PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) Presents unaudited condensed consolidated financial statements and notes on organization, accounting policies, financial instruments, and events [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | June 30, 2023 (unaudited) | December 31, 2022 | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and cash equivalents | **$1,741** | **$11,927** | | Total current assets | **42,317** | **47,735** | | Property and equipment, net | **267,790** | **191,784** | | Total assets | **$416,723** | **$418,463** | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Total current liabilities | **38,695** | **40,326** | | Total liabilities | **73,513** | **75,571** | | Total stockholders' equity | **343,210** | **342,892** | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenue - bitcoin mining | **$31,224** | $- | **$53,119** | $- | | Cost of revenue | **15,868** | - | **24,009** | - | | General and administrative | **21,335** | **16,704** | **38,755** | **34,094** | | Depreciation | **14,412** | **8** | **26,067** | **15** | | Change in fair value of derivative asset | **(3,222)** | - | **(8,550)** | - | | Power sales | **(5,651)** | - | **(5,749)** | - | | Equity in losses of equity investees | **1,431** | **12,079** | **2,181** | **12,232** | | Realized gain on sale of bitcoin | **(4,185)** | - | **(8,206)** | - | | Impairment of bitcoin | **2,828** | **535** | **4,633** | **539** | | Other gains | - | - | **(2,260)** | - | | **Operating loss** | **(11,592)** | **(29,326)** | **(17,761)** | **(46,880)** | | **Net loss** | **(12,701)** | **(29,219)** | **(19,302)** | **(46,718)** | | Net loss per share - basic and diluted | **$(0.05)** | **$(0.12)** | **$(0.08)** | **$(0.19)** | | Weighted average shares outstanding - basic and diluted | **249,127,664** | **247,730,410** | **248,892,181** | **248,945,581** | [Condensed Consolidated Statement of Changes in Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Stockholders%27%20Equity) | Metric | Common Shares (thousands) | Common Stock Amount ($) | Additional Paid-in Capital (thousands) | Accumulated Deficit (thousands) | Treasury Shares (thousands) | Treasury Stock Amount ($) | Total Stockholders' Equity (thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Six Months Ended June 30, 2023** | | | | | | | | | Balance as of January 1, 2023 | **251,095** | **251** | **453,854** | **$(111,209)** | **(3,543)** | **(4)** | **342,892** | | Issuance of common shares, net of offering costs | **978** | **1** | **2,744** | - | - | - | **2,745** | | Delivery of common stock under RSUs, net of tax withholding | **2,474** | **2** | **(1,115)** | - | **(838)** | - | **(1,113)** | | Share-based compensation | **248** | - | **17,988** | - | - | - | **17,988** | | Net loss | - | - | - | **(19,302)** | - | - | **(19,302)** | | **Balance as of June 30, 2023** | **254,796** | **254** | **473,471** | **$(130,511)** | **(4,382)** | **(4)** | **343,210** | | **Six Months Ended June 30, 2022** | | | | | | | | | Balance as of January 1, 2022 | **252,132** | **252** | **425,438** | **$(72,156)** | **(2,852)** | **(3)** | **353,531** | | Delivery of common stock under RSUs, net of tax withholding | **1,760** | **2** | **(3,053)** | - | **(659)** | **(1)** | **(3,052)** | | Common stock cancelled | **20** | - | - | - | - | - | - | | Warrants exercised | **(2,890)** | **(3)** | **(9,997)** | - | - | - | **(10,000)** | | Share-based compensation | - | - | **19,578** | - | - | - | **19,578** | | Net loss | - | - | - | **(46,718)** | - | - | **(46,718)** | | **Balance as of June 30, 2022** | **251,001** | **251** | **431,966** | **$(118,874)** | **(3,511)** | **(4)** | **313,339** | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flows From | Six Months Ended June 30, 2023 (thousands) | Six Months Ended June 30, 2022 (thousands) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | **$24,679** | **$(9,932)** | | Net cash used in investing activities | **(34,437)** | **(159,815)** | | Net cash used in financing activities | **(428)** | **(3,052)** | | Net decrease in cash and cash equivalents | **(10,186)** | **(172,799)** | | Cash and cash equivalents, beginning of period | **11,927** | **209,841** | | Cash and cash equivalents, end of period | **$1,741** | **$37,042** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [NOTE 1. ORGANIZATION](index=12&type=section&id=NOTE%201.%20ORGANIZATION) - **Cipher Mining Inc. develops and operates industrial scale bitcoin mining data centers, with bitcoin mining as its principal revenue-generating activity**. It operates **four data centers in Texas**, including **one wholly-owned and three partially-owned through joint ventures**[14](index=14&type=chunk)[31](index=31&type=chunk) - As of June 30, 2023, the Company had **cash and cash equivalents of $1.7 million**, **working capital of $3.6 million**, **total stockholders' equity of $343.2 million**, and an **accumulated deficit of $130.5 million**[34](index=34&type=chunk) - During the six months ended June 30, 2023, the Company sold **2,063 bitcoin** for approximately **$52.5 million** to support operating expenses[34](index=34&type=chunk)[178](index=178&type=chunk) - The Company purchased **11,000 new A1346 model miners** from Canaan, **all delivered and installed at the Odessa Facility prior to June 30, 2023**, with **payments structured in monthly installments through November 2023**[39](index=39&type=chunk)[178](index=178&type=chunk) - Management believes existing financial resources, combined with projected cash and bitcoin inflows, will be **sufficient to meet operating and capital requirements for at least 12 months**[40](index=40&type=chunk)[179](index=179&type=chunk) [NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=14&type=section&id=NOTE%202.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP and include the accounts of Cipher Mining Inc. and its controlled subsidiary, CMTI[47](index=47&type=chunk)[48](index=48&type=chunk) - The Company views its operations and manages its business in **one segment**[52](index=52&type=chunk) - The adoption of ASC Topic 326, Financial Instruments – Credit Losses, on January 1, 2023, **did not have a material impact** on the Company's financial statements[64](index=64&type=chunk) [NOTE 3. BITCOIN](index=15&type=section&id=NOTE%203.%20BITCOIN) | Metric | June 30, 2023 | January 1, 2023 | | :--- | :--- | :--- | | Balance | **$10,536** | **$6,283** | | Bitcoin received from equity investees | **317** | - | | Revenue recognized from bitcoin mined | **52,836** | - | | Proceeds from sale of bitcoin, net of realized gain | **(44,267)** | - | | Impairment of bitcoin | **(4,633)** | - | - The fair value of the Company's bitcoin as of June 30, 2023, was approximately **$12.3 million**, estimated using the closing price of bitcoin (**Level 1 input**)[60](index=60&type=chunk) - Impairment charges on bitcoin holdings were approximately **$4.6 million** for the six months ended June 30, 2023, compared to **$0.5 million** for the same period in 2022[65](index=65&type=chunk) [NOTE 4. DERIVATIVE ASSET](index=15&type=section&id=NOTE%204.%20DERIVATIVE%20ASSET) - The Luminant Power Agreement, which supplies fixed-price electricity to the Odessa Facility, is accounted for as a derivative under ASC 815 due to the ability to sell excess electricity in the ERCOT market[61](index=61&type=chunk)[69](index=69&type=chunk) - The Company earned approximately **$5.7 million** from power sales for both the three and six months ended June 30, 2023, by selling excess electricity in the ERCOT market[63](index=63&type=chunk) [NOTE 5. PROPERTY AND EQUIPMENT](index=16&type=section&id=NOTE%205.%20PROPERTY%20AND%20EQUIPMENT) | Category | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Miners and mining equipment | **$158,318** | **$79,909** | | Leasehold improvements | **135,209** | **94,807** | | Software | **1,054** | **596** | | Office and computer equipment | **279** | **88** | | Autos | **73** | **73** | | Furniture and fixtures | **88** | **69** | | Construction-in-progress | **2,167** | **20,437** | | **Total cost of property and equipment** | **297,188** | **195,979** | | Less: accumulated depreciation | **(29,398)** | **(4,195)** | | **Property and equipment, net** | **$267,790** | **$191,784** | - Depreciation expense was approximately **$26.1 million** for the six months ended June 30, 2023, significantly higher than the immaterial amount in the prior year, primarily due to miners and leasehold improvements at the Odessa Facility being placed into service[70](index=70&type=chunk) - As of June 30, 2023, the Company had a total of **61,024 miners** at its Odessa Facility, including MicroBT, S19j Pro, and Canaan A1346 models[71](index=71&type=chunk) [NOTE 6. DEPOSITS ON EQUIPMENT](index=17&type=section&id=NOTE%206.%20DEPOSITS%20ON%20EQUIPMENT) - As of June 30, 2023, deposits on equipment totaled **$1.7 million**, primarily for shipping costs and peripheral cables related to the Canaan Agreement[75](index=75&type=chunk) - The Company utilized accumulated Bitmain credits and coupons for the majority of the purchase price for **7,200 S19j Pro miners**, with **no further payments due**[74](index=74&type=chunk) [NOTE 7. INVESTMENTS IN EQUITY INVESTEES](index=17&type=section&id=NOTE%207.%20INVESTMENTS%20IN%20EQUITY%20INVESTEES) - The Company uses the equity method for its **49% interest** in Alborz LLC, Bear LLC, and Chief LLC (Data Center LLCs)[76](index=76&type=chunk) - Net losses in equity investees decreased to approximately **$2.2 million** for the six months ended June 30, 2023, from **$12.2 million** in the prior year, partly due to accretion of basis differences from miner contributions[76](index=76&type=chunk)[77](index=77&type=chunk) - As of June 30, 2023, remaining basis differences totaling approximately **$28.1 million** had not yet been accreted[77](index=77&type=chunk) [NOTE 8. SECURITY DEPOSITS](index=17&type=section&id=NOTE%208.%20SECURITY%20DEPOSITS) | Category | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Luminant Power Purchase Agreement Independent Collateral Amount | **$12,554** | **$12,554** | | Luminant Purchase and Sale Agreement collateral | **3,063** | **3,063** | | Operating lease security deposits | **967** | **960** | | Other deposits | **1,158** | **1,153** | | **Total security deposits** | **$17,742** | **$17,730** | [NOTE 9. SUPPLEMENTAL FINANCIAL INFORMATION](index=18&type=section&id=NOTE%209.%20SUPPLEMENTAL%20FINANCIAL%20INFORMATION) - Prepaid expenses and other current assets decreased from **$7.3 million** at December 31, 2022, to **$2.3 million** at June 30, 2023, primarily due to the absence of bitcoin held for a joint venture partner[82](index=82&type=chunk) | Category | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Taxes (primarily sales tax) | **$12,929** | **$18,798** | | Power costs | **3,374** | - | | Finance lease | **2,373** | **339** | | Legal settlement | **2,000** | - | | Employee compensation | **1,045** | - | | Legal fees | **376** | **215** | | Other | **649** | **1** | | **Total accrued expenses and other current liabilities** | **$22,746** | **$19,353** | [NOTE 10. RELATED PARTY TRANSACTIONS](index=18&type=section&id=NOTE%2010.%20RELATED%20PARTY%20TRANSACTIONS) - Related party receivables increased to **$1.6 million** as of June 30, 2023, from **$1.1 million** at December 31, 2022, mainly for expenses paid on behalf of Data Center LLCs[84](index=84&type=chunk) - The Company made direct payments of approximately **$5.8 million** to Paradigm for BBAC manufacturing services, reducing obligations to Bitfury USA[85](index=85&type=chunk) - All bitcoin held on behalf of WindHQ was liquidated and proceeds transferred during the six months ended June 30, 2023, eliminating the **$1.2 million** payable to WindHQ[86](index=86&type=chunk) [NOTE 11. LEASES](index=18&type=section&id=NOTE%2011.%20LEASES) - The Combined Luminant Lease Agreement for the Odessa Facility's land and substation commenced November 22, 2022, with estimated total undiscounted principal payments of **$15.0 million** over **five years**, expected to begin in August 2023[91](index=91&type=chunk)[92](index=92&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) - The Canaan Agreement for **11,000 miners** is **classified as finance leases**, with a **six-month lease term aligning with the final payment and title transfer in November 2023**[93](index=93&type=chunk) | Category | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Finance leases: Amortization of ROU assets | **$1,027** | $- | **$1,816** | $- | | Finance leases: Interest on lease liability | **477** | - | **878** | - | | **Total finance lease expense** | **1,504** | **-** | **2,694** | **-** | | Operating leases: Operating lease expense | **467** | **371** | **921** | **618** | | Operating leases: Variable lease cost | - | - | - | - | | **Total operating lease expense** | **467** | **371** | **921** | **618** | | **Total lease expense** | **$1,971** | **$371** | **$3,615** | **$618** | | Period Ended December 31, | Finance Lease (thousands) | Operating Lease (thousands) | Total (thousands) | | :--- | :--- | :--- | :--- | | Remaining Period Ended 2023 | **$10,511** | **$790** | **$11,301** | | Year Ended 2024 | **4,068** | **1,581** | **5,649** | | Year Ended 2025 | **4,068** | **1,581** | **5,649** | | Year Ended 2026 | **4,068** | **1,581** | **5,649** | | Year Ended 2027 | **2,712** | **659** | **3,371** | | **Total lease payments** | **25,427** | **6,192** | **31,619** | | Less present value discount | **(3,402)** | **(1,169)** | **(4,571)** | | **Total** | **$22,025** | **$5,023** | **$27,048** | [NOTE 12. COMMITMENTS AND CONTINGENCIES](index=20&type=section&id=NOTE%2012.%20COMMITMENTS%20AND%20CONTINGENCIES) - The Company is involved in a lawsuit filed by Luminant seeking recoupment of **$6.8 million** in payments related to the Odessa Facility[106](index=106&type=chunk) - The Company **wholly disputes Luminant's claims** and has established a **$2.0 million** accrual for the cost of resolving the claims[107](index=107&type=chunk) - Management does not believe there is a reasonable possibility that a material loss will result from any claims, lawsuits, and proceedings[105](index=105&type=chunk) [NOTE 13. STOCKHOLDERS' EQUITY](index=21&type=section&id=NOTE%2013.%20STOCKHOLDERS%27%20EQUITY) - As of June 30, 2023, **500,000,000 shares** of Common Stock and **10,000,000 shares** of Preferred Stock are authorized[108](index=108&type=chunk) - During the six months ended June 30, 2023, the Company issued **2,473,759 shares** of Common Stock for vested RSUs and repurchased **838,388 shares** for tax withholding, placing them in treasury stock[110](index=110&type=chunk) - The Company received approximately **$2.7 million** (net of issuance costs) from the sale of **978,207 common shares** through an at-the-market offering during the six months ended June 30, 2023, which was **terminated effective August 1, 2023**[15](index=15&type=chunk)[111](index=111&type=chunk)[114](index=114&type=chunk) [NOTE 14. WARRANTS](index=22&type=section&id=NOTE%2014.%20WARRANTS) - As of June 30, 2023, there were **8,499,980 Public Warrants** and **114,000 Private Placement Warrants** outstanding, each exercisable for one share of Common Stock at **$11.50**[115](index=115&type=chunk) - Warrants are **not subject to adjustment for issuances of common stock below their exercise prices and will not be net cash settled**[115](index=115&type=chunk) [NOTE 15. SHARE-BASED COMPENSATION](index=22&type=section&id=NOTE%2015.%20SHARE-BASED%20COMPENSATION) - The Incentive Award Plan had **5,694,657 shares** of Common Stock available for issuance as of June 30, 2023, after an increase of **7,426,559 shares** on January 1, 2023[117](index=117&type=chunk) | Category | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Service-based RSUs | **$5,580** | **$6,685** | **$10,827** | **$12,858** | | Performance-based RSUs | **3,378** | **3,379** | **6,720** | **6,720** | | Common stock, fully-vested | **220** | - | **441** | - | | **Total share-based compensation expense** | **$9,178** | **$10,064** | **$17,988** | **$19,578** | - As of June 30, 2023, unrecognized compensation expense for unvested Service-based RSUs was approximately **$32.7 million** (weighted-average vesting period of **1.6 years**) and for Performance-based RSUs was **$11.1 million** (weighted-average derived service period of **0.9 years**)[119](index=119&type=chunk)[123](index=123&type=chunk) [NOTE 16. FAIR VALUE MEASUREMENTS](index=23&type=section&id=NOTE%2016.%20FAIR%20VALUE%20MEASUREMENTS) | Assets/Liabilities | Level 1 (thousands) | Level 2 (thousands) | Level 3 (thousands) | Total (thousands) | | :--- | :--- | :--- | :--- | :--- | | **Assets:** | | | | | | Money market securities | **$175** | $- | $- | **$175** | | Accounts receivable | **380** | - | - | **380** | | Derivative asset | - | - | **75,252** | **75,252** | | **Total Assets** | **$555** | **$-** | **$75,252** | **$75,807** | | **Liabilities:** | | | | | | Warrant liability | $- | $- | **$66** | **$66** | | **Total Liabilities** | **$-** | **$-** | **$66** | **$66** | - The derivative asset related to the Luminant Power Agreement is **classified as Level 3**, with an estimated fair value of **$75.3 million** as of June 30, 2023, reflecting an **$8.5 million** change in fair value during the six months ended June 30, 2023[130](index=130&type=chunk)[131](index=131&type=chunk) - The Private Placement Warrants are **classified as a Level 3 liability**, with a fair value of **$66 thousand** as of June 30, 2023, based on a **Black-Scholes option-pricing model**[131](index=131&type=chunk)[137](index=137&type=chunk) [NOTE 17. INCOME TAXES](index=25&type=section&id=NOTE%2017.%20INCOME%20TAXES) - Income tax expense totaled approximately **$0.7 million** for the six months ended June 30, 2023, representing **-3.7%** of loss before taxes[133](index=133&type=chunk)[176](index=176&type=chunk) [NOTE 18. SUBSEQUENT EVENTS](index=25&type=section&id=NOTE%2018.%20SUBSEQUENT%20EVENTS) - On August 3, 2023, the Company entered into a Controlled Equity OfferingSM Sales Agreement with several agents to sell up to **$250.0 million** of Common Stock in "at-the-market" offerings[138](index=138&type=chunk)[139](index=139&type=chunk)[146](index=146&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and results, covering operational highlights, equity offerings, performance, liquidity, capital, and non-GAAP measures [Overview](index=26&type=section&id=Overview) - **Cipher Mining's mission is to expand and strengthen the Bitcoin network's critical infrastructure by developing and operating industrial-scale bitcoin mining data centers**[142](index=142&type=chunk)[143](index=143&type=chunk) - As of July 31, 2023, the Company operated approximately **76,322 miners** with an aggregate hashrate capacity of **7.8 EH/s**, deploying **253 MW** of electricity[143](index=143&type=chunk) - The Company operates **four bitcoin mining data centers in Texas**: **one wholly-owned** (Odessa Facility) and **three partially-owned** (Alborz, Bear, Chief Facilities) through joint ventures with WindHQ LLC[144](index=144&type=chunk) - By the end of Q3 2023, the Company anticipates operating approximately **80,500 miners**, capable of generating **8.2 EH/s**[144](index=144&type=chunk) [Recent Developments](index=26&type=section&id=Recent%20Developments) - On August 3, 2023, the Company entered into a Controlled Equity OfferingSM Sales Agreement to sell up to **$250.0 million** of Common Stock through "at-the-market" offerings[146](index=146&type=chunk)[147](index=147&type=chunk) - The Company will pay the designated agent a commission of up to **3.0%** of the aggregate gross proceeds from any shares sold under the Sales Agreement[148](index=148&type=chunk) [Factors Affecting Our Results of Operations](index=27&type=section&id=Factors%20Affecting%20Our%20Results%20of%20Operations) - There have been **no material changes** to the "Factors Affecting Our Results of Operations" as disclosed in the 2022 Form 10-K[16](index=16&type=chunk) | Metric | Quantity (Bitcoin) | Amounts ($ thousands) | | :--- | :--- | :--- | | Balance as of January 1, 2023 | **394** | **$6,283** | | Bitcoin received from equity investees | **18** | **317** | | Revenue recognized from bitcoin mined | **2,055** | **52,836** | | Proceeds from sale of bitcoin, net of realized gain | **(2,063)** | **(44,267)** | | Impairment of bitcoin | - | **(4,633)** | | **Balance as of June 30, 2023** | **404** | **$10,536** | [Results of Operations](index=27&type=section&id=Results%20of%20Operations) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenue - bitcoin mining | **$31,224** | $- | **$53,119** | $- | | Cost of revenue | **15,868** | - | **24,009** | - | | General and administrative | **21,335** | **16,704** | **38,755** | **34,094** | | Depreciation | **14,412** | **8** | **26,067** | **15** | | Change in fair value of derivative asset | **(3,222)** | - | **(8,550)** | - | | Power sales | **(5,651)** | - | **(5,749)** | - | | Equity in losses of equity investees | **1,431** | **12,079** | **2,181** | **12,232** | | Realized gain on sale of bitcoin | **(4,185)** | - | **(8,206)** | - | | Impairment of bitcoin | **2,828** | **535** | **4,633** | **539** | | Other gains | - | - | **(2,260)** | - | | **Operating loss** | **(11,592)** | **(29,326)** | **(17,761)** | **(46,880)** | | **Net loss** | **(12,701)** | **(29,219)** | **(19,302)** | **(46,718)** | - Bitcoin mining revenue for the three and six months ended June 30, 2023, was **$31.2 million** (**1,112 bitcoin** at **$28,009 average**) and **$53.1 million** (**2,055 bitcoin** at **$25,390 average**), respectively, with **no comparable revenue in 2022** as the Odessa Facility began operations in mid-November 2022[151](index=151&type=chunk)[161](index=161&type=chunk) - General and administrative expenses increased to **$21.3 million** (Q2 2023) and **$38.8 million** (H1 2023) from **$16.7 million** and **$34.1 million** in the prior year periods, driven by increased payroll, legal claims accrual, and office costs, partially offset by lower share-based compensation[18](index=18&type=chunk)[167](index=167&type=chunk) - The Company recognized a realized gain on sale of bitcoin of **$4.2 million** (Q2 2023) and **$8.2 million** (H1 2023) as it began selling bitcoin to support operations in 2023[157](index=157&type=chunk)[172](index=172&type=chunk) - Other gains of **$2.3 million** were recognized in H1 2023 from the sale of Bitmain coupons that the Company did not intend to use[174](index=174&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) - The Company generated **$24.7 million** in cash flow from operations for the six months ended June 30, 2023, a **significant improvement** from a **$9.9 million** cash use in the prior year[178](index=178&type=chunk)[181](index=181&type=chunk) - As of June 30, 2023, cash and cash equivalents were **$1.7 million**, with total stockholders' equity of **$343.2 million** and an accumulated deficit of **$130.5 million**[178](index=178&type=chunk) - Net cash used in investing activities decreased by **$125.4 million** to **$34.4 million** for H1 2023, mainly due to a **$153.9 million** decrease in deposits for miners, partially offset by increased property and equipment purchases[182](index=182&type=chunk) - Net cash used in financing activities decreased to **$0.4 million** for H1 2023, driven by **$2.8 million** from common stock issuance and reduced share repurchases for taxes, partially offset by finance lease principal payments[184](index=184&type=chunk) - The Company entered into the Canaan Agreement to purchase **11,000 miners**, with payments funded through ongoing operations, including bitcoin sales[178](index=178&type=chunk)[192](index=192&type=chunk) - Management believes existing financial resources, combined with projected cash and bitcoin inflows, will be **sufficient to meet operating and capital requirements for at least 12 months**[179](index=179&type=chunk) - The Company has an "at-the-market" offering agreement (Sales Agreement) to sell up to **$250.0 million** of Common Stock, providing **access to additional capital**[180](index=180&type=chunk)[138](index=138&type=chunk) [Non-GAAP Financial Measures](index=33&type=section&id=Non-GAAP%20Financial%20Measures) | Metric | Three Months Ended June 30, 2023 (thousands) | Three Months Ended June 30, 2022 (thousands) | Six Months Ended June 30, 2023 (thousands) | Six Months Ended June 30, 2022 (thousands) | | :--- | :--- | :--- | :--- | :--- | | Operating loss (GAAP) | **$(11,592)** | **$(29,326)** | **$(17,761)** | **$(46,880)** | | Depreciation and amortization | **14,642** | **8** | **26,519** | **15** | | Change in fair value of derivative asset | **(3,222)** | - | **(8,550)** | - | | Share-based compensation expense | **9,178** | **10,064** | **17,988** | **19,578** | | Other gains - nonrecurring | - | - | **(2,255)** | - | | **Non-GAAP income (loss) from operations** | **$9,006** | **$(19,254)** | **$15,941** | **$(27,287)** | | Metric | Three Months Ended June 30, 2023 (thousands) | Three Months Ended June 30, 2022 (thousands) | Six Months Ended June 30, 2023 (thousands) | Six Months Ended June 30, 2022 (thousands) | | :--- | :--- | :--- | :--- | :--- | | Net loss (GAAP) | **$(12,701)** | **$(29,219)** | **$(19,302)** | **$(46,718)** | | Depreciation and amortization | **14,642** | **8** | **26,519** | **15** | | Change in fair value of derivative asset | **(3,222)** | - | **(8,550)** | - | | Share-based compensation expense | **9,178** | **10,064** | **17,988** | **19,578** | | Other gains - nonrecurring | - | - | **(2,255)** | - | | Change in fair value of warrant liability | **(22)** | **63** | **(59)** | **111** | | Deferred income tax expense | **(584)** | - | **(637)** | - | | **Non-GAAP net income (loss)** | **$7,291** | **$(19,084)** | **$13,704** | **$(27,014)** | | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Basic and diluted net loss per share (GAAP) | **$(0.05)** | **$(0.12)** | **$(0.08)** | **$(0.19)** | | Non-GAAP basic and diluted net income (loss) per share | **$0.04** | **$(0.08)** | **$0.06** | **$(0.11)** | [Critical Accounting Policies and Use of Estimates](index=34&type=section&id=Critical%20Accounting%20Policies%20and%20Use%20of%20Estimates) - The preparation of financial statements requires management to make estimates and assumptions in conformity with GAAP[200](index=200&type=chunk) - **No material changes** have occurred in the information disclosed in the notes to the audited consolidated financial statements in the 2022 Form 10-K[200](index=200&type=chunk) [Recent accounting pronouncements](index=34&type=section&id=Recent%20accounting%20pronouncements) - Information regarding recent accounting pronouncements is included in Note 2 to the unaudited condensed consolidated financial statements[201](index=201&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Cipher Mining Inc. is not required to provide quantitative and qualitative disclosures about market risk in this Quarterly Report - The Company is a smaller reporting company and is **not required to provide information under this item**[203](index=203&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were ineffective due to IT General Controls material weakness; a remediation plan is underway with no material changes in internal control - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were **not effective** at the reasonable assurance level as of June 30, 2023[208](index=208&type=chunk) - A **material weakness** was identified related to certain Information Technology General Controls over user access, segregation of duties, and change management controls[209](index=209&type=chunk) - The **remediation plan** includes enhancing resources in financial reporting and IT, utilizing external firms for internal audit and SOX 404 implementation, implementing new processes and controls, and formalizing policies over outside service providers[205](index=205&type=chunk)[210](index=210&type=chunk) - **No changes in internal control over financial reporting occurred** during the three months ended June 30, 2023, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[213](index=213&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The Company is not currently a party to any material pending legal proceedings, with no material changes from previous disclosures in its 2022 Form 10-K - The Company is **not a party to any material pending legal proceedings**[216](index=216&type=chunk) - There have been **no material changes to legal proceedings previously disclosed** in the 2022 Form 10-K[216](index=216&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) The Company's business and financial condition are subject to various factors, and there have been no material changes to the risk factors previously disclosed in its 2022 Form 10-K - The Company's business, financial condition, and operating results can be affected by factors disclosed in the "Risk Factors" section of its 2022 Form 10-K[217](index=217&type=chunk) - There have been **no material changes to the risk factors previously disclosed** in the 2022 Form 10-K[217](index=217&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) There were no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities to report during the period - **None to report**[218](index=218&type=chunk) [Item 3. Defaults Upon Senior Securities](index=37&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities to report during the period - **None to report**[219](index=219&type=chunk) [Item 4. Mine Safety Disclosures](index=37&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the Company - **Not applicable**[220](index=220&type=chunk) [Item 5. Other Information](index=37&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2023 - **No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement** during the three months ended June 30, 2023[221](index=221&type=chunk) [Item 6. Exhibits](index=38&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Quarterly Report, including agreements and certifications, for corporate document transparency - The report includes exhibits such as the Controlled Equity OfferingSM Sales Agreement, certifications of the CEO and CFO, and Inline XBRL documents[223](index=223&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk) Signatures [Signatures](index=39&type=section&id=Signatures) Report signed by CEO and CFO, certifying contents and compliance with reporting requirements - The report is signed by Tyler Page, Chief Executive Officer, and Edward Farrell, Chief Financial Officer, on August 8, 2023[228](index=228&type=chunk)[230](index=230&type=chunk)

Cipher Mining Inc. (NASDAQ:CIFR) Q1 2023 Earnings Conference Call May 9, 2023 8:00 AM ET Company Participants Josh Kane - Head of IR Tyler Page - CEO Ed Farrell - CFO Conference Call Participants John Todaro - Needham Joseph Vafi - Canaccord Will Carlson - Cantor Fitzgerald Operator Good morning, and welcome to the Cipher Mining First Quarter 2023 Conference Call. All lines have been placed on use to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Ope ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR | --- | --- | |----------------------------------------------------------------------------------------------------------------------------|------------------------------------------| | | | | For the transition period from | to . | | Commission File Number: | 001-39625 | | CIPHER MINING INC. ...

Financial Data and Key Metrics Changes - For the year ended December 31, 2022, the company reported a net loss of $39.1 million, resulting in a net loss of $0.16 per share, with revenue of $3 million generated entirely from Bitcoin mining operations [51][35] - The change in fair value of the Odessa power agreement resulted in a gain of $73.5 million, offset by equity losses totaling $37 million [51][49] - General and administrative expenses for the year were $70.8 million, including stock-based compensation of $41.5 million [52] Business Line Data and Key Metrics Changes - The company ended February 2023 with the ability to mine over 15.5 Bitcoin per day and held 465 Bitcoin in reserve [7] - As of the end of February 2023, Cipher reported 5.2 exahash per second of self-mining operations across all sites, with potential expansion to 8.2 exahash per second by year-end 2023 [17][33] - The Odessa data center began operations in November 2022, mining 180 Bitcoin from November 22, 2022, to December 31, 2022 [35] Market Data and Key Metrics Changes - The company noted that energy prices have softened recently, but there are still more mining rigs looking for homes than available sites with good mining cost economics [11] - The average electricity cost per Bitcoin produced at the Alborz site was approximately $5,143, while at Bear and Chief, it was about $6,293 [21][40] Company Strategy and Development Direction - Cipher Mining aims to control electricity costs and capital expenditures to maintain low production costs, positioning itself as a low-cost producer in the Bitcoin mining industry [10] - The company is focused on organic growth opportunities within its existing portfolio, particularly at the Odessa site, while remaining open to low-risk cyclical opportunities [24][30] - The company plans to manage growth prudently amid challenging market conditions and financing environments [33][48] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term potential for Bitcoin, despite current market challenges, and emphasized the importance of maintaining a strong liquidity profile [12][61] - The management team highlighted that they have no debt obligations and are funding operations through current Bitcoin production, which positions them well for future growth [49][50] Other Important Information - The company has access to a $250 million at-the-market equity shelf but has yet to utilize it [47] - The company has a strong focus on proactive counterparty risk management, maintaining accounts with major banks [12] Q&A Session Summary Question: How is the company thinking about CapEx spend needed to expand at Bear and Chief? - Management indicated that financing options could include debt financing, equity sales, or operational cash flow, depending on market conditions [57] Question: What prices is the company currently seeing for rigs? - Management noted that rig prices are constantly shifting, and they are prepared to purchase rigs at potentially below manufacturing costs, but will wait until infrastructure is in place [69] Question: How does the company evaluate the use of the $250 million shelf offering? - Management stated that they would consider using it for accretive opportunities, particularly if they find favorable rig prices [72] Question: What is the company's strategy regarding Bitcoin inventory? - Management aims to build Bitcoin inventory slowly over time while liquidating some to cover operational expenses [137] Question: How does the company view the potential excise tax on electricity for digital mining? - Management expressed skepticism about the proposal's likelihood of passing and noted that it could have significant implications for the industry [140]

Year Ended Eleven Months Ended | --- | --- | --- | --- | |--------------|-----------------------------------------------------------|-----------------------------------|-----------------------------| | Consolidated | Revenue - bitcoin mining | December 31, 2022 \n$ 3,037 | December 31, 2021 \n$ - | | Statement of | Costs and operating expenses (income) | | | | | Cost of revenue | 748 | - | | Operations | General and administrative | 70,836 | 72,147 | | | Depreciation | 4,378 | 5 | | | Change in fair value o ...

[PART I](index=8&type=section&id=PART%20I) This part covers the company's business overview, risk factors, properties, and legal proceedings [Item 1. Business](index=8&type=section&id=Item%201.%20Business) Cipher Mining is a U.S.-based industrial-scale bitcoin mining company operating four data centers in Texas - Cipher Mining operates as an emerging technology company focused on developing and running industrial-scale bitcoin mining data centers, with its primary revenue generated from bitcoin mining[288](index=288&type=chunk) Operational Snapshot (as of Feb 28, 2023) | Metric | Value | | :--- | :--- | | **Miners Operated** | ~58,500 | | **Aggregate Hashrate** | ~6.1 EH/s | | **Electricity Deployed** | ~203 MW | | **Company-Owned Hashrate** | ~5.2 EH/s | - The company's revenue model is based on earning bitcoin through block rewards and transaction fees by contributing computing power to a mining pool[290](index=290&type=chunk)[293](index=293&type=chunk) - Cipher Mining utilizes a third-party mining pool, Foundry USA Pool, to combine its hashrate with other miners[294](index=294&type=chunk) [Data Centers](index=9&type=section&id=Data%20Centers) The company operates four data centers in Texas, including the wholly-owned 207 MW Odessa Facility and three partially-owned facilities - **Odessa Facility:** A wholly-owned 207 MW data center, capable of producing approximately **4.2 EH/s** as of February 28, 2023, with plans for **~60,000 miners** generating **~6.2 EH/s** fully built out[299](index=299&type=chunk) - **Alborz Facility:** A 40 MW data center (49% owned) powered exclusively by wind, with a capacity of **~1.3 EH/s** and Cipher's share being **~0.64 EH/s**[302](index=302&type=chunk)[303](index=303&type=chunk)[304](index=304&type=chunk) - **Bear & Chief Facilities:** Two 10 MW data centers (49% owned) that curtail operations based on electricity prices, each with expansion potential up to **135 MW**[306](index=306&type=chunk)[307](index=307&type=chunk)[308](index=308&type=chunk) [Business Agreements](index=11&type=section&id=Business%20Agreements) Cipher has secured long-term power and hosting agreements, including a PPA with Luminant and a JV with WindHQ, ensuring low electricity costs - The company has power and hosting arrangements providing an average electricity cost of approximately **2.7 c/kWh** until at least 2027[313](index=313&type=chunk) - A power purchase agreement with Luminant supplies the Odessa Facility with up to **207 MW** under a take-or-pay arrangement[314](index=314&type=chunk) - A joint venture framework agreement with WindHQ governs the construction and operation of the Alborz, Bear, and Chief data centers, with Cipher holding a **49%** membership interest in each[338](index=338&type=chunk) - The company has purchased a total of **34,200 S19j Pro miners** from Bitmain and **35,119 MicroBT miners** from SuperAcme[405](index=405&type=chunk)[406](index=406&type=chunk)[407](index=407&type=chunk) - A Master Services and Supply Agreement with controlling shareholder Bitfury Top HoldCo allows Cipher to request equipment and services and includes a non-compete clause for bitcoin mining in the U.S.[408](index=408&type=chunk)[409](index=409&type=chunk) [Item 1A. Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from the volatile digital asset industry, operational dependencies, regulatory uncertainty, and its concentrated operations [Risks Related to Our Business, Industry and Operations](index=17&type=section&id=Risks%20Related%20to%20Our%20Business,%20Industry%20and%20Operations) The business is exposed to digital asset market volatility, operational concentration in Texas, reliance on third-party suppliers, and energy price fluctuations - The development and acceptance of digital assets are highly uncertain, with recent market disruptions like FTX's bankruptcy potentially slowing industry growth and increasing regulatory scrutiny[478](index=478&type=chunk)[480](index=480&type=chunk)[481](index=481&type=chunk) - The company's operations are concentrated in Texas, exposing it to risks from regional regulatory changes, market conditions, and natural disasters like severe weather events that could cause power outages[533](index=533&type=chunk)[465](index=465&type=chunk) - Bitcoin mining is energy-intensive, and government regulators may restrict electricity supply, increase taxes on power usage, or ban mining operations due to environmental concerns[495](index=495&type=chunk)[496](index=496&type=chunk)[528](index=528&type=chunk) - The business depends on third-party suppliers for critical mining equipment, such as ASIC chips, which are subject to price fluctuations, shortages, and supply chain disruptions, particularly from geopolitical tensions or trade barriers[537](index=537&type=chunk)[346](index=346&type=chunk)[349](index=349&type=chunk) - The company faces intense competition from other mining operations that may have greater resources, access to cheaper power, or operate in less regulated environments[497](index=497&type=chunk)[530](index=530&type=chunk) - A legal dispute is ongoing with Luminant regarding payments made under the Luminant Power Agreement, which could consume significant management resources and potentially affect the agreement's future valuation[365](index=365&type=chunk)[366](index=366&type=chunk)[368](index=368&type=chunk) [Risks Related to Regulatory Framework](index=36&type=section&id=Risks%20Related%20to%20Regulatory%20Framework) Regulatory uncertainty in the digital asset space, including potential classification as a security or MSB, could impose significant compliance costs and operational restrictions - Regulatory actions and changes in how bitcoin is legally characterized could restrict its use and adversely affect the business, with different U.S. agencies classifying bitcoin differently, creating an unclear environment[68](index=68&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk) - If the company's activities were deemed to require registration as a Money Services Business (MSB) under FinCEN or state laws, it could incur substantial, potentially cost-prohibitive, compliance costs[82](index=82&type=chunk)[88](index=88&type=chunk) - There is a risk of being classified as an "investment company" under the 1940 Act, which would impose impractical restrictions on business operations, particularly if bitcoin were deemed a security[77](index=77&type=chunk)[78](index=78&type=chunk)[86](index=86&type=chunk) - Potential climate change legislation could impose significant costs, such as taxes on electricity or requirements to purchase renewable energy credits, negatively impacting the profitability of energy-intensive bitcoin mining[99](index=99&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) - The pseudonymous nature of blockchain transactions exposes the company to the risk of inadvertently transacting with persons on government sanctions lists, which could lead to penalties and reputational harm[104](index=104&type=chunk)[105](index=105&type=chunk) - The tax treatment of digital assets is evolving and uncertain, with future guidance potentially imposing a greater tax burden on bitcoin transactions, negatively affecting its value and the company's business[116](index=116&type=chunk)[117](index=117&type=chunk)[122](index=122&type=chunk) [Risks Related to Cryptocurrency](index=43&type=section&id=Risks%20Related%20to%20Cryptocurrency) The company faces risks from holding and transacting with cryptocurrencies, including loss or theft, network attacks, blockchain forks, and uncertain market acceptance - The loss or compromise of private keys to digital wallets could result in the irreversible loss of the company's bitcoin holdings[123](index=123&type=chunk)[124](index=124&type=chunk) - Storing bitcoin on third-party trading platforms exposes the company to risks of loss from hacks or platform failures, as exemplified by recent bankruptcies like FTX and BlockFi[125](index=125&type=chunk)[126](index=126&type=chunk) - Digital asset exchanges are largely unregulated and have been subject to fraud and failure, which can reduce confidence in the market and negatively impact bitcoin's price[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk) - A malicious actor gaining control of over **50%** of the Bitcoin network's processing power could alter the blockchain, enabling double-spending and undermining network integrity[182](index=182&type=chunk)[183](index=183&type=chunk)[185](index=185&type=chunk) - A permanent "hard fork" in the Bitcoin blockchain could create competing versions, splitting the user and miner base, reducing security, and negatively affecting bitcoin's value[156](index=156&type=chunk)[157](index=157&type=chunk)[159](index=159&type=chunk) - The limited and uncertain acceptance of cryptocurrency in the retail and commercial marketplace limits its utility and contributes to price volatility[141](index=141&type=chunk)[142](index=142&type=chunk) [Risks Related to Bitcoin Mining](index=52&type=section&id=Risks%20Related%20to%20Bitcoin%20Mining) The company's success is highly dependent on bitcoin's value, facing risks from halving events, potential protocol shifts, and the need for continuous technological investment - The company's financial success is almost entirely dependent on the market value of bitcoin, which is historically volatile, and a significant decline would adversely affect operating results[195](index=195&type=chunk)[198](index=198&type=chunk) - Accounting rules require impairment charges if bitcoin's fair value falls below its carrying value, but gains are not recorded until realized, creating significant volatility in reported earnings[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk) - The next Bitcoin halving, expected in April 2024, will cut the block reward to **3.125 bitcoin**, potentially reducing revenue if not offset by a price increase or transaction fees[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk) - A potential shift of the Bitcoin network's consensus algorithm from "proof-of-work" to "proof-of-stake" would render the company's specialized ASIC miners obsolete and diminish its competitive advantage[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk) - The rapid technological evolution of mining hardware requires continuous investment in new, more efficient miners to remain competitive, with failure to keep pace negatively affecting the business[220](index=220&type=chunk)[221](index=221&type=chunk) [Risks Related to our Common Stock and Warrants](index=57&type=section&id=Risks%20Related%20to%20our%20Common%20Stock%20and%20Warrants) Risks include reduced disclosure as an "emerging growth company," the controlling influence of Bitfury Top HoldCo, stock price volatility, and potential worthlessness of warrants - As an "emerging growth company," Cipher is permitted to rely on exemptions from certain disclosure requirements, potentially providing less information to investors[257](index=257&type=chunk)[260](index=260&type=chunk) - Bitfury Top HoldCo is the controlling shareholder, holding approximately **81.2%** of common stock as of March 7, 2023, allowing it to control strategic direction and shareholder approvals[264](index=264&type=chunk)[265](index=265&type=chunk) - The company is a "controlled company" under Nasdaq rules, exempting it from certain corporate governance requirements, such as having a majority of independent directors[322](index=322&type=chunk)[323](index=323&type=chunk) - There is no guarantee that the company's public warrants, with an exercise price of **$11.50** per share, will ever be "in the money" and they may expire worthless[279](index=279&type=chunk) - A material weakness in internal control over financial reporting was identified as of December 31, 2022, related to IT general controls, which could affect financial statement accuracy and investor confidence[380](index=380&type=chunk)[381](index=381&type=chunk) [Item 2. Properties](index=67&type=section&id=Item%202.%20Properties) The company leases all its properties, including executive offices in New York City and data centers in Texas, which are deemed adequate for near-term needs - The company leases all of its locations, including its executive offices in New York, NY, and its data center facilities across Texas[439](index=439&type=chunk) [Item 3. Legal Proceedings](index=67&type=section&id=Item%203.%20Legal%20Proceedings) The company is not a party to any material pending legal proceedings, but is vigorously contesting a lawsuit with Luminant in Texas state court - The company is not party to any material pending legal proceedings[440](index=440&type=chunk) - A lawsuit was filed by Luminant against the company's subsidiary, CMTI, in November 2022, seeking recoupment of approximately **$6.7 million** in payments related to the Odessa data center, which the company is contesting[366](index=366&type=chunk)[558](index=558&type=chunk)[574](index=574&type=chunk) [PART II](index=68&type=section&id=PART%20II) This part details the market for common equity, management's discussion and analysis of financial condition, and the financial statements [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=68&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock and warrants trade on Nasdaq, with 51 record holders as of March 7, 2023, and no plans for cash dividends - The company's common stock and public warrants began trading on the Nasdaq Stock Exchange on August 30, 2021, under the symbols "CIFR" and "CIFRW"[444](index=444&type=chunk) - As of March 7, 2023, there were **51** holders of record of the company's common stock[445](index=445&type=chunk) - The company has never declared or paid cash dividends and does not plan to in the foreseeable future, intending to retain earnings for business development and growth[449](index=449&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=68&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) For FY2022, Cipher Mining reported its first revenue of **$3.0 million** from bitcoin mining, incurring a net loss of **$39.1 million**, with liquidity primarily from its 2021 business combination [Results of Operations](index=73&type=section&id=Results%20of%20Operations) For FY2022, the company generated **$3.0 million** in revenue from bitcoin mining, with a net loss of **$39.1 million**, significantly impacted by a **$73.5 million** derivative asset gain Comparison of Operations (2022 vs. 2021) | Metric (in thousands) | Year Ended Dec 31, 2022 | Eleven Months Ended Dec 31, 2021 | | :--- | :--- | :--- | | **Revenue - bitcoin mining** | $3,037 | $- | | **Operating loss** | $(37,421) | $(72,152) | | **Net loss** | $(39,053) | $(72,153) | | **Change in fair value of derivative asset** | $(73,479) | $- | | **Equity in losses of equity investees** | $36,972 | $- | | **General and administrative** | $70,836 | $72,147 | - Revenue of **$3.0 million** was generated entirely from the Odessa Facility, which began mining on November 22, 2022, mining **180 bitcoin** at an average price of approximately **$17,000** per coin[520](index=520&type=chunk) - A **$73.5 million** gain was recognized from the change in fair value of a derivative asset related to the Luminant Power Agreement, which included an initial recognition of **$83.6 million**[4](index=4&type=chunk) - Equity in losses of equity investees totaled **$37.0 million**, primarily consisting of **$33.4 million** in losses recognized from contributing miners to joint ventures at fair values below their cost[376](index=376&type=chunk) - General and administrative expenses decreased slightly to **$70.8 million** from **$72.1 million**, mainly due to a **$22.3 million** reduction in share-based compensation, offset by increased costs for insurance, payroll, and professional services[522](index=522&type=chunk) [Liquidity and Capital Resources](index=75&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2022, the company had **$11.9 million** in cash and an accumulated deficit of **$111.2 million**, with an ATM offering agreement for up to **$250 million** Financial Position (as of Dec 31, 2022) | Metric | Value (in millions) | | :--- | :--- | | **Cash and cash equivalents** | $11.9 | | **Total stockholders' equity** | $342.9 | | **Accumulated deficit** | $111.2 | | **Net loss (FY 2022)** | $39.1 | | **Negative cash flow from operations (FY 2022)** | $20.9 | - The company has a shelf registration statement on Form S-3 effective, allowing it to offer and sell up to **$500.0 million** in securities[10](index=10&type=chunk) - An at-the-market (ATM) offering agreement was established, allowing the company to sell up to **$250.0 million** of its Common Stock, with no shares sold as of the report date[11](index=11&type=chunk)[12](index=12&type=chunk) [Cash Flows](index=76&type=section&id=Cash%20Flows) For FY2022, net cash used in operating activities was **$20.9 million**, while investing activities used **$173.9 million**, and financing activities resulted in a net use of **$3.1 million** Summary of Cash Flows (in thousands) | Activity | Year Ended Dec 31, 2022 | Eleven Months Ended Dec 31, 2021 | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(20,915) | $(31,666) | | **Net cash used in investing activities** | $(173,909) | $(120,140) | | **Net cash (used in) provided by financing activities** | $(3,090) | $361,647 | - Net cash used in investing activities increased by **$53.8 million** year-over-year, driven by a **$73.2 million** increase in deposits for miners and a **$34.8 million** increase for property and equipment purchases, partially offset by **$54.0 million** in cash distributions from joint ventures[17](index=17&type=chunk) - Net cash from financing activities decreased by **$364.7 million**, primarily because the prior period included **$384.9 million** in net proceeds from the Business Combination[18](index=18&type=chunk) [Contractual Obligations and Other Commitments](index=77&type=section&id=Contractual%20Obligations%20and%20Other%20Commitments) The company has significant contractual obligations, including a five-year executive office lease and **$73.0 million** in prepaid mining equipment purchase commitments - The company has a five-year, four-month lease for its executive office space with monthly rent of approximately **$0.1 million**[330](index=330&type=chunk) - A combined agreement with Luminant for the Odessa Facility includes a five-year lease for land and a substation, with total estimated undiscounted principal payments of **$15.0 million**[331](index=331&type=chunk)[332](index=332&type=chunk)[333](index=333&type=chunk) Mining Equipment Commitments (as of Dec 31, 2022, in thousands) | Vendor | Open Purchase Commitment | Deposits Paid | | :--- | :--- | :--- | | Bitmain Technologies Limited | $1,720 | $1,720 | | SuperAcme Technology | $50,660 | $50,660 | | Bitfury USA and other vendors | $20,638 | $20,638 | | **Total** | **$73,018** | **$73,018** | [Item 8. Financial Statements and Supplementary Data](index=87&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for FY2022 and the eleven months ended December 31, 2021, including notes [Notes to Consolidated Financial Statements](index=107&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, including reverse recapitalization, bitcoin as an indefinite-lived intangible asset, derivative asset valuation, and equity method investments - The 2021 merger with GWAC was accounted for as a reverse recapitalization, with CMTI as the accounting acquirer[779](index=779&type=chunk)[758](index=758&type=chunk) - Bitcoin held by the company is treated as an indefinite-lived intangible asset, tested daily for impairment if its carrying value exceeds its fair value, with no subsequent reversals permitted[792](index=792&type=chunk)[793](index=793&type=chunk) - The Luminant Power Agreement is accounted for as a derivative asset, recorded at fair value, with an initial recognition of **$83.6 million** as of July 1, 2022[886](index=886&type=chunk)[4](index=4&type=chunk) - The company accounts for its **49%** interest in three data center LLCs using the equity method, recognizing its share of net losses, which totaled **$5.6 million** in 2022[938](index=938&type=chunk)[545](index=545&type=chunk) - As of December 31, 2022, the company had a finance lease liability of **$14.8 million** and an operating lease liability of **$5.5 million**[970](index=970&type=chunk) - Share-based compensation expense for FY 2022 was **$41.5 million**, a decrease from **$63.8 million** in the prior eleven-month period[565](index=565&type=chunk) [Item 9A. Controls and Procedures](index=87&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls were ineffective as of December 31, 2022, due to a material weakness in IT General Controls, for which a remediation plan is underway - Management concluded that as of December 31, 2022, the company's disclosure controls and procedures were not effective at a reasonable assurance level[668](index=668&type=chunk) - A material weakness was identified in internal control over financial reporting related to IT General Controls, with deficiencies in user access controls, segregation of duties, and program change management for financially relevant systems[671](index=671&type=chunk)[381](index=381&type=chunk) - The company has initiated a remediation plan including devoting more resources to IT and financial reporting, utilizing a third-party firm, and formalizing policies for IT change management and user access[382](index=382&type=chunk)[697](index=697&type=chunk) [PART III](index=90&type=section&id=PART%20III) This part outlines the company's directors, executive officers, and corporate governance practices [Item 10. Directors, Executive Officers and Corporate Governance](index=90&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) This section identifies the company's executive officers and board of directors, confirming no family relationships and the adoption of a code of business conduct and ethics - The company's executive officers include Tyler Page (CEO), Edward Farrell (CFO), Patrick Kelly (COO), and William Iwaschuk (CLO)[700](index=700&type=chunk) - The board of directors includes Chairman James Newsome and members such as Cary Grossman, Caitlin Long, and Robert Dykes[700](index=700&type=chunk)[737](index=737&type=chunk) - There are no family relationships among the company's directors or executive officers[612](index=612&type=chunk) - A written code of business conduct and ethics has been adopted for all directors, officers, and employees and is available on the company's website[684](index=684&type=chunk) [PART IV](index=94&type=section&id=PART%20IV) This part lists the exhibits and financial statement schedules included in the report [Item 15. Exhibit and Financial Statement Schedules](index=94&type=section&id=Item%2015.%20Exhibit%20and%20Financial%20Statement%20Schedules) This section provides an index of the financial statements and a list of all exhibits filed as part of the Form 10-K - This section contains the index to the consolidated financial statements and a list of exhibits filed with the Form 10-K[731](index=731&type=chunk)[711](index=711&type=chunk)

Cipher Mining Inc. (NASDAQ:CIFR) Q3 2022 Earnings Conference Call November 14, 2022 8:00 AM ET Company Participants Lori Barker - IR Tyler Page - CEO Ed Farrel - CFO Conference Call Participants Mike Colonnese - H.C. Wainwright Operator Good morning. Thank you for standing by, and welcome to Cipher Mining's Third Quarter 2022 Business Update Conference Call. Please be advised, today's conference is being recorded and a replay will be available on Cipher Mining's Investor Relations website. I would now like ...

*: Cipher Mining November 14, 2022 Safe Harbor • This presentation has been prepared by Cipher Mining Inc. and is made for informational purposes only. The information set forth herein does not purport to be complete or to contain all of the information you may desire. You must evaluate, and bear all risks associated with, the use of any information provided hereunder, including any reliance on the accuracy, completeness, safety or usefulness of such information. This information is not intended to be used ...

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements of Cipher Mining Inc. for the period ended September 30, 2022, including the balance sheets, statements of operations, changes in stockholders' equity (deficit), and cash flows, along with detailed notes explaining the company's accounting policies, financial instruments, and significant transactions [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets provide a snapshot of Cipher Mining Inc.'s financial position as of September 30, 2022, compared to December 31, 2021, highlighting significant changes in assets, liabilities, and stockholders' equity Assets (in thousands) | Metric | Sep 30, 2022 | Dec 31, 2021 | | :-------------------------------- | :----------- | :----------- | | Cash and cash equivalents | $28,111 | $209,841 | | Total current assets | $69,774 | $223,660 | | Deposits on equipment | $200,033 | $114,857 | | Property and equipment, net | $40,751 | $5,124 | | Investment in equity investee | $31,690 | $- | | Total assets | $407,493 | $354,167 | Liabilities and Stockholders' Equity (in thousands) | Metric | Sep 30, 2022 | Dec 31, 2021 | | :-------------------------------- | :----------- | :----------- | | Total current liabilities | $19,609 | $499 | | Total liabilities | $24,393 | $636 | | Total stockholders' equity | $383,100 | $353,531 | | Total liabilities and stockholders' equity | $407,493 | $354,167 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The condensed consolidated statements of operations detail the company's financial performance for the three and nine months ended September 30, 2022, compared to the corresponding periods in 2021, showing a significant shift from net loss to net income, primarily driven by changes in the fair value of derivative assets Three Months Ended September 30 (in thousands) | Metric | 2022 | 2021 | | :-------------------------------- | :----------- | :----------- | | General and administrative | $17,755 | $2,283 | | Change in fair value of derivative asset | $(85,658) | $- | | Equity in loss of equity investment | $8,345 | $- | | Operating income (loss) | $59,233 | $(2,283) | | Net income (loss) | $59,292 | $(2,421) | | Net income (loss) per share - basic | $0.24 | $(0.01) | Nine Months Ended September 30 (in thousands) | Metric | 2022 | 2021 (Eight Months) | | :-------------------------------- | :------------------ | :------------------ | | General and administrative | $51,849 | $2,942 | | Change in fair value of derivative asset | $(85,658) | $- | | Equity in loss of equity investment | $20,577 | $- | | Operating income (loss) | $12,353 | $(2,943) | | Net income (loss) | $12,574 | $(3,082) | | Net income (loss) per share - basic | $0.05 | $(0.01) | [Condensed Consolidated Statement of Changes in Stockholder's Equity (Deficit)](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Stockholder's%20Equity%20(Deficit)) This statement outlines the changes in stockholders' equity for the three and nine months ended September 30, 2022, and the corresponding periods in 2021, reflecting impacts from net income, share-based compensation, and common stock transactions - Total Stockholders' Equity (in thousands) * Balance as of June 30, 2022: **$313,339**[29](index=29&type=chunk) * Net income for Q3 2022: **$59,292**[29](index=29&type=chunk) * Share-based compensation for Q3 2022: **$10,494**[29](index=29&type=chunk) * Balance as of September 30, 2022: **$383,100**[29](index=29&type=chunk) - Key Changes (Nine Months Ended September 30, 2022, in thousands) * Balance as of December 31, 2021: **$353,531**[33](index=33&type=chunk) * Share-based compensation: **$30,072**[33](index=33&type=chunk) * Net income: **$12,574**[33](index=33&type=chunk) * Common stock cancelled: **$(10,000)**[33](index=33&type=chunk) * Balance as of September 30, 2022: **$383,100**[33](index=33&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The condensed consolidated statements of cash flows present the cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2022, and the eight months ended September 30, 2021, showing a significant decrease in cash and cash equivalents in 2022 Cash Flows Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2022 | Eight Months Ended Sep 30, 2021 | | :-------------------------------- | :----------------------------- | :------------------------------ | | Net cash used in operating activities | $(8,891) | $(27,100) | | Net cash used in investing activities | $(169,762) | $(74,476) | | Net cash (used in) provided by financing activities | $(3,077) | $383,853 | | Net (decrease) increase in cash and cash equivalents | $(181,730) | $282,277 | | Cash and cash equivalents, end of period | $28,111 | $282,277 | - Noncash Investing and Financing Activities (Nine Months Ended Sep 30, 2022, in thousands) * Equity method investment acquired for non-cash consideration: **$93,208**[39](index=39&type=chunk) * Common stock cancelled: **$10,000**[39](index=39&type=chunk) * Right-of-use asset obtained in exchange for operating lease liability: **$5,859**[39](index=39&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and additional information supporting the unaudited condensed consolidated financial statements, covering the company's organization, significant accounting policies, fair value measurements, and specific financial accounts and transactions [NOTE 1. ORGANIZATION AND BUSINESS](index=10&type=section&id=NOTE%201.%20ORGANIZATION%20AND%20BUSINESS) Cipher Mining Inc. was formed through a Business Combination on August 27, 2021, specializing in Bitcoin mining in the U.S. The company began mining operations in February 2022 at the partially-owned Alborz Facility and is actively building out wholly-owned and partially-owned sites. Bitfury Group holds an 81.6% beneficial ownership, giving them control. The company faces risks related to liquidity, limited business history, and global economic conditions like COVID-19 - Company Formation: Cipher Mining Inc. was formed on **August 27, 2021**, through a merger between Good Works Acquisition Corp. (GWAC) and Cipher Mining Technologies Inc[42](index=42&type=chunk)[43](index=43&type=chunk) - Business Focus: The company is an emerging technology company operating in the Bitcoin mining ecosystem in the United States, developing and growing a cryptocurrency mining business specializing in Bitcoin[44](index=44&type=chunk) - Operational Buildout: Began deployment of capacity in **Q1 2022**, with mining operations starting in **February 2022** at the partially-owned Alborz Facility in Texas[44](index=44&type=chunk) - Control: As of **September 30, 2022**, Bitfury Top HoldCo beneficially owned approximately **81.6%** of the Company's common stock, granting the Bitfury Group control[45](index=45&type=chunk) - Liquidity and Capital Resources (in millions) * Used **$8.9** of cash for operations during the nine months ended September 30, 2022[46](index=46&type=chunk) * Cash and cash equivalents: **$28.1** as of September 30, 2022[46](index=46&type=chunk) * Total stockholders' equity: **$383.1** as of September 30, 2022[47](index=47&type=chunk) * Accumulated deficit: **$59.6** as of September 30, 2022[47](index=47&type=chunk) * Paid **$184.1** in deposits for miners and mining equipment during the nine months ended September 30, 2022[51](index=51&type=chunk) * Management believes existing resources, potential equipment order delays, projected cash/crypto inflows, and potential stock sales will be sufficient for at least **12 months**[46](index=46&type=chunk)[47](index=47&type=chunk)[51](index=51&type=chunk) - COVID-19 Impact: The pandemic has caused economic dislocation and increased volatility in the cryptocurrency space, potentially leading to supply delays, construction delays, and adverse effects on business operations[54](index=54&type=chunk)[55](index=55&type=chunk) [NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=11&type=section&id=NOTE%202.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the key accounting policies used in preparing the unaudited condensed consolidated financial statements, including the basis of presentation, use of estimates, principles of consolidation, and specific policies for investments in equity investees, property and equipment, leases, cryptocurrencies, derivative accounting, and income per share - Basis of Presentation: Financial statements are prepared in accordance with **GAAP** for interim financial information and **SEC** regulations[56](index=56&type=chunk)[61](index=61&type=chunk) - Consolidation: Includes accounts of the Company and its controlled subsidiary, Cipher Mining Technologies, with all intercompany transactions eliminated[59](index=59&type=chunk) - Use of Estimates: Management makes significant judgments and estimates, particularly for equity instruments, derivative and warrant valuations, useful lives of assets, and deferred tax assets[60](index=60&type=chunk) - Fiscal Year Change: Assumed GWAC's financial calendar, with the fiscal year ending **December 31**, approved on **September 23, 2021**[63](index=63&type=chunk) - Investment in Equity Investees: Accounts for investments using the **equity method** when significant influence (**20-50% ownership**) exists, initially at cost or fair value upon derecognition of nonfinancial assets[64](index=64&type=chunk) Property and Equipment, Net (in thousands) | Category | Sep 30, 2022 | Dec 31, 2021 | | :----------------------------- | :----------- | :----------- | | Construction-in-progress | $40,192 | $5,069 | | Total cost of property and equipment | $40,767 | $5,129 | | Less: accumulated depreciation | $(16) | $(5) | | Property and equipment, net | $40,751 | $5,124 | - Leases: Accounts for leases under **ASC 842**, recognizing **ROU assets** and lease liabilities for terms exceeding **12 months**, using the incremental borrowing rate[73](index=73&type=chunk)[74](index=74&type=chunk) - Cryptocurrencies: Accounted for as **indefinite-lived intangible assets**, assessed for impairment annually or more frequently. Impairment losses are recognized when carrying amount exceeds fair value (lowest intra-day market price) * Impairment charges: **$0.3 million** (Q3 2022) and **$0.9 million** (YTD Sep 30, 2022)[81](index=81&type=chunk)[111](index=111&type=chunk) - Derivative Accounting (Luminant Power Agreement): The Luminant Power Agreement is treated as a **derivative** under **ASC 815** due to net settlement capability, recorded at fair value with changes recognized in the statements of operations * Sold **$1.7 million** in electricity during Q3 2022[87](index=87&type=chunk)[88](index=88&type=chunk) Antidilutive Shares Excluded (September 30, 2022) | Category | Shares | | :----------------------------- | :----------- | | Public Warrants | 8,499,980 | | Private Placement Warrants | 114,000 | | Unvested RSUs | 15,364,457 | | **Total** | **23,978,437** | [NOTE 3. FAIR VALUE MEASUREMENTS](index=16&type=section&id=NOTE%203.%20FAIR%20VALUE%20MEASUREMENTS) This note details the fair value measurements of the company's financial assets and liabilities, categorizing them into Level 1, 2, and 3 inputs, with a focus on the derivative asset from the Luminant Power Agreement and the warrant liability Fair Value Hierarchy (September 30, 2022, in thousands) | Category | Level 1 | Level 2 | Level 3 | Total | | :----------------------------- | :------ | :------ | :------ | :------ | | Money market securities | $11,111 | $- | $- | $11,111 | | Derivative asset | $- | $- | $78,880 | $78,880 | | **Total Assets** | **$11,111** | **$-** | **$78,880** | **$89,991** | | Warrant liability | $- | $- | $22 | $22 | | **Total Liabilities** | **$-** | **$-** | **$22** | **$22** | - Level 3 Derivative Asset * Related to the Luminant Power Agreement, effective **July 1, 2022**[102](index=102&type=chunk) * Fair value derived from Level 2 and Level 3 inputs (unobservable inputs due to lack of quoted prices)[102](index=102&type=chunk) * Discount rates used: **7.19%** (July 1, 2022) and **7.39%** (September 30, 2022)[103](index=103&type=chunk) * Balance as of September 30, 2022: **$78,880 thousand**[102](index=102&type=chunk) * Proceeds from reduction of scheduled power (August Amendment): **$(5,056) thousand**[103](index=103&type=chunk) * Change in fair value: **$326 thousand**[103](index=103&type=chunk) - Level 3 Warrant Liability * Private Placement Warrants are classified as **Level 3**[104](index=104&type=chunk) * Valuation uses **Black-Scholes option-pricing model** and Common Stock quoted price[104](index=104&type=chunk) * Key Assumptions (September 30, 2022) * Risk-free rate: **4.08%**[107](index=107&type=chunk) * Volatility: **78.2%**[107](index=107&type=chunk) * Contractual term: **3.9 years**[107](index=107&type=chunk) * Exercise price: **$11.50**[107](index=107&type=chunk) * Balance as of September 30, 2022: **$22 thousand** (down from $137 thousand on Jan 1, 2022)[104](index=104&type=chunk) [NOTE 4. PREPAID EXPENSES AND ACCRUED EXPENSES](index=18&type=section&id=NOTE%204.%20PREPAID%20EXPENSES%20AND%20ACCRUED%20EXPENSES) This note provides a breakdown of the company's prepaid expenses and other current assets, primarily related to prepaid insurance, and its accrued expenses, which significantly increased due to taxes - Prepaid Expenses and Other Current Assets (in thousands) * September 30, 2022: **$8,300** (primarily prepaid insurance)[108](index=108&type=chunk) * December 31, 2021: **$13,800** (primarily prepaid insurance)[108](index=108&type=chunk) Accrued Expenses (in thousands) | Category | Sep 30, 2022 | Dec 31, 2021 | | :----------------------------- | :----------- | :----------- | | Taxes (primarily sales tax) | $9,895 | $- | | Legal | $389 | $100 | | Accounting and audit | $238 | $153 | | Other | $204 | $4 | | **Total accrued expenses** | **$10,726** | **$257** | [NOTE 5. CRYPTOCURRENCIES](index=18&type=section&id=NOTE%205.%20CRYPTOCURRENCIES) This note details the company's cryptocurrency holdings, primarily Bitcoin, and the related activities including receipts from equity investees, sales, and impairment charges Cryptocurrency Activity (Nine Months Ended Sep 30, 2022, in thousands) | Activity | Amount | | :-------------------------------- | :------- | | Balance, December 31, 2021 | $- | | Cryptocurrencies received from equity investees | $3,139 | | Proceeds from sale of cryptocurrencies | $(23) | | Realized gain on sale of cryptocurrencies | $6 | | Impairment of cryptocurrencies | $(859) | | **Balance, September 30, 2022** | **$2,263** | - Fair Market Value: Bitcoin fair market value as of **September 30, 2022**, was approximately **$2.4 million**, estimated using the closing price (Level 1 input)[110](index=110&type=chunk) - Impairment Charges: Recognized **$0.3 million** for the three months and **$0.9 million** for the nine months ended September 30, 2022[111](index=111&type=chunk) [NOTE 6. DEPOSITS ON EQUIPMENT](index=19&type=section&id=NOTE%206.%20DEPOSITS%20ON%20EQUIPMENT) This note outlines the company's significant commitments for purchasing mining equipment, including agreements with Bitmain and SuperAcme, and deposits paid, along with reclassifications to equity investments - Outstanding Purchase Agreements (as of Sep 30, 2022) * **27,000 Antminer S19j Pro (100 TH/s)** miners from Bitmain Technologies Limited[114](index=114&type=chunk) * **60,000 MicroBT M30S, M30S+ and M30S++** miners from SuperAcme Technology (Hong Kong) Limited[116](index=116&type=chunk) * **240 units of BlockBox air-cooled containers (BBACs)** from Bitfury USA Inc[114](index=114&type=chunk) Purchase Commitments and Deposits (in thousands) | Vendor | Open Purchase Commitment | Deposits Paid | Expected Shipping | | :-------------------------------- | :----------------------- | :------------ | :-------------------------------- | | Bitmain Technologies Limited | $55,500 | $55,500 | Oct 2022 - Dec 2022 | | SuperAcme Technology (Hong Kong) | $222,401 | $101,819 | Oct 2022 - Dec 2022 | | Bitfury USA and other vendors | $57,173 | $42,715 | 2022 | | **Total** | **$335,074** | **$200,033** | | - Equipment Contributions to Alborz Facility * Contributed equipment with a total cost of **$93.2 million** (**12,953 miners** and other equipment)[119](index=119&type=chunk) * Reclassified from deposits on equipment to investment in equity investee[119](index=119&type=chunk) * Recognized losses of **$11.6 million** (June 2022) and **$7.2 million** (July 2022) related to these contributions[119](index=119&type=chunk) [NOTE 7. SECURITY DEPOSITS](index=20&type=section&id=NOTE%207.%20SECURITY%20DEPOSITS) This note details the company's security deposits, primarily related to power purchase and sale agreements with Luminant and an office lease Security Deposits (in thousands) | Category | Sep 30, 2022 | Dec 31, 2021 | | :-------------------------------- | :----------- | :----------- | | Luminant Power Purchase Agreement Independent Collateral Amount | $6,277 | $6,277 | | Luminant Purchase and Sale Agreement collateral | $3,063 | $3,063 | | Office lease security deposit | $960 | $922 | | Other deposits | $1,155 | $90 | | **Total security deposits** | **$11,455** | **$10,352** | [NOTE 8. INVESTMENT IN EQUITY INVESTEES](index=20&type=section&id=NOTE%208.%20INVESTMENT%20IN%20EQUITY%20INVESTEES) This note describes the company's equity investments, primarily through the WindHQ Joint Venture Agreement for Data Centers, and the accounting treatment for its 49% ownership in LLCs like Alborz and Bear, including recognized losses on miner contributions - WindHQ Joint Venture Agreement * Signed **June 10, 2021**, for construction, buildout, deployment, and operation of Data Centers in the U.S[123](index=123&type=chunk) * Cipher and WindHQ each own **49%** and **51%** respectively, of Initial Data Center LLCs[129](index=129&type=chunk) * Cipher's **49% ownership** in individual Data Center LLCs is accounted for under the **equity method**[129](index=129&type=chunk) - Alborz LLC and Bear LLC * Alborz LLC Agreement entered **January 28, 2022**; Bear LLC Agreement entered **May 16, 2022**[132](index=132&type=chunk) * Cipher recognized **$1.9 million** and **$2.6 million** as equity in the net loss of Alborz LLC for the three and nine months ended September 30, 2022, respectively[133](index=133&type=chunk) * Cryptocurrency mining operations had not commenced at the Bear Facility as of **September 30, 2022**[133](index=133&type=chunk) - Miner Contributions to Alborz Facility * Contributed **6,629 miners** (June 2022) and **2,375 miners** (July 2022)[134](index=134&type=chunk) * Recognized losses of **$7.2 million** (Q3 2022) and **$18.8 million** (YTD Sep 30, 2022) due to fair value being lower than cost[134](index=134&type=chunk) Investment in Equity Investee Activity (Nine Months Ended Sep 30, 2022, in thousands) | Activity | Amount | | :-------------------------------- | :------- | | Balance, December 31, 2021 | $- | | Cost of miners and mining equipment contributed, net of losses | $74,384 | | Sales taxes to be paid by Cipher on behalf of equity investee | $5,316 | | Accretion of basis difference | $821 | | Capital distributions | $(43,291) | | Cryptocurrencies received from equity investee | $(3,139) | | Equity in net loss of equity investee | $(2,574) | | **Balance, September 30, 2022** | **$31,690** | [NOTE 9. RELATED PARTY TRANSACTIONS](index=21&type=section&id=NOTE%209.%20RELATED%20PARTY%20TRANSACTIONS) This note details transactions and agreements with related parties, primarily Bitfury Top HoldCo and its affiliates, including a waiver agreement for stock transfer restrictions, the Master Services and Supply Agreement, and various purchase commitments and payables - Waiver Agreement (**April 8, 2022**) * Permitted Stockholders (including Bitfury Top HoldCo) to pledge or hypothecate Lock-up Shares as collateral for loans[136](index=136&type=chunk) * Extended Lock-up Period by **three months** to **November 26, 2023**, for pledged shares[137](index=137&type=chunk) * Resulted in the cancellation of **2,890,173 shares** of Common Stock held by Bitfury Top HoldCo as consideration for a **$10.0 million** deposit for mining rigs[140](index=140&type=chunk) - Board Observer Agreement (**April 8, 2022**): Granted Bitfury Holding and Bitfury Top HoldCo the right to designate a representative as a Board observer[141](index=141&type=chunk) - Master Services and Supply Agreement (**August 26, 2021**) * Initial term of **84 months**, with automatic **12-month renewals**[142](index=142&type=chunk) * Cipher can request equipment and services (construction, engineering, operations) from Bitfury Top HoldCo for mining centers[143](index=143&type=chunk) * Pricing framework: "**onsite**" services at cost **+5%**, "**remote services**" on a ratchet basis (**$1,000/MW** up to 445MW, **$450/MW** above 445MW)[143](index=143&type=chunk) - Purchase Commitments and Related Party Payables * Paid **$21.7 million** to Bitfury USA for BBACs during the nine months ended September 30, 2022[144](index=144&type=chunk) * Deposits on equipment related to Bitfury USA agreements: **$21.9 million** (Sep 30, 2022) and **$5.1 million** (Dec 31, 2021)[145](index=145&type=chunk) * Construction-in-progress related to Bitfury USA agreements: **$2.7 million** (Sep 30, 2022)[148](index=148&type=chunk) * Total balance owed to Bitfury USA (accounts payable, related party): **$3.2 million** as of September 30, 2022[148](index=148&type=chunk) - Related Party Receivables: Approximately **$0.7 million** as of September 30, 2022, for expenses paid on behalf of Data Center LLCs[150](index=150&type=chunk) [NOTE 10. LEASES](index=23&type=section&id=NOTE%2010.%20LEASES) This note details the company's operating lease for office space, including rent expense, ROU assets, lease liabilities, and future minimum lease payments - Office Lease: Initial term of **64 months**, commenced **February 1, 2022**[151](index=151&type=chunk) - Rent Expense (in thousands) * Three months ended September 30, 2022: **$0.4 million**[152](index=152&type=chunk) * Nine months ended September 30, 2022: **$1.0 million**[152](index=152&type=chunk) - Supplemental Lease Information (Nine Months Ended Sep 30, 2022) * Operating cash flows - operating leases: **$395 thousand**[153](index=153&type=chunk) * Right-of-use assets obtained in exchange for operating lease liabilities: **$5,859 thousand**[153](index=153&type=chunk) * Weighted-average remaining lease term: **4.7 years**[153](index=153&type=chunk) * Weighted-average discount rate: **10.9%**[153](index=153&type=chunk) [NOTE 11. COMMITMENTS AND CONTINGENCIES](index=23&type=section&id=NOTE%2011.%20COMMITMENTS%20AND%20CONTINGENCIES) This note addresses the company's legal proceedings, indemnification commitments, and significant contractual obligations, including the Standard Power Hosting Agreement and the Luminant Lease and Purchase and Sale Agreements for its Odessa Facility - Legal Proceedings: Not a party to any material legal proceedings[154](index=154&type=chunk) - Indemnification Commitments: Enters into contracts that contain a variety of indemnifications; maximum exposure unknown, no significant losses anticipated[157](index=157&type=chunk) - Standard Power Hosting Agreement (**Feb 3, 2021**) * Company provides Bitcoin miners; Standard Power hosts, operates, and manages them at three Ohio facilities[158](index=158&type=chunk) * Company pays hosting and operational service fees, effective pro rata based on miners in operation[161](index=161&type=chunk) * Term: **five years** with automatic **five-year renewals**[161](index=161&type=chunk) - Luminant Lease and Purchase and Sale Agreements (Combined Luminant Lease Agreement) * Leases land for the Odessa Facility and involves the purchase and sale of Interconnection Electrical Facilities (substation)[162](index=162&type=chunk) * Requires **$12.6 million** in collateral (Independent Collateral Amount) for the Luminant Power Agreement; **$6.3 million** paid as of Sep 1, 2021[163](index=163&type=chunk) * Provided an additional **$3.1 million** collateral under the Purchase and Sale Agreement[166](index=166&type=chunk) * Financing for land and substation provided by Luminant affiliates, with **$13.1 million** in undiscounted principal payments over **five years**[167](index=167&type=chunk) [NOTE 12. STOCKHOLDERS' EQUITY](index=25&type=section&id=NOTE%2012.%20STOCKHOLDERS'%20EQUITY) This note details the company's authorized and outstanding common stock, including share repurchases for tax withholding and the cancellation of shares related to a deposit, as well as the filing of a shelf registration statement and an at-the-market offering agreement - Authorized Shares (as of Sep 30, 2022) * **500,000,000 shares** of Common Stock (**$0.001 par value**)[169](index=169&type=chunk) * **10,000,000 shares** of preferred stock[169](index=169&type=chunk) - Common Stock Transactions * Repurchased **13,193 shares** (Q3 2022) and **672,424 shares** (YTD Sep 30, 2022) for RSU tax withholding[171](index=171&type=chunk) * Cancelled **2,890,173 shares** held by Bitfury Top HoldCo as consideration for a **$10.0 million** deposit[172](index=172&type=chunk) - Shelf Registration Statement (Form S-3) * Filed **September 21, 2022**, declared effective **October 6, 2022**[173](index=173&type=chunk) * Covers offer and sale of up to **$500.0 million** in securities by the company[173](index=173&type=chunk) * Covers offer and sale from time to time by selling securityholders of up to **23,265,565 shares** of Common Stock and **85,500 warrants**[173](index=173&type=chunk) * Covers shares issuable upon exercise of **8,499,978 public warrants** and **114,000 private placement warrants**[173](index=173&type=chunk) - At-The-Market Offering Agreement (Sales Agreement) * Entered with H.C. Wainwright & Co., LLC on **September 21, 2022**[174](index=174&type=chunk) * Allows sale of up to **$250.0 million** in Common Stock through the Agent[174](index=174&type=chunk) * Company pays Agent a commission of up to **3.0%** of gross proceeds[174](index=174&type=chunk) * No shares sold under this agreement as of the issuance date[174](index=174&type=chunk) [NOTE 13. WARRANTS](index=26&type=section&id=NOTE%2013.%20WARRANTS) This note describes the Public and Private Placement Warrants assumed by the company upon the Business Combination, outlining their exercise terms and potential adjustments - Warrants Assumed: Public Warrants and Private Placement Warrants assumed upon Business Combination[177](index=177&type=chunk) - Exercise Terms: Entitle holder to purchase one share of Common Stock at an exercise price of **$11.50 per share**[177](index=177&type=chunk) - Outstanding Warrants (as of Closing Date) * Public Warrants: **8,500,000**[177](index=177&type=chunk) * Private Placement Warrants: **114,000**[177](index=177&type=chunk) - Adjustments: Exercise price and number of shares may be adjusted for stock dividends, extraordinary dividends, recapitalization, reorganization, merger, or consolidation, but not for issuances below exercise price[177](index=177&type=chunk) - Settlement: Company not required to net cash settle the warrants[177](index=177&type=chunk) [NOTE 14. SHARE-BASED COMPENSATION](index=26&type=section&id=NOTE%2014.%20SHARE-BASED%20COMPENSATION) This note details the company's share-based compensation under the Incentive Award Plan, including the types of awards granted (Service-Based and Performance-Based RSUs), recognized expenses, and vesting schedules - Incentive Award Plan: Approved upon Business Combination, allows grants of stock options, SARs, RSUs, and other awards to employees, consultants, and directors[178](index=178&type=chunk) - Shares Available * Initially **19,869,312 shares**; increased by **7,478,382 shares** on January 1, 2022[179](index=179&type=chunk) * As of September 30, 2022: **1,638,142 shares** available[179](index=179&type=chunk) Total Share-Based Compensation Expense (in thousands) | Category | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2022 | | :----------------------------- | :------------------------------ | :----------------------------- | | Service-Based RSUs | $7,078 | $19,936 | | Performance-Based RSUs | $3,416 | $10,136 | | **Total** | **$10,494** | **$30,072** | - Service-Based RSUs (Nine Months Ended Sep 30, 2022) * Unvested at Jan 1, 2022: **6,798,238 shares** (WA Grant Date Fair Value: **$8.04**)[181](index=181&type=chunk) * Granted: **9,108,086 shares** (WA Grant Date Fair Value: **$1.90**)[181](index=181&type=chunk) * Vested: **(1,802,123) shares**[181](index=181&type=chunk) * Unvested at Sep 30, 2022: **13,899,153 shares** (WA Grant Date Fair Value: **$4.10**)[182](index=182&type=chunk) * Unrecognized compensation expense: **$35.5 million**, expected over **1.8 years**[182](index=182&type=chunk) * Vesting generally in equal installments over **3-4 years**, with full vesting upon termination without cause, death, permanent disability, or change in control[185](index=185&type=chunk) - Performance-Based RSUs * Unvested at Sep 30, 2022: **4,257,710 shares** (WA Grant Date Fair Value: **$7.76**)[186](index=186&type=chunk) * Unrecognized compensation expense: **$21.2 million**, expected over **1.7 years**[187](index=187&type=chunk) * One-third vest upon achieving market capitalization milestones (**$5B, $7.5B, $10B**) over a **30-day period**, subject to CEO's continuous service[187](index=187&type=chunk) [NOTE 15. SUBSEQUENT EVENTS](index=27&type=section&id=NOTE%2015.%20SUBSEQUENT%20EVENTS) This note outlines significant events that occurred after September 30, 2022, including the formation of Chief Mountain LLC, miner contributions to new facilities, a supplementary agreement with SuperAcme, payments to vendors on behalf of Bitfury, and an ongoing dispute with Luminant regarding power payments - Chief LLC Agreement (Effective **Oct 7, 2022**): Entered with Chief Interests DC LLC (WindHQ subsidiary) for the construction, operation, and management of the Chief Facility in Texas[188](index=188&type=chunk) - Miner Contributions to Bear and Chief Facilities (**Oct 2022**) * Contributed approximately **6,500 miners**[189](index=189&type=chunk) * Expected to record a loss of approximately **$15 million** due to fair value being lower than cost[189](index=189&type=chunk) - SuperAcme Supplementary Agreement (**Nov 4, 2022**) * Establishes new fixed and floating price terms for remaining M30S, M30S+, and M30S++ miners[190](index=190&type=chunk) * Company not obligated to send further money to SuperAcme[190](index=190&type=chunk) * SuperAcme delivered **17,833 miners** (approx. **$53.6 million** value); company paid **$101.8 million** in advance[190](index=190&type=chunk) * Remaining **$48.2 million** balance will be applied to future miner purchases[190](index=190&type=chunk) - Payments on behalf of Bitfury (After Sep 30, 2022) * Paid approximately **$2.1 million** directly to Paradigm for BBAC manufacturing services[191](index=191&type=chunk) * Company's obligations to Bitfury USA under Master Services and Supply Agreement reduced by the same amount[193](index=193&type=chunk) - Luminant Power Agreement Dispute (**Oct 26, 2022**) * Luminant disputed **$1.7 million** in payments for electricity sales (July-Aug 2022) and a **$5.1 million** payment for ramp-up schedule modification (Sep 2022)[194](index=194&type=chunk) * Company wholly disputes Luminant's claims and is in discussions to resolve disagreements[195](index=195&type=chunk) * Company has not received payment from Luminant for electricity sold in Sep and Oct 2022[196](index=196&type=chunk) * Luminant requested the remaining half of the **$12.6 million** Independent Collateral Amount, expected to be delivered by end of **November 2022**[196](index=196&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and operational results, highlighting its Bitcoin mining business buildout, the impact of the Business Combination, recent developments, and a detailed comparison of financial performance for the reported periods. It also discusses liquidity, capital resources, and critical accounting policies - Business Overview: Cipher Mining is an emerging technology company focused on Bitcoin mining in the U.S., aiming to be a leading operator through large-scale operations, best-in-class technology, and favorable power/hosting arrangements[200](index=200&type=chunk)[205](index=205&type=chunk) - Operational Milestones * Began mining operations at Alborz Facility in **February 2022**[201](index=201&type=chunk) * Alborz Facility capable of **~1.3 EH/s** (Cipher owns **~0.64 EH/s**)[202](index=202&type=chunk) * Bear and Chief Facilities completed in **October 2022**, expected to generate **~0.65 EH/s** (Cipher owns **~0.32 EH/s**)[203](index=203&type=chunk) * Plan to deploy **~267MW** electrical power capacity across four sites by early **2023**, with **~8.0 EH/s** total hashrate (Cipher expects to own **~7.0 EH/s**)[204](index=204&type=chunk) * Expected average electricity cost: **~2.7 c/kWh** for at least **five years**[204](index=204&type=chunk) - Business Combination (**August 27, 2021**): Resulted in cash proceeds, net of issuance costs, of approximately **$384.9 million**[212](index=212&type=chunk) - Recent Developments (Post Sep 30, 2022) * Chief LLC Agreement for Chief Facility in Texas[218](index=218&type=chunk) * Contributed **~6,500 miners** to Bear and Chief Facilities in **October 2022**, expecting a **~ $15 million** loss[219](index=219&type=chunk) * Supplementary Agreement with SuperAcme (**Nov 4, 2022**) for new miner pricing terms; remaining **$48.2 million** advance payment to be applied to purchases[220](index=220&type=chunk) * Paid **$13.1 million** to Paradigm for BBACs, reducing obligations to Bitfury USA[221](index=221&type=chunk) * Dispute with Luminant over **$1.7 million** in electricity payments and **$5.1 million** modification payment[222](index=222&type=chunk) * Luminant requested remaining half of Independent Collateral Amount[223](index=223&type=chunk)[224](index=224&type=chunk) - Comparative Results (Three Months Ended September 30) * No revenue generated in **2022** or **2021**[231](index=231&type=chunk) * General and administrative expenses: **$17.8 million** (2022) vs. **$2.3 million** (2021)[234](index=234&type=chunk) * Share-based compensation: **$10.5 million** (2022)[235](index=235&type=chunk) * Change in fair value of derivative asset: increased operating income by **$85.7 million** (2022)[234](index=234&type=chunk) * Equity in loss of equity investment: **$8.3 million** (2022), including **$7.2 million** loss on miner contributions[235](index=235&type=chunk) * Impairment of cryptocurrencies: **$0.3 million** (2022)[235](index=235&type=chunk) - Comparative Results (Nine Months Ended September 30) * No revenue generated in **2022** or **2021**[237](index=237&type=chunk) * General and administrative expenses: **$51.8 million** (2022) vs. **$2.9 million** (2021)[240](index=240&type=chunk) * Share-based compensation: **$30.1 million** (2022)[241](index=241&type=chunk) * Change in fair value of derivative asset: increased operating income by **$85.7 million** (2022)[240](index=240&type=chunk) * Equity in loss of equity investment: **$20.6 million** (2022), including **$18.8 million** loss on miner contributions[241](index=241&type=chunk) * Impairment of cryptocurrencies: **$0.9 million** (2022)[241](index=241&type=chunk) - Liquidity and Capital Resources * Negative cash flows from operations: **$8.9 million** (nine months ended Sep 30, 2022)[245](index=245&type=chunk) * Cash and cash equivalents: **$28.1 million** (Sep 30, 2022)[245](index=245&type=chunk) * Paid **$184.1 million** in deposits on equipment (nine months ended Sep 30, 2022)[247](index=247&type=chunk) * Management believes existing resources, potential delays, crypto inflows, and potential stock sales (via **$250M** at-the-market offering) will be sufficient for **12 months**[247](index=247&type=chunk) Non-GAAP Financial Measures (Nine Months Ended Sep 30, 2022, in thousands) | Metric | GAAP | Non-GAAP | | :-------------------------------- | :----------- | :----------- | | Operating income (loss) | $12,353 | $(41,485) | | Net income (loss) | $12,574 | $(41,149) | | Basic and diluted net income (loss) per share | $0.05 | $(0.17) | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Cipher Mining Inc. is not required to provide quantitative and qualitative disclosures about market risk under this item - The company is a smaller reporting company and is not required to provide this information[294](index=294&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the principal executive and financial officers, evaluated the effectiveness of the company's disclosure controls and procedures as of September 30, 2022, concluding they were effective at a reasonable assurance level. No material changes in internal control over financial reporting occurred during the quarter - Effectiveness of Disclosure Controls: Management concluded that disclosure controls and procedures were effective at the reasonable assurance level as of **September 30, 2022**[296](index=296&type=chunk) - Changes in Internal Control: No material changes in internal control over financial reporting during the quarter ended **September 30, 2022**[297](index=297&type=chunk) [PART II. OTHER INFORMATION](index=40&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) Cipher Mining Inc. is not currently a party to any material pending legal proceedings, though it may encounter various claims in the ordinary course of business - The company is not a party to any material pending legal proceedings[300](index=300&type=chunk) - May be subject to legal proceedings and claims arising in the ordinary course of business[300](index=300&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) This section updates previously disclosed risk factors, specifically highlighting an ongoing dispute with Luminant regarding payments under the Luminant Power Agreement, which could divert management's attention and adversely affect the business - Luminant Power Agreement Dispute: Luminant disputed **$1.7 million** in electricity payments (July-Aug 2022) and a **$5.1 million** payment for ramp-up schedule modification (Sep 2022)[302](index=302&type=chunk) - Company's Stance: Cipher Mining Inc. wholly disputes Luminant's claims and is engaged in discussions to resolve disagreements, including whether Luminant's obligations should be tied to ERCOT's interconnection approval[303](index=303&type=chunk) - Unresolved Status: The company does not know how or when this dispute will be resolved[303](index=303&type=chunk) - Collateral Request: Luminant requested the remaining half of the Independent Collateral Amount, which the company expects to deliver by end of **November 2022**[303](index=303&type=chunk) - Potential Impact: Resolution efforts may divert management time and resources, potentially affecting the next quarterly valuation of the Luminant Power Agreement and having a material adverse effect on the business[304](index=304&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item states that there were no recent unregistered sales of equity securities and no material change in the expected use of proceeds from the GWAC initial public offering and private placement - No recent unregistered sales of equity securities[305](index=305&type=chunk) - No material change in the expected use of net proceeds from the GWAC IPO and private placement[307](index=307&type=chunk) [Item 3. Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - No defaults upon senior securities[308](index=308&type=chunk) [Item 4. Mine Safety Disclosures](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[310](index=310&type=chunk) [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) This item is not applicable to the company - Not applicable[310](index=310&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including merger agreements, corporate documents, warrant agreements, stock unit grant notices, power purchase agreements, and offering agreements - Includes Agreement and Plan of Merger (8-K, 001-39625, 3/5/2021)[313](index=313&type=chunk) - Includes Second Amended and Restated Certificate of Incorporation and Bylaws (8-K, 001-39625, 8/31/2021)[313](index=313&type=chunk) - Includes Third Amendment to the Power Purchase Agreement (8-K, 001-39625, 9/1/2022)[313](index=313&type=chunk) - Includes At-The-Market Offering Agreement (S-3, 333-267537, 9/21/2022)[313](index=313&type=chunk) - Includes Supplementary Agreement of the Framework Agreement on Supply of Blockchain Servers (8-K, 001-39625, 11/7/2022)[313](index=313&type=chunk) - Includes various certifications (CEO, CFO) and Inline XBRL documents[314](index=314&type=chunk)[315](index=315&type=chunk) [Signatures](index=45&type=section&id=Signatures) This section contains the official signatures of the Chief Executive Officer and Chief Financial Officer, certifying the filing of the Quarterly Report on Form 10-Q on behalf of Cipher Mining Inc - Signed by Tyler Page, Chief Executive Officer, on **November 14, 2022**[320](index=320&type=chunk) - Signed by Edward Farrell, Chief Financial Officer, on **November 14, 2022**[320](index=320&type=chunk)

Cipher Mining, Inc. (NASDAQ:CIFR) Q2 2022 Earnings Conference Call August 9, 2022 8:00 AM ET Company Participants Lori Barker - Investor Relations Tyler Page - Chief Executive Officer Ed Farrel - Chief Financial Officer Conference Call Participants Kevin Dede - H.C. Wainwright Operator Good morning. Thank you for standing by and welcome to Cipher Mining's Second Quarter 2022 Business Update Conference Call. Please be advised, today's conference is being recorded and a replay will be available on Cipher Mini ...