Bitcoin miner Cipher Mining has finished deploying mining rigs to its 40-megawatt wind powered facility in Alborz, Texas, representing about 1.3 exahash per second (EH/s) in hash rate.
The new site will be able to produce up to 5.7 bitcoin per day, the company said in its second-quarter results presentation.
"Against challenging cryptocurrency market conditions, our attractive bitcoin mining unit economics uniquely position us to move ahead successfully," said CEO Tyler Page.
The Alborz facility is Cipher's first site. The US-based miner has started shipping rigs to its second and third centers (Bear and Chief, in Texas), which have an initial capacity of 10 megawatts each and are expected to add a combined 0.6 EH/s to the company's hash rate.
Cipher is also preparing to start shipping miners soon to its 205-megawatt site in Odessa, Texas, and is scheduled to deploy them throughout the second half of 2022.
Looking ahead to 2023, Cipher is considering adding 200 megawatts at a facility in Andrews, Texas, co-located with a new solar farm. It is also looking at several possible sites with its joint venture partner WindHQ.
Cipher had a net loss of $29.2 million in the second quarter, translating to $0.12 per share.
The company said that it had no debt at a corporate level, other than its share of an equipment finance facility at its Alborz joint venture of approximately $11 million. Through Alborz LLC, a joint venture between Cipher Mining and WindHQ, the miner secured financing for the Alborz center through a $46.9 million loan from BlockFi in early May.
The miner scaled back its hash rate forecast for the beginning of 2023 from 7.5 EH/s last quarter to 6.9 EH/s.
Cipher has sourced power via five-year purchase agreements with an average fixed price of $0.0273 per kilowatt-hour, Page said during the earnings call on Monday.
"These contracts are an incredible asset to have," he also said. "In the current power and bitcoin price environment, the cost of power for someone without a fixed cost contract can exceed the revenue generated by mining bitcoin."
Whenever the potential revenue for selling power is higher than the revenue that can be generated from mining bitcoin, Cipher plans to sell that power to the grid rather than use it to mine.
Several bitcoin miners in Texas have agreements with the grid regulator, Electric Reliability Council of Texas, to power down in times of high electricity demand. Riot, for instance, reduced operations by 11,717 megawatt-hours in July and made $9.5 million in power credits, which outweighed what it could have generated in mining revenues, according to its own estimates.
"With an average price of power of roughly $17 per megawatt-hour, Cipher can be very successful even in the current environment," Page said.
Correction: This article has been updated to correct price per kilowatt-hour that Cipher is paying.
© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.