Good day and welcome to the Cipher Mining Q2 business update conference call. At this time, all participants are on listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. Instructions will be given at that time. As a reminder, this call may be recorded. I would now like to turn the call over to Joshua Kane, Head of Investor Relations. Please go ahead. Good morning and thank you for joining us on this conference call to discuss Cipher Mining's Q2 2024 business update. Joining me on the call today are Tyler Page, Chief Executive Officer and Edward 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. 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 were filed at the end of our earnings release issued earlier this morning. I will now turn the call over to Tyler Page. Tyler? Thanks, Josh. Hello, this is Tyler Page, CEO of Cipher Mining. Thank you very much for joining our Q2 2024 business update call. Let me begin the call with a few key metrics for Cipher as of the end of July 2024. The upcoming growth of our business is the major theme of the call today and Cipher's growth and expansion continued throughout the Q2. We have now grown to 8.7 EH/s of self-mining capacity, with a current fleet efficiency of 27.8J/TH. As we look to the rest of 2024, we plan a significant upgrade of mining rigs at our largest data center at Odessa that will bring our self-mining capacity to 13.5 exahash per second and improve our fleet-wide efficiency to 18.6 joules per terahash by year-end. Those upgraded rigs are scheduled to ship in the Q3 and we will install them as they arrive because the site is already prepared to take them. Our growth is then expected to accelerate considerably in 2025, with the addition of our new 300MW Black Pearl data center reaching completion. We expect that the data center will expand our self-mining capacity to 35 EH/s and improve our fleet-wide efficiency to 15.3 J/TH. Cipher has continued to build its Bitcoin inventory and, as of the end of July, held 2,270 Bitcoin. And as a reminder for those that are newer to the story, Cipher is probably best known in the industry for its very competitive all-in weighted average power price of 2.7 cents per kWh. Electricity represents the large majority of our operating costs and our low price is a key driver of our best-in-class unit economics. I mentioned that our focus will largely be on Cipher's upcoming growth and today I am very excited to provide early details of the extensive work we have been doing to build our pipeline of attractive new data center sites for future development. We have consistently said that owning our own infrastructure is vital to our success. Cipher has always sourced, owned and operated its own data centers. Historically, we have acquired sites that have already received interconnection approvals, but we recently expanded our scope and signed a letter of intent for an option to acquire three new sites in North America that are adjacent to transmission assets and in the final stages of approval for interconnection with a 500-MW targeted capacity per site. By getting involved earlier in the development timeline, we can avoid broader bidding competitions and source valuable sites that most of our competitors cannot, while improving the long-term visibility for our supply chain and construction functions. Our ultimate purchase price for the sites under our agreement will be very attractive and based on the number of megawatts approved for interconnection, limiting our downside risk. In addition to this purchase option, we are moving forward with a front-of-the-meter site in Texas called Reveille that has already been approved for 70 MW and we believe can be expanded to 200 MW by the time it energizes in Q1 2027. So for future development after Black Pearl, we now have a potential pipeline of up to 1.7 GW of capacity across four new sites. Notably, all of these future data center sites sit at the center of the major trends we see impacting the data center space in the coming years. The continued adoption of the Bitcoin network and related value of Bitcoin mining as a flexible load, as well as the meteoric growth of AI-related HPC data centers. We believe large-scale interconnections that can be used in a variety of ways will become more valuable over time, The 4 sites we intend to develop all have the necessary characteristics for development of HPC data centers, but also sit in locations with demand response programs that would allow us to monetize the flexibility of curtailment used in Bitcoin mining operations. With these sites, we have a lot of optionality, which is exactly where we like to be positioned in front of trends with the potential for massive growth. In connection with the updates on our pipeline of new sites, I am also pleased to announce the launch of our HPC infrastructure business. Given the requirements for success in the HPC infrastructure business and the relative strengths of Cipher Mining, we believe we will be a market leader in this space. In recent months, we have devoted considerable focus to the evolving HPC data center marketplace and have identified three specific advantages we have over competitors. A successful provider of HPC infrastructure needs to have access to the right data center sites, an experienced construction and operations team and the capital to finance the necessary build-out. Cipher is well-positioned in all three areas. Our pipeline sites all have access to adequate land and fiber necessary to service HPC customers. The existing construction and operations team at Cipher has extensive experience building and operating Tier III data centers at firms like Google, Vantage and Meta. As an example of the team's excellence being recognized, the Uptime Institute recently awarded our Odessa data center the Management and Operations stamp of approval. The Uptime Institute sets industry standards in the data center industry and has historically focused exclusively on traditional data centers. This is their first instance of branching out to the Bitcoin mining industry. Our team literally sets the standard for operational excellence in our industry. When it comes to financing expansion, our management team has deep Wall Street experience with a proven track record of raising capital. Over the last few months, we have been inundated with requests from HPC lenders and investors managing billions of dollars dedicated to the space, asking for information about our data center sites, our development pipeline and our level of interest in being a provider of HPC infrastructure. We have also had deep technical discussions with potential tenants and we are confident in our ability to build powered shells that will be very attractive to hyperscalers and other large tenants. Given our site portfolio, our unique strengths in construction and operations and the level of investment capital available, we are excited to embark on a new major line of business for the company. We are also still very excited about Bitcoin mining and the potential for managing the associated curtailment. While it is too early to predict the exact mix of our business lines over time, Bitcoin mining and HPC infrastructure are complementary lines of business with different risk and payoff profiles and even have the potential to converge. We think Cipher is uniquely positioned to be best-in-class in both verticals and our strategy will be guided by our intent to maximize shareholder value over time as we develop our future data centers. Now let's turn to the next data centers we are building. Slide 6 and 7 show a rendering of the completed data center at Black Pearl and photos from the current site work. We are scheduled to energize the site in the Q2 of 2025. Our O&M building is taking shape at the site and steel erection, concrete foundations and underground electrical work is progressing on schedule. Our design envisions 250 MW of air-cooled and 50 MW of liquid-cooled Bitcoin mining. We have had hyperscalers inquire about our willingness to repurpose a portion of the data center for HPC infrastructure and while we haven't completely ruled it out, our current intent is to dedicate the full 300 MW to Bitcoin mining. At full capacity, the site is anticipated to produce roughly 21.5 EH/s of hash rate. Slide 8 shows an overview of the Reveille data center site. The site is located in Cotulla, Texas, in Load Zone South, which is a different area of ERCOT from Odessa and Black Pearl, which are located in Load Zone West. It has been approved for 70 MW, but based on early discussions with the transmission and distribution service provider, we believe we can expand the site to 200 MW in 2027. Given that the timeline to energize this site aligns with the necessary timeline to manage the supply chain and build a Tier III data center, we have focused our initial planning and discussions for Reveille on HPC infrastructure. It is still too early to determine the exact plan for the site, but we have had a high level of interest from capital providers and potential tenants and our baseline plan now is to proceed with building a powered shell data center for HPC and securing a long-term lease from a high-quality tenant. Now let's move to a review of our current operations. On slide 10, we give a portfolio overview of our existing data centers and a near-term timeline for expected scaling of our data centers and expansion in our self-mining hash rate. Year to date, we paid an average all-in electricity cost of $15,004 per Bitcoin produced at our data centers. We are very proud of this number and it drives our best-in-class unit economics. Please note that when some of our competitors talk about these costs, they only include electricity and not transmission and other charges. In contrast, when we talk about all-in electricity costs, we mean the total cost to deliver electricity to our mining rigs. So our numbers include all transmission and other charges and our low numbers dramatically demonstrate our competitive advantage. On the left side of this slide, you have an overview of our four current data centers, along with our all-in electricity cost per Bitcoin at the sites year to date. The charts on the right side of this slide give you a graphic illustration of the number of megawatts we manage related to our self-mining operations and the hash rate produced by those operations, as well as the additional growth opportunities in the coming year and a half. As you can see, we expect to manage 566 MW of self-mining across our five data centers in 2025 and we expect those data centers to produce 35 exahash per second of hash rate. At this point, we will turn to production by site. On slide 11, you can see a picture of our Odessa facility. Odessa is the most significant part of our portfolio, as it represents approximately 86% of our Bitcoin production in July. Recently, Odessa became the first Bitcoin mining data center to be awarded the Uptime Institute's stamp of approval for management and operations. 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. We currently generate approximately 6.9 exahash per second at the site, utilizing approximately 207MW. Those same 207 megawatts will generate roughly 11.3 exahash per second, with the pending rig upgrade expected in the coming months. We have mined roughly 1,622 Bitcoin at the site year to date through the end of July. On this page, we also provide the observed all-in electricity cost per Bitcoin at the site post-halving, which was $23,563. Even after the recent halving reduced the number of new Bitcoin paid to miners, you can see how valuable it is for Cipher to have a cheap, fixed price of power available on such a large portion of our portfolio. On slide 12, we highlight our joint venture data centers of Alborz, Bear and Chief. With the recent expansions at each of Bear and Chief, the sites now have a total power capacity of 120 MW and currently generate approximately 3.7 EH/s. We own 49% of the JV sites and they now generate roughly 14% of our overall Bitcoin production. On this page, we also provide the observed all-in electricity cost per Bitcoin at the site's post-halving, which was $28,784. As a reminder, both Bear and Chief operate as front-of-the-meter sites, so there will be some expected seasonal fluctuations with their electricity costs and summer months tend to be higher. As we turn toward the rest of 2024, we look forward to our continued growth in both our Bitcoin mining business and our new HPC infrastructure vertical. At this point, I'll turn it over to our Chief Financial Officer, Ed Farrell. Thank you, Tyler and hello to everyone on the call. As I've done on previous calls, I'd like to start by providing some high-level observations on the quarter and then we'll go through the key line items in detail. For anyone tracking Bitcoin and the miners, it should come as no surprise that revenues are down in the first full quarter after halving. From the outset, Tyler and I have emphasized designing a business that we can thrive through the entire cycle. Despite the anticipated drop in revenues, we are very encouraged by the business performance and the company's growth profile as we move past the recent halving. Low-cost, fixed-price power and a strong balance sheet remain key strengths of our financial position. Slides 14 and 15 give a snapshot, which we provide every quarter on some of our financial metrics on both a sequential and year-over-year basis. Let's move on to slide 16 and delve into the numbers in more detail. In the Q2, we faced significant industry-wide headwinds, including a drop in revenues driven by the halving, as well as a drop of more than 50% in hash price over the course of the quarter. For the quarter, we had a GAAP net loss of $15 million, a sequential decrease of 138% and a 16% decrease from the prior quarter, when we reported a net loss of $13 million. In the current quarter, we mined 563 Bitcoin, generating revenues of $37 million at an average price per Bitcoin of $65,000, compared to 924 Bitcoin in the Q1 of 2024 at an average price of $52,000 or $48 million in revenues, a sequential decrease of 24%. Year over year, our revenues increased 18%, primarily driven by the increase in Bitcoin price, partially offset by the halving in April. As I mentioned at the outset, our fixed-price power is a critical contributor to our attractive unit economics. In the current quarter, the cost of revenues declined 4% sequentially. When comparing revenues in the current quarter versus the same quarter in the prior year, you can see that the cost of power on a percentage basis was down significantly by our growth over the past year. This is primarily attributable to our fixed price PPA at Odessa, which we've talked about in previous quarters. The value of that contract increased by $22 million this quarter alone, underscoring the inherent value of the power arrangement. I should point out that as the value of the PPA is in large part driven by the time remaining on the contract and the expected future energy prices, which are seasonal and volatile, it would not be surprising to see a decrease from quarter to quarter in periods going forward. Moving on, as you recall, we adopted the new crypto fair value accounting standard in 2023 and with the drop in Bitcoin price in the quarter, we recorded a loss of $21 million of the fair value of our Bitcoin holdings. However, this mark-to-market loss was offset by $5 million of realized gains from the sale of Bitcoin in the period. Our philosophy towards the growth of our Bitcoin inventory and approach to treasury management has not changed. We remain optimistic about the long-term outlook for Bitcoin and believe there are significant advantages to growing our Bitcoin inventory beyond near price appreciation. We've discussed this in previous quarters, but it's worth reiterating. We maintain an opportunistic approach, continually assessing various funding avenues for our growth initiatives. While we generally aim to increase the size of our Bitcoin inventory over time, our decisions are guided by the markets and our overarching capital allocation strategy. We constantly assess the markets to find the most attractive forms of capital available, weighing the pros and cons of different funding methods to support our business and expansion plans efficiently. This might include using our cash reserves, Bitcoin holdings, or issuing equity. Through this ongoing evaluation process, we determine our estimated cost of capital and manage our treasury dynamically. At June thirtieth, we held 2,200 Bitcoin in treasury. As in previous quarters, I'd like to spend a minute on our G&A expenses and our philosophy for managing these costs. Last quarter, we began reporting compensation benefits as a separate line item on the face of the income statement. Compensation and benefits increased $3 million sequentially to $16 million, primarily driven by share-based compensation. Current quarter versus prior year quarter increased by 29%, primarily due to an increase in headcount and share-based compensation. Now on to general administrative expenses, which include IT, corporate insurance, professional fees, occupancy and other public company expenses. These costs increased by $2 million, driven by professional fees and public company expenses, primarily related to Sarbanes-Oxley compliance. Current year quarter versus prior year quarter, these expenses were down 3%. As we have stated previously, building our team and technology stack are pivotable to maintaining the competitive edge and as such, we have made significant investments in both personnel and technology, anticipating that our model will scale effectively as we increase the total megawatts under management. We expect these investments to drive future top-line growth, thereby positively impacting our bottom line. Depreciation and amortization expense totaled $20 million, an increase of $3 million, or 17% from the prior quarter and a 41% rise compared to the Q2 of 2023. The sequential increase was driven by a change in depreciation schedule for our miners. Previously, we accounted for the depreciation of miners over a 5-year period. However, given our recent fleet upgrade and the rapid efficiency gains with next-generation miners, we now believe that a 3-year depreciation schedule is more appropriate. Our expectations for upgrade cycles and our ability to purchase and install much more efficient machines have evolved and we believe this should be reflected in our accounting treatment the entire fleet. We made this change effective June 1 and accounted for it prospectively. When comparing current quarter versus prior-year quarter, the increases primarily relates to additional assets placed into service in late 2023 to complete Odessa. Now let's turn to our non-GAAP measure slide we use to reconcile adjusted earnings. As always, I will remind you that adjusted earnings exclude the impact of depreciation and amortization, the non-cash change in the fair value of our derivative assets, deferred income tax expense, the non-cash change in fair value of the warrant liability and share-based compensation. These supplemental financial measures are not measurements of financial performance in accordance with U.S. GAAP. However, we believe that these non-GAAP measures may be useful to investors for comparing our performance across reporting periods consistently. Internally, management uses these non-GAAP financial measures to better understand, manage and evaluate our business performance and to facilitate our operational decisions. When adjusting our Q2 GAAP net loss, we add $12 million for the items I just listed. This brings us to an adjusted net loss of $3 million for the quarter, compared to an adjusted net income of $63 million in the prior quarter and $8 million in the Q2 of last year. Now, let's turn our attention to the balance sheet at June 30. Our total current assets amounted to $309 million, an increase of $154 million from the end of 2023. Our cash position grew to $123 million, an increase of $36 million at the close of 2023. Our current liquidity position is $211 million, comprised of $71 million in cash and $140 million worth of Bitcoin. The decrease in our cash position subsequent to June 30, was primarily driven by deposits related to miners we contracted to purchase and capital expenditures related to the build-out of our Black Pearl data center. I'll now cover quickly some of our balance sheet line items at June 30. Prepaid expenses amounted to $4 million, flat from year-end. This balance is primarily related to corporate insurance. We recorded a Bitcoin balance of $138 million, reflecting the 2,200 Bitcoin held in treasury. This figure marks an increase from the 780 Bitcoin held at year-end, valued at $33 million. In the Q2, we liquidated 153 Bitcoin or $10 million. Now, I'd like to shift our focus to the value of our Odessa power contract, which we record as a derivative asset. We discussed in the past the significant competitive advantage provided by this contract, enabling us to be a low-cost producer of Bitcoin. As a reminder, we began reporting third-party marks for this agreement in the Q3 of 2022. This mark is reflected as a derivative asset on our balance sheet and is subject to revaluation each reporting period. Essentially, it represents the in-the-money value of the contract relative to the time value and prevailing forward power prices at our Odessa facility. As of June 30th, this asset was valued at $123 million, reflecting a $22 million increase in the Q2 and an increase of $29 million from year-end. This change is recorded as a gain on our statement of operations. As always, fluctuations in the fair value of this contract will impact our GAAP earnings, but we exclude it from adjusted earnings. Other significant assets include property and equipment totaling $239 million, primarily attributed to our Odessa facility. Within this category, mining rigs and related equipment accounted for $177 million. Leasehold improvements are valued at $137 million and construction in progress at $20 million. These figures are net of $95 million in accumulated depreciation. Deposits on equipment of $58 million primarily consist of progress payments we've made in accordance with previously announced miner purchases. Additionally, we hold intangible assets totaling $9 million, with $7 million attributed to the Black Pearl site and its associated ERCOT approval and the remaining $2 million related to capitalized software. At the end of the Q1, our equity investee interest in Alborz, Bear and Chief JVs stand at $50 million and we had operating lease obligations of $10 million. We had security deposits totaling $22 million, which include the $13 million of collateral posted at our Odessa power provider and $6 million deposit to Oncor related to the construction of our new Black Pearl data center. There were no significant changes to the liability side of the balance sheet from year-end and as we've reported in the past, we have no debt that hinders our capital structure. As always, we look forward to updating you in greater detail on our growth plans over the coming quarters. I will pause now and Tyler and I are happy to answer your questions. Thank you. If you'd like to ask a question, please press star one, one. If your question has been answered and you'd like to remove yourself from the queue, please press star one, one again. One moment for questions. Our first question comes from Brett Knoblauch with Cantor Fitzgerald. Your line is open. Hi, guys. Thanks for taking my question. And congrats on building up the, the infra pipeline. It's nice to see. Maybe this one's for Tyler. First, I think there's been some speculation about Cipher being an acquisition target out there. Maybe you could provide any color or comment on that. And then secondly to that, could you provide some additional color on the M&A landscape and how you view maybe organic site acquisition versus inorganic opportunities out there, especially kind of post-halving? Thank you. Sure, Brett, thank you very much for the question. this has been a popular topic. I think, as far as market rumors about Cipher, I will stay consistent with what the company has been saying all along, which is we have no comment. I think it's not—it shouldn't be surprising to anyone that the press would speculate that we're a popular target, given all the growth and opportunity we just talked about on the call. We're very bullish on our prospects, but, you know, the company has not put out anything and we will continue to have no comment on market rumors. That's for the press to handle. I guess, speaking then more broadly about Because I've talked about M&A on the past calls, I think what we're seeing now is there is a fair amount of M&A in the industry. It's really the expected chaos that's been unleashed by the halving. And I think it forces miners to sort of question what they are, right? If we see all-time low hash costs over the last quarter, you know, a miner has to decide to do kind of one of two things, an all-time low hash price over the last quarter. So a miner has to decide what they're gonna do with their own hash costs, so that the cost that they spend to produce a unit of compute, you can kind of go in two directions. One is to basically strip out all the overhead you possibly can, to take it down to really just your power and basic operations cost, so that you can continue to make a profit margin. Or alternatively, you lean into growth, you get a more efficient fleet, you add top line hash rate and drive down your hash cost because you're spreading it across more terahash and you're pumping that electricity through more efficient machines. That is definitely where we're going. I mean, to give a sense, our recent hash cost was about $43 per petahash per day. That breaks down roughly into, like, $19 or so of power cost and $24 of ops and G&A. And I view that as, like, the $24 of overhead there is because we're a development company. We're adding these new sites. We've got all these expansions coming in the near term and that will drive down our, our costs significantly. To give you a sense, just looking at hash cost, like just post our Odessa upgrade, which is just a matter of rigs being delivered between now and year-end and us swapping out older rigs, just doing that will likely drive our hash costs to below $30 per peta hash per day. And so if you, if you have the opportunity with low power costs, you know, now is a good time to buy equipment, invest in scale and I think there's a lot of growth opportunity. You know, I think the other thing you can do is try to strip out all the costs and then you're really just a site that's trying to maximize your, your economics at a site. You're not a development company. I think in general, that's what is driving a lot of the M&A, is folks trying to get to scale and maybe address their own shortcomings in, in their ability to do some part of the entire value chain. We do that all in-house, so we source our own sites, we, we take it from dirt to an operating data center and then we, we trade and manage curtailment and and energy around the operations once it's done. So what has happened is, I talked about M&A. We've been very busy this year. We've been in a lot of data rooms looking at opportunities for sites, companies to acquire, et cetera. Frankly, we think people overpay for built sites and that may be rational for other companies because they don't have the capabilities to build, source their own sites and build their own sites. We do, so I think we tend not to pay a premium and often we don't make it to the final bidding round. And what that's driven us towards is finding more sites earlier in the development chain. That's where we see the highest return on our investment. And so from an M&A perspective, you know, that's where we've ended up allocating our time and efforts and that's why you see the new sites that are coming online. Perfect and then maybe just kind of following up on the timing of new sites coming online. So Black Pearl, you know, call it middle of next year. Can you provide an update on Cotulla and the new 1.5 GW of sites that I guess you guys have kind of secured power for, or have options on? What, what's the timing of those potentially being energized and how should we think about the maybe financial outlays for that and when that would occur? So look, we're, we're really excited about it, but I think everyone needs to understand that this is a longer term opportunity. These sites are 2.5 years away, basically, from energizing. Now, the good news about that and I think as we think about the HPC business, we've spent a lot of time talking to potential tenants and thinking about how we would build a data center with three nines or five nines of uptime and and the supply chains you have to manage for that. Those supply chains go out years. So, I think i know there's a lot of buzz in the industry about people throwing in HPC revenue. All I'd say is, if you're gonna do it by providing infrastructure to a large tenant, it, it takes a long time anyway before that revenue is gonna materialize. And so the opportunity set here for us is those are well beyond Black Pearl and so we have a really a best of option. We like Bitcoin mining. These sites would be great for Bitcoin mining. They are also very large scale and have the necessary components for HPC. We've had so much interest in that space, we've spent a lot of time mapping out what it would take to build a data center with five nines of uptime from scratch and it lines up with that timeline. So these are longer term projects, but I think where we see the industry going in the coming years is this value for interconnect, value for data centers that are in desired locations and have the desired and and we're like a best of option between the two businesses. But that's part of the long-term positioning for Cipher. Perfect. Appreciate it. Thanks for all the color, guys. Thank you. Our next question comes from Bill Papanastasiou with Stifel. Your line is open. good morning, gentlemen. Thank you for taking my questions. For the first one here, I was just hoping, Tyler, you'd be able to kind of share your philosophy on the HPC/AI opportunity and how you're, you're weighing the capital allocation strategy going forward. You know, how might it look relative to Bitcoin mining, now that you have these options enhanced? Sure. Thanks, Bill. So I guess first of all, since there's I guess some of our competitors are taking different approaches in this space, so let me distinguish what we're interested in. We do not plan to buy our own GPUs and be a seller of compute. That is not a business we think is very complementary to our skill sets and it has its own risks and enormous capital outlays associated with it and so that is not our plan. Our plan is to be effectively a host for HPC infrastructure. And so, what we hope to do is build out sites and have hyperscaler or other large high-quality tenants to sign a long-term lease. Now, it's still a little early. I have been very busy speaking to both the potential tenants and a lot of financiers. The market is extremely busy and interested in this. The thing to keep in mind that's very different about the two businesses is there's different markets and different times where we may make more money Bitcoin mining, or we may make more money in selling HPC infrastructure. The attractiveness of the HPC infrastructure opportunity is that those tend to be long-term leases and obviously are not correlated with the ups and downs of Bitcoin price. The other thing is, even though that's a much more capital-intensive business, there is quite a developed financing market with some of the biggest lenders and investors in the world. And if you're focusing on the piece of the business that we are, there's a lot of appetite to finance debt and even equity if you set up a development company to do very high LTC loans, you know, up to 90% of the cost might be loaned if you have a hyperscaler tenant at a very reasonable interest rate. And then as you develop more and more sites, you have the opportunity, you know, as they mature and have active tenants, there's a whole asset-backed securities financing market that's available. And so it is a very different business in how it operates compared to Bitcoin mining, where lenders have shied away from Bitcoin mining for the past 2+ years. And maybe that doesn't stay that way forever, but the successful Bitcoin miners, including Cipher, have pretty much entirely funded the build-outs with equity. Now, you know, I think we can see really good ROI potentials on sites that you own and operate. You know, if we look at Black Pearl, of course, everything is gonna depend on what happens to hash price and Bitcoin price going forward. But, you know, we look at ROIs on Black Pearl of a year and a half to 3 years, depending on what happens on the market and that's great. So I think going forward, we do have time. We're gonna launch the HPC business. I think it starts with getting a really high-quality tenant that wants to sign up for a lease at one of these sites. We have had a lot of time with some of those big names, our construction and ops team and I know you know this, Bill, because we went over it recently, but, you know, we've got a lot of people that are ex-Google, Vantage, Meta, have operated hyperscaler data centers. We've had all-day meetings with technical teams, senior management, with hyperscaler potential tenants. I think our team is very well situated. This is a big competitive advantage for us. So if that helps us secure a lease in the near term, where a lot of design input can come from the potential tenant, you know, pretty soon we would be dedicating those sites, whether it's the site in Cotulla, or the future sites, under option and then seeing where that business goes. Again, Black Pearl, you know, we expect to have a very, very robust Bitcoin mining business next year. I think in a perfect world, we will offset it with, you know, a very nice long-term HPC tenant contract and then we'll see as it goes. And the great thing about those sites that we've got in the pipeline is they'd also be wonderful for Bitcoin mining. I think the long-term prospects for an HPC tenant are kind of nice. If you look at the longer term leases, they probably, in the back years of those contracts, will exceed what Bitcoin mining data centers are likely to produce, because hash price over long time periods tends to go down. There's a cyclical nature around halvings. You know, we're very bullish over the next year and a half for hash price expansion, but the long-term trend is that you've got to get more efficient. And so the great thing about, you know, HPC revenue would be the sort of back end of a potential lease, where the numbers are likely to be higher in dollar terms that you're being paid for producing that, providing that data center. Awesome. I appreciate that color. I recall visiting the sites, you know, over a year ago and I was really impressed with the team there in Odessa. Just shifting gears here, Tyler, you know, Cipher has been able to leapfrog a number of peers and is now a top five miner on account of scale with 35 exahash. So just focusing on the Bitcoin mining aspect of the business, I'm curious to hear how important it is for Cipher to maintain this level of network market share relative to peers going forward. How should we think about that? I mean, I think that's a good proxy for what we wanna do, but we don't really do capital planning in terms of, like, what's our market share. I guess we do as kind of a derivative of the way we think about it, but we're really focused on what's likely to happen to hash price and what will be our hash cost to produce the hash. And that margin, that spread between those two numbers is really the business. And so, you know, listen, the foundation of that, as I harp on every one of our earnings calls, is the low-cost power. That drives you know, that's the number you cannot change or tweak. And so once you lock that in, you can then be opportunistic through the cycle to do things like improve the efficiency of your miners. So, you know, I would say versus the last couple of years, we're still in a relatively cheap pricing period to acquire new rigs. And so the pickup in efficiency can be very large for what is, at least compared to historical numbers, a smaller capital outlay. We tend to look at projections on, you know, can we lower our hash cost? How much do we lower our hash cost? What's the capital outlay to produce that? What's the payback period? Now, I guess the knock-on effect of that is it implies we will take market share and certainly thinking about what happens to network hash rate will determine the market share, but that's all kind of accounted in the forecasting for hash price. So like, if Bitcoin prices go up, there'll be more network hash rate, you'll be fighting for market share and you might have less of it, but of course, Bitcoin prices will be higher. So really, you know, the dynamic we look at is this forecasted hash price versus what our hash costs will be. Appreciate the color, Tyler and congrats again on those, HPC AI announcements. Thanks, Bill. Thank you. Our next question comes from John Todaro with Needham & Company. Your line is open. Great. Thanks for taking my question. I have two of them, I guess, first on the Bitcoin business and then the down the road HPC business. Tyler, how do you think about allocating costs and investing in the business? And I guess another way to put it is, how should investors be thinking about it? Is it on a more so a per Bitcoin cost basis in this post halving environment, or that cost on a hash basis, as you've mentioned a few times here? That's a good question, John. I mean, I think this is as investors get more savvy in the sector, I generally think the better way to think about things is hash price versus hash cost, 'cause it accounts for the kind of multiple variables, especially if you're projecting forward. I don't think the right thing to do is project forward on a cost per Bitcoin basis. That said, we get this question and almost every big institutional investor that's maybe newer to the space, they always start with a framework of what's your cost per Bitcoin, right? Because everyone follows the Bitcoin price. It's easier to think of in that sense. And I guess, like, on a backward-looking basis, I'm comfortable doing that, because you don't have to think about, well, what happens to network hash rate? So like, if we just look post-halving, if I translate our hash cost and hash price, you know, hash cost numbers rather and I'm backwards looking, just post-halving, because that's what's most relevant. You know, our power cost to produce a Bitcoin is about $24,000 a Bitcoin and for our all-in cash costs, it's sub $50,000. And that's post-halving in what we expect is, you know, the expected bad environment post-halving. This is sort of supposed to be the market that squeezes miners. This is a known unknown when you go through the halving, that you're gonna have a rough period. And so I think, you know, backwards looking, I can tell you, cash cost to produce a Bitcoin was sub $50,000. And that's with this idea that, again, we are completely focused on growth. We think these trends around data centers and Bitcoin mining, or rather Bitcoin network adoption, are likely to be really big. And I know you know this and most of our investors know this, but like, you know, as hash price goes up or as Bitcoin price goes up, you know, in the moment, those additional $ per Bitcoin drop to our bottom line. You know, so we're very focused on expansion, but like, you know, half the cash costs we're sending, I view as an investment in scale and expansion. And so those numbers will get better and better by year-end when we have a fleet that is much more efficient and has a bigger top-line hash rate because of the upgraded Odessa. And then in 2025, you know, we're projecting about 15.5 joules per terahash efficiency across the entire fleet and potentially, you know, nearly tripling the top line. So, that investment today that we sort of make in the people that originate these sites and build these high-quality data centers, that's now defrayed over a smaller, less efficient fleet. We are very much on the growth side of growth philosophy of driving down that hash cost and then that translates to Bitcoin. But for, like, a metric in the ugly months post-halving, which are expected to be ugly, we're spending less than $50,000 of cash and that includes what I'll call this investment in the forward nature of the business and expansion, as well as the cash costs to actually pay for electricity and mine the Bitcoin. Got it. Thanks for that. And then just my other one, real quickly on HPC. You know, we spent a lot of time due diligencing different sites and and locations. In Texas, there, there is a little bit of a concern around curtailment. I guess, do you guys envision this site, if it is for HPC, say, the full 200 MW to HPC, which it sounds like is, is what you guys are leaning towards, do you envision curtailment at that site? And especially as you think about the broader 1.5 GW, does that actually impact ERCOT approval? Has there been questions about that piece? Any kind of color on that? I mean, high level, I'd separate it. Even within ERCOT, you apply to be a flexible load or an inflexible load when you're, you know, part of the approval to do what we do at our Bitcoin mining data centers is getting what's called the LFL approval, the large flexible load approval, where sort of mapping out curtailments is a big part of how they think about balancing the grid down there and the particular areas of transmission and distribution. The HPC opportunity, no, these have availability to, you know, power 100% of the time. Even the site at Reveille, the site in Cotulla, Texas, you know, that's set up as a front-of-the-meter site, where, again, for Bitcoin mining, if we were to do Bitcoin mining there, we would absolutely manage curtailment because you're stripping—you know, when we manage curtailment, we're stripping out the highest prices we would be paying for power and cutting our overall average power cost nearly in half by stripping out maybe 5% of the most expensive hours. HPC is a very different business. You're being paid for that 100% uptime and really, most of the CapEx goes into that additional reliability of uptime. I mean, to give you a sense, you know, when we say three nines of uptime, of course, I'm sure everyone knows, but, you know, you're thinking about 99.9% and and then going out to five nines, which is more typical for, say, a hyperscaler, so 99.999% of uptime. The, the cost goes up dramatically, right? You, you might be spending $3-$4 million per MW for infrastructure to get three nines of uptime, whereas you could be up to, you know, $10 million or even more, depending on the real estate location, for five nines of uptime. But the point is, that is generally all built around the idea that you are not managing curtailment. Now, what I'll say, I, I did allude to this earlier on the call. This is a very dynamic market. A year ago, you know, I think hyperscalers would only maybe look at real estate in a place like the Dulles Corridor and want five nines of uptime. And if you talk to them, they may have 300 line items that they require for redundancy and very specific technical design requirements. What we've seen is there's now such a drive for megawatts and it's kind of dynamic. Megawatts that are available sooner are even more valuable. You've seen a lot more flexibility on the side of the potential tenants. And so I think playing that out, what that means and could be interesting over time is maybe that trend continues and in the future, curtailment becomes part of HPC. Maybe they say, "Hey, if you could drive down our cost, maybe we'd be willing to give up a couple% of the uptime." All remains to be seen. That's pure speculation. I think we're really well positioned if that is what happens to the market, given, you know, just how much of that is our core business. We'll see, but based on, let's call it, the other compromises on location and some of the other, sort of technical requirements, it wouldn't surprise me if we see a market that continues to evolve on the HPC side in terms of what's required. Appreciate that. Thanks, Tyler. Thank you. Thank you. Our next question comes from Mike Colonnese with H.C. Wainwright. Your line is open. Good morning, guys and congrats on all the recent deals. Definitely a lot in the works right now for Cipher. So I know it's still early days, but how should investors think about the revenue model and the economics for this upcoming HPC business, based on your planned go-to-market strategy, which sounds like you're going to take more of a co-location approach here? thanks, Mike. I'd say, listen, first off, I'll try to give you a sense for what we've seen in preliminary discussions, but it's very clear to us that deals we would strike are, are pretty bespoke, so I don't know that the deals we've seen would necessarily be indicative. But I mean, I, I think what we're seeing is, you know, gross margins in that business of 80%. And then you know, financing quite a bit of that CapEx, depending on the stage you are, who the lender would be. I mean, anecdotally, I can tell you there's quite a few investors that are out there, that are interested in earlier stage financing, maybe when you're just building a data center or you have, say, a letter of intent from a large, high-quality tenant. There's a much more developed market if you've got a lease from a high-quality tenant that is like, you know, bank financing and much more reasonably priced. These are all kind of dynamics we're looking at. Suffice to say, investors are very interested in just the overall breadth of our portfolio and the potential capacity to do, you know 1.7 GW in the coming years has a lot of people excited. I think it's really hard for us to size specifics because we're just doing lots and lots of meetings on this right now, trying to move quickly. But, that's you know for what it's worth, that's what we've seen on the type of business we're looking at and we'll probably have more details as specific conversations advance. Got it. Got it. Thanks for that. And just curious, what made you guys decide to go with the liquid-cooled infrastructure for 50 of the total MW over at Black Pearl versus going air-cooled for the full site? And how are you guys estimating out the CapEx related costs for liquid-cooled versus what you would otherwise see for the air-cooled? Thanks. Great question. So look, we've been modeling a lot of different operating strategies in the test kitchen for a while now. Obviously, Texas is hot and so managing that heat and efficiency and all the various ways you can under clock and try to optimize your performance are all part of the analysis. At a high level, you know, air-cooled tends to be the cheapest CapEx and then the question is, you know, also the OpEx is low, but you're probably gonna have worse efficiency in production. The question is sort of: where do you cross over to make a bigger upfront investment worth it? You know, for us to do 50 of the 300 MW in hydro, you're talking about an incremental spend of probably, you know, close to $20 million, use round numbers. I think what's important to us is, number one, we think we've arrived at a setup and a system that's gonna be best in class and will easily justify the incremental spend, when we, when we operate there. I think the other thing is, it's important for us to have a data center that, frankly, we can show off, where we're doing hydro, because there's implications of that for HPC, obviously. And I think as part of a large scale first step, we wanted to do 50. Now, that said, you know, we know air cooling pretty well. We know with our curtailment and energy trading strategy, we can operate well in Texas with air-cooled. And so, you know, 50 MW ended up being the kind of Goldilocks just right amount, that it's large scale, but it's not like increasing CapEx in a crazy way with, you know, new, new way of operating, where I'm sure as good as we are, we'll certainly stub our toe and learn some lessons along the way. But overall, that's kind of the incremental pickup for the 50 MW of hydro that we're gonna do there. Great. Thanks for taking my questions, Tyler. Thanks, Mike. Thank you. Our next question comes from Tyler DiMatteo with BTIG. Your line is open. Hi, guys. Good morning. Thanks for taking the question here. Tyler, I'm curious, on the HPC opportunity and the sites, I guess at a high level, can you just kind of add some color in terms of the actual sourcing process and your, you know, your strategy for that? Maybe, you know, who you're bidding against, how early does the process have to start? I guess what I'm wondering is, you know, you hear a lot about HPC. I'm curious, just, you know, is there a sweet spot for megawatts? I know it's early days for customers, but, but, but I guess, is there a sweet spot as well? Any thoughts there broadly? Sure. So, I'll go in reverse order on those questions, Tyler, thanks. You know, the largest tenants, let's call it hyperscalers, are probably not looking sub 100 and really would prefer, like, 200+ MW. You know, I did mention earlier on the call, we've had a lot of people ring us up and ask about Black Pearl and hey, could we take that for HPC and ditch your Bitcoin mining plans? And, you know, the answer has been no. So I think, you know, from a scale perspective, that's the most attractive thing about this portfolio of sites we've sourced, is that, you know, we're hoping they are all approved for 500 MW of interconnect. That process is not done, but we're very constructive on it and I think the good news is, we came up with a pricing framework that we're only paying for the amount of megawatts that get approved. So, you know, our hope is that even if they don't get to 500 each, they are several hundred and in the ballpark and they're all gonna be very attractive. I expect to have more color on those in the coming months. You know, I expect well, you know, I hesitate to give exact timing, because sometimes, you know, approvals processes take a while, but in the coming months, I think we will have more color on some of that, as far as what gets approved. To take your first question on sourcing, overall, I think this is something we take a great deal of pride in and I'm very proud of our team. This is it's no secret to everyone on the call, it's an extraordinarily hot market to source opportunities. You add on top of that, that in Bitcoin mining specifically, it's a very active M&A environment. Lots of assets are for sale, companies are for sale, et cetera. I think anyone can go buy a finished product and what you see is, like I mentioned, people overspend in our opinion. I think, you know, Bitcoin miners are optimists and so, you know, when you're looking at an asset, you can price it with rosier assumptions about what's gonna happen to Bitcoin and justify a higher cost. We tend to be a little bit more bearish in our forecasting, just to protect the downside. It's not what we actually think is gonna happen in the real world. What we've observed is, there are not very many of our competitors and even this is true on the HPC side, like, the hyperscalers have departments of people sourcing opportunities, but they're not necessarily experts in all the local rules for getting a site, approved for interconnect. And so what we found is, there's just not as many people fishing in that pond. We've been pretty consistent on that, right? All of our sites were sourced as, like, unbuilt dirt patches and that's continued and you've seen that with Black Pearl. I mean, we got a great 300 MW opportunity at Black Pearl for $7 million. So we just, You know the downside to that is they're not ready as soon. Sometimes I know our Twitter antagonists say we move too slowly, I think we're just moving very deliberately to build what is ultimately the best company in the space. It's just that good things take time. Okay, great. Thanks for answering the question there, Tyler. Really appreciate it. I'll, I'll turn it back to the queue here. Thank you. Our next question comes from Reggie Smith with JPM. Your line is open. Hey, hey, Tyler. Thanks for taking the question. So first, I wanted to give you guys credit for managing operating expenses. It's, it's not lost on us that you guys are, are holding the line there, pretty well. I guess, just let's based on the last answer, it sounds like your M&A team is the real MVP and you guys need to make sure that they don't leave and go to a hyperscaler. But my question, I wanted to ask you, thinking about what you've announced today, I'm trying to, I guess, frame the CapEx requirement for that. I think, if I look at the 1.5, 1.8 gigawatts you guys have announced today, if you were to build that as a miner, my math is that it could cost roughly $3 billion to build out. Thinking about HPC, rough math, I think for every 100 MW, you're looking at maybe $1 billion-$2 billion in just infrastructure build out. One, I wanted to see if those numbers are correct. And then two, with that as kind of a backdrop, how do you think about balancing CapEx and returning capital to investors or rather, you know, holding cash or whatever it is? You know, like, it seems like there's a heavy period of investment that we're kind of looking at and I'm curious how you balance that. So the question is, are those numbers accurate? And then two, how do you balance the need for CapEx with the need for returning cash or generating free cash flow? Thanks. Sure. Thanks, Reggie. Let me say before I answer your questions, that, you know, we, I'm very blessed. I have a lot of MVPs here. I have about the easiest job in the world because I have really good people in sourcing sites, but also we've got MVPs in building the sites, operating the sites, trading and hedging, et cetera. All I have to do is watch our great people do great work. So, we're sort of an all-star team here, that I get to just coach. You know, that said, quick math on your numbers. I'd say on the HPC side, that sounds ballpark correct. It is a very capital-intensive business and that's why, you know, when it comes to thinking about investment returns, it's really driven by the funding there. That's why we mentioned this as one of the legs of the stool. You've got to have the sites, you've got to have the team that can do it. Again, we've already got the sites. We've got the team already hired. We don't need to go out and hire people that know how to build and develop HPC data centers. The third piece is the capital and it's early on that. I'd say we're comfortable talking about this business at such an early stage because of just the amount of interest from very high-quality lenders and investors that have been all over us, for this business. So yes, the capital outlay is enormous if you think about a 1.7 GW type portfolio, but the only way that will be built by Cipher is if lots of it is financed, debt financed and that could include, you know we've got multiple proposals for setting up DevCos that would finance separately from the Bitcoin mining business. There's a lot of structuring, analysis and optimization that needs to be done and none of that is finalized. So you're highlighting one of the main challenges is just like, wow, that's a lot of capital if you're gonna do that all for HPC and you would definitely not finance that business the way we finance Bitcoin mining. Now separately, running the numbers on... I'll try to without thinking about, I don't know that I can do the math on the fly on what Bitcoin mining would likely to be on 1.7 GW. I think, let me give you some framework for how we think about return on Black Pearl. We look at the build costs and that includes, obviously, where you're locking in rig prices is a massive part of the cost there. We look at ROIs under various forward hash price scenarios. And again, we look at ROIs that we're targeting a 1.5-3-year payback period on Black Pearl. So that's, that's gonna be a similar framework for how we decide what to do with any data center for Bitcoin mining. Now, what becomes different is, if we're thinking about these sites that are maybe you know, 2, 3 years off, how we finance them, you know, I hope that someday reasonably priced debt financing becomes available for Bitcoin mining. I think it will. You need Bitcoin to be more generally accepted. Maybe we've got, you know, broader acceptance across the investing universe here, a continued growth of the ETFs and embraced by politicians, et cetera. And then you can debt finance more of it and it's less of just an equity financed game. You know, that said, we'll have to see what the market looks like. I know there's lots of avenues available to us to finance Bitcoin mining, but it's hard to project on the entire portfolio. You know, that's a lot of capital. That's why I'm pretty comfortable saying a decent portion of that is highly likely to be HPC. Perfect. Thank you. Thank you. Our next question comes from Mike Grondahl with Northland. Your line is open. Hey, Tyler and Ed, thank you. You know, over the last 90 days, it sounds like you had a lot of discussions with hyperscalers and finance partners. What was sort of the biggest learnings for you and maybe what do you see as sort of the biggest challenge kind of going forward with that HPC effort? So it's a good question, Mike and I think you actually alluded to at least what I think the biggest challenge is, that you're pulling together two pieces to make it work, right? You need to figure out a path for financing for any of these large-scale builds and you need to figure out a high credit quality tenant side. So we're running both in parallel. We've learned quite a bit. I'd say on the tenant side, it's a lot of it is around the technical requirements. So our team, as I often highlight, has spent a lot of time at places like Google. They've built hyperscaler data centers. The market a few years ago, before they were at Cipher, was a little bit different in that, I think a hyperscaler tenant might be a lot, a lot more set in their ways about what their technical requirements might be. And to be specific, you know, some of these potential tenants, you know, imagine like a hundreds of requirements on a endless spreadsheet, for all the technical details of the build. You know, it's not to say they're compromising any of what they want, it's more that there's some flexibility because I think there's such a desire for large scale sites. And so I think what's been interesting is learning just how flexible some tenants have become in what they're willing to accept. So the most obvious first step of that is like, sure, we'd love a data center somewhere in West Texas. You know, like, what about i told you, we got some inquiries about Black Pearl. You know, but that's because fiber networks continue to get built out. You know, it starts to become questions of like, what's nice to have versus must have as folks build out this massive need for capacity. I think on the financing side, you know, still a learning process. I think it's learning about, I think, both how mature the financing market is for like a full-on lease from a high-quality tenant. I'm not sure I realize how quite fully developed and broadly acceptable by the biggest banks in the world that marketplace is. I think we're still learning kind of then, if you go earlier in the financing and construction financing stages, like what the marketplace is like and what people are willing to, to loan, for in the pre-lease stages and that's also highly variable. So it's an ongoing learning experience. I mean, I think, you know, my calendar is chock-a-block full of meetings with people and there's a pretty wide variety actually, on what people will finance and how anxious they are to get in the business. So I think the, the number one takeaway, I think the hardest thing is lining up the two pieces simultaneously, because they're very much connected, right? You want to get to a place where you have a full-on lease, because that's going to give you the broadest, cheapest financing options. On the financing side, it's also just how bespoke it is and I think it's indicative of a market that's just frenzied to find large-scale sites that work. Got it. Hey, that's, that's helpful. Best of luck. Thank you. Thank you. That's all the time we have for questions. I'd like to turn the call back over to Tyler Page for any closing remarks. Well, thank you, everyone, for taking time this morning to join us. We're at the cusp of a lot of growth and scale coming to Cipher and we're really excited about where we're positioned. So look forward to giving future updates as everything builds out. Thank you again. Thank you for your participation. This does conclude the program and you may now disconnect. Everyone, have a great day.