Cipher Digital Inc. Q4 FY2023 Earnings Call

Good morning and thank you for standing by. Welcome to Cipher Mining Inc. Fourth Quarter and Full Year 2023 Business Update Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host, Josh Kane, Head of Investor Relations. Josh, please go ahead.

Good morning and thank you for joining us on this conference call to discuss Cipher Mining's Fourth Quarter and Full Year End 2023 Business Update. Joining me on the call today are Tyler Page, Chief Executive Officer, and Ed Farrell, Chief Financial Officer. Please note that you may also review our press release and presentation which can be found on the Investor relations section of the company's website. Please note that this call will also be simultaneously webcast on the Investor Relations section of the company's website. This conference call is the property of Cipher Mining and any taping or other reproduction is expressly prohibited without prior consent. Before we start, I'd like to remind you that the following discussion as well as our press release and presentation contain forward-looking statements, including, but not limited to, Cipher's financial outlook, business plans and objectives and other future events and developments, including statements about the market potential of our business operations, potential competition and our goals and strategies. The forward-looking statements and risks in this conference call, including responses to your questions, are based on current expectations as of today, and Cipher assumes no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law. Additionally, the following discussion may contain non-GAAP financial measures. We may use non-GAAP measures to describe the way in which we manage and operate our business. We reconcile non-GAAP measures to the most directly comparable GAAP measures and you are encouraged to examine those reconciliations, which are found at the end of our earnings release issued earlier this morning. I will now turn the call over to Tyler Page.

Thanks, Josh. Hi, this is Tyler Page, CEO of Cipher Mining. Thank you very much for joining our Fourth Quarter 2023 Business Update call. Let me begin the call with a few summary financial statistics from our outstanding fourth quarter of 2023. Ed will give a full breakdown of our numbers during his portion of the call, but I wanted to highlight our performance during the fourth quarter of 2023 upfront because it was the first quarter we have had since going public that featured completed operations at our original four data centers for the full quarter. In this sense, it provides the most accurate view of the progress we have made toward our vision of Cipher's full capabilities as a low-cost producer of bitcoin. Our progress has been immense. By mining 1,327 bitcoin in the quarter, a production increase of 252% year-over-year, we produced revenues of $43 million and GAAP net earnings of $11 million. We early adopted the new accounting standard in 2023, and these numbers include mark to market gains on our bitcoin inventory. But I think it is important to highlight that even under the previous accounting treatment for bitcoin, Cipher also would have produced positive GAAP net earnings for the quarter. This is not something most of our competitors can say. Our adjusted earnings were even stronger. We produced adjusted earnings of $28 million for the quarter, which represents massive progress and an improvement of over $50 million year-over-year. We are very proud of these milestones as they demonstrate our relative strength and outperformance versus competitors. And with the upcoming halving on the horizon, we believe that the relative advantages of being a low-cost producer of bitcoin will only increase going forward. As of the end of February, Cipher held 1,433 bitcoin in inventory and $69 million of cash, while our total self-mining hash rate has grown to 7.4 exahash per second. For those that follow the bitcoin mining space, you already know that the halving is nearly upon us. We have spoken repeatedly about how Cipher is built to thrive throughout market cycles. While the cut in new bitcoin supply from the halving is painful for the industry, it can reward thoughtful miners while exposing those miners who have not been disciplined in their strategic decision-making. Cipher has been very disciplined while planning for the halving for years. We are built to succeed with approximately 96% of our portfolio energized through fixed price power at an industry low cost of electricity of roughly $0.027 per kilowatt hour. As a reminder, electricity represents the large majority of our operating costs and our low price is a key driver of our best-in-class unit economics. Furthermore, as we complete our expansions at Bear and Chief and complete the full Black Pearl site, our overall rig fleet efficiency will improve from 29.9 joules per terahash currently to 22 joules per terahash. Turning to our growth plans, we expect to complete 30 megawatt expansions at each of our Bear and Chief Joint Venture Data Centers in the second quarter of this year. And for those expansions to add 1.25 exahash per second of self-mining capacity to our production. We also expect to add an incremental 0.62 exahash per second of self-mining capacity via hardware and software optimization of our existing fleet that we expect to be fully online by the end of the third quarter. Lastly, we are most excited about the enormous potential of Black Pearl, our 300 megawatt site in West Texas. We recently commenced construction activity and aim to energize the site in the second quarter of 2025.

Thank you, Tyler, and hello to everyone on the call. As a reminder for those following our webcast presentation, I'll be referring to our results for the three months and 12 months ending December 31st, 2023. I will discuss some of the key financial metrics for Q4. I'll provide some additional fourth quarter color as well as walk through our full year results. This quarter marked our first quarter of operations since inception with all four of our data centers being fully deployed, and it's a testament to the dedication of our entire team and the strength of our company that we were able to deliver positive GAAP earnings for the quarter, even before adopting a new accounting standard related to the fair value of bitcoin. As observed across the industry, top-line growth doesn't always translate into bottom-line earnings. However, at Cipher, this quarter showcased strong top-line growth that also positively impacts our bottom line. In the quarter, we mined 1,195 bitcoins, which resulted in revenues of $43.4 million, an achievement we all take great pride in. Yet, upon closer examination these numbers become even more impressive. While our revenues were up 43% sequentially, the cost of power to generate those revenues was only up 2%, underscoring the value we get from our fixed price PPA at Odessa. We will talk about it later, but the value of that PPA also increased by over $13 million in the quarter, again a testament to the capabilities of our power and origination team. Despite substantial top-line growth in Q4 at $22.5 million, G&A expenses were down 6% from the prior period. This emphasizes the significant potential for operational leverage within our business model. Looking ahead, we are excited about our prospects as we scale up operations significantly over the course of this year in 2025. We anticipate encountering industry headwinds such as the upcoming having and rising network hash rates, which are challenges that all of our competitors face. However, we firmly believe that Cipher is well positioned to navigate these obstacles and emerge as a leader through this next cycle.

Great. Thanks for taking my question. Congrats on the quarter, guys, looks pretty solid, despite the accounting rule changes. I guess two questions, maybe one for each of you. Ed, when we talked about operational leverage boost, so we noticed that as well, so G&A coming in a little bit lower than where we actually estimated for Q4. If you can grow exahash to 9-plus, and G&A flat in '24 seems like another big boost there. Is that how we should be expecting G&A to basically be flat over '24?

Yeah. Good morning, John. Thanks for listening, and thanks for the question. I would look at G&A over the next two quarters as being relatively flat. So we don't expect a significant increase. As we mentioned, we built out the team, I think we'll get a lot of leverage from building out the team. As we bring on more exahash and expand our data centers, we should expect some additional depreciation and amortization. But when you neutralize that for the non-GAAP numbers, I would expect that not to be too much greater than what we've been reporting in the fourth quarter of '23. Is that helpful?

Yes, that is. Thanks, Ed. And then Tyler on the Bitfury side of things, and apologies if I missed this, but can you just remind us, so how many shares Bitfury still has right now, the timeline for that distribution? And then I believe there's no more lockups. Is that correct?

Sure, John. Let me add some additional context to Ed's response about SG&A, as it’s quite relevant. I understand you’re looking for short-term specifics, but it’s crucial to consider SG&A, especially as we approach the halving. Our approach to SG&A is quite unique compared to other bitcoin miners, and this is something analysts and investors should keep in mind when evaluating these companies post-having. We often discuss the constant quest for affordable power, which is vital for our unit economics. In a post-having environment, as our operations scale up, there are essentially two paths to secure cheap power. Some companies have chosen locations with potential regulatory risks, which we find difficult to navigate, putting their access to cheap power in jeopardy if miner taxes rise or regulatory scrutiny increases. Other companies may manage that risk differently than we do. The second path, which we've focused on since day one, is setting up operations in Texas, where our data centers can quickly adjust their output. They can power up or shut down within a minute, enabling us to respond to price signals effectively. We see significant potential in participating in demand response programs and offering power back to the grid, which adds another revenue stream. Conversely, a more conventional mining operation that aims to maintain continuous production often faces challenges. For instance, power costs in Texas average around $0.06 per kilowatt-hour, which means that to achieve lower electricity costs, you must have the ability to curtail operations and potentially join demand response initiatives. Achieving this requires skilled personnel across various functions, something that we do uniquely at scale, especially as we expand Black Pearl. Thus, when discussing our SG&A, it’s important to recognize that we are building a company with a distinct and scalable skill set. Currently, less than half of our output is derived from megawatts and less than a third from hash rate, but as we bring Black Pearl online, our SG&A will scale effectively. It's not a straightforward linear growth. Your question regarding the next quarter or two is relevant, but to emphasize, we believe this will evolve into one of our strongest advantages long-term as we introduce larger data centers with minimal SG&A growth. We are just beginning to construct the foundation necessary to generate and control our own low-cost power supply. Regarding Bitfury, they are currently distributing shares and have announced plans to have 50 million shares, which would represent less than 20% of our total shares. We've also leveraged some funds through ATMs, so this percentage might be even lower. This process is underway, and while I don’t have all the details since that’s outside my direct discussions with them, I anticipate it should be finalized soon. Previously, they held over 80% of our cap table, and we are now expected to see that drop significantly below 20%, with no lockup restrictions on these shares as they are distributed. This is important context because I’ve heard from many investors who appreciate our business model focused on affordable power and maintaining a healthy balance sheet, but they’ve hesitated due to the high concentration of shareholding. Addressing this has been a priority for us, as we aim to build a robust business while also enhancing Cipher's stock as an investment. The positive aspect of this distribution is that these are shares previously owned by Bitfury and are being directed to investors who have been engaged in the bitcoin mining space for a long time, often over a decade. Therefore, from Cipher’s standpoint, we view this development favorably. Based on my discussions, it seems our stock has been undervalued due to the concentrated cap table, and I believe that this discount will decrease, positioning us to trade at a premium reflective of our strong performance.

Hey, good morning, guys. A few housekeeping questions. I'll get to those in a second, but I wanted to, I think you guys announced a big purchase with Bitmain, I believe it was in December. It included an option for 2024. I look at your Odessa site, and it has very impressive power costs, but still has a pretty high joules per terahash. My question is, does it make sense to swap out machines at Odessa for maybe the T21s? Kind of how do you think about that? What's the calculus for doing that? And I have a few follow-ups. Thank you.

Thank you for the question, Reggie. Our current plan is not to deploy the T21s from that large order you mentioned, which could total up to 15.8 exahash at a cost of $14 per terahash—a fantastic price when considering our profitability. Currently, we estimate efficiency similar to the S19J Pro, with electricity costs around $165 per megawatt hour, making our operations increasingly profitable. Securing the $14 price for that purchase is excellent for us. We plan to use 1.2 exahash of S21s at Odessa to replace machines that are being repaired and to upgrade from our least efficient units. This replacement is a significant part of our projected hash rate growth this year, with expectations of 8.7 exahash in the second quarter and 9.3 exahash in the third quarter, largely due to the expansions at Bear and Chief and the optimization of less efficient rigs at our site. Additionally, our current efficiency surpasses the industry average, which is around 34 to 35 joules per terahash. We aim to reach 22 joules per terahash once all new units are operational. We are also exploring various hardware and software optimizations, learning from our experience with these rigs and adapting to optimize their performance. Even our least efficient machines are seeing improvements through minor upgrades that do not require complete replacements.

Got it. To clarify, regarding the Bitmain announcement in December, there was a component designated for 2025 and an option for 2024. Based on what you have announced and disclosed so far today and in the past few weeks, does this imply that any of that option is being utilized for 2024? If not, how do you plan to approach that option? Is it possible to extend it beyond 2024? Lastly, I have a lot of questions for you.

Yeah. So sizing of that option is tied out with Black Pearl. So we could build the full 300 megawatts of Black Pearl buying rigged T21s for $14 a terahash. And so at Black Pearl, which will be energized in the first half of 2025, we have the ability to basically build that full site. If you look at Slide 7 of our deck, the walk out to 25.1 exahashes assumes that we plug in all those T21s at that site. Now, keep in mind, the option is exercisable in calendar year 2024. But when we exercise it, it takes a few months to deliver. So here's how we're thinking about it. At a baseline, when we do CapEx planning for Black Pearl, we've locked in the most important variable cost in CapEx. That cost per terahash can go up 600%. We've locked it with that option. And if we find nothing else to do with rigs beyond the expansions we've already laid out, we can exercise that full option and build the full Black Pearl. The sort of great thing about this timeline that we've got is also to answer your second question about tuck-in acquisitions, we are spending a lot of time looking at opportunities. There is a lot for sale. There are companies for sale. There are ones that are well known, there's private ones that are less well known. There's domestic ones, there's international ones. There are sites. There are folks that want to get out of the hosting business. There's folks that want to sell infrastructure. So we are looking at a lot. I think a hallmark of our history has been an extremely disciplined focus on return on investment. And so, we're just not going to overpay for stuff because that's ultimately what produces things like positive GAAP earnings is the discipline not to overpay for things. So my hope is that we will find amazing opportunities at very low prices that are available right away. We could exercise that Bitmain option right away to fill it, fill whatever we buy with new rigs, and then we can source other rigs for sort of the back half of Black Pearl. But at a minimum, we can use the full option to build all of Black Pearl, and then it truly has optionality if we find a better way to use them faster. Does that make sense?

It does. It does make sense. One last point of clarification on that. So I assume that, that means the option piece of it can be exercised at any point in '24 and not necessarily at the end of '24?

Correct. That's right.

Thank you. One moment for our next question. And our next question coming from the line of Joseph Vafi with Canaccord. Your line is open.

Hey, guys. Good morning. Great to see the Q4 results and the adoption of the new accounting standards. I was just thinking here, we've had this really nice run up here in bitcoin that's been pretty rapid and precipitous. Just wondering how the higher bitcoin price is perhaps having effect on your operating strategy, the build out strategy, and the HODL strategy. Could you move Black Pearl forward faster now with a higher average price per bitcoin selling them? Or does it make sense to HODL or do you HODL less because the price is high? It's kind of a high-class problem, but just trying to see how it's affecting the business and maybe tweaking the strategy.

Thanks, Joe. So, good question. First of all, Black Pearl has an energization schedule, which is set for the second quarter of next year. So unfortunately, we cannot move that up. In addition to there just being a lot of logistics, we're clearing large 50-acre fields now. We have to install and build everything. But really, the timeline there, even if we wanted to, the challenge is, there's an energization timeline that we don't have optionality on. Now, what we do have optionality on is how much we built. We sort of publicly committed to building the first half of it. We have an option to build the second half of it. And the way I think of the increasing economics of the business, frankly, which is tied to the higher bitcoin price, it makes it more likely that we could greenlight the full 300 megawatts, as opposed to just the first half of it, which we've committed to. That we do have optionality on. So I think of it in those terms. And then speaking more broadly about treasury management, let me remind everyone that in general, it's our goal to build a bitcoin treasury over time. We need to do that thoughtfully about different ways we can tap capital. It's been very favorable to build that treasury recently, but in addition to selling some bitcoin with regularity to pay our fiat bills and holding an increasing number of bitcoin, we also hedge. We did see a noticeable pickup in hedging over the last few months, and that's because we've had these big sort of known binary events, right? Things like the ETF approval date when everyone was coming into that week, for example. We put several costless collars around bitcoin, we held in inventory, where we protected the downside in case we got a piece of bad news on that inventory. And also, we didn't pay anything for it other than giving up upside that was well above the then market price, sort of we're either selling at a better price than was in the market to buy downside insurance. We continue to do that as well as look at other ways to think about hedging. We're following the hash rate derivatives market very closely to look at ideas. We've got other known events coming up like the halving, but also things like there's timelines on the ETF approval, which may have an impact on the space. It wouldn't surprise me if we continue to do things like costless collars. Of course, that also comes down to an analysis of the relative economics. We want to do that when the option map is very favorable, and we can keep a lot of upside to protect downside. So it's not just we put this much in this bucket and this much in that bucket, it's dynamic. But listen, the rising bitcoin price is certainly very helpful for our optionality, not only on sort of building the full Black Pearl, but when we look at acquisition opportunities, it certainly is nice to have that going up.

Sure. That's a great color. Thanks, Tyler. And then I'm just wondering, transaction fees have been kind of in the news, and I know you mentioned it, how material was that in the quarter relative to overall revenue? And just trying to think about post-having transaction fees, if you got any thoughts on that. Thanks a lot.

It's crucial to consider certain factors when thinking about investing in a bitcoin miner, especially as we approach a significant moment in the industry with the upcoming halving. This event is likely to reveal less disciplined practices within the sector, highlighting the need for a deeper understanding of power usage and maintaining a clean balance sheet. Additionally, with the introduction of ETFs, many historically short-term investors who traded based on bitcoin's fluctuations and held bitcoin balances are now showing interest in firms like MicroStrategy. This shift suggests a need to separate bitcoin mining operations from their bitcoin holdings, as investors have alternative options available. It's worth noting that in the last quarter, we achieved profitability without needing to bring bitcoin held in treasury to market value, showcasing our strength as an operational business with a solid treasury position. Addressing your question about transaction fees, what's significant about our operating mining business is that during the fourth quarter, we experienced noticeable spikes in these fees. While they are not always constant—sometimes influenced by popular BRC-20 tokens, particularly from Asian investors—there were occasions when our Coinbase rewards from transaction fees doubled. This indicates a considerable upside potential. We also observe ongoing developments in how block space is valued. Potential investors might wonder why they would consider a bitcoin mining company in the presence of ETFs. The answer lies in the combination of operational leverage and the potential for future transaction fee earnings. If we observe spikes in these fees or if they become more stable, it presents additional value from our business model, which can increase quickly with rising demand. Historically, when more investors enter the market and demand increases, transaction fees typically rise as well. Last quarter, we also saw promising new uses for block space, and although I don't have the exact total for the entire quarter, there were days when we received 50% to 100% of our rewards from Coinbase through those fees.

Yeah. Hi. Thank you and good morning, and thanks for taking my question. Tyler, I was hoping for a little bit of an update on Alborz and where the status is of getting grid connected to there, and any kind of timelines and thoughts around what else needs to happen in terms of spending to make that happen.

Sure. Thanks for the question. We still believe it will happen in the near term, potentially as soon as the next quarter. The only reason I haven't provided a specific date is that we're currently negotiating contracts, which are all in progress. Some contracts, especially those involving setting up a grid connection, tend to take longer than others. That's why I can't provide an exact timeline. However, it's in process, and my optimistic goal is the second quarter, which I believe is achievable. Additionally, we have a technically established 50 megawatt PPA there, giving us the potential for another 10 megawatts of expansion at Alborz if we decide to proceed with that. The grid connection is expected to increase the uptime of the existing machines by roughly 20%, which would be significant. While it may not drastically change the overall situation, it's a great way to maximize our current resources.

Okay, great. As we consider this, the electricity costs appear to be among the best in the industry. With the grid connection, it might increase slightly, reflecting the electricity pricing you mentioned regarding the PPA, possibly resembling the situation in Odessa. I'm curious if the improvement in utilization will significantly exceed the higher marginal cost of electricity. Is that the perspective we should have?

That's right. I think of it this way: our cheapest power comes from Alborz, and it's most effective when the wind is blowing, offering the best economics. When the wind is calm, we aren't currently extracting power. In Texas, when the wind blows, the market price typically drops. I believe the costs will be higher than what we pay when sourcing from the grid. However, at all of our front-of-the-meter sites, we will manage curtailment by avoiding the most expensive market hours and increasing our utilization. I estimate that for about three-quarters of the time, we will benefit from the lower price at Alborz, while for the remaining quarter, it will be closer to the costs from Bear and Chief.

Yeah. Hi. Thanks for taking my question, guys. First of all, I know it's still early stages, but I'd love to understand kind of how you're thinking about the pace of CapEx spending and the rollout of that spending as we head into the Black Pearl energization. Thank you.

Sure, we're still in the early stages and are currently experimenting with various design options at Black Pearl. We're considering air cooling and hydro, and while we haven't completely dismissed immersion, it's not our primary choice. We are leaning more towards either hydro or air cooling. In terms of cost estimates for the site, our projections are aligning closely with Odessa, where we estimated just over $500,000 per megawatt for non-rig infrastructure. We're tracking towards similar figures at Black Pearl, though one distinction is that we are building and owning the substation for a 300 megawatt site there. Including that, the average cost might be between $650,000 and $700,000 per megawatt for non-rig infrastructure, but it's still early, and we plan to include contingencies. Additionally, if we decide to deploy all the T21s there, that price is already fixed and partly paid. So far, we've spent a bit over $20 million in this process, and by the end of February, our combined cash and bitcoin amounted to around $165 million. March has been strong in terms of bitcoin value. Given our cash reserves and anticipated operating cash flows, we feel very confident about the first half of Black Pearl. We're optimistic about potentially achieving the full 300 megawatts right from the start as we monitor market dynamics.

Yeah, understood. Thanks Tyler. That's helpful color. And look, in your presentation, you broke down your energy cost buy side on an all-in basis. And I think it's very helpful, really points to the operating leverage inherent in this business. I'm curious as Black Pearl comes online, how are you thinking about its impact on your all-in energy cost per bitcoin mined moving forward?

Let me provide some insight into our thoughts. It's challenging to make precise projections. Black Pearl is a front of the meter site, and we plan to manage curtailment while participating in demand response programs in Texas, such as ancillary services. For context, if you consider a typical model bitcoin miner that operates machines continuously, the cost in Texas would be around $0.06 per kilowatt hour, which isn't appealing to us and is significantly higher than what we have elsewhere in our portfolio. If we manually operate and manage curtailment to replicate what we've achieved at Odessa, where we have it set at a fixed price, we would essentially turn off the 5% of the most expensive hours for floating market prices. This approach could reduce that $0.06 cost to approximately the mid $0.03 range. With optimal trading decisions related to power optimization, including participation in the ancillary services market, analyzing real-time versus day-ahead markets, and considering congestion trading, we believe it might be possible to lower the net price below $0.02 per kilowatt hour. However, realistically, I would expect our fully scaled-up site to operate at a net cost between $0.02 and $0.035 per kilowatt hour, which aligns closely with our current portfolio.

Yeah. Good morning, guys, and congrats on the pyramid. Thank you for taking my questions. I just have one here. Tyler, we're just hoping you could share your thoughts on how you see the industry evolving over time with respect to consolidation. If we look at the universal public bitcoin miners, it's evident that operators who focus purely on bitcoin mining have achieved arguably superior financial performance and scale. And a number of these players are building massive data centers. And so what's your take on the appetite to acquire subscale peers? Has that diminished at all?

Thank you for your question. We evaluate all opportunities and are always on the lookout. Typically, we find that sites are for sale or sellers are in distress for specific reasons. Often, we choose to pass on opportunities due to concerns over power prices that we don't believe can sustain through different market cycles. The competitive landscape is expanding, which suggests that larger players are likely to perform better moving forward. Being a registered company in the US provides excellent access to capital markets for funding expansion and negotiating lower capital expenditures. Some competitors are considering alternatives because bitcoin mining might not be as lucrative, while newer interests like AI emerge. We have examined various AI proposals, but currently, that is not part of our strategic plan. We are more focused on opportunities that allow us to integrate further into the power industry and will continue exploring those options. Regarding the future, the situation is rapidly changing. Bitcoin prices are currently increasing significantly, and it’s uncertain what the price will be at the halving. This might benefit less efficient miners. If we experience substantial growth in network hash rates, while bitcoin prices don't see extreme increases, we expect to see a clear differentiation among miners. Companies will not be viewed uniformly, and trading won't be aligned. For us, having a team and operational technology that effectively generates affordable power from the free market and interacts well with the grid, especially in states like Texas, will enhance our sustainability. From a mergers and acquisitions perspective, we are cautious about the hosting sector during market fluctuations, particularly with new chipsets being released. We have less interest in sites that feature hosted clients with obligations they cannot pass through. There are challenges that often lead to these sites being for sale. Ultimately, we want to identify companies that see Cipher as having the best unit economics, large scale, and a healthy balance sheet, and that want to collaborate with us to become a significant player in the market. We perceive a notable valuation gap between ourselves and some of the top miners, believing we are operating a more efficient company. If opportunities arise at favorable prices that would benefit our shareholders, we are certainly interested.

Hi. Good morning, guys. Great quarter and thank you for taking my question this morning. I'm curious to what price range you'd consider on a cost per megawatt basis to acquire infrastructure as you evaluate some of these M&A opportunities out there. Thanks.

Thanks, Mike. I'd say it's dynamic like everything else, right, I mean, the bitcoin price is going up, enthusiasm is going up. I don't think anyone's ever going to get the price we got for Black Pearl. We paid $7 million for a 300 megawatt, ERCOT approved site. So, no, it's not built. But having the sort of approval and capacity to go to 300 megawatts, is an amazing price, and far, far less than I've seen anyone achieve. I think it's dynamic it's really site by site. It depends on what you're buying, what the power contract is, what are the opportunities to do things like manage your curtailment and be paid for that, so that you can sort of, again, manufacture your own cheaper prices. And then if there's hardware there, what's the state of the hardware? Again, we're due in diligence on some sites. Some sites, the hardware is pristine, at other places, it's not. And so coming up with a secondary market value for things like, if there are rigs there or substations, transformers, et cetera, is it a building, containerized, et cetera. So I'd say every situation is a little bit different. But where we always start is, we typically look for a minimum of scale. We screen out things most often below 50 megawatts, unless there's a compelling reason to look at them. Next thing we look at is the power, how sustainable is the power? What are the risks that the power could change, or what's the regime like, et cetera? And then beyond that, it's kind of a market price evaluation of what equipment might be there. So it's hard to give a stock answer to that, other than basically anything we do with capital at the company starts with a return on investment calculation, and that's whether we're buying rigs, buying power, or buying a site. And so all I can say is we will remain very disciplined and try to make investments that we think are going to have a fantastic return for shareholders. Well, look, thank you very much to everyone that participated on the call. We are really excited. We have been thinking about the halving for years when we built this business and even this earnings call, getting excited to talk about where we would be positioned going into this really transformational period in the space. So, thank you for your time, and we're very excited to give you further updates in the coming months.

Ladies and gentlemen that does conclude our conference for today. Thank you for your participation. You may now disconnect.