe a for it characteristic lot of strength of that So is

a prices, It's very so volatile market able quickly. off lot wonderful use general.That said, we're Texas, being Texas. it of us a concentrated for it's power a power there's and strengthening grid from And perspective. the then also set, to it's of very place in lot in in in return for with like value -- a And benefit a turn

we would love have expand and United in in at places to other we the So opportunities countries. States other to geographies, other in and looked

to start what and in still it's if is then physical a to it's love do law contracts, for we risks we But environment, overseas, jurisdictions our et -- cetera? like also of both We the operate a are us with any we we mindful property Texas I do opportunities risk it the dynamics jurisdiction. I perspective, place. but good the want of place a what would rights general, power monetize in diversify, to be respective to think and et what of computers, there response a typically are, and is flexibility? big And cetera, are great, demand a assessment think ways from think rule

as You diversified Texas well. can within be

Bill Papanastasiou

you Black strategy a remind us And Pearl. planned just of at may the as power again follow-up,

hear of Just average kind you're as what it's going and as whether megawatt expecting Odessa, be per as attractive to cost of fleet-wide power? to the curious

Rodney Page

Sure.

up. going the So forward Texas general in in power been has curve for

seemingly can our of it though that contracted about again, volatility You Texas up interesting those even prices. quarter time in losing Odessa, those value. keeps see going we every that keep is high the wide the of what's prices But in and dispersion value on

a so Bear we look site. And expect would like to Pearl a meter lot the in front it's Black that of Chief, &

X% to going be curtailment in option. it's is, But effectively our we that So has the paying a Odessa do if power recreate market Odessa, counterparty contract, which you recall prices. what at

be & is the meter Bear would those effectively So avoid to they are the power, times, our same of if of do get you'll in and time, the to when we expensive X% manage curtail in is, the the use very which elevated we it, which prices with we front mid, $X.XX time, the we prices because $X.XX call Chief, thing Texas.We X% being ancillary which create to the fair that's that that like to site, most keep what can quite what of a kilowatt can down per we expect. time. that, day-ahead bit will would amount operator, to something real opportunities that, Then have hour or be potentially curtailment doing Texas, in of for it for doing is site, available in capacity markets such would range, that.And participate beyond a $X.XXX, your it services a making you get grid paid a to nuance and the there's forecast large

active management that make prices. the hope power above close to call what we average to and we value today. And think is Pearl down let's you drive to payments at our trading it produce net price capacity, high avoiding Black out so there, and hope those overall when the the to we of portfolio And just beyond will would

trading, management sub-$X.XX, and get require won't will always So be there, and but confident to will but we're get active that there. we able we

Operator

Thank Tyler to session. for closing it you. I'd back This turn concludes our Page now to remarks. like question-and-answer

Rodney Page

This Thank and Cipher in you, the Mining. waiting continued is been everyone, for time interest moment your we've for.

soon. excited us, we're about speaking to the opportunities So very of front forward and I all you to in look we've got again

Operator

concludes This call. today's participating, you conference and disconnect. Thank now may you for

Cipher Mining (CIFR) 7 May 242024 Q1 Earnings call transcript