CIFR - Earnings call transcript Q3 2024

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Operator

Good day and thank you for standing by. Welcome to the Cipher Mining Third Quarter 2024 Business Update Conference call. [Operator Instructions] Please be advised, 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 and thank you for joining us on this conference call to address Cipher Mining's third quarter 2024 business update.

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

other like competition we start, release statements including remind Before and statements to and potential following the potential future discussion market contain about strategies. and outlook, presentation well I'd including, our our press events to our and financial business you not and operations, limited plans Cipher's that developments, as but goals of forward-looking as business and objectives,

this questions, and current including whether and call, responses except of risks statements as assumes a no your law. Cipher as in expectations or obligation by or to result to revise Forward-looking as otherwise, developments update on them, conference of based new are required today

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

Rodney Page

model built-in via Thank a update weeks rapidly being for our Tyler evolved to with being had extremely call. is a third centers, Cipher, business Hello, quarter just from has few offtake Mining. Josh. this HPC CEO much data mining unique always natural business miner Page, knowing joining we at our busy developer site of put Bitcoin We've a that an investing and XXXX tenant footprint, of can our high materialize, recently found to very Thanks, you have truly and development prospective Bitcoin continue we or a for sites operate Bitcoin a HPC for if that build the sites opportunistically a to by fails greenfield niche HPC quality we profitable expand can sites. We mining tenant, believe use. in to an and Cipher

We to closed months. acquire development data in deals X such greenfield center sites last the have X

be professionals for as as proven Texas intent always these primary current in centers, develop X data but curtailment from operations and Our electricity would to to manage and joined our and in excellent the HPC experienced also all costs. Cipher located for site end is use team sites bitcoin of them sites an the ability are our combines of origination produce construction the own hyperscalers. development mining best-in-class can at with funnel, sites power expertise us we front that

waiting their are required suggesting are demand executives large language the large in where up system power backdrop believe both race rate few to operating mining development talents large through interconnections is in center times manage progress scale further CapEx built entire the winner growth The center and we prices hyperscalers order spend new in HPC are I evolves. According bear recent with of the interconnects, the the new data this to will about for those the bitcoin increasingly chief downstream, and has Regulators in from that to to valuable, receive the more extend and most centers needed of process large data to rise annual technology am hard this HPC models years environment as is at continues to compound high-tech for is AI, are team Our available of energy We in and that rare believe an we vertical. our scale situation match is launched growing against and ramping generation interconnects It even by data juxtaposed piece be a faster trend driven Further for find. sites a data hyperscalers to you the and and in in today. innovate the space. industry the the now JLL, operators to centers, requests research industry and XX% AI. and some forecast curtailment next XXXX. seemingly tell exceedingly excited will approvals. This grow against our fruit demand the world, trading Cipher's and

portfolio, me Before metrics let of some development the about key I XXXX. end our updating by of call for the begin Cipher new September as talk

XX.X will electricity right While complete is of have with of efficient rig in to end we X grown competitive mining bitcoin and holding very the capacity terahash. Cipher X,XXX costs, By near significant in expansion weighted end, we now. We upgrade, through our pumping are exahash per bitcoin second and expect Odessa industry our installing exahash $X.XXX also morning the for the at majority the self-mining X.X middle are we of of the In price coming the efficiency XX.X industry's are months, joules to average unit we next known the to a significant grow capacity bitcoin best end wide the and of manage driver second we new be the of sites, in major second. to as of key in exahash business per of upgrade of per fleet our as XX.X of have with the all year, the growth operated future cheapest a in represents its quarter large and self-mining of this of as continues hour. Electricity our inventory, our third our Odessa per a mining per middle price we outstanding most our kilowatt economics. operating X a power probably low our fleets. of quarter, the

portfolio we per to scaling of centers Year-to-date, capacity. Now power let's our our overview an our existing produced at a of a managed expected bitcoin a we cost Slide current electricity term roughly of operations. data average move review $XX,XXX for data near paid On of timeline give all-in in X, our centers.

this our are we to proud note talk We that rigs. mean all-in we very costs, deliver when of to number. Please the cost electricity electricity total mining about

and transmission, So charges, include dramatically taxes, our numbers and numbers competitive our all demonstrate low our advantage. other

growth left our production of the sites side JV cost Odessa bitcoin our and an of across overview at of year-to-date. The the graphic the side of currently chart electricity the number you slide as the right a megawatts split well we on On gives per year. the data the projected our we this slide, along illustration as coming with all-in for manage show of centers,

X be pays when bitcoin X you the currently some production agreement, for represented turn manage awarded first summary in our it Management fixed XXX the prices As is as Pearl production approximately across a has bring a of X-year megawatts became a in to data significant see, is we XXXX the online. mining most centers Odessa Odessa facility to Odessa expect Recently center will and portfolio, power our by and point, part Black of Barber for data bitcoin the Lake XX% price we approval to production stamp power and September. site. Slide of we middle wholly-owned operations. Odessa can purchase the of At in this the lowest of Uptime in Institute's of our industry. facility.

number of Even megawatts can X.X this available will cost approximately exahash data per miners, XXX we generated which having exahash such the Cipher & also the our see site, the the upgrade it end all-in As was to second, power large cheap we bitcoin roughly of Bear now. On generate how $XX,XXX. are in provide quarter of a we the XX.X observed approximately portfolio. On roughly we new our fixed using at same centers paid a the of executing page, halving, Those site portion per X, April of highlight at price post to for XXX venture Alborz, on with joint after of the electricity you per is second Chief. bitcoin Slide middle rig megawatts. valuable have reduced

expansions which and XX% per Bear was power XXXmegawatts, also With We now own our of electricity XX% halving, the JV generated have of we $XX,XXX. a roughly of generate Chief, the this each recent portion capacity total sites roughly recently our bitcoin & page, all-in overall the provide post bitcoin per second. the sites sites at observed at X.X-exahash production. On of and cost approximately the

higher. their Bear of to sites, expected a operate and some summer so be tend As will be there seasonal & meter reminder, front months with as electricity costs, the fluctuations Chief

site data update photos show an development rendering and underway. a Pearl, at center to and Black turn the of let's Now our the XX work Slides completed portfolio. current XX on from

We are half second scheduled is the full which on progressing schedule. site Phase of is and the first our megawatt in X, quarter of building, XXX XXXX. energize substation Everything to the the for

per envisions liquid XX.X capacity, second to rate. cooled At roughly hash megawatts and of Our full bitcoin exahash produce of current XXX megawatts anticipated design cooled air of mining. the XX is site

of optimal to inquiries the of acquired of last has most our so and for This on consider data data along gives Perhaps the we energized new best an land. for the by is XXX acres receive XX capacity on been We can that month. first we use is for saw will immediately on also sites we purchased turn megawatts, the on progress already substation, the has Lake site the surrounding to any center Texas. site large energize our managing has at potential and in produce service is as Barber our HPC HPC site Reveille medium-term our the recognized Pearl. will XX ideal expand capacity it. in It provider, the tenant XX The located overview site we forward center more XXXX. to it be who the market to depend given to it has Barber host in thus to of importantly, continued far updating have we final will Lake seen scheduled We will By shows running a for tenant. as willingness look think it site, potential approved outcome at large an XXX hosting, We in you Cotulla, of The we believe energized. of our design Lake a major interest overview been with to our available various existing time discussions we early the portion the HPC have site the iXX. based is completion fiber site pipeline site that detail, for expressed ultimately Every and megawatts, has its potentially Barber is is an when what already setup. Black we site located upon Reveille, approved construction. When initial but transmission next we repurpose time immediately first the site line discussions. Slide which shareholders. Slide XXX the an megawatts in

models or quality also and fleet multitenant own Given a hyperscaler, long-term to and lot potential the a a model, capabilities, the a our we business build strategy energization, We for timeline to data will a Cipher's the more powered expand GPUs. But tenant. secure a of managing including choose variety high potential a on we our from of for flexibility of have to of shell lease even may have site. review center

some have Mikeska, to we call XX, watch what our that evolve, XMs we recently the covered give X Milsing, and options planning. Slides purchase XX by the strategic acquired before develop sites of to or McLennan, complete for the We These overviews we our the finalized short. for and market be sites sites hope furthest results of each development in coming approval the they approval final out site. we the pending as to megawatts processes expect are year. We the are XXX interconnection, and to in receive for pipeline, the at approval up for to time

HPC of also land that our operations sites necessary. addition of at bitcoin flexibility allow necessary demand site. centers, substantial for sit the us of also purchase cover the mining options programs All parcels the response In interconnections, X if data characteristics each with have in to curtailment used locations monetize would but development to in

front to With we massive exactly a growth. trends, lot like optionality, is for of positioned of we have the these with in which potential where be sites

can you a so development as our company As occurred far. rapidly has see, evolution

originating scale of and power the building are demonstrated bringing mining, success We on expertise and our deals Bitcoin sites data the market. that to traditional best center in large

like the for non-traditional As to It and market the large towards need that us. feels evolving now. areas is entire market tenants scale moving go forcing they to is

define sites plans our finalize long-term we Barber out As and at the and ambitions pipeline. Pearl further in for the our Lake, Black

positioning. confident are extremely in We our

confident negotiations, yet today our current are why why review So there conditions current confirm in our we a so demonstrates specifics our don't While is in on of of simple economics and to the we so have positioning? market operating sites. HPC business much interest GPUs

view XXX to options a Zuckerberg We own and and to that our is companies can among the currently billions large too that about on the the that amounts driving new of if before capacity the dearth that data $X can sites spent he revenue than to their potential want scarcity acceleration, to the the have scale need "Rather they needed dynamics in every has risk HPC next spinning would, of our years year race, additional for sites development GPUs. To have to currently These the supremacy times across the generate long confidence revenue ultimately overall before that to at lead generate great AI up it sites their in as ready. our up be centers, we exciting tenants, for our backdrop, data over they X and Lake offer market years to extra site quickly are XXXX. in operate to given of business. potential the Hyperscalers and us want and in operations are estimated sites, as accelerate tenants years. said current X center dollars. available talked recently Barber GPUs. $X late few the Black of megawatts Pearl largest general critical the win infrastructure for capacity companies possible. Mark in that of center NVIDIA is the building of compared point that a race of waiting can given other have rather in market The those in are projected within as can Cipher sites in Hyperscalers on particular. Against And investing end interest of profit from growth time the X for that projects." suitable tremendous dollar X be large used success industry, many HPC giving data from This

that over and to lease a I that, We with expect Farrell. to sign turn everyone substantial a generate returns our more Ed long-term we to shareholders, look to updating share. With tenant high forward Cipher quality Financial Chief it have to Officer will when details specific I'll

Edward Farrell

Thank on site by part critical you, our initiative us begin some like high on to which and significant thoughts this represent everyone the quarter. Tyler acquisitions, recent for our to I'd and level a are of call. investments HPC hello sharing

is such established As of an we space to but the did the Tyler financing. The attractive foundational work only has leader in mentioned, and strong sites expertise this we ability company. also being secure when great direct a sites, in experienced a requires not result team

opportunities still stack, believe like of our and stages sheet, of made a these to our The on our have swiftly, are investments we position we our key enabled HPC will we've strategic centers. in elements balance capitalize team, the us of are the leading act data as Lake. unique that early us strength initiative, tech Although areas developer HPC in Barber

third it given quarter was that to was surprise revenues down. industry's a first full comes Turning halving, as were post the that it one, earnings, no quarter the challenging

company's underlying However, overall performance growth the and business' we remain encouraged trajectory. the by

in a balance which critical snapshot, to low-cost and our to year-over-year strong quarter power we financial every on strengths metrics position. Slides of continue sequential sheet solid some of give XX and a both maintaining price XX provide financial be fixed Our access our basis. and

Similar to rate. dive we price, move into detail. a cash low last industry encountered XX numbers slide Let's and network headwinds the on more a and quarter, including rising in to significant record hash

we bitcoin XXX at an sequential GAAP a to year. In due revenues net in compares resulting the decrease a XXX This we and of primarily in per $XX,XXX. $XX,XXX, mined in and XX% price in $XX increase the of million Year-over-year, of compared at XX%. revenue, a in million quarter the generating average quarter million, of hash $XX current in to bitcoin, million last the bitcoin prior QX, same quarter, price by an average XXXX $XX decline revenues $XX million $XX in For mined of recorded the the halving, the loss of prices, quarter loss bitcoin decreased to rate. network

a increased earlier, In upgrade This fleet remains to our our the power economics. was revenues one-off cost I by the maintaining price quarter, X% increase unit mentioned current As attractive expenses critical sequentially. driven in primarily factor fixed at by Odessa. related of

our true of revenues power, the thanks price our price to more Excluding Odessa. discuss these, the fixed evident We'll cost the low-cost is PPA its is detail at in value of in cost our which flat quarter-over-quarter, remained reflected of pricing but in later, fixed revenues. quarterly PPA

our adopted Moving fair drop recall, and million value we with price in bitcoin on, of as the you on accounting $XX XXXX new unrealized we an loss in holdings. recorded of standard crypto bitcoin in value a the the fair quarter,

However, in loss the from This of sale realized bitcoin $XX this gains financials. was net the by in $X the of resulted loss which of offset million million, period. in is mark-to-market a reported

changed. of to various philosophy and an evaluating growth Our treasury our bitcoin options maintain initiatives. not our continuously the approach approach, We to growth inventory, towards funding has opportunistic management our support

markets cash the and or disadvantages funded example plans to holdings considering of most over to bitcoin aim sources and involve general our actively allocation carefully using efficiently. funding time, acquisition different our equity. and Lake, capital, the quarter methods bitcoin the driven sale may our of Barber our inventory. are by the business our identify approach overall during issuing conditions, of our part the expansion our market decisions assess of attractive grow advantages we inventory This is strategy. We of reserves, this of While support to capital through which An was bitcoin the

constructive highly optimal on bitcoin, an bitcoin remain we to acquisition, our While was holdings choice. using the fund

As an asset rare we valuable exchanged even rare said, more and one. for one valuable Tyler and has

XX, of bitcoin our As September X,XXX held Treasury. in we

basis I'd quarters, was these share-based G&A compensation, costs. to decreased and flat. relatively previous expenses by for minute remain on decreased to a in $X spend As these a expenses quarter current philosophy quarter primarily our in managing expense. and Compensation and quarter-over-quarter million. benefits like prior due a sequentially also million share-based $XX decrease decrease XX%, compensation driven This versus year in to On

company which flat. IT, professional Now current expenses. professional expenses On these relatively quarter onto these XX%, prior expenses, expenses primarily year year the corporate other quarter, include general costs related and and fees, versus public public remain compliance. Sarbanes-Oxley occupancy, company driven were administrative insurance, to Sequentially, fees, by up a

technology to our These in proven As significant early we investments long-term we we HPC differentiators stages both have success. our be made investments of to believe which last our have initiative. are quarter, discussed already key in stack, crucial team and

of for XX% our third depreciation schedule, We or an a a driven was of prior expect from and by $X compared line. Depreciation them the sequential increase quarter mining to recent top impact rigs. and $XX in XXXX. our million XX% continue to increase million, having to our totaled change The the drive expense quarter bottom ultimately growth, on line the future rise, positive amortization

for depreciation previously period. the of over X a had we rigs accounted reminder, a As year

believe given is we upgrade now efficiency and our the rigs, X-year schedule more generation next rapid However, appropriate. fleet gains with depreciation that recent

be Our second much and change and and this the We accounting fleet. evolved, for we and entire reflected to it our this in treatment efficient upgrade the machines have believe of ability in accounted for quarter made our prospectively. cycles purchase install should expectations more

slide let's reconcile Now our measures turn non-GAAP where earnings. adjusted to our we

other exclude not fair derivative non-cash compensation As deferred depreciation non-recurring always, in the the GAAP. warrant in performance financial value in I'd supplemental value and measurements like gains. These financial accordance our expense, the income fair the change with tax to of and non-cash asset, adjusted of the of liability, U.S. share-based remind you earnings of that are amortization, the changes measures impact

add items our that an management believe to quarter these facilitate our performance the useful measures, performance business the us consistently. listed. of be may non-GAAP we loss, net Internally manage just million net and $XX quarter income of across quarter, However, better million non-GAAP we periods of operational third net of and I investors million third these to GAAP measures and $X to million uses loss evaluate in to the reporting brings comparing, to an the $X for loss net understand, decisions. When our for financial year. This prior for last adjusted compared in $X quarter, adjusted adjusting

turn Now at to sheet attention let's XX. our balance the September

to $XXX million. Our total current assets amounted

came to position the $XX from the second $XX cash of of decrease close XXXX. quarter million, of Our down million a

million, liquidity of million as Our XX comprised worth $XX bitcoin. of $XX million in of position $XXX September is cash and

investments million quarter, for the our million, million. of purchase quickly $XX some we items. Pearl. I'll and expenses This sheet significant of prepaid to Lake Black miners Barber the of for development with in line September $XX XX, the This from million. X,XXX primarily amounted million or the During figure for XXXX $X made million. At cover XXX at balance to year is the balance a held $XX.X $XX increase of quarter marks Treasury. reflecting the end valued bitcoin reported third X,XXX million, corporate in $XX liquidated bitcoin at an We bitcoin we bitcoin In $XX deposits related insurance. held

to asset. turn as like our to which record value of I'd Now, contract, derivative Odessa our we attention the power a

our power contract asset facility. in-the-money and represents it has value Essentially, the in forward we've to based producer mark quarter provides advantage, as Odessa each discussed sheet and a time reporting This a be XXXX. enabling contract this recorded derivative us reevaluated on significant agreement the a of of began mark previously, the with balance prevailing is at for low-cost we period. prices third-party on third value of us As this Bitcoin. To reporting recap, competitive our

the assets quarter, seasonality of and to valuation. impact in fluctuations the each leading gradual expected investors pricing reminded expiry quarterly contract we As

we forward in we significant experienced a Texas mild the Given curve, summer in seen and the corresponding drop power have valuation. unexpectedly in quarter-over-quarter decline

is However, provides securing reflected our advantage fixed our by power low-cost Odessa competitive lower it substantial value the no while mark way sheet, in at the price on contract diminishes this balance site. and

this $XX valued was a year-end. $XX change million at decrease million of as our As loss million, is on of from asset the a quarter reflecting XXth, recorded in of operations. September This decrease third a and $XX statement

are As value in contributes $XXX it always, of net rigs $XXX mining related contract announced quarter. Other this figures half this of will million. $XX Within to adjusted Leasehold for previously and significant than are rig net in Land from These fair consists construction account our made impact fluctuations with attributable the more depreciation. Deposits $XXX note equipment the given $XX $XXX and accordance mark million. facility. GAAP in property earnings. of the earnings, valued million, particularly primarily mining of to of in-progress and payments include of at exclude but improvements assets category, $XX GAAP important equipment for progress million million our we equipment to accumulated is purchases. of $XXX Odessa the This totaling million. we've million, primarily loss infrastructure on million of lower

million, JVs were software. At million. the our to & in we the end Pearl the with and $XX Bear capital quarter, Additionally, of changes structure. Lake $X $XX and the operating $XX approval deposits side of equity we And the sheet end. million million Black had balance no construction investee we deposits Chief We hold totaling Barber Alborz's, that we've obligations the data to Pearl stand third hinges of past, lease as the our to which no at million Barber of debt totaling and Black attributed in assets capitalized interest the had represent liability our related $XX related Lake $XX have security and million to year at ERCOT centers. There encore intangible reported remaining the from significant

and updating happy our you look your the and we to will on detail in to over coming forward plans pause answer are Tyler As always, greater questions. now quarters. I growth I

Operator

question Grondahl [Operator with first Our Instructions] Northland. from Mike comes

Mike Grondahl

development the Congratulations on pipeline.

You you thinking and of And there to opportunities, about recently. you guys how wanted to going forward that? ask, good thinking are HPC Bitcoin mining that, X related -- have with you made projects? between about progress a How Tyler, projects ton allocating are capital how I are just

Rodney Page

the thanks Mike, for question.

good it's one it's -- and a So space. our one that's head of occupying lot because a

I that. easiest way making that the goes focused what's going think the the decision answer higher that We're getting say to drive to to stock and the returns. on is shareholder value on greatest driven we're around

very I think they're both to good just verticals operating have. They're very different.

and we As market. and we go know halvings, chip kind X subject bull bear well, through is get the Bitcoin to mining, really upgrade cyclical markets year process you markets. of a We cycles, get booms busts, and

very different on it, going a least high counterparty is of have is kind really the we way business That a that lease. a hosting to I you're quality of looking business profile. have to a HPC the playing at long-term think are

It's different profile reliable cash than a very mining. completely heavily So be CapEx debt a from Bitcoin financed perspective. that just flows can

challenges as of And a where correlated and And lot one think investors lot mining, also of market of of least the is obviously at well. some lot is that's that at I Bitcoin a that. having of they lenders correlated in you these own look is as business the way relies treasury, if related Bitcoin value the that to on of have they the a it equipment risk. risk today the of hash-price volatile, view their if a is it but miners wrong sense

business a really profile. is is HPC the about it completely interesting what's so, And different

percentages loan-to-cost you be at looking If XX% can you've high-quality got a even. counterparty, north of

complementary think very driven be what by on I we that drives Bitcoin revenue really it's investors, I so we're but the think valued stream most to when value, differently look mining. And will out,

HPC way about they traditionally I in Bitcoin sites the were tenants be that been developed of And has large at because scale than larger such strengths the think different the last sites we over overlooked. couple interesting is, need now. was may market changing what's locations That is months finding again, developed mining looking. great have

of market And kind to has so us. come that really

I So a this right hedge let's Bitcoin company these mining as as go clearly now, that if got not hot sites forward, as kind that curtailment, center manage has we of it which built-in do. think Cipher that, you as we data really of development great is we've turns for HPC work can and it's say

the businesses. question of most expect just I both It's specific, we and where have specific, So can to really site be a market opportunistic.

Mike Grondahl

hyperscalers, your really are customers, kind you those then developing? discussions of with And getting mean, stages they in are are partners. HPC where terms discussions the some financing of how I and those and of initial past of initial

Rodney Page

me years speak you're generally for those is really paid we buy for But got whole look to probably look, you that, at some And broadly because specific on at let Lake, we high the had of not Barber of get marketplace, more discussions. double-digits It that I'm paid going at such complicated there I that pay if from percentage to site, you're these site. And to to it. the we've for because more But oversimplify a will multiples multiple it a deal. I a this. mean, the single-digits example, to are pay So for in to at to they're a a it's that, and roughly it too already. per little be sites is complicated what great obligated going than including say, lease bit are of they different wants than the elements build that in we speaking, cost somewhere client the offers going annum. value total the mid percentage plus the long-term to them, value and have to XX of lease, going some contributing

the would would specifics. be say, is that the that's they we got we've bit if a quality out the on with depending pretty market basically then a in had financed can we're a would counterparty. to discussions. with pay credit And I on and that credit lease advanced. interest. little percent quality ability going We've business amount the and that that be is more again, how So, deep further I many work to have that, they'd double-digits. And an your lower of spectrum, the pretty by somewhat lot -- a the of is quality counterparty, say lease the they're known on credit driven finance executed But

But more give said you get the level the call, the that it can't received way in we're comments all that. and interest and many than in confident beginning I of the at like finish specifics we this marketplace So heard to the will I line. we've too of the very

Operator

with Your from Paul Golding Macquarie. next question comes

Paul Golding

quick the Thanks Black Pearl. question so on on I development much a and had congrats pipeline. all

is of to the all level demand if with there's thinking in HPC a how a earlier terms at there any is Thanks. Given you're potential you're optionality tenants, in Black -- HPC on higher to whether I a follow-up. then there? conversations change having And Pearl a some about slot have

Rodney Page

Sure.

planned center way and the operating construction Pearl that going is XXX mining ahead Bitcoin everything the that have So is speed full we we are Black data on-track. megawatt is with envisioned right now

large XXXX hosting HPC. the sites that scale unsolicited we think energized a that are inquiry so site reverse are on for received have of lot that rare in I

what I'd Pearl return it the and we'll driven best the produce think If the company. investment offer by the we so offers. a to building than facility stars Moon returns Black will kind say we we're someone will And for wants there, entertain we're those Again, better the produce and Bitcoin is, for flexible. certainly of think what

of when of pictures what the got hard every the all up there it's and the happen about end to presentation. and we showed progress that but the it's the nothing our day So say changed running, process hundreds folks out making in may we've working at way has

Paul Golding

liquid cetera? I then XXX think see we How since Pearl, towards there development been for center how And you're whole split megawatt XX approaching a of Thanks. about for Black more terms when air-cooled maybe to should data think historically GPUs, about, more Tyler. Is maybe liquid you has from for your you're in time it over Is positioned site fleet direct that of terms if for chip, air-cooled? to anything liquid-cooled you've et well to that macro bifurcating? looking to be cooled. in potential Thanks, there how glean pivot

Rodney Page

Great question.

spend CapEx back-in investment to as out as it something difference So we when returns we do. you're not mining. that modeled going to have sure hydro, hydro you make have for the important we and look in really it view I'm Candidly, and at the Bitcoin

a there generally given air-cooled. hydro be managing that. a where data think said, fleet machines. That Pearl, of megawatts check-in And industry time. on scale that. And industry that why time that's was Paul, how moving a can you doing the we should over our meaningful it and large broadly, is ROIs works over better. the be assumptions cooled have We're our to and we more suggested, at the credible center so have the Black for that on see I versus favored show the direct-to-chip such exactly experience where And modeling. operational view got we world experience will we ROI got doing We to prepared just think to good we've it off those certainly are site air-cooled that managing do progresses pretty that in and there as we And other interesting everything so we've something megawatts that to is at check our want

Operator

comes question Mike with Wainwright. H.C. next Colonnese Our from

Michael Colonnese

of there. question First follow-up me to previous one for bit a is a the

Pearl So it portion to utilizing you're a sounds like open HPC. for at capacity of Black

for on exahash your XXXX deal how you which HPC a currently find I'm great that assuming calls outlook, XX curious the So hash-rate second, impact per would side?

Rodney Page

Thanks, Mike.

XX represents Pearl. the Pearl Black -- of mining of And projection envisions an Bitcoin projection at estimated full next for by exahash calculation. XX exahash the that XX.Xish build-out Black the So end the year

that sites astounding enthusiasm everyone only portion would the moving to keeps sites an what and that that on there's is HPC. Again, question, would like how on much why HPC site can it So proportionately being direction end of which amount and down be your Pearl year. would up answer would we're ramp for giving I depending XX.X next by it repurpose depend potentially of even we perspective, But is something for something if the better. that scale for hashrate if are knowledgeable up of large defining Black energized in see -- just coming still portion of progress better be I changing for we anything et not market one as the cetera. is XXXX much exahash pricing we're to think that, we it someone the in think our from scheduling, of just making, open end kind It's the projected, we to out a want about and our of

Michael Colonnese

of could assuming HPC, CapEx the remind that us you how if the remaining out we coming is build needed and could Pearl of to And complete just figure the as impacted progress through at be a how portion Black full really that allocated quarters? capacity

Rodney Page

Sure.

could give about Pearl a the there, to defined. So talk let it's well it on we're that's Black more Bitcoin specifics hard me about bit what but perspective exact up from because little mining end thinking as

certain Let me down. of a hitting have there any so remind beyond deposits obligations site, megawattage take we've meter the for it's put front or pay some you that don't of we kind minimum

that out about XXX first you $XX the to you could XXX assuming were The site of is first Bitcoin full roughly million the if megawatts phase, the double for build And which the infrastructure left mining. megawatts go. of of spending has

sort to are plan full that course, exahash unplugging at repurpose do of expect kind them if going we is, not I'm really conditions at cutting-edge that just we by could Bitcoin of obligation. and XPs strength we'd Bitmain but and machines the rigs. That And upgrading were we we to or some giving the that buy as on site, to market flexibility generation into all site, $XXX excessive profitably. All of have next you and buy of do I'll about -- have can for our we that, spend, just the those get machines. at million could, be the we go a If is and options, if everything like what currently and prices, meter way paying get somewhere rigs envisioned, operate the get the XX.X a exahash remind didn't obligations mining, so attractive bull both exahash options XX.X that about on you curtailment be rigs. The recall rigs the to Now it's to are And front to opportunistically. that's from saying why something manage X.X year, Odessa Canaan machines of run next of that to do of Reason machines of the that SXX we very but that's those Bitcoin the full mining down build-out said, else. materialize an deposits the next-gen those that full not

Operator

with question Stifel. Papanastasiou Bill comes next Our from

Bill Papanastasiou

on Congrats again discussions questions. my your hyperscale advance the with and developments in answering thanks for recent

hyperscalers pipelines more I'm have the hear on advantage color For of share in in just multiple has first one one, are the of how sites? considering have a Do curious the amount looking could been just hoping that to you customer the is largest demanding. mind to mining you it space? some capacity for these Tyler, that potential bitcoin

Rodney Page

color. me give some Let

some like outsized effectively those been least met some quotas very a seems at had, capacity to that on have users have discussions of be the very compute. term focus of near large we in So at there XXXX of not

been of a pipeline. vanilla our megawatts. focus can for are has on time. But more version that sort let's will call available of over the be, attempts up on well lines them that it business. the XXX sites the potentially of to us hosting I the That screen sooner for expand bit least kind real pieces we mentioned, Most as just first at little other And so, business in very what's that of of

a that's screen. think general I

know I interest. folks XXX bigger, than, megawatts. we've you how I Other even expressed don't know, half color much got, can I have it's don't dozen give that. than more Sometimes a know,

mentioned have after the some and only reverse they to aggressively really we been of Black inquiry has of progressed kind also Barber rare that, know the generally and discussions us Black those been but about knowing people pretty and how as that's state Some Pearl, those world. of got asking with I've into that fantastic of found us. And Pearl, It's is. they've went Lake certainly, discussions

Bill Papanastasiou

hyperscalers strategy, changed sticking Texas you just power points greenfield with data has of portfolio recent the then some of this you secure seeing now the due a to X it and point will capacity have And or lead of how sites that share important there. color yet anxious terms secure over quarters, gigawatts times? the how power, more level Appreciate long know in and can unallocated power the be number you the at getting you're roughly to to of difficulty

Rodney Page

Sure.

as sure, a I'm context, for knows, a portfolio. obviously everyone mean, having large is I gigawatts probably very So, X.X

opportunities just, lot a found because We historically used have have these of sites. bitcoin big miners

typically brokered go site. deals. bidding not ever sticky and even We That's not always got we round will expertise sure final The to found, through heavily sites have think we bids. spot. we in have kind challenging them. get made think, them. getting in a a look, and some looking active So tend to of in don't they though our provide marketed we've been be a of I'm for and more call situations. I do sweet find I really for we've a it's very participating

been sites sites that's need constituents kind there's we've we've Our sweet able at complicated. to spot extract close lot agreement. to been various of been are reason, history some tended quickly. There's where have been value. that able challenges has getting to swoop Whatever, that, of a Maybe again, be really they to for having whatever and in, to the sites those

don't we for what really, on, at as we these. as look good tend but on it. That we have get means we've source done job you really sites a do we to sites, If paid many bid

earlier different we our than options getting more XM on it's is how I we sort we process look that sites. at the development it the the look last mentioned sites, over think find ever if have indicative in you progress are quarter, challenging gone. The to of at in timelines,

those see been in the XMs, market to sites of getting are the and marketplace making We've bought cycle will large number rates They interconnection. and have greenfield, very favorable to the megawatts centers that data we they be in extraordinarily and sizing tighter in development each. an approved. on we have gone of the based this what is participate that them element again, of typically the or interconnects. get. those that to Xsites tighter, overall successful In able case fixed to be to framework applying bidding XXX they acquire are of every of risk we're and for approved lock harder megawatts pricing our we've are securing gets earlier because approved. Again, So tighter seems confident the get but with And some

So harder to to and harder are be I sites get. do think going

Island. It's you've like can the Three things or now to they're have speak the the is that grid. they you not grid that And to a to lot providing why with If Island that's that's some these operators As know, you system that's our are the saying, earlier, the think match of discussions the putting Microsoft restarting on that a curtailable seen the where seen some I they Mile are if press. But these generation Three way load buying that Mile that we it more about match. mentioned value we're think drawn it's typically and be in harder, of run, Please load very generation to system. and power seems puts being to want large quotes you've of hyperscalers go and harder even securing. and of to sites to the large-scale of way get operators, continues be on maybe going, scale the and sites interconnects off the going

we folks As time on but pressure we've earlier. that's changing development as They're we see over there's the term, the moved and on much hyperscalers XXXX. why and look the not that to from earlier the business near at market so sites. Again, XXXX out focused

Operator

next & John Needham from comes Todaro Company. with Our question

John Todaro

Two for you, guys.

So avenues CapEx list Tyler, sounds like it it's first a off Obviously few remarks, there's HPC. a prepared with the go could down big guys in you different though.

in follow-up that. you a are have going towards or I a from lease to lease if And dollars So wondering building CapEx without a customer dedicated at major site, any a question? then a place put

Rodney Page

lot to kinds a CapEx it, infrastructure we build at the know, doing you high sites basic there's for of and spend, A can voltage be future a arranging of looks of I would grading that et So used. think cetera mid-voltage sites. some both sort to site, preparing substation things the same like

tenant Those so at prospective there on least center a kinds build without the are of would that's kind the design depending based our mind, very particular a this And evolution, requirements in would things. of on the on data we not do. We because at in discussions, build are probably and spec things our tenant.

would would spec expect our it would not what something be going and letter on is probably build to, you that, sheet, think we of in they term this sort point to you again intent we're what do. We would look debt know, get place hope finance have so come is build as should tenant would as and we make I a then lease at to progress And thing evolution like of lease. design that an on on final kind a much requirements with We in the to that build executed envisioned. towards of as we would costs. the that And look possible

So sort of the ways are would in There executed many calling finance between there I us have to CapEx. avenues provide different of that and been do all folks a lot months we intent, of letter to to lease. that. are up fair offering think some spending have say But

So think I within reach. all it's easily

John Todaro

or Is but more just Because -- it the more like here. a be lease capture to timeframe signed seems of would And a something in of get 'XX a cracking that running generating be that short revenue then up almost just revenue in so to very it for generating be like and talk 'XX? unless seems customer, so pretty to would quickly it you HPC, follow-up, demand? like more there's the XXXX ground been and site some kind in 'XX so

Rodney Page

challenging. that from humming. course there Barber no of to But starting sitting going you're scratch, that the that's Lake the Yes, thing and about if is is doubt be substation

question. X, from a the time specific. If that the item, and in you're there. they're to in uptime of forever, year XXXX Xs get be at from by little lead X, item generators build some could day of end of to a that with long up And getting long it's lead probably customer really not to next or run wants until the that gating be other going least. XXXX. And uptime figure willing generators. and would say downstream you typically receiving be a it's generators, So to It's the running going you'd be after is timeline. is X, Xs at of out construction advance time very late maybe bit If a that customer But

You could have be move you getting but started would theoretically, to quickly.

models I of this own and think not some own is clients all have design their of the other are mention, procuring there's that and lot it. thing business. one their different There equipment, you're a to

providing inventory constructing the basically for they them, on sitting land an to generators. may of But and suit be basis. are You shell build the on a

very to that So is which case that is but 'XX, it's in it's a admittedly construction just timeline, really many months, going be late doable.

tenants. it a little So depends on the bit

Operator

Smith Reggie from JPMorgan. comes with question next Our

Reginald Smith

Obviously be some the deal you. to at soon, kind for again, surprised nailing yet? analysis, question it? aren't that interest Tyler announced. going HPC question one of term, Are why kind I some you scientific been deal as things just hasn't the you for guess in you is lot seen down users causing like it it's by of pace Tyler, plants nuclear see longer becomes Or development, it are through XXXX? range application and And hard of of kind the think it up of like heads what for of is, HPC. signed question. things their are is But because my surprised? signed you do very hesitate? builds something you last What are of a a Is the pricing of if big near We've the to there's weave. deals kind core We've or seen core from on

Rodney Page

I mean, on amount is experience, based of I'd Well, say fair our diligence. a there

risks of, fair sites, companies of the frankly and CapEx things of to on you while their there's go a revenue, again, spending are dollars, to visits, this be about et site quickly there's calls cloud services. to study related that the studies, to hundreds of of with are there tend of the large billions you the amount thousands hyperscalers, cetera, lot can geo-tech like enthusiasm very companies investments, that, of that also listen a hear if employees. And the earnings the the understanding So

I picture think hurry. that's of So why kind a in they're big the driver, of

we're just company I diligence these take with time, a think not, complex. It's working between are does leases very that self-mining. these organizations and large things nimble

bit for us execute easy us. dating things the cheap. a to things not very there to quickly know get would the design bit to broadly little more process. mining here. nothing, Also it's So speaking, of by industry I a bureaucratic. built is look, for Other are They've has a in on bitcoin say general, got

And and of have X, detail of building talented very the Google a like margin the is to experienced [ of places construction craftsmanship where are this requires has. We spectrum margin, and operations Xs attention team is not uptime of high every on end builds. and by costs We to of the that revenue would often data blessed space spectrum for a ] at centers, than be Meta low very centers. their happen company very the in at and that, level with squeezing I say, driven but end high out that that revenue data different worked

part we is in very great having the I a impresses. so, diligence that in my It's have these reason process show to sites, think confidence we addition And the of team for well.

since industry. And of question kind about the your is so, I think overall,

in I'm the I deals. I marketplace, are these folks these the multiple in But just with we're involved would extremely the our in reasons are given leading and as prospects. I'm would imagine And confident not those that are think confident of I if charge, you'll some I the there probably discussions setup well. know see folks other of types imagine,

Operator

with Lewis Greg from comes BTIG. question final Our

Gregory Lewis

it I I'll hour, so keep to on guess we're X. the just

spot to in some that as we just us about we that electricity thinking just about, So in just Tyler like maybe, we a miners to out down think were can as potential at, maybe it book? the the and we like write-down guess, that? pricing like and looks give called of Is kind bit you're of be prices kind you look we been like really thought at of past? Texas, much market, kind and around from in or about looking hedge continue little you Ed, hearing how can as not this we a X-year range, Just low might power, kind I and, how the doing look are to are as 'XX look the we've in have If going power of something we we're low. thoughts it's thinking at just as to were it's build about if of

Rodney Page

It's a good question.

to going margins. for to I the favorable most think that, always lock look listen, we're way in

that's in the Sometimes floating spot market.

with market contract. the an Sometimes a presents you opportunity price to do fixed

and contract ERCOT. the some context to give speak me on Let

how left mark-to-market and pricing much to the is curve depend going the So quarter each sure on over coming everyone power I'm is contract that's time knows of forward and years. this. But course, those is what

always contract And so the been the has in money.

hedged summer. a those basis, forward hit have price cheap second ever on local high, think, certainly believe the in on prices a the very basis. on been, highest but a have, I at over quarter the We a they at I least maybe forward

so quite bit. a contract marked the And up

earnings, have in item. Of moves non-cash a mark-to-market stripped always because adjusted that It our lot. a course around is out we it

$X.XXX for contract really ongoing changes that's kilowatt that operations. think paying the power. we're that of value thing per is is fact nothing bigger I the And in the the about hour

course look, mark-to-market question. of the on forward basis the and More speaking, So it value the it expired potentially specific has goes prices time to another both remaining. And a that's implications from highs down continues came on quarter those develop that of summer, over time. the market came down, over the contract and and broadly where HPC for industry bitcoin on we mining

users are without coming it to going would loads You going to wait these build not to the and know, the the grids their time of for again, take want grid huge generation to want operators generation. HPC not onto are if

You and prices at could afternoon where the and ramp imagine world it's Texas a if hot look a solar summer, you spike. you perhaps the dynamics, in get in

for bringing curtailment of generators, showed It our because that, a between doing going will depends. But an of to that's can of going great of of that time forward. Texas Power about always a manage summer backup lot mining. potentially This power, load. HPC a been could couple be different and it Dynamics long You growth expect batteries in and We're kind and so the bitcoin were we one think continue and And business not in for evolve. from we in and expertise. to grid think strengths excited bring like hours, to lot very I really drawing things we've been a

Operator

back I'll Tyler any closing turn it remarks. for to

Rodney Page

Yes, thank you, excited Halloween. future very you. everyone, for as We're the to we Happy again as Thank and about can. soon joining. look updates providing more

Operator

that concludes Ladies today's and gentlemen, presentation.

a may have disconnect and day. You wonderful now

Cipher Mining (CIFR) 31 Oct 242024 Q3 Earnings call transcript