10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 001-39625

CIPHER MINING INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	85-1614529
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1 Vanderbilt Avenue, Floor 54, Suite C New York, New York	10017
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (332) 262-2300

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	CIFR	The Nasdaq Stock Market LLC
Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per whole share	CIFRW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 4, 2023, the registrant had 250,955,743 shares of Common Stock, $0.001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	4
Item 1.	Financial Statements (Unaudited)	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statement of Changes in Stockholder’s Equity	6
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35
Signatures		36

i

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements contained in this Quarterly Report, other than statements of historical fact, including, without limitation, statements regarding our future results of operations and financial position, business strategy, timing and likelihood of success, potential expansion of bitcoin mining data centers, expectations regarding the operations of mining centers, and management plans and objectives are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements use these words or expressions. The forward-looking statements in this Quarterly Report are only predictions and are largely based on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following :

•The further development and acceptance of digital asset networks and other digital assets, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. The slowing or stopping of the development or acceptance of digital asset systems may adversely affect an investment in us.

•We may face several risks due to disruptions in the crypto asset markets, including but not limited to, the risk from depreciation in our stock price, financing risk, risk of increased losses or impairments in our investments or other assets, risks of legal proceedings and government investigations, and risks from price declines or price volatility of crypto assets.

•Our business and the markets in which we operate are new and rapidly evolving, which makes it difficult to evaluate our future prospects and the risks and challenges we may encounter.

•We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing military conflict between Russia and Ukraine. Our business, financial condition and results of operations may be materially adversely affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine or any other geopolitical tensions.

•If we fail to grow our hashrate, we may be unable to compete, and our results of operations could suffer.

•Bitcoin mining activities are energy-intensive, which may restrict the geographic locations of miners and have a negative environmental impact. Government regulators may potentially restrict the ability of electricity suppliers to provide electricity to mining operations, such as ours, increase taxes on the purchase of electricity used to mine bitcoin, or even fully or partially ban mining operations.

•We have concentrated our operations in Texas and, thus, are particularly exposed to changes in the regulatory environment, market conditions and natural disasters in this state.

•Our operating results may fluctuate due to the highly volatile nature of cryptocurrencies in general and, specifically, bitcoin.

•We depend on third parties to provide us with certain critical equipment and may rely on components and raw materials that may be subject to price fluctuations or shortages, including ASIC chips that have been subject to periods of significant shortage and high innovation pace.

•We may be affected by price fluctuations in the wholesale and retail power markets.

•We are vulnerable to severe weather conditions and natural disasters, including severe heat, winter weather events, earthquakes, fires, floods, hurricanes, as well as power outages and other industrial incidents, which could severely disrupt the normal operation of our business and adversely affect our results of operations.

•We are exposed to risks related to disruptions or other failures in the supply chain for bitcoin mining hardware and related data center hardware, and difficulties in obtaining new hardware.

•Bitcoin miners and other necessary hardware are subject to malfunction, technological obsolescence and physical degradation.

•Our automated processes with respect to curtailment may adversely affect our operations.

1

•The important factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (the “SEC”) on March 14, 2023 (the “2022 Form 10-K”) and our future reports filed with the SEC.

The forward-looking statements in this Quarterly Report are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report and the documents that we reference in this Quarterly Report and have filed as exhibits to this Quarterly Report with the understanding that our actual future results, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Quarterly Report. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report, whether as a result of any new information, future events or otherwise.

2

WHERE YOU CAN FIND MORE INFORMATION

Our corporate website address is https://www.ciphermining.com (“Corporate Website”). The contents of, or information accessible through, our Corporate Website are not part of this Quarterly Report.

The Company maintains a dedicated investor website at https://investors.ciphermining.com/investors (“Investors’ Website”) which is similarly not part of this Quarterly Report. We make our filings with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports, available free of charge on our Investors’ Website as soon as reasonably practicable after we file such reports with, or furnish such reports to, the SEC.

We may use our Investors’ Website as a distribution channel of material information about the Company including through press releases, investor presentations, sustainability reports, and notices of upcoming events. We intend to utilize our Investors’ Website as a channel of distribution to reach public investors and as a means of disclosing material non-public information for complying with disclosure obligations under Regulation FD.

Any reference to our Corporate Website or Investors’ Website addresses do not constitute incorporation by reference of the information contained on or available through those websites, and you should not consider such information to be a part of this Quarterly Report or any other filings we make with the SEC.

3

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

CIPHER MINING INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except for share and per share amounts)

	June 30, 2023			December 31, 2022
	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	1,741		$	11,927
Accounts receivable		380			98
Receivables, related party		1,614			1,102
Prepaid expenses and other current assets		2,260			7,254
Bitcoin		10,536			6,283
Derivative asset		25,786			21,071
Total current assets		42,317			47,735
Property and equipment, net		267,790			191,784
Deposits on equipment		1,675			73,018
Investment in equity investees		33,098			37,478
Derivative asset		49,466			45,631
Operating lease right-of-use asset		4,635			5,087
Security deposits		17,742			17,730
Total assets	$	416,723		$	418,463
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	2,053		$	14,286
Accounts payable, related party		1,554			3,083
Accrued expenses and other current liabilities		22,746			19,353
Finance lease liability, current portion		11,189			2,567
Operating lease liability, current portion		1,087			1,030
Warrant liability		66			7
Total current liabilities		38,695			40,326
Asset retirement obligation		17,538			16,682
Finance lease liability		10,836			12,229
Operating lease liability		3,936			4,494
Deferred tax liability		2,508			1,840
Total liabilities		73,513			75,571
Commitments and contingencies (Note 12)
Stockholders’ equity
Preferred stock, $0.001 par value; 10,000,000 shares authorized, none issued and outstanding as of June 30, 2023 and December 31, 2022		-			-
Common stock, $0.001 par value, 500,000,000 shares authorized, 254,795,626 and 251,095,305 shares issued as of June 30, 2023 and December 31, 2022, respectively, and 250,413,891 and 247,551,958 shares outstanding as of June 30, 2023 and December 31, 2022, respectively		254			251
Additional paid-in capital		473,471			453,854
Accumulated deficit		(130,511	)		(111,209	)
Treasury stock, at par, 4,381,735 and 3,543,347 shares at June 30, 2023 and December 31, 2022, respectively		(4	)		(4	)
Total stockholders’ equity		343,210			342,892
Total liabilities and stockholders’ equity	$	416,723		$	418,463

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

CIPHER MINING INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except for share and per share amounts)

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Revenue - bitcoin mining	$	31,224		$	-		$	53,119		$	-
Costs and operating expenses (income)
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	)		-
Total costs and operating expenses		42,816			29,326			70,880			46,880
Operating loss		(11,592	)		(29,326	)		(17,761	)		(46,880	)
Other income (expense)
Interest income		25			44			101			51
Interest expense		(485	)		-			(886	)		-
Change in fair value of warrant liability		(22	)		63			(59	)		111
Other expense		(12	)		-			(12	)		-
Total other income (expense)		(494	)		107			(856	)		162
Loss before taxes		(12,086	)		(29,219	)		(18,617	)		(46,718	)
Current income tax expense		(31	)		-			(48	)		-
Deferred income tax expense		(584	)		-			(637	)		-
Total income tax expense		(615	)		-			(685	)		-
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

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

CIPHER MINING INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, except for share amounts)

(unaudited)

Three Months Ended June 30, 2023

	Common Stock				Additional			Accumulated			Treasury Stock						Total
	Shares		Amount		Paid-in Capital			Deficit			Shares			Amount			Stockholders’ Equity
Balance as of March 31, 2023		253,050,088	$	253	$	462,181		$	(117,810	)		(4,144,081	)	$	(4	)	$	344,620
Issuance of common shares, net of offering costs - At-the-market offering		978,207		1		2,744			-			-			-			2,745
Delivery of common stock underlying restricted stock units, net of shares settled for tax withholding settlement		674,817		-		(632	)		-			(237,654	)		-			(632	)
Share-based compensation		92,514		-		9,178			-			-			-			9,178
Net loss		-		-		-			(12,701	)		-			-			(12,701	)
Balance as of June 30, 2023		254,795,626	$	254	$	473,471		$	(130,511	)		(4,381,735	)	$	(4	)	$	343,210

Three Months Ended June 30, 2022

	Common Stock						Additional			Accumulated			Treasury Stock						Total
	Shares			Amount			Paid-in Capital			Deficit			Shares			Amount			Stockholders’ Equity
Balance as of March 31, 2022		253,685,763		$	254		$	431,899		$	(89,655	)		(3,511,490	)	$	(4	)	$	342,494
Common stock cancelled		(2,890,173	)		(3	)		(9,997	)		-			-			-			(10,000	)
Delivery of common stock underlying restricted stock units		205,482			-			-			-			-			-			-
Share-based compensation		-			-			10,064			-			-			-			10,064
Net loss		-			-			-			(29,219	)		-			-			(29,219	)
Balance as of June 30, 2022		251,001,072		$	251		$	431,966		$	(118,874	)	$	(3,511,490	)	$	(4	)	$	313,339

6

CIPHER MINING INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, except for share amounts)

(unaudited)

Six Months Ended June 30, 2023

	Common Stock				Additional			Accumulated			Treasury Stock						Total
	Shares		Amount		Paid-in Capital			Deficit			Shares			Amount			Stockholders’ Equity
Balance as of January 1, 2023		251,095,305	$	251	$	453,854		$	(111,209	)		(3,543,347	)	$	(4	)	$	342,892
Issuance of common shares, net of offering costs - At-the-market offering		978,207		1		2,744			-			-			-			2,745
Delivery of common stock underlying restricted stock units, net of shares settled for tax withholding settlement		2,473,756		2		(1,115	)		-			(838,388	)		-			(1,113	)
Share-based compensation		248,358		-		17,988			-			-			-			17,988
Net loss		-		-		-			(19,302	)		-			-			(19,302	)
Balance as of June 30, 2023		254,795,626	$	254	$	473,471		$	(130,511	)		(4,381,735	)	$	(4	)	$	343,210

Six Months Ended June 30, 2022

	Common Stock						Additional			Accumulated			Treasury Stock						Total
	Shares			Amount			Paid-in Capital			Deficit			Shares			Amount			Stockholders’ Equity
Balance as of January 1, 2022		252,131,679		$	252		$	425,438		$	(72,156	)		(2,852,259	)	$	(3	)	$	353,531
Delivery of common stock underlying restricted stock units, net of shares settled for tax withholding settlement		1,759,546			2			(3,053	)		-			(659,231	)		(1	)		(3,052	)
Common stock cancelled		20			-			-			-			-			-			-
Warrants exercised		(2,890,173	)		(3	)		(9,997	)		-			-			-			(10,000	)
Share-based compensation		-			-			19,578			-			-			-			19,578
Net loss		-			-			-			(46,718	)		-			-			(46,718	)
Balance as of June 30, 2022		251,001,072		$	251		$	431,966		$	(118,874	)		(3,511,490	)	$	(4	)	$	313,339

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7

CIPHER MINING INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Six Months Ended June 30,
	2023			2022
Cash flows from operating activities
Net loss	$	(19,302	)	$	(46,718	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation		26,067			15
Amortization of operating right-of-use asset		452			347
Share-based compensation		17,988			19,578
Equity in losses of equity investees		2,181			12,232
Impairment of bitcoin		4,633			539
Non-cash lease expense		878			-
Deferred income taxes		637			-
Bitcoin received as payment for services		(52,836	)		-
Change in fair value of derivative asset		(8,550	)		-
Change in fair value of warrant liability		59			(111	)
Realized gain on sale of bitcoin		(8,206	)		-
Changes in assets and liabilities:
Proceeds from sale of bitcoin		52,474			-
Accounts receivable		(282	)		-
Receivables, related party		(512	)		(467	)
Prepaid expenses and other current assets		4,994			4,134
Security deposits		(12	)		(1,065	)
Accounts payable		(184	)		104
Accounts payable, related party		(1,529	)		-
Accrued expenses and other current liabilities		6,323			1,209
Lease liabilities		(594	)		271
Net cash provided by (used in) operating activities		24,679			(9,932	)
Cash flows from investing activities
Deposits on equipment		(2,932	)		(156,811	)
Purchases of property and equipment		(28,541	)		(13,069	)
Capital distributions from equity investees		3,807			10,065
Investment in equity investees		(3,095	)		-
Prepayments on financing lease		(3,676	)		-
Net cash used in investing activities		(34,437	)		(159,815	)
Cash flows from financing activities
Proceeds from the issuance of common stock		2,821			-
Offering costs paid for the issuance of common stock		(76	)		-
Repurchase of common shares to pay employee withholding taxes		(1,114	)		(3,052	)
Principal payments on financing lease		(2,059	)		-
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 the period		11,927			209,841
Cash and cash equivalents, end of the period	$	1,741		$	37,042
Supplemental disclosure of noncash investing and financing activities
Reclassification of deposits on equipment to property and equipment	$	72,130			-
Right-of-use asset obtained in exchange for finance lease liability	$	14,212			-
Finance lease costs in accrued expenses	$	2,034			-
Equity method investment acquired for non-cash consideration	$	1,926			75,933
Sales tax accruals reversed due to exemption	$	1,837			-
Bitcoin received from equity investees	$	317			1,326
Property and equipment purchases in accounts payable, accounts payable, related party and accrued expenses	$	-			5,459
Deposits on equipment in accounts payable and accounts payable, related party	$	-			10,972
Common stock cancelled	$	-			10,000
Right-of-use asset obtained in exchange for operating lease liability	$	-			5,859
Investment in equity investees in accrued expenses	$	-			4,345
Reclassification of deferred investment costs to investment in equity investees	$	-			174

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

8

CIPHER MINING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1. ORGANIZATION

Nature of operations

Cipher Mining Inc. (“Cipher” or the “Company”) is an emerging technology company that develops and operates industrial scale bitcoin mining data centers. The Company operates or jointly operates four bitcoin mining data centers in Texas including one wholly-owned data center and three partially-owned data centers that were acquired through investments in joint ventures. Bitcoin mining is the Company’s principal revenue generating business activity. The Company began deployment of capacity in the first quarter of 2022, with mining operations beginning at the partially-owned Alborz facility in February 2022 (the “Alborz Facility”). In August 2022, installation of the last mining rigs delivered to the Alborz Facility was completed. In October 2022, installation at the partially-owned Bear facility (the “Bear Facility”) and the partially-owned Chief facility (the “Chief Facility”) was also completed. In November 2022, the Company began bitcoin mining operations at the wholly-owned Odessa facility (the “Odessa Facility”) and is continuing to expand those operations.

Cipher Mining Technologies Inc. (“CMTI”) was established on January 7, 2021, in Delaware, by Bitfury Top HoldCo B.V. and its subsidiaries (“Bitfury Top HoldCo” and, with its subsidiaries, the “Bitfury Group”). Bitfury Top HoldCo (together with Bitfury Holding B.V., a subsidiary of Bitfury Top HoldCo, and referred to herein as “Bitfury Holding”) beneficially owned approximately 80.6% of the Company’s common stock, $0.001 par value per share (“Common Stock”), as of June 30, 2023, with sole voting and sole dispositive power over those shares and, as a result, Bitfury Top HoldCo has control of the Company as defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation (“ASC 810”). As of August 4, 2023, pursuant to that certain Lock-up Agreement, dated as of August 26, 2021, by and between GWAC and Bitfury Top HoldCo, 129,017,513 of Bitfury Top HoldCo’s shares of the Company’s Common Stock remain subject to lock-up which, subject to any potential modifications under the waiver agreement with Bitfury Top HoldCo entered into on April 8, 2022, is expected to expire on August 27, 2023.

Out-of-period-adjustments

Cost of revenue and power sales for the six months ended June 30, 2023 included out-of-period adjustments of approximately $2.0 million and $1.6 million, respectively, that increased both cost of revenue and power sales on the unaudited condensed consolidated statements of operations for the six months ended June 30, 2023, and resulted in net increases to operating loss and loss before taxes of approximately $0.4 million during the same period. These out-of-period adjustments related to power costs and power sales for the year ended December 31, 2022 at the Company’s Odessa Facility, which are invoiced on a net basis by the Company’s power provider. Management evaluated the impact of this error on the Company’s previously issued audited consolidated financial statements for the year ended December 31, 2022, as well as on its unaudited condensed consolidated financial statements for the six months ended June 30, 2023, assessing the error both quantitatively and qualitatively, and concluded that the error was not material to the financial statements for either period.

Risks and uncertainties

Liquidity, capital resources and limited business history

The Company has historically experienced net losses and negative cash flows from operations. As of June 30, 2023, the Company had approximate balances of 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. For fiscal years ended December 31, 2022 and 2021, the Company, in large part, relied on proceeds from the consummation of its business combination with Good Works Acquisition Corp. (“GWAC”) to fund its operations; however, during the six months ended June 30, 2023, the Company utilized proceeds from sales of bitcoin earned by or received from its bitcoin mining data centers to support its operating expenses. During the six months ended June 30, 2023, the Company sold 2,063 bitcoin for proceeds of approximately $52.5 million. Additionally, in January 2023, the Company was approached by a third party that offered to purchase coupons that the Company had received from Bitmain Technologies Limited (“Bitmain”) during fiscal year 2022. These transferrable coupons provided the Company with potential discounts of approximately $10.9 million that could only be redeemed with the purchase of additional miners from Bitmain prior to the coupons’ April 2023 expiration date. As the Company did not intend to purchase additional Bitmain miners prior to the expiration date of the coupons, it sold the coupons to the interested third party for proceeds of approximately $2.3 million, which it recorded in other gains within costs and operating expenses (income) on its unaudited condensed consolidated statement of operations during the six months ended June 30, 2023.

9

CIPHER MINING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The Company monitors its balance sheet on an ongoing basis to determine the proper mix of bitcoin retention and bitcoin sales to support its cash requirements and ongoing operations. Bitcoin is classified as a current asset on the Company’s balance sheets due to its intent and ability to sell bitcoin to support operations when needed. Operating activities provided approximately $24.7 million of cash during the six months ended June 30, 2023.

During the six months ended June 30, 2023, the Company paid approximately $2.9 million of deposits for mining equipment and reclassified approximately $72.1 million to property and equipment in connection with the receipt of miners and other equipment at the Odessa Facility. As of June 30, 2023, the Company had 61,024 miners located at the Odessa Facility and had 12,953, 3,254 and 3,254 contributed miners at its partially-owned Alborz Facility, Bear Facility and Chief Facility, respectively.

As of June 30, 2023, the Company had approximately $1.7 million of deposits on equipment on its unaudited condensed consolidated balance sheet, primarily related to shipping costs associated with miners to be delivered under the Canaan Agreement (defined below). On May 4, 2023, the Company entered into an agreement with Canaan Creative Global Pte. Ltd. (“Canaan”) to purchase 11,000 new A1346 model miners (the “Canaan Agreement”), all of which were delivered prior to June 30, 2023 and have been installed at the Odessa Facility. Because the Company is paying for the Canaan miners over time, the Company does not yet hold title to the miners. The Company paid an initial 10% deposit plus 18% of the total purchase price prior to delivery, and is required to pay monthly installment payments for the Canaan miners through November 2023, at which time title to the miners will transfer to the Company. The Company expects to fund its ongoing payment obligations for the purchase through its ongoing operations, including by selling bitcoin generated at its data centers.

Management intends to continue with the infrastructure buildout at the Odessa Facility to get the site to full capacity in support of the Company’s current business plans. Management believes that the Company’s existing financial resources, combined with projected cash and bitcoin inflows from its data centers and its intent and ability to sell bitcoin received or earned, will be sufficient to enable the Company to meet its operating and capital requirements for at least 12 months from the date these unaudited condensed consolidated financial statements are issued.

There is limited historical financial information about the Company upon which to base an evaluation of its performance. The business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in exploration and/or development, and possible cost overruns due to price and cost increases in services. The Company’s management has no current intention of entering into a merger or acquisition within the next 12 months. The Company may require additional capital to pursue certain business opportunities or respond to technological advancements, competitive dynamics or technologies, challenges, acquisitions or unforeseen circumstances. Additionally, the Company has incurred and expects to continue to incur significant costs related to operating as a public company. Accordingly, the Company may engage in equity or debt financings or enter into credit facilities for the above-mentioned or other reasons; however, the Company may not be able to timely secure additional debt or equity financings on favorable terms, if at all. If the Company raises additional funds through equity financing, its existing stockholders could experience significant dilution. Furthermore, any debt financing obtained by the Company in the future could involve restrictive covenants relating to the Company’s capital raising activities and other financial and operational matters, which may make it more difficult for the Company to obtain additional capital and to pursue business opportunities. If the Company is unable to obtain adequate financing on terms that are satisfactory to the Company, when the Company requires it, the Company’s ability to continue to grow or support the business and to respond to business challenges could be significantly limited, which may adversely affect the Company’s business plan.

Macroeconomic conditions: COVID-19 and other economic, business and political conditions

The Company’s results of operations could be adversely affected by general conditions in the global economy and in the global financial markets, including conditions that are outside of the Company’s control, such as any epidemics, pandemics or disease outbreaks or other public health conditions. For example, the COVID-19 pandemic (“COVID-19”) that was declared on March 11, 2020 has caused significant economic dislocation in the United States (“U.S.”) and globally as governments across the world, including the U.S., introduced measures aimed at preventing the spread of COVID-19. While most policies and regulations implemented by governments in response to COVID-19 have been lifted, they have had a significant impact, both directly and indirectly, on global business and commerce.

The Company may experience disruptions to its business operations resulting from supply interruptions, quarantines, self-isolations, or other movement and restrictions on the ability of its employees or its counterparties to perform their jobs. The Company may also experience delays in construction and obtaining necessary equipment in a timely fashion. If the Company is unable to effectively set up and service its miners, its ability to mine bitcoin will be adversely affected. There is no assurance that COVID-19 or any other pandemic, or other unfavorable global economic, business or political conditions, such as a rise in energy prices, a slowdown in the

10

CIPHER MINING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

U.S. or international economy, high inflation rates or other factors, will not materially and adversely affect the Company’s business, prospects, financial condition and operating results.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and principles of consolidation

The Company prepares its unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the U.S. (“GAAP”) as determined by the FASB and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”).

The unaudited condensed consolidated financial statements include the accounts of the Company and its controlled subsidiary, CMTI. All intercompany transactions and balances have been eliminated.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. The most significant estimates inherent in the preparation of the Company’s financial statements include, but are not limited to, those related to equity instruments issued in share-based compensation arrangements, valuations of its derivative asset and warrant liability under Level 3 of the fair value hierarchy, useful lives of property and equipment, the asset retirement obligation and the valuation allowance associated with the Company’s deferred tax assets, among others. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.

Unaudited condensed consolidated financial statements

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of the Company’s management, these unaudited condensed consolidated financial statements reflect all adjustments, which consist of only normal recurring adjustments necessary for the fair presentation of the balances and results for the periods presented. These unaudited condensed consolidated financial statement results are not necessarily indicative of results to be expected for the full fiscal year or any future period.

A description of the Company’s significant accounting policies is included in the Company’s 2022 Form 10-K. You should read the unaudited condensed consolidated financial statements in conjunction with the Company’s audited consolidated financial statements and accompanying notes in the Company’s 2022 Form 10-K. Except as disclosed herein, there has been no material change in the information disclosed in the notes to the Company’s audited consolidated financial statements included in the Company’s 2022 Form 10-K.

Segment information

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is comprised of several members of its executive management team. The Company views its operations and manages its business in one segment.

Net loss per share

Basic net loss per share is computed by dividing net loss allocated to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share adjusts net loss and net loss per common share for the effect of all potentially dilutive shares of Common Stock. Potential common shares consist of the Company’s outstanding public and private placement warrants to purchase Common Stock, as well as unvested restricted stock units (“RSUs”). Basic net loss per common share is the same as dilutive net loss per common share for all periods presented as the inclusion of all potential common shares would have been antidilutive.

11

CIPHER MINING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The following table presents the common shares that are excluded from the computation of diluted net loss per common share at June 30, 2023 and 2022, because including them would have been antidilutive.

	June 30,
	2023		2022
Public warrants		8,499,980		8,499,980
Private placement warrants		114,000		114,000
Unvested RSUs		23,134,869		12,975,614
		31,748,849		21,589,594

Recently issued and adopted accounting pronouncements

In June 2016, the FASB issued Accounting Standards Update ASU No. 2016‑13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which was codified with its subsequent amendments as ASC Topic 326, Financial Instruments – Credit Losses (“ASC 326”). ASC 326 seeks to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments, including trade receivables, and other commitments to extend credit held by a reporting entity at each reporting date. The amendments require an entity to replace the incurred loss impairment methodology in other GAAP with a methodology that reflects current expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The adoption of this guidance on January 1, 2023 did not have a material impact on the Company’s unaudited condensed consolidated financial statements and disclosures.

The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes to determine the consequences of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financial statements properly reflect the change. The Company reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on its condensed consolidated financial statements.

NOTE 3. BITCOIN

The following table presents information about the Company’s bitcoin (in thousands):

Balance as of January 1, 2023	$	6,283
Bitcoin received from equity investees		317
Revenue recognized from bitcoin mined, net of receivable		52,836
Proceeds from sale of bitcoin, net of realized gain		(44,267	)
Impairment of bitcoin		(4,633	)
Balance as of June 30, 2023	$	10,536

The fair value of the Company’s bitcoin as of June 30, 2023 was approximately $12.3 million and was estimated using the closing price of bitcoin, which is a Level 1 input (i.e., an observable input such as a quoted price in an active market for an identical asset).

During the three and six months ended June 30, 2023, the Company recorded impairment charges on its bitcoin holdings of approximately $2.8 million and $4.6 million, respectively. Impairment charges were approximately $0.5 million for both the three and six months ended June 30, 2022.

NOTE 4. DERIVATIVE ASSET

Luminant Power Agreement

On June 23, 2021, the Company entered into a power purchase agreement with Luminant ET Services Company LLC (“Luminant”), which was subsequently amended and restated on July 9, 2021, and further amended on February 28, 2022 and August 26, 2022 (as amended, the “Luminant Power Agreement”), for the supply of a fixed amount of electric power to the Odessa Facility at a fixed price for a term of five years, subject to certain early termination exemptions. The Luminant Power Agreement provides for a subsequent automatic annual renewal unless either party provides written notice to the other party of its intent to terminate the agreement at least six months prior to the expiration of the then current term. Starting from July 1, 2022, and prior to the receipt of interconnection

12

CIPHER MINING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

approval from the Electric Reliability Council of Texas (“ERCOT”), under the take or pay framework of the Luminant Power Agreement and pursuant to the ramp-up schedule agreed to between Luminant and Cipher, Luminant began sales of the scheduled energy in the ERCOT market.

Because ERCOT allows for net settlement, the Company’s management determined that, as of July 1, 2022, the Luminant Power Agreement met the definition of a derivative under ASC 815, Derivatives and Hedging (“ASC 815”). Because the Company has the ability to sell its electricity in the ERCOT market rather than take physical delivery, physical delivery is not probable through the entirety of the contract and therefore, the Company’s management does not believe the normal purchases and normal sales scope exception applies to the Luminant Power Agreement. Accordingly, the Luminant Power Agreement (the non-hedging derivative contract) is recorded at its estimated fair value each reporting period with the change in the fair value recorded in change in fair value of derivative asset in the consolidated statements of operations. See additional information regarding valuation of the Luminant Power Agreement derivative in Note 16. Fair Value Measurements.

Depending on the spot market price of electricity, the Company may opportunistically sell electricity in the ERCOT market in exchange for cash payments, rather than utilizing the power to mine for bitcoin at the Odessa Facility during peak times in order to most efficiently manage the Company’s operating costs. The Company earned approximately $5.7 million and $5.7 million, respectively from power sales for the three and six months ended June 30, 2023, and recorded this amount in power sales within costs and operating expenses (income) on the unaudited condensed consolidated statement of operations, with the corresponding cost of the power sold recorded in cost of revenue. See Note 1. Organization for information regarding the out-of-period adjustments recorded during the six months ended June 30, 2023, which affected cost of power, power sales, net operating loss and net loss on the Company’s unaudited condensed consolidated statement of operations.

NOTE 5. PROPERTY AND EQUIPMENT

Property and equipment, net consisted of the following (in thousands):

	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

During the six months ended June 30, 2023 and 2022, the Company placed approximately $34.4 million and nil, respectively, of construction-in-progress into service at the Odessa Facility. Depreciation expense was approximately $14.4 million and $26.1 million, respectively, for the three and six months ended June 30, 2023 and included approximately $0.4 million and $0.9 million, respectively, of accretion expense related to the Company’s asset retirement obligation. Depreciation expense was immaterial for the three and six months ended June 30, 2022.

During the first quarter of fiscal 2023, the Company received the remaining 17,094 MicroBT M30S, M30S+ and M30S++ miners (“MicroBT miners”) related to the framework agreement of September 2021 with SuperAcme Technology (Hong Kong) Limited (“SuperAcme”), which was amended and restated by the Amended and Restated Framework Agreement on Supply of Blockchain Servers (the “Amended and Restated Framework Agreement”), dated as of May 6, 2022, and subject to the Supplementary Agreement of the Framework Agreement on Supply of Blockchain Servers (the “Supplementary Agreement). These MicroBT miners received during the first quarter of fiscal 2023 had an aggregate cost of approximately $50.7 million and were purchased by the Company at the new fixed and floating price terms set forth in the Supplementary Agreement. The Company also received 4,622 Antminer S19j Pro (100 TH/s) (“S19j Pro”) miners from Bitmain with a cost basis of approximately $1.6 million during the first quarter of fiscal 2023. As of June 30, 2023, the Company had a total of 35,117 MicroBT miners, 14,907 S19j Pro miners and 11,000 Canaan A1346 model miners for a total of 61,024 miners at its Odessa Facility. See additional information regarding the Canaan miners in Note 1. Organization and Note 11. Leases.

13

CIPHER MINING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 6. DEPOSITS ON EQUIPMENT

In November and December 2022, the Company agreed to purchase 5,000 and 2,200, respectively, S19j Pro miners from Bitmain. The Company utilized accumulated Bitmain credits and coupons for the majority of the purchase price for these miners and has no further payments due in respect of these orders. Information regarding the quantity of Bitmain miners received pursuant to these agreements during the six months ended June 30, 2023 is disclosed in Note 5. Property and Equipment. As of June 30, 2023, the Company did not have material open purchase agreement commitments.

As of June 30, 2023, deposits on equipment was $1.7 million, primarily related to shipping costs and peripheral cables associated with the equipment from the Canaan Agreement described in Note 1. Organization and further in Note 11. Leases.

NOTE 7. INVESTMENTS IN EQUITY INVESTEES

The Company uses the equity method of accounting to account for its 49% equity interest in its partially owned mining operations Alborz LLC, Bear LLC and Chief, LLC (the “Data Center LLCs”). The Company recognized a total of approximately $1.4 million and $2.2 million of net losses in equity in losses of equity investees within the condensed consolidated statements of operations during the three and six months ended June 30, 2023, respectively, and $12.1 million and $12.2 million of net losses in equity in losses of equity investees during the three and six months ended June 30, 2022, respectively. Cryptocurrency mining operations for the Data Center LLCs consisted only of minimal activity at the Alborz Facility for the six months ended June 30, 2022.

During fiscal year 2022, the Company contributed miners and mining equipment to the Alborz, Bear and Chief Facilities. The majority of these contributed miners had a fair value that was lower than the cost paid by the Company to obtain them, and the Company recognized losses at the time of the contributions, resulting in basis differences related to the Company’s investments in Alborz LLC, Bear LLC and Chief LLC, all of which recorded the contributions of equipment from the Company at the historical cost paid by the Company to obtain the equipment. As Alborz LLC, Bear LLC and Chief LLC depreciate the historical cost of these miners on their respective financial statements over the expected depreciation period of five years, the Company accretes these basis differences over the same period and records the accretion amount for each reporting period within equity in losses of equity investees on its statements of operations until these miners are fully depreciated and the corresponding basis differences are fully accreted. As of June 30, 2023, the Company had remaining basis differences totaling approximately $28.1 million that have not yet been accreted. Accretion recorded by the Company during the six months ended June 30, 2023 is shown in the table below and was recorded within equity in losses of equity investees on the statement of operations.

Activity in the Company’s investments in equity investees during the six months ended June 30, 2023 consisted of the following (in thousands):

Balance as of January 1, 2023	$	37,478
Cost of miners and mining equipment contributed		1,925
Accretion of basis differences related to miner contributions		3,340
Capital distributions		(3,807	)
Bitcoin received from equity investees		(317	)
Equity in net losses of equity investees		(5,521	)
Balance as of June 30, 2023	$	33,098

NOTE 8. SECURITY DEPOSITS

The Company’s security deposits consisted of the following (in thousands):

	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

14

CIPHER MINING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 9. SUPPLEMENTAL FINANCIAL INFORMATION

As of June 30, 2023 and December 31, 2022, the Company had approximately $2.3 million and $7.3 million, respectively, of prepaid expenses and other current assets, which was primarily related to prepaid insurance other than approximately $1.2 million of bitcoin temporarily held for the Company’s joint venture partner, WindHQ LLC (“WindHQ”), as of December 31, 2022.

The Company’s accrued expenses and other current liabilities consisted of the following (in thousands):

	June 30, 2023		December 31, 2022
Taxes (primarily sales tax)	$	12,929	$	18,798
Power costs		3,374		-
Finance lease (1)		2,373		339
Legal settlement (2)		2,000		-
Employee compensation		1,045		-
Legal fees		376		215
Other		649		1
Total accrued expenses and other current liabilities	$	22,746	$	19,353

__________

(1) See Note 11. Leases for additional information regarding the Company’s finance leases.

(2) See Note 12. Commitments and Contingencies for additional information regarding the legal settlement accrual as of June 30, 2023.

NOTE 10. RELATED PARTY TRANSACTIONS

Related party receivables

The Company recorded related party receivables of approximately $1.6 million and $1.1 million as of June 30, 2023 and December 31, 2022, respectively, related to expenses paid on behalf of the Data Center LLCs for which it expects to be reimbursed.

Purchase commitments, deposits on equipment and related party payables

The Company entered into two agreements with Bitfury USA Inc. (“Bitfury USA”), made under, and as a part of, the Master Services and Supply Agreement to purchase BBACs. Additionally, Bitfury USA contracted with third-party vendors for the purchase of equipment and the receipt of services related to Cipher’s future mining operations. Pursuant to one of these arrangements between Bitfury USA and a third-party vendor, Paradigm Controls of Texas, LLC (“Paradigm”), the Company made payments directly to Paradigm in place of Bitfury USA, in respect of manufacturing services for BBACs, totaling approximately $5.8 million during the six months ended June 30, 2023 and the Company’s obligations to Bitfury USA under the Master Services and Supply Agreement were reduced by the same amount.

As of December 31, 2022, in relation to the Company assisting WindHQ with the liquidation of some of WindHQ’s bitcoin holdings, the Company had approximately $1.2 million of bitcoin and approximately $0.3 million of proceeds received, but not yet transferred to WindHQ, respectively, recorded in accounts payable, related party on its consolidated balance sheet. During the six months ended June 30, 2023, all of the bitcoin held by the Company on behalf of WindHQ was liquidated and all proceeds received from the liquidation were forwarded to WindHQ, leaving no remaining amount payable to WindHQ in accounts payable, related party as of June 30, 2023 on the Company’s unaudited condensed consolidated balance sheet.

NOTE 11. LEASES

Combined Luminant Lease Agreement

The Company entered into a series of agreements with affiliates of Luminant, including the Lease Agreement dated June 29, 2021, with amendment and restatement on July 9, 2021 (as amended and restated, the “Luminant Lease Agreement”). The Luminant Lease Agreement leases a plot of land to the Company for the data center, ancillary infrastructure and electrical system (the “Interconnection Electrical Facilities” or “substation”) of the Odessa Facility. The Company entered into the Luminant Lease Agreement and the

15

CIPHER MINING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Luminant Purchase and Sale Agreement to build the infrastructure necessary to support its Odessa Facility operations. The Company determined that the Luminant Lease Agreement and the Luminant Purchase and Sale Agreement should be combined for accounting purposes under ASC 842 (collectively, the “Combined Luminant Lease Agreement”) and that amounts exchanged under the combined contract should be allocated to the various components of the overall transaction based on relative fair values.

The Company’s management determined that the Combined Luminant Lease Agreement contains two lease components; and the components should be accounted for together as a single lease component, because the effect of accounting for the land lease separately would be insignificant. Financing for use of the land and substation is provided by Luminant affiliates, with monthly installments of principal and interest due over a five-year period starting upon transfer of legal title of the substation to the Company (estimated total undiscounted principal payments of $15.0 million).

The Combined Luminant Lease Agreement commenced on November 22, 2022 and has an initial term of five years, with renewal provisions that are aligned with the Luminant Power Agreement. Despite lease commencement in November 2022, the Company has not been required by Luminant to make any lease payments for the substation, therefore the Company is continuing to accrue amounts due under the Combined Luminant Lease Agreement in accrued expenses and other current liabilities on its unaudited condensed consolidated balance sheet. The Company expects to begin making monthly lease payments in August 2023. At the end of the lease term for the Interconnection Electrical Facilities, the substation will be sold back to Luminant’s affiliate, Vistra Operations Company, LLC at a price to be determined based upon bids obtained in the secondary market.

Canaan Agreement

As described in Note 1. Organization, the Company entered into the Canaan Agreement to purchase 11,000 new A1346 model miners, all of which were received prior to June 30, 2023 and have been installed at the Odessa Facility. The Company was required to pay a total of approximately $4.1 million prior to delivery of the miners. The Company will also make six monthly installment payments of approximately $1.7 million each month, through November 2023, at which time the Company will obtain title to the miners. The Company determined that the Canaan Agreement contains embedded leases as defined in ASC 842, one for each batch of miners delivered. Based on the terms of the arrangement and intent of the parties, the Company has classified the leases of the Canaan miners as finance leases. Each lease commences upon delivery of the associated batch, as the delivery date represents the date upon which the Company obtains the right to use the assets for a period of time in exchange for consideration. As a result of all 11,000 miners being delivered to the Company in June 2023, the Company determined there will effectively be a single lease commencement date for all of the underlying right-of-use assets. The lease term for the Canaan miners will be six months, aligning with the final payment and title transfer date. Upon title transfer, the Company will continue depreciating the residual value of the miners over their remaining useful life.

Office headquarters lease

The Company entered into an operating lease for office space located in New York. The lease has an initial term of 64 months and commenced on February 1, 2022. The lease does not provide the Company with renewal options.

Additional lease information

Components of the Company’s lease expenses are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Finance leases:
Amortization of ROU assets (1)	$	1,027	$	-	$	1,816	$	-
Interest on lease liability		477		-		878		-
Total finance lease expense		1,504		-		2,694		-
Operating leases:
Operating lease expense		467		371		921		618
Variable lease cost		-		-		-		-
Total operating lease expense		467		371		921		618
Total lease expense	$	1,971	$	371	$	3,615	$	618

__________

(1) Amortization of finance lease ROU assets is included within depreciation expense.

16

CIPHER MINING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The Company did not incur any variable lease costs during any of the periods presented.

Other information related to the Company’s leases is shown below (dollar amounts in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Operating cash flows - operating lease	$	396	$	-	$	791	$	-
Right-of-use assets obtained in exchange for operating lease liabilities	$	-	$	-	$	-	$	5,859

	June 30, 2023			December 31, 2022
Weighted-average remaining lease term – finance lease (in years)		2.7			4.7
Weighted-average remaining lease term – operating lease (in years)		3.9			4.4
Weighted-average discount rate – finance lease		11.0	%		11.0	%
Weighted-average discount rate – operating lease		10.9	%		10.9	%
Finance lease ROU assets (1)	$	26,868		$	14,471

__________

(1) As of June 30, 2023 and December 31, 2022, the Company had recorded accumulated amortization of approximately $2.3 million and $0.5 million, respectively, for the finance lease ROU assets. Finance lease ROU assets are recorded within property and equipment, net on the Company’s consolidated balance sheets.

As of June 30, 2023, future minimum lease payments during the next five years are as follows (in thousands):

	Finance Lease			Operating Lease			Total
Remaining Period Ended December 31, 2023	$	10,511		$	790		$	11,301
Year Ended December 31, 2024		4,068			1,581			5,649
Year Ended December 31, 2025		4,068			1,581			5,649
Year Ended December 31, 2026		4,068			1,581			5,649
Year Ended December 31, 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

Commitments

In the normal course of business, the Company enters into contracts that contain a variety of indemnifications with its employees, licensors, suppliers and service providers. The Company’s maximum exposure under these arrangements, if any, is unknown as of June 30, 2023. The Company does not anticipate recognizing any significant losses relating to these arrangements.

Contingencies

The Company, and its subsidiaries, are subject at times to various claims, lawsuits and governmental proceedings relating to the Company’s business and transactions arising in the ordinary course of business. The Company cannot predict the final outcome of such proceedings. Where appropriate, the Company vigorously defends such claims, lawsuits and proceedings. Some of these claims, lawsuits and proceedings seek damages, including consequential, exemplary or punitive damages, in amounts that could, if awarded, be significant. Certain of the claims, lawsuits and proceedings arising in the ordinary course of business are covered by the Company’s insurance program. The Company maintains property and various types of liability insurance in an effort to protect the Company from such claims. In terms of any matters where there is no insurance coverage available to the Company, or where coverage is available and the Company maintains a retention or deductible associated with such insurance, the Company may establish an accrual for such loss, retention or deductible based on current available information. In accordance with accounting guidance, if it is probable that an asset has been impaired or a liability has been incurred as of the date of the financial statements, and the amount of loss is reasonably

17

CIPHER MINING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

estimable, then an accrual for the cost to resolve or settle these claims is recorded by the Company in the accompanying unaudited condensed consolidated balance sheets. If it is reasonably possible that an asset may be impaired as of the date of the financial statements, then the Company discloses the range of possible loss. Expenses related to the defense of such claims are recorded by the Company as incurred and included in the accompanying unaudited condensed consolidated statements of operations. Management, with the assistance of outside counsel, may from time to time adjust such accruals according to new developments in the matter, court rulings, or changes in the strategy affecting the Company’s defense of such matters. On the basis of current information, the Company does not believe there is a reasonable possibility that a material loss, if any, will result from any claims, lawsuits and proceedings to which the Company is subject to either individually, or in the aggregate.

Luminant Power Agreement

On November 18, 2022, Luminant filed suit against CMTI in the 95th District Court of Dallas County, Texas, asserting Texas state law claims for declaratory judgment and “money had and received”, seeking recoupment and return of money previously paid by Luminant to CMTI in connection with Luminant’s (and its affiliates’) construction and energization of Cipher’s bitcoin mining data center in Odessa, Texas. These prior payments were (i) the sum of $5.1 million paid to CMTI in September 2022 pursuant to a contractual provision requiring such payment in the parties’ written and executed August 25, 2022 Third Amendment to the Luminant Power Agreement, and (ii) the sum of $1.7 million also paid to CMTI in September 2022, as agreed by the parties, for electrical power sold by Luminant for CMTI’s benefit into the open market prior to the final energization of the Company’s facility. Luminant contends that such payments were mistaken because, although voluntarily made by Luminant, they were not actually due under the terms of the Luminant Power Agreement, as amended. The Company filed its answer on January 17, 2023, denying any liability to Luminant. Cipher has not received payment from Luminant for electricity sold in the ERCOT market in September 2022 and October 2022.

The Company wholly disputes the claims made by Luminant and intends to contest the case vigorously. The parties have exchanged basic discovery disclosures, and discovery and motion practice have not substantively commenced. An initial trial date has been set. The parties continue to discuss a potential resolution and, while the Company does not yet know how or when this matter will be resolved, it has established a $2.0 million accrual for the cost of resolving the claims.

NOTE 13. STOCKHOLDERS’ EQUITY

As of June 30, 2023, 510,000,000 shares with a par value of $0.001 per share are authorized, of which, 500,000,000 shares are designated as Common Stock and 10,000,000 shares are designated as preferred stock (“Preferred Stock”).

Common Stock

Holders of each share of Common Stock are entitled to dividends when, as and if declared by the Board. As of the issuance of these unaudited condensed consolidated financial statements, the Company had not declared any dividends. The holder of each share of Common Stock is entitled to one vote. The voting, dividend, liquidation and other rights and powers of the Common Stock are subject to and qualified by the rights, powers and preferences of any outstanding series of Preferred Stock, for which there currently are none outstanding.

During the six months ended June 30, 2023, the Company issued 2,473,759 shares of Common Stock to officers, employees and consultants in settlement of an equal number of fully vested RSUs awarded to these individuals, and 248,358 shares of Common Stock to directors, pursuant to grants made under the Cipher Mining Inc. 2021 Incentive Award Plan (the “Incentive Award Plan”). The Company immediately repurchased 838,388 of these shares of Common Stock from officers and employees, with a fair value of approximately $1.1 million, to cover taxes related to the settlement of vested RSUs, as permitted by the Incentive Award Plan. The Company placed the repurchased shares in treasury stock.

At-the-Market Sales Agreement

On September 21, 2022, the Company filed with the SEC a shelf registration statement on Form S-3, which was declared effective on October 6, 2022 (the “Registration Statement”). In connection with the filing of the Registration Statement, the Company also entered into an at the market offering agreement (the “Prior Sales Agreement”) with H.C. Wainwright & Co., LLC (the “Prior Agent”), under which the Company may, from time to time, sell shares of its Common Stock having an aggregate offering price of up to $250.0 million in “at the market” offerings through the Prior Agent. During the six months ended June 30, 2023, in connection with the Prior Sales Agreement, the Company received proceeds of approximately $2.7 million, net of issuance costs, from the sale of

18

CIPHER MINING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

978,207 shares of common stock, with an average fair value of $2.78 per share. Effective August 1, 2023, the Company terminated the Prior Sales Agreement. On August 3, 2023, the Company entered into a Controlled Equity OfferingSM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co., Canaccord Genuity LLC, Needham & Company, LLC and Compass Point Research & Trading, LLC. See Note 18. Subsequent Events for additional information related to the Sales Agreement.

NOTE 14. WARRANTS

Upon consummation of the business combination, the Company assumed Common Stock warrants that were originally issued in GWAC’s initial public offering (the “Public Warrants”), as well as warrants that were issued in a private placement that closed concurrently with GWAC’s initial public offering (the “Private Placement Warrants”). The Public and Private Placement Warrants entitle the holder to purchase one share of Common Stock at an exercise price of $11.50 per share, subject to adjustment. There were 8,499,980 Public Warrants and 114,000 Private Placement Warrants outstanding as of both June 30, 2023 and December 31, 2022. The exercise price and number of shares of Common Stock issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or the Company’s recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of shares of Common Stock at a price below their respective exercise prices. Additionally, in no event will the Company be required to net cash settle the warrants.

NOTE 15. SHARE-BASED COMPENSATION

The Incentive Award Plan provides for the grant of stock options, including incentive stock options and nonqualified stock options, stock appreciation rights, RSUs and other stock or cash-based awards to employees, consultants and directors. Upon vesting of an award, the Company may either issue new shares or reissue treasury shares.

Initially, up to 19,869,312 shares of Common Stock were available for issuance under awards granted pursuant to the Incentive Award Plan. In addition, the number of shares of Common Stock available for issuance under the Incentive Equity Plan is increased on January 1 of each calendar year beginning in 2022 and ending in 2031 by an amount equal to the lesser of (a) three percent (3%) of the total number of shares of Common Stock outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of shares determined by the Board. On January 1, 2023, this resulted in an increase of 7,426,559 shares of Common Stock available for issuance under the Incentive Award Plan. As of June 30, 2023, 5,694,657 shares of Common Stock were available for issuance under the Incentive Award Plan.

The Company recognized total share-based compensation expense in general and administrative expenses on the unaudited condensed consolidated statements of operations for the following categories of awards as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		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

Service-based RSUs

A summary of the Company’s unvested Service-based RSU activity for the six months ended June 30, 2023 is shown below:

	Number of Shares			Weighted Average Grant Date Fair Value
Unvested at January 1, 2023		14,441,044		$	3.96
Granted		6,909,873		$	2.25
Vested		(2,473,758	)	$	5.91
Unvested at June 30, 2023		18,877,159		$	3.08

As of June 30, 2023, there was approximately $32.7 million of unrecognized compensation expense related to unvested Service-based RSUs, which is expected to be recognized over a weighted-average vesting period of approximately 1.6 years.

19

CIPHER MINING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

If not fully vested upon grant, Service-based RSUs awarded generally vest over a period ranging from two to four years in equal installments on the award’s anniversary of the vesting commencement date, which will generally coincide with the timing when the employee or consultant began to provide services to the Company, as determined by the Board, and which may precede the grant date. Vesting is subject to the award recipient’s continuous service on the applicable vesting date; provided, that if the award recipient’s employment is terminated by the Company without “cause”, by award recipient for “good reason” (if applicable, as such term or similar term may be defined in any employment, consulting or similar service agreement between award recipient and the Company) or due to award recipient’s death or permanent disability, all unvested Service-based RSUs will vest in full. In addition, in the event of a change in control, any unvested Service-based RSUs will vest subject to the award recipient’s continuous service to the Company through such change in control. In addition, if the Company achieves a $10 billion market capitalization milestone (described further below) and the Chief Executive Officer (“CEO”) remains in continuous service through such achievement, any then-unvested Service-based RSUs awarded to the CEO will also vest.

Performance-based RSUs

There was no new activity for unvested Performance-based RSUs during the six months ended June 30, 2023 There were 4,257,710 unvested Performance-based RSUs with a weighted average grant date fair value of $7.76 as of both June 30, 2023 and December 31, 2022. As of June 30, 2023, there was approximately $11.1 million of unrecognized compensation expense related to unvested Performance-based RSUs, which is expected to be recognized over a weighted-average derived service period of approximately 0.9 years.

One-third of the outstanding Performance-based RSUs will vest upon the Company achieving a market capitalization equal to or exceeding $5 billion, $7.5 billion and $10 billion, in each case over a 30-day lookback period and subject to the CEO’s continuous service through the end of the applicable 30-day period. In the event of a change in control and CEO’s continuous service through such change in control, the per share price (plus the per share value of any other consideration) received by the Company’s stockholders in such change in control will be used to determine whether any of the market capitalization milestones are achieved (without regard to the 30-day lookback period). Any Performance-based RSUs that do not vest prior to the CEO’s termination of service or, if earlier, in connection with a change in control will be forfeited for no consideration.

NOTE 16. FAIR VALUE MEASUREMENTS

The Company’s financial assets and liabilities subject to fair value measurement on a recurring basis and the level of inputs used for such measurements were as follows as of the dates indicated (in thousands):

	Fair Value Measured as of June 30, 2023
	Level 1		Level 2		Level 3		Total
Assets included in:
Cash and cash equivalents
Money market securities	$	175	$	-	$	-	$	175
Accounts receivable		380		-		-		380
Derivative asset		-		-		75,252		75,252
	$	555	$	-	$	75,252	$	75,807
Liabilities included in:
Warrant liability	$	-	$	-	$	66	$	66
	$	-	$	-	$	66	$	66

20

CIPHER MINING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

	Fair Value Measured as of December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets included in:
Cash and cash equivalents
Money market securities	$	10,943	$	-	$	-	$	10,943
Accounts receivable		98		-		-		98
Derivative asset		-		-		66,702		66,702
	$	11,041	$	-	$	66,702	$	77,743
Liabilities included in:
Warrant liability	$	-	$	-	$	7	$	7
	$	-	$	-	$	7	$	7

The carrying values reported in the Company’s consolidated balance sheets for cash (excluding cash equivalents which are recorded at fair value on a recurring basis), accounts payable and accrued expenses and other current liabilities are reasonable estimates of their fair values due to the short-term nature of these items.

There were no transfers of financial instruments between Level 1, Level 2 and Level 3 during the periods presented.

Level 3 asset

The Company’s derivative asset, related to the Luminant Power Agreement, is divided between current and noncurrent assets, and was initially recorded on its unaudited condensed consolidated balance sheets on the derivative asset’s effective date of July 1, 2022, with an offsetting amount recorded to change in fair value of derivative asset in costs and operating expenses on the unaudited condensed consolidated statements of operations. Subsequent changes in fair value are also recorded to change in fair value of derivative asset. The Luminant Power Agreement was not designated as a hedging instrument. The estimated fair value of the Company’s derivative asset was derived from Level 2 and Level 3 inputs (i.e., unobservable inputs) due to a lack of quoted prices for similar type assets and as such, is classified in Level 3 of the fair value hierarchy. Specifically, the discounted cash flow estimation models contain quoted spot and forward prices for electricity, as well as estimated usage rates consistent with the terms of the Luminant Power Agreement, which has a remaining term of approximately 4.0 years. The valuations performed by the third-party valuation firm engaged by the Company utilized pre-tax discount rates of 6.94% and 6.83% as of June 30, 2023 and December 31, 2022, respectively, and include observable market inputs, but also include unobservable inputs based on qualitative judgment related to company-specific risk factors. Unrealized gains associated with the derivative asset within the Level 3 category include changes in fair value that were attributable to changes to the quoted forward electricity rates, as well as unobservable inputs (e.g., changes in estimated usage rates and discount rate assumptions).

The following table presents the changes in the estimated fair value of the derivative asset measured using significant unobservable inputs (Level 3) for the six months ended June 30, 2023 (in thousands):

Balance as of January 1, 2023	$	66,702
Change in fair value		8,549
Balance as of June 30, 2023	$	75,251

Level 3 liability

The Company’s Private Placement Warrants (as defined in Note 14. Warrants) are its only liability classified within Level 3 of the fair value hierarchy because the fair value is based on significant inputs that are unobservable in the market. The valuation of the Private Placement Warrants uses assumptions and estimates the Company believes would be made by a market participant in making the same valuation. The Company assesses these assumptions and estimates on an on-going basis as additional data impacting the assumptions and estimates are obtained.

21

CIPHER MINING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The Company engaged a valuation firm to determine the fair value of the Private Placement Warrants using a Black-Scholes option-pricing model and the quoted price of its Common Stock. The following table presents significant assumptions utilized in the valuations of the Private Placement Warrants as of the dates indicated:

	June 30, 2023			December 31, 2022
Risk-free rate		4.36	%		4.06	%
Dividend yield rate		0.00	%		0.00	%
Volatility		74.7	%		90.0	%
Contractual term (in years)		3.2			3.7
Exercise price	$	11.50		$	11.50

The following table presents changes in the estimated fair value of the Private Placement Warrants for the six months ended June 30, 2023 (in thousands):

Balance as of January 1, 2023	$	7
Change in fair value		59
Balance as of June 30, 2023	$	66

NOTE 17. INCOME TAXES

The determination of income tax expense in the unaudited condensed consolidated statements of operations is based upon the estimated effective tax rate for the year, adjusted for the impact of any discrete items which are accounted for in the period in which they occur. The Company recorded income tax expense of approximately 3.7% and nil of loss before taxes for each of the six months ended June 30, 2023 and 2022, respectively.

NOTE 18. SUBSEQUENT EVENTS

At-the-Market Sales Agreement

On August 3, 2023, the Company entered into a Controlled Equity OfferingSM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co., Canaccord Genuity LLC, Needham & Company, LLC and Compass Point Research & Trading, LLC (each, an “Agent” and, together, the “Agents”), pursuant to which the Company may offer and sell, from time to time through or to the Agents, shares of its Common Stock, for aggregate gross proceeds of up to $250.0 million (the “Shares”). The offering and sale of up to $250.0 million of the Shares has been registered under the Registration Statement, the base prospectus contained within the Registration Statement, and a prospectus supplement that was filed with the SEC on August 4, 2023 (the “Prospectus Supplement”).

Pursuant to the Sales Agreement, the Agent selected by the Company (such Agent, the “Designated Agent”) may sell the Shares in sales deemed to be “at the market offerings” as defined in Rule 415(a)(4) promulgated under the Securities Act. The Company has no obligation to sell any of the Shares under the Sales Agreement and may at any time suspend or terminate the offering of the Shares pursuant to the Sales Agreement upon notice and subject to other conditions. The Agents will act as sales agents and will use commercially reasonable efforts to sell on the Company’s behalf all of the Shares requested to be sold by it, on mutually agreed terms between the Agents and the Company. Under the terms of the Sales Agreement, the Company agreed to pay the Designated Agent a commission up to 3.0% of the aggregate gross proceeds from any Shares sold through such Designated Agent pursuant to the Sales Agreement. In addition, the Company agreed to reimburse certain expenses incurred by the Agents in connection with the Sales Agreement.

22

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report, as well as our audited consolidated financial statements and related notes disclosed in our 2022 Form 10-K. This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the “Risk Factors” sections of our 2022 Form 10-K and this Quarterly Report and other factors set forth in other parts of this Quarterly Report.

Unless the context otherwise requires, references in this Quarterly Report to the “Company,” “Cipher,” “Cipher Mining,” “we,” “us” or “our” refers to Cipher Mining Inc. and its consolidated subsidiaries, unless otherwise indicated.

Overview

We are an emerging technology company that develops and operates industrial scale bitcoin mining data centers. Cipher Mining Inc., through itself and its consolidated subsidiaries, including Cipher Mining Technologies Inc. (“CMTI”), currently operates four bitcoin mining data centers in Texas. Bitcoin mining is our principal revenue generating business activity.

Our current intention is to continue to expand our bitcoin mining business by developing additional data centers, expanding capacity at our current data centers and entering into other arrangements, such as joint ventures or data center hosting agreements.

Our key mission is to expand and strengthen the Bitcoin network’s critical infrastructure. As of July 31, 2023, we operated approximately 76,322 miners, with an aggregate hashrate capacity of approximately 7.8 EH/s, deploying approximately 253 MW of electricity, of which we owned approximately 66,397 miners, with an aggregate hashrate capacity of approximately 6.8 EH/s, deploying approximately 222 MW of electricity.

We operate four bitcoin mining data centers in Texas, including one wholly-owned and three partially-owned data centers acquired through investments in joint ventures. Our largest data center is our Odessa data center (the “Odessa Facility”), which is our wholly-owned 207 MW facility located in Odessa, Texas. We also operate our Alborz data center (the “Alborz Facility”), which is located near Happy, Texas and is partially-owned through a joint venture with WindHQ LLC (“WindHQ”). Our Bear data center (the “Bear Facility”) and our Chief data center (the “Chief Facility”) are both located near Andrews, Texas and are also partially-owned through separate joint ventures with WindHQ. We have a 49% membership interest in Alborz LLC, Bear LLC and Chief LLC, which own the Alborz Facility, the Bear Facility and the Chief Facility, respectively. By the end of the third quarter 2023, we anticipate operating approximately 80,500 miners, capable of generating approximately 8.2 EH/s across our sites, of which we will own approximately 70,500 miners, representing approximately 7.2 EH/s.

Recent Developments

At-the-Market Sales Agreement

On September 21, 2022, we filed with the SEC a shelf registration statement on Form S-3, which was declared effective on October 6, 2022 (the “Registration Statement”). In connection with the filing of the Registration Statement, we also entered into an at-the-market offering agreement (the “Prior Sales Agreement”) with H.C. Wainwright & Co., LLC (the “Prior Agent”), under which we may, from time to time, sell shares of our Common Stock having an aggregate offering price of up to $250.0 million in “at-the-market” offerings through the Prior Agent. During the six months ended June 30, 2023, in connection with the Prior Sales Agreement, we received proceeds of approximately $2.7 million, net of issuance costs, from the sale of 978,207 shares of common stock, with an average fair value of $2.78 per share. Effective August 1, 2023, we terminated the Prior Sales Agreement.

On August 3, 2023, we entered into a Controlled Equity OfferingSM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co., Canaccord Genuity LLC, Needham & Company, LLC and Compass Point Research & Trading, LLC (each, an “Agent” and, together, the “Agents”), pursuant to which we may offer and sell, from time to time through or to the Agents, shares of our Common Stock, for aggregate gross proceeds of up to $250.0 million (the “Shares”). The offering and sale of up to $250.0 million of the Shares has been registered under the Registration Statement, the base prospectus contained within the Registration Statement, and a prospectus supplement that was filed with the SEC on August 4, 2023 (the “Prospectus Supplement”).

Pursuant to the Sales Agreement, the Agent selected by us (such Agent, the “Designated Agent”) may sell the Shares in sales deemed to be “at the market offerings” as defined in Rule 415(a)(4) promulgated under the Securities Act. We have no obligation to sell any of the Shares under the Sales Agreement and may at any time suspend or terminate the offering of the Shares pursuant to the Sales

23

Agreement upon notice and subject to other conditions. The Agents will act as sales agents and will use commercially reasonable efforts to sell on our behalf all of the Shares requested to be sold by us, on mutually agreed terms between the Agents and us. Under the terms of the Sales Agreement, we agreed to pay the Designated Agent a commission up to 3.0% of the aggregate gross proceeds from any Shares sold through such Designated Agent pursuant to the Sales Agreement. In addition, we agreed to reimburse certain expenses incurred by the Agents in connection with the Sales Agreement.

Factors Affecting Our Results of Operations

There have been no material changes to the “Factors Affecting Our Results of Operations” in the Management’s Discussion and Analysis section of our 2022 Form 10-K. Our financial position and results of operations depend to a significant extent on those factors.

Summary of Bitcoin Mining Results

The following table presents information about our Bitcoin mining activities, including bitcoin production and sales of bitcoin (dollar amounts in thousands):

	Quantity			Amounts
Balance as of January 1, 2023		394		$	6,283
Bitcoin received from equity investees		18			317
Revenue recognized from bitcoin mined, net of receivable		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

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Revenue - bitcoin mining	$	31,224		$	-		$	53,119		$	-
Costs and operating expenses (income)
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	)		-
Total costs and operating expenses		42,816			29,326			70,880			46,880
Operating loss		(11,592	)		(29,326	)		(17,761	)		(46,880	)
Other income (expense)
Interest income		25			44			101			51
Interest expense		(485	)		-			(886	)		-
Change in fair value of warrant liability		(22	)		63			(59	)		111
Other expense		(12	)		-			(12	)		-
Total other income (expense)		(494	)		107			(856	)		162
Loss before taxes		(12,086	)		(29,219	)		(18,617	)		(46,718	)
Current income tax expense		(31	)		-			(48	)		-
Deferred income tax expense		(584	)		-			(637	)		-
Total income tax expense		(615	)		-			(685	)		-
Net loss	$	(12,701	)	$	(29,219	)	$	(19,302	)	$	(46,718	)

Comparative Results for the Three Months Ended June 30, 2023 and 2022

24

Revenue

Bitcoin mining operations at our Odessa Facility mined 1,112 bitcoin and generated revenue of $31.2 million for the three months ended June 30, 2023, at an average price per bitcoin of $28,009. The Odessa Facility began mining operations in mid-November 2022, therefore, we did not earn revenue from bitcoin mining during the three months ended June 30, 2022.

Cost of revenue

Cost of revenue for the three months ended June 30, 2023 was $15.9 million and consisted primarily of power costs at the Odessa Facility as delivered under our power purchase agreement with Luminant ET Services Company LLC (the “Luminant Power Agreement”), as well as maintenance expenses for mining equipment. We incurred no costs of revenue during the three months ended June 30, 2022 as the Odessa Facility did not begin its bitcoin mining operations until mid-November 2022.

General and administrative

General and administrative expenses were $21.3 million for the three months ended June 30, 2023, compared to $16.7 million for the three months ended June 30, 2022. The increase was primarily driven by increases of $2.5 million for payroll and payroll-related benefits due to increasing headcount, a $2.0 million accrual for the cost of resolving legal claims, and a $0.8 million increase in office supplies and software costs, partially offset by a decrease of $0.9 million for share-based compensation costs.

Depreciation

Depreciation for the three months ended June 30, 2023 was $14.4 million, primarily related to miners, mining equipment and leasehold improvements at the Odessa Facility being placed into service beginning in November 2022, with additional miners and mining-related assets placed into service during the three months ended June 30, 2023 as we continued to expand capacity at the Odessa Facility. Also included in depreciation is the amortization of our finance lease right-of-use asset for our Interconnection Electrical Facilities (as defined below) that provides power to the Odessa Facility, amortization of our finance lease right-of-use assets representing mining equipment from the Canaan Agreement (as defined below), and accretion of our estimated asset retirement obligation related to the Odessa Facility and depreciation of the associated capitalized costs. Depreciation for the three months ended June 30, 2022 was immaterial.

Change in fair value of derivative asset

The change in the fair value of our derivative asset related to the Luminant Power Agreement resulted in a gain of $3.2 million during the three months ended June 30, 2023. The gain was primarily due to the change in the power market forward curve as compared to the curve as of March 31, 2023. The Luminant Power Agreement was not in effect during the three months ended June 30, 2022.

Power sales

In accordance with the Luminant Power Agreement, we sold excess electricity that is available under the Luminant Power Agreement, but not needed in our mining operations at the Odessa Facility, back to the ERCOT market through Luminant for which we received proceeds of $5.7 million for three months ended June 30, 2023.

Equity in losses of equity investees

Equity in losses of equity investees totaled approximately $1.4 million for the three months ended June 30, 2023, a decrease of $10.7 million from approximately $12.1 million for the three months ended June 30, 2022. Equity in losses of equity investees consists of our 49% share in the earnings (losses) generated by our three partially-owned mining sites and also includes accretion of the basis differences in our investments in the equity investees that resulted from contributions of miners during the year ended December 31, 2022 with values at the time of the contributions that were less than the costs we paid to obtain the miners. We are accreting these basis differences over the five-year useful life of the miners. Our share of the losses in the mining operations of Alborz LLC, Bear LLC and Chief LLC increased to approximately $3.1 million for the three months ended June 30, 2023 from approximately $0.5 million for the three months ended June 30, 2022. During the current three month period, all three sites were fully operational, whereas in the prior year period, only Alborz LLC had begun mining operations with a limited number of miners prior to June 30, 2022. We recognized approximately $1.7 million and nil for the three months ended June 30, 2023 and 2022, respectively, for the accretion of basis differences.

25

Realized gain on sale of bitcoin

Realized gain on sale of bitcoin was $4.2 million during the three months ended June 30, 2023. We began selling a portion of our bitcoin holdings at the start of 2023 to support our operations and cash requirements. We did not sell any bitcoin during the three months ended June 30, 2022.

Impairment of bitcoin

We recognized a total of approximately $2.8 million of impairment on our bitcoin holdings during the three months ended June 30, 2023, compared to $0.5 million for the three months ended June 30, 2022.

Other income (expense)

Other expense totaled $0.5 million for the three months ended June 30, 2023, consisting primarily of $0.5 million of interest expense recognized related to our finance leases for the Interconnection Electrical Facilities and Canaan Agreement. Other income and expense for the three months ended June 30, 2022 was not significant.

Income tax expense

Income tax expense totaled $0.6 million, or -5.1% of loss before taxes, and nil for the three months ended June 30, 2023 and 2022, respectively, and was determined using the estimated effective tax rate for the year, adjusted for the impact of any discrete items which are accounted for in the period in which they occur.

Comparative Results for the Six Months Ended June 30, 2023 and 2022

Revenue

Bitcoin mining operations at our Odessa Facility mined 2,055 bitcoin and generated revenue of $53.1 million for the six months ended June 30, 2023, at an average price per bitcoin of $25,390. The Odessa Facility began mining operations in mid-November 2022, therefore, we did not earn revenue from bitcoin mining during the six months ended June 30, 2022.

Cost of revenue

Cost of revenue for the six months ended June 30, 2023 was $24.0 million and consisted primarily of power costs at the Odessa Facility as delivered under our power purchase agreement with Luminant ET Services Company LLC (the “Luminant Power Agreement”), as well as maintenance expenses for mining equipment. Power costs for the six months ended June 30, 2023 included $2.1 million of power costs related to the year ended December 31, 2022 that were recorded as an out-of-period adjustment during the current reporting period. We incurred no costs of revenue during the six months ended June 30, 2022 as the Odessa Facility did not begin its bitcoin mining operations until mid-November 2022.

General and administrative

General and administrative expenses were $38.8 million for the six months ended June 30, 2023 compared to $34.1 million for the six months ended June 30, 2022. The increase was primarily driven by increases of $4.8 million for payroll and payroll-related benefits due to increasing headcount, a $2.0 million accrual for the cost of resolving legal claims, and a $1.4 million increase in office supplies and software costs. These increases were partially offset by decreases of $1.6 million for state and franchise taxes, $1.6 million for share-based compensation costs, $0.8 million for legal expenses, and $0.4 million for business insurance. Legal and consulting expenses were higher during the six months ended June 30, 2022 in part due to legal expenses associated with the waiver, lock-up and board observer agreements that we entered into in early April 2022.

Depreciation

Depreciation for the six months ended June 30, 2023 was $26.1 million, primarily related to miners, mining equipment and leasehold improvements at the Odessa Facility being placed into service beginning in November 2022, with additional miners and mining-related assets placed into service during the six months ended June 30, 2023 as we continued to expand capacity at the Odessa Facility. Also included in depreciation is the amortization of our finance lease right-of-use asset for our Interconnection Electrical Facilities (as defined below) that provides power to the Odessa Facility, amortization of our finance lease right-of-use assets representing mining equipment from the Canaan Agreement, and accretion of our estimated asset retirement obligation related to the Odessa Facility and depreciation of the associated capitalized costs. Depreciation for the six months ended June 30, 2022 was immaterial.

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Change in fair value of derivative asset

The change in the fair value of our derivative asset related to the Luminant Power Agreement resulted in a gain of $8.6 million during the six months ended June 30, 2023. The gain was primarily due to the change in the power market forward curve as compared to the curve as of December 31, 2022. The Luminant Power Agreement was not effective during the six months ended June 30, 2022.

Power sales

In accordance with the Luminant Power Agreement, we sold excess electricity that is available under the Luminant Power Agreement, but not needed in our mining operations at the Odessa Facility, back to the ERCOT market through Luminant for which we received proceeds of $5.7 million for the six months ended June 30, 2023. Power sales for the six months ended June 30, 2023 included $1.6 million for sales of power that occurred during the year ended December 31, 2022 that were recorded as an out-of-period adjustment during the current reporting period.

Equity in losses of equity investees

Equity in losses of equity investees totaled approximately $2.2 million for the six months ended June 30, 2023, a decrease of $10.0 million from approximately $12.2 million for the six months ended June 30, 2022. Equity in losses of equity investees consists of our 49% share in the earnings (losses) generated by our three partially-owned mining sites and also includes accretion of the basis differences in our investments in the equity investees that resulted from contributions of miners during the year ended December 31, 2022 with values at the time of the contributions that were less than the costs we paid to obtain the miners. We are accreting these basis differences over the five-year useful life of the miners. Our share of the losses in the mining operations of Alborz LLC, Bear LLC and Chief LLC increased to approximately $5.5 million for the six months ended June 30, 2023 from approximately $0.6 million for the six months ended June 30, 2022. During the current six month period, all three sites were fully operational, whereas in the prior year period, only Alborz LLC had begun mining operations with a limited number of miners prior to June 30, 2022. We recognized approximately $3.3 million and nil for the six months ended June 30, 2023 and 2022, respectively, for the accretion of basis differences.

Realized gain on sale of bitcoin

Realized gain on sale of bitcoin was $8.2 million during the six months ended June 30, 2023. We began selling a portion of our bitcoin holdings at the start of 2023 to support our operations and cash requirements. We did not sell any bitcoin during the six months ended June 30, 2022.

Impairment of bitcoin

We recognized a total of approximately $4.6 million of impairment on our bitcoin holdings during the six months ended June 30, 2023, compared to $0.5 million for the six months ended June 30, 2022.

Other gains

We recognized proceeds of approximately $2.3 million during the six months ended June 30, 2023 related to the sale of transferrable coupons received from Bitmain Technologies Limited (“Bitmain”) during fiscal year 2022. These coupons could be redeemed by us only through the purchase of additional miners from Bitmain prior to the April 2023 expiration date, however, we did not expect to use them and instead sold the coupons to a third party that approached us with interest to purchase them.

Other income (expense)

Other expense totaled $0.9 million for the six months ended June 30, 2023, consisting mainly of $0.9 million of interest expense recognized related to our finance lease for the Interconnection Electrical Facilities. Other income for the six months ended June 30, 2023 was not significant.

Income tax expense

Income tax expense totaled $0.7 million, or -3.7% of loss before taxes, and nil for the six months ended June 30, 2023 and 2022, respectively, and was determined using the estimated effective tax rate for the year, adjusted for the impact of any discrete items which are accounted for in the period in which they occur.

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Liquidity and Capital Resources

We generated cash flows from operations of $24.7 million for the six months ended June 30, 2023. As of June 30, 2023, we had cash and cash equivalents of $1.7 million, total stockholders’ equity of $343.2 million and an accumulated deficit of $130.5 million. For our fiscal years ended December 31, 2022 and 2021, in large part, we relied on proceeds from the consummation of our business combination with Good Works Acquisition Corp. (“GWAC’) to fund our operations; however, during the six months ended June 30, 2023, we utilized proceeds from sales of bitcoin earned by or received from its bitcoin mining data centers to support operating expenses. During the six months ended June 30, 2023, we sold 2,063 bitcoin for proceeds of approximately $52.5 million. On May 4, 2023, we entered into an agreement with Canaan Creative Global Pte. Ltd. (“Canaan”) to purchase 11,000 new A1346 model miners (the “Canaan Agreement”), all of which were delivered prior to June 30, 2023 and have been installed at the Odessa Facility. Because we are paying for the Canaan miners over time, we do not yet hold title to the miners. We paid an initial 10% deposit plus 18% of the total purchase price prior to delivery, and are required to pay monthly installment payments for the Canaan miners through November 2023, at which time title to the miners will transfer to us. We expect to fund our ongoing payment obligations for the purchase through our ongoing operations, including by selling bitcoin generated at our data centers.

Management intends to continue with the infrastructure buildout at the Odessa Facility to get the site to full capacity in support of our current business plans. Management believes that our existing financial resources, combined with projected cash and bitcoin inflows from its data centers and its intent and ability to sell bitcoin received or earned, will be sufficient to enable us to meet our operating and capital requirements for at least 12 months from the date these unaudited condensed consolidated financial statements are issued.

On September 21, 2022, the Company filed with the SEC a shelf registration statement on Form S-3, which was declared effective on October 6, 2022 (the “Registration Statement”). In connection with the filing of the Registration Statement, the Company also entered into an at-the market offering agreement (the “Sales Agreement”) with H.C. Wainwright & Co., LLC (the “Agent”), under which the Company may, from time to time, sell shares of its Common Stock having an aggregate offering price of up to $250.0 million in “at-the-market” offerings through the Agent, which is included in the $500.0 million of securities that may be offered pursuant to the Registration Statement. As of June 30, 2023, the Company had received net proceeds on sales of 1.0 million shares of common stock under the Prior Sales Agreement of approximately $2.7 million (net of commissions and expenses) at a weighted average price of $2.78.

Cash Flows

The following table summarizes our sources and uses of cash (in thousands):

	Six Months Ended June 30,
	2023			2022
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	)

Operating Activities

Net cash provided by operating activities increased by $34.6 million to $24.7 million for the six months ended June 30, 2023 from net cash used of $9.9 million for the six months ended June 30, 2022. Net loss improved by $27.4 million to $19.3 million for the six months ended June 30, 2023 from $46.7 million for the six months ended June 30, 2022. Net loss impact to cash flows was affected by a $49.2 million decrease in non-cash items, primarily driven by $52.8 million for bitcoin received as payment from our mining pool operator (with no comparable activity in the prior year period), a $10.1 million decrease in equity in losses of equity investees, $8.6 million change in fair value of the Luminant Power Agreement derivative asset, $8.2 million realized gain on the sale of bitcoin (with no comparable activity in the prior year period), partially offset by an increase of $26.1 million of depreciation and $4.1 million increase in the impairment of bitcoin. Additionally, changes in assets and liabilities resulted in an increase in cash provided of $56.4 million between the six months ended June 30, 2023 and 2022. This increase in cash provided was due primarily to proceeds of $52.5 million from the sale of bitcoin, and a $5.1 million increase in accrued expenses and other current liabilities, partially offset by the $1.5 million decrease in accounts payable to related parties.

Investing Activities

Net cash used in investing activities decreased by $125.4 million to $34.4 million for the six months ended June 30, 2023 from $159.8 million for the six months ended June 30, 2022, primarily related to a $153.9 million decrease of deposits for miners and mining equipment, partially offset by a $15.5 million increase in purchases of property and equipment related to our continued build out of the infrastructure at our Odessa Facility, $6.3 million decrease in capital distributions from equitee investees.

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Financing Activities

Net cash used in financing activities decreased to $0.4 million for the six months ended June 30, 2023 from $3.1 million for the six months ended June 30, 2022, primarily driven by $2.8 million of proceeds from the issuance of common stock (with no comparable activity in the prior year period), a $1.9 million decrease in the repurchase of shares to cover tax obligations of employees resulting from the vesting of RSUs during the respective periods, partially offset by $2.1 million in principal payments on finance leases.

Limited Business History; Need for Additional Capital

There is limited historical financial information about us upon which to base an evaluation of our performance. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in exploration and/or development, and possible cost overruns due to price and cost increases in services. We have no current intention of entering into a merger or acquisition within the next 12 months. We may require additional capital to pursue certain business opportunities or respond to technological advancements, competitive dynamics or technologies, customer demands, challenges, acquisitions or unforeseen circumstances. Additionally, we have incurred and expect to continue to incur significant costs related to becoming a public company. Accordingly, we may engage in equity or debt financings or enter into credit facilities for the above-mentioned or other reasons; however, we may not be able to timely secure additional debt or equity financings on favorable terms, if at all. If we raise additional funds through equity financing, our existing stockholders could experience significant dilution. Furthermore, any debt financing obtained by us in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities. If we are unable to obtain adequate financing on terms that are satisfactory to us, when we require it, our ability to continue to grow or support the business and to respond to business challenges could be significantly limited, which may adversely affect our business plan. For risks associated with this, see “Risks Factors—Risks Related to Our Business, Industry and Operations—We may need to raise additional capital, which may not be available on terms acceptable to us, or at all” in our 2022 Form 10-K.

Contractual Obligations and Other Commitments

On December 17, 2021, we entered into a lease agreement for executive office space, with an effective term that commenced on February 1, 2022 and monthly rent payments of approximately $0.1 million. The initial lease term is for a period of five years and four months.

We also entered into a series of agreements with affiliates of Luminant ET Services Company LLC ( “Luminant”), including the Lease Agreement dated June 29, 2021, with amendment and restatement on July 9, 2021 (as amended and restated, the “Luminant Lease Agreement”). The Luminant Lease Agreement leases a plot of land to us where our data center, ancillary infrastructure and electrical system (the “Interconnection Electrical Facilities” or “substation”) have been set up for our Odessa Facility. We entered into the Luminant Lease Agreement and the Luminant Purchase and Sale Agreement to build the infrastructure necessary to support our planned operations. Management determined that the Luminant Lease Agreement and the Luminant Purchase and Sale Agreement should be combined for accounting purposes under ASC 842 (collectively, the “Combined Luminant Lease Agreement”) and that amounts exchanged under the combined contract should be allocated to the various components of the overall transaction based on relative fair values.

Our management determined that the Combined Luminant Lease Agreement contains two lease components; and the components should be accounted for together as a single lease component, because the effect of accounting for the land lease separately would be insignificant. Financing for use of the land and substation is provided by Luminant affiliates, with monthly installments of principal and interest due over a five-year period starting upon transfer of legal title of the substation to us (estimated total undiscounted principal payments of approximately $15.0 million).

The Combined Luminant Lease Agreement commenced on November 22, 2022 and has an initial term of five years, with renewal provisions that are aligned with the Luminant Power Agreement. Since commencement, we have not made any payments for rent of the Interconnection Electrical Facilities, but we have recorded an accrual of approximately $2.4 million for the estimated payments due under the Luminant Lease Agreement. The Company expects to begin making monthly lease payments in August 2023. At the end of the lease term for the Interconnection Electrical Facilities, the substation will be sold back to Luminant’s affiliate, Vistra Operations Company, LLC at a price to be determined based upon bids obtained in the secondary market.

Mining and Mining Equipment

In November and December 2022, we agreed to purchase 5,000 and 2,200, respectively, Antminer S19j Pro (100 TH/s) (“S19j Pro”) miners from Bitmain. For these miners, we paid an average price of $2.35 per terahash, covering the majority of the purchase price by using accumulated Bitmain coupons from previous orders. We have no further payments due in respect of those orders. As of April 2023, all of those miners have been delivered to us in Texas.

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On May 4, 2023, we entered into the Canaan Agreement with Canaan to purchase 11,000 new A1346 model miners, all of which were delivered prior to June 30, 2023 and have been installed at the Odessa Facility. Because the Company is paying for the Canaan miners over time, the Company does not yet hold title to the miners. We paid an initial 10% deposit plus 18% of the total purchase price prior to delivery, and we are required to pay monthly installment payments for the Canaan miners through November 2023, at which time title to the miners will transfer to us. We expect to fund our ongoing payment obligations for the purchase through our ongoing operations, including by selling bitcoin generated at our data centers.

Non-GAAP Financial Measures

We are providing supplemental financial measures for (i) non-GAAP loss from operations that excludes the impact of depreciation and amortization, the non-cash change in the fair value of our derivative asset, share-based compensation expense and nonrecurring gains, which in the six months ended June 30, 2023 were associated with the sale of Bitmain coupons and (ii) non-GAAP net income (loss) and non-GAAP basic and diluted income (loss) per share that exclude the impact of depreciation and amortization, the non-cash change in the fair value of our derivative asset, share-based compensation expense, nonrecurring gains, the change in the fair value of the warrant liability and deferred income tax expense. These supplemental financial measures are not measurements of financial performance under accounting principles generally accepted in the United States (“GAAP”) and, as a result, these supplemental financial measures may not be comparable to similarly titled measures of other companies. Management uses these non-GAAP financial measures internally to help understand, manage, and evaluate our business performance and to help make operating decisions.

We believe that these non-GAAP financial measures are also useful to investors in comparing our performance across reporting periods on a consistent basis. Non-GAAP loss from operations excludes non-cash operational expenses that we believe are not reflective of our general business performance such as (i) depreciation and amortization, (ii) the non-cash change in the fair value of our derivative asset (iii) share-based compensation expense and (iv) nonrecurring gains, which could vary significantly in comparison to other companies.

Non-GAAP net income (loss) and non-GAAP basic and diluted income (loss) per share exclude the impact of (i) depreciation and amortization, (ii) the non-cash change in the fair value of our derivative asset, (iii) share-based compensation expense, (iv) nonrecurring gains, (v) the non-cash change in the fair value of our warrant liability and (vi) deferred income tax expense. We believe the use of these non-GAAP financial measures can also facilitate comparison of our operating results to those of our competitors.

Non-GAAP financial measures are subject to material limitations as they are not in accordance with, or a substitute for, measurements prepared in accordance with GAAP. For example, we expect that share-based compensation expense, which is excluded from the non-GAAP financial measures, will continue to be a significant recurring expense over the coming years and is an important part of the compensation provided to certain employees, officers and directors. Similarly, we expect that depreciation and amortization will continue to be a recurring expense over the useful lives of the related assets. Our non-GAAP financial measures are not meant to be considered in isolation and should be read only in conjunction with our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report, which have been prepared in accordance with GAAP. We rely primarily on such unaudited condensed consolidated financial statements to understand, manage and evaluate our business performance and use the non-GAAP financial measures only supplementally.

The following is a reconciliation of our non-GAAP loss from operations, which excludes the impact of (i) depreciation and amortization, (ii) the non-cash change in the fair value of our derivative asset (iii) share-based compensation expense and (iv) nonrecurring gains, to its most directly comparable GAAP measure for the periods indicated (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Reconciliation of non-GAAP income (loss) from operations:
Operating loss	$	(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	)

The following are reconciliations of our non-GAAP net income (loss) and non-GAAP basic and diluted net income (loss) per share, in each case excluding the impact of (i) depreciation and amortization (ii) the non-cash change in the fair value of our derivative asset,

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(iii) share-based compensation expense, (iv) nonrecurring gains, (v) the non-cash change in the fair value of our warrant liability and (vi) deferred income tax expense, to the most directly comparable GAAP measures for the periods indicated:

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Reconciliation of non-GAAP net income (loss):
Net loss	$	(12,701	)	$	(29,219	)	$	(19,302	)	$	(46,718	)
Non-cash adjustments to net loss:
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	)		-
Total non-cash adjustments to net loss		19,992			10,135			33,006			19,704
Non-GAAP net income (loss)	$	7,291		$	(19,084	)	$	13,704		$	(27,014	)
Reconciliation of non-GAAP basic and diluted net income (loss) per share:
Basic and diluted net loss per share	$	(0.05	)	$	(0.12	)	$	(0.08	)	$	(0.19	)
Depreciation and amortization (per share)	$	0.06			-			0.11			-
Change in fair value of derivative asset (per share)	$	(0.01	)		-			(0.03	)		-
Share-based compensation expense (per share)	$	0.04			0.04			0.07			0.08
Other gains - nonrecurring (per share)	$	-			-			(0.01	)		-
Change in fair value of warrant liability (per share)	$	-			-			-			-
Deferred income tax expense (per share)	$	-			-			-			-
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

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of expenses during the reporting period. A description of our significant accounting policies in included in our 2022 Form 10-K. You should read the accompanying unaudited condensed consolidated financial statements in conjunction with our audited consolidated financial statements and accompanying notes in our 2022 Form 10-K. There have been no material changes in the information disclosed in the notes to our audited consolidated financial statements included in our 2022 Form 10-K.

Recent accounting pronouncements

Information regarding recent accounting pronouncements applicable to us, adopted and not yet adopted as of the date of this report, is included in Note 2 to our unaudited condensed consolidated financial statements located in “Part I - Financial Information, Item 1. Financial Statements” in this Quarterly Report.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

Item 4. Controls and Procedures.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

We conducted an evaluation of the effectiveness of our “disclosure controls and procedures” (“Disclosure Controls”), as defined by Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of June 30, 2023, the end of the period covered by this Quarterly Report. The Disclosure Controls evaluation was done under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, with the goal being that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, our disclosure controls and procedures were not effective at the reasonable assurance level as of June 30, 2023.

Remediation of Material Weakness

As noted in the 2022 Form 10-K, during management’s assessment of internal controls over financial reporting, a material weakness was identified related to certain Information Technology General Controls over user access, segregation of duties and change management controls.

As management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, we understand the importance of developing a resolution plan aligned with management and overseen by the Audit Committee of our Board of Directors. Our plan includes the following:

•Enhance our remediation efforts by continuing to devote resources in 2023 in key financial reporting and information technology areas.

•Continue to utilize an external third-party internal audit and SOX 404 implementation firm to work to improve the Company’s controls related to our material weaknesses, specifically relating to user access and change management surrounding the Company’s IT systems and applications.

•Continue to implement new processes and controls and engage external resources when required in connection with remediating this material weakness, such that these controls are designed, implemented, and operating effectively.

•Continue to formalize our policies and processes over including those over outside service providers with a specific focus on enhancing design and documentation related to (i) developing and communicating additional policies and procedures to govern the areas of IT change management and user access processes and related control activities and (ii) develop robust processes to validate data received from third-parties and relied upon to generate financial statements is complete and accurate.

We recognize that the material weaknesses in our internal control over financial reporting will not be considered remediated until the remediated controls operate for a sufficient period of time and can be tested and concluded by management to be designed and operating effectively. Because our remediation efforts involve our outsourced service providers, we cannot provide any assurance that these remediation efforts will be successful or that our internal control over financial reporting will be effective as a result of these efforts.

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We continue to evaluate and work to improve our internal control over financial reporting related to the identified material weaknesses and management may determine to take additional measures to address control deficiencies or determine to modify the remediation plan described above. In addition, we report the progress and status of the above remediation efforts to the Audit Committee on a periodic basis.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are not a party to any material pending legal proceedings. From time to time, we may be subject to legal proceedings and claims arising in the ordinary course of business. There have been no material changes to such proceedings previously disclosed in our 2022 Form 10-K.

Item 1A. Risk Factors.

Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to the risk factors as previously disclosed in Part I, Item 1A, “Risk Factors” of our 2022 Form 10-K, which is incorporated herein by reference. There have been no material changes to the risk factors previously disclosed in our 2022 Form 10-K.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

During the three months ended June 30, 2023, no director or “officer” (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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Item 6. Exhibits.

		Incorporated by Reference				Filed/
Exhibit Number	Exhibit Description	From	File No.	Exhibit	Filing Date	Furnished Herewith
2.1†	Agreement and Plan of Merger, dated as of March 4, 2021, by and among Good Works Acquisition Corp., Currency Merger Sub, Inc. and Cipher Mining Technologies Inc.	8-K	001-39625	2.1	3/5/2021
3.1	Second Amended and Restated Certificate of Incorporation of Cipher Mining Inc.	8-K	001-39625	3.1	8/31/2021
3.2	Amended and Restated Bylaws of Cipher Mining Inc.	8-K	001-39625	3.2	8/31/2021
4.1	Specimen Warrant Certificate of Good Works Acquisition Corp.	S-1/A	333-248333	4.3	10/9/2020
4.2	Warrant Agreement, dated as of October 19, 2020, by and between Continental Stock Transfer & Trust Company and Good Works Acquisition Corp.	8-K	001-39625	4.1	10/28/2020
10.1	Controlled Equity OfferingSM Sales Agreement by and between Cipher Mining Inc. and Cantor Fitzgerald & Co., Canaccord Genuity LLC, Needham & Company, LLC and Compass Point Research & Trading, LLC, dated August 3, 2023.	8-K	001-39625	1.1	8/4/2023
10.2	Amended and Restated Non-Employee Directors Compensation Policy.					*
31.1	Certification of Chief Executive Officer pursuant to Rule 13a‑14(a)/15d‑14(a).					*
31.2	Certification of Chief Financial Officer pursuant to Rule 13a‑14(a)/15d‑14(a).					*
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.					**
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.					**
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document					*
101.SCH	Inline XBRL Taxonomy Extension Schema Document					*
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document					*
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document					*
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document					*
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document					*
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)					*

* Filed herewith.

** Furnished herewith.

† Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.

35

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CIPHER MINING INC.
Date: August 8, 2023	By:	/s/ Tyler Page
		Tyler Page
		Chief Executive Officer
		(Principal Executive Officer)
Date: August 8, 2023	By:	/s/ Edward Farrell
		Edward Farrell
		Chief Financial Officer
		(Principal Financial Officer)

36

EX-10.2

Exhibit 10.2

CIPHER MINING INC.

NON-EMPLOYEE DIRECTORS COMPENSATION POLICY

(As Amended and Restated Effective March 9, 2023)

Non-employee members of the board of directors (the “Board”) of Cipher Mining Inc. (the “Company”) shall be eligible to receive cash and equity compensation as set forth in this Amended and Restated Non-Employee Directors Compensation Policy (this “Policy”). The cash and equity compensation described in this Policy shall be paid or be made, as applicable, automatically and without further action of the Board, to each member of the Board who is not an employee of the Company or any parent or subsidiary of the Company (each, a “Non-Employee Director”)unless such Non-Employee Director declines the receipt of such cash or equity compensation by written notice to the Company. This Policy shall remain in effect until it is revised or rescinded by further action of the Board. This Policy may be amended, modified or terminated by the Board at any time in its sole discretion. The terms and conditions of this Policy shall supersede any prior cash and/or equity compensation arrangements for service as a member of the Board between the Company and any of its Non-Employee Directors and between any subsidiary of the Company and any of its non-employee directors.

1. Cash Compensation.

(a) Annual Retainers. Each Non-Employee Director shall receive an annual retainer of $100,000 for service on the Board.

(b) Additional Annual Retainers. In addition, a Non-Employee Director shall receive the following annual retainers:

(i) Lead Independent Director. A Non-Employee Director serving as Lead Independent Director shall receive an additional annual retainer of $50,000 for such service.

(ii) Audit Committee. A Non-Employee Director serving as Chairperson of the Audit Committee shall receive an additional annual retainer of $20,000 for such service. A Non-Employee Director serving as a member of the Audit Committee (other than the Chairperson of the Audit Committee) shall receive an additional annual retainer of $10,000 for such service.

(iii) Compensation Committee. A Non-Employee Director serving as Chairperson of the Compensation Committee shall receive an additional annual retainer of $15,000 for such service. A Non-Employee Director serving as a member of the Compensation Committee (other than the Chairperson of the Compensation Committee) shall receive an additional annual retainer of $10,000 for such service.

(iv) Nominating and Corporate Governance Committee. A Non-Employee Director serving as Chairperson of the Nominating and Corporate Governance Committee shall receive an additional annual retainer of $12,500 for such service. A Non-Employee Director serving as a member of the Nominating and Corporate Governance Committee (other than the Chairperson of the Nominating and Corporate Governance Committee) shall receive an additional annual retainer of $7,500 for such service.

(c) Payment of Retainers. The annual retainers described in Sections 1(a) and 1(b) shall be earned on a quarterly basis based on a calendar quarter and shall be paid by the Company in arrears on a quarterly prorated portion basis (where applicable) not later than the fifteenth day following the end of each calendar quarter. In the event a Non-Employee Director does not serve as a Non-Employee Director, or in the applicable positions described in Section 1(b), for an entire calendar quarter, such Non-Employee Director shall receive a prorated portion of the annual retainer(s) otherwise payable to such Non-Employee Director for such calendar quarter pursuant to Sections 1(a) and 1(b), with such prorated portion determined by multiplying such otherwise payable retainer(s) by a fraction, the numerator of which is the number of days during which the Non-Employee Director serves as a Non-Employee Director or in the applicable positions described in Section 1(b) during the applicable calendar quarter and the denominator of which is the number of days in the applicable calendar quarter.

2. Equity Compensation. Non-Employee Directors shall be granted the equity awards described below. The awards described below shall be granted in the form of fully vested shares of Company common stock (par value $0.001 “Common Stock”) under and shall be subject to the terms and provisions of the Company’s 2021 Incentive Award Plan or any other applicable Company equity incentive plan then maintained by the Company (such plan, as may be amended from time to time, the “Equity Plan”). All applicable terms of the Equity Plan apply to this Policy as if fully set forth herein, and all equity grants hereunder are subject in all respects to the terms of the Equity Plan.

(a) Annual Awards. Without any further action of the Board or the compensation committee of the Board, each Non-Employee Director who is elected to the Board on the date of an annual meeting of the Company’s stockholders (each, an “Annual Meeting”) and who serves on the Board as of the Grant Dates (as defined below) shall automatically receive, for each one (1) year period commencing on the date of the 2023 Annual Meeting, an annual award of fully vested shares of Common Stock (each, an “Annual Award”),having a value of $140,000. Each Annual Award shall be granted in four (4) equal $35,000 installments on each of the following dates: (i) the date of the Annual Meeting; (ii) August 20; (iii) November 20; and (iv) February 20, provided that if any of the foregoing dates is not a trading day, then the grant shall be made on the immediately following trading day (each such date, a “Grant Date”), subject to the relevant Grantee’s continued service on the applicable Grant Date; provided further that the Board shall have authority to determine for any reason not to grant an installment on an applicable Grant Date. The number of shares of Common Stock granted on each Grant Date shall be determined by dividing $35,000 by the average of the closing sales price for such Common Stock as quoted on the Nasdaq on each of the seven trading days immediately preceding the applicable Grant Date. For the purposes of this Policy, a “trading day” is a day on which national stock exchanges are open for trading.

(b) Initial Awards. Except as otherwise determined by the Board, each Non-Employee Director who is initially elected or appointed to the Board on any date other than the date of an Annual Meeting shall be automatically granted, on the date of such Non-Employee Director’s initial election or appointment to the Board (such Non-Employee Director’s “Start Date”), an award of vested shares of Common Stock having a value equal to the product of (i) $35,000 and (ii) a fraction, the numerator of which is (x) 90 minus (y) the number of days in the period beginning on the most recent Grant Date immediately preceding such Non-Employee Director’s Start Date and ending on such Non-Employee Director’s Start Date and the denominator of which is 90. The number of shares of Common Stock granted on the Non-Employee Director’s Start Date shall be determined by dividing the value determined in accordance with the immediately preceding sentence by the average of the closing sales price for such Common Stock as quoted on the Nasdaq on each of the seven trading days immediately preceding the Non-Employee Director’s Start Date. The award made on the Non-Employee Director’s Start Date shall be referred to as an “Initial Award.” For the avoidance of doubt, no Non-Employee Director shall be granted more than one Initial Award. If the Non-Employee Director’s Start Date is on a Grant Date or more than 90 days following the immediately preceding Grant Date, the Non-Employee Director shall not receive an Initial Award. Following the Non-Employee Director’s Start Date, such Non-Employee Director shall receive installments of Annual Awards on each Grant Date on which such Non-Employee Director is serving on the Board in accordance with Section 2(a) above.

(c) Termination of Employment of Employee Directors. Members of the Board who are employees of the Company or any parent or subsidiary of the Company who subsequently terminate their employment with the Company and any parent or subsidiary of the Company and remain on the Board will not receive an Initial Award pursuant to Section 2(b) above, but to the extent that they are otherwise eligible, will be eligible to receive, after termination from employment with the Company and any parent or subsidiary of the Company, installments of Annual Awards as described in Section 2(a) above on each applicable Grant Date.

3. Expenses. The Company will reimburse each Non-Employee Director for ordinary, necessary and reasonable out-of-pocket travel expenses to cover in-person attendance at and participation in Board meetings and meetings of any committee of the Board; provided, that the Non-Employee Director timely submit to the Company appropriate documentation substantiating such expenses in accordance with the Company’s travel and expense policy applicable to directors, as in effect from time to time. To the extent that any taxable reimbursements are provided to any Non-Employee Director, they will be provided in accordance with Section 409A of the Internal Revenue Code of 1986, as amended, including, but not limited to, the following provisions: (i) the amount of any such expenses eligible for reimbursement during such individual’s taxable year may not affect the expenses eligible for reimbursement in any other taxable year; (ii) the reimbursement of an eligible expense must be made no later

than the last day of such individual’s taxable year that immediately follows the taxable year in which the expense was incurred; and (iii) the right to any reimbursement may not be subject to liquidation or exchange for another benefit.

4. Business Days. In the event any time period or any date provided in this Policy ends or falls on a day other than a Business Day, such date shall be deemed to fall on the next succeeding Business Day, and performance herein may be made on such Business Day, with the same force and effect as if made on such other day. “Business Day” means any calendar day that is not a Saturday, a Sunday, or a day on which commercial banks in New York, New York are authorized or required to be closed.

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Tyler Page, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Cipher Mining Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 8, 2023	By:	/s/ Tyler Page
		Tyler Page
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Edward Farrell, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Cipher Mining Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 8, 2023	By:	/s/ Edward Farrell
		Edward Farrell
		Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Cipher Mining Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 8, 2023	By:	/s/ Tyler Page
		Tyler Page
		Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Cipher Mining Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 8, 2023	By:	/s/ Edward Farrell
		Edward Farrell
		Chief Financial Officer

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2023	Aug. 04, 2023
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Document Transition Report	false
Entity File Number	001-39625
Entity Registrant Name	CIPHER MINING INC.
Entity Central Index Key	0001819989
Current Fiscal Year End Date	--12-31
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	85-1614529
Entity Address, Address Line One	1 Vanderbilt Avenue, Floor 54
Entity Address, Address Line Two	Suite C
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10017
City Area Code	332
Local Phone Number	262-2300
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	CIFR
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		250,955,743
Warrants
Document Information [Line Items]
Title of 12(b) Security	Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per whole share
Trading Symbol	CIFRW
Security Exchange Name	NASDAQ

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Current assets
Cash and cash equivalents	$ 1,741	$ 11,927
Prepaid expenses and other current assets	2,260	7,254
Bitcoin	10,536	6,283
Derivative asset	25,786	21,071
Total current assets	42,317	47,735
Property and equipment, net	267,790	191,784
Deposits on equipment	1,675	73,018
Investment in equity investees	33,098	37,478
Derivative asset	49,466	45,631
Operating lease right-of-use asset	4,635	5,087
Security deposits	17,742	17,730
Total assets	416,723	418,463
Current liabilities
Accrued expenses and other current liabilities	22,746	19,353
Finance lease liability, current portion	11,189	2,567
Operating lease liability, current portion	1,087	1,030
Warrant liability	66	7
Total current liabilities	38,695	40,326
Asset retirement obligation	17,538	16,682
Finance lease liability	10,836	12,229
Operating lease liability	3,936	4,494
Deferred tax liability	2,508	1,840
Total liabilities	73,513	75,571
Commitments and contingencies (Note 12)
Stockholders' equity
Preferred stock, $0.001 par value; 10,000,000 shares authorized, none issued and outstanding as of June 30, 2023 and December 31, 2022
Common stock, $0.001 par value, 500,000,000 shares authorized, 254,795,626 and 251,095,305 shares issued as of June 30, 2023 and December 31, 2022, respectively, and 250,413,891 and 247,551,958 shares outstanding as of June 30, 2023 and December 31, 2022, respectively	254	251
Additional paid-in capital	473,471	453,854
Accumulated deficit	(130,511)	(111,209)
Treasury stock, at par, 4,381,735 and 3,543,347 shares at June 30, 2023 and December 31, 2022, respectively	(4)	(4)
Total stockholders' equity	343,210	342,892
Total liabilities and stockholders' equity	416,723	418,463
Related party
Current assets
Accounts receivable	1,614	1,102
Current liabilities
Accounts payable	1,554	3,083
Nonrelated Party
Current assets
Accounts receivable	380	98
Current liabilities
Accounts payable	$ 2,053	$ 14,286

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Preferred stock par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	254,795,626	251,095,305
Common stock, shares outstanding	250,413,891	247,551,958
Treasury stock, shares	4,381,735	3,543,347

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement [Abstract]
Revenue - bitcoin mining	$ 31,224		$ 53,119
Costs and operating expenses (income)
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)
Total costs and operating expenses	42,816	29,326	70,880	46,880
Operating loss	(11,592)	(29,326)	(17,761)	(46,880)
Other income (expense)
Interest income	25	44	101	51
Interest expense	(485)		(886)
Change in fair value of warrant liability	(22)	63	(59)	111
Other expense	(12)		(12)
Total other income (expense)	(494)	107	(856)	162
Loss before taxes	(12,086)	(29,219)	(18,617)	(46,718)
Current income tax expense	(31)		(48)
Deferred income tax expense	(584)		(637)
Total income tax expense	(615)		(685)
Net loss	$ (12,701)	$ (29,219)	$ (19,302)	$ (46,718)
Net loss per share - basic	$ (0.05)	$ (0.12)	$ (0.08)	$ (0.19)
Net loss per share - diluted	$ (0.05)	$ (0.12)	$ (0.08)	$ (0.19)
Weighted average shares outstanding - basic	249,127,664	247,730,410	248,892,181	248,945,581
Weighted average shares outstanding - diluted	249,127,664	247,730,410	248,892,181	248,945,581

XML

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Treasury Stock
Beginning balance at Dec. 31, 2021	$ 353,531	$ 252	$ 425,438	$ (72,156)	$ (3)
Beginning balance, Shares at Dec. 31, 2021		252,131,679			(2,852,259)
Delivery of common stock underlying restricted stock units, net of shares settled for tax withholding settlement	(3,052)	$ 2	(3,053)		$ (1)
Delivery of common stock underlying restricted stock units, net of shares settled for tax withholding settlement, Shares		1,759,546			(659,231)
Common stock cancelled, Shares		20
Warrants exercised	(10,000)	$ (3)	(9,997)
Warrants exercised, Shares		(2,890,173)
Share-based compensation	19,578		19,578
Net Income (Loss)	(46,718)			(46,718)
Ending balance at Jun. 30, 2022	313,339	$ 251	431,966	(118,874)	$ (4)
Ending balance, Shares at Jun. 30, 2022		251,001,072			(3,511,490)
Beginning balance at Mar. 31, 2022	342,494	$ 254	431,899	(89,655)	$ (4)
Beginning balance, Shares at Mar. 31, 2022		253,685,763			(3,511,490)
Common stock cancelled	(10,000)	$ (3)	(9,997)
Common stock cancelled, Shares		(2,890,173)
Delivery of common stock underlying restricted stock units, Shares		205,482
Share-based compensation	10,064		10,064
Net Income (Loss)	(29,219)			(29,219)
Ending balance at Jun. 30, 2022	313,339	$ 251	431,966	(118,874)	$ (4)
Ending balance, Shares at Jun. 30, 2022		251,001,072			(3,511,490)
Beginning balance at Dec. 31, 2022	$ 342,892	$ 251	453,854	(111,209)	$ (4)
Beginning balance, Shares at Dec. 31, 2022	251,095,305	251,095,305			(3,543,347)
Issuance of common shares, net of offering costs - At-the-market offering	$ 2,745	$ 1	2,744
Issuance of common shares, net of offering costs - At-the-market offering, Shares		978,207
Delivery of common stock underlying restricted stock units, net of shares settled for tax withholding settlement	(1,113)	$ 2	(1,115)
Delivery of common stock underlying restricted stock units, net of shares settled for tax withholding settlement, Shares		2,473,756			(838,388)
Share-based compensation	17,988		17,988
Share-based compensation, Shares		248,358
Net Income (Loss)	(19,302)			(19,302)
Ending balance at Jun. 30, 2023	$ 343,210	$ 254	473,471	(130,511)	$ (4)
Ending balance, Shares at Jun. 30, 2023	254,795,626	254,795,626			(4,381,735)
Beginning balance at Mar. 31, 2023	$ 344,620	$ 253	462,181	(117,810)	$ (4)
Beginning balance, Shares at Mar. 31, 2023		253,050,088			(4,144,081)
Issuance of common shares, net of offering costs - At-the-market offering	2,745	$ 1	2,744
Issuance of common shares, net of offering costs - At-the-market offering, Shares		978,207
Delivery of common stock underlying restricted stock units, net of shares settled for tax withholding settlement	(632)		(632)
Delivery of common stock underlying restricted stock units, net of shares settled for tax withholding settlement, Shares		674,817			(237,654)
Share-based compensation	9,178		9,178
Share-based compensation, Shares		92,514
Net Income (Loss)	(12,701)			(12,701)
Ending balance at Jun. 30, 2023	$ 343,210	$ 254	$ 473,471	$ (130,511)	$ (4)
Ending balance, Shares at Jun. 30, 2023	254,795,626	254,795,626			(4,381,735)

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities
Net loss	$ (19,302)	$ (46,718)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation	26,067	15
Amortization of operating right-of-use asset	452	347
Share-based compensation	17,988	19,578
Equity in losses of equity investees	2,181	12,232
Impairment of bitcoin	4,633	539
Non-cash lease expense	878
Deferred income taxes	637
Bitcoin received as payment for services	(52,836)
Change in fair value of derivative asset	(8,550)
Change in fair value of warrant liability	59	(111)
Realized gain on sale of bitcoin	(8,206)
Changes in assets and liabilities:
Proceeds from sale of bitcoin	52,474
Accounts receivable	(282)
Receivables, related party	(512)	(467)
Prepaid expenses and other current assets	4,994	4,134
Security deposits	(12)	(1,065)
Accounts payable	(184)	104
Accounts payable, related party	(1,529)
Accrued expenses and other current liabilities	6,323	1,209
Lease liabilities	(594)	271
Net cash provided by (used in) operating activities	24,679	(9,932)
Cash flows from investing activities
Deposits on equipment	(2,932)	(156,811)
Purchases of property and equipment	(28,541)	(13,069)
Capital distributions from equity investees	3,807	10,065
Investment in equity investees	(3,095)
Prepayments on financing lease	(3,676)
Net cash used in investing activities	(34,437)	(159,815)
Cash flows from financing activities
Proceeds from the issuance of common stock	2,821
Offering costs paid for the issuance of common stock	(76)
Repurchase of common shares to pay employee withholding taxes	(1,114)	(3,052)
Principal payments on financing lease	(2,059)
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 the period	11,927	209,841
Cash and cash equivalents, end of the period	1,741	37,042
Supplemental disclosure of noncash investing and financing activities
Reclassification of deposits on equipment to property and equipment	72,130
Right-of-use asset obtained in exchange for finance lease liability	14,212
Finance lease costs in accrued expenses	2,034
Equity method investment acquired for non-cash consideration	1,926	75,933
Sales tax accruals reversed due to exemption	1,837
Bitcoin received from equity investees	$ 317	1,326
Property and equipment purchases in accounts payable, accounts payable, related party and accrued expenses		5,459
Deposits on equipment in accounts payable and accounts payable, related party		10,972
Common stock cancelled		10,000
Right-of-use asset obtained in exchange for operating lease liability		5,859
Investment in equity investees in accrued expenses		4,345
Reclassification of deferred investment costs to investment in equity investees		$ 174

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Pay vs Performance Disclosure
Net Income (Loss)	$ (12,701)	$ (29,219)	$ (19,302)	$ (46,718)

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Insider Trading Arrangements	3 Months Ended
	Jun. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

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Organization

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

NOTE 1. ORGANIZATION

Nature of operations

Cipher Mining Inc. (“Cipher” or the “Company”) is an emerging technology company that develops and operates industrial scale bitcoin mining data centers. The Company operates or jointly operates four bitcoin mining data centers in Texas including one wholly-owned data center and three partially-owned data centers that were acquired through investments in joint ventures. Bitcoin mining is the Company’s principal revenue generating business activity. The Company began deployment of capacity in the first quarter of 2022, with mining operations beginning at the partially-owned Alborz facility in February 2022 (the “Alborz Facility”). In August 2022, installation of the last mining rigs delivered to the Alborz Facility was completed. In October 2022, installation at the partially-owned Bear facility (the “Bear Facility”) and the partially-owned Chief facility (the “Chief Facility”) was also completed. In November 2022, the Company began bitcoin mining operations at the wholly-owned Odessa facility (the “Odessa Facility”) and is continuing to expand those operations.

Cipher Mining Technologies Inc. (“CMTI”) was established on January 7, 2021, in Delaware, by Bitfury Top HoldCo B.V. and its subsidiaries (“Bitfury Top HoldCo” and, with its subsidiaries, the “Bitfury Group”). Bitfury Top HoldCo (together with Bitfury Holding B.V., a subsidiary of Bitfury Top HoldCo, and referred to herein as “Bitfury Holding”) beneficially owned approximately 80.6% of the Company’s common stock, $0.001 par value per share (“Common Stock”), as of June 30, 2023, with sole voting and sole dispositive power over those shares and, as a result, Bitfury Top HoldCo has control of the Company as defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation (“ASC 810”). As of August 4, 2023, pursuant to that certain Lock-up Agreement, dated as of August 26, 2021, by and between GWAC and Bitfury Top HoldCo, 129,017,513 of Bitfury Top HoldCo’s shares of the Company’s Common Stock remain subject to lock-up which, subject to any potential modifications under the waiver agreement with Bitfury Top HoldCo entered into on April 8, 2022, is expected to expire on August 27, 2023.

Out-of-period-adjustments

Cost of revenue and power sales for the six months ended June 30, 2023 included out-of-period adjustments of approximately $2.0 million and $1.6 million, respectively, that increased both cost of revenue and power sales on the unaudited condensed consolidated statements of operations for the six months ended June 30, 2023, and resulted in net increases to operating loss and loss before taxes of approximately $0.4 million during the same period. These out-of-period adjustments related to power costs and power sales for the year ended December 31, 2022 at the Company’s Odessa Facility, which are invoiced on a net basis by the Company’s power provider. Management evaluated the impact of this error on the Company’s previously issued audited consolidated financial statements for the year ended December 31, 2022, as well as on its unaudited condensed consolidated financial statements for the six months ended June 30, 2023, assessing the error both quantitatively and qualitatively, and concluded that the error was not material to the financial statements for either period.

Risks and uncertainties

Liquidity, capital resources and limited business history

The Company has historically experienced net losses and negative cash flows from operations. As of June 30, 2023, the Company had approximate balances of 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. For fiscal years ended December 31, 2022 and 2021, the Company, in large part, relied on proceeds from the consummation of its business combination with Good Works Acquisition Corp. (“GWAC”) to fund its operations; however, during the six months ended June 30, 2023, the Company utilized proceeds from sales of bitcoin earned by or received from its bitcoin mining data centers to support its operating expenses. During the six months ended June 30, 2023, the Company sold 2,063 bitcoin for proceeds of approximately $52.5 million. Additionally, in January 2023, the Company was approached by a third party that offered to purchase coupons that the Company had received from Bitmain Technologies Limited (“Bitmain”) during fiscal year 2022. These transferrable coupons provided the Company with potential discounts of approximately $10.9 million that could only be redeemed with the purchase of additional miners from Bitmain prior to the coupons’ April 2023 expiration date. As the Company did not intend to purchase additional Bitmain miners prior to the expiration date of the coupons, it sold the coupons to the interested third party for proceeds of approximately $2.3 million, which it recorded in other gains within costs and operating expenses (income) on its unaudited condensed consolidated statement of operations during the six months ended June 30, 2023.

The Company monitors its balance sheet on an ongoing basis to determine the proper mix of bitcoin retention and bitcoin sales to support its cash requirements and ongoing operations. Bitcoin is classified as a current asset on the Company’s balance sheets due to its intent and ability to sell bitcoin to support operations when needed. Operating activities provided approximately $24.7 million of cash during the six months ended June 30, 2023.

During the six months ended June 30, 2023, the Company paid approximately $2.9 million of deposits for mining equipment and reclassified approximately $72.1 million to property and equipment in connection with the receipt of miners and other equipment at the Odessa Facility. As of June 30, 2023, the Company had 61,024 miners located at the Odessa Facility and had 12,953, 3,254 and 3,254 contributed miners at its partially-owned Alborz Facility, Bear Facility and Chief Facility, respectively.

As of June 30, 2023, the Company had approximately $1.7 million of deposits on equipment on its unaudited condensed consolidated balance sheet, primarily related to shipping costs associated with miners to be delivered under the Canaan Agreement (defined below). On May 4, 2023, the Company entered into an agreement with Canaan Creative Global Pte. Ltd. (“Canaan”) to purchase 11,000 new A1346 model miners (the “Canaan Agreement”), all of which were delivered prior to June 30, 2023 and have been installed at the Odessa Facility. Because the Company is paying for the Canaan miners over time, the Company does not yet hold title to the miners. The Company paid an initial 10% deposit plus 18% of the total purchase price prior to delivery, and is required to pay monthly installment payments for the Canaan miners through November 2023, at which time title to the miners will transfer to the Company. The Company expects to fund its ongoing payment obligations for the purchase through its ongoing operations, including by selling bitcoin generated at its data centers.

Management intends to continue with the infrastructure buildout at the Odessa Facility to get the site to full capacity in support of the Company’s current business plans. Management believes that the Company’s existing financial resources, combined with projected cash and bitcoin inflows from its data centers and its intent and ability to sell bitcoin received or earned, will be sufficient to enable the Company to meet its operating and capital requirements for at least 12 months from the date these unaudited condensed consolidated financial statements are issued.

There is limited historical financial information about the Company upon which to base an evaluation of its performance. The business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in exploration and/or development, and possible cost overruns due to price and cost increases in services. The Company’s management has no current intention of entering into a merger or acquisition within the next 12 months. The Company may require additional capital to pursue certain business opportunities or respond to technological advancements, competitive dynamics or technologies, challenges, acquisitions or unforeseen circumstances. Additionally, the Company has incurred and expects to continue to incur significant costs related to operating as a public company. Accordingly, the Company may engage in equity or debt financings or enter into credit facilities for the above-mentioned or other reasons; however, the Company may not be able to timely secure additional debt or equity financings on favorable terms, if at all. If the Company raises additional funds through equity financing, its existing stockholders could experience significant dilution. Furthermore, any debt financing obtained by the Company in the future could involve restrictive covenants relating to the Company’s capital raising activities and other financial and operational matters, which may make it more difficult for the Company to obtain additional capital and to pursue business opportunities. If the Company is unable to obtain adequate financing on terms that are satisfactory to the Company, when the Company requires it, the Company’s ability to continue to grow or support the business and to respond to business challenges could be significantly limited, which may adversely affect the Company’s business plan.

Macroeconomic conditions: COVID-19 and other economic, business and political conditions

The Company’s results of operations could be adversely affected by general conditions in the global economy and in the global financial markets, including conditions that are outside of the Company’s control, such as any epidemics, pandemics or disease outbreaks or other public health conditions. For example, the COVID-19 pandemic (“COVID-19”) that was declared on March 11, 2020 has caused significant economic dislocation in the United States (“U.S.”) and globally as governments across the world, including the U.S., introduced measures aimed at preventing the spread of COVID-19. While most policies and regulations implemented by governments in response to COVID-19 have been lifted, they have had a significant impact, both directly and indirectly, on global business and commerce.

The Company may experience disruptions to its business operations resulting from supply interruptions, quarantines, self-isolations, or other movement and restrictions on the ability of its employees or its counterparties to perform their jobs. The Company may also experience delays in construction and obtaining necessary equipment in a timely fashion. If the Company is unable to effectively set up and service its miners, its ability to mine bitcoin will be adversely affected. There is no assurance that COVID-19 or any other pandemic, or other unfavorable global economic, business or political conditions, such as a rise in energy prices, a slowdown in the

U.S. or international economy, high inflation rates or other factors, will not materially and adversely affect the Company’s business, prospects, financial condition and operating results.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and principles of consolidation

The Company prepares its unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the U.S. (“GAAP”) as determined by the FASB and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”).

The unaudited condensed consolidated financial statements include the accounts of the Company and its controlled subsidiary, CMTI. All intercompany transactions and balances have been eliminated.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. The most significant estimates inherent in the preparation of the Company’s financial statements include, but are not limited to, those related to equity instruments issued in share-based compensation arrangements, valuations of its derivative asset and warrant liability under Level 3 of the fair value hierarchy, useful lives of property and equipment, the asset retirement obligation and the valuation allowance associated with the Company’s deferred tax assets, among others. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.

Unaudited condensed consolidated financial statements

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of the Company’s management, these unaudited condensed consolidated financial statements reflect all adjustments, which consist of only normal recurring adjustments necessary for the fair presentation of the balances and results for the periods presented. These unaudited condensed consolidated financial statement results are not necessarily indicative of results to be expected for the full fiscal year or any future period.

A description of the Company’s significant accounting policies is included in the Company’s 2022 Form 10-K. You should read the unaudited condensed consolidated financial statements in conjunction with the Company’s audited consolidated financial statements and accompanying notes in the Company’s 2022 Form 10-K. Except as disclosed herein, there has been no material change in the information disclosed in the notes to the Company’s audited consolidated financial statements included in the Company’s 2022 Form 10-K.

Segment information

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is comprised of several members of its executive management team. The Company views its operations and manages its business in one segment.

Net loss per share

Basic net loss per share is computed by dividing net loss allocated to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share adjusts net loss and net loss per common share for the effect of all potentially dilutive shares of Common Stock. Potential common shares consist of the Company’s outstanding public and private placement warrants to purchase Common Stock, as well as unvested restricted stock units (“RSUs”). Basic net loss per common share is the same as dilutive net loss per common share for all periods presented as the inclusion of all potential common shares would have been antidilutive.

The following table presents the common shares that are excluded from the computation of diluted net loss per common share at June 30, 2023 and 2022, because including them would have been antidilutive.

	June 30,
	2023		2022
Public warrants		8,499,980		8,499,980
Private placement warrants		114,000		114,000
Unvested RSUs		23,134,869		12,975,614
		31,748,849		21,589,594

Recently issued and adopted accounting pronouncements

In June 2016, the FASB issued Accounting Standards Update ASU No. 2016‑13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which was codified with its subsequent amendments as ASC Topic 326, Financial Instruments – Credit Losses (“ASC 326”). ASC 326 seeks to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments, including trade receivables, and other commitments to extend credit held by a reporting entity at each reporting date. The amendments require an entity to replace the incurred loss impairment methodology in other GAAP with a methodology that reflects current expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The adoption of this guidance on January 1, 2023 did not have a material impact on the Company’s unaudited condensed consolidated financial statements and disclosures.

The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes to determine the consequences of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financial statements properly reflect the change. The Company reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on its condensed consolidated financial statements.

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Bitcoin

6 Months Ended

Jun. 30, 2023

CryptocurrenciesAbstract

Bitcoin

NOTE 3. BITCOIN

The following table presents information about the Company’s bitcoin (in thousands):

Balance as of January 1, 2023	$	6,283
Bitcoin received from equity investees		317
Revenue recognized from bitcoin mined, net of receivable		52,836
Proceeds from sale of bitcoin, net of realized gain		(44,267	)
Impairment of bitcoin		(4,633	)
Balance as of June 30, 2023	$	10,536

The fair value of the Company’s bitcoin as of June 30, 2023 was approximately $12.3 million and was estimated using the closing price of bitcoin, which is a Level 1 input (i.e., an observable input such as a quoted price in an active market for an identical asset).

During the three and six months ended June 30, 2023, the Company recorded impairment charges on its bitcoin holdings of approximately $2.8 million and $4.6 million, respectively. Impairment charges were approximately $0.5 million for both the three and six months ended June 30, 2022.

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Derivative Asset

6 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Asset

NOTE 4. DERIVATIVE ASSET

Luminant Power Agreement

On June 23, 2021, the Company entered into a power purchase agreement with Luminant ET Services Company LLC (“Luminant”), which was subsequently amended and restated on July 9, 2021, and further amended on February 28, 2022 and August 26, 2022 (as amended, the “Luminant Power Agreement”), for the supply of a fixed amount of electric power to the Odessa Facility at a fixed price for a term of five years, subject to certain early termination exemptions. The Luminant Power Agreement provides for a subsequent automatic annual renewal unless either party provides written notice to the other party of its intent to terminate the agreement at least six months prior to the expiration of the then current term. Starting from July 1, 2022, and prior to the receipt of interconnection

approval from the Electric Reliability Council of Texas (“ERCOT”), under the take or pay framework of the Luminant Power Agreement and pursuant to the ramp-up schedule agreed to between Luminant and Cipher, Luminant began sales of the scheduled energy in the ERCOT market.

Because ERCOT allows for net settlement, the Company’s management determined that, as of July 1, 2022, the Luminant Power Agreement met the definition of a derivative under ASC 815, Derivatives and Hedging (“ASC 815”). Because the Company has the ability to sell its electricity in the ERCOT market rather than take physical delivery, physical delivery is not probable through the entirety of the contract and therefore, the Company’s management does not believe the normal purchases and normal sales scope exception applies to the Luminant Power Agreement. Accordingly, the Luminant Power Agreement (the non-hedging derivative contract) is recorded at its estimated fair value each reporting period with the change in the fair value recorded in change in fair value of derivative asset in the consolidated statements of operations. See additional information regarding valuation of the Luminant Power Agreement derivative in Note 16. Fair Value Measurements.

Depending on the spot market price of electricity, the Company may opportunistically sell electricity in the ERCOT market in exchange for cash payments, rather than utilizing the power to mine for bitcoin at the Odessa Facility during peak times in order to most efficiently manage the Company’s operating costs. The Company earned approximately $5.7 million and $5.7 million, respectively from power sales for the three and six months ended June 30, 2023, and recorded this amount in power sales within costs and operating expenses (income) on the unaudited condensed consolidated statement of operations, with the corresponding cost of the power sold recorded in cost of revenue. See Note 1. Organization for information regarding the out-of-period adjustments recorded during the six months ended June 30, 2023, which affected cost of power, power sales, net operating loss and net loss on the Company’s unaudited condensed consolidated statement of operations.

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Property and Equipment

6 Months Ended

Jun. 30, 2023

Property, Plant and Equipment [Abstract]

Property and Equipment

NOTE 5. PROPERTY AND EQUIPMENT

Property and equipment, net consisted of the following (in thousands):

	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

During the six months ended June 30, 2023 and 2022, the Company placed approximately $34.4 million and nil, respectively, of construction-in-progress into service at the Odessa Facility. Depreciation expense was approximately $14.4 million and $26.1 million, respectively, for the three and six months ended June 30, 2023 and included approximately $0.4 million and $0.9 million, respectively, of accretion expense related to the Company’s asset retirement obligation. Depreciation expense was immaterial for the three and six months ended June 30, 2022.

During the first quarter of fiscal 2023, the Company received the remaining 17,094 MicroBT M30S, M30S+ and M30S++ miners (“MicroBT miners”) related to the framework agreement of September 2021 with SuperAcme Technology (Hong Kong) Limited (“SuperAcme”), which was amended and restated by the Amended and Restated Framework Agreement on Supply of Blockchain Servers (the “Amended and Restated Framework Agreement”), dated as of May 6, 2022, and subject to the Supplementary Agreement of the Framework Agreement on Supply of Blockchain Servers (the “Supplementary Agreement). These MicroBT miners received during the first quarter of fiscal 2023 had an aggregate cost of approximately $50.7 million and were purchased by the Company at the new fixed and floating price terms set forth in the Supplementary Agreement. The Company also received 4,622 Antminer S19j Pro (100 TH/s) (“S19j Pro”) miners from Bitmain with a cost basis of approximately $1.6 million during the first quarter of fiscal 2023. As of June 30, 2023, the Company had a total of 35,117 MicroBT miners, 14,907 S19j Pro miners and 11,000 Canaan A1346 model miners for a total of 61,024 miners at its Odessa Facility. See additional information regarding the Canaan miners in Note 1. Organization and Note 11. Leases.

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Deposits on Equipment

6 Months Ended

Jun. 30, 2023

Disclosure Deposits On Equipment [Abstract]

Deposits on Equipment

NOTE 6. DEPOSITS ON EQUIPMENT

In November and December 2022, the Company agreed to purchase 5,000 and 2,200, respectively, S19j Pro miners from Bitmain. The Company utilized accumulated Bitmain credits and coupons for the majority of the purchase price for these miners and has no further payments due in respect of these orders. Information regarding the quantity of Bitmain miners received pursuant to these agreements during the six months ended June 30, 2023 is disclosed in Note 5. Property and Equipment. As of June 30, 2023, the Company did not have material open purchase agreement commitments.

As of June 30, 2023, deposits on equipment was $1.7 million, primarily related to shipping costs and peripheral cables associated with the equipment from the Canaan Agreement described in Note 1. Organization and further in Note 11. Leases.

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Security Deposits

6 Months Ended

Jun. 30, 2023

Deposit Assets Disclosure [Abstract]

Security Deposits

NOTE 8. SECURITY DEPOSITS

The Company’s security deposits consisted of the following (in thousands):

	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

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Supplemental Financial Information

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Supplemental financial information

NOTE 9. SUPPLEMENTAL FINANCIAL INFORMATION

As of June 30, 2023 and December 31, 2022, the Company had approximately $2.3 million and $7.3 million, respectively, of prepaid expenses and other current assets, which was primarily related to prepaid insurance other than approximately $1.2 million of bitcoin temporarily held for the Company’s joint venture partner, WindHQ LLC (“WindHQ”), as of December 31, 2022.

The Company’s accrued expenses and other current liabilities consisted of the following (in thousands):

	June 30, 2023		December 31, 2022
Taxes (primarily sales tax)	$	12,929	$	18,798
Power costs		3,374		-
Finance lease (1)		2,373		339
Legal settlement (2)		2,000		-
Employee compensation		1,045		-
Legal fees		376		215
Other		649		1
Total accrued expenses and other current liabilities	$	22,746	$	19,353

__________

(1) See Note 11. Leases for additional information regarding the Company’s finance leases.

(2) See Note 12. Commitments and Contingencies for additional information regarding the legal settlement accrual as of June 30, 2023.

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Investment in Equity Investees

6 Months Ended

Jun. 30, 2023

Equity Method Investments and Joint Ventures [Abstract]

Investment in Equity Investees

NOTE 7. INVESTMENTS IN EQUITY INVESTEES

The Company uses the equity method of accounting to account for its 49% equity interest in its partially owned mining operations Alborz LLC, Bear LLC and Chief, LLC (the “Data Center LLCs”). The Company recognized a total of approximately $1.4 million and $2.2 million of net losses in equity in losses of equity investees within the condensed consolidated statements of operations during the three and six months ended June 30, 2023, respectively, and $12.1 million and $12.2 million of net losses in equity in losses of equity investees during the three and six months ended June 30, 2022, respectively. Cryptocurrency mining operations for the Data Center LLCs consisted only of minimal activity at the Alborz Facility for the six months ended June 30, 2022.

During fiscal year 2022, the Company contributed miners and mining equipment to the Alborz, Bear and Chief Facilities. The majority of these contributed miners had a fair value that was lower than the cost paid by the Company to obtain them, and the Company recognized losses at the time of the contributions, resulting in basis differences related to the Company’s investments in Alborz LLC, Bear LLC and Chief LLC, all of which recorded the contributions of equipment from the Company at the historical cost paid by the Company to obtain the equipment. As Alborz LLC, Bear LLC and Chief LLC depreciate the historical cost of these miners on their respective financial statements over the expected depreciation period of five years, the Company accretes these basis differences over the same period and records the accretion amount for each reporting period within equity in losses of equity investees on its statements of operations until these miners are fully depreciated and the corresponding basis differences are fully accreted. As of June 30, 2023, the Company had remaining basis differences totaling approximately $28.1 million that have not yet been accreted. Accretion recorded by the Company during the six months ended June 30, 2023 is shown in the table below and was recorded within equity in losses of equity investees on the statement of operations.

Activity in the Company’s investments in equity investees during the six months ended June 30, 2023 consisted of the following (in thousands):

Balance as of January 1, 2023	$	37,478
Cost of miners and mining equipment contributed		1,925
Accretion of basis differences related to miner contributions		3,340
Capital distributions		(3,807	)
Bitcoin received from equity investees		(317	)
Equity in net losses of equity investees		(5,521	)
Balance as of June 30, 2023	$	33,098

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Related Party Transactions

6 Months Ended

Jun. 30, 2023

Related Party Transactions [Abstract]

Related Party Transactions

NOTE 10. RELATED PARTY TRANSACTIONS

Related party receivables

The Company recorded related party receivables of approximately $1.6 million and $1.1 million as of June 30, 2023 and December 31, 2022, respectively, related to expenses paid on behalf of the Data Center LLCs for which it expects to be reimbursed.

Purchase commitments, deposits on equipment and related party payables

The Company entered into two agreements with Bitfury USA Inc. (“Bitfury USA”), made under, and as a part of, the Master Services and Supply Agreement to purchase BBACs. Additionally, Bitfury USA contracted with third-party vendors for the purchase of equipment and the receipt of services related to Cipher’s future mining operations. Pursuant to one of these arrangements between Bitfury USA and a third-party vendor, Paradigm Controls of Texas, LLC (“Paradigm”), the Company made payments directly to Paradigm in place of Bitfury USA, in respect of manufacturing services for BBACs, totaling approximately $5.8 million during the six months ended June 30, 2023 and the Company’s obligations to Bitfury USA under the Master Services and Supply Agreement were reduced by the same amount.

As of December 31, 2022, in relation to the Company assisting WindHQ with the liquidation of some of WindHQ’s bitcoin holdings, the Company had approximately $1.2 million of bitcoin and approximately $0.3 million of proceeds received, but not yet transferred to WindHQ, respectively, recorded in accounts payable, related party on its consolidated balance sheet. During the six months ended June 30, 2023, all of the bitcoin held by the Company on behalf of WindHQ was liquidated and all proceeds received from the liquidation were forwarded to WindHQ, leaving no remaining amount payable to WindHQ in accounts payable, related party as of June 30, 2023 on the Company’s unaudited condensed consolidated balance sheet.

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Leases

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Leases

NOTE 11. LEASES

Combined Luminant Lease Agreement

The Company entered into a series of agreements with affiliates of Luminant, including the Lease Agreement dated June 29, 2021, with amendment and restatement on July 9, 2021 (as amended and restated, the “Luminant Lease Agreement”). The Luminant Lease Agreement leases a plot of land to the Company for the data center, ancillary infrastructure and electrical system (the “Interconnection Electrical Facilities” or “substation”) of the Odessa Facility. The Company entered into the Luminant Lease Agreement and the

Luminant Purchase and Sale Agreement to build the infrastructure necessary to support its Odessa Facility operations. The Company determined that the Luminant Lease Agreement and the Luminant Purchase and Sale Agreement should be combined for accounting purposes under ASC 842 (collectively, the “Combined Luminant Lease Agreement”) and that amounts exchanged under the combined contract should be allocated to the various components of the overall transaction based on relative fair values.

The Company’s management determined that the Combined Luminant Lease Agreement contains two lease components; and the components should be accounted for together as a single lease component, because the effect of accounting for the land lease separately would be insignificant. Financing for use of the land and substation is provided by Luminant affiliates, with monthly installments of principal and interest due over a five-year period starting upon transfer of legal title of the substation to the Company (estimated total undiscounted principal payments of $15.0 million).

The Combined Luminant Lease Agreement commenced on November 22, 2022 and has an initial term of five years, with renewal provisions that are aligned with the Luminant Power Agreement. Despite lease commencement in November 2022, the Company has not been required by Luminant to make any lease payments for the substation, therefore the Company is continuing to accrue amounts due under the Combined Luminant Lease Agreement in accrued expenses and other current liabilities on its unaudited condensed consolidated balance sheet. The Company expects to begin making monthly lease payments in August 2023. At the end of the lease term for the Interconnection Electrical Facilities, the substation will be sold back to Luminant’s affiliate, Vistra Operations Company, LLC at a price to be determined based upon bids obtained in the secondary market.

Canaan Agreement

As described in Note 1. Organization, the Company entered into the Canaan Agreement to purchase 11,000 new A1346 model miners, all of which were received prior to June 30, 2023 and have been installed at the Odessa Facility. The Company was required to pay a total of approximately $4.1 million prior to delivery of the miners. The Company will also make six monthly installment payments of approximately $1.7 million each month, through November 2023, at which time the Company will obtain title to the miners. The Company determined that the Canaan Agreement contains embedded leases as defined in ASC 842, one for each batch of miners delivered. Based on the terms of the arrangement and intent of the parties, the Company has classified the leases of the Canaan miners as finance leases. Each lease commences upon delivery of the associated batch, as the delivery date represents the date upon which the Company obtains the right to use the assets for a period of time in exchange for consideration. As a result of all 11,000 miners being delivered to the Company in June 2023, the Company determined there will effectively be a single lease commencement date for all of the underlying right-of-use assets. The lease term for the Canaan miners will be six months, aligning with the final payment and title transfer date. Upon title transfer, the Company will continue depreciating the residual value of the miners over their remaining useful life.

Office headquarters lease

The Company entered into an operating lease for office space located in New York. The lease has an initial term of 64 months and commenced on February 1, 2022. The lease does not provide the Company with renewal options.

Additional lease information

Components of the Company’s lease expenses are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Finance leases:
Amortization of ROU assets (1)	$	1,027	$	-	$	1,816	$	-
Interest on lease liability		477		-		878		-
Total finance lease expense		1,504		-		2,694		-
Operating leases:
Operating lease expense		467		371		921		618
Variable lease cost		-		-		-		-
Total operating lease expense		467		371		921		618
Total lease expense	$	1,971	$	371	$	3,615	$	618

__________

(1) Amortization of finance lease ROU assets is included within depreciation expense.

The Company did not incur any variable lease costs during any of the periods presented.

Other information related to the Company’s leases is shown below (dollar amounts in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Operating cash flows - operating lease	$	396	$	-	$	791	$	-
Right-of-use assets obtained in exchange for operating lease liabilities	$	-	$	-	$	-	$	5,859

	June 30, 2023			December 31, 2022
Weighted-average remaining lease term – finance lease (in years)		2.7			4.7
Weighted-average remaining lease term – operating lease (in years)		3.9			4.4
Weighted-average discount rate – finance lease		11.0	%		11.0	%
Weighted-average discount rate – operating lease		10.9	%		10.9	%
Finance lease ROU assets (1)	$	26,868		$	14,471

__________

(1) As of June 30, 2023 and December 31, 2022, the Company had recorded accumulated amortization of approximately $2.3 million and $0.5 million, respectively, for the finance lease ROU assets. Finance lease ROU assets are recorded within property and equipment, net on the Company’s consolidated balance sheets.

As of June 30, 2023, future minimum lease payments during the next five years are as follows (in thousands):

	Finance Lease			Operating Lease			Total
Remaining Period Ended December 31, 2023	$	10,511		$	790		$	11,301
Year Ended December 31, 2024		4,068			1,581			5,649
Year Ended December 31, 2025		4,068			1,581			5,649
Year Ended December 31, 2026		4,068			1,581			5,649
Year Ended December 31, 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

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 12. COMMITMENTS AND CONTINGENCIES

Commitments

In the normal course of business, the Company enters into contracts that contain a variety of indemnifications with its employees, licensors, suppliers and service providers. The Company’s maximum exposure under these arrangements, if any, is unknown as of June 30, 2023. The Company does not anticipate recognizing any significant losses relating to these arrangements.

Contingencies

The Company, and its subsidiaries, are subject at times to various claims, lawsuits and governmental proceedings relating to the Company’s business and transactions arising in the ordinary course of business. The Company cannot predict the final outcome of such proceedings. Where appropriate, the Company vigorously defends such claims, lawsuits and proceedings. Some of these claims, lawsuits and proceedings seek damages, including consequential, exemplary or punitive damages, in amounts that could, if awarded, be significant. Certain of the claims, lawsuits and proceedings arising in the ordinary course of business are covered by the Company’s insurance program. The Company maintains property and various types of liability insurance in an effort to protect the Company from such claims. In terms of any matters where there is no insurance coverage available to the Company, or where coverage is available and the Company maintains a retention or deductible associated with such insurance, the Company may establish an accrual for such loss, retention or deductible based on current available information. In accordance with accounting guidance, if it is probable that an asset has been impaired or a liability has been incurred as of the date of the financial statements, and the amount of loss is reasonably

estimable, then an accrual for the cost to resolve or settle these claims is recorded by the Company in the accompanying unaudited condensed consolidated balance sheets. If it is reasonably possible that an asset may be impaired as of the date of the financial statements, then the Company discloses the range of possible loss. Expenses related to the defense of such claims are recorded by the Company as incurred and included in the accompanying unaudited condensed consolidated statements of operations. Management, with the assistance of outside counsel, may from time to time adjust such accruals according to new developments in the matter, court rulings, or changes in the strategy affecting the Company’s defense of such matters. On the basis of current information, the Company does not believe there is a reasonable possibility that a material loss, if any, will result from any claims, lawsuits and proceedings to which the Company is subject to either individually, or in the aggregate.

Luminant Power Agreement

On November 18, 2022, Luminant filed suit against CMTI in the 95th District Court of Dallas County, Texas, asserting Texas state law claims for declaratory judgment and “money had and received”, seeking recoupment and return of money previously paid by Luminant to CMTI in connection with Luminant’s (and its affiliates’) construction and energization of Cipher’s bitcoin mining data center in Odessa, Texas. These prior payments were (i) the sum of $5.1 million paid to CMTI in September 2022 pursuant to a contractual provision requiring such payment in the parties’ written and executed August 25, 2022 Third Amendment to the Luminant Power Agreement, and (ii) the sum of $1.7 million also paid to CMTI in September 2022, as agreed by the parties, for electrical power sold by Luminant for CMTI’s benefit into the open market prior to the final energization of the Company’s facility. Luminant contends that such payments were mistaken because, although voluntarily made by Luminant, they were not actually due under the terms of the Luminant Power Agreement, as amended. The Company filed its answer on January 17, 2023, denying any liability to Luminant. Cipher has not received payment from Luminant for electricity sold in the ERCOT market in September 2022 and October 2022.

The Company wholly disputes the claims made by Luminant and intends to contest the case vigorously. The parties have exchanged basic discovery disclosures, and discovery and motion practice have not substantively commenced. An initial trial date has been set. The parties continue to discuss a potential resolution and, while the Company does not yet know how or when this matter will be resolved, it has established a $2.0 million accrual for the cost of resolving the claims.

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Stockholders' Equity

6 Months Ended

Jun. 30, 2023

Stockholders' Equity Note [Abstract]

Stockholders' Equity

NOTE 13. STOCKHOLDERS’ EQUITY

As of June 30, 2023, 510,000,000 shares with a par value of $0.001 per share are authorized, of which, 500,000,000 shares are designated as Common Stock and 10,000,000 shares are designated as preferred stock (“Preferred Stock”).

Common Stock

Holders of each share of Common Stock are entitled to dividends when, as and if declared by the Board. As of the issuance of these unaudited condensed consolidated financial statements, the Company had not declared any dividends. The holder of each share of Common Stock is entitled to one vote. The voting, dividend, liquidation and other rights and powers of the Common Stock are subject to and qualified by the rights, powers and preferences of any outstanding series of Preferred Stock, for which there currently are none outstanding.

During the six months ended June 30, 2023, the Company issued 2,473,759 shares of Common Stock to officers, employees and consultants in settlement of an equal number of fully vested RSUs awarded to these individuals, and 248,358 shares of Common Stock to directors, pursuant to grants made under the Cipher Mining Inc. 2021 Incentive Award Plan (the “Incentive Award Plan”). The Company immediately repurchased 838,388 of these shares of Common Stock from officers and employees, with a fair value of approximately $1.1 million, to cover taxes related to the settlement of vested RSUs, as permitted by the Incentive Award Plan. The Company placed the repurchased shares in treasury stock.

At-the-Market Sales Agreement

On September 21, 2022, the Company filed with the SEC a shelf registration statement on Form S-3, which was declared effective on October 6, 2022 (the “Registration Statement”). In connection with the filing of the Registration Statement, the Company also entered into an at the market offering agreement (the “Prior Sales Agreement”) with H.C. Wainwright & Co., LLC (the “Prior Agent”), under which the Company may, from time to time, sell shares of its Common Stock having an aggregate offering price of up to $250.0 million in “at the market” offerings through the Prior Agent. During the six months ended June 30, 2023, in connection with the Prior Sales Agreement, the Company received proceeds of approximately $2.7 million, net of issuance costs, from the sale of

978,207 shares of common stock, with an average fair value of $2.78 per share. Effective August 1, 2023, the Company terminated the Prior Sales Agreement. On August 3, 2023, the Company entered into a Controlled Equity OfferingSM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co., Canaccord Genuity LLC, Needham & Company, LLC and Compass Point Research & Trading, LLC. See Note 18. Subsequent Events for additional information related to the Sales Agreement.

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Warrants

6 Months Ended

Jun. 30, 2023

Warrants and Rights Note Disclosure [Abstract]

Warrants

NOTE 14. WARRANTS

Upon consummation of the business combination, the Company assumed Common Stock warrants that were originally issued in GWAC’s initial public offering (the “Public Warrants”), as well as warrants that were issued in a private placement that closed concurrently with GWAC’s initial public offering (the “Private Placement Warrants”). The Public and Private Placement Warrants entitle the holder to purchase one share of Common Stock at an exercise price of $11.50 per share, subject to adjustment. There were 8,499,980 Public Warrants and 114,000 Private Placement Warrants outstanding as of both June 30, 2023 and December 31, 2022. The exercise price and number of shares of Common Stock issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or the Company’s recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of shares of Common Stock at a price below their respective exercise prices. Additionally, in no event will the Company be required to net cash settle the warrants.

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Share-based Compensation

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Share-based Compensation

NOTE 15. SHARE-BASED COMPENSATION

The Incentive Award Plan provides for the grant of stock options, including incentive stock options and nonqualified stock options, stock appreciation rights, RSUs and other stock or cash-based awards to employees, consultants and directors. Upon vesting of an award, the Company may either issue new shares or reissue treasury shares.

Initially, up to 19,869,312 shares of Common Stock were available for issuance under awards granted pursuant to the Incentive Award Plan. In addition, the number of shares of Common Stock available for issuance under the Incentive Equity Plan is increased on January 1 of each calendar year beginning in 2022 and ending in 2031 by an amount equal to the lesser of (a) three percent (3%) of the total number of shares of Common Stock outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of shares determined by the Board. On January 1, 2023, this resulted in an increase of 7,426,559 shares of Common Stock available for issuance under the Incentive Award Plan. As of June 30, 2023, 5,694,657 shares of Common Stock were available for issuance under the Incentive Award Plan.

The Company recognized total share-based compensation expense in general and administrative expenses on the unaudited condensed consolidated statements of operations for the following categories of awards as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		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

Service-based RSUs

A summary of the Company’s unvested Service-based RSU activity for the six months ended June 30, 2023 is shown below:

	Number of Shares			Weighted Average Grant Date Fair Value
Unvested at January 1, 2023		14,441,044		$	3.96
Granted		6,909,873		$	2.25
Vested		(2,473,758	)	$	5.91
Unvested at June 30, 2023		18,877,159		$	3.08

As of June 30, 2023, there was approximately $32.7 million of unrecognized compensation expense related to unvested Service-based RSUs, which is expected to be recognized over a weighted-average vesting period of approximately 1.6 years.

If not fully vested upon grant, Service-based RSUs awarded generally vest over a period ranging from two to four years in equal installments on the award’s anniversary of the vesting commencement date, which will generally coincide with the timing when the employee or consultant began to provide services to the Company, as determined by the Board, and which may precede the grant date. Vesting is subject to the award recipient’s continuous service on the applicable vesting date; provided, that if the award recipient’s employment is terminated by the Company without “cause”, by award recipient for “good reason” (if applicable, as such term or similar term may be defined in any employment, consulting or similar service agreement between award recipient and the Company) or due to award recipient’s death or permanent disability, all unvested Service-based RSUs will vest in full. In addition, in the event of a change in control, any unvested Service-based RSUs will vest subject to the award recipient’s continuous service to the Company through such change in control. In addition, if the Company achieves a $10 billion market capitalization milestone (described further below) and the Chief Executive Officer (“CEO”) remains in continuous service through such achievement, any then-unvested Service-based RSUs awarded to the CEO will also vest.

Performance-based RSUs

There was no new activity for unvested Performance-based RSUs during the six months ended June 30, 2023 There were 4,257,710 unvested Performance-based RSUs with a weighted average grant date fair value of $7.76 as of both June 30, 2023 and December 31, 2022. As of June 30, 2023, there was approximately $11.1 million of unrecognized compensation expense related to unvested Performance-based RSUs, which is expected to be recognized over a weighted-average derived service period of approximately 0.9 years.

One-third of the outstanding Performance-based RSUs will vest upon the Company achieving a market capitalization equal to or exceeding $5 billion, $7.5 billion and $10 billion, in each case over a 30-day lookback period and subject to the CEO’s continuous service through the end of the applicable 30-day period. In the event of a change in control and CEO’s continuous service through such change in control, the per share price (plus the per share value of any other consideration) received by the Company’s stockholders in such change in control will be used to determine whether any of the market capitalization milestones are achieved (without regard to the 30-day lookback period). Any Performance-based RSUs that do not vest prior to the CEO’s termination of service or, if earlier, in connection with a change in control will be forfeited for no consideration.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

NOTE 16. FAIR VALUE MEASUREMENTS

The Company’s financial assets and liabilities subject to fair value measurement on a recurring basis and the level of inputs used for such measurements were as follows as of the dates indicated (in thousands):

	Fair Value Measured as of June 30, 2023
	Level 1		Level 2		Level 3		Total
Assets included in:
Cash and cash equivalents
Money market securities	$	175	$	-	$	-	$	175
Accounts receivable		380		-		-		380
Derivative asset		-		-		75,252		75,252
	$	555	$	-	$	75,252	$	75,807
Liabilities included in:
Warrant liability	$	-	$	-	$	66	$	66
	$	-	$	-	$	66	$	66

	Fair Value Measured as of December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets included in:
Cash and cash equivalents
Money market securities	$	10,943	$	-	$	-	$	10,943
Accounts receivable		98		-		-		98
Derivative asset		-		-		66,702		66,702
	$	11,041	$	-	$	66,702	$	77,743
Liabilities included in:
Warrant liability	$	-	$	-	$	7	$	7
	$	-	$	-	$	7	$	7

The carrying values reported in the Company’s consolidated balance sheets for cash (excluding cash equivalents which are recorded at fair value on a recurring basis), accounts payable and accrued expenses and other current liabilities are reasonable estimates of their fair values due to the short-term nature of these items.

There were no transfers of financial instruments between Level 1, Level 2 and Level 3 during the periods presented.

Level 3 asset

The Company’s derivative asset, related to the Luminant Power Agreement, is divided between current and noncurrent assets, and was initially recorded on its unaudited condensed consolidated balance sheets on the derivative asset’s effective date of July 1, 2022, with an offsetting amount recorded to change in fair value of derivative asset in costs and operating expenses on the unaudited condensed consolidated statements of operations. Subsequent changes in fair value are also recorded to change in fair value of derivative asset. The Luminant Power Agreement was not designated as a hedging instrument. The estimated fair value of the Company’s derivative asset was derived from Level 2 and Level 3 inputs (i.e., unobservable inputs) due to a lack of quoted prices for similar type assets and as such, is classified in Level 3 of the fair value hierarchy. Specifically, the discounted cash flow estimation models contain quoted spot and forward prices for electricity, as well as estimated usage rates consistent with the terms of the Luminant Power Agreement, which has a remaining term of approximately 4.0 years. The valuations performed by the third-party valuation firm engaged by the Company utilized pre-tax discount rates of 6.94% and 6.83% as of June 30, 2023 and December 31, 2022, respectively, and include observable market inputs, but also include unobservable inputs based on qualitative judgment related to company-specific risk factors. Unrealized gains associated with the derivative asset within the Level 3 category include changes in fair value that were attributable to changes to the quoted forward electricity rates, as well as unobservable inputs (e.g., changes in estimated usage rates and discount rate assumptions).

The following table presents the changes in the estimated fair value of the derivative asset measured using significant unobservable inputs (Level 3) for the six months ended June 30, 2023 (in thousands):

Balance as of January 1, 2023	$	66,702
Change in fair value		8,549
Balance as of June 30, 2023	$	75,251

Level 3 liability

The Company’s Private Placement Warrants (as defined in Note 14. Warrants) are its only liability classified within Level 3 of the fair value hierarchy because the fair value is based on significant inputs that are unobservable in the market. The valuation of the Private Placement Warrants uses assumptions and estimates the Company believes would be made by a market participant in making the same valuation. The Company assesses these assumptions and estimates on an on-going basis as additional data impacting the assumptions and estimates are obtained.

The Company engaged a valuation firm to determine the fair value of the Private Placement Warrants using a Black-Scholes option-pricing model and the quoted price of its Common Stock. The following table presents significant assumptions utilized in the valuations of the Private Placement Warrants as of the dates indicated:

	June 30, 2023			December 31, 2022
Risk-free rate		4.36	%		4.06	%
Dividend yield rate		0.00	%		0.00	%
Volatility		74.7	%		90.0	%
Contractual term (in years)		3.2			3.7
Exercise price	$	11.50		$	11.50

The following table presents changes in the estimated fair value of the Private Placement Warrants for the six months ended June 30, 2023 (in thousands):

Balance as of January 1, 2023	$	7
Change in fair value		59
Balance as of June 30, 2023	$	66

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Income Taxes

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 17. INCOME TAXES

The determination of income tax expense in the unaudited condensed consolidated statements of operations is based upon the estimated effective tax rate for the year, adjusted for the impact of any discrete items which are accounted for in the period in which they occur. The Company recorded income tax expense of approximately 3.7% and nil of loss before taxes for each of the six months ended June 30, 2023 and 2022, respectively.

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Subsequent Events

6 Months Ended

Jun. 30, 2023

Subsequent Events [Abstract]

Subsequent Events

NOTE 18. SUBSEQUENT EVENTS

At-the-Market Sales Agreement

On August 3, 2023, the Company entered into a Controlled Equity OfferingSM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co., Canaccord Genuity LLC, Needham & Company, LLC and Compass Point Research & Trading, LLC (each, an “Agent” and, together, the “Agents”), pursuant to which the Company may offer and sell, from time to time through or to the Agents, shares of its Common Stock, for aggregate gross proceeds of up to $250.0 million (the “Shares”). The offering and sale of up to $250.0 million of the Shares has been registered under the Registration Statement, the base prospectus contained within the Registration Statement, and a prospectus supplement that was filed with the SEC on August 4, 2023 (the “Prospectus Supplement”).

Pursuant to the Sales Agreement, the Agent selected by the Company (such Agent, the “Designated Agent”) may sell the Shares in sales deemed to be “at the market offerings” as defined in Rule 415(a)(4) promulgated under the Securities Act. The Company has no obligation to sell any of the Shares under the Sales Agreement and may at any time suspend or terminate the offering of the Shares pursuant to the Sales Agreement upon notice and subject to other conditions. The Agents will act as sales agents and will use commercially reasonable efforts to sell on the Company’s behalf all of the Shares requested to be sold by it, on mutually agreed terms between the Agents and the Company. Under the terms of the Sales Agreement, the Company agreed to pay the Designated Agent a commission up to 3.0% of the aggregate gross proceeds from any Shares sold through such Designated Agent pursuant to the Sales Agreement. In addition, the Company agreed to reimburse certain expenses incurred by the Agents in connection with the Sales Agreement.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Basis of Presentation and Principles of Consolidation

Basis of presentation and principles of consolidation

The Company prepares its unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the U.S. (“GAAP”) as determined by the FASB and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”).

The unaudited condensed consolidated financial statements include the accounts of the Company and its controlled subsidiary, CMTI. All intercompany transactions and balances have been eliminated.

Use of Estimates

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. The most significant estimates inherent in the preparation of the Company’s financial statements include, but are not limited to, those related to equity instruments issued in share-based compensation arrangements, valuations of its derivative asset and warrant liability under Level 3 of the fair value hierarchy, useful lives of property and equipment, the asset retirement obligation and the valuation allowance associated with the Company’s deferred tax assets, among others. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.

Unaudited Interim Condensed Consolidated Financial Statements

Unaudited condensed consolidated financial statements

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of the Company’s management, these unaudited condensed consolidated financial statements reflect all adjustments, which consist of only normal recurring adjustments necessary for the fair presentation of the balances and results for the periods presented. These unaudited condensed consolidated financial statement results are not necessarily indicative of results to be expected for the full fiscal year or any future period.

A description of the Company’s significant accounting policies is included in the Company’s 2022 Form 10-K. You should read the unaudited condensed consolidated financial statements in conjunction with the Company’s audited consolidated financial statements and accompanying notes in the Company’s 2022 Form 10-K. Except as disclosed herein, there has been no material change in the information disclosed in the notes to the Company’s audited consolidated financial statements included in the Company’s 2022 Form 10-K.

Segment information

Segment information

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is comprised of several members of its executive management team. The Company views its operations and manages its business in one segment.

Net loss per share

Net loss per share

Basic net loss per share is computed by dividing net loss allocated to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share adjusts net loss and net loss per common share for the effect of all potentially dilutive shares of Common Stock. Potential common shares consist of the Company’s outstanding public and private placement warrants to purchase Common Stock, as well as unvested restricted stock units (“RSUs”). Basic net loss per common share is the same as dilutive net loss per common share for all periods presented as the inclusion of all potential common shares would have been antidilutive.

The following table presents the common shares that are excluded from the computation of diluted net loss per common share at June 30, 2023 and 2022, because including them would have been antidilutive.

	June 30,
	2023		2022
Public warrants		8,499,980		8,499,980
Private placement warrants		114,000		114,000
Unvested RSUs		23,134,869		12,975,614
		31,748,849		21,589,594

Recently Issued and Adopted Accounting Pronouncements

Recently issued and adopted accounting pronouncements

In June 2016, the FASB issued Accounting Standards Update ASU No. 2016‑13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which was codified with its subsequent amendments as ASC Topic 326, Financial Instruments – Credit Losses (“ASC 326”). ASC 326 seeks to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments, including trade receivables, and other commitments to extend credit held by a reporting entity at each reporting date. The amendments require an entity to replace the incurred loss impairment methodology in other GAAP with a methodology that reflects current expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The adoption of this guidance on January 1, 2023 did not have a material impact on the Company’s unaudited condensed consolidated financial statements and disclosures.

The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes to determine the consequences of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financial statements properly reflect the change. The Company reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on its condensed consolidated financial statements.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Computation of Diluted Net Income (Loss) Per Common Share

The following table presents the common shares that are excluded from the computation of diluted net loss per common share at June 30, 2023 and 2022, because including them would have been antidilutive.

	June 30,
	2023		2022
Public warrants		8,499,980		8,499,980
Private placement warrants		114,000		114,000
Unvested RSUs		23,134,869		12,975,614
		31,748,849		21,589,594

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Bitcoin (Tables)

6 Months Ended

Jun. 30, 2023

CryptocurrenciesAbstract

Schedule of Bitcoin

The following table presents information about the Company’s bitcoin (in thousands):

Balance as of January 1, 2023	$	6,283
Bitcoin received from equity investees		317
Revenue recognized from bitcoin mined, net of receivable		52,836
Proceeds from sale of bitcoin, net of realized gain		(44,267	)
Impairment of bitcoin		(4,633	)
Balance as of June 30, 2023	$	10,536

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Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2023

Property, Plant and Equipment [Abstract]

Summary of Property and Equipment

Property and equipment, net consisted of the following (in thousands):

	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

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Security Deposits (Tables)

6 Months Ended

Jun. 30, 2023

Deposit Assets Disclosure [Abstract]

Schedule Of security deposits consisted

	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

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Supplemental Financial Information (Tables)

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of accrued expenses and other current liabilities

The Company’s accrued expenses and other current liabilities consisted of the following (in thousands):

	June 30, 2023		December 31, 2022
Taxes (primarily sales tax)	$	12,929	$	18,798
Power costs		3,374		-
Finance lease (1)		2,373		339
Legal settlement (2)		2,000		-
Employee compensation		1,045		-
Legal fees		376		215
Other		649		1
Total accrued expenses and other current liabilities	$	22,746	$	19,353

__________

(1) See Note 11. Leases for additional information regarding the Company’s finance leases.

(2) See Note 12. Commitments and Contingencies for additional information regarding the legal settlement accrual as of June 30, 2023.

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Investment in Equity Investees (Tables)

6 Months Ended

Jun. 30, 2023

Equity Method Investments and Joint Ventures [Abstract]

Schedule of Activity in Investment in Equity Investee

Activity in the Company’s investments in equity investees during the six months ended June 30, 2023 consisted of the following (in thousands):

Balance as of January 1, 2023	$	37,478
Cost of miners and mining equipment contributed		1,925
Accretion of basis differences related to miner contributions		3,340
Capital distributions		(3,807	)
Bitcoin received from equity investees		(317	)
Equity in net losses of equity investees		(5,521	)
Balance as of June 30, 2023	$	33,098

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Leases (Tables)

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Schedule of Components of Lease Expenses

Components of the Company’s lease expenses are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Finance leases:
Amortization of ROU assets (1)	$	1,027	$	-	$	1,816	$	-
Interest on lease liability		477		-		878		-
Total finance lease expense		1,504		-		2,694		-
Operating leases:
Operating lease expense		467		371		921		618
Variable lease cost		-		-		-		-
Total operating lease expense		467		371		921		618
Total lease expense	$	1,971	$	371	$	3,615	$	618

__________

(1) Amortization of finance lease ROU assets is included within depreciation expense.

Schedule of Other Information Related to Leases

Other information related to the Company’s leases is shown below (dollar amounts in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Operating cash flows - operating lease	$	396	$	-	$	791	$	-
Right-of-use assets obtained in exchange for operating lease liabilities	$	-	$	-	$	-	$	5,859

	June 30, 2023			December 31, 2022
Weighted-average remaining lease term – finance lease (in years)		2.7			4.7
Weighted-average remaining lease term – operating lease (in years)		3.9			4.4
Weighted-average discount rate – finance lease		11.0	%		11.0	%
Weighted-average discount rate – operating lease		10.9	%		10.9	%
Finance lease ROU assets (1)	$	26,868		$	14,471

__________

(1) As of June 30, 2023 and December 31, 2022, the Company had recorded accumulated amortization of approximately $2.3 million and $0.5 million, respectively, for the finance lease ROU assets. Finance lease ROU assets are recorded within property and equipment, net on the Company’s consolidated balance sheets.

Schedule of Future Minimum Lease Payments

As of June 30, 2023, future minimum lease payments during the next five years are as follows (in thousands):

	Finance Lease			Operating Lease			Total
Remaining Period Ended December 31, 2023	$	10,511		$	790		$	11,301
Year Ended December 31, 2024		4,068			1,581			5,649
Year Ended December 31, 2025		4,068			1,581			5,649
Year Ended December 31, 2026		4,068			1,581			5,649
Year Ended December 31, 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

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Share-based Compensation (Tables)

6 Months Ended

Jun. 30, 2023

Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]

Schedule of Share-based Compensation Expense

The Company recognized total share-based compensation expense in general and administrative expenses on the unaudited condensed consolidated statements of operations for the following categories of awards as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		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

Service-Based RSUs

Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]

Summary of Unvested RSU Activity

A summary of the Company’s unvested Service-based RSU activity for the six months ended June 30, 2023 is shown below:

	Number of Shares			Weighted Average Grant Date Fair Value
Unvested at January 1, 2023		14,441,044		$	3.96
Granted		6,909,873		$	2.25
Vested		(2,473,758	)	$	5.91
Unvested at June 30, 2023		18,877,159		$	3.08

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Summary of Financial Assets And Liabilities Measurement on Recurring Basis

The Company’s financial assets and liabilities subject to fair value measurement on a recurring basis and the level of inputs used for such measurements were as follows as of the dates indicated (in thousands):

	Fair Value Measured as of June 30, 2023
	Level 1		Level 2		Level 3		Total
Assets included in:
Cash and cash equivalents
Money market securities	$	175	$	-	$	-	$	175
Accounts receivable		380		-		-		380
Derivative asset		-		-		75,252		75,252
	$	555	$	-	$	75,252	$	75,807
Liabilities included in:
Warrant liability	$	-	$	-	$	66	$	66
	$	-	$	-	$	66	$	66

	Fair Value Measured as of December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets included in:
Cash and cash equivalents
Money market securities	$	10,943	$	-	$	-	$	10,943
Accounts receivable		98		-		-		98
Derivative asset		-		-		66,702		66,702
	$	11,041	$	-	$	66,702	$	77,743
Liabilities included in:
Warrant liability	$	-	$	-	$	7	$	7
	$	-	$	-	$	7	$	7

Summary of Changes in the Estimated Fair Value of the Derivative Asset

The following table presents the changes in the estimated fair value of the derivative asset measured using significant unobservable inputs (Level 3) for the six months ended June 30, 2023 (in thousands):

Balance as of January 1, 2023	$	66,702
Change in fair value		8,549
Balance as of June 30, 2023	$	75,251

Summary of Assumptions Utilized in Valuations of Private Placement Warrants

The following table presents significant assumptions utilized in the valuations of the Private Placement Warrants as of the dates indicated:

	June 30, 2023			December 31, 2022
Risk-free rate		4.36	%		4.06	%
Dividend yield rate		0.00	%		0.00	%
Volatility		74.7	%		90.0	%
Contractual term (in years)		3.2			3.7
Exercise price	$	11.50		$	11.50

Summary of Change in the Fair Value of the Private Placement Warrants

The following table presents changes in the estimated fair value of the Private Placement Warrants for the six months ended June 30, 2023 (in thousands):

Balance as of January 1, 2023	$	7
Change in fair value		59
Balance as of June 30, 2023	$	66

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Net Loss Per Share (Tables)

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Schedule of Common Shares Excluded from Computation of Diluted Net Loss Per Common Share

The following table presents the common shares that are excluded from the computation of diluted net loss per common share at June 30, 2023 and 2022, because including them would have been antidilutive.

	June 30,
	2023		2022
Public warrants		8,499,980		8,499,980
Private placement warrants		114,000		114,000
Unvested RSUs		23,134,869		12,975,614
		31,748,849		21,589,594

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Organization - Additional Information (Detail)		3 Months Ended		6 Months Ended
	Aug. 04, 2023 shares	Jun. 30, 2023 USD ($) Mining $ / shares	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) DataCenters Mining $ / shares	Jun. 30, 2022 USD ($)	May 04, 2023 Miner	Mar. 31, 2023 USD ($)	Dec. 31, 2022 USD ($) $ / shares	Mar. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Common stock, par value | $ / shares		$ 0.001		$ 0.001				$ 0.001
Cost of revenue		$ 15,868,000		$ 24,009,000
Power sales		5,651,000		5,749,000
Operating loss		11,592,000	$ 29,326,000	17,761,000	$ 46,880,000
Loss before taxes		12,086,000	29,219,000	18,617,000	46,718,000
Cash flow provided by operations				24,679,000	(9,932,000)
Cash and cash equivalents		1,741,000	37,042,000	1,741,000	37,042,000			$ 11,927,000		$ 209,841,000
Working capital		3,600,000		3,600,000
Stockholders' equity		343,210,000	$ 313,339,000	343,210,000	313,339,000		$ 344,620,000	342,892,000	$ 342,494,000	$ 353,531,000
Accumulated deficit		130,511,000		130,511,000				111,209,000
Deposits on equipment				(2,932,000)	$ (156,811,000)
Deposits on equipment, primarily for miners		$ 1,675,000		$ 1,675,000				$ 73,018,000
Number of bitcoin mining data centers | DataCenters				4
Number of bitcoin wholly-owned data centers | DataCenters				1
Number of bitcoin partially owned data centers | DataCenters				3
Proceeds from sale of coupons				$ 2,300,000
Sale Of Bitcoin				2,063
Proceeds from sale of Bitcoin				52,500,000
Out-of-period-adjustments
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Cost of revenue				2,000,000
Power sales				1,600,000
Operating loss				(400,000)
Loss before taxes				(400,000)
Bitmain Technologies Limited
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Discounted coupon amount				$ 10,900,000
Coupon expiry date, month and year				2023-04
Canaan Agreement | Canaan Creative Global Pte. Ltd
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of new A1346 model miners purchased | Miner						11,000
Percentage of initial deposit paid		10.00%		10.00%
Percentage of purchase price paid		18.00%		18.00%
Odessa Facility
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Cost of equipment transferred from deposits on equipment				$ 72,100,000
Total number of miners | Mining		61,024		61,024
Alborz Facility
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of miners and other mining equipment | Mining		12,953		12,953
Bear Facility
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of miners and other mining equipment | Mining		3,254		3,254
Chief Facility
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of miners and other mining equipment | Mining		3,254		3,254
Bitfury Top HoldCo
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Ownership percentage		80.60%		80.60%
Common stock, par value | $ / shares		$ 0.001		$ 0.001
Bitfury Top HoldCo | Subsequent Event
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Common stock shares subject to lock-up | shares	129,017,513
Lock-up agreement expiration date	Aug. 27, 2023

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Summary of Significant Accounting Policies - Additional Information (Details) - ASU 2016-13	Jun. 30, 2023
Property, Plant and Equipment [Line Items]
Change in accounting principle, accounting standards update, adoption date	Jan. 01, 2023
Change in accounting principle, accounting standards update, adoption	true
Change in accounting principle, accounting standards update, immaterial effect [true false]	true

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Summary of Significant Accounting Policies - Computation of Diluted Net Income (Loss) Per Common Share (Details) - shares	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive shares excluded from computation of net loss per common share	31,748,849	21,589,594
Public Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive shares excluded from computation of net loss per common share	8,499,980	8,499,980
Private Placement Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive shares excluded from computation of net loss per common share	114,000	114,000
Unvested RSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive shares excluded from computation of net loss per common share	23,134,869	12,975,614

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Bitcoin - Schedule of Bitcoin (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Bitcoin [Abstract]
Balance as of January 1, 2023			$ 6,283
Bitcoin received from equity investees			317	$ 1,326
Revenue recognized from bitcoin mined, net of receivable			52,836
Proceeds from sale of bitcoin, net of realized gain			(44,267)
Impairment of bitcoin	$ (2,828)	$ (535)	(4,633)	$ (539)
Balance as of June 30, 2023	$ 10,536		$ 10,536

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Bitcoin - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Bitcoin [Abstract]
Fair market value of Bitcoin in level 1 input	$ 12.3		$ 12.3
Impairment charges on bitcoin	$ 2.8	$ 0.5	$ 4.6	$ 0.5

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Derivative Asset - Additional Information (Details) - Luminant Power Agreement - USD ($) $ in Millions			3 Months Ended	6 Months Ended
	Aug. 26, 2022	Feb. 28, 2022	Jun. 30, 2023	Jun. 30, 2023
Derivative Instruments, Gain (Loss) [Line Items]
Effective agreement date for scheduled amount of energy				Jul. 01, 2022
Sale of electricity back to ERCOT			$ 5.7	$ 5.7
Luminant ET Services Company LLC
Derivative Instruments, Gain (Loss) [Line Items]
Definitive power purchase agreement date				Jun. 23, 2021
Definitive power purchase agreement amendment date				Jul. 09, 2021
Definitive power purchase agreement further amendment date	Aug. 26, 2022	Feb. 28, 2022
Term of power agreement				5 years

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Property and Equipment - Summary of Property and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
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
Miners and Mining Equipment
Property, Plant and Equipment [Line Items]
Total cost of property and equipment	158,318	79,909
Leasehold Improvements
Property, Plant and Equipment [Line Items]
Total cost of property and equipment	135,209	94,807
Software
Property, Plant and Equipment [Line Items]
Total cost of property and equipment	1,054	596
Office and Computer Equipment
Property, Plant and Equipment [Line Items]
Total cost of property and equipment	279	88
Autos
Property, Plant and Equipment [Line Items]
Total cost of property and equipment	73	73
Furniture and Fixtures
Property, Plant and Equipment [Line Items]
Total cost of property and equipment	88	69
Construction in Progress
Property, Plant and Equipment [Line Items]
Total cost of property and equipment	$ 2,167	$ 20,437

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Property and Equipment - Additional Information (Details) $ in Thousands	3 Months Ended			6 Months Ended
	Jun. 30, 2023 USD ($) Miner	Mar. 31, 2023 USD ($) Miner	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) Miner	Jun. 30, 2022 USD ($)
Property, Plant and Equipment [Line Items]
Construction-in-progress placed into service | $				$ 34,400
Depreciation expense | $	$ 14,412		$ 8	26,067	$ 15
Accretion expense related to asset retirement obligation | $	$ 400			$ 900
Bitmain
Property, Plant and Equipment [Line Items]
Aggregate cost | $		$ 1,600
Number of miners deployed		4,622
SuperAcme Technology (Hong Kong) Limited
Property, Plant and Equipment [Line Items]
Aggregate cost | $		$ 50,700
Number of MicroBT miners deployed		17,094
Odessa Facility
Property, Plant and Equipment [Line Items]
Number of MicroBT miners deployed	35,117			35,117
Number of antminer pro miners deployed	14,907			14,907
Number of Canaan miners deployed	11,000			11,000
Number of miners deployed	61,024			61,024

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Deposits on Equipment - Additional Information (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($) ProMiner	Nov. 30, 2022 ProMiner
Property, Plant and Equipment [Line Items]
Deposits on equipment | $	$ 1,675	$ 73,018
Bitmain Technologies Limited
Property, Plant and Equipment [Line Items]
Description of purchase agreements	the Company agreed to purchase 5,000 and 2,200, respectively, S19j Pro miners from Bitmain. The Company utilized accumulated Bitmain credits and coupons for the majority of the purchase price for these miners and has no further payments due in respect of these orders. Information regarding the quantity of Bitmain miners received pursuant to these agreements during the six months ended June 30, 2023 is disclosed in Note 5. Property and Equipment. As of June 30, 2023, the Company did not have material open purchase agreement commitments.
Number of miners to be purchased | ProMiner		2,200	5,000

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Security Deposits - Schedule of Security Deposits Consisted (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Operating lease security deposits	$ 967	$ 960
Other deposits	1,158	1,153
Total security deposits	17,742	17,730
Luminant Power Purchase Agreement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Collateral amount	12,554	12,554
Luminant Purchase and Sale Agreement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Collateral amount	$ 3,063	$ 3,063

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Supplemental Financial Information - Additional Information (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Prepaid expenses and other current assets	$ 2,260	$ 7,254
Wind HQ
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Temporarily held cryptocurrency		$ 1,200

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Supplemental Financial Information - Schedule of Accrued Expenses And Other Current Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Accrued Expenses And Other Current Liabilities [Abstract]
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

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Investment in Equity Investees - Additional Information (Details) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($) Mining	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) Mining	Jun. 30, 2022 USD ($)
Schedule of Equity Method Investments [Line Items]
Remaining Basis Differences Not Yet Been Accreted	$ 28.1		$ 28.1
Alborz Facility
Schedule of Equity Method Investments [Line Items]
Number of miners and other mining equipment | Mining	12,953		12,953
Alborz, Bear & Chief Equity Investees
Schedule of Equity Method Investments [Line Items]
Company's share of equity method investment loss	$ (1.4)	$ (12.1)	$ (2.2)	$ (12.2)
Alborz, Bear and Chief Joint Ventures | Miners and Mining Equipment
Schedule of Equity Method Investments [Line Items]
Estimated useful lives of assets	5 years		5 years
Initial Data Center LLC
Schedule of Equity Method Investments [Line Items]
Percentage of interest in joint venture			49.00%

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Investment in Equity Investees - Schedule of Activity in Investment in Equity Investee (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Equity Method Investments and Joint Ventures [Abstract]
Balance, January 1, 2023	$ 37,478
Cost of miners and mining equipment contributed	1,925
Accretion of basis differences related to miner contributions	3,340
Capital distributions	(3,807)	$ (10,065)
Bitcoin received from equity investees	(317)	$ (1,326)
Equity in net loss of equity investee	(5,521)
Balance as of June 30, 2023	$ 33,098

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Related Party Transactions - Additional Information (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Related Party Transaction [Line Items]
Bitcoin	$ 10,536	$ 6,283
Bitfury USA Inc
Related Party Transaction [Line Items]
Payment for manufacturing services on behalf of related party	5,800
Data Center LLCs | Related party
Related Party Transaction [Line Items]
Accounts receivable	$ 1,600	1,100
Wind HQ
Related Party Transaction [Line Items]
Bitcoin		1,200
Bitcoin received as payment for services		$ 300

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Leases - Additional Information (Details)	1 Months Ended	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($) Miner	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	May 04, 2023 Miner
Lessee, Lease, Description [Line Items]
Lease initial term				64 months
Lease commencement date				Feb. 01, 2022
Variable lease costs		$ 0	$ 0	$ 0	$ 0
Combined Luminant Lease Agreements
Lessee, Lease, Description [Line Items]
Principal and interest due over period				5 years
Estimated undiscounted principal payments	$ 15,000,000	$ 15,000,000		$ 15,000,000
Lease initial term				5 years
Lease commencement date				Nov. 22, 2022
Canaan Agreement
Lessee, Lease, Description [Line Items]
Payment of miners				$ 4,100,000
Monthly installment payment for miners				$ 1,700,000
Number of miners delivered | Miner	11,000
Affiliates of Luminant ET Services Company LLC
Lessee, Lease, Description [Line Items]
Lease agreement date				Jun. 29, 2021
Lease amendment and restatement date				Jul. 09, 2021
Canaan Creative Global Pte. Ltd | Canaan Agreement
Lessee, Lease, Description [Line Items]
Number of new A1346 model miners purchased | Miner						11,000

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Leases - Schedule of Components of Lease Expenses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Finance lease:
Amortization of ROU asset	$ 1,027		$ 1,816
Interest on lease liability	477		878
Total finance lease expense	1,504		2,694
Operating leases:
Operating lease expense	467	$ 371	921	$ 618
Total operating lease expense	467	371	921	618
Total lease expense	$ 1,971	$ 371	$ 3,615	$ 618

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Leases - Schedule of Other Information Related to Lease (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Leases [Abstract]
Operating cash flows - operating lease	$ 396	$ 791
Right-of-use assets obtained in exchange for operating lease liabilities			$ 5,859
Weighted-average remaining lease term - finance lease (in years)	2 years 8 months 12 days	2 years 8 months 12 days		4 years 8 months 12 days
Weighted-average remaining lease term - operating lease (in years)	3 years 10 months 24 days	3 years 10 months 24 days		4 years 4 months 24 days
Weighted-average discount rate - finance lease	11.00%	11.00%		11.00%
Weighted-average discount rate - operating lease	10.90%	10.90%		10.90%
Finance lease ROU asset	$ 26,868	$ 26,868		$ 14,471
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Property, Plant and Equipment, Net	Property, Plant and Equipment, Net		Property, Plant and Equipment, Net

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Leases - Schedule of Other Information Related to Leases (Parenthetical) (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Leases [Abstract]
Accumulated amortization for finance lease ROU asset	$ 2.3	$ 0.5

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Leases - Schedule of Future Minimum Lease Payments (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Finance lease:
Remaining Period Ended December 31, 2023	$ 10,511
Year Ended December 31, 2024	4,068
Year Ended December 31, 2025	4,068
Year Ended December 31, 2026	4,068
Year Ended December 31, 2027	2,712
Total lease payments	25,427
Less present value discount	(3,402)
Total	22,025
Operating leases:
Remaining Period Ended December 31, 2023	790
Year Ended December 31, 2024	1,581
Year Ended December 31, 2025	1,581
Year Ended December 31, 2026	1,581
Year Ended December 31, 2027	659
Total lease payments	6,192
Less present value discount	(1,169)
Total	5,023
Total
Remaining Period Ended December 31, 2023	11,301
Year Ended December 31, 2024	5,649
Year Ended December 31, 2025	5,649
Year Ended December 31, 2026	5,649
Year Ended December 31, 2027	3,371
Total lease payments	31,619
Less present value discount	(4,571)
Total	$ 27,048

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Commitments and Contingencies - Additional Information (Details) - Luminant Power Agreement - USD ($) $ in Millions		3 Months Ended
	Sep. 29, 2022	Jun. 30, 2023
Loss Contingencies [Line Items]
Amount received from Power Agreement	$ 5.1
Proceeds from power sales	$ 1.7
Accrual cost of resolving claims		$ 2.0

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Stockholders' Equity - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions			3 Months Ended	6 Months Ended
	Aug. 03, 2023	Sep. 21, 2022	Jun. 30, 2022	Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022	Mar. 31, 2022	Dec. 31, 2021
Shares authorized				510,000,000
Share par value				$ 0.001
Common stock, shares authorized				500,000,000		500,000,000
Preferred stock, shares authorized				10,000,000		10,000,000
Common stock voting rights				one vote
Common stock, shares issued				254,795,626		251,095,305
Public Warrants
Warrant outstanding				8,499,980
Private Placement Warrants
Warrant outstanding						114,000
Common Stock
Shares issued			205,482
Common stock, shares issued			251,001,072	254,795,626	253,050,088	251,095,305	253,685,763	252,131,679
At the Market Offering Agreement | Maximum
Aggregate amount of offering price to be received		$ 250.0
At the Market Offering Agreement | Maximum | Subsequent Event
Aggregate amount of offering price to be received	$ 250.0
Prior Sales Agreement
Proceeds received from sale of common stock				$ 2.7
Sale of shares of common stock				978,207
Sale of stock, price per share				$ 2.78
Incentive Award Plan | Officers, employees and consultants
Shares issued				2,473,759
Incentive Award Plan | Directors
Common stock, shares issued				248,358
Restricted Stock Units | Officers, employees and consultants
Repurchase of common stock related to tax withholding settlement				838,388
Repurchase of common stock related to tax withholding settlement, fair value				$ 1.1

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Warrants - Additional Information (Details) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Subsidiary Sale Of Stock [Line Items]
Number of common stock entitled to purchase	1
Exercise price of warrants	$ 11.50
Private Placement Warrants
Subsidiary Sale Of Stock [Line Items]
Warrant outstanding		114,000
Public Warrants
Subsidiary Sale Of Stock [Line Items]
Warrant outstanding	8,499,980

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Share-based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions		6 Months Ended
	Aug. 27, 2021	Jun. 30, 2023	Dec. 31, 2022	Jan. 01, 2022
Common Stock
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Share-based compensation arrangement by share-based payment award, description		Initially, up to 19,869,312 shares of Common Stock were available for issuance under awards granted pursuant to the Incentive Award Plan. In addition, the number of shares of Common Stock available for issuance under the Incentive Equity Plan is increased on January 1 of each calendar year beginning in 2022 and ending in 2031 by an amount equal to the lesser of (a) three percent (3%) of the total number of shares of Common Stock outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of shares determined by the Board.
Service-Based RSUs
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Unrecognized compensation expense		$ 32.7
Unrecognized compensation expense, weighted-average vesting period		1 year 7 months 6 days
Share-based compensation award vest upon achievement of maximum market capitalization		$ 10,000.0
Number of unvested shares		18,877,159	14,441,044
Weighed average grant date fair value		$ 3.08	$ 3.96
Performance-Based RSUs
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Unrecognized compensation expense		$ 11.1
Unrecognized compensation expense, weighted-average vesting period		10 months 24 days
Number of unvested shares		4,257,710
Weighed average grant date fair value		$ 7.76	$ 7.76
Equity Incentive Plan
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Maximum percentage of annual increase in shares available for incentive plan to outstanding common stock	3.00%
Equity Incentive Plan | Common Stock | Maximum
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Number of shares available for issuance of awards	19,869,312
Incentive Award Plan | Common Stock
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Number of shares available for issuance of awards		5,694,657
Number of shares available for issuance of awards increase (decrease)				7,426,559
Incentive Award Plan | Performance-Based RSUs | Tranche One | CEO
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Share-based compensation award vest upon achievement of maximum market capitalization		$ 5,000.0
Award lookback period		30 days
Incentive Award Plan | Performance-Based RSUs | Tranche Two | CEO
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Share-based compensation award vest upon achievement of maximum market capitalization		$ 7,500.0
Award lookback period		30 days
Incentive Award Plan | Performance-Based RSUs | Tranche Three | CEO
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Share-based compensation award vest upon achievement of maximum market capitalization		$ 10,000.0
Award lookback period		30 days

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Share-based Compensation - Schedule of Share-based Compensation Expense (Details) - General and Administrative Expense - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	$ 9,178	$ 10,064	$ 17,988	$ 19,578
Service-Based RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	5,580	6,685	10,827	12,858
Performance-Based RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	3,378	$ 3,379	6,720	$ 6,720
Common Stock, Fully-Vested
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	$ 220		$ 441

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Share-based Compensation - Summary of Unvested RSU Activity (Details) - Service-Based RSUs	6 Months Ended
	Jun. 30, 2023 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares, Unvested, Beginning | shares	14,441,044
Number of Shares, Granted | shares	6,909,873
Number of Shares, Vested | shares	(2,473,758)
Number of Shares, Unvested, Ending | shares	18,877,159
Weighted Average Grant Date Fair Value, Unvested, Beginning | $ / shares	$ 3.96
Weighted Average Grant Date Fair Value, Granted | $ / shares	2.25
Weighted Average Grant Date Fair Value, Vested | $ / shares	5.91
Weighted Average Grant Date Fair Value, Unvested, Ending | $ / shares	$ 3.08

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Fair Value Measurements - Summary of Financial Assets And Liabilities Measurement on Recurring Basis (Details) - Fair Value, Recurring - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Assets included in:
Accounts receivable	$ 380	$ 98
Assets, fair value	75,807	77,743
Liabilities:
Liabilities, fair value	66	7
Level 1
Assets included in:
Accounts receivable	380	98
Assets, fair value	555	11,041
Level 3
Assets included in:
Assets, fair value	75,252	66,702
Liabilities:
Liabilities, fair value	66	7
Warrant Liability
Liabilities:
Liabilities, fair value	66	7
Warrant Liability | Level 3
Liabilities:
Liabilities, fair value	66	7
Money Market Securities
Assets included in:
Cash and cash equivalents	175	10,943
Money Market Securities | Level 1
Assets included in:
Cash and cash equivalents	175	10,943
Derivative Asset
Assets included in:
Assets, fair value	75,252	66,702
Derivative Asset | Level 3
Assets included in:
Assets, fair value	$ 75,252	$ 66,702

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Fair Value Measurements - Additional Information (Details) - Level 3		6 Months Ended	12 Months Ended
	Jul. 01, 2022	Jun. 30, 2023	Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Percentage of discount rate utilized		6.94%	6.83%
Luminant Power Agreement
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative term of contract	4 years

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Fair Value Measurements - Summary of Change in Estimated Fair Value of Derivative Asset (Details) - Level 3 - Derivative Asset $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance, beginning of period	$ 66,702
Change in fair value	$ 8,549
Fair Value, Asset, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Change in Fair Value of Derivative Asset
Balance, end of period	$ 75,251

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Fair Value Measurements - Summary of Assumptions Utilized in Valuations of Private Placement Warrants (Details) - Private Placement Warrants	Jun. 30, 2023	Dec. 31, 2022
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants and Rights Outstanding, Term	3 years 2 months 12 days	3 years 8 months 12 days
Risk-free Rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Private placement warrants, Measurement input	0.0436	0.0406
Dividend Yield Rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Private placement warrants, Measurement input	0	0
Volatility
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Private placement warrants, Measurement input	0.747	0.90
Exercise price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Private placement warrants, Measurement input	11.5	11.5

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Fair Value Measurements - Summary of Change in the Fair Value of the Private Placement Warrants (Details) - Private Placement Warrants $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Balance, beginning of period	$ 7
Change in fair value	$ 59
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Fair Value Adjustment of Warrants
Balance, end of period	$ 66

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Income Taxes - Additional Information (Details)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Operating Loss Carryforwards [Line Items]
Income tax expense percentage	3.70%

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Subsequent Events - Additional Information (Details) - USD ($) $ in Millions			6 Months Ended
	Aug. 03, 2023	Sep. 21, 2022	Jun. 30, 2023
Maximum | At the Market Offering Agreement
Subsequent Event [Line Items]
Aggregate amount of offering price to be received		$ 250.0
Bitfury USA Inc
Subsequent Event [Line Items]
Payment for manufacturing services on behalf of related party			$ 5.8
Subsequent Event | Maximum | At the Market Offering Agreement
Subsequent Event [Line Items]
Designated agent commission percentage	3.00%
Aggregate amount of gross proceeds	$ 250.0
Aggregate amount of offering price to be received	$ 250.0