Summary Cipher Mining grew topline revenue from Bitcoin mining substantially in the fourth quarter from $24.1 million to $42.2 million sequentially. Q4 generated positive net income. For the full year, the company lost $44.6 million and had an estimated breakeven cost of nearly $94k. Four months of that production came pre-halving. 'Sats per share' backing CIFR stock, while up year over year, have fallen considerably over the last two quarters. More than 300 BTC have been subsequently sold since EOY. SoftBank's $50 million cash infusion in January came via dilution and those shares have already been registered for sale. However, hedge fund balances were higher in Q4. A lot has happened since I last covered Cipher Mining ( CIFR ) for Seeking Alpha in September. As an asset, Bitcoin ( BTC-USD ) has been very present in the zeitgeist. First with President Trump's Truth Social posts from March 2nd and then with the Trump administration 'delivering' on its campaign promise to order the ceased selling of BTC held by the US government. While market speculators and HODLers were likely looking for something more similar to the Lummis/RJK Jr proposals from last summer, the reality is such a move was always an overly optimistic expectation - at least this year. We can let the KOLs on X who have made Bitcoin their entire personal identity debate whether the President's March 6th executive order was bullish enough for price today. As investors, we need to dissect the information as best we can and allocate capital accordingly. And while a lot has happened since September, I'm not sure much as actually changed for Bitcoin. Miners are perhaps a different story. When I wrote about CIFR last year, Cipher had a large cash hoard and the sixth largest BTC stack among public mining stocks. Neither of which are still true. Q4 Earnings & Balance Sheet For the quarter ended December, Cipher Mining reported top line revenue of $42.2 million. This was a large sequential increase from $24.1 million in Q3 and a relatively small decline from $43.4 million year over year. Importantly, Cipher's $17.5 million net income in the quarter wasn't entirely attributable to revaluing unrealized gains on Bitcoin holdings. That's the good news. Periods Ended December (Cipher Mining) For the full year, Cipher Mining's operating loss came in at $43.7 million. This was more than double the operating loss from 2023 even with Bitcoin prices significantly higher for all of 2024. After interest income, interest expense, and taxes, Cipher Mining ended 2024 with a $44.6 million net loss. Cipher Mining Given the 2,756 BTC the company mined during the calendar year, at $258 million in COGS, Comp, G&A, and D&A, Cipher would have needed a $93.7k average selling price on BTC mined for the company to have broken even. That's actually not a bad breakeven price all things considered, but bear in mind that nearly half of the company's mined BTC from the full year came in the first four months before the block reward halving event in April. This same expense profile in a full year post halving world would put Cipher's break even price above $100k BTC. Which is certainly attainable at current Bitcoin pricing but at the moment, the company can't operate profitably without cutting costs. The question is how much room for error does Cipher have? I suspect not very much. Data by YCharts At the end of December, Cipher Mining had less than $6 million in cash and equivalents against $173.5 million in total liabilities. To be sure, assets also grew substantially year over year from $566 million to $855 million. This growth in assets was attributable to a near-doubling of property and equipment as well as an almost $60 million YoY increase in the value of Cipher's Bitcoin holdings. To be sure, this growth in assets has come at a cost and that cost has generally been through shareholder dilution. Cipher, Seeking Alpha, Author's Chart By my count, Cipher Mining's 'sats per share' has been in decline since quarter ended June and currently stands at its lowest level since December 2023. The good thing for those who like miners to keep BTC on the balance sheet is that 'sats per share' has indeed grown year over year by nearly 40%. I'm not expecting this to continue to be quite honest. Febru ary Production Like all miners, Cipher is enduring diminishing BTC-denominated returns from mining: Cipher, Author's Chart This is both a product of the block reward halving last April as well as increased global hash rate chasing Bitcoin's price increase. Over the last three reported production months (Dec-Feb), Cipher's average monthly BTC haul has been 211 BTC. Given the company's plans for exahash growth through the rest of the year, it's not a surprise to see Cipher's HODL stack has declined each of the last 6 months: Cipher, Author's Chart Cipher's HODL now stands at 1,032 BTC - 392 of which have been pledged as collateral. After Bitcoin's price topped out during the 2021 bull run, it was not unusual to see public miners that had scaled stacks during the run start to sell BTC off when cash flow got tight. That may or may not be at play here for Cipher, but it's useful nonetheless for readers who prioritize a 'BTC yield.' That's not a viable play any longer for CIFR in my view. Valuation The other consideration is valuation. I've shared this table before in additional Bitcoin mining articles and I'll do so again here: CIFR Market Capitalization $1,318,185,105 Monthly Production 211 FWD P/S At $85k BTC 6.12 FWD P/S At $100k BTC 5.21 FWD P/S At $150k BTC 3.47 FWD P/S At $200k BTC 2.60 Sources: Cipher, Google Finance, Author's Calculations At 211 monthly BTC, Cipher is trading at an annualized price to sales ratio of 5.2 given a $100k BTC price. That multiple is over 6x forward sales at the currently closer $85k per coin price. Cipher's revenue comes from mining. Even though the company aspires for HPC revenue - something that I believe is more challenging now than it was a year ago - I think valuing these companies on Bitcoin-based assets and Bitcoin-based revenue is the better approach today. Data by YCharts On a price to book multiple, CIFR is valued closer to companies like MARA Holdings ( MARA ) and CleanSpark ( CLSK ) than it is to a company like TeraWulf ( WULF ). Share Registration and Holdings Data One of the risks that I pointed out back in September was that insiders were selling CIFR stock to a fairly significant degree. In the first half of September, BitFury (a 10% owner) sold $27.9 million in CIFR stock. Since then, that selling has subsided a bit with $18.1 million in combined sales from BitFury and two executives in the subsequent months. In late-February, Cipher Mining released a filing indicating a SoftBank subsidiary had purchased 10.4 million shares for $50 million and registered those shares for sale: Cipher Minining Given these shares were purchased at $4.79 - a 21% premium to the March 6th closing price - I don't imagine these 10.4 million shares are an immediate risk to be sold. Doing so would realize a $10.4 million loss in just a handful of weeks - again, it's unlikely these get moved immediately in my eyes. What's also interesting is the growth we've seen in mining stock shares held by asset managers over the last two quarters. Shares Held By Hedge Funds (millions) Q2-24 Q3-24 Q4-24 QoQ Core Scientific ( CORZ ) 88.59 110.84 141.54 27.7% Cipher Mining 58.26 62.06 76.50 23.3% CleanSpark 66.45 70.41 83.63 18.8% MARA Holdings 114.63 113.01 129.31 14.4% Riot Platforms ( RIOT ) 89.12 86.35 134.95 56.3% IREN Ltd. ( IREN ) 50.47 26.67 38.01 42.5% Source: Hedge Follow While Cipher's institutional ownership is slightly below most of the other stocks listed in the table above, CIFR shares held by hedge funds (as tracked by Hedge Follow) grew faster than the sector average of 21% in the fourth quarter. By itself, this is not necessarily a reason to go long or short the stock since it is lagging data, but I do think it's interesting and noteworthy nonetheless. Do with it what you will. Closing Thoughts I think the primary signals here that CIFR shareholders and prospective buyers should pay attention to are pretty simple; Cipher's break even cost last year wasn't actually all that bad and it still couldn't find a way to run a profitable business. Revenue generation isn't going to get any easier in 2025 with higher hash rate and diminishing BTC-denominated returns. Transaction fees in February were abysmal and can't reasonably be relied on for incremental revenue growth any time soon. The company had very little cash at the end of last year, has had to raise capital from uncommitted investors like SoftBank, and has been selling down it's BTC stack. I'm not going to call CIFR a 'sell,' but I think there are better opportunities out there.
