Good day, and thank you for standing by. Welcome to the Cipher Mining third quarter 2023 business update conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Josh Kane. Please go ahead. Good morning. Thank you for joining us on this conference call to discuss Cipher Mining's third quarter 2023 business update. Joining me on the call today are Tyler Page, Chief Executive Officer, and Ed Farrell, Chief Financial Officer. Please note that you may also review our press release and presentation, which can be found on the Investor Relations section of the company's website. Please note that this call will also be simultaneously webcast on the investor relations section of the company's website. This conference call is the property of Cipher Mining, and any taping or other reproduction is expressly prohibited without prior consent. Before we start, I'd like to remind you that the following discussion, as well as our press release and presentation, contain forward-looking statements, including, but not limited to, Cipher's financial outlook, business plans and objectives, and other future events and developments, including statements about the market potential of our business operations, potential competition, and our goals and strategies. The forward-looking statements and risks in this conference call, including responses to your questions, are based on current expectations as of today, and Cipher assumes no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law. Additionally, the following discussion may contain non-GAAP financial measures. We may use non-GAAP measures to describe the way in which we manage and operate our business. We reconcile non-GAAP measures to the most directly comparable GAAP measures, and you are encouraged to examine those reconciliations, which are found at the end of our earnings press release issued earlier this morning. I will now turn the call over to Tyler. Tyler? Thanks, Josh. Hi, this is Tyler Page, CEO of Cipher Mining. Thank you very much for joining our third quarter 2023 business update call. We've got some exciting growth updates that we're delighted to announce, but before we walk through those, I'd like to spend a few minutes on Q3 and our recent accomplishments. During the third quarter, we reached several significant milestones. With the completion of our Odessa data center, we have achieved 7.2 EH/s of self-mining capacity across our portfolio. With all four initial sites now up and running, approximately 96% of our portfolio is energized through fixed-price power, and we believe our cost of electricity at a price of roughly $0.027 per kWh is among the lowest in the entire industry. As a reminder, electricity represents the majority of our operating costs, and our low price is a key driver of our best-in-class unit economics. Now that the first chapter of our growth story is completed, I am very happy to report that we will soon embark on the next major phase of expansion. We are delighted to announce that we have just agreed to acquire a Texas-based greenfield site with conditional ERCOT interconnection approval for up to 300 MW, called Black Pearl. At Cipher, we have long prided ourselves on prudently managing the cyclical nature of Bitcoin mining industry. As I have stated on our last few business update calls, we have been patiently reviewing many deals for the past several months, looking for the right one. Black Pearl is that right one. It is a front-of-the-meter site that we hope to bring online in 2025. Note that due to the nature of the site, we have no take-or-pay obligations for purchasing a minimum amount of power and will build our data center at the pace we deem most appropriate. It is our current intention to build the full 300 MW over time, but we will likely build it out in incremental stages and are currently deciding on the most appropriate schedule. We intend to fund the build-out of the new data center with a combination of cash generated from Bitcoin mining operations, as well as from our Bitcoin inventory or equity sales from our at-the-market equity shelf, to the extent market conditions make that an attractive option for the company. We will also continue our ongoing discussions with construction and equipment lenders, as well as consider other favorable debt financing opportunities. Once the data center is built, we intend to participate in ancillary services in ERCOT, and we hope to generate supplemental revenues from optimizing our operations and using our data center to help with grid stability by providing capacity back to the market in times of need. Continuing theme of timing the cycle when investing in growth, I'm also pleased to announce that we recently purchased 1.2 EH/s of Bitmain's latest generation S21 rigs for $14 per terahash, which are scheduled to be delivered in the first half of 2024. This was an opportunity to acquire very efficient, cutting-edge machines at a great price. Our current plan is to cycle these machines into service at Odessa as they arrive and either replace machines that are in the process of being repaired or upgrade our operations by swapping them in for our least efficient rigs. Finally, we have talked in previous quarters about the attractive organic growth opportunities at our existing sites, and we've continued to make progress on that front as well. At Alborz, we recently received ERCOT approval for a supplemental grid connection that will allow us to increase our targeted operational uptime significantly. We expect this backfeed to be in place in the first half of 2024. We are at an important inflection point for the company as we pivot to the next stage of growth, and we are excited to be expanding and investing in advance of what we hope will be a bull market for Bitcoin in the months and years to come. Now let's turn to some specifics on the current state of the business. On page 4, we highlight key performance indicators as of the end of October. These metrics should give you a sense of our current production and the potential growth we hope to see over the near and medium term. Our current self-mining hash rate is 7.2 EH/s, and with the acquisition of the new Bitmain rigs, we now have a total capacity in service or under contract of 8.4 EH/s. With the addition of Black Pearl, we have the potential to expand to 23.5 EH/s by the end of 2025. On the bottom of this slide, you can see some of our current and year-to-date production numbers, which reflect the growth of our production over the past several quarters. We are often asked about our treasury management philosophy. These KPIs give some insight into how we approach our Bitcoin inventory. In the middle of the page, you can see our Bitcoin held, which has risen quarter-over-quarter. We manage our Bitcoin treasury by generally selling enough Bitcoin every month to fund our operating expenses and existing CapEx commitments. Beyond those sales, we may choose to sell more Bitcoin for dollars to invest in expansion opportunities, to hedge our inventory with futures or options, or to hold excess Bitcoin to build our overall treasury balance. It's our goal to build our Bitcoin inventory over time, but we also believe that our monthly free cash flow generation gives us greater flexibility to take advantage of growth opportunities in periods where other financing alternatives are less attractive. Slide 5 is a high-level overview of Bitcoin mining business that we like to include each quarter to remind everyone how our business model works. We operate the box in the middle of the drawing that says mining equipment, which represents our data centers and mining rigs. As I discussed earlier, we spend the majority of our operating expenses on electricity, which our data centers convert into computing output. Unlike traditional data centers, which operate a similar model and sell their computing output to enterprise clients for dollars, Cipher sells its computing output, called hash rate, to the Bitcoin network for Bitcoins. To make this model operate profitably, Bitcoin mining company needs to control both its electricity and the capital it spends to build data centers, including what it spends to purchase mining equipment. Controlling these costs enables a miner to be a lower-cost producer, and our focus at Cipher has always been on controlling these specific costs to produce the best possible unit economics. That illustration hopefully gives you a good sense of a Bitcoin mining business. Cipher, however, does have an additional element to our business that is incredibly valuable. We have the ability to sell power back to the grid. Our power purchase agreement gives us a combination of downside risk protection as well as upside optionality to our revenue streams that doesn't exist for many Bitcoin miners. Now let's turn to page 6 and look at some recent Bitcoin market events. The news flow for miners has been mixed over the last four months. Much like last quarter, we've seen positive headlines speculating on the approval of a Bitcoin spot ETF by the SEC. That speculation has driven a recent rally in Bitcoin price to the current level, close to $35,000. But against this backdrop, there has also been a steady climb to an all-time high in overall Bitcoin network hash rate, which continues to suppress overall mining economics. We have also seen announcements from the rig manufacturers of their next-generation machines, which feature dramatic improvements in efficiency. While announcements of new rigs have typically been paired with new premium pricing arrangements in the past, this time, the manufacturers have announced very aggressive pricing dynamics. As with many other facets of Bitcoin mining business, rig pricing can be cyclical, and a prudent miner will acquire rigs when pricing is cheap. In the last bull market, rigs were pricing at many multiples higher than current prices. Against this market backdrop, as we head toward the halving in 2024, Cipher is focused on acquiring vital assets like new data center sites and efficient mining rigs at cyclical lows and optimizing our power use, trading, and Bitcoin production. On slide 7, we give a portfolio overview of our data centers. Year to date through September, we have paid an average all-in electricity cost of $8,379 per Bitcoin produced. We are very proud of this number, and it drives our best-in-class unit economics. On the left side of the slide, you have a snapshot of our four current data centers, along with our all-in electricity cost per Bitcoin at the respective sites. The chart on the right side of the slide gives you a graphic illustration of the current Cipher hash rate, as well as the additional potential growth opportunity through 2025. At this point, we will turn to production by site. On slide eight, you can see a picture of our Odessa Facility that we completed in the third quarter. Odessa is clearly the most significant part of our portfolio, as it represents approximately 90% of our Bitcoin production. Odessa is a wholly owned facility with a five-year fixed-price power purchase agreement and some of the lowest-cost power in the industry. As of the third quarter last year, we began reporting a third-party independent valuation to give investors a sense of how much value is represented in the power contract alone. As always, Ed will talk more about it in his remarks. At the end of September, we generated approximately 6.2 EH/s at the site, using approximately 207 MW. We have mined roughly 3,531 bitcoins at the site through October 31st and had a recent maximum daily mining capacity of approximately 12.9 bitcoins per day. We will be hosting an investor day at Odessa next week and look forward to showcasing the operations and team now that the build-out of the site is complete. On slide 9, we show a picture and highlights from our Alborz data center, which we believe is a truly unique site. Alborz is 100% powered by wind and is a joint venture that we share with our energy provider. It currently has a total operating capacity of 40 MW when the wind blows. That 40 MW powers roughly 1.3 EH/s of rigs. Alborz can mine a maximum of roughly 2.7 Bitcoin per day in current market conditions, and year-to-date, the site has mined approximately 603 Bitcoin through October 31st. Roughly half of that total capacity and site production belong to Cipher. Most importantly, our year-to-date all-in electricity cost per bitcoin at Alborz was approximately $6,794, demonstrating our resilient low-cost setup. We are working to supplement the wind production at Alborz with a grid connection, which would allow us to increase our uptime and generate more Bitcoin with the existing equipment at the site, and we hope to have that arrangement in place in the first half of 2024. Slide 10 shows operational highlights from our Bear and Chief data centers. Combined, the sites operate 20 MW, which power approximately 0.65 EH/s and can generate roughly 1.4 Bitcoins per day in current market conditions. Bear and Chief are also structured as joint ventures and feature shared economics similar to Alborz. Unlike our other two sites, which have behind-the-meter power arrangements, Bear and Chief are set up in front-of-the-meter at a location in Texas that typically features attractive market prices. Our year-to-date all-in electricity cost per bitcoin at the combined sites was approximately $10,448. Now, I'll turn it over to our Chief Financial Officer, Ed Farrell. Thank you, Tyler, and hello to everyone on the call. Before I move on to my remarks on the quarter, I'd like to remind everyone that I will be referring to the reported financial results for the three months and nine months ending September 30th. Looking back at the third quarter, we are extremely pleased with the performance of the company during our first full summer of operations in Texas. As Tyler mentioned, we achieved two very significant milestones: the completion of Odessa and our near-term target of 7.2 EH of self-mining capacity across our portfolio. Looking back at the third quarter, we expect the summer months to be seasonally the most challenging operating environment. With record heat and significant curtailment from our power provider, the team did an outstanding job of optimizing the performance of our mining rigs. Over the course of Q3, our operations and technology teams gained greater insight into our miner portfolio and continued to put into place improvements in our process, which we expect to bolster performance over time. Despite the challenging operating environment, the third quarter was characterized by solid top line, free cash flow, and improved liquidity. I'm happy to report for the three months ended September 30, 2023, that our Odessa Facility mined 1,091 bitcoin, resulting in Cipher reporting $30.3 million in revenue. For the nine months ended September 30, 2023, Odessa mined 3,162 bitcoin, resulting in $83.4 million in revenue. This, coupled with the 130 bitcoin we earned at our JVs, resulted in a total of 1,203 bitcoins mined in the third quarter, and for the nine months, our JVs earned 457 bitcoins, for a total of 3,020 bitcoins. Please note that the financial impact of the bitcoin mined at our JVs is included in the equity investee account on the income statement. Before diving further into the numbers, I do want to mention a few important points on the corporate side.... Just as we do across all our business, our infrastructure teams strive to be best in class and leverage technology. As part of that process, we've begun to implement additional technology solutions which enhance our control and reporting processes. As an example, we will be implementing Workday for our financial management and human resource teams. On the treasury side, we announced a $10 million credit facility with Coinbase. We believe these are all indications of the strength of our business and growing confidence of our counterparties as we continue to mature as a public company. Now I'd like to turn to the Odessa PPA. We have talked extensively about the competitive advantage our power contract at Odessa gives us. As a reminder, we began publishing a third-party mark for this agreement in the third quarter of 2022, which we believe underlines the fundamental value in the business. That mark is shown as a derivative asset on our balance sheet that gets revalued each reporting period. It essentially reflects the in-the-money value of the contract relative to the current market for power prices at Odessa. As of September 30th, this asset was valued at $80 million, or an increase of $4.7 million, which is recorded as a gain on our income statement. Please note that this asset is in two components on the balance sheet: $33 million as a current asset and $46.9 million as a non-current asset. For this period and future periods, the change in fair value of this contract will flow through our GAAP earnings and will exclude the impact for non-GAAP reporting. Our other significant assets as of the end of the quarter include liquidity of $17 million. This includes cash of $3.3 million and Bitcoin of $13.7 million. Property and equipment of $258.3 million is primarily related to the Odessa Facility, which includes miners of $160.4 million, leasehold improvements of $135.7 million, and other fixed assets of $5 million. These items are offset by $42.8 million of accumulated depreciation. In addition, we have security deposits of $17.6 million that primarily relate to the collateral posted to our Odessa power provider. Our equity investment of $33.6 million relates to our JVs, Alborz, Bear, and Chief. Our current liquidity position is $19.6 million, comprised of $2.5 million in cash and $17.1 million in Bitcoin. In the third quarter, we utilized the ATM and issued approximately 2.8 million shares at an average fair market value of $3.12 per share, or $8.6 million net of issuance fees. Our philosophy continues to be that we believe the ATM is a useful tool which we can access in the right market conditions and for the right growth opportunities. Now let's look at our GAAP operating results for the quarter ended September 30. We had a net loss of $17.7 million, or a net loss of $0.07 per share. This is compared to the prior year's third quarter, where we had a net gain of $59.3 million, or a net gain of $0.24 per share. Please note that in the prior year quarter is when we initially valued our Luminant PPA and recorded a gain of $85.7 million. Again, our Odessa Facility mined 1,091 bitcoin and generated $30.3 million for the three months ended September 30, using an average price per bitcoin of approximately $28,000. Cost of revenue for the three months ended September 30, 2023, was $13 million and consisted primarily of power costs at the Odessa Facility, as well as maintenance expenses for mining operations. In addition, we have reported power sales of $2.7 million for the quarter. The change in fair value of our Odessa power agreement, which I mentioned earlier, resulted in a gain of $4.7 million. Equity and losses of equity investees totaled approximately $2 million for the quarter ended September 30, a decrease of $6.3 million for the three months ended September 30, 2022. To remind everyone, equity and losses of equity investees consists of our 49% share in the earnings or losses generated by our three partially owned mining sites. General administrative expenses totaled $23.9 million for the current quarter versus $17.8 million for the previous year's quarter. Our team remains our single most important asset and competitive advantage as we continue to invest in the business and have made several hires in the current year. Within G&A, the primary drivers are stock-based compensation of $10.7 million in the current quarter versus $10.5 million in the prior year's quarter. Compensation and benefits of $6.3 million versus $1.4 million in the prior year quarter. This increase is attributed to the building out of the team over the course of the year. We currently have 33 employees versus 20 a year ago. We believe there is significant operational leverage as we continue to grow operations. Corporate insurance totaled $2 million in the current quarter versus $2.4 million in the prior year quarter. Professional fees totaled $2 million, which is flat versus the prior year quarter, and other G&A of $2.3 million includes IT, occupancy, and other public company expenses versus $2.4 million for the three months ending September 30, 2022. Depreciation for the third quarter was $16.2 million versus an immaterial amount in the prior year's third quarter. This is because in the third quarter of 2022, we hadn't yet started mining at Odessa, so the depreciation on equipment was minimal. We had a realized gain on the sale of Bitcoin of $2.5 million in the third quarter. As I mentioned on previous calls, we began selling a portion of our Bitcoin holdings at the start of 2023 to support our operations and cash requirements. Finally, we recognized a $3.4 million impairment on our Bitcoin holdings in the third quarter versus $300,000 in the previous year's quarter. Let's move on to our non-GAAP financial measures. We are providing supplemental financial measures for non-GAAP income from operations that excludes the impact of depreciation of fixed assets, share-based compensation expense, the non-cash change in the fair value of our warrant liability, deferred tax expense, and the non-cash change in fair value of our derivative asset, which again, is the power contract at Odessa. These supplemental financial measures are not measurements of financial performance in accordance with U.S. GAAP, and as such, they may not be comparable to similarly titled measures of other companies. We believe that these non-GAAP measures may be useful to investors in comparing our performance across reporting periods on a consistent basis. Management uses these non-GAAP financial measures internally to help understand, manage, and evaluate our business performance and to help make operating decisions. For the three months ended September 30, 2023, we had non-GAAP net income of $5.9 million, or $0.02 per share. This compares to a non-GAAP net loss of $16.3 million, or a net loss of $0.07 per share for the previous year's third quarter. I encourage you to review our earnings release, where we have provided a reconciliation of these GAAP versus non-GAAP results. I would close out my remarks by saying we are pleased with the financial performance in Q3 and excited about the next stage of growth for the company. We have talked about the importance of maintaining a strong balance sheet to give us maximum flexibility going into the halving and beyond. With our current financial position, free cash flow generation, and best-in-class unit economics, we believe we should be well positioned to move forward with our next stage of growth. We look forward to updating you in greater detail on the financial results with Odessa now fully up and running, and we begin to put in place our next leg of growth for the company. I will pause, and Tyler and I are happy to answer your questions. Certainly. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. One moment for our first question. Again, one moment while we compile the Q&A roster. Our first question will come from John Todaro of Needham. Your line is open. Great, thanks for taking my question. Congrats on the quarter, guys. I have a couple here, if you don't mind. First one, can you just talk a little bit more about that operational leverage you see as you grow top line with new hash power coming and what it means for G&A spend moving forward? Yeah, sure, John. This is Ed. Thanks for the question. As you heard, you know, Tyler and I both speak, you know, we're going through a period of growth. We've just announced some additional growth this morning, and as we continue to build out our infrastructure and technology stack, we've been looking at some of the third-party contractors that we've hired to help support our operations. And we're building up the team now to, like, bring some more of that in-house and have more control over it, which we believe over time will be less expensive than having contractors do the work. This is something that is all, you know, with which we have currently, but I expect that to flatten out over the next, you know, through 2024, as, you know, we're making some of these strategic investments on people and technology stack. Got it. Got it? That's great. Thanks for that. Yes, that does. One more question. So on the Black Pearl site, is this gonna be kind of, call it sub $0.03 cents per kWh as well? And then just on the CapEx, so if it's 300 MW, and we assume maybe around $400,000 per MW, should we be thinking $120 million ballpark CapEx? Hey, John, I'll take that one. Thanks for the question. I think the real key to understand, if you're gonna understand the value at Black Pearl, it's really the flexibility at the site, right? So first of all, it's a front-of-the-meter site, so it's gonna pay the floating rates of electricity, you know, unless we were to, at some point, put in a financial hedge of some sort, but we probably wouldn't in these current markets. But the flexibility to draw power when it's cheap means that probably the pricing will look closer, I mean, it'll be large scale, but closer to, like, Bear and Chief. That said, keep in mind, we will also be able to participate in ancillary services at scale. I know that some of our competitors had a summer this summer with, you know, record-breaking demand for power in Texas, where that produced some significant revenues for them. So this is a diversification of the kinds of sites we have in that there will be revenue streams, so there's some seasonality to that. As you know, there will be times when the price of power might be high, but you're also giving up capacity and being paid for that. So I think overall, we view it to be in line generally with our portfolio, but it will float over time. I think the key to understanding on the, on the kind of the CapEx side, I would say first of all, we just signed the agreement to purchase this site about a day ago. So we're still working on thinking about the phasing and how we build out and what the costs will be. I do think it'd probably be a little bit more expensive than you're estimating. Number one, just because when you look back, just with inflation and everything else where it's running, I would expect the cost to be higher on the CapEx side than they were for Odessa, and that's mostly just a time function. The other thing is we are considering other technologies there. We have spent money on R&D and looked at quite a bit of hydro and immersion and other things. We're still trying to figure out how we will parcel out the 300 MW in terms of the types of, of mining we do. Those all have different CapEx spends. We're gonna be driven by ROI, and so whatever's gonna produce the best return to shareholders over time will be how we do it. But I, I would guess that those non-rig infra costs you cited are probably a little bit low, to be determined. The real key here, though, is that unlike, say, Odessa, where we sign a long-term power purchase agreement that requires us to draw a certain amount of power, and we start getting billed at a certain point, that is not the setup here, right? So we can optimize, when we're drawing power and when we're not, and also the pace at which we build out the data center. So certainly, it's our goal to build out the full 300 MW, frankly, as quickly as possible. But we can still choose to be opportunistic in how we finance that. We can wait for the market to come to us. There's no requirement that it's all 300 MW by a certain date. You know, it could be 50 MW or 100 MW in stages, but it's certainly our goal, and I do think, you know, we will be heavily incentivized, obviously, to get the production up as quickly as we can. But it's that flexibility that I think, and in addition to just the terms at which we acquired the site, that make this site really exciting. You know, the other thing is, from a diversification standpoint, you know, this is a site that has a ground lease of 50 years on it, or it's up to 50 years. So really a different kind of site and gives our overall portfolio a lot of resilience. We're very excited about it. Great. Thanks for that, Tyler. One moment for our next question. Our next question will come from Reggie Smith of J.P. Morgan. Reggie, your line is open. Hey, good morning, guys. This is Charlie on for Reggie this morning. Congrats on the Black Pearl announcement. Very exciting. I was wondering if you could talk about how you're prioritizing investment in the JVs versus, Black Pearl moving forward. Sure. Thanks, Charlie. It's a great question. I'd say right now, you know, subject to things evolving every day, our priority is gonna be Black Pearl, just because we own, you know, 100% of that site, and we will be very focused, and we don't— While we have a great JV partner at the three JV sites, that's, of course, a collective decision. As you know as well as I do, lots of moving parts in Bitcoin mining universe, as we talked about on the call. Excitement around the ETF driving price, network hash rate going higher, new rigs, you know, all a very complicated decision-making process for how to allocate capital. From our perspective, Black Pearl will be our priority for now. That's not to say we're, we're not focused on the other sites, but I think the flexibility and, and the ability to move quickly and make decisions probably put Black Pearl at the top of our priority stack. You know, that said, as I mentioned, Alborz within the, the JVs is probably our, our priority there, and, and that starts because with the backfill, or pardon me, the backfeed agreement, we can attach a grid connection and, and bring our production up on the existing equipment there. So that's the priority there, and I still fully expect that we will do the expansions at Alborz, Bear, and Chief over time. But from a prioritization perspective, Black Pearl's at the top. Got it. That's helpful. And then with the announcement of the new rig purchases, is there, like, a target fleet efficiency we should be thinking about for the new 8.4 EH? Thanks. Yeah, so I think when you add the 1.2 EH of the new rigs, we will be about 29 joules per terahash across the entire fleet when that's plugged in. Perfect. And certainly, as we make more rig purchases, I mean, as I indicated on the call, this is a cyclically favorable time to do rig purchases. You know, as we add more, I would expect, obviously, that efficiency will drop lower and lower in terms of joules per terahash. Got it. Thanks. One moment for our next question. Our next question will be coming from Gregory Lewis of BTIG. Gregory, your line is open. Yeah. Hey, thanks, and good morning, everybody, and thanks for taking my question. Tyler, I just wanted to follow up on the last question around the 1.2 EH. Any sense for the timing of how we should be think about those rigs coming online and generating hash capacity? Sure. Thanks for the question. The delivery schedule is the first half of next year, so it's monthly batches, January to June. That's when they ship, so, you know, figure delivery the following month. And those orders are backloaded, so it's about one third in the first quarter and two thirds in the second quarter. I think if you do the math, it's about 6,000 rigs or so. And so as those arrive, you know, we will certainly make sure they are plugged in as soon as possible just because they're so powerful. And as I indicated earlier on the call, I mean, I think the main point on that rig purchase is that at $14 a terahash, and I should also mention, the last 20% of the purchase price on that contract is actually financed basically by Bitmain and is not due until a year after the rigs arrive. So it's really a fabulous deal. I mean, I think it's just a very accretive purchase, but at the scale at which they will arrive and the number of rigs, I think we'll start with the prioritization that, you know, look, when you run a 70,000-rig fleet, there's always a couple hundred rigs in repairs. We will make sure to get all the most powerful rigs plugged in, and then I think we would look to prioritize as they arrive, swapping out, in all likelihood, our least efficient rigs to make sure the most efficient ones are plugged in. That's super helpful, Tyler, and I didn't realize that. Could you talk a little bit more how that dynamic has changed with at least Cipher in terms of the ability to, you know, the timing of, you know, payments for rigs and how that's shifting? And is that something that kind of what you're seeing across the market, or was that kinda specific to this transaction? I think it's in this case... Well, let me speak more broadly about it because I think it's helpful. Yeah, sure. For any investor, any investor in this space to understand, because this, you know, this is what drives the big CapEx number on a site and ultimately drives the ROIs that we all care so much about. And as you probably remember, in the bull market of, you know, a year or two years ago, really two years ago at this point, these rigs were, you know, five, six, seven times as expensive, you know, crazy, more expensive and very hard to earn an ROI. And with that pricing, also was very much a seller's market, right? And so it was really about, how do we get access to these rigs? And that was really the story two years ago. I think what's evolved and certainly been a very high priority for me personally, has been to develop a relationship with the C-suite of the three big rig manufacturers that are all Chinese companies, and Canaan, I think, is relocated to Singapore at this point. But, you know, it wasn't easy in the days of COVID and, you know, in the bull market. And so what I'd say is, Cipher has struck some deals in the past that I think others have not. Certainly, people in the industry know about, and we have talked about in previous calls, our deal with Canaan, where we got some financing on those rigs, which was really first of its kind, where rigs were delivered in advance of being fully paid for. I think the reputation we've built with the rig manufacturers is one where they understand we are gonna be around for a long time. When you think about what's most important to a rig manufacturer, it's the stability of purchases over time so that they can reserve capacity at the fab. I think it speaks very highly of Cipher that we've consistently been able to strike deals indicating a belief in us as a counterparty. And so now to this specific deal, I do think there's been a couple other folks that struck similar deals. I think that you had to be a big known purchaser to Bitmain to be offered these terms, and you had to move quickly. But I do think these terms were offered to a few of our competitors as well. Very favorable for large, well-known, counterparties of Bitmain. This one, in particular, is not individual to Cipher, but it would not surprise me if going forward in the near future, we do find deals that are particular to Cipher because we are in regular contact with the C-suite of all three rig manufacturers. Okay, super helpful. Thanks. And realizing it, it sounds like the ink on the Black Pearl acquisition was really just signed yesterday. As we think about the infrastructure and lead times, any kind of rough estimates, you know, because I think you mentioned the 2025 startup target. How should we be thinking about long lead items and when we probably need to order those to be able to, and maybe this is for Black Pearl, but across the industry as well, like how are we thinking about supply chain and the ability to source things like transformers and things that will be needed to, you know, power up Black Pearl? Great question. I would say that generally, the longest lead items for a greenfield site are, you know, identifying and acquiring the building, the substation. I think we hear estimates across the industry that that can be 12-18 months. I will say, not unlike the rig manufacturers, we have focused a lot on building relationships over the last year or two, and I think we can get that timeline significantly shortened based on our relationships. Now, from a deployment of Black Pearl, again, it's really early, like, we're still going through the different scheduling and options and how much do you build in each phase, et cetera. But I think our goal would be to get it online and, like, the first piece energized, probably second quarter of 2025. It's very early on that. That's subject to move around. I mean, literally, the ink's still dry, but that's when we would hope to have something energized, and that gives us plenty of time to appropriately lay out and, and frankly, negotiate attractive prices on both the infrastructure and the rigs. You may remember, Greg, during the bull market, we got a really, really cheap price for our fleet. At times when the spot prices for rigs were $90, $100 a terahash, we were sub-$40, and that's because we leveraged our longer lead time for a greenfield site that we were building. So I think, again, that consistency of a future order is a great thing to have and think about, with—it's very valuable from the rig manufacturer's perspective. Also value for the other infra. We have time to, to stretch it out. What I would say is, overall, I'm sure at our next quarterly update, we will have a lot more specifics around timelines and maybe even in the interim. But right now, it's just early other than that generalized target, and we think we can easily line up the timelines to be ready for that. Super helpful. Thank you very much. Yep. One moment for our next question. Our next question will be coming from Chase White of Compass Point Research and Trading. Chase, your line's open. Thanks. Morning, guys. Thanks for taking my questions. So, first of all, could you guys give us a sense of what the JV EBITDA was in total? Hi, Chase. That's a bit of a challenge there. I mean, if you look at our loss that we have there, it was about $2 million or so. So, you know, keep in mind, we were, you know, from a GAAP perspective, we're 49% of that. I don't have in front of me at this point in time the exact all the data they have on the JVs, but it's something that we could look into. Gotcha, um- One thing to add to that, Chase, just keep in mind, we do have the last few bits of a BlockFi rig loan at Alborz that will be rolling off in the first quarter of the new year. So that is at least a payment that will go away on a monthly basis. Yeah, and I would just add to that, the results of that, all the JVs and our share of those results will be much better than they have been in previous quarters because of that. Gotcha. That's helpful. And then, you know, given you're swapping out rigs for the S21s, how should we think about your net total hash rate when all said and done in 2024? I mean, presumably, it's not going to be 8.4 EH at this point, right? Or am I not thinking about that correctly? I think it's tough to forecast because it, the answer is, it depends. I think there's a lot of moving parts. But you're right. Net-net, it, it depends exactly on how we deploy the 1.2 exahash of rigs. If we were to completely swap it out, we would probably be swapping it out for the least efficient rigs at Odessa, which are MicroBT M30s, and I think average about 38 joules a terahash. I haven't done the math to give you a forecast, but you can probably piece it together. We plug in 1.2 and unplug an equivalent power draw of 38 joules per terahash machine. I think also keep in mind, Chase, that, like, again, at this scale, it's no joke that repairs can vary wildly and, you know, we could have 1,000 machines in the shop. So I think having an extra fleet probably generates more production all the time. Like, you can imagine a world where we've swapped out M30s, but they're sitting there, and if something comes in for a repair, we immediately plug something in rather than have it out of commission. Gotcha, but there's not, like, extra capacity somewhere out there that you're going to be able to, like, plug in above and beyond. You have, you know, the ability- Not, not- Basically 70,000 rigs to operate. Not currently. There's a lot for sale out there. Gotcha. Helpful. Thank you, guys. One moment for our next question. Our next question will come from Josh Siegler of Cantor Fitzgerald. Your line is open. Yeah. Hi, guys. Thanks for taking my question today. Nice to see the announcement on the Black Pearl. I'm curious if you can engage in a hedging strategy on power at the Black Pearl site to smooth out the energy costs over time? Let me speak at a real high level about... And I know, Josh, you know this from a lot of folks that have large-scale front-of-the-meter setups. You can think of hedging in a couple different buckets. The simplest might be in a different pricing regime for power; we could effectively put in a financial hedge that would, even though we're paying market prices at the site, could fix our price at a lower level. We wouldn't do that in the current pricing regime because power prices are generally elevated right now and, you know, at the higher part of the cycle. So in the same way that we have a fixed price at Odessa, and a big part of that, in addition to the unique elements of the contract, was a different pricing regime for power. We probably wouldn't lock that in, but over time, you know, there will be cycles, there may be times when we do that. I think the other way to think about hedging is if you're participating, you know, in ancillary services, there will be things like day-ahead capacity markets, right? So if we get another hot summer like we had this past summer, and you're breaking demands for power, we can think about hedging in the sense of seeing the prices a day ahead being high and selling the capacity forward effectively or offering the capacity up, I think, a better way to say it, instead of planning to mine and netting that out as a way of effectively hedging our power price. Does that make sense? Yes, very helpful. Thank you. And, for my follow-up, you know, obviously, you have many different funding sources to use, as you ramp up Black Pearl. I was curious, kind of, if you would embrace potentially tapping the HODL to help pay for it. Yeah, absolutely. I mean, I think, look, we're always gonna, if you think about all the levers we can pull, it's, we have a Bitcoin inventory, and the price bounces around. We can tap equity markets or we can tap debt markets. We constantly think about the returns on all of those. Again, I think if you've got a truly great opportunity to lock in a price for something at a cyclical low in the market, it's easy to draw down on some of the treasury balance in Bitcoin. If you know that our production is coming in every day and, you know, you see the strong production numbers every day, you can replace that. So absolutely, we would think about spending it. We're not religious. Our goal is to optimize our dollar-based return for shareholders. So it's not impossible. It is our goal to build that inventory over time, so we're always going to weigh the costs of the different ways we can raise capital. I would say in general, you know, and I indicated this in my earlier remarks, but I would say as the enthusiasm seems to build around Bitcoin price, maybe an ETF, there's institutional interest. I would say in general, there are the early stages of big investor conversations coming back to miners. I think our story around power optimization puts us in a unique category, where we've got some investors talking to us that may not be talking to other Bitcoin miners, and we'll just have to see how that develops. But I view over the long term, Cipher is part of a disruptive technology to power generation. I think power generators started to think this way before all the kind of broader crypto market shenanigans of 2022. If we see a bull market for Bitcoin, it would not surprise me for them to come back to be very interested in this space. And I do think there's a lot of pools of capital, well, much larger pools of capital invest in that space than invest Bitcoin mining. and so, you know, we'll see. I think we're always going to look at what all the options are, but it's really this flexibility at Black Pearl that enables us to find the most opportunistic way and timing to build out the full data center. Great. Thank you, Tyler. Appreciate the update, and looking forward to hearing more about Black Pearl. Thanks, Josh. One moment for our next question. Our next question will come from Mike Colonnese of H.C. Wainwright & Company. Your line's open, Mike. Hi, good morning, guys. Congrats on Black Pearl- Thanks. Thank you for taking my questions this morning. Can you talk to the expected timeline for the organic expansion projects at Alborz, Bear, and Chief, to ensure that you have sufficient capacity to really take in those net new rigs, that'll get you to the quoted 8.7 EH you have in your deck there, over the 7.2 deployed today? Yeah. So I think on the JV side, again, the priority is the backfeed at Alborz, which is, you know, no new rigs. That's just producing more Bitcoin from the rigs that are already there. I'd love to flip it on tomorrow. I know we've got hundreds of pages of agreements that our team's got to go through and negotiate to get that, but we're confident that'll be done sometime in the first half of 2024. Beyond that, again, no time pressure for expansion on any of those, and that'll be a joint decision based on market conditions with our JV partner, WindHQ. So again, the new rigs, we will probably look to cycle in, own 100% of the hash rate of at Odessa, and we will do, it'll become sort of a total fleet management exercise. But I think the real, the real strong point for, for those rig purchases is that a net price of $14 per terahash is an awesome price to buy rigs, and so we're very excited to have those efficient rigs in front of the halving. But again, current plans would be to cycle them in at Odessa, actually, subject to modification. If we decide we're gonna expand or if we have a new site or something like that, we can always reposition them. They'll be delivered January to June of next year. Great. Great. Appreciate that clarification, Tyler. So it sounds like maintaining that optionality at some of the JV sites there. And second one for me. In your conversations with investors and potential Cipher shareholders, how are you positioning your approach to ESG? You have Alborz, which is 100% powered by wind, but grid connections at other sites, so the power mix is naturally a bit more diverse. So it'd be good to get a refresher on Cipher's ESG strategy here. ... That's a great question. Thanks, Mike. I think, you know, always answering this question, let me start by saying that two-thirds of those initials, the S and the G, Cipher is very strong as strong on as a company, and I think Bitcoin Bitcoin mining are, you know, is an incredibly strong industry. So usually the question behind the question there is on the E part, and so I can highlight how we think about that. Yeah, as you mentioned, we're very proud that, as far as I know, we run the only off-grid wind farm co-located data center on Earth, as far as I Bitcoin mining or otherwise. And that's a live example of what a lot of folks in this industry talk about as the future ESG credential of this industry. That it is a way to make the returns on investing in more renewables more viable without government subsidies, right? This is a free market solution to produce better investment returns for greater renewables. So overall, the industry and Cipher in particular is really leading the charge on that, I think, for the industry overall and our innovations at such a site show what can be done. Overall, again, we're now expanding further in Texas. You know, just... I know everyone thinks of Texas as the energy capital of the United States, if not the world. You know, keep in mind that there's over 40 GW of wind, and I think about 13 GW of solar in Texas. It's over a quarter of the United States wind energy production. So this is a grid with lots of renewables, and a lot of the questions around the peak demand over the summer have to do with the intermittent nature of renewables. And so by expanding in Texas and being able to offer our capacity, you know, from our sites, the sort of utilizing the instantly curtailable nature of Bitcoin mining data center, further supports decarbonization of the grid overall. So I think overall, in the industry, and Cipher's approach is extremely strong, based on our location and how we're developing. You know, I would say, as a further note, we've talked about in the past, you know, things like carbon offsets. We have done a fair amount of research into that space. At this point, we're not purchasing offsets. If you look at our carbon output across our portfolio, it's about one half of the typical carbon output of an electricity user in the United States. So the legitimate output, the actual physical output of carbon from our sites is lower than average in the United States. And so, you know, we haven't loved what we've seen in the carbon offset market, and so we are not pursuing that currently. Just to round out that question, because I know lots of miners talk about that in their ESG strategy, but really it's just an offset strategy. That's great. Thanks, Tyler. Again, ladies and gentlemen, if you do have a question, please press star one, one on your telephone and wait for your name to be announced. Our next question will be coming from Joseph Vafi of Canaccord. Joseph, your line is open. Hey, guys, good morning. Nice, nice progress on the business, so my congrats on that as well. Just, you know, congrats on Black Pearl, and, you know, just at a high level, you know, 300 MW is a lot. You know, there is the halving event coming up. You do have some lead time here. I think I know the answer to the question, but I thought I'd throw it out anyway. You know, other miners are starting to explore some optionality of the business model, including perhaps, you know, HPC and AI for some of their, you know, their power. And I was just wondering if you're at all considering that optionality, with Black Pearl, given its size, and then I'll quick follow up. Sure. That's, that's a great question. So I would say this: Let me—I will get to the actual answer, but let me take a little bit of a roundabout way to get there. One of the priorities for our construction team is to think about the evolution Bitcoin mining data centers over time and how they evolve and how do we make them more future-proof. I had the privilege of going to look at Bitfury's original immersion facility this last quarter. I went to Tbilisi and I saw it, and one of the things that was a very innovative design data center, but one of the things that struck me is, you know, how do you make things less customized and more standardized so that you can swap out things? For example, Bitcoin mining to more of like a standard rack mount in the design over time, so that you could do things like potentially swap out other, you know, users of HPC, et cetera, and have a very standardized value proposition at the data center. We are certainly doing that in the design. I think with 300 MW of capacity, keep in mind, we can take that down over time. So of course, it's not how do you scale this 300 MW mountain? It's sort of what are the bite sizes you're gonna take piece by piece. But I think we are considering all kinds of optionality. I mean, Joe, I think we've talked about in the past, we are not the biggest fans or have not been the biggest fans of the hosting business, for example, in mining. But, you know, post-halving, with three, four years before the next halving and new generations of rigs and frankly, growth in hash rate and not necessarily a commensurate growth in, in plugs available for them, that's a strategy we could also consider. With 300 MW, there's all kinds of flexibility. But yes, we have had some early discussions about what if part of this data site was dedicated to other, you know, uses for compute? I don't know if we'll get there. I don't think that's core to our business strategy. We're really more focused on, the intersection of power generation, sort of trading and Bitcoin generation. But that said, certainly as we talk to investors, folks like to see that optionality, so that door is open. I just don't know where it's gonna lead yet. Sure. Fair enough. Yeah, I mean, there is, there is some lead time, and things can change, so we'll keep asking the question, Tyler, to see if there's any change there for Black Pearl. And then just quickly, I guess, on Alborz, getting your plug-in to the grid to keep it going, any sense at this point, kind of what that power cost might be, relative to kind of your overall average? Thanks a lot. Yeah, I think it probably will end up being slightly higher than the overall average, and, and here's why. Again, Alborz draws directly from a co-located wind farm that has basically the cheapest power in our portfolio, and you can see that in the electricity cost per Bitcoin at the site that we list. You know, that's what's so attractive about that site. Now, recall, that site is a big engineering challenge because if the wind's not blowing, we're not mining Bitcoin. And we, we designed the data center targeting about 75% uptime, which is lower than you typically hear Bitcoin mining. but again, with the economics we can have at that site, it, it makes plenty of sense to, to only have 75% uptime. So when we have a backfeed there, conceivably, the rest of the time, we would have access to power. Now, keep in mind, if the wind's not blowing, typically in West Texas, you know, if the wind's not blowing, market prices are higher because that 40 GW of wind, some portion of it might be offline. So I'd say we're still gonna optimize, and it will bring the uptime up. But of course, our tech stack always operates with a business logic that we only mine when it's profitable. The revenue from mining has to be, you know, higher than the cost of power. So what I'd say is, on average, because we're gonna be drawing power when the wind's not blowing, the market price there will be at the higher end of our portfolio, but we're only gonna mine when it's profitable to do so. Fair enough. Yeah, the rigs are in there, right? So it's just- Yes. You know, getting more incremental output for the rigs and a profitable output. Thanks a lot, guys. Thank you. I'm showing no further questions. I would now like to turn the conference back to Tyler Page for closing remarks. Well, thank you once again for everyone dialing in and the great questions. For those of you that will be in Odessa next week at our Investor Day, at our tour of the site, we look forward to seeing you and showing it off and trying to give a sense of why we're so excited about the next generation that we're gonna build it at Black Pearl. Thanks again for your support, and we'll talk to you soon. This concludes today's conference. Thank you for participating. You may now disconnect.