• Revenue: Increased from $43 million to $48 million quarter over quarter.

• GAAP Net Earnings: Rose from $11 million to $40 million quarter over quarter.

• Adjusted Earnings: Grew from $28 million to $63 million quarter over quarter.

• Bitcoin Inventory: Held 2,033 bitcoin as of the end of April.

• Cash Holdings: Reported $96 million in cash holdings.

• Self Mining Hash Rate: Increased to 7.7 exahash per second.

• Electricity Cost: Maintained low electricity cost at approximately $0.027 per kilowatt hour.

• Bitcoin Produced: Mined 924 Bitcoin, resulting in $48.1 million in revenues for the quarter.

• All-in Electricity Cost per Bitcoin: $11,912 at their data centers.

• GAAP Net Income: Reported $39.9 million this quarter, a significant increase from the previous year.

• Warning! GuruFocus has detected 1 Warning Sign with CIFR.

Release Date: May 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cipher Mining Inc (NASDAQ:CIFR) reported significant revenue growth, with revenues increasing from $43 million to $48 million quarter over quarter.

• GAAP net earnings saw a substantial rise from $11 million to $40 million, and adjusted earnings increased from $28 million to $63 million.

• The company holds a strong liquidity position with $96 million in cash and 2,033 bitcoins in inventory.

• Cipher Mining Inc (NASDAQ:CIFR) has successfully expanded its self-mining hash rate to 7.7 exahash per second, enhancing its mining capacity.

• The company's strategic power purchase agreements and efficient operational management have enabled it to maintain low electricity costs, which are crucial for profitability in bitcoin mining.

Negative Points

• The bitcoin halving event has reduced block rewards, which could potentially impact future revenue from bitcoin mining operations.

• Despite the current growth, there is an anticipated squeeze on miner economics due to the halving, which could affect less efficient miners more severely.

• Cipher Mining Inc (NASDAQ:CIFR) faces intense competition in the bitcoin mining industry, which could impact its market share and profitability.

• The company's reliance on the volatile bitcoin market adds financial risk, as cryptocurrency prices are highly unpredictable.

• While expansion plans are robust, they require significant capital expenditure, which could strain financial resources if not managed carefully.

Q & A Highlights

Q: Can you comment on some post-halving dynamics, specifically changes in deal types or competitor behavior? A: Tyler Page, CEO: Post-halving, the economics for miners have settled as expected, with a significant squeeze on minor economics. This has led to increased acquisition activity as miners with less favorable economics struggle to cope. Cipher is well-positioned as a low-cost producer and is actively reviewing opportunities to leverage its strengths in this environment.

Q: How are you planning to finance the expansion for the full 25 exahash at Black Pearl? A: Tyler Page, CEO: The total cost for the Black Pearl site is projected at about $420 million. Cipher plans to cover this through a combination of operational cash flow, Bitcoin holdings, and potentially tapping into equity or debt markets. The company maintains a strategic approach to managing its treasury, aiming to optimize capital sourcing while increasing its Bitcoin inventory over time.

Q: Could you walk us through the decision to proceed with a full 300 megawatt build-out at Black Pearl? A: Tyler Page, CEO: The decision is driven by Cipher's core strengths in sourcing and developing greenfield sites and structuring power arrangements. The full build-out leverages these capabilities and is seen as providing the best return on investment. The infrastructure build begins first, with rig purchases planned closer to operation commencement, providing flexibility in response to market conditions.

Q: How should we think about the cadence of CapEx related to Black Pearl over the coming quarters? A: Tyler Page, CEO: The major CapEx for Black Pearl will be related to infrastructure and rig purchases, with significant payments scheduled closer to the delivery of rigs, expected in the second quarter of next year. Cipher plans a just-in-time delivery approach to optimize construction and cost management.

Q: What are your thoughts on the AI investment wave and its potential impact on the bitcoin mining industry, particularly regarding access to power and site development? A: Tyler Page, CEO: The AI boom could potentially increase competition for power and data center sites. However, Cipher's expertise in securing and developing greenfield sites provides a competitive edge. The company is monitoring the situation and sees potential opportunities in leveraging its capabilities in this evolving landscape.

Q: Can you provide more details on potential M&A activities and how they might impact your operations, especially in relation to the Black Pearl timeline? A: Tyler Page, CEO: Cipher is exploring M&A opportunities that align with its strategic strengths, such as acquiring sites with favorable power costs or those that can be quickly upgraded using Cipher's existing rig contracts. While M&A activities could influence the timeline for Black Pearl, the company remains committed to its development plans and will strategically assess any potential adjustments needed based on new opportunities.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.