Cover Page
Cover Page - USD ($) $ in Millions | 11 Months Ended | ||
Dec. 31, 2021 | Mar. 01, 2022 | Jun. 30, 2021 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2021 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Document Transition Report | false | ||
Entity File Number | 001-39625 | ||
Entity Registrant Name | Cipher Mining Inc. | ||
Entity Central Index Key | 0001819989 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 85-1614529 | ||
Entity Address, Address Line One | 1 Vanderbilt Avenue, Floor 54, | ||
Entity Address, Address Line Two | Suite C | ||
Entity Address, City or Town | New York | ||
Entity Address, State or Province | NY | ||
Entity Address, Postal Zip Code | 10017 | ||
City Area Code | 332 | ||
Local Phone Number | 262-2300 | ||
Title of 12(b) Security | Common Stock, par value $0.001 per share | ||
Trading Symbol | CIFR | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 200.4 | ||
Entity Common Stock, Shares Outstanding | 250,174,253 | ||
Documents Incorporated by Reference [Text Block] | DOCUMENTS INCORPORATED BY REFERENCE: None. Auditor Firm Id: 688 Auditor Name: Marcum LLP Auditor Location: San Francisco, CA | ||
Auditor Firm ID | 688 | ||
Auditor Name | Marcum LLP | ||
Auditor Location | San Francisco, CA | ||
Warrant [Member] | |||
Document Information [Line Items] | |||
Title of 12(b) Security | Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per whole share | ||
Trading Symbol | CIFRW | ||
Security Exchange Name | NASDAQ |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2021 | Jan. 31, 2021 |
Current assets | ||
Cash and cash equivalents | $ 209,841,257 | |
Prepaid expenses | 13,818,825 | $ 0 |
Total current assets | 223,660,082 | |
Property and equipment, net | 5,124,266 | 1,637 |
Deposits on equipment | 114,856,314 | |
Deferred offering costs | 171,450 | |
Deferred investment costs | 174,250 | |
Security deposits | 10,352,306 | |
Total assets | 354,167,218 | 173,087 |
Current liabilities | ||
Accounts payable | 241,764 | 1,919 |
Accrued expenses | 257,487 | 174,648 |
Total current liabilities | 499,251 | 176,567 |
Warrant liability | 136,800 | |
Total liabilities | 636,051 | 176,567 |
Commitments and contingencies (Note 9) | ||
Stockholders' equity (deficit) | ||
Preferred stock, $0.001 par value, 10,000,000 shares authorized and none issued and outstanding as of December 31, 2021, no shares authorized as of January 31, 2021 | ||
Common stock, $0.001 par value, 500,000,000 shares authorized, 252,131,679 shares issued and 249,279,420 shares outstanding as of December 31, 2021, 200,000,000 shares authorized and subscribed as of January 31, 2021 | 252,132 | 200,000 |
Subscription receivable | (5) | |
Additional paid-in capital | 425,437,931 | (199,995) |
Treasury stock, at par, 2,852,259 shares as of December 31, 2021, no shares as of January 31, 2021 | (2,852) | |
Accumulated deficit | (72,156,044) | (3,480) |
Total stockholders' equity (deficit) | 353,531,167 | (3,480) |
Total liabilities and stockholders' equity (deficit) | $ 354,167,218 | $ 173,087 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares | Dec. 31, 2021 | Jan. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 0 |
Preferred stock, shares issued | 0 | |
Preferred stock, shares outstanding | 0 | |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 200,000,000 |
Common stock, shares issued | 252,131,679 | |
Common stock, shares outstanding | 249,279,420 | |
Common stock, shares subscribed | 200,000,000 | |
Treasury stock, shares | 2,852,259 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 1 Months Ended | 11 Months Ended |
Jan. 31, 2021 | Dec. 31, 2021 | |
Costs and expenses | ||
General and administrative | $ 3,475 | $ 72,146,944 |
Depreciation | 5 | 4,867 |
Total costs and expenses | 3,480 | 72,151,811 |
Operating loss | (3,480) | (72,151,811) |
Other expense | ||
Interest income | 4,331 | |
Interest expense | (26,912) | |
Change in fair value of warrant liability | 21,828 | |
Total other expense | (753) | |
Net loss | $ (3,480) | $ (72,152,564) |
Basic and diluted net loss per share | $ (0.33) | |
Basic and diluted weighted average number of shares outstanding | 218,026,424 |
STATEMENTS OF CHANGES IN STOCKH
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) | Total | Previously Reported | Common Stock | Common StockPreviously Reported | Common StockRetroactive Application of Recapitalization | Subscription Receivable | Subscription ReceivablePreviously Reported | Additional Paid-in Capital | Additional Paid-in CapitalPreviously Reported | Additional Paid-in CapitalRetroactive Application of Recapitalization | Treasury Stock | Accumulated Deficit | Accumulated DeficitPreviously Reported |
Beginning balance at Jan. 06, 2021 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | ||||||||
Beginning balance, Shares at Jan. 06, 2021 | 0 | ||||||||||||
Subscription receivable | $ 1 | $ (5) | $ 4 | ||||||||||
Subscription receivable, shares | 500 | ||||||||||||
Net loss | (3,480) | $ (3,480) | $ (3,480) | ||||||||||
Ending balance at Jan. 31, 2021 | (3,480) | $ (3,480) | $ 200,000 | $ 1 | $ 199,999 | (5) | $ (5) | (199,995) | $ 4 | $ (199,999) | (3,480) | $ (3,480) | |
Ending balance, Shares at Jan. 31, 2021 | 200,000,000 | 500 | 199,999,500 | ||||||||||
Cash received for common stock subscribed | 5 | $ 5 | |||||||||||
Business Combination, net of redemptions and equity issuance costs of $40.6 million | 385,167,646 | $ 46,381 | 385,121,265 | ||||||||||
Business Combination, net of redemptions and equity issuance costs of $40.6 million, Shares | 46,381,119 | ||||||||||||
Delivery of Common stock underlying restricted stock units | $ 5,751 | (5,751) | |||||||||||
Delivery of common stock underlying restricted stock units, Shares | 5,750,560 | ||||||||||||
Shares settled for tax withholding on vesting of restricted stock units | (23,245,913) | (23,243,061) | $ (2,852) | ||||||||||
Shares settled for tax withholding on vesting of restricted stock units, Shares | (2,852,259) | ||||||||||||
Share-based compensation | 63,765,473 | 63,765,473 | |||||||||||
Net loss | (72,152,564) | (72,152,564) | |||||||||||
Ending balance at Dec. 31, 2021 | $ 353,531,167 | $ 252,132 | $ 425,437,931 | $ (2,852) | $ (72,156,044) | ||||||||
Ending balance, Shares at Dec. 31, 2021 | 252,131,679 | (2,852,259) |
STATEMENTS OF CHANGES IN STOC_2
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Parentheticals) $ in Millions | 11 Months Ended |
Dec. 31, 2021USD ($) | |
Statement of Stockholders' Equity [Abstract] | |
Equity issuance cost | $ 40.6 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) | 1 Months Ended | 11 Months Ended |
Jan. 31, 2021 | Dec. 31, 2021 | |
Cash flows from operating activities | ||
Net loss | $ (3,480) | $ (72,152,564) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 5 | 4,867 |
Change in fair value of warrant liability | (21,828) | |
Share-based compensation | 63,765,473 | |
Changes in assets and liabilities: | ||
Prepaid expenses | (13,385,639) | |
Security deposits | (10,352,306) | |
Accounts payable | 277 | 221,775 |
Accrued expenses | 3,198 | 254,289 |
Net cash used in operating activities | (31,665,933) | |
Cash flows from investing activities | ||
Deposits on equipment | (114,856,314) | |
Purchases of property and equipment | (5,109,426) | |
Payments for deferred investment costs | (174,250) | |
Net cash used in investing activities | (120,139,990) | |
Cash flows from financing activities | ||
Proceeds from borrowings on related party loan | 7,038,038 | |
Repayments under related party loan | (7,038,038) | |
Proceeds from the issuance of common stock | 5 | |
Business Combination, net of issuance costs paid | 384,893,088 | |
Repurchase of common shares to pay employee withholding taxes | (23,245,913) | |
Net cash provided by financing activities | 361,647,180 | |
Net increase in cash and cash equivalents | 209,841,257 | |
Cash and cash equivalents, end of the period | 209,841,257 | |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 26,912 | |
Supplemental disclosure of noncash investing and financing activities | ||
Property and equipment purchases in accounts payable | 1,642 | 18,070 |
Net assets assumed from GWAC in the Business Combination | 433,186 | |
Non-cash fair value of private warrants | $ 261,060 | |
Deferred offering costs included in accrued expenses | $ 171,450 |
Organization and Business
Organization and Business | 11 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business | NOTE 1. ORGANIZATI ON AND BUSINESS Organization On August 27, 2021 (the “Closing Date”), Good Works Acquisition Corp. (“GWAC”), a special purpose acquisition company, consummated the Agreement and Plan of Merger dated as of March 4, 2021 (the “Merger Agreement”), by and among GWAC, Currency Merger Sub, Inc. (“Merger Sub”), a wholly-owned direct subsidiary of GWAC, and Cipher Mining Technologies Inc. (“Cipher Mining Technologies”). Pursuant to the terms of the Merger Agreement, Merger Sub merged with and into Cipher Mining Technologies, the separate corporate existence of Merger Sub ceasing and Cipher Mining Technologies being the surviving corporation and a wholly-owned subsidiary of GWAC (the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Business Combination”). Following the Business Combination, the combined company was named Cipher Mining Inc. (“Cipher” or the “Company”). The Company comprises all of GWAC’s and Cipher Mining Technologies’ operations. Business The Company is an emerging technology company that operates in the Bitcoin mining ecosystem in the United States. Specifically, the Company is developing and growing a cryptocurrency mining business, specializing in Bitcoin. As a stand-alone, U.S.-based cryptocurrency mining business, the Company has begun its buildout of cryptocurrency mining sites in the United States. The Company began deployment of capacity in the first quarter of 2022, with mining operations beginning at one site in February 2022 and with power and infrastructure readiness at two of its other mining sites planned by the end of March 2022. Cipher Mining Technologies was established on January 7, 2021, in Delaware, by Bitfury Top Holdco B.V. and its subsidiaries (“Bitfury Top Holdco” and, with its subsidiaries, the “Bitfury Group”), a global full-service blockchain and technology specialist and one of the leading private infrastructure providers in the blockchain ecosystem. Bitfury Top HoldCo (together with Bitfury Holding B.V., a subsidiary of Bitfury Top HoldCo, and referred to herein as “Bitfury Holding”) beneficially owned approximately 82.6 % and 83.4 % of the Company’s common stock as of December 31, 2021 and upon completion of the Business Combination (as defined above), respectively, with sole voting and sole dispositive power over those shares and, as a result, the Bitfury Group has control of the Company as defined in Financial Accounting Standard Board (“FASB”) Accounting Standards Codification (“ASC”) 810, “Consolidation.” Risks and uncertainties Liquidity and Financial Condition The Company incurred a net loss of $ 72.2 million and negative cash flows from operations of $ 31.7 million for the eleven months ended December 31, 2021. As of December 31, 2021, the Company had approximate balances of cash and cash equivalents of $ 209.8 million, working capital of $ 223.2 million, total stockholders’ equity of $ 353.5 million and an accumulated deficit of $ 72.2 million. To date, the Company has, in large part, relied on proceeds from the consummation of the Business Combination to fund its operations. During the eleven months ended December 31, 2021, the Company paid approximately $ 114.9 million as deposits on equipment, primarily for miners, and has significant future commitments related to these deposits as detailed in Note 6, for which the Company will need additional capital in order to meet these commitments in accordance with the existing contractual terms. Management believes that the Company’s existing financial resources, combined with its ability to delay or change its planned buildout steps, are sufficient to meet its operating and capital requirements for at least 12 months from the date these consolidated financial statements are issued. There is limited historical financial information about the Company upon which to base an evaluation of its performance and the Company has not generated any revenues from its business to date. The business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the exploration and/or development, and possible cost overruns due to price and cost increases in services. Management of the Company has no current intention of entering into a merger or acquisition within the next 12 months and has a specific business plan and timetable to complete our 12-month plan of operation. The Company is in the process of an active operational buildout and anticipates that additional capital will be required to implement the buildout. The Company may also require additional capital to pursue certain business opportunities or respond to technological advancements, competitive dynamics or technologies, customer demands, challenges, acquisitions or unforeseen circumstances. Additionally, t he Company has incurred and expects to continue to incur significant costs related to becoming a public company. Accordingly, the Company may engage in equity or debt financings or enter into credit facilities for the above-mentioned or other reasons; however, the Company may not be able to timely secure additional debt or equity financings on favorable terms, if at all. If the Company raises additional funds through equity financing, its existing stockholders could experience significant dilution. Furthermore, any debt financing obtained by the Company in the future could involve restrictive covenants relating to the Company’s capital raising activities and other financial and operational matters, which may make it more difficult for the Company to obtain additional capital and to pursue business opportunities. If the Company is unable to obtain adequate financing on terms that are satisfactory to the Company, when the Company requires it, the Company’s ability to continue to grow or support the business and to respond to business challenges could be significantly limited. If the Company is unable to obtain adequate debt or equity financing for its planned buildout, the Company may be required to delay or change its planned buildout steps, which may adversely affect the Company's business plan. COVID-19 The Company's results of operations could be adversely affected by general conditions in the global economy and in the global financial markets, including conditions that are outside of the Company's control, such as the outbreak and global spread of the novel coronavirus disease (“COVID-19”). The COVID-19 pandemic that was declared on March 11, 2020 has caused significant economic dislocation in the United States and globally as governments across the world, including the United States, introduced measures aimed at preventing the spread of COVID-19. The spread of COVID-19 and the imposition of related public health measures have resulted in, and are expected to continue to result in, increased volatility and uncertainty in the cryptocurrency space. Any severe or prolonged economic downturn, as result of the COVID-19 pandemic or otherwise, could result in a variety of risks to the business and management cannot anticipate all the ways in which the current economic climate and financial market conditions could adversely impact its business. The Company may experience disruptions to its business operations resulting from supply interruptions, quarantines, self-isolations, or other movement and restrictions on the ability of its employees or its counterparties to perform their jobs. The Company may also experience delays in construction and obtaining necessary equipment in a timely fashion. If the Company is unable to effectively set up and service its miners, its ability to mine Bitcoin will be adversely affected. The future impact of the COVID-19 pandemic is still highly uncertain and there is no assurance that the COVID-19 pandemic or any other pandemic, or other unfavorable global economic, business or political conditions, will not materially and adversely affect the Company's business, prospects, financial condition, and operating results. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 11 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation and principles of consolidation The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”) as determined by the FASB and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”). The Merger was accounted for as a reverse recapitalization in accordance with GAAP (the “Reverse Recapitalization”). Under this method of accounting, GWAC is treated as the acquired company and Cipher Mining Technologies is treated as the acquirer for financial statement reporting purposes. Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of Cipher Mining Technologies issuing stock for the net assets of GWAC, accompanied by a recapitalization. The net assets of GWAC are stated at historical cost, with no goodwill or other intangible assets recorded, see Note 3. Cipher Mining Technologies was determined to be the accounting acquirer based on an evaluation of the following facts and circumstances: • Cipher Mining Technologies’ existing shareholder has the greatest voting interest in the Company; • the majority of the members of the board of directors of the Company are primarily composed of individuals associated with Cipher Mining Technologies; • Cipher Mining Technologies’ senior management is the senior management of the Company; and • Cipher Mining Technologies’ operations prior to the Reverse Recapitalization comprise the only ongoing operations of the Company after the consummation of the Business Combination. The consolidated assets, liabilities and results of operations prior to the Reverse Recapitalization are those of Cipher Mining Technologies. The shares and corresponding capital amounts and losses per share prior to the Business Combination have been retroactively restated based on shares reflecting the exchange ratio established in the Business Combination, see Note 3. The consolidated financial statements include the accounts of the Company and its controlled subsidiary, Cipher Mining Technologies. All intercompany transactions and balances have been eliminated. Emerging growth company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company, which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications have no impact on the previously reported financial position. Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. The most significant estimates inherent in the preparation of the Company's consolidated financial statements include, but are not limited to, those related to equity instruments issued in share-based compensation arrangements, valuation of the warrant liability, useful lives of property and equipment, an d the valuation allowance associated with the Company’s deferred tax assets, among others. Making estimates req uires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. Change in fiscal year Cipher Mining Technologies assumed GWAC’s financial calendar for the combined entity beginning with the third fiscal quarter ending September 30 and its fiscal year ending December 31. This change to the fiscal year end was approved by the Company's board of directors (“Board”) on September 23, 2021. Cipher Mining Technologies’ fiscal year previously ended on January 31. Cash and cash equivalents The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. The Company’s cash equivalents consist of funds held in a money market account. The Company had $ 101 .0 million and nil in cash equivalents as of December 31, 2021 and January 31, 2021, respectively. Concentrations of credit risk Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents. Periodically, the Company may maintain deposits in financial institutions in excess of government insured limits. Management believes that the Company is not exposed to significant credit risk as the Company’s deposits are held at financial institutions that management believes to be of high credit quality. The Company has not experienced any losses on these deposits. Fair value of financial instruments The Company’s financial assets and liabilities are accounted for in accordance with ASC 820, “Fair Value Measurements and Disclosures”, which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy requires an entity to maximize the use of observable inputs when measuring fair value and classifies those inputs into three levels: Level 1 – Observable inputs, such as quoted prices in active markets for identical assets and liabilities. Level 2 – Inputs other than Level 1 inputs that are either directly or indirectly observable, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the instrument’s anticipated life. Level 3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair values requires more judgement. Accordingly, the degree of judgement exercised by management in determining fair value is greatest for instruments categorized as Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Deferred offering and deferred investment costs Deferred offering costs consist of legal fees incurred as of the balance sheet date that were directly related to the Business Combination and were allocated as offering costs to the proceeds received and substantially charged to shareholders' equity (deficit) upon the consummation of the Business Combination, see Note 3. Deferred investment costs consist of legal fees incurred through the balance sheet date that are directly related to the formation of a joint venture and which will be capitalized as part of the Company’s total investment in the joint venture upon consummation of the joint venture agreement, see Note 9. Property and equipment, net Property and equipment consists primarily of construction-in-progress at one of the Company’s planned sites in Texas and computer equipment and is stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, which is generally three years for computer-related assets. Construction-in-progress consists primarily of leasehold improvements at one of the Texas sites which, when placed into service, will be depreciated in accordance with the lease term of five years . Property and equipment, net consisted of the following: December 31, 2021 January 31, 2021 Computer equipment $ 59,720 $ 1,642 Construction-in-progress 5,069,418 - Property and equipment, gross 5,129,138 1,642 Less: accumulated depreciation ( 4,872 ) ( 5 ) Property and equipment, net $ 5,124,266 $ 1,637 Impairment of long-lived assets Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used will be measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized will be measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. There were no indicators of impairment during the eleven months ended December 31, 2021 or during the period from January 7, 2021 (inception) through January 31, 2021. Common stock warrants Upon the consummation of the Business Combination, the Company assumed common stock warrants that were originally issued in GWAC’s initial public offering (the “Public Warrants”), as well as warrants that were issued in a private placement that closed concurrently with GWAC’s initial public offering (the “Private Placement Warrants”). See Note 11 for additional information on the Public and Private Placement Warrants. The Company is capitalized as a single class of common stock, accordingly, a qualifying cash tender offer of more than 50 % of the Common Stock will always result in a change-in-control, and in accordance with ASC 815-40-55-3, this would not preclude permanent equity classification of the Public Warrants; therefore, the Public Warrants are equity classified. The Private Placement Warrants are accounted for as a liability under ASC 815-40, “Derivatives and Hedging - Contracts in Entity’s Own Equity,” as they are a freestanding financial instrument that require the Company to transfer assets upon exercise. The Company recorded the Private Placement Warrants as a liability in the consolidated balance sheet at fair value on the Closing Date, with subsequent changes in fair value recognized in the change in fair value of warrant liability within the consolidated statements of operations. The Private Placement Warrants were valued using a Black-Scholes option-pricing model as described in Note 4. Share-based compensation The Company accounts for all share-based payments to employees, consultants and directors, which may include grants of stock options, stock appreciation rights, restricted stock awards, and restricted stock units (“RSUs”) to be recognized in the consolidated financial statements, based on their respective grant date fair values. As of December 31, 2021, the Company has awarded only RSUs with service-based vesting conditions (“Service-Based RSUs”) and performance-based RSUs with market-based vesting conditions (“Performance-Based RSUs”). Compensation expense for all awards is amortized based upon a graded vesting method over the estimated requisite service period. All share-based compensation expenses are recorded in general and administrative expense in the consolidated statements of operations. Forfeitures are recorded as they occur. See also Note 12 below. The fair value of Service-Based RSUs is the closing market price of the Company's Common Stock on the date of the grant. The Company employs a Monte Carlo simulation technique to calculate the fair value of the Performance-Based RSUs on the date granted based on the average of the future simulated outcomes. The Performance-Based RSUs contain different market-based vesting conditions that are based upon the achievement of certain market capitalization milestones. Under the Monte Carlo simulation model, a number of variables and assumptions are used including, but not limited to, the underlying price of the Company's Common Stock, the expected stock price volatility over the term of the award, a correlation coefficient, and the risk-free rate. The Performance-Based RSUs awarded do not have an explicit requisite service period, therefore compensation expense is recorded over a derived service period based upon the estimated median time it will take to achieve the market capitalization milestone using a Monte Carlo simulation. Weighted average assumptions used in the November 17, 2021 Monte Carlo valuation model for Performance-Based RSUs awarded on that date were: expected volatility of 96.1 % and a risk-free rate of 1.60 % based upon a remaining term of 10 years . Treasury stock Treasury share purchases obtained through share withholdings for taxes are recorded at par value. Revenue recognition The Company will recognize revenue under ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle: • Step 1: Identify the contract with the customer • Step 2: Identify the performance obligations in the contract • Step 3: Determine the transaction price • Step 4: Allocate the transaction price to the performance obligations in the contract • Step 5: Recognize revenue when the company satisfies a performance obligation In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct), and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract). If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. When determining the transaction price, an entity must consider the effects of all of the following: • Variable consideration • Constraining estimates of variable consideration • The existence of a significant financing component in the contract • Noncash consideration • Consideration payable to a customer Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate. Digital asset mining services Providing computing power in digital asset transaction verification services will be an output of the Company’s ordinary activities. The provision of providing such computing power is a performance obligation. The transaction consideration the Company receives, if any, is noncash consideration, which the Company will measure at fair value on the date received. The consideration is all variable. There is no significant financing component in these transactions. Mining pools The Company will also enter into digital asset mining pools by executing contracts, as amended from time to time, with the mining pool operators to provide computing power to the mining pool. The contracts are terminable at any time by either party and the Company’s enforceable right to compensation only begins when the Company provides computing power to the mining pool operator. In exchange for providing computing power, the Company will be entitled to a fractional share of the fixed cryptocurrency award the mining pool operator receives (less digital asset transaction fees to the mining pool operator which will be recorded as contra-revenue), for successfully adding a block to the blockchain. The Company’s fractional share is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm. Providing computing power in digital asset transaction verification services is an output of the Company’s ordinary activities. The provision of providing such computing power is the only performance obligation in the Company’s contracts with mining pool operators. The transaction consideration the Company receives, if any, is noncash consideration, which the Company will measure at fair value on the date received, which is not materially different than the fair value at contract inception or the time the Company has earned the award from the pools. The consideration is all variable. Consideration is constrained from recognition until the mining pool operator successfully places a block (by being the first to solve an algorithm) and the Company receives confirmation of the consideration it will receive; at this time, cumulative revenue is no longer probable of significant reversal, i.e., associated uncertainty is resolved. Fair value of the cryptocurrency awards received will be determined using the quoted price of the related cryptocurrency at the time of receipt. There is currently no specific definitive guidance under GAAP or alternative accounting framework for the accounting for cryptocurrencies recognized as revenue or held, and management expects to exercise significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the FASB, the Company may be required to change its policies, which could have an effect on the Company’s consolidated financial position and results from operations. There is no significant financing component in these transactions. There is, however, consideration payable to the customer in the form of a pool operator fee, payable only if the pool is the first to solve the equation; this fee will be deducted from the proceeds received by the Company and will be recorded as contra-revenue, as it does not represent a payment for a distinct good or service as described in ASC 606-10-32-25. Certain aspects of the Company’s performance obligations, such as providing computing power, may be contracted to various third parties and there is a risk that if these parties are unable to perform or curtail their operations, the Company’s revenue and operating results may be affected. Please see Note 9 for additional information about the Company’s power arrangements. Cryptocurrencies Cryptocurrencies, including Bitcoin, will be included in current assets in the consolidated balance sheets. Cryptocurrencies purchased will be recorded at cost and cryptocurrencies awarded to the Company through its mining activities will be accounted for in connection with the Company’s revenue recognition policy disclosed above. Cryptocurrencies will be accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the cryptocurrency at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. Purchases of cryptocurrencies made by the Company will be included within investing activities in the consolidated statements of cash flows, while cryptocurrencies awarded to the Company through its mining activities will be included as a non-cash adjustment within operating activities in the consolidated statements of cash flows. The sales of cryptocurrencies will be included within investing activities in the consolidated statements of cash flows and any realized gains or losses from such sales will be included in other income (expense) in the consolidated statements of operations. The Company will account for its gains or losses in accordance with the first in first out (“FIFO”) method of accounting. Income taxes The Company complies with the accounting and reporting requirements of FASB ASC Topic 740, “Income Taxes” (“ASC 740”), which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of December 31, 2021 or January 31, 2021. The Company did no t record any interest and penalties for the unrecognized tax benefits for the eleven months ended December 31, 2021 or during the period from January 7, 2021 (inception) through January 31, 2021, though its policy is to recognize accrued interest and penalties related to unrecognized tax benefits as income tax expense. The Company files income tax returns in the United States federal tax jurisdiction and various state jurisdictions. The Company did not have any foreign operations during any periods presented in these consolidated financial statements. The statute of limitations for assessment by the Internal Revenue Service and state tax authorities is open since inception, and in addition, carryforward attributes generated since inception may be adjusted upon examination to the extent utilized in a future period. The Company is not aware of any tax examinations currently taking place. Segment information Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one segment. Leases Effective February 1, 2021, the Company began accounting for leases in accordance with ASC 842, “Leases”. Accordingly, the Company determines whether an arrangement contains a lease at the inception of the arrangement. If a lease is determined to exist, the term of such lease is assessed based on the date on which the underlying asset is made available for the Company’s use by the lessor. The Company’s assessment of the lease term reflects the non-cancelable term of the lease, inclusive of any rent-free periods and/or periods covered by early-termination options which the Company is reasonably certain of not exercising, as well as periods covered by renewal options which the Company is reasonably certain of exercising. The Company also determines lease classification as either operating or finance at lease commencement, which governs the pattern of expense recognition and the presentation reflected in the consolidated statements of operations over the lease term. A lease liability will be recorded on the Company’s consolidated balance sheet at lease commencement reflecting the present value of its fixed minimum payment obligations over the lease term. A corresponding right-of-use (“ROU”) asset equal to the initial lease liability will also be recorded, adjusted for any accrued or prepaid rents and/or unamortized initial direct costs incurred in connection with execution of the lease and reduced by any lease incentives received. For purposes of measuring the present value of its fixed payment obligations for a given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement, as rates implicit in its leasing arrangements are typically not readily determinable. The Company's incremental borrowing rate reflects the rate it would pay to borrow on a secured basis and incorporates the term and economic environment of the associated lease. ROU assets will be reviewed for impairment, consistent with other long-lived assets, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For the Company’s operating leases, fixed lease payments will be recognized as lease expense on a straight-line basis over the lease term. Variable lease costs are expensed as incurred and are not included in the measurement of ROU assets and lease liabilities. The Company entered into a series of agreements with affiliates of Luminant ET Services Company LLC (“Luminant”), including the Lease Agreement dated June 29, 2021, with amendment and restatement on July 9, 2021 (as amended and restated, the “Luminant Lease Agreement”). Additionally, the Company executed a lease for office space dated December 17, 2021. Once either the Luminant Lease Agreement or the office lease are effective and the Company has control over the applicable leased asset, the Company will record both a ROU asset and a corresponding lease liability in accordance with ASC 842 for each lease component as applicable under the respective agreements. Recently issued and adopted accounting pronouncements Recently adopted accounting pronouncements Effective February 1, 2021 , the Company early adopted ASC 842 using the modified retrospective method . This new guidance requires a lessee to recognize both a ROU asset representing its right to use the underlying asset for the lease term and a liability for future lease payments on the balance sheet for almost all of its leases. The new guidance continues to differentiate between finance leases and operating leases; however, this distinction now primarily relates to differences in the manner of expense recognition over time. Classification for both lessees and lessors is now based on an assessment of whether a lease contract is economically similar to the purchase of a non-financial asset from the perspective of control. The new guidance also requires quantitative and qualitative disclosures to enable users to understand the amount, timing, and judgments related to leases and the related cash flows. There was no impact to the Company's consolidated financial statements as of or for the eleven months ending December 31, 2021 resulting from the early adoption of ASC 842. Recently issued accounting pronouncements not yet adopted In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”, which is intended to simplify various aspects related to accounting for income taxes. The new guidance removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for the Company for annual reporting periods beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, with early adoption permitted. Management is currently evaluating the impact of the adoption of ASU 2019-12 on our consolidated financial statements. In May 2021, the FASB issued ASU 2021-04, “Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40)”. ASU 2021-04 reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. ASU 2021-04 provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. It specifically addresses: (1) how an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; (2) how an entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; and (3) how an entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange. ASU 2021-04 will be effective for all entities for fiscal years beginning after December 15, 2021. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted, including adoption in an interim period. The |
Business Combination
Business Combination | 11 Months Ended |
Dec. 31, 2021 | |
Business Combinations [Abstract] | |
Business Combination | NOTE 3. BUSINESS COMBINATION As discussed in Note 1, on August 27, 2021, GWAC, Merger Sub and Cipher Mining Technologies consummated the Business Combination (the “Closing”), with Cipher Mining Technologies surviving the Merger as a wholly-owned subsidiary of Cipher. At the effective time of the Merger (the “Effective Time”), and subject to the terms and conditions of the Merger Agreement, each share of Cipher Mining Technologies common stock was canceled and converted into the right to receive 400,000 shares (the “Exchange Ratio”) of the Company’s common stock, $ 0.001 par value per share (the “Common Stock”). Upon the Closing, the Company’s certificate of incorporation was amended and restated to, among other things, increase the total number of authorized shares of all classes of capital stock to 510,000,000 shares, $ 0.001 par value per share, of which, 500,000,000 shares are designated as Common Stock and 10,000,000 shares are designated as preferred stock (“Preferred Stock”). The holder of each share of Common Stock is entitled to one vote . In connection with the execution of the Merger Agreement, GWAC also entered into: (i) subscription agreements to sell to certain investors (the “PIPE Investors”), an aggregate of 32,235,000 shares of Common Stock, immediately following the Closing, for a purchase price of $ 10.00 per share and aggregate gross proceeds of $ 322.4 million (the “PIPE Financing”) and (ii) a subscription agreement with Bitfury Top HoldCo to sell to Bitfury Top HoldCo (or an affiliate of Bitfury Top HoldCo) an aggregate of 6,000,000 shares of Common Stock following the Closing, for a purchase price of $ 10.00 per share and Bitfury Top HoldCo’s payment in cash and/or forgiveness of outstanding indebtedness for aggregate gross proceeds of $ 60.0 million (the “Bitfury Private Placement”). Upon the consummation of the Business Combination, all holders of Cipher Mining Technologies common stock received shares of the Company's Common Stock at $ 10.00 per share after giving effect to the Exchange Ratio, resulting in 200,000,000 shares of Common Stock to be immediately issued and outstanding to Bitfury Top HoldCo (in addition to 8,146,119 shares of Common Stock held by GWAC), 32,235,000 shares of Common Stock held by the PIPE Investors and 6,000,000 shares of Common Stock received by Bitfury Holding under the Bitfury Private Placement, based on the following events contemplated by the Merger Agreement: • the cancellation of each issued and outstanding share of Cipher Mining Technologies common stock; and • the conversion into the right to receive a number of shares of the Company's Common Stock based upon the Exchange Ratio. The following table reconciles the elements of the Business Combination to the statement of cash flows and the statement of changes in stockholders’ equity (deficit) for the eleven months ended December 31, 2021. Recapitalization Cash - GWAC trust and cash, net of redemptions $ 43,197,478 Cash - PIPE Financing 322,350,000 Cash, subscription receivable and/or debt forgiveness - Bitfury Private Placement 60,000,000 Add: Non-cash net assets assumed from GWAC 433,186 Less: Fair value of private warrants ( 261,060 ) Less: Transaction costs and advisory fees allocated to equity ( 40,551,958 ) Net Business Combination 385,167,646 Less: Non-cash net assets assumed from GWAC ( 433,186 ) Less: Transaction costs and advisory fees allocated to warrants ( 102,432 ) Add: Fair value of private warrants 261,060 Net cash contributions from Business Combination $ 384,893,088 The Company recorded transaction costs and advisory fees allocated to the Private Placement Warrants as a component of change in fair value of warrant liability in the statement of operations. The number of shares of Common Stock issued immediately following the consummation of the Business Combination was as follows: Common stock of GWAC, net of redemptions 4,345,619 GWAC founder shares 3,572,500 GWAC private placement shares 228,000 Shares issued in PIPE Financing 32,235,000 Shares issued in the Bitfury Private Placement 6,000,000 Business Combination, PIPE Financing and Bitfury Private Placement shares - Common Stock 46,381,119 Cipher common shares issued in Business Combination (1) 200,000,000 Shares outstanding 246,381,119 (1) The number of Cipher Mining Technologies common shares outstanding immediately prior to the Business Combination was 500 shares converted at the Exchange Ratio. |
Fair Value Measurements
Fair Value Measurements | 11 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | NOTE 4. FAIR VALUE MEASUREMENTS The Company’s financial assets and liabilities subject to fair value measurement on a recurring basis and the level of inputs used for such measurements were as follows: Fair Value Measured as of December 31, 2021 Level 1 Level 2 Level 3 Total Assets included in: Cash and cash equivalents Money market securities $ 101,004,331 $ - $ - $ 101,004,331 $ 101,004,331 $ - $ - $ 101,004,331 Liabilities included in: Warrant liability $ - $ - $ 136,800 $ 136,800 $ - $ - $ 136,800 $ 136,800 Fair values of cash and cash equivalents, prepaid expenses, accounts payable and accrued expenses approximate the recorded value due to the short-term nature of these items. The Company’s Private Placement Warrants are classified within Level 3 of the fair value hierarchy because the fair value is based on significant inputs that are unobservable in the market. The valuation of the Private Placement Warrants uses assumptions and estimates the Company believes would be made by a market participant in making the same valuation. The Company assesses these assumptions and estimates on an on-going basis as additional data impacting the assumptions and estimates are obtained. The Company engaged a valuation firm to determine the fair value of the Private Placement Warrants using a Black-Scholes option-pricing model and the quoted price of the Company’s Common Stock. The following table presents significant assumptions utilized in the valuations of the Private Placement Warrants as of the dates indicated: August 26, 2021 December 31, 2021 Risk-free rate 0.84 % 1.20 % Dividend yield rate 0.00 % 0.00 % Volatility 21.6 % 58.8 % Contractual term (in years) 5 .00 4.65 Exercise price $ 11.50 $ 11.50 The following table presents changes in the fair value of the Private Placement Warrants for the eleven months ended December 31, 2021: Balance, February 1, 2021 $ - Assumed in Business Combination 261,060 Change in fair value ( 124,260 ) Balance, December 31, 2021 $ 136,800 |
Prepaid and Accrued Expenses
Prepaid and Accrued Expenses | 11 Months Ended |
Dec. 31, 2021 | |
Prepaid And Accrued Expenses [Abstract] | |
Prepaid and Accrued Expenses | NOTE 5. PREPAID AND ACCRUED EXPENSES As of December 31, 2021, the Company had $ 13.8 million of prepaid expenses on its consolidated balance sheet, which was almost entirely related to prepaid insurance. There were no prepaid expenses as of January 31, 2021. The Company's accrued expenses consisted of the following: December 31, 2021 January 31, 2021 Accounting and audit $ 152,800 $ 875 Legal costs 100,000 171,450 Employee related 4,687 - Investor relations - 2,323 Total accrued expenses $ 257,487 $ 174,648 |
Deposits on Equipment
Deposits on Equipment | 11 Months Ended |
Dec. 31, 2021 | |
Disclosure Deposits On Equipment [Abstract] | |
Deposits on Equipment | NOTE 6. DEPOSITS ON EQUIPMENT As of December 31, 2021, the Company had outstanding executed purchase agreements for the purchase of (1) 27,000 Antminer S19j Pro (100 TH/s) miners from Bitmain Technologies Limited (“Bitmain”) and (2) 60,000 MicroBT M30S, M30S+ and M30S++ miners from SuperAcme Technology (Hong Kong) Limited (“SuperAcme”). The Company also has an agreement for the purchase of between 28,000 to 56,000 mining rigs from Bitfury Top HoldCo, made under, and as a part of, the Master Services and Supply Agreement between the Company and Bitfury Top HoldCo dated August 26, 2021. The agreement is a non-binding commitment unless and until confirmed by a mutually executed order confirmation. See Note 8 for more information on the Master Services and Supply Agreement. All of the miners to be acquired under the purchase agreements with Bitmain and SuperAcme are to be delivered in monthly batches from January 2022 through December 2022 . Additionally, the Company also entered into two agreements with Bitfury USA Inc., a subsidiary of Bitfury Top HoldCo, made under, and as a part of, the Master Services and Supply Agreement, to purchase a total of 200 units of BlockBox air-cooled containers (each a “BBAC”), the modular data centers that house mining machines. The delivery of the first 20 containers is expected to begin in the first quarter of 2022 and the remainder are expected to be delivered in 20 batches between May 2022 and October 2022 . The maximum purchase agreement commitments, deposits paid and expected delivery timing (remaining balances are payable in advance of shipping) are summarized below: Vendor Agreement Date Maximum Purchase Commitment* Deposits Paid Expected Shipping Bitmain Technologies Limited** August 20, 2021 and August 30, 2021 $ 171,135,000 $ 75,024,010 January 2022 - September 2022 SuperAcme Technology (Hong Kong)** September 2, 2021 222,400,800 22,240,080 July 2022 - December 2022 Bitfury Top HoldCo B.V. October 11, 2021 *** 10,000,000 *** Bitfury USA Inc. and other vendors (primarily for BBACs) Various 44,594,951 7,592,224 Total $ 438,130,751 $ 114,856,314 * Maximum purchase commitment does not consider discounts that the Company may qualify for with the respective vendors, which could reduce the total cost of the miners. ** Pursuant to the Company's agreements with Bitmain and SuperAcme, the Company is responsible for all logistics costs related to transportation, packaging for transportation and insurance related to the delivery of the miners. *** As of December 31, 2021, there were no mutually executed order confirmations and as such, the Company had no binding commitments to acquire miners from Bitfury Top HoldCo. |
Security Deposits
Security Deposits | 11 Months Ended |
Dec. 31, 2021 | |
Deposit Assets Disclosure [Abstract] | |
Security Deposits | NOTE 7. SECURITY DEPOSITS Security deposits as of December 31, 2021 are shown in the table below. No security deposits had been paid as of January 31, 2021. December 31, 2021 Luminant Purchase and Sale Agreement collateral (see Note 9) $ 3,063,020 Luminant Power Purchase Agreement Independent Collateral Amount (see Note 9) 6,276,902 Office lease security deposit 922,384 Other deposits 90,000 Total security deposits $ 10,352,306 |
Related Party Transactions
Related Party Transactions | 11 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 8. RELATED PARTY TRANSACTIONS Master Services and Supply Agreement In connection with the Business Combination, Bitfury Top HoldCo and Cipher entered into the Master Services and Supply Agreement on August 26, 2021 . The initial term of the agreement is 84 months , with automatic 12-month renewals thereafter (unless either party provides sufficient notice of non-renewal). Pursuant to this agreement, Cipher can request and Bitfury Top HoldCo is required to use commercially reasonable efforts to provide, or procure the provision of, certain equipment and/or services, such as construction, engineering and operations, in each case as may be required to launch and maintain Cipher’s mining centers in the United States. The Master Services and Supply Agreement is not exclusive to Bitfury Top HoldCo or any of its affiliates, and Cipher may retain any other parties to manufacture and deliver any equipment or perform any of the services required. Cipher is not obligated to order any equipment or services from the Bitfury Group under the Master Services and Supply Agreement. In addition to the Master Services and Supply Agreement, Cipher and Bitfury Holding also entered into a fee side letter, which sets out the basic pricing framework applicable under the Master Services and Supply Agreement for any services. Under the side letter, monthly fees for any potential future services, if any, would be determined by reference to two groups of services, which may be provided under the Master Services and Supply Agreement: (i) Bitfury Top HoldCo’s “onsite” services fee would be calculated on a straight cost +5% basis (plus applicable duties and taxes) ; and (ii) Bitfury Top HoldCo’s “remote services” would be calculated on a ratchet basis applying a management fee of $ 1000 /MW up to 445 MW (capped at $ 200,000 /month) and $ 450 USD/MW above 445 MW (plus applicable duties and taxes). Purchase commitments and deposits on equipment As discussed above in Note 6, the Company entered into agreements with Bitfury Top HoldCo providing the Company an option to purchase mining rigs and with Bitfury USA Inc., a subsidiary of Bitfury Top HoldCo, for BBACs. Such agreements are pursuant to the Master Services and Supply Agreement. As of December 31, 2021, the Company had paid $ 10.0 million and $ 5.1 million to Bitfury Top HoldCo and Bitfury USA Inc., respectively, pursuant to these agreements, which were recorded to deposits on equipment on the Company's consolidated balance sheet. In addition, Bitfury Top HoldCo made payments on the Company's behalf totaling approximately $ 2.4 million during the eleven months ended December 31, 2021 for deposits on equipment and/or construction-in-progress. The Company reimbursed Bitfury Top HoldCo for these amounts plus a 7 % service fee upon completion of the Business Combination and, as a result, recorded the amounts reimbursed to Bitfury (including the service fee) as follows: approximately $ 2.5 million is included in deposits on equipment and approximately $ 0.1 million in included in construction-in-progress on the Company's consolidated balance sheet as of December 31, 2021. Accounts payable, related party The chief executive officer (“CEO”) and chief financial officer of the Company purchased several computers and funded other operating expenses of the Company and were subsequently reimbursed by an affiliate of Bitfury Top HoldCo. Additionally, the affiliate of Bitfury Top HoldCo also paid a consulting fee to the Company’s CEO for several months prior to the CEO being hired on a full-time basis by the Company. These amounts totaled $ 47,475 and were recorded as a related party accounts payable line item on the Company’s balance sheets until they were reclassified to the related party loan on August 26, 2021(see further discussion below). Related party loan The Company entered into a loan agreement with an affiliate of Bitfury Top HoldCo (the “Lender”) for an initial amount of $ 0.1 million on February 8, 2021. The interest rate under the loan was initially set at 0.3 % and the Lender approved multiple increases to the outstanding loan balance, as well as paid vendors directly on behalf of the Company. On August 26, 2021, the loan agreement was amended by the parties to amend the interest rate per annum to 2.5 %, to revise the maturity date to August 31, 2021 , and to update the total amount disbursed under the loan to approximately $ 7.0 million, which included the reclassified accounts payable related party balance of $ 47,475 . The $ 7.0 million outstanding loan balance was repaid by the Company at the Closing on August 27, 2021 by offsetting it against the $ 60.0 million of cash due under the Bitfury Private Placement. The Company recognized $ 26,823 of interest expense on its consolidated statement of operations during the eleven months ended December 31, 2021, which represents all interest due to the Lender under this loan agreement at the revised interest rate of 2.5 %. Subscription receivable On January 7, 2021, the Company received a letter for a subscription for 500 shares ( 200,000,000 shares converted at the Exchange Ratio) of its Common Stock from Bitfury Top HoldCo in exchange for a future payment of $ 5 , which was recorded as a subscription receivable on the balance sheet as of January 31, 2021. The Company received payment for the subscribed shares on February 24, 2021. |
Commitments and Contingencies
Commitments and Contingencies | 11 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 9. COMMITMENTS AND CONTINGENCIES Litigation The Company is not a party to any material legal proceedings and is not aware of any pending or threatened claims. From time to time, the Company may be subject to various legal proceedings and claims that arise in the ordinary course of its business activities. Commitments In the normal course of business, the Company enters into contracts that contain a variety of indemnifications with its employees, licensors, suppliers and service providers. The Company's maximum exposure under these arrangements, if any, is unknown as of December 31, 2021. The Company does not anticipate recognizing any significant losses relating to these arrangements. Power and hosting arrangements The Company is party to several power and hosting arrangements as described below. Luminant power arrangement On June 23, 2021 , the Company entered into a power purchase agreement, which was subsequently amended and restated on July 9, 2021 and further amended on February 28, 2022 , with Luminant for the supply of electric power to one of our planned sites in Texas for a term of five years with a subsequent automatic annual renewal provision (as amended, the “Luminant Power Agreement”). The Luminant Lease Agreement leases the Company a plot of land where the planned data center, ancillary infrastructure and electrical system (the “Interconnection Electrical Facilities” or “substation”) will be set up for the Texas site. The Company also entered into the Purchase and Sale Agreement dated June 28, 2021 , with amendment and restatement on July 9, 2021 (as amended and restated the “Luminant Purchase and Sale Agreement””) with another Luminant affiliate. The Company entered into the Luminant Lease Agreement and the Luminant Purchase and Sale Agreement to build the infrastructure necessary to support its planned operations. The Company determined that the Luminant Lease Agreement and the Luminant Purchase and Sale Agreement should be combined for accounting purposes under the new lease guidance (collectively, the “Combined Luminant Lease Agreement”) and that amounts exchanged under the combined contract should be allocated to the various components of the overall transaction based on relative fair values. Under the Luminant Power Agreement, the Company is required to provide Luminant with collateral of approximately $ 12.6 million (the “Independent Collateral Amount”). Half, or approximately $ 6.3 million, of the Independent Collateral Amount was paid to Luminant on September 1, 2021 and is recorded in security deposits on the consolidated balance sheet as of December 31, 2021, as the Company received notice that Luminant had commenced construction of the Interconnection Electrical Facilities. The other half will be due 15 days prior to the date on which the Interconnection Electrical Facilities are completed and made operational. The Independent Collateral Amount will remain in place throughout the term of the Luminant Power Agreement. Details of the construction of the Interconnection Electrical Facilities, including collateral arrangements that are in addition to the Independent Collateral Amount, are set out in the Luminant Purchase and Sale Agreement. Under the Luminant Purchase and Sale Agreement, the Company provided approximately $ 3.1 million as collateral separate from the Independent Collateral Amount, which is recorded in security deposits on the consolidated balance sheet as of December 31, 2021. The Combined Luminant Lease Agreement is effective from the date of the Company’s notification of the Effective Date of the Business Combination, which was August 27, 2021 , and shall continue for five years following completion of the substation, subject to renewal provisions aligned with the Luminant Power Agreement. Financing for use of the land and substation is provided by Luminant affiliates, with monthly installments of principal and interest due over a five-year period starting upon transfer of legal title of the substation to the Company (estimated total undiscounted principal payments of $ 13.1 million). At the end of the lease term for the Interconnection Electrical Facilities, the substation will be sold back to Luminant’s affiliate, Vistra Operations Company, LLC at a price to be determined based upon bids obtained in the secondary market. Standard Power hosting agreement Under the Standard Power Hosting Agreement entered into on February 3, 2021 by the Company and 500 N 4th Street LLC, doing business as Standard Power (“Standard Power”), the Company agrees to provide Standard Power with Bitcoin miners with a specified energy utilization capacity necessary to generate computational power at three Ohio facilities (the “Miners”). Standard Power, in turn, is obligated to (i) host the Miners in specialized containers and provide the electrical power and transmission and connection equipment necessary for the mining and (ii) host, operate and manage the Miners there, in each case in accordance with the terms and conditions of the Standard Power Hosting Agreement. The Standard Power Hosting Agreement provides that Standard Power shall provide an electric power infrastructure, including containers, necessary to operate Miners with a specified energy utilization capacity at facility 1 in Ohio in accordance with the specifications and power availability date set out in the availability schedule. Thereafter, Standard Power shall provide the hosting capacity, housing and equipment for Miners with the specified energy utilization capacities that will be delivered to the facilities in accordance with the availability schedule, as may be amended and supplemented. Standard Power also undertakes to be responsible for the proper installation and the costs of work for hosting the Miners in the specialized containers in each facility and for the proper care and maintenance of the Miners, the facilities and the containers in which the Miners are installed. Under the Standard Power Hosting Agreement, the Company is obligated to pay a hosting fee and an operational service fee. The Company’s payment obligations under the Standard Power Hosting Agreement become effective on a pro rata basis according to the number of Miners in operation in accordance with the terms of this agreement. The Standard Power Hosting Agreement provides for a term of five years with automatic five-year renewal provisions. The associated fees paid under the Standard Power Hosting Agreement will be expensed as services are received. WindHQ power arrangement and joint venture On June 10, 2021 , the Company and WindHQ, LLC (“WindHQ”) signed a binding definitive framework agreement with respect to the construction, buildout, deployment and operation of one or more data centers (“Data Centers”) in the United States (the “WindHQ Joint Venture Agreement”). The WindHQ Joint Venture Agreement provides that the parties shall collaborate to fund the construction and buildout of certain specified Data Centers at locations already identified by the parties (“Initial Data Centers”). Each Initial Data Center will be owned by a separate limited liability company (each, an “Initial Data Center LLC”), and WindHQ and the Company will each own 51 % and 49 %, respectively, of the initial membership interests of each Initial Data Center LLC. The WindHQ Joint Venture Agreement includes a development schedule for additional electrical power capacity through the joint identification, procurement, development and operation of additional Data Centers (“Future Data Centers”). Each Future Data Center will be owned by a separate limited liability company (each, a “Future Data Center LLC”, and collectively with the Initial Data Center LLCs, the “Data Center LLCs”), and the Company and WindHQ, or respective affiliates of the Company or WindHQ, shall become a member of each Data Center LLC by entering into a limited liability company agreement for each such Data Center LLC (“LLC Agreement”). WindHQ will own at least 51 % of the initial membership interests of each Data Center LLC and the Company will own a maximum of 49 % of the initial membership interests of each Data Center LLC. Furthermore, under the WindHQ Joint Venture Agreement, WindHQ is required to procure energy for Future Data Centers at the most favorable pricing then available. Similarly, the Company is required to procure the applicable equipment needed for the Future Data Centers at the most favorable pricing then available. Under the WindHQ Joint Venture Agreement, WindHQ agrees to provide a series of services to each of the Data Centers, including but not limited to: (i) the design and engineering of each of the Data Centers; (ii) the procurement of energy equipment and other related services such as logistics for each of the Data Centers; and (iii) the construction work for each of the Data Centers. Furthermore, the Company is required to support and monitor (remotely) the operations of the hardware at each Data Center (particularly the mining servers) as required under the WindHQ Joint Venture Agreement. A development fee equal to 2 % of capital expenditures in respect of the initial development of each Data Center shall be paid 50 % to WindHQ and 50 % to the Company. Furthermore, a fee equal to 2 % of the gross revenues of each of the Data Centers will be payable monthly based on the immediately prior month gross revenue of such Data Center, 50 % to WindHQ and 50 % to the Company. For each Data Center, WindHQ and the Company will cooperate to prepare a financial model incorporating the relevant economic factors of such Data Center, and both WindHQ and the Company will provide the initial funding required for each Data Center on a pro rata basis in accordance with the parties’ respective ownership interests in the applicable Data Center LLC. In the absence of any material breaches by either party, the WindHQ Joint Venture Agreement may only be terminated by mutual written consent of both parties. On January 28, 2022, i n connection with the WindHQ Joint Venture Agreement, Cipher Mining Technologies and Alborz Interests DC LLC (a subsidiary of WindHQ), as members, entered into the Amended and Restated Limited Liability Company Agreement of Alborz LLC (the “Alborz LLC Agreement”). The Alborz LLC Agreement delineates the rights and obligations of the members related to the construction, operation and management of the Alborz facility located in Texas. Currently, it is not anticipated by management of the Company that the Company’s investment in any of the individual Data Center LLCs will meet the definition of a variable interest entity in accordance with ASC 810, “Consolidation” and the Company will not have a controlling voting interest in any of the Data Center LLCs. Based upon the Company's expectation that they will have significant influence over the operations and major decisions of the Data Center LLCs, the Company’s 49 % ownership in each individual Data Center LLC will be separately accounted for under the equity method of accounting, as the Company does not expect to exercise control over the Data Center LLCs. |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) | 11 Months Ended |
Dec. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity (Deficit) | NOTE 10. STOCKHOLDERS’ EQUITY (DEFICIT) As of December 31, 2021, 510,000,000 shares with a par value of $ 0.001 per share are authorized, of which, 500,000,000 shares are designated as Common Stock and 10,000,000 shares are designated as Preferred Stock. Common Stock Holders of each share of Common Stock are entitled to dividends when, as and if declared by the Board. As of December 31, 2021, the Company had not declared any dividends. The holder of each share of Common Stock is entitled to one vote . The voting, dividend, liquidation and other rights and powers of the Common Stock are subject to and qualified by the rights, powers and preferences of any outstanding series of Preferred Stock. Cipher Mining Technologies As of January 31, 2021, 5,000 common shares of Cipher Mining Technologies were authorized with a par value of $ 0.001 per share, and 500 units were subscribed, which were issued subsequent to January 31, 2021, as discussed above in Note 8. In connection with the Business Combination, the 500 common shares of Cipher Mining Technologies were converted into 200,000,000 shares of the Company’s Common Stock. |
Warrants
Warrants | 11 Months Ended |
Dec. 31, 2021 | |
Warrants and Rights Note Disclosure [Abstract] | |
Warrants | NOTE 11. WARRANTS The Company assumed the Public and Private Placement Warrants, as mentioned above in Note 2, upon consummation of the Business Combination. The Public and Private Placement Warrants entitle the holder to purchase one share of Common Stock at an exercise price of $ 11.50 per share, subject to adjustment. There were 8,500,000 Public Warrants and 114,000 Private Placement Warrants outstanding both as of the Closing Date of the Business Combination and as of December 31, 2021. The exercise price and number of shares of Common Stock issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or the Company’s recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of shares of Common Stock at a price below their respective exercise prices. Additionally, in no event will the Company be required to net cash settle the warrants. Public Warrants The Public Warrants are exercisable at any time commencing on October 19, 2021, provided in each case that the Company has an effective registration statement covering the shares of Common Stock issuable upon exercise of the Public Warrants and a current prospectus relating to such shares of Common Stock is available (or the Company permits holders to exercise their Public Warrants on a cashless basis under the circumstances specified in the warrant agreement) and such shares of Common Stock are registered, qualified or exempt from registration under the securities or blue sky laws of the state of residence of the holder. The Public Warrants will expire five years after the completion of the Business Combination or earlier upon redemption or liquidation. Once the warrants become exercisable, the Company may redeem the outstanding warrants (except as described below with respect to the Private Placement Warrants): • in whole and not in part; • at a price of $ 0.01 per warrant; • upon a minimum of 30 days’ prior written notice of redemption to each warrant holder; • if, and only if, the closing price of the Company's Common Stock equals or exceeds $ 18.00 per share (as adjusted for share splits, stock capitalizations, reorganizations, recapitalizations and the like), for any 20 trading days within a 30 -trading day period ending three trading days before the Company sends notice of redemption to warrant holders. If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. Private Placement Warrants The Private Placement Warrants have terms and provisions that are identical to the Public Warrants, except that the Private Placement Warrants and the shares of Common Stock issuable upon the exercise of the Private Placement Warrants did not become transferable, assignable or salable until September 27, 2021, subject to certain limited exceptions. Additionally, the Private Placement Warrants are exercisable for cash or on a cashless basis, at the holder’s option, and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants are redeemable by the Company and exercisable by the holders on the same basis as the Public Warrants. |
Share-based Compensation
Share-based Compensation | 11 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Share-based Compensation | NOTE 12. SHARE-BASED COMPENSATION Upon Closing of the Business Combination, the Board approved the Cipher Mining Inc. 2021 Incentive Award Plan (the “Incentive Award Plan”). The Incentive Award Plan provides for the grant of stock options, including incentive stock options and nonqualified stock options, stock appreciation rights, RSUs and other stock or cash-based awards to employees, consultants and directors. Upon vesting of an award, we may either issue new shares or reissue treasury shares. Initially, up to 19,869,312 shares of Common Stock are available for issuance under awards granted pursuant to the Incentive Award Plan. In addition, the number of shares of Common Stock available for issuance under the Incentive Equity Plan will be increased on January 1 of each calendar year beginning in 2022 and ending in 2031 by an amount equal to the lesser of (a) three percent ( 3 %) of the total number of shares of Common Stock outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of shares determined by the Board. On November 10, 2021, the Board approved grants of RSUs under the Incentive Award Plan to the Company's Chief Executive Officer (“CEO”), to the Company's Chief Financial Officer (“CFO”), as well as to several other executives, consultants and directors, which grants were effective November 17, 2021. The RSUs awarded to the directors and a grant of 5,676,946 RSUs made to the CEO were fully vested upon grant on November 17, 2021. Additionally, the CEO received an additional grant of 7,096,183 RSUs, 2,838,473 of which are Service-Based RSUs and 4,257,710 of which are Performance-Based RSUs. The Board approved additional grants of RSUs for several new employees on December 7, 2021. The CFO, other executives, employees and consultants received Service-Based RSUs. The material terms of the RSU grants are described below. There were no awards granted during the period from January 7, 2021 (inception) through January 31, 2021. As of December 31, 2021, 3,062,798 shares of Common Stock were available for issuance under the Incentive Award Plan. During the eleven months ended December 31, 2021, the Company recognized total share-based compensation for the following categories of awards: Service-Based RSUs $ 62,094,704 Performance-Based RSUs 1,670,769 Total share-based compensation expense $ 63,765,473 Service-Based RSUs A summary of the Company's unvested Service-Based RSU activity for the eleven months ended December 31, 2021 is shown below: Number of Shares Weighted Average Grant Date Fair Value Unvested at February 1, 2021 - $ - Granted 12,548,804 8.09 Vested ( 5,750,566 ) 8.15 Unvested at December 31, 2021 6,798,238 $ 8.04 There was approximately $ 39.4 million of unrecognized compensation expense related to unvested Service-Based RSUs, which is expected to be recognized over a weighted-average vesting period of approximately 1.6 years. If not fully-vested upon grant, Service-Based RSUs awarded generally vest in equal installments on the first four anniversaries of the vesting commencement date as determined by the Board, which will generally coincide with the timing when the employee or consultant began to provide services to the Company, and which may precede the grant date. Vesting is subject to the award recipient's continuous service on the applicable vesting date; provided, that if the award recipient's employment is terminated by the Company without “cause”, by award recipient for “good reason” (if applicable, as such term or similar term may be defined in any employment, consulting or similar service agreement between award recipient and the Company) or due to award recipient’s death or permanent disability, all unvested Service-Based RSUs will vest in full. In addition, in the event of a change in control, any unvested Service-Based RSUs will vest subject to the award recipient's continuous service to the Company through such change in control. In addition, if the $ 10 billion market capitalization milestone (described further below) is achieved and the CEO remains in continuous service through such achievement, any then-unvested Service-Based RSUs awarded to the CEO will also vest. Performance-Based RSUs A summary of the Company's unvested Performance-Based RSU activity for the eleven months ended December 31, 2021 is shown below: Number of Shares Weighted Average Grant Date Fair Value Unvested at February 1, 2021 - $ - Granted 4,257,710 7.76 Unvested at December 31, 2021 4,257,710 $ 7.76 There was approximately $ 31.4 million of unrecognized compensation expense related to unvested Performance-Based RSUs, which is expected to be recognized over a weighted-average derived service period of approximately 2.4 years. One-third of the Performance-Based RSUs will vest upon the Company achieving a market capitalization equal to or exceeding $ 5 billion, $ 7.5 billion and $ 10 billion, in each case over a 30 -day lookback period and subject to the CEO's continuous service through the end of the applicable 30-day period. In the event of a change in control and CEO’s continuous service through such change in control, the per share price (plus the per share value of any other consideration) received by the Company’s stockholders in such change in control will be used to determine whether any of the market capitalization milestones are achieved (without regard to the 30-day lookback period). Any Performance-Based RSUs that do not vest prior to the CEO's termination of service or, if earlier, in connection with a change in control will be forfeited for no consideration. |
Income Taxes
Income Taxes | 11 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 13. INCOME TAXES No provision for federal income taxes has been recorded for the eleven months ended December 31, 2021 or for the period from January 7, 2021 (inception) through January 31, 2021. Current income taxes are based upon the current period's income taxable for federal and state tax reporting purposes. Deferred income taxes (benefits) are provided for certain income and expenses, which are recognized in different periods for tax and financial reporting purposes. Deferred tax assets and liabilities are computed for differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the period in which the differences are expected to affect taxable income, and net operating loss (“NOL”) carryforwards. A reconciliation of the expected tax computed at the U.S. statutory federal income tax rate to the total benefit for income taxes is shown below: Eleven Months Ended For the period January 7, 2021 (inception) through January 31, 2021 Income tax benefit at federal statutory rate 21.0 % 21.0 % State taxes, net of federal benefit 1.0 % 5.1 % 162m limitations ( 13.4 )% 0.0 % Stock compensation ( 3.3 )% 0.0 % Change in valuation allowance ( 5.3 )% ( 26.1 )% Income tax provision (benefit) 0.0 % 0.0 % Significant components of the Company's deferred tax assets and liabilities were as follows: December 31, 2021 January 31, 2021 Deferred tax assets: Net operating loss carryforwards $ 6,711,946 $ 434 Share-based compensation 1,457,280 - Accruals and other temporary differences 67,294 836 Gross deferred tax assets 8,236,520 1,270 Property and equipment, net ( 574 ) ( 361 ) Valuation allowance ( 8,235,946 ) ( 909 ) Net deferred tax assets $ - $ - As required by ASC 740, management of the Company has evaluated the evidence bearing upon the realizability of its deferred tax assets. Based on the weight of available evidence, both positive and negative, management has determined that it is more likely than not that the Company will not realize the benefits of these assets. Accordingly, the Company recorded a valuation allowance of $ 8.2 million at December 31, 2021. The valuation allowance increased by $ 8.2 million during the eleven months ended December 31, 2021, primarily as a result of the increase in NOL carryforwards generated in the current period. As of December 31, 2021, the Company had Federal and State NOL carryforwards of approximately $ 29.8 million and $ 8.8 million, respectively. The Federal NOL carryforwards do not expire, but the State NOL carryforwards expire if not utilized prior to 2041 . Utilization of the U.S. federal and state NOL carryforwards may be subject to a substantial annual limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, due to ownership changes that have occurred previously or that could occur in the future. These ownership changes may limit the amount of NOL carryforwards that can be utilized annually to offset future taxable income and tax liabilities, respectively. The Company has not completed a study to assess whether a change of ownership has occurred, or whether there have been multiple ownership changes since its formation, due to the significant cost and complexity associated with such a study. Any limitation may result in expiration of a portion of the NOL carryforwards before utilization. Further, until a study is completed by the Company and any limitation is known, no amounts are being presented as an uncertain tax position. |
Net Loss Per Share
Net Loss Per Share | 11 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | NOTE 14. NET LOSS PER SHARE Basic net loss per share is computed by dividing net loss allocable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share adjusts net loss and net loss per common share for the effect of all potentially dilutive shares of the Company’s Common Stock. Basic net loss per common share is the same as dilutive net loss per common share for the eleven months ended December 31, 2021 and for the period from January 7, 2021 (inception) through January 31, 2021, as the inclusion of all potential common shares would have been antidilutive. Potential common shares consist of public and private warrants to purchase Common Stock (using the treasury stock method) that were sold by GWAC in its initial public offering or concurrent with its initial public offering, respectively, and assumed by the Company as of the Effective Date of the Business Combination, as well as unvested RSUs and PSUs. The following table presents the securities that are excluded from the computation of diluted net loss per common share as of December 31, 2021, because including them would have been antidilutive. There were no potentially dilutive securities as of January 31, 2021. December 31, 2021 Public Warrants 8,500,000 Private Placement Warrants 114,000 Unvested RSUs 11,055,948 19,669,948 |
Subsequent Events
Subsequent Events | 11 Months Ended |
Dec. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | NO TE 15. SUBSEQUENT EVENTS In addition to the subsequent events noted above in Note 9, the following items also occurred subsequent to December 31, 2021: On January 1, 2022, 1,554,064 of the Company's outstanding Service-Based RSUs awarded to employees and consultants vested and 659,231 of those shares were repurchased by the Company for tax withholdings owed by the employees. The repurchased shares were recognized in treasury stock on the consolidated balance sheet following the repurchase. In January 2022 and February 2022, the Company made payments totaling approximately $ 22.3 million to Bitmain and $ 18.5 million to SuperAcme for miners, as well as payments totaling approximately $ 18.0 million to Bitfury USA Inc. for other mining-related equipment. These payments were related to purchase commitments disclosed above in Note 6 and increased the Company's deposits on equipment on the consolidated balance sheet subsequent to year end. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 11 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of presentation and principles of consolidation The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”) as determined by the FASB and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”). The Merger was accounted for as a reverse recapitalization in accordance with GAAP (the “Reverse Recapitalization”). Under this method of accounting, GWAC is treated as the acquired company and Cipher Mining Technologies is treated as the acquirer for financial statement reporting purposes. Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of Cipher Mining Technologies issuing stock for the net assets of GWAC, accompanied by a recapitalization. The net assets of GWAC are stated at historical cost, with no goodwill or other intangible assets recorded, see Note 3. Cipher Mining Technologies was determined to be the accounting acquirer based on an evaluation of the following facts and circumstances: • Cipher Mining Technologies’ existing shareholder has the greatest voting interest in the Company; • the majority of the members of the board of directors of the Company are primarily composed of individuals associated with Cipher Mining Technologies; • Cipher Mining Technologies’ senior management is the senior management of the Company; and • Cipher Mining Technologies’ operations prior to the Reverse Recapitalization comprise the only ongoing operations of the Company after the consummation of the Business Combination. The consolidated assets, liabilities and results of operations prior to the Reverse Recapitalization are those of Cipher Mining Technologies. The shares and corresponding capital amounts and losses per share prior to the Business Combination have been retroactively restated based on shares reflecting the exchange ratio established in the Business Combination, see Note 3. The consolidated financial statements include the accounts of the Company and its controlled subsidiary, Cipher Mining Technologies. All intercompany transactions and balances have been eliminated. |
Emerging Growth Company | Emerging growth company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company, which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications have no impact on the previously reported financial position. |
Use of Estimates | Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. The most significant estimates inherent in the preparation of the Company's consolidated financial statements include, but are not limited to, those related to equity instruments issued in share-based compensation arrangements, valuation of the warrant liability, useful lives of property and equipment, an d the valuation allowance associated with the Company’s deferred tax assets, among others. Making estimates req uires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. |
Change in Fiscal Year | Change in fiscal year Cipher Mining Technologies assumed GWAC’s financial calendar for the combined entity beginning with the third fiscal quarter ending September 30 and its fiscal year ending December 31. This change to the fiscal year end was approved by the Company's board of directors (“Board”) on September 23, 2021. Cipher Mining Technologies’ fiscal year previously ended on January 31. |
Cash and Cash Equivalents | Cash and cash equivalents The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. The Company’s cash equivalents consist of funds held in a money market account. The Company had $ 101 .0 million and nil in cash equivalents as of December 31, 2021 and January 31, 2021, respectively. |
Concentrations of Credit Risk | Concentrations of credit risk Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents. Periodically, the Company may maintain deposits in financial institutions in excess of government insured limits. Management believes that the Company is not exposed to significant credit risk as the Company’s deposits are held at financial institutions that management believes to be of high credit quality. The Company has not experienced any losses on these deposits. |
Fair Value of Financial Instruments | Fair value of financial instruments The Company’s financial assets and liabilities are accounted for in accordance with ASC 820, “Fair Value Measurements and Disclosures”, which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy requires an entity to maximize the use of observable inputs when measuring fair value and classifies those inputs into three levels: Level 1 – Observable inputs, such as quoted prices in active markets for identical assets and liabilities. Level 2 – Inputs other than Level 1 inputs that are either directly or indirectly observable, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the instrument’s anticipated life. Level 3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair values requires more judgement. Accordingly, the degree of judgement exercised by management in determining fair value is greatest for instruments categorized as Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. |
Deferred Offering and Deferred Investment Costs | Deferred offering and deferred investment costs Deferred offering costs consist of legal fees incurred as of the balance sheet date that were directly related to the Business Combination and were allocated as offering costs to the proceeds received and substantially charged to shareholders' equity (deficit) upon the consummation of the Business Combination, see Note 3. Deferred investment costs consist of legal fees incurred through the balance sheet date that are directly related to the formation of a joint venture and which will be capitalized as part of the Company’s total investment in the joint venture upon consummation of the joint venture agreement, see Note 9. |
Property and Equipment, Net | Property and equipment, net Property and equipment consists primarily of construction-in-progress at one of the Company’s planned sites in Texas and computer equipment and is stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, which is generally three years for computer-related assets. Construction-in-progress consists primarily of leasehold improvements at one of the Texas sites which, when placed into service, will be depreciated in accordance with the lease term of five years . Property and equipment, net consisted of the following: December 31, 2021 January 31, 2021 Computer equipment $ 59,720 $ 1,642 Construction-in-progress 5,069,418 - Property and equipment, gross 5,129,138 1,642 Less: accumulated depreciation ( 4,872 ) ( 5 ) Property and equipment, net $ 5,124,266 $ 1,637 |
Impairment of Long-lived Assets | Impairment of long-lived assets Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used will be measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized will be measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. There were no indicators of impairment during the eleven months ended December 31, 2021 or during the period from January 7, 2021 (inception) through January 31, 2021. |
Common Stock Warrants | Common stock warrants Upon the consummation of the Business Combination, the Company assumed common stock warrants that were originally issued in GWAC’s initial public offering (the “Public Warrants”), as well as warrants that were issued in a private placement that closed concurrently with GWAC’s initial public offering (the “Private Placement Warrants”). See Note 11 for additional information on the Public and Private Placement Warrants. The Company is capitalized as a single class of common stock, accordingly, a qualifying cash tender offer of more than 50 % of the Common Stock will always result in a change-in-control, and in accordance with ASC 815-40-55-3, this would not preclude permanent equity classification of the Public Warrants; therefore, the Public Warrants are equity classified. The Private Placement Warrants are accounted for as a liability under ASC 815-40, “Derivatives and Hedging - Contracts in Entity’s Own Equity,” as they are a freestanding financial instrument that require the Company to transfer assets upon exercise. The Company recorded the Private Placement Warrants as a liability in the consolidated balance sheet at fair value on the Closing Date, with subsequent changes in fair value recognized in the change in fair value of warrant liability within the consolidated statements of operations. The Private Placement Warrants were valued using a Black-Scholes option-pricing model as described in Note 4. |
Share-based Compensation | Share-based compensation The Company accounts for all share-based payments to employees, consultants and directors, which may include grants of stock options, stock appreciation rights, restricted stock awards, and restricted stock units (“RSUs”) to be recognized in the consolidated financial statements, based on their respective grant date fair values. As of December 31, 2021, the Company has awarded only RSUs with service-based vesting conditions (“Service-Based RSUs”) and performance-based RSUs with market-based vesting conditions (“Performance-Based RSUs”). Compensation expense for all awards is amortized based upon a graded vesting method over the estimated requisite service period. All share-based compensation expenses are recorded in general and administrative expense in the consolidated statements of operations. Forfeitures are recorded as they occur. See also Note 12 below. The fair value of Service-Based RSUs is the closing market price of the Company's Common Stock on the date of the grant. The Company employs a Monte Carlo simulation technique to calculate the fair value of the Performance-Based RSUs on the date granted based on the average of the future simulated outcomes. The Performance-Based RSUs contain different market-based vesting conditions that are based upon the achievement of certain market capitalization milestones. Under the Monte Carlo simulation model, a number of variables and assumptions are used including, but not limited to, the underlying price of the Company's Common Stock, the expected stock price volatility over the term of the award, a correlation coefficient, and the risk-free rate. The Performance-Based RSUs awarded do not have an explicit requisite service period, therefore compensation expense is recorded over a derived service period based upon the estimated median time it will take to achieve the market capitalization milestone using a Monte Carlo simulation. Weighted average assumptions used in the November 17, 2021 Monte Carlo valuation model for Performance-Based RSUs awarded on that date were: expected volatility of 96.1 % and a risk-free rate of 1.60 % based upon a remaining term of 10 years . |
Treasury Stock | Treasury stock Treasury share purchases obtained through share withholdings for taxes are recorded at par value. |
Revenue Recognition | Revenue recognition The Company will recognize revenue under ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle: • Step 1: Identify the contract with the customer • Step 2: Identify the performance obligations in the contract • Step 3: Determine the transaction price • Step 4: Allocate the transaction price to the performance obligations in the contract • Step 5: Recognize revenue when the company satisfies a performance obligation In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct), and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract). If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. When determining the transaction price, an entity must consider the effects of all of the following: • Variable consideration • Constraining estimates of variable consideration • The existence of a significant financing component in the contract • Noncash consideration • Consideration payable to a customer Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate. Digital asset mining services Providing computing power in digital asset transaction verification services will be an output of the Company’s ordinary activities. The provision of providing such computing power is a performance obligation. The transaction consideration the Company receives, if any, is noncash consideration, which the Company will measure at fair value on the date received. The consideration is all variable. There is no significant financing component in these transactions. Mining pools The Company will also enter into digital asset mining pools by executing contracts, as amended from time to time, with the mining pool operators to provide computing power to the mining pool. The contracts are terminable at any time by either party and the Company’s enforceable right to compensation only begins when the Company provides computing power to the mining pool operator. In exchange for providing computing power, the Company will be entitled to a fractional share of the fixed cryptocurrency award the mining pool operator receives (less digital asset transaction fees to the mining pool operator which will be recorded as contra-revenue), for successfully adding a block to the blockchain. The Company’s fractional share is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm. Providing computing power in digital asset transaction verification services is an output of the Company’s ordinary activities. The provision of providing such computing power is the only performance obligation in the Company’s contracts with mining pool operators. The transaction consideration the Company receives, if any, is noncash consideration, which the Company will measure at fair value on the date received, which is not materially different than the fair value at contract inception or the time the Company has earned the award from the pools. The consideration is all variable. Consideration is constrained from recognition until the mining pool operator successfully places a block (by being the first to solve an algorithm) and the Company receives confirmation of the consideration it will receive; at this time, cumulative revenue is no longer probable of significant reversal, i.e., associated uncertainty is resolved. Fair value of the cryptocurrency awards received will be determined using the quoted price of the related cryptocurrency at the time of receipt. There is currently no specific definitive guidance under GAAP or alternative accounting framework for the accounting for cryptocurrencies recognized as revenue or held, and management expects to exercise significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the FASB, the Company may be required to change its policies, which could have an effect on the Company’s consolidated financial position and results from operations. There is no significant financing component in these transactions. There is, however, consideration payable to the customer in the form of a pool operator fee, payable only if the pool is the first to solve the equation; this fee will be deducted from the proceeds received by the Company and will be recorded as contra-revenue, as it does not represent a payment for a distinct good or service as described in ASC 606-10-32-25. Certain aspects of the Company’s performance obligations, such as providing computing power, may be contracted to various third parties and there is a risk that if these parties are unable to perform or curtail their operations, the Company’s revenue and operating results may be affected. Please see Note 9 for additional information about the Company’s power arrangements. |
Cryptocurrencies | Cryptocurrencies Cryptocurrencies, including Bitcoin, will be included in current assets in the consolidated balance sheets. Cryptocurrencies purchased will be recorded at cost and cryptocurrencies awarded to the Company through its mining activities will be accounted for in connection with the Company’s revenue recognition policy disclosed above. Cryptocurrencies will be accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the cryptocurrency at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. Purchases of cryptocurrencies made by the Company will be included within investing activities in the consolidated statements of cash flows, while cryptocurrencies awarded to the Company through its mining activities will be included as a non-cash adjustment within operating activities in the consolidated statements of cash flows. The sales of cryptocurrencies will be included within investing activities in the consolidated statements of cash flows and any realized gains or losses from such sales will be included in other income (expense) in the consolidated statements of operations. The Company will account for its gains or losses in accordance with the first in first out (“FIFO”) method of accounting. |
Income Taxes | Income taxes The Company complies with the accounting and reporting requirements of FASB ASC Topic 740, “Income Taxes” (“ASC 740”), which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of December 31, 2021 or January 31, 2021. The Company did no t record any interest and penalties for the unrecognized tax benefits for the eleven months ended December 31, 2021 or during the period from January 7, 2021 (inception) through January 31, 2021, though its policy is to recognize accrued interest and penalties related to unrecognized tax benefits as income tax expense. The Company files income tax returns in the United States federal tax jurisdiction and various state jurisdictions. The Company did not have any foreign operations during any periods presented in these consolidated financial statements. The statute of limitations for assessment by the Internal Revenue Service and state tax authorities is open since inception, and in addition, carryforward attributes generated since inception may be adjusted upon examination to the extent utilized in a future period. The Company is not aware of any tax examinations currently taking place. |
Segment Information | Segment information Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one segment. |
Leases | Leases Effective February 1, 2021, the Company began accounting for leases in accordance with ASC 842, “Leases”. Accordingly, the Company determines whether an arrangement contains a lease at the inception of the arrangement. If a lease is determined to exist, the term of such lease is assessed based on the date on which the underlying asset is made available for the Company’s use by the lessor. The Company’s assessment of the lease term reflects the non-cancelable term of the lease, inclusive of any rent-free periods and/or periods covered by early-termination options which the Company is reasonably certain of not exercising, as well as periods covered by renewal options which the Company is reasonably certain of exercising. The Company also determines lease classification as either operating or finance at lease commencement, which governs the pattern of expense recognition and the presentation reflected in the consolidated statements of operations over the lease term. A lease liability will be recorded on the Company’s consolidated balance sheet at lease commencement reflecting the present value of its fixed minimum payment obligations over the lease term. A corresponding right-of-use (“ROU”) asset equal to the initial lease liability will also be recorded, adjusted for any accrued or prepaid rents and/or unamortized initial direct costs incurred in connection with execution of the lease and reduced by any lease incentives received. For purposes of measuring the present value of its fixed payment obligations for a given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement, as rates implicit in its leasing arrangements are typically not readily determinable. The Company's incremental borrowing rate reflects the rate it would pay to borrow on a secured basis and incorporates the term and economic environment of the associated lease. ROU assets will be reviewed for impairment, consistent with other long-lived assets, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For the Company’s operating leases, fixed lease payments will be recognized as lease expense on a straight-line basis over the lease term. Variable lease costs are expensed as incurred and are not included in the measurement of ROU assets and lease liabilities. The Company entered into a series of agreements with affiliates of Luminant ET Services Company LLC (“Luminant”), including the Lease Agreement dated June 29, 2021, with amendment and restatement on July 9, 2021 (as amended and restated, the “Luminant Lease Agreement”). Additionally, the Company executed a lease for office space dated December 17, 2021. Once either the Luminant Lease Agreement or the office lease are effective and the Company has control over the applicable leased asset, the Company will record both a ROU asset and a corresponding lease liability in accordance with ASC 842 for each lease component as applicable under the respective agreements. |
Recently Issued and Adopted Accounting Pronouncements | Recently issued and adopted accounting pronouncements Recently adopted accounting pronouncements Effective February 1, 2021 , the Company early adopted ASC 842 using the modified retrospective method . This new guidance requires a lessee to recognize both a ROU asset representing its right to use the underlying asset for the lease term and a liability for future lease payments on the balance sheet for almost all of its leases. The new guidance continues to differentiate between finance leases and operating leases; however, this distinction now primarily relates to differences in the manner of expense recognition over time. Classification for both lessees and lessors is now based on an assessment of whether a lease contract is economically similar to the purchase of a non-financial asset from the perspective of control. The new guidance also requires quantitative and qualitative disclosures to enable users to understand the amount, timing, and judgments related to leases and the related cash flows. There was no impact to the Company's consolidated financial statements as of or for the eleven months ending December 31, 2021 resulting from the early adoption of ASC 842. Recently issued accounting pronouncements not yet adopted In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”, which is intended to simplify various aspects related to accounting for income taxes. The new guidance removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for the Company for annual reporting periods beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, with early adoption permitted. Management is currently evaluating the impact of the adoption of ASU 2019-12 on our consolidated financial statements. In May 2021, the FASB issued ASU 2021-04, “Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40)”. ASU 2021-04 reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. ASU 2021-04 provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. It specifically addresses: (1) how an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; (2) how an entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; and (3) how an entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange. ASU 2021-04 will be effective for all entities for fiscal years beginning after December 15, 2021. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted, including adoption in an interim period. The adoption of ASU 2021-04 is not expected to have a material impact on the Company’s consolidated financial statements or disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 11 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Summary of Property and Equipment | Property and equipment, net consisted of the following: December 31, 2021 January 31, 2021 Computer equipment $ 59,720 $ 1,642 Construction-in-progress 5,069,418 - Property and equipment, gross 5,129,138 1,642 Less: accumulated depreciation ( 4,872 ) ( 5 ) Property and equipment, net $ 5,124,266 $ 1,637 |
Business Combination (Tables)
Business Combination (Tables) | 11 Months Ended |
Dec. 31, 2021 | |
Business Combinations [Abstract] | |
Schedule of Reconciliation of Elements of Business Combination | The following table reconciles the elements of the Business Combination to the statement of cash flows and the statement of changes in stockholders’ equity (deficit) for the eleven months ended December 31, 2021. Recapitalization Cash - GWAC trust and cash, net of redemptions $ 43,197,478 Cash - PIPE Financing 322,350,000 Cash, subscription receivable and/or debt forgiveness - Bitfury Private Placement 60,000,000 Add: Non-cash net assets assumed from GWAC 433,186 Less: Fair value of private warrants ( 261,060 ) Less: Transaction costs and advisory fees allocated to equity ( 40,551,958 ) Net Business Combination 385,167,646 Less: Non-cash net assets assumed from GWAC ( 433,186 ) Less: Transaction costs and advisory fees allocated to warrants ( 102,432 ) Add: Fair value of private warrants 261,060 Net cash contributions from Business Combination $ 384,893,088 |
Schedule of Common Stock Issued Following the Consummation of Business Combination | The number of shares of Common Stock issued immediately following the consummation of the Business Combination was as follows: Common stock of GWAC, net of redemptions 4,345,619 GWAC founder shares 3,572,500 GWAC private placement shares 228,000 Shares issued in PIPE Financing 32,235,000 Shares issued in the Bitfury Private Placement 6,000,000 Business Combination, PIPE Financing and Bitfury Private Placement shares - Common Stock 46,381,119 Cipher common shares issued in Business Combination (1) 200,000,000 Shares outstanding 246,381,119 (1) The number of Cipher Mining Technologies common shares outstanding immediately prior to the Business Combination was 500 shares converted at the Exchange Ratio. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 11 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Summary of Financial Assets And Liabilities Measurement on Recurring Basis | The Company’s financial assets and liabilities subject to fair value measurement on a recurring basis and the level of inputs used for such measurements were as follows: Fair Value Measured as of December 31, 2021 Level 1 Level 2 Level 3 Total Assets included in: Cash and cash equivalents Money market securities $ 101,004,331 $ - $ - $ 101,004,331 $ 101,004,331 $ - $ - $ 101,004,331 Liabilities included in: Warrant liability $ - $ - $ 136,800 $ 136,800 $ - $ - $ 136,800 $ 136,800 |
Summary of Assumptions Utilized in Valuations of Private Placement Warrants | The following table presents significant assumptions utilized in the valuations of the Private Placement Warrants as of the dates indicated: August 26, 2021 December 31, 2021 Risk-free rate 0.84 % 1.20 % Dividend yield rate 0.00 % 0.00 % Volatility 21.6 % 58.8 % Contractual term (in years) 5 .00 4.65 Exercise price $ 11.50 $ 11.50 |
Summary of Change in the Fair Value of the Private Placement Warrants | The following table presents changes in the fair value of the Private Placement Warrants for the eleven months ended December 31, 2021: Balance, February 1, 2021 $ - Assumed in Business Combination 261,060 Change in fair value ( 124,260 ) Balance, December 31, 2021 $ 136,800 |
Prepaid and Accrued Expenses (T
Prepaid and Accrued Expenses (Tables) | 11 Months Ended |
Dec. 31, 2021 | |
Prepaid And Accrued Expenses [Abstract] | |
Schedule of Accrued Expenses | The Company's accrued expenses consisted of the following: December 31, 2021 January 31, 2021 Accounting and audit $ 152,800 $ 875 Legal costs 100,000 171,450 Employee related 4,687 - Investor relations - 2,323 Total accrued expenses $ 257,487 $ 174,648 |
Deposits on Equipment (Tables)
Deposits on Equipment (Tables) | 11 Months Ended |
Dec. 31, 2021 | |
Disclosure Deposits On Equipment [Abstract] | |
Schedule of Purchase Agreement Commitments, Deposits Paid and Expected Delivery Timing | The maximum purchase agreement commitments, deposits paid and expected delivery timing (remaining balances are payable in advance of shipping) are summarized below: Vendor Agreement Date Maximum Purchase Commitment* Deposits Paid Expected Shipping Bitmain Technologies Limited** August 20, 2021 and August 30, 2021 $ 171,135,000 $ 75,024,010 January 2022 - September 2022 SuperAcme Technology (Hong Kong)** September 2, 2021 222,400,800 22,240,080 July 2022 - December 2022 Bitfury Top HoldCo B.V. October 11, 2021 *** 10,000,000 *** Bitfury USA Inc. and other vendors (primarily for BBACs) Various 44,594,951 7,592,224 Total $ 438,130,751 $ 114,856,314 * Maximum purchase commitment does not consider discounts that the Company may qualify for with the respective vendors, which could reduce the total cost of the miners. ** Pursuant to the Company's agreements with Bitmain and SuperAcme, the Company is responsible for all logistics costs related to transportation, packaging for transportation and insurance related to the delivery of the miners. *** As of December 31, 2021, there were no mutually executed order confirmations and as such, the Company had no binding commitments to acquire miners from Bitfury Top HoldCo. |
Security Deposits (Tables)
Security Deposits (Tables) | 11 Months Ended |
Dec. 31, 2021 | |
Deposit Assets Disclosure [Abstract] | |
Schedule of Security Deposits Consisted | Security deposits as of December 31, 2021 are shown in the table below. No security deposits had been paid as of January 31, 2021. December 31, 2021 Luminant Purchase and Sale Agreement collateral (see Note 9) $ 3,063,020 Luminant Power Purchase Agreement Independent Collateral Amount (see Note 9) 6,276,902 Office lease security deposit 922,384 Other deposits 90,000 Total security deposits $ 10,352,306 |
Share-based Compensation (Table
Share-based Compensation (Tables) | 11 Months Ended |
Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Share-based Compensation Expense | During the eleven months ended December 31, 2021, the Company recognized total share-based compensation for the following categories of awards: Service-Based RSUs $ 62,094,704 Performance-Based RSUs 1,670,769 Total share-based compensation expense $ 63,765,473 |
Service-Based RSUs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of Unvested RSU Activity | A summary of the Company's unvested Service-Based RSU activity for the eleven months ended December 31, 2021 is shown below: Number of Shares Weighted Average Grant Date Fair Value Unvested at February 1, 2021 - $ - Granted 12,548,804 8.09 Vested ( 5,750,566 ) 8.15 Unvested at December 31, 2021 6,798,238 $ 8.04 |
Performance-Based RSUs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of Unvested RSU Activity | A summary of the Company's unvested Performance-Based RSU activity for the eleven months ended December 31, 2021 is shown below: Number of Shares Weighted Average Grant Date Fair Value Unvested at February 1, 2021 - $ - Granted 4,257,710 7.76 Unvested at December 31, 2021 4,257,710 $ 7.76 |
Income Taxes (Tables)
Income Taxes (Tables) | 11 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Reconciliation of Expected Tax Computed at U.S. Statutory Federal Income Tax Rate to Total Benefit for Income Taxes | A reconciliation of the expected tax computed at the U.S. statutory federal income tax rate to the total benefit for income taxes is shown below: Eleven Months Ended For the period January 7, 2021 (inception) through January 31, 2021 Income tax benefit at federal statutory rate 21.0 % 21.0 % State taxes, net of federal benefit 1.0 % 5.1 % 162m limitations ( 13.4 )% 0.0 % Stock compensation ( 3.3 )% 0.0 % Change in valuation allowance ( 5.3 )% ( 26.1 )% Income tax provision (benefit) 0.0 % 0.0 % |
Schedule of Deferred Tax Assets and Liabilities | Significant components of the Company's deferred tax assets and liabilities were as follows: December 31, 2021 January 31, 2021 Deferred tax assets: Net operating loss carryforwards $ 6,711,946 $ 434 Share-based compensation 1,457,280 - Accruals and other temporary differences 67,294 836 Gross deferred tax assets 8,236,520 1,270 Property and equipment, net ( 574 ) ( 361 ) Valuation allowance ( 8,235,946 ) ( 909 ) Net deferred tax assets $ - $ - |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 11 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of Common Shares Excluded from Computation of Diluted Net Loss Per Common Share | The following table presents the securities that are excluded from the computation of diluted net loss per common share as of December 31, 2021, because including them would have been antidilutive. There were no potentially dilutive securities as of January 31, 2021. December 31, 2021 Public Warrants 8,500,000 Private Placement Warrants 114,000 Unvested RSUs 11,055,948 19,669,948 |
Organization and Business - Add
Organization and Business - Additional Information (Details) - USD ($) | 1 Months Ended | 11 Months Ended | ||
Jan. 31, 2021 | Dec. 31, 2021 | Aug. 27, 2021 | Jan. 06, 2021 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Net loss | $ (3,480) | $ (72,152,564) | ||
Cash flows from operations | (31,665,933) | |||
Cash and cash equivalents | 209,841,257 | |||
Working capital | 223,200,000 | |||
Stockholders' equity | (3,480) | 353,531,167 | $ 0 | |
Accumulated deficit | $ (3,480) | (72,156,044) | ||
Deposits on equipment | $ 114,856,314 | |||
Bitfury Top HoldCo | ||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Ownership percentage | 82.60% | 83.40% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) | Nov. 17, 2021 | Jan. 31, 2021USD ($) | Dec. 31, 2021USD ($)Segment |
Property, Plant and Equipment [Line Items] | |||
Cash equivalents | $ 101,000,000 | ||
Unrecognized tax benefits | 0 | 0 | |
Unrecognized tax benefit, interest and penalties | $ 0 | $ 0 | |
Number of segment | Segment | 1 | ||
Change in accounting principle, accounting standards update, adoption date | Feb. 1, 2021 | ||
Change in accounting principle, accounting standards update, early adoption | true | ||
Change in accounting principle, accounting standards update, immaterial effect [true false] | true | ||
Accounting Standards Update [Extensible Enumeration] | us-gaap:AccountingStandardsUpdate201602Member | ||
Performance-Based RSUs | |||
Property, Plant and Equipment [Line Items] | |||
Expected volatility rate | 96.10% | ||
Risk-free rate | 1.60% | ||
Weighted average remaining term | 10 years | ||
Common Stock | |||
Property, Plant and Equipment [Line Items] | |||
Cash tender offer minimum percentage | 50.00% | ||
Computer Equipment | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful lives of assets | 3 years | ||
Construction in Progress | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful lives of assets | 5 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Summary of Property and Equipment (Details) - USD ($) | Dec. 31, 2021 | Jan. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment gross | $ 5,129,138 | $ 1,642 |
Less: accumulated depreciation | (4,872) | (5) |
Property and equipment, net | 5,124,266 | 1,637 |
Computer Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment gross | 59,720 | $ 1,642 |
Construction in Progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment gross | $ 5,069,418 |
Business Combination - Addition
Business Combination - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | Aug. 27, 2021 | Dec. 31, 2021 | Jan. 31, 2021 |
Business Acquisition [Line Items] | |||
Common stock, par value | $ 0.001 | $ 0.001 | |
Shares authorized | 510,000,000 | ||
Share par value | $ 0.001 | ||
Common stock, shares authorized | 500,000,000 | 200,000,000 | |
Preferred stock, shares authorized | 10,000,000 | 0 | |
Common stock voting rights | one vote | ||
Common stock, shares issued | 252,131,679 | ||
Common stock, shares outstanding | 246,381,119 | 249,279,420 | |
Shares issued, price per share | $ 10 | ||
GWAC | |||
Business Acquisition [Line Items] | |||
Fixed exchange ratio (in shares) | 200,000,000 | ||
Shares authorized | 510,000,000 | ||
Share par value | $ 0.001 | ||
Common stock, shares authorized | 500,000,000 | ||
Preferred stock, shares authorized | 10,000,000 | ||
Common stock voting rights | Common Stock is entitled to one vote | ||
Common stock shares held | 8,146,119 | ||
PIPE Investors | |||
Business Acquisition [Line Items] | |||
Aggregate of shares (in Shares) | 32,235,000 | ||
Shares issued, price per share | $ 10 | ||
Gross proceeds | $ 322.4 | ||
Common stock shares held | 32,235,000 | ||
Bitfury Top HoldCo | |||
Business Acquisition [Line Items] | |||
Common stock, shares issued | 200,000,000 | ||
Common stock, shares outstanding | 200,000,000 | ||
Aggregate of shares (in Shares) | 6,000,000 | ||
Shares issued, price per share | $ 10 | ||
Gross proceeds | $ 60 | ||
Bitfury Top HoldCo | Bitfury Private Placement | |||
Business Acquisition [Line Items] | |||
Common stock, shares issued | 6,000,000 | ||
Common Stock | GWAC | |||
Business Acquisition [Line Items] | |||
Fixed exchange ratio (in shares) | 400,000 | ||
Common stock, par value | $ 0.001 |
Business Combination - Schedule
Business Combination - Schedule of Reconciliation of Elements of Business Combination (Details) | 11 Months Ended |
Dec. 31, 2021USD ($) | |
Business Acquisition [Line Items] | |
Less: Fair value of private warrants | $ (261,060) |
Less: Transaction costs and advisory fees allocated to equity | (40,551,958) |
Net Business Combination | 385,167,646 |
Less: Transaction costs and advisory fees allocated to warrants | (102,432) |
Add: Fair value of private warrants | 261,060 |
Net cash contributions from Business Combination | 384,893,088 |
Bitfury Private Placement | |
Business Acquisition [Line Items] | |
Cash, subscription receivable and/or debt forgiveness | 60,000,000 |
GWAC | |
Business Acquisition [Line Items] | |
Add: Non-cash net assets assumed | 433,186 |
Less: Non-cash net assets assumed | (433,186) |
GWAC Trust and Cash, Net of Redemptions | |
Business Acquisition [Line Items] | |
Cash | 43,197,478 |
PIPE Financing | |
Business Acquisition [Line Items] | |
Cash | $ 322,350,000 |
Business Combination - Schedu_2
Business Combination - Schedule of Common Stock Issued Following the Consummation of Business Combination (Details) - shares | Aug. 27, 2021 | Dec. 31, 2021 |
Business Acquisition [Line Items] | ||
Common stock, shares outstanding | 246,381,119 | 249,279,420 |
Common Stock | ||
Business Acquisition [Line Items] | ||
Business Combination, PIPE Financing and Bitfury Private Placement shares - Common Stock | 46,381,119 | |
GWAC | ||
Business Acquisition [Line Items] | ||
Common stock, net of redemptions | 4,345,619 | |
Cipher common shares issued in Business Combination | 200,000,000 | |
GWAC | Common Stock | ||
Business Acquisition [Line Items] | ||
Business Combination, PIPE Financing and Bitfury Private Placement shares - Common Stock | 46,381,119 | |
Cipher common shares issued in Business Combination | 400,000 | |
GWAC | Founder Shares | ||
Business Acquisition [Line Items] | ||
Business Combination, PIPE Financing and Bitfury Private Placement shares - Common Stock | 3,572,500 | |
GWAC | Private Placement | ||
Business Acquisition [Line Items] | ||
Business Combination, PIPE Financing and Bitfury Private Placement shares - Common Stock | 228,000 | |
GWAC | PIPE Financing | ||
Business Acquisition [Line Items] | ||
Business Combination, PIPE Financing and Bitfury Private Placement shares - Common Stock | 32,235,000 | |
GWAC | Bitfury | Private Placement | ||
Business Acquisition [Line Items] | ||
Business Combination, PIPE Financing and Bitfury Private Placement shares - Common Stock | 6,000,000 |
Business Combination - Schedu_3
Business Combination - Schedule of Common Stock Issued Following the Consummation of Business Combination (Parenthentical) (Details) - shares | Aug. 27, 2021 | Jan. 07, 2021 |
Cipher | ||
Business Acquisition [Line Items] | ||
Shares converted at exchange ratio | 500 | 500 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Financial Assets And Liabilities Measurement on Recurring Basis (Details) - Fair Value, Recurring | Dec. 31, 2021USD ($) |
Assets included in: | |
Assets, fair value | $ 101,004,331 |
Liabilities: | |
Liabilities, fair value | 136,800 |
Level 1 | |
Assets included in: | |
Assets, fair value | 101,004,331 |
Level 3 | |
Liabilities: | |
Liabilities, fair value | 136,800 |
Warrant Liability | |
Liabilities: | |
Liabilities, fair value | 136,800 |
Warrant Liability | Level 3 | |
Liabilities: | |
Liabilities, fair value | 136,800 |
Money Market Securities | |
Assets included in: | |
Cash and cash equivalents | 101,004,331 |
Money Market Securities | Level 1 | |
Assets included in: | |
Cash and cash equivalents | $ 101,004,331 |
Fair Value Measurements - Sum_2
Fair Value Measurements - Summary of Assumptions Utilized in Valuations of Private Placement Warrants (Details) - Private Placement Warrants | Dec. 31, 2021 | Aug. 26, 2021 |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants and Rights Outstanding, Term | 4 years 7 months 24 days | 5 years |
Risk-free Rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Private placement warrants, Measurement input | 1.20 | 0.84 |
Dividend Yield Rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Private placement warrants, Measurement input | 0 | 0 |
Volatility | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Private placement warrants, Measurement input | 58.8 | 21.6 |
Exercise price | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Private placement warrants, Measurement input | 11.50 | 11.50 |
Fair Value Measurements - Sum_3
Fair Value Measurements - Summary of Change in the Fair Value of the Private Placement Warrants (Details) - Private Placement Warrants | 11 Months Ended |
Dec. 31, 2021USD ($) | |
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items] | |
Assumed in Business Combination | $ 261,060 |
Change in fair value | (124,260) |
Balance, December 31, 2021 | $ 136,800 |
Prepaid and Accrued Expenses -
Prepaid and Accrued Expenses - Additional Information (Details) - USD ($) | Dec. 31, 2021 | Jan. 31, 2021 |
Prepaid And Accrued Expenses [Abstract] | ||
Prepaid expenses | $ 13,818,825 | $ 0 |
Prepaid and Accrued Expenses _2
Prepaid and Accrued Expenses - Schedule of Accrued Expenses (Details) - USD ($) | Dec. 31, 2021 | Jan. 31, 2021 |
Accrued Expenses [Abstract] | ||
Accounting and audit | $ 152,800 | $ 875 |
Legal costs | 100,000 | 171,450 |
Employee related | 4,687 | 0 |
Investor relations | 0 | 2,323 |
Total accrued expenses | $ 257,487 | $ 174,648 |
Deposits on Equipment - Additio
Deposits on Equipment - Additional Information (Details) | 3 Months Ended | 11 Months Ended |
Mar. 31, 2022Containers | Dec. 31, 2021ContainersAntminerBatchMining | |
Property, Plant and Equipment [Line Items] | ||
Description of purchase agreements | the Company had outstanding executed purchase agreements for the purchase of (1) 27,000 Antminer S19j Pro (100 TH/s) miners from Bitmain Technologies Limited (“Bitmain”) and (2) 60,000 MicroBT M30S, M30S+ and M30S++ miners from SuperAcme Technology (Hong Kong) Limited (“SuperAcme”). The Company also has an agreement for the purchase of between 28,000 to 56,000 mining rigs from Bitfury Top HoldCo, made under, and as a part of, the Master Services and Supply Agreement between the Company and Bitfury Top HoldCo dated August 26, 2021. The agreement is a non-binding commitment unless and until confirmed by a mutually executed order confirmation. See Note 8 for more information on the Master Services and Supply Agreement. All of the miners to be acquired under the purchase agreements with Bitmain and SuperAcme are to be delivered in monthly batches from January 2022 through December 2022. | |
Bitfury USA Inc | ||
Property, Plant and Equipment [Line Items] | ||
Expected delivery starting month and year | 2022-05 | |
Expected delivery ending month and year | 2022-10 | |
Number of block box air cooled containers to be purchased | Containers | 200 | |
Number of batches containers expected to be delivered | Batch | 20 | |
Scenario Forecast | Bitfury USA Inc | ||
Property, Plant and Equipment [Line Items] | ||
Number of containers expected to be delivered | Containers | 20 | |
BlocKBox Air-Cooled Containers | Bitfury USA Inc | ||
Property, Plant and Equipment [Line Items] | ||
Description of purchase agreements | also entered into two agreements with Bitfury USA Inc., a subsidiary of Bitfury Top HoldCo, made under, and as a part of, the Master Services and Supply Agreement, to purchase a total of 200 units of BlockBox air-cooled containers (each a “BBAC”), the modular data centers that house mining machines. The delivery of the first 20 containers is expected to begin in the first quarter of 2022 and the remainder are expected to be delivered in 20 batches between May 2022 and October 2022. | |
Maximum | Bitfury Top Hold Co [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Number of miners to be purchased | Mining | 56,000 | |
Minimum | Bitfury Top Hold Co [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Number of miners to be purchased | Mining | 28,000 | |
Bitmain Technologies Limited | ||
Property, Plant and Equipment [Line Items] | ||
Number of miners to be purchased | Antminer | 27,000 | |
Expected delivery starting month and year | 2022-01 | |
Expected delivery ending month and year | 2022-09 | |
SuperAcme Technology (Hong Kong) | ||
Property, Plant and Equipment [Line Items] | ||
Number of miners to be purchased | Antminer | 60,000 | |
Expected delivery starting month and year | 2022-07 | |
Expected delivery ending month and year | 2022-12 | |
Bitmain and SuperAcme | ||
Property, Plant and Equipment [Line Items] | ||
Expected delivery starting month and year | 2022-01 | |
Expected delivery ending month and year | 2022-12 |
Deposits on Equipment - Schedul
Deposits on Equipment - Schedule of Purchase Agreement Commitments, Deposits Paid and Expected Delivery Timing (Details) | 11 Months Ended |
Dec. 31, 2021USD ($) | |
Property Plant And Equipment [Line Items] | |
Maximum Purchase Commitment | $ 438,130,751 |
Deposits Paid | $ 114,856,314 |
Bitfury Top HoldCo | |
Property Plant And Equipment [Line Items] | |
Agreement Date | Oct. 11, 2021 |
Deposits Paid | $ 10,000,000 |
Bitmain Technologies Limited | |
Property Plant And Equipment [Line Items] | |
Maximum Purchase Commitment | 171,135,000 |
Deposits Paid | $ 75,024,010 |
Expected Shipping Starting Month and Year | 2022-01 |
Expected Shipping Ending Month and Year | 2022-09 |
Bitmain Technologies Limited | Agreement One | |
Property Plant And Equipment [Line Items] | |
Agreement Date | Aug. 20, 2021 |
Bitmain Technologies Limited | Agreement Two | |
Property Plant And Equipment [Line Items] | |
Agreement Date | Aug. 30, 2021 |
SuperAcme Technology (Hong Kong) | |
Property Plant And Equipment [Line Items] | |
Agreement Date | Sep. 2, 2021 |
Maximum Purchase Commitment | $ 222,400,800 |
Deposits Paid | $ 22,240,080 |
Expected Shipping Starting Month and Year | 2022-07 |
Expected Shipping Ending Month and Year | 2022-12 |
Bitfury USA Inc. and Other Vendors (Primarily for BBACs) | |
Property Plant And Equipment [Line Items] | |
Maximum Purchase Commitment | $ 44,594,951 |
Deposits Paid | $ 7,592,224 |
Security Deposits - Schedule of
Security Deposits - Schedule of Security Deposits Consisted (Details) | Dec. 31, 2021USD ($) |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
Office lease security deposit | $ 922,384 |
Other deposits | 90,000 |
Total security deposits | 10,352,306 |
Luminant Purchase and Sale Agreement | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
Collateral amount | 3,063,020 |
Luminant Power Purchase Agreement Independent | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
Collateral amount | $ 6,276,902 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) | Aug. 27, 2021USD ($) | Aug. 26, 2021USD ($) | Feb. 08, 2021USD ($) | Jan. 07, 2021USD ($)shares | Dec. 31, 2021USD ($)$ / MWMW | Jan. 31, 2021shares |
Related Party Transaction [Line Items] | ||||||
Outstanding loan balance repaid | $ 7,038,038 | |||||
Common stock, shares subscribed | shares | 200,000,000 | |||||
Master Services and Supply Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Agreement, date of commencement | Aug. 26, 2021 | |||||
Agreement, initial term | 84 months | |||||
Agreement, auto renewal period | 12 months | |||||
Bitfury Top HoldCo | ||||||
Related Party Transaction [Line Items] | ||||||
Common stock value subscriptions | $ 5 | |||||
Common stock, shares subscribed | shares | 500 | |||||
Shares converted | shares | 200,000,000 | |||||
Bitfury Top HoldCo | Master Services and Supply Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Onsite service fee percentage calculation, description | Bitfury Top HoldCo’s “onsite” services fee would be calculated on a straight cost +5% basis (plus applicable duties and taxes) | |||||
Management fee range in megawatts | MW | 445 | |||||
Management fee per megawatt up to four forty five megawatt | $ / MW | 1,000 | |||||
Management fee per megawatt above four forty five megawatt | $ / MW | 450 | |||||
Capped amount per month | $ 200,000 | |||||
Bitfury Top HoldCo | Purchase Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Percentage of service fee | 7.00% | |||||
Bitfury Top HoldCo | Deposits on Equipment | Purchase Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Payment to related party | $ 10,000,000 | |||||
Amount reimbursed to related party including service fee | 2,500,000 | |||||
Bitfury Top HoldCo | Construction in Progress | Purchase Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Amount reimbursed to related party including service fee | 100,000 | |||||
Bitfury Top HoldCo | Deposits on Equipment and Construction-in-Progress | Purchase Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Payment to related party | $ 2,400,000 | |||||
Bitfury Top HoldCo | Loan Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Debt instrument face amount | $ 100,000 | |||||
Related party debt interest rate | 2.50% | 0.30% | 2.50% | |||
Related party maturity date | Aug. 31, 2021 | |||||
Outstanding loan due to related parties | $ 7,000,000 | |||||
Reclassification of account payable Related party debt to related party loan payable | $ 47,475 | |||||
Outstanding loan balance repaid | $ 7,000,000 | |||||
Related party debt accrued interest | $ 26,823 | |||||
Bitfury USA Inc | Deposits on Equipment | Purchase Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Payment to related party | $ 5,100,000 | |||||
Private Placement | Bitfury Top HoldCo | Loan Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Consideration Received on Transaction | $ 60,000,000 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Millions | 11 Months Ended | ||
Dec. 31, 2021 | Sep. 01, 2021 | Jul. 09, 2021 | |
Loss Contingencies [Line Items] | |||
Percentage of development fee payment | 50.00% | ||
Percentage of share in gross revenue payment by joint venture. | 50.00% | ||
Initial Data Center LLC | |||
Loss Contingencies [Line Items] | |||
Percentage of Interest in Joint Venture | 49.00% | ||
Future Date Center LLC | Maximum | |||
Loss Contingencies [Line Items] | |||
Expected percentage of interest in future joint venture | 49.00% | ||
Luminant Power Arrangement | |||
Loss Contingencies [Line Items] | |||
Definitive power purchase agreement date | Jun. 23, 2021 | ||
Payment of independent collateral amount description | Half, or approximately $6.3 million, of the Independent Collateral Amount was paid to Luminant on September 1, 2021 and is recorded in security deposits on the consolidated balance sheet as of December 31, 2021, as the Company received notice that Luminant had commenced construction of the Interconnection Electrical Facilities. The other half will be due 15 days prior to the date on which the Interconnection Electrical Facilities are completed and made operational. | ||
Independent collateral amount paid | $ 6.3 | ||
Definitive power purchase agreement amendment date | Jul. 9, 2021 | ||
Definitive power purchase agreement further amendment date | Feb. 28, 2022 | ||
Term of power agreement | 5 years | ||
Required collateral amount for power purchase agreement | $ 12.6 | ||
Purchase and sale agreement date | Jun. 28, 2021 | ||
Amendment and restatement date on purchase and sale agreement | Jul. 9, 2021 | ||
Combined Luminant Lease Agreement | |||
Loss Contingencies [Line Items] | |||
Effective start date of lease agreement | Aug. 27, 2021 | ||
Lease agreement period | 5 years | ||
Principal and interest due over period | 5 years | ||
Undiscounted principal payments | $ 13.1 | ||
Standard Power Arrangement | |||
Loss Contingencies [Line Items] | |||
Standard power hosting agreement date | Feb. 3, 2021 | ||
Term of power agreement | 5 years | ||
Renewal term period of power agreement. | 5 years | ||
Agreement term description | The Standard Power Hosting Agreement provides for a term of five years with automatic five-year renewal provisions. | ||
Wind HQ | |||
Loss Contingencies [Line Items] | |||
Definitive framework agreement date | Jun. 10, 2021 | ||
Development fee percentage on capital expenditure | 2.00% | ||
Percentage of development fee payment | 50.00% | ||
Payable fee percentage on gross revenue | 2.00% | ||
Percentage of share in gross revenue payment by joint venture. | 50.00% | ||
Wind HQ | Initial Data Center LLC | |||
Loss Contingencies [Line Items] | |||
Percentage of Interest in Joint Venture | 51.00% | ||
Wind HQ | Future Date Center LLC | Minimum | |||
Loss Contingencies [Line Items] | |||
Expected percentage of interest in future joint venture | 51.00% | ||
Security Deposits | Luminant Power Arrangement | |||
Loss Contingencies [Line Items] | |||
Collateral amount | $ 3.1 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) - Additional Information (Details) - $ / shares | Aug. 27, 2021 | Jan. 07, 2021 | Dec. 31, 2021 | Jan. 31, 2021 |
Shares authorized | 510,000,000 | |||
Share par value | $ 0.001 | |||
Common stock, par value | $ 0.001 | $ 0.001 | ||
Common stock, shares authorized | 500,000,000 | 200,000,000 | ||
Preferred stock, shares authorized | 10,000,000 | 0 | ||
Common stock, shares subscribed | 200,000,000 | |||
Common stock voting rights | one vote | |||
Conversion of stock, shares issued | 200,000,000 | |||
Cipher | ||||
Common stock, par value | $ 0.001 | |||
Common stock, shares authorized | 5,000 | |||
Common stock, shares subscribed | 500 | |||
Shares converted | 500 | 500 |
Warrants - Additional Informati
Warrants - Additional Information (Details) - $ / shares | 11 Months Ended | |
Dec. 31, 2021 | Aug. 27, 2021 | |
Subsidiary Sale Of Stock [Line Items] | ||
Number of common stock entitled to purchase | 1 | |
Exercise price of warrants | $ 11.50 | |
Private Placement Warrants | ||
Subsidiary Sale Of Stock [Line Items] | ||
Warrant outstanding | 114,000 | 114,000 |
Public Warrants | ||
Subsidiary Sale Of Stock [Line Items] | ||
Warrant outstanding | 8,500,000 | 8,500,000 |
Warrant expiration term | 5 years | |
Redemption price | $ 0.01 | |
Minimum period for written notice of redemption | 30 days | |
Redemption closing price | $ 18 | |
Consecutive trading days | 20 days | |
Consecutive trading days after commencement | 30 days | |
Warrant description | Once the warrants become exercisable, the Company may redeem the outstanding warrants (except as described below with respect to the Private Placement Warrants):•in whole and not in part;•at a price of $0.01 per warrant;•upon a minimum of 30 days’ prior written notice of redemption to each warrant holder;•if, and only if, the closing price of the Company's Common Stock equals or exceeds $18.00 per share (as adjusted for share splits, stock capitalizations, reorganizations, recapitalizations and the like), for any 20 trading days within a 30-trading day period ending three trading days before the Company sends notice of redemption to warrant holders. |
Share-based Compensation - Addi
Share-based Compensation - Additional Information (Details) - USD ($) $ in Millions | Nov. 17, 2021 | Aug. 27, 2021 | Jan. 31, 2021 | Dec. 31, 2021 |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Vesting period | 4 years | |||
Common Stock | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Share-based compensation arrangement by share-based payment award, description | Initially, up to 19,869,312 shares of Common Stock are available for issuance under awards granted pursuant to the Incentive Award Plan. In addition, the number of shares of Common Stock available for issuance under the Incentive Equity Plan will be increased on January 1 of each calendar year beginning in 2022 and ending in 2031 by an amount equal to the lesser of (a) three percent (3%) of the total number of shares of Common Stock outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of shares determined by the Board. | |||
Service-Based RSUs | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Share-based compensation arrangement award fully vested upon grant | 5,750,566 | |||
Share-based compensation arrangement award granted | 12,548,804 | |||
Unrecognized compensation expense | $ 39.4 | |||
Unrecognized compensation expense, weighted-average vesting period | 1 year 7 months 6 days | |||
Share-based compensation award vest upon achievement of maximum market capitalization | $ 10,000 | |||
Performance-Based RSUs | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Share-based compensation arrangement award granted | 4,257,710 | |||
Unrecognized compensation expense | $ 31.4 | |||
Unrecognized compensation expense, weighted-average vesting period | 2 years 4 months 24 days | |||
Equity Incentive Plan | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Maximum percentage of annual increase in shares available for incentive plan to outstanding common stock | 3.00% | |||
Equity Incentive Plan | Common Stock | Maximum | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Number of shares available for issuance of awards | 19,869,312 | |||
Incentive Award Plan | Common Stock | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Number of shares available for issuance of awards | 3,062,798 | |||
Incentive Award Plan | Restricted Stock Units | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Share-based compensation arrangement award granted | 0 | |||
Incentive Award Plan | Restricted Stock Units | CEO | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Share-based compensation arrangement award fully vested upon grant | 5,676,946 | |||
Share-based compensation arrangement award granted | 7,096,183 | |||
Incentive Award Plan | Service-Based RSUs | CEO | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Share-based compensation arrangement award granted | 2,838,473 | |||
Incentive Award Plan | Performance-Based RSUs | CEO | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Share-based compensation arrangement award granted | 4,257,710 | |||
Incentive Award Plan | Performance-Based RSUs | Tranche One | CEO | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Vesting rights percentage | 33.33% | |||
Share-based compensation award vest upon achievement of maximum market capitalization | $ 5,000 | |||
Award lookback period | 30 days | |||
Incentive Award Plan | Performance-Based RSUs | Tranche Two | CEO | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Vesting rights percentage | 33.33% | |||
Share-based compensation award vest upon achievement of maximum market capitalization | $ 7,500 | |||
Award lookback period | 30 days | |||
Incentive Award Plan | Performance-Based RSUs | Tranche Three | CEO | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Vesting rights percentage | 33.33% | |||
Share-based compensation award vest upon achievement of maximum market capitalization | $ 10,000 | |||
Award lookback period | 30 days |
Share-based Compensation - Sche
Share-based Compensation - Schedule of Share-based Compensation Expense (Details) | 11 Months Ended |
Dec. 31, 2021USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share-based compensation expense | $ 63,765,473 |
Service-Based RSUs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share-based compensation expense | 62,094,704 |
Performance-Based RSUs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share-based compensation expense | $ 1,670,769 |
Share-based Compensation - Summ
Share-based Compensation - Summary of Unvested RSU Activity (Details) | 11 Months Ended |
Dec. 31, 2021$ / sharesshares | |
Service-Based RSUs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Shares, Unvested, Beginning | shares | |
Number of Shares, Granted | shares | 12,548,804 |
Number of Shares, Vested | shares | (5,750,566) |
Number of Shares, Unvested, Ending | shares | 6,798,238 |
Weighted Average Grant Date Fair Value, Unvested, Beginning | $ / shares | |
Weighted Average Grant Date Fair Value, Granted | $ / shares | $ 8.09 |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 8.15 |
Weighted Average Grant Date Fair Value, Unvested, Ending | $ / shares | $ 8.04 |
Performance-Based RSUs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Shares, Unvested, Beginning | shares | |
Number of Shares, Granted | shares | 4,257,710 |
Number of Shares, Unvested, Ending | shares | 4,257,710 |
Weighted Average Grant Date Fair Value, Unvested, Beginning | $ / shares | |
Weighted Average Grant Date Fair Value, Granted | $ / shares | $ 7.76 |
Weighted Average Grant Date Fair Value, Unvested, Ending | $ / shares | $ 7.76 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 1 Months Ended | 11 Months Ended |
Jan. 31, 2021 | Dec. 31, 2021 | |
Operating Loss Carryforwards [Line Items] | ||
Provision for federal income taxes | $ 0 | $ 0 |
Valuation allowance | $ 909 | 8,235,946 |
Increase in valuation allowance | 8,200,000 | |
Federal | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | 29,800,000 | |
State | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | $ 8,800,000 | |
Operating loss carryforwards, expiration year | 2041 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Expected Tax Computed at U.S. Statutory Federal Income Tax Rate to Total Benefit for Income Taxes (Details) | 1 Months Ended | 11 Months Ended |
Jan. 31, 2021 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Income tax benefit at federal statutory rate | 21.00% | 21.00% |
State taxes, net of federal benefit | 5.10% | 1.00% |
162m limitations | 0.00% | (13.40%) |
Stock compensation | 0.00% | (3.30%) |
Change in valuation allowance | (26.10%) | (5.30%) |
Income tax provision (benefit) | 0.00% | 0.00% |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2021 | Jan. 31, 2021 |
Deferred tax assets: | ||
Net Operating loss carryforwards | $ 6,711,946 | $ 434 |
Share-based compensation | 1,457,280 | |
Accruals and other temporary difference | 67,294 | 836 |
Gross deferred tax assets | 8,236,520 | 1,270 |
Property and equipment, net | (574) | (361) |
Valuation allowance | $ (8,235,946) | $ (909) |
Net Loss Per Share - Schedule o
Net Loss Per Share - Schedule of Common Shares Excluded from Computation of Diluted Net Loss Per Common Share (Details) | 11 Months Ended |
Dec. 31, 2021shares | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |
Antidilutive shares excluded from computation of net loss per common share | 19,669,948 |
Public Warrants | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |
Antidilutive shares excluded from computation of net loss per common share | 8,500,000 |
Private Placement Warrants | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |
Antidilutive shares excluded from computation of net loss per common share | 114,000 |
Unvested RSUs | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |
Antidilutive shares excluded from computation of net loss per common share | 11,055,948 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - USD ($) $ in Millions | Jan. 01, 2022 | Feb. 28, 2022 | Dec. 31, 2021 |
Subsequent Event | Bitmain Technologies Limited | |||
Subsequent Event [Line Items] | |||
Payments made related to purchase commitments | $ 22.3 | ||
Subsequent Event | SuperAcme Technology (Hong Kong) | |||
Subsequent Event [Line Items] | |||
Payments made related to purchase commitments | 18.5 | ||
Subsequent Event | Bitfury USA Inc | |||
Subsequent Event [Line Items] | |||
Payments made related to purchase commitments | $ 18 | ||
Service-Based RSUs | |||
Subsequent Event [Line Items] | |||
Shares vested | 5,750,566 | ||
Service-Based RSUs | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Shares repurchased for tax withholdings owed by employees | 659,231 | ||
Service-Based RSUs | Employees and Consultants | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Shares vested | 1,554,064 |