Cipher Mining Inc. (CIFR)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 delivered $44.0m revenue (GAAP $43.565m) and non-GAAP adjusted earnings of $30.3m ($0.08 per diluted share), while GAAP net loss widened to $46.0m (-$0.12) due to non-cash derivative fair value changes and higher depreciation from fleet upgrades .
• Operations exceeded internal guidance: self-mining hashrate reached ~16.8 EH/s by quarter-end (vs. ~16.0 EH/s prior plan) and Q3 hashrate target was raised from ~23.1 EH/s to ~23.5 EH/s; Black Pearl Phase I energized ahead of schedule and ramping .
• Strategic pivot: Black Pearl Phase II to a flexible “BTC mining/HPC-ready” design enabling rapid conversion to Tier 1–3 HPC specifications, positioning Cipher to monetize power quickly via tenants or mining; Barber Lake HPC tenant discussions continue with financing partner framework in place .
• Revenue fell sequentially (-10% QoQ) amid Texas summer curtailment and higher network hashrate, but adjusted earnings surged (to $30m) as Black Pearl came online and non-cash items were excluded; management emphasized low-cost power (3.1¢/kWh expected blended) and efficiency improvements as core advantages .
• Wall Street EPS/revenue consensus via S&P Global was unavailable for Q2 2025, so external “beat/miss” comparisons cannot be made; internal operational “beats” on hashrate delivery and Q3 target raise are the key stock catalysts [GetEstimates—no data returned; S&P Global consensus unavailable].

What Went Well and What Went Wrong

What Went Well

• “Commenced hashing at Black Pearl Phase I ahead of schedule,” delivering ~6.9 EH/s initially and on track for ~10.0 EH/s in Q3 with latest-generation rigs (Bitmain S21 XP and Canaan A15 Pro) fully funded and scheduled for delivery by quarter-end .
• Exceeded hashrate growth guidance: total self-mining at ~16.8 EH/s at Q2 end vs. ~16.0 EH/s prior plan; raised Q3 target to ~23.5 EH/s reflecting stronger deliveries and fleet efficiency improvement to ~16.8 J/TH when fully deployed .
• Strategic HPC optionality: “moving forward with the construction of Black Pearl Phase II… designed to support both hydro Bitcoin mining and HPC compute applications simultaneously,” enabling fast conversion to Tier 1–3 specs in <6 months and positioning Cipher for rising AI energy demand .

What Went Wrong

• Sequential revenue decline to $43.6m from $49.0m (-10%) as Texas summer curtailment (4CP avoidance) and rising network hashrate pressured production; CFO flagged curtailment as deliberate to preserve industry-low power costs .
• GAAP net loss widened to -$46.0m, driven by a non-cash decrease in the fair value of the Odessa PPA derivative asset (mark-to-market of forward power curve/time value) and higher D&A from upgraded miners and shorter useful lives .
• JV sites (Alborz, Bear & Chief) carried higher all-in electricity cost per BTC ($44,594 in Q2), while Odessa remained low ($24,686), highlighting cost dispersion and seasonal variability at front-of-the-meter locations .

Financial Results

KPIs and Unit Economics

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We’re thrilled to have commenced hashing at Black Pearl Phase I ahead of schedule… will soon be fully equipped with latest-generation rigs from our two fully funded rig orders.” — Tyler Page, CEO .
• “We are moving forward with the construction of Black Pearl Phase II… designed to support both hydro Bitcoin mining and HPC compute applications simultaneously… enabling a turnaround for conversions in less than six months.” — Tyler Page, CEO .
• “Of the $172.5 million of gross proceeds… $108 [million] was used primarily to purchase the latest generation of miners… negotiate for an expedited rig delivery schedule to avoid broader tariff impact.” — Ed Farrell, CFO .
• “Revenue down 10% QoQ… rising summer power prices in Texas… increased curtailment allowed the company to avoid 4CP penalties and maintain… lowest power costs.” — Ed Farrell, CFO .
• “Our proprietary software… critical advantage in optimizing for profitability… across our sites… we paid an average all-in electricity cost of approximately $27,324 per Bitcoin produced.” — Tyler Page, CEO .

Q&A Highlights

• Conversion timeline and cost: Phase II flexible “tier one-and-a-half” build, $1.5m/MW base for 150 MW ($225–$230m), with incremental spend to Tier 3 depending on redundancy; goal is rapid modular upgrades to accommodate evolving GPU density .
• Tenant pipeline/fortress JV economics: Day-one ~20% equity with promotes; potential to own ~40% of total economics under typical lease/refi/exit assumptions; exclusivity with Fortress remains, but other financing partners are interested .
• Hashrate trajectory: On track to ~23.5 EH/s by end-Q3; post Q3, incremental mining growth depends on HPC tenant pace and tariff dynamics; Phase II could host hydro miners tactically if tenant timing warrants .
• Power cost dynamics: Blended expected power price now ~3.1¢/kWh due to mix shift to front-of-the-meter Black Pearl; model still targets industry-low cash costs via curtailment and ancillary services participation .

Estimates Context

• Wall Street consensus EPS and revenue via S&P Global were unavailable for Q2 2025 and surrounding quarters, preventing external beat/miss assessment. We therefore anchor comparisons on company-reported results and internal guidance changes [GetEstimates—no data returned; S&P Global consensus unavailable].
• Given the operational over-delivery (EH/s) and Q3 target raise, and the sequential revenue dip from deliberate curtailment and higher network hashrate, we expect estimates to adjust to reflect higher near-term hashrate/efficiency and seasonality in power costs .

Key Takeaways for Investors

• Operational execution exceeded guidance with ~16.8 EH/s delivered and Q3 target raised to ~23.5 EH/s; expect visible production uplift in Q3 as new rigs fully hash .
• Strategic HPC optionality at Black Pearl Phase II (rapid Tier 1–3 convertibility) and active Barber Lake tenant dialogues create diversified monetization paths amid AI-driven power scarcity—watch for lease announcements as key stock catalysts .
• Near-term revenue can be volatile due to curtailment and network hashrate; however, low-cost power (3.1¢ blended target) and improving fleet efficiency underpin strong unit economics and non-GAAP profitability trajectory .
• Balance sheet strengthened: cash rose to ~$62.7m, short-term borrowings reduced to zero, and deposits on equipment reflect fully funded rig orders—supports continued ramp without near-term dilution .
• Watch power market and tariff headlines: expedited deliveries mitigated tariff risk; ancillary services and curtailment strategies aim to preserve low-cost positioning .
• Focus Q3: confirmation of ~23.5 EH/s, adjusted earnings sustainability, and any HPC tenant signings at Barber Lake/Black Pearl as medium-term thesis drivers .
• Longer-term: pipeline of 2.6 GW with multiple sites (Stingray, Reveille, Mikeska, Milsing, McLennan) positions Cipher to scale HPC/data centers closer to metros—timing of interconnects and tenant demand will shape capex cadence and returns .