Cipher Mining Provides Second Quarter 2022 Business Update

·11 min read

First of Four Initial Data Centers Completed

Three Additional Data Centers on Track for Deployment this Year

Power and Machine Contract Cost Discipline Provides Flexible and Resilient Business Model

NEW YORK, Aug. 09, 2022 (GLOBE NEWSWIRE) -- Cipher Mining Inc. (NASDAQ: CIFR) ("Cipher" or the "Company"), a U.S.-based bitcoin mining company, today announced results for its second quarter ending June 30, 2022, along with an update on its operations and deployment strategy.

“We are pleased to announce another quarter of successfully meeting our significant build-out milestones. We completed our Alborz data center, mining rigs are en route to finalize the initial phases of the Bear and Chief data centers, and our 205 megawatt facility at Odessa is scheduled to deploy over the remainder of 2022,” said Tyler Page, CEO of Cipher. "Against challenging cryptocurrency market conditions, our attractive bitcoin mining unit economics uniquely position us to move ahead successfully with our plans to become the world’s most efficient U.S.-based, large-scale bitcoin miner.”

Operations Updates

  • Cipher’s initial data centers are on track and continue to reach major milestones:

    • Alborz: All mining rigs have been installed at this 40 MW wind-powered site with Cipher’s joint venture partner, producing up to 1.3 EH/s;

    • Bear and Chief: All mining rigs are en route to these two sites, which will have a total initial capacity of 20MW, expected to produce up to 0.6 EH/s; and

    • Odessa: Initial mining rigs are shipping soon to this 205 MW site, and Cipher anticipates ramping up production throughout the rest of the year.

  • Across the four initial data centers, Cipher remains on track to deploy up to 6.9 EH/s by early 2023, with a highly efficient machine fleet, averaging 32.1 J/TH, and purchased at an average price of $34.96/TH/s.

  • The weighted average power price at the company’s sites currently under contract is approximately 2.73 c/kWh.

  • The company has sufficient capital to complete the non-rig infrastructure buildout at all of its initial data centers, and no debt obligations other than its share of an equipment finance facility at its Alborz joint venture of approximately $11 million.

  • Cipher’s best-in-class team now consists of 20 senior members, with a wide range of skills and experience, drawn from industry leaders in crypto, finance, energy, operations, data science, and technology fields, who oversee approximately 180 contractors at its data center sites.

  • Cipher’s data science team is working to optimize efficiency at our sites with predictive wind models developed using machine learning.

Business Update Call and Webcast

Cipher will host a conference call and webcast today at 8:00 a.m. Eastern Time to discuss the second quarter results for 2022 and management’s outlook for future financial and operational performance. The live webcast and a webcast replay of the conference call can be accessed from the investor relations page of Cipher's website at https://investors.ciphermining.com. To access this conference call, dial (800) 715-9871 or (646) 307-1963 and use the conference ID 9118892.

About Cipher

Cipher is an emerging technology company focused on the development and operation of bitcoin mining data centers in the United States.  Cipher is dedicated to expanding and strengthening the Bitcoin network’s critical infrastructure.  Together with its diversely talented team and strategic partnerships, Cipher aims to be a market leader in bitcoin mining growth and innovation.  To learn more about Cipher, please visit https://www.ciphermining.com/.

Forward Looking Statements

This press release contains certain forward-looking statements within the meaning of the federal securities laws of the U.S. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Any statements made in this press release or during the business update conference call that are not statements of historical fact, including statements about our beliefs and expectations regarding our performance, strategy, expansion plans, future operations, future operating results, projected costs, prospects, plans, and objectives of our management, are forward-looking statements and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan and strategies. These forward-looking statements generally are identified by the words "believe," "project," "expect," "anticipate," "estimate," "intend," "strategy," "future," "forecast," "opportunity," "plan," "may," "should," "will," "would," "will be," "will continue," "will likely result," and similar expressions (including the negative versions of such words or expressions).

These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Cipher and its management, are inherently uncertain. Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied by such forward looking statements. New risks and uncertainties may emerge from time to time, and it is not possible to predict all risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this document, including but not limited to: volatility in the price of Cipher's securities due to a variety of factors, including changes in the competitive and regulated industry in which Cipher operates, variations in performance across competitors, changes in laws and regulations affecting Cipher's business, and the ability to implement business plans, forecasts, and other expectations and to identify and realize additional opportunities. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the "Risk Factors" section of our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 4, 2022, the “Risk Factors” section of our Quarterly Report on Form 10-Q filed with the SEC on May 10, 2022 and in Cipher's subsequent filings with the SEC including Cipher’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (“SEC”) on August 9, 2022. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Cipher assumes no obligation and, except as required by law, does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise.

Contacts:
Investor Contact:
Lori Barker
Blueshirt Group Investor Relations
cipher@blueshirtgroup.com

Media Contact:
Ryan Dicovitsky / Kendal Till
Dukas Linden Public Relations
CipherMining@DLPR.com

CIPHER MINING INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands except for share and per share amounts)

 

June 30, 2022

 

 

December 31, 2021

 

 

(unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

$

37,042

 

 

$

209,841

 

Receivables, related party

 

467

 

 

 

-

 

Prepaid expenses and other current assets

 

9,554

 

 

 

13,819

 

Cryptocurrencies

 

787

 

 

 

-

 

Total current assets

 

47,850

 

 

 

223,660

 

Deposits on equipment

 

196,707

 

 

 

114,857

 

Property and equipment, net

 

23,637

 

 

 

5,124

 

Security deposits

 

11,417

 

 

 

10,352

 

Investment in equity investee

 

56,828

 

 

 

-

 

Right-of-use asset

 

5,512

 

 

 

-

 

Deferred investment costs

 

-

 

 

 

174

 

Total assets

$

341,951

 

 

$

354,167

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

$

4,739

 

 

$

242

 

Accounts payable, related party

 

12,038

 

 

 

-

 

Operating lease liability, current portion

 

975

 

 

 

-

 

Accrued expenses

 

5,811

 

 

 

257

 

Total current liabilities

 

23,563

 

 

 

499

 

Operating lease liability, net of current portion

 

5,023

 

 

 

-

 

Warrant liability

 

26

 

 

 

137

 

Total liabilities

 

28,612

 

 

 

636

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

Preferred stock, $0.001 par value; 10,000,000 shares authorized, none issued and outstanding as of June 30, 2022 and December 31, 2021

 

-

 

 

 

-

 

Common stock, $0.001 par value, 500,000,000 shares authorized, 251,001,072 and 252,131,679 shares issued as of June 30, 2022 and December 31, 2021, respectively, and 247,489,582 and 249,279,420 shares outstanding as of June 30, 2022 and December 31, 2021, respectively

 

251

 

 

 

252

 

Additional paid-in capital

 

431,966

 

 

 

425,438

 

Treasury stock, at par, 3,511,490 and 2,852,259 shares at June 30, 2022 and December 31, 2021, respectively

 

(4

)

 

 

(3

)

Accumulated deficit

 

(118,874

)

 

 

(72,156

)

Total stockholders’ equity

 

313,339

 

 

 

353,531

 

Total liabilities and stockholders’ equity

$

341,951

 

 

$

354,167

 

  

CIPHER MINING INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except for share and per share amounts)
(unaudited)

 

Three Months Ended

 

 

Six Months Ended

 

 

Five Months Ended

 

 

June 30, 2022

 

 

June 30, 2021

 

 

June 30, 2022

 

 

June 30, 2021

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

General and administrative

$

16,704

 

 

$

546

 

 

$

34,094

 

 

$

659

 

Depreciation

 

8

 

 

 

1

 

 

 

15

 

 

 

1

 

Impairment of cryptocurrencies

 

535

 

 

 

-

 

 

 

539

 

 

 

-

 

Equity in loss of equity investment

 

12,079

 

 

 

-

 

 

 

12,232

 

 

 

-

 

Total costs and expenses

 

29,326

 

 

 

547

 

 

 

46,880

 

 

 

660

 

Operating loss

 

(29,326

)

 

 

(547

)

 

 

(46,880

)

 

 

(660

)

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

44

 

 

 

-

 

 

 

51

 

 

 

-

 

Interest expense

 

-

 

 

 

(1

)

 

 

-

 

 

 

(1

)

Change in fair value of warrant liability

 

63

 

 

 

-

 

 

 

111

 

 

 

-

 

Total other income (expense)

 

107

 

 

 

(1

)

 

 

162

 

 

 

(1

)

Net loss

$

(29,219

)

 

$

(548

)

 

$

(46,718

)

 

$

(661

)

Basic and diluted net loss per share

$

(0.12

)

 

$

-

 

 

$

(0.19

)

 

$

-

 

Basic and diluted weighted average number of shares outstanding

 

247,730,410

 

 

 

200,000,000

 

 

 

248,945,581

 

 

 

200,000,000

 

CIPHER MINING INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)

 

Six Months Ended

 

 

Five Months Ended

 

 

June 30, 2022

 

 

June 30, 2021

 

Cash flows from operating activities

 

 

 

 

 

Net loss

$

(46,718

)

 

$

(661

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

Depreciation

 

15

 

 

 

-

 

Amortization of right-of-use assets

 

347

 

 

 

-

 

Change in fair value of warrant liability

 

(111

)

 

 

-

 

Share-based compensation

 

19,578

 

 

 

-

 

Equity in loss of equity investment

 

12,232

 

 

 

-

 

Impairment of cryptocurrencies

 

539

 

 

 

-

 

Changes in assets and liabilities:

 

 

 

 

 

Receivables, related party

 

(467

)

 

 

-

 

Prepaid expenses and other current assets

 

4,134

 

 

 

(18

)

Security deposits

 

(1,065

)

 

 

(441

)

Accounts payable

 

104

 

 

 

27

 

Accounts payable, related party

 

-

 

 

 

44

 

Accrued expenses

 

1,209

 

 

 

46

 

Lease liability

 

271

 

 

 

-

 

Net cash used in operating activities

 

(9,932

)

 

 

(1,003

)

Cash flows from investing activities

 

 

 

 

 

Deposits on equipment

 

(156,811

)

 

 

-

 

Purchases of property and equipment

 

(13,069

)

 

 

-

 

Capital distribution from equity investee

 

10,065

 

 

 

-

 

Net cash used in investing activities

 

(159,815

)

 

 

-

 

Cash flows from financing activities

 

 

 

 

 

Repurchase of common shares to pay employee withholding taxes

 

(3,052

)

 

 

-

 

Proceeds from borrowings on related party loan

 

-

 

 

 

4,300

 

Payments for deferred offering costs

 

-

 

 

 

(132

)

Net cash (used in) provided by financing activities

 

(3,052

)

 

 

4,168

 

Net (decrease) increase in cash and cash equivalents

 

(172,799

)

 

 

3,165

 

Cash and cash equivalents, beginning of the period

 

209,841

 

 

 

-

 

Cash and cash equivalents, end of the period

$

37,042

 

 

$

3,165

 

Supplemental disclosure of cash flow information

 

 

 

 

 

Cash paid for interest

$

-

 

 

$

-

 

Cash paid for income taxes, net

$

-

 

 

$

-

 

Supplemental disclosure of noncash investing and financing activities

 

 

 

 

 

Equity method investment acquired for non-cash consideration

$

75,933

 

 

$

-

 

Common stock cancelled

$

10,000

 

 

$

-

 

Deposits on equipment in accounts payable, related party

$

10,612

 

 

$

-

 

Right-of-use asset obtained in exchange for operating lease liability

$

5,859

 

 

$

-

 

Investment in equity investee in accrued expenses

$

4,345

 

 

$

-

 

Property and equipment purchases in accounts payable

$

4,033

 

 

$

-

 

Property and equipment purchases in accounts payable, related party

$

1,426

 

 

$

3

 

Cryptocurrencies received from equity method investment

$

1,326

 

 

$

-

 

Reclassification of deferred investment costs to equity method investment

$

174

 

 

$

-

 

Property and equipment purchases in related party loan

$

-

 

 

$

109

 

Deposits on equipment in accounts payable

$

360

 

 

$

-

 

Deferred offering costs included in accrued expenses

$

-

 

 

$

1,791

 

Deferred offering costs included in accounts payable

$

-

 

 

$

20

 

Deferred investment costs included in accrued expenses

$

-

 

 

$

187

 

Non-GAAP Financial Measures

The following is a reconciliation of our non-GAAP loss from operations, which excludes the impact of (i) depreciation of fixed assets and (ii) stock compensation expense, to its most directly comparable GAAP measure for the periods indicated:

 

 

Three Months Ended

 

 

Six Months Ended

 

 

Five Months Ended

 

 

 

June 30, 2022

 

 

June 30, 2021

 

 

June 30, 2022

 

 

June 30, 2021

 

Reconciliation of non-GAAP loss from operations:

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

$

(29,326

)

 

$

(547

)

 

$

(46,880

)

 

$

(660

)

Depreciation

 

 

8

 

 

 

1

 

 

 

15

 

 

 

1

 

Stock compensation expense

 

 

10,064

 

 

 

-

 

 

 

19,578

 

 

 

-

 

Non-GAAP loss from operations

 

$

(19,254

)

 

$

(546

)

 

$

(27,287

)

 

$

(659

)

The following are reconciliations of our non-GAAP net loss and non-GAAP basic and diluted net loss per share, in each case excluding the impact of (i) depreciation of fixed assets (ii) change in fair value of warrant liability and (iii) stock compensation expense, to the most directly comparable GAAP measures for the periods indicated:

 

 

Three Months Ended

 

 

Six Months Ended

 

 

Five Months Ended

 

 

 

June 30, 2022

 

 

June 30, 2021

 

 

June 30, 2022

 

 

June 30, 2021

 

Reconciliation of non-GAAP net loss:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(29,219

)

 

$

(548

)

 

$

(46,718

)

 

$

(661

)

Non-cash adjustments to net loss:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

8

 

 

 

1

 

 

 

15

 

 

 

1

 

Change in fair value of warrant liability

 

 

63

 

 

 

-

 

 

 

111

 

 

 

-

 

Stock compensation expense

 

 

10,064

 

 

 

-

 

 

 

19,578

 

 

 

-

 

Total non-cash adjustments to net loss

 

 

10,135

 

 

 

1

 

 

 

19,704

 

 

 

1

 

Non-GAAP net loss

 

$

(19,084

)

 

$

(547

)

 

$

(27,014

)

 

$

(660

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of non-GAAP basic and diluted net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net loss per share

 

$

(0.12

)

 

$

-

 

 

$

(0.19

)

 

$

-

 

Depreciation of fixed assets (per share)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Change in fair value of warrant liability (per share)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Stock compensation expense (per share)

 

 

0.04

 

 

 

-

 

 

 

0.08

 

 

 

-

 

Non-GAAP basic and diluted net loss per share

 

$

(0.08

)

 

$

-

 

 

$

(0.11

)

 

$

-