Cipher Digital Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Fourth Quarter Results: Cipher achieved revenues of $42 million in the fourth quarter, with GAAP net earnings of $18 million and adjusted earnings of $51 million (up $54 million from the prior quarter). The Odessa fleet was successfully upgraded, increasing total self-mining hashrate to 13.5 EH/s.
• Growth Initiatives: Expect hashrate to reach at least 23 EH/s in Q3 2025 with the completion of Black Pearl phase 1. Acquired 337 acres at the Barber Lake site and signed a memorandum of understanding for a potential 500-MW data center expansion. Acquired the Stingray 100-MW data center site in West Texas.
• Data Center Development: Black Pearl phase 1 is on track to energize in Q2 2025, with potential for HPC hosting or Bitcoin mining in phase 2. The Barber Lake site has a potential total capacity of 800 MW by 2029. The Stingray site is expected to energize in Q2 2026, and four sites in 2027 with 1.6 GW power capacity.
• Financials: In 2024, revenue increased by $24 million compared to 2023. GAAP net loss was $45 million, while adjusted earnings were $107 million (up from $46 million in 2023). Hashrate grew 88% from 7.2 EH/s in 2023 to 13.5 EH/s in 2024.

Segment Performance

• Odessa: In January 2024, Odessa accounted for approximately 87% of Bitcoin production. After the successful fleet upgrade, the operating hash rate at Odessa increased to 11.3 EH/s, with fleet efficiency at 17.6 joules per thash. The all-in electricity cost per Bitcoin at Odessa in January was roughly $20,298.
• JV Data Centers (Alborz, Bear & Chief): These sites had a total power capacity of 120 MW and generated approximately 4.4 EH/s. Cipher owned 49% of these JV sites, which contributed roughly 13% of overall Bitcoin production in 2024. The all-in electricity cost per Bitcoin at these sites in the fourth quarter was roughly $34,542.

Guidance

• Hashrate Projection: Cipher expects hashrate to reach at least 23 EH/s in Q3 2025 with the completion of Black Pearl phase 1.
• Barber Lake Expansion: The Barber Lake site has a potential 800 MW capacity by 2029, with a MOU for a 500-MW data center expansion.
• Black Pearl Phase 1: On track to energize in Q2 2025, with evaluation of phase 2 for either HPC hosting or Bitcoin mining.

Risks

• Market Volatility: Fluctuations in Bitcoin prices and power market prices could impact earnings.
• Execution Delays: Delays in data center construction, interconnection approvals, or tenant negotiations may affect growth timelines.
• Contract Expiry: Odessa's fixed price power contract expires in July 2027, and future pricing could be affected.

Question and Answer

Q: John Tadaro on HPC exclusivity with SoftBank and hyperscaler interest A: Tyler Page mentioned steady interest in Barber Lake, Black Pearl, and 3M sites. Exclusivity with SoftBank ends end of week, with a steady drumbeat of hyperscaler interest.

Q: John Tadaro on Odessa fixed power contract A: Odessa's contract runs till July 2027 (~2.5 years left), with preliminary discussions to extend, and potential for floating pricing or front-of-meter power.

Q: Logan Hennen on Black Pearl phase 2 evaluation A: Evaluating HPC vs Bitcoin mining for phase 2, weighing opportunity cost, expecting direction by next earnings call.

Q: Logan Hennen on Barber Lake MOU A: Bought 337 acres at Barber Lake and signed MOU for a 500-MW data center expansion, with consistent interest in large-scale HPC opportunities.

Q: Charlie Peguero on HPC workloads A: Interest across use cases, with inference driving some interest, but continued interest in Black Pearl.

Q: Bill Papanastasiou on hyperscaler terms vs Bitcoin mining revenue A: HPC leases are long-term (15+ years) with creditworthy counterparties, vs Bitcoin mining's cyclical nature; HPC is financeable, while Bitcoin mining has peaks.

Q: Bill Papanastasiou on 2025 capital expenditures A: Phase 1 Black Pearl has ~$200M remaining spend, easily funded. Opportunistic spending on phase 2 if Bitcoin mining looks strong, with cash hash cost scaling nicely with expansion.