Cipher Raises Year Hashrate View While Cutting Power Guidance

Bitcoin miner Cipher Mining (CIFR) increased its expectations for the total hashrate capacity for the remainder of the year by 0.5 exahash/second (EH/s), according to a Tuesday filing with the U.S. Securities and Exchange Commission.

• In its annual earnings report for 2021, Cipher Mining had said it expected to deploy a total of 8.5 EH/s, with 7.2 EH/s going to its self-mining operations, by the end of 2022. The miner now expects 9 EH/s in total hashrate, 7.5 EH/s of which will go towards its own mining operations.
• The increased hashrate is due to improved machine allocation from MicroBT, according to the filing. The firm has contracts for 27,000 rigs with Bitmain and 60,000 rigs from MicroBT, CEO Tyler Page said in Tuesday's earnings conference call.
• Cipher is "having conversations" with virtually every mining rig manufacturer, including new entrants like Intel, Page said.
• At the same time, Cipher Mining reduced its expectations of power capacity. The firm expected to have 405 megawatts (MW) of total capacity by the end of 2022, 305MW of which would go towards its self-mining operations, but now has updated its forecast to 345MW, with 275MW used for self-mining, the filing said.
• The filing also shows that phase 2 of development of Cipher Mining's Bear and Chief facilities has been pushed back to 2023. Page said during the earnings conference call that the Bear and Chief facilities operate as "front-of-meter system" where the power must pass through an electric meter before reaching a consumer. Owing to this setup, Cipher and its joint venture (JV) partners work with transmission and distribution service providers for their power supply. These providers informed the company that the required modification of the substation infrastructure needed to be pushed back out until 2023 or mid-2023, which affected the Phase 2 timeline.
• However, the CEO said in Tuesday's call that the electricity capacity is more than enough to host machines that are scheduled for delivery throughout the year. The facilities could accommodate more mining rigs, should the firm find opportunity to buy them at competitive pricing, he said.
• Cipher Mining closed its first loan to finance the purchase of equipment, it said earlier in May, securing $46.9 million for its Alborz facility from BlockFi. The firm believes lenders are and will continue to "be comfortable" with Cipher Mining's model, given its low costs, despite unfavorable market conditions, Page said.
• Given its current contracts, the firm has anticipates its cost of electricity to be $0.0273 per kilowatt hour and the cost of machines to be $45.01 per TH/s, according to the filing.
• The firm believes lenders are and will continue to "be comfortable" with Cipher Mining's model, given its low costs, despite unfavorable market conditions, and expects multiple debt deals in the future.
• Shares of Cipher slumped about 46% on Tuesday, underperforming its mining peers, which have somewhat recovered from a brutal selloff. Meanwhile, bitcoin finally caught some bids and rose above $31,000.

UPDATED (May 10 17:58 UTC): Updated headline, fifth and last bullet point to add comments from conference call about the cut to power capacity expectations, as well as share price performance.

Read more: Cipher Mining, WindHQ Joint Venture Secures $46.9M Loan From BlockFi