- Self-Mining Capacity: 8.7 exahash per second as of end of July 2024.
- Fleet Efficiency: 28.7 joules per terahash.
- Bitcoin Inventory: 2,270 Bitcoin as of end of July.
- All-In Weighted Average Power Price: $0.027 per kilowatt hour.
- GAAP Net Loss: $15 million for Q2 2024.
- Bitcoin Mined: 563 Bitcoin in Q2 2024.
- Revenue: $37 million for Q2 2024.
- Average Price per Bitcoin: $65,000 in Q2 2024.
- Cost of Revenues: Declined 4% sequentially in Q2 2024.
- Fair Value Loss on Bitcoin Holdings: $21 million in Q2 2024.
- Realized Gains from Bitcoin Sales: $5 million in Q2 2024.
- Compensation and Benefits: $16 million in Q2 2024.
- General Administrative Expenses: Increased by $2 million in Q2 2024.
- Depreciation and Amortization: $20 million in Q2 2024.
- Adjusted Net Loss: $3 million for Q2 2024.
- Total Current Assets: $309 million as of June 30, 2024.
- Cash Position: $123 million as of June 30, 2024.
- Bitcoin Holdings Value: $138 million as of June 30, 2024.
- Odessa Power Contract Value: $123 million as of June 30, 2024.
- Property and Equipment: $239 million as of June 30, 2024.
- Deposits on Equipment: $58 million as of June 30, 2024.
- Intangible Assets: $9 million as of June 30, 2024.
- Equity Investee Interest: $50 million as of June 30, 2024.
- Operating Lease Obligations: $10 million as of June 30, 2024.
- Security Deposits: $22 million as of June 30, 2024.
Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cipher Mining Inc (CIFR, Financial) has grown its self-mining capacity to 8.7 exahash per second with plans to reach 13.5 exahash per second by year-end 2024.
- The company has a very competitive all-in weighted average power price of $0.027 per kilowatt hour, driving best-in-class unit economics.
- Cipher Mining Inc (CIFR) is expanding its infrastructure with the upcoming 300-megawatt Black Pearl data center, expected to significantly boost capacity and efficiency.
- The company has secured a pipeline of up to 1.7 gigawatts of capacity across four new sites, positioning itself for future growth.
- Cipher Mining Inc (CIFR) is launching an HPC infrastructure business, leveraging its strengths in site access, experienced construction and operations team, and capital financing capabilities.
Negative Points
- The company reported a GAAP net loss of $15 million for the quarter, a sequential decrease of 138% from the prior quarter.
- Revenues were down 24% sequentially due to the halving and a significant drop in hash price.
- The cost of power on a percentage basis was down significantly, impacting overall financial performance.
- The company recorded a loss of $21 million on the fair value of its Bitcoin holdings due to a drop in Bitcoin price.
- Depreciation and amortization expenses increased by 17% sequentially, driven by changes in the depreciation schedule for miners.
Q & A Highlights
Highlights of Cipher Mining Inc (CIFR) Q2 2024 Earnings Call
Q: There's been speculation about Cipher being an acquisition target. Can you provide any color or comment on that, and how do you view organic site acquisition versus inorganic opportunities post-halving?
A: Tyler Page, CEO: We have no comment on market rumors. Regarding M&A, the industry is seeing a lot of activity due to the halving. Miners need to decide whether to strip out overhead costs or lean into growth. We focus on growth and efficiency. Our recent hash cost was about $43 per petahash per day, and we expect it to drop below $30 post-Odessa upgrade. We prefer sourcing sites earlier in the development chain to avoid overpaying for built sites.
Q: Can you provide an update on the timing of new sites coming online, specifically Black Pearl and Cotulla?
A: Tyler Page, CEO: Black Pearl is expected to energize in mid-2025. The new 1.5 gigawatts of sites are about two and a half years away from energizing. These sites are well-suited for both Bitcoin mining and HPC infrastructure, and we are mapping out plans for both.
Q: How are you weighing the capital allocation strategy for the HPC AI opportunity relative to Bitcoin mining?
A: Tyler Page, CEO: We do not plan to buy GPUs and sell compute. Instead, we aim to be a host for HPC infrastructure, signing long-term leases with high-quality tenants. The HPC business offers long-term leases that are not correlated with Bitcoin price volatility. Financing for HPC is more developed, with high LTC loans available for projects with hyperscaler tenants.
Q: How important is it for Cipher to maintain its level of network market share relative to peers going forward?
A: Tyler Page, CEO: We focus on hash price versus hash cost rather than market share. Our low-cost power is a key driver. We aim to lower our hash cost through efficiency and scale. Post-halving, our power cost to produce a Bitcoin is about $24,000, and our all-in cash costs are sub-$50,000. We are focused on growth and expansion to drive down costs further.
Q: How should investors think about the revenue model and economics for the upcoming HPC business?
A: Tyler Page, CEO: Preliminary discussions indicate gross margins of 80% for the HPC business. Financing options vary, with high LTC loans available for projects with high-quality tenants. The market is very interested in our portfolio's potential capacity of 1.7 gigawatts.
Q: Why did you decide to go with liquid-cooled infrastructure for 50 megawatts at Black Pearl?
A: Tyler Page, CEO: Liquid cooling offers better efficiency and production in hot climates like Texas. The incremental spend for 50 megawatts of hydro is about $20 million. We aim to showcase our capabilities in hydro cooling, which has implications for HPC. Air cooling is well understood and effective with our curtailment strategy.
Q: Can you provide more color on the sourcing process and strategy for HPC sites?
A: Tyler Page, CEO: Hyperscalers prefer sites with 200+ megawatts. Our sites are targeted for 500 megawatts of interconnect. We source sites early in the development chain to avoid overpaying. Our team has expertise in local rules and approvals, giving us a competitive edge.
Q: How do you balance the need for CapEx with the need for returning capital to investors?
A: Tyler Page, CEO: The HPC business is capital-intensive, but we aim to finance much of it through debt. For Bitcoin mining, we target ROIs of 1.5 to 3 years. We hope for more debt financing options for Bitcoin mining in the future, but currently, we focus on equity financing for growth.
Q: What was the biggest learning from recent discussions with hyperscalers and finance partners, and what is the biggest challenge going forward?
A: Tyler Page, CEO: The biggest learning is the flexibility of hyperscalers in their technical requirements and the maturity of the financing market for leased sites. The biggest challenge is aligning financing with securing high-quality tenants, as both are interconnected.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
