CIFR Filings — Cipher Digital Inc.

CIFR Filings — Cipher Digital Inc. - FilingSpy

10-Q · Quarter ended Jun 30, 2026 · SEC filing ↗

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Management's Discussion and Analysis

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report. This discussion contains forward‑looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward‑looking statements as a result of various factors, including those set forth in Part II, Item 1A, “Risk Factors” and other factors set forth in other parts of this Quarterly Report. Unless the context otherwise requires, references in this Quarterly Report to the “Company,” “Cipher,” “Cipher Digital,” “we,” “us” or “our” refers to Cipher Digital Inc. and its consolidated subsidiaries, unless otherwise indicated. Overview We are dedicated to developing and operating industrial-scale data centers engineered for next-generation computing at the highest standards of innovation, precision, and excellence. Over the past several years, we have intentionally evolved from a pure-play bitcoin miner into a vertically integrated data center development and operations platform focused on energy-intensive compute infrastructure. Our vertical integration spans critical stages of the data center value chain, including land and power origination and interconnection, site development, data center design and construction, oversight and ongoing facility operations. Fundamentally, we bring together construction, engineering, operations, power, real estate and technology expertise to deliver high quality, purpose-built data centers that meet tenants’ needs. Our in-house teams source and control industrial-scale sites with access to substantial electric power capacity, advance grid interconnection and substation development, and manage the design and construction of data center campuses. We also operate and maintain energy-intensive data center facilities, leveraging operational expertise developed through our employees’ extensive experience managing Tier III HPC data centers and large, flexible electrical loads. Against a backdrop of increasing demand for AI technology and access to energized HPC data centers to meet consumers’ demands for such technology, we believe we play an important part of the AI economy and we expect to benefit from powerful, long-term growth drivers. While bitcoin mining has been an important component of our business model in prior years, our strategy increasingly emphasizes the development of industrial-scale data centers that can be leased to hyperscalers and other HPC customers under long-term contracts, while retaining the flexibility to deploy bitcoin mining as an interim or complementary use of power. On February 20, 2026, we changed our name to “Cipher Digital Inc.” Rebranding to “Cipher Digital” aligns with our corporate strategy to scale into a leading HPC data center developer and operator, as we leverage our existing site pipeline and source additional sites, partnering with premier tenants, and developing and operating industry-leading data centers purpose-built for HPC. Our goal is to monetize our power assets and manage capital efficiently through market cycles in order to align our infrastructure with the growing global demand for AI-driven compute capacity. Our data center portfolio consists of approximately 5.3 gigawatts (“GW”) of capacity across 11 sites, at various stages of interconnection. We are currently developing 700 MW of HPC data center facilities across three sites for hyperscaler tenants, and we currently operate approximately 207 MW of capacity at one bitcoin mining data center in Texas. We also maintain a pipeline of approximately 4.4 GW across seven sites in Texas and one additional site in Ohio. We have executed HPC leases at three of our data centers and are currently marketing potential leases at others of our pipeline sites. We believe we have a demonstrated ability to source high-quality sites suitable for HPC tenants, with characteristics like proximity to major metropolitan areas, ample acreage, diverse fiber routes, and available interconnection infrastructure. We have experienced in-house construction, engineering and operations teams and project management competencies. We have demonstrated an ability to access and manage capital in a disciplined manner. A significant component of our current and future growth is expected to be generated through the development of our existing portfolio and acquisition of new sites. We are focused on developing the remaining sites in our pipeline for future HPC tenants, and evaluating additional sites, locations, and partnerships to expand our pipeline that are suitable for HPC tenants. From time to time, we may also look to sell individual assets that we do not consider to be core to our business and growth strategy. For further details on our pipeline of future sites that we expect to be suitable for HPC, see “Business—Site Pipeline” of our Annual Report on Form 10-K. 41 Recent Developments On July 23, 2026, we entered into an option agreement to acquire a 900 MW site in Texas. On July 24, 2026, we amended the HPC lease at the Black Pearl Facility, which accelerated delivery of the first capacity to July 31, 2026. 42 Factors Affecting Our Results of Operations There have been no material changes to the “Factors Affecting Our Results of Operations” in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our 2025 Form 10-K. Our financial position and results of operations depend to a significant extent on those factors. 43 Summary of Bitcoin Inventory The following table presents information about our Bitcoin inventory for the six months ended June 30, 2026, including bitcoin production and sales of bitcoin (dollar amounts in thousands): Quantity Amounts Opening balance 1,433 $ 125,400 Bitcoin received from equity investees 34 2,772 Bitcoin received from mining activities 798 60,129 Proceeds from sales of bitcoin (1,619) (123,428) Realized losses on sale of bitcoin — (47,732) Unrealized gains on fair value of bitcoin — 20,661 Ending balance 646 $ 37,802 44 Components of Our Results of Operations Revenue Our current revenue consists of bitcoin earned through mining activities at the Odessa and Black Pearl Facilities. We currently participate in third-party mining pools to mine bitcoin. The provision of computing power in accordance with the mining pool operator’s terms of service is the only performance obligation in our contract with the mining pool operator. We are entitled to a fractional share of the set cryptocurrency award from the mining pool operator (referred to as a “block reward”) and potentially transaction fees generated from blockchain users and distributed to individual miners by the mining pool operator. Our fractional share of the block reward is based on the proportion of computing power we contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm, over the contract term. The block reward is pre-determined in the protocol governing the relevant blockchain. Our proportionate share of transaction fees is based on our contributed share of hashrate as a percentage of total network hashrate during the contract term. The transaction fees are the aggregate fees paid by parties whose transactions are included in the block. Bitcoin earned is measured at fair value at contract inception and is recognized in revenue over the contract term as hashrate is provided. Cost of revenue Cost of revenue consists of direct production costs of bitcoin mining operations, primarily electricity expenses, as well as other facilities costs, but excludes depreciation which is separately stated. Compensation and benefits Compensation and benefits includes payroll and payroll-related expenses, as well as stock based compensation awarded to employees of the Company. General and administrative expenses General and administrative expenses represent insurance expense, rent expense, professional fees, including accounting and audit, consulting, legal, public relations and/or investor relations expenses, non-income taxes and licenses, travel, and other expenses. We expect our general and administrative fees to remain high as we incur the ongoing costs of operating as a public company, including increased director and officer insurance costs, and increased travel and conference participation expenses. Depreciation Our depreciation expense consists mainly of depreciation for our miners and mining equipment, as well as depreciation associated with leasehold improvements and other capitalized assets. We capitalize the cost of our mining machines and record depreciation expense on a straight-line basis over the estimated useful life of the machines, which is generally three years. Leasehold improvements include capitalized asset retirement costs, which are amortized over the estimated useful life of the related asset. All other leasehold improvements are depreciated over the lesser of the estimated useful life of the asset or the remaining life of the related lease. Change in fair value of derivative asset and power sales The change in fair value of derivative asset represents the changes in fair value of the Luminant Power Agreement recorded during the reporting period. Equity in losses of equity investees Equity in losses of equity investees includes our share of the losses recorded by Alborz LLC, Bear LLC and Chief Mountain LLC prior to February 19, 2026, when we sold our interests in these joint ventures. Changes in fair value of bitcoin and realized gain/loss on sale of bitcoin All of our bitcoin is recorded as a current asset on our condensed consolidated balance sheet as we expect to regularly exchange our bitcoin held for fiat currency to fund our operating expenses. We adopted ASU 2023-08 Accounting 45 for and Disclosure of Crypto Assets (“ASU 2023-08”) effective January 1, 2023, which requires cryptocurrencies to be measured at fair value each reporting period with changes in fair value being reported in net income. The fair value of bitcoin has been highly volatile since we began to obtain bitcoin through our operating activities, which has impacted our operating results and we expect volatility in the fair value of bitcoin to continue for the foreseeable future. Provision for income taxes Our provision for income taxes primarily consists of U.S. deferred federal taxes. A valuation allowance is recorded against substantially all of our net deferred tax assets, which are composed primarily of federal and state net operating loss carryforwards, stock-based compensation, intangible assets other than goodwill, investments in joint ventures and lease liabilities; in addition, we have deferred tax liabilities resulting from our derivative and right-to-use assets. Our ability to offset our deferred tax liabilities with our deferred tax assets is limited due to restrictions on the ability to offset taxable income by more than eighty percent with federal net operating losses. As a result, we have recorded a deferred tax liability for the amount of future taxable income that is not expected to be covered by net operating losses. We evaluate our ability to recognize our deferred tax assets annually by considering all positive and negative evidence available as prescribed by the Financial Accounting Standards Board (“FASB”) under its general principles of Accounting Standards Codification (“ASC”) 740, Income Taxes. 46 Results of Operations The following table sets forth our results of operations for the periods indicated (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Revenue - bitcoin mining $ 24,837 $ 43,565 $ 59,675 $ 92,524 Costs and operating (expenses) income Cost of revenue (15,046) (15,330) (32,751) (30,224) Compensation and benefits (42,359) (15,659) (77,362) (29,962) General and administrative (16,479) (9,078) (28,220) (18,029) Depreciation and amortization (19,365) (44,086) (38,379) (87,553) Change in fair value of power purchase agreement (5,900) (15,480) (34,130) (8,150) Power sales 2,295 1,376 4,433 2,367 Equity in losses of equity investees - (1,701) (1,601) (6,993) Unrealized gains (losses) on fair value of bitcoin 16,901 17,143 20,661 (3,035) Realized (losses) gains on sale of bitcoin (23,509) (3,639) (47,732) 8,557 Other operating income (losses) 89 (2,354) (17,699) (2,833) Total costs and operating expenses (103,373) (88,808) (252,780) (175,855) Operating loss (78,536) (45,243) (193,105) (83,331) Other income (expense) Interest income 35,861 296 67,451 486 Interest expense (66,736) (1,137) (125,894) (1,914) Change in fair value of warrant liability (150,510) - (106,900) - Other (expenses) income (7,241) 1,220 (22,623) 1,064 Total other (expense) income (188,626) 379 (187,966) (364) Loss before taxes (267,162) (44,864) (381,071) (83,695) Current income tax expense (367) (1,145) (774) (1,924) Deferred income tax benefit - 228 - 863 Total income tax expense (367) (917) (774) (1,061) Net loss (267,529) (45,781) (381,845) (84,756) Less: Net loss attributable to redeemable noncontrolling interest $ — $ — $ — $ — Net loss available for common stockholders $ (267,529) $ (45,781) $ (381,845) $ (84,756) Comparative Results for the Three Months Ended June 30, 2026 and 2025 Revenue Revenue for the three months ended June 30, 2026 was $24.8 million compared to $43.6 million for the three months ended June 30, 2025 and was generated from bitcoin mining operations at the Odessa Facility. The year over year decrease was driven by lower bitcoin prices in the current quarter compared to the prior year quarter, partially offset by an increase in total bitcoin mined. Cost of revenue Cost of revenue for the three months ended June 30, 2026 was $15.0 million, compared with $15.3 million for the three months ended June 30, 2025, and consisted primarily of power costs at our Odessa data center, which has a fixed power cost. 47 Compensation and benefits Compensation and benefits for the three months ended June 30, 2026 was $42.4 million, compared to $15.7 million for the three months ended June 30, 2025. The increase is primarily due to stock-based compensation related to awards granted in the current year. General and administrative General and administrative expenses increased by $7.4 million to $16.5 million during the three months ended June 30, 2026 from $9.1 million for the three months ended June 30, 2025. The increase was primarily driven by increased legal fees in the current quarter related to strategic initiatives. Depreciation and amortization Depreciation and amortization for the three months ended June 30, 2026 was $19.4 million, a decrease of $24.7 million compared to Depreciation and amortization of $44.1 million for the three months ended June 30, 2025. The decrease was primarily due to asset write-downs related to our mining business, and fewer assets in service in the current year due to sales of mining rigs. Change in fair value of power purchase agreement Change in fair value of power purchase agreement was a $5.9 million loss for the three months ended June 30, 2026 and was driven by the fair value of the Luminant Power Agreement. The estimated fair value of power purchase agreement was derived from Level 2 and Level 3 inputs, and, due to a lack of quoted prices for similar type assets, is classified in Level 3 of the fair value hierarchy. Specifically, the discounted cash flow estimation models contain quoted spot and forward prices for electricity, as well as estimated usage rates consistent with the terms of the Luminant Power Agreement, the initial term of which is five years. The loss was driven by a decrease in the forward curve for power prices as well as less time remaining on the contract. Power sales At the Odessa Facility we sold excess electricity that was available under the Luminant Power Agreement back to the ERCOT market through Luminant. We sold power for proceeds of $2.3 million and $1.4 million for the three months ended June 30, 2026, and 2025, respectively. Power sales fluctuate each period based on power and bitcoin prices which are both volatile. Equity in losses of equity investees There were no Equity in losses of equity investees for the three months ended June 30, 2026 compared to $1.7 million for the three months ended June 30, 2025. Equity in losses of equity investees consisted of our 49% share in the losses generated by our three partially-owned mining sites prior to selling our interests in February 2026. Unrealized gains on fair value of bitcoin Unrealized gains on fair value of bitcoin totaled $16.9 million for the three months ended June 30, 2026, compared to $17.1 million for the three months ended June 30, 2025. Unrealized gains on fair value of bitcoin is driven by the cost of bitcoin mined compared to the price of bitcoin at the end of the period. Realized losses on sale of bitcoin Realized losses on sale of bitcoin totaled $23.5 million for the three months ended June 30, 2026 compared to $3.6 million for the three months ended June 30, 2025. Realized losses on sale of bitcoin is a result of selling bitcoin at prices different from the cost basis. Other (losses) income Other losses totaled $188.6 million for the three months ended June 30, 2026, compared to Other income of $0.4 million for three months ended June 30, 2025. The loss in the current quarter is primarily related to the change in fair value of our Warrant liability. 48 Provision for income taxes For the three months ended June 30, 2026, we recorded a provision for income taxes of $0.4 million in the current period. For the three months ended June 30, 2025, we recorded a provision for income taxes of $0.9 million. Comparative Results for the Six Months Ended June 30, 2026 and 2025 Revenue Revenue for the six months ended June 30, 2026 was $59.7 million, compared to $92.5 million for the six months ended June 30, 2025, and was generated from bitcoin mining operations at the Odessa and Black Pearl Facilities. The decrease year over year was primarily driven by a decrease in the average bitcoin price in the current year, partially offset by an increase in the amount of bitcoin mined. Cost of revenue Cost of revenue for the six months ended June 30, 2026 was $32.8 million, compared with $30.2 million for the six months ended June 30, 2025, and consisted primarily of power costs at our data centers. The increase is primarily due to increased power costs at the Black Pearl Facility. Compensation and benefits Compensation and benefits for the six months ended June 30, 2026 was $77.4 million, an increase from $30.0 million for the six months ended June 30, 2025, driven by an increase in headcount, and higher valuation on performance based stock compensation in the year. General and administrative General and administrative expenses for the six months ended June 30, 2026 was $28.2 million, an increase of $10.2 million compared to $18.0 million for the six months ended June 30, 2025. The increase was primarily driven by an increase in legal fees related to strategic initiatives, including our lease negotiations and other transactions. Depreciation and amortization Depreciation and amortization for the six months ended June 30, 2026 was $38.4 million, a decrease of $49.2 million compared to Depreciation and amortization of $87.6 million for the six months ended June 30, 2025. The decrease was primarily due to asset write-downs and sales related to our mining business resulting in fewer assets in service in the current year. Change in fair value of power purchase agreement Change in fair value of power purchase agreement was a $34.1 million decrease for the six months ended June 30, 2026 and was driven by the fair value of the Luminant Power Agreement. The estimated fair value of our power purchase agreement was derived from Level 2 and Level 3 inputs, and, due to a lack of quoted prices for similar type assets, is classified in Level 3 of the fair value hierarchy. Specifically, the discounted cash flow estimation models contain quoted spot and forward prices for electricity, as well as estimated usage rates consistent with the terms of the Luminant Power Agreement. The loss was driven by a decrease in the forward curve for power prices as well as less time remaining on the contract. Power sales At our Odessa Facility, we sell excess electricity that is available under the Luminant Power Agreement, but not needed in our mining operations, back to the ERCOT market through Luminant. We sold power for proceeds of $4.4 million and $2.4 million for the six months ended June 30, 2026, and 2025, respectively. Power sales fluctuate each period based on power and bitcoin prices, which are volatile. Equity in losses of equity investees Equity in losses of equity investees totaled $1.6 million for the six months ended June 30, 2026 compared to $7.0 million for the six months ended June 30, 2025. Equity in losses of equity investees consists of our 49% share in the losses 49 generated by our three partially-owned bitcoin mining sites, and the accretion of the basis differences in our investments in the equity investees. These interests were sold in February 2026. Unrealized (losses) gains on fair value of bitcoin Unrealized gains on fair value of bitcoin totaled $20.7 million for the six months ended June 30, 2026, compared to immaterial unrealized losses on fair value of bitcoin for the six months ended June 30, 2025. Unrealized (losses) gains on fair value of bitcoin is driven by the cost of bitcoin mined compared to the price of bitcoin at the end of the period. Realized gains and losses on sale of bitcoin Realized losses on sale of bitcoin totaled $47.7 million for the six months ended June 30, 2026 compared to gains of $8.6 million in the prior year period. In both periods, this is driven by selling bitcoin at prices differing from our cost basis. Other expense Other expense totaled $188.0 million for the six months ended June 30, 2026, compared to expenses of $0.4 million for the six months ended June 30, 2025. Other expense in the current year primarily contains the loss on fair value of our Warrant liability of $106.9 million. Income tax benefit (expense) For the six months ended June 30, 2026, we recorded a provision for income taxes of $0.8 million as a result of projected taxable income for the current year in the jurisdictions which we operate. For the six months ended June 30, 2025, we recorded a provision for income taxes of $1.1 million. Liquidity and Capital Resources Cash used in operations was $152.0 million for the six months ended June 30, 2026. As of June 30, 2026, we had cash and cash equivalents of $831.8 million, total stockholders’ equity of $562.1 million and an accumulated deficit of $1,385.5 million. We fund operations primarily through a combination of at-the-market stock issuances, short-term and long-term financing arrangements, and bitcoin sales. We have established an at-the-market sales agreement (as amended and restated, the “Amended and Restated Sales Agreement”) with Cantor Fitzgerald & Co., Canaccord Genuity LLC, Needham & Company, LLC, Compass Point Research & Trading, LLC, Keefe, Bruyette & Woods, Inc., Virtu Americas LLC, and BTIG, LLC (each, an “Agent” and, together, the “Agents”), pursuant to which we may, from time to time, sell shares of our common stock having an aggregate offering price of up to $725.7 million. For the quarter ended June 30, 2026, we received net proceeds on sales of 5.5 million shares of common stock under the Amended and Restated Sales Agreement of approximately $129.2 million (net of commissions and expenses) at an average net selling price of $23.50 per share. For more information on our at-the-market sales agreement and our at-the-market offerings, see Note 15. Stockholders’ Equity. On March 23, 2026, we entered into a $200.0 million Revolving Credit Facility with Morgan Stanley Senior Funding, Inc. as administrative agent and collateral agent, and a syndicate of lenders, which matures on March 23, 2030 (subject to a potential Springing Maturity Date tied to the 2030 Convertible Notes). The Revolving Credit Facility also provides for additional accordion option of up to $50.0 million. During the Pre-Completion Availability Period, the period prior to the completion of the Barber Lake Facility and the Black Pearl Facility, aggregate borrowings under the Revolving Credit Facility are limited to $50.0 million. The Revolving Credit Facility includes a $50.0 million letter of credit sublimit. Borrowings bear interest at Term SOFR plus an initial applicable margin of 1.75% (or ABR plus 0.75%), with the margin adjustable thereafter based on our Consolidated Total Debt to Market Capitalization Ratio. We are also required to pay a commitment fee of 0.50% per annum on unfunded commitments. The Revolving Credit Facility is secured on a first-priority basis by substantially all of the assets of the Borrower and the guarantors. The Revolving Credit Facility contains a financial maintenance covenant requiring us to maintain minimum Liquidity of $100.0 million, increasing to $150.0 million after the first, and $200.0 million after both, of the Barber Lake Facility and the Black Pearl Facility commence operations. As of June 30, 2026, we had no outstanding borrowings under the Revolving Credit Facility and were in compliance with all covenants. For more information on the Revolving Credit Facility, see Note 14. Debt. We have a master loan agreement with Coinbase Credit, Inc., as lender, and Coinbase, Inc., as lending service provider. Pursuant to the master loan agreement, we currently have a secured line of credit up to $25.0 million (the 50 “Coinbase Overnight Credit Facility”), subject to credit review. We will not incur commitment fees for unused portions of the Coinbase Overnight Credit Facility. The borrowing rate on amounts drawn against the Coinbase Overnight Credit Facility is determined on the basis of the Federal Funds Target Rate - Upper Bound, plus 2.5%, calculated daily based on a 365-day year and payable monthly for the duration of the loan. Borrowings under the Coinbase Overnight Credit Facility are available on demand, open term, and collateralized by bitcoin transferred to the lending service provider’s platform. As of June 30, 2026, we had nothing drawn on the Coinbase Overnight Credit Facility. On May 22, 2025, we issued $172.5 million principal amount of convertible notes due in 2030 with an interest rate of 1.75% (the “2030 Convertible Notes”). The 2030 Convertible Notes are senior, unsecured obligations with interest due semiannually on May 15 and November 15 each year beginning on November 15, 2025. On September 30, 2025, we issued an aggregate principal amount of $1,300.0 million of 0.00% Convertible Senior Notes due 2031 (the “2031 Convertible Notes” and together with the 2030 Convertible Notes, the “Convertible Notes”). With the net proceeds of the 2031 Convertible Notes, we funded capped call transactions which are generally expected to reduce the potential dilution of the Company’s common stock that will initially underlie the 2031 Convertible Notes, and expect to use the remaining proceeds to finance a portion of the construction at the Barber Lake Facility, continue to develop our sites, and for general corporate purposes. For more information on our 2030 Convertible Notes and 2031 Convertible Notes, see Note 14. Debt. Management believes that our existing financial resources, combined with projected cash and bitcoin inflows from our data centers, our intent and ability to sell bitcoin received or earned, and our intent and ability to sell common stock through at-the-market offerings will be sufficient to enable us to meet our operating and capital requirements for at least 12 months from the date the condensed consolidated financial statements included in this Quarterly Report are issued and the foreseeable future. Cash Flows The following table summarizes our sources and uses of cash for the periods indicated (in thousands): Six Months Ended June 30, 2026 2025 Net cash used in operating activities $ (152,007) $ (103,455) Net cash used in investing activities (797,049) (110,470) Net cash provided by financing activities 2,844,212 271,044 Net increase in cash and cash equivalents, and restricted cash $ 1,895,156 $ 57,119 Operating Activities Net cash used in operating activities was $152.0 million for the six months ended June 30, 2026 compared to net cash used in operating activities of $103.5 million for the six months ended June 30, 2025. We incurred a net loss of $381.8 million for the six months ended June 30, 2026, compared to a net loss of $84.8 million for the six months ended June 30, 2025, representing an increase of $297.1 million. Cash flows from operating activities was impacted by a $248.5 million increase in non-cash items, primarily driven by the increase in amortization of debt discount and issuance costs of $125.9 million, change in fair value of derivative asset of $26.0 million, and change in fair value of warrant liability of $106.9 million, partially offset by a $23.7 million decrease in unrealized losses on fair value of bitcoin, a decrease of $49.2 million in depreciation. Additionally, changes in assets and liabilities resulted in an increase in cash used of $105.3 million between the six months ended June 30, 2026 and 2025. Investing Activities Cash used in investing activities increased to $797.0 million for the six months ended June 30, 2026 compared to $110.5 million for the six months ended June 30, 2025. This change primarily related to an increase of $746.0 million in purchases of property and equipment related to building out the Black Pearl and Barber Lake Facilities, partially offset by an increase of $2.1 million in proceeds from the sale of bitcoin and increase of $52.8 million of proceeds from disposal of assets. 51 Financing Activities Cash flows provided by financing activities increased by $2,573.2 million to $2,844.2 million net cash provided by financing activities for the six months ended June 30, 2026 from $271.0 million net cash provided by financing activities for the six months ended June 30, 2025. This change was primarily driven by $2,599.3 million of proceeds from the issuance of notes, net of issuance costs, increase of $43.5 million of proceeds from issuance of common stock, net of offering costs, partially offset by a $44.7 million increase in cash used to repurchase common shares to pay employee withholding taxes during the six months ended June 30, 2026. Contractual Obligations and Other Commitments On December 17, 2021, we entered into a lease agreement for office space, amended in the second quarter of 2024, with a term through May 2029. Monthly rent payments associated with the amended lease are approximately $0.2 million. We also 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”). The Luminant Lease Agreement leases a plot of land to us where our data center, ancillary infrastructure and electrical system (the “Interconnection Electrical Facilities” or “substation”) have been set up for our Odessa Facility. We entered into the Luminant Lease Agreement and the Luminant Purchase and Sale Agreement to build the infrastructure necessary to support our planned operations. Management determined that the Luminant Lease Agreement and the Luminant Purchase and Sale Agreement should be combined for accounting purposes under ASC 842, Leases (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. Our management determined that the Combined Luminant Lease Agreement contains two lease components; and the components should be accounted for together as a single lease component, because the effect of accounting for the land lease separately would be insignificant. The Combined Luminant Lease Agreement commenced on November 22, 2022 and has an initial term of five years, with renewal provisions that are aligned with the Luminant Power Agreement. Financing for use of the land and substation is provided by Luminant affiliates. Despite lease commencement in November 2022, we had not been required by Luminant to make any lease payments for the substation prior to July 2023, therefore we accrued amounts due under the Combined Luminant Lease Agreement in accrued expenses and other current liabilities on its condensed consolidated balance sheet. On August 23, 2023, we entered into a second amendment of the Luminant Lease Agreement, the terms of which included an amended payment schedule, reflecting monthly installments of principal and interest totaling $19.7 million on an undiscounted basis, due over the remaining four-year period starting in July 2023. This amendment did not have a material impact on our condensed consolidated financial statements. 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. Non-GAAP Financial Measures We are providing supplemental financial measures for Adjusted EBITDA, that excludes the impact of (i) interest income, (ii) interest expense, (iii) income taxes, (iv) depreciation and amortization, (v) the non-cash change in fair value of derivative asset, (vi) share-based compensation expense, (vii) nonrecurring gains and losses, (viii) the non-cash change in fair value of warrant liability, (ix) non-cash losses related to miners reclassified as held for sale, (x) impairment of long-lived assets, and (xi) non-cash disposal of miners. 52 Beginning with the three months ended March 31, 2026, we changed our primary non-GAAP performance measure from “Adjusted Earnings (Loss)”, to Adjusted EBITDA. Adjusted EBITDA differs from Adjusted Earnings (Loss) only in that, in addition to the adjustments previously made to compute Adjusted Earnings (Loss), Adjusted EBITDA also excludes interest expense, interest income, and current income tax expense. We believe Adjusted EBITDA is more representative of our core operating performance, more comparable to measures used by industry peers, and more useful to investors evaluating our underlying business. The reconciliation table below presents Adjusted EBITDA for both periods presented under our new methodology. We do not intend to report Adjusted Earnings (Loss) in future periods. These supplemental financial measures are not measurements of financial performance under GAAP accounting principles and, as a result, these supplemental financial measures may not be comparable to similarly titled measures of other companies. Management uses these non-GAAP financial measures internally to help understand, manage, and evaluate our business performance and to help make operating decisions. We believe the use of these non-GAAP financial measures can also facilitate comparison of our operating results to those of our competitors by excluding certain items that vary in our industry based on company policy. Non-GAAP financial measures are subject to material limitations as they are not in accordance with, or a substitute for, measurements prepared in accordance with GAAP. For example, we expect that share-based compensation expense, which is excluded from the non-GAAP financial measure, will continue to be a significant recurring expense over the coming years and is an important part of the compensation provided to certain employees, officers and directors. Similarly, we expect that depreciation and amortization will continue to be a recurring expense over the term of the useful life of the related assets. Our non-GAAP financial measures are not meant to be considered in isolation and should be read only in conjunction with our condensed consolidated financial statements included elsewhere in this Quarterly Report, which have been prepared in accordance with GAAP. We rely primarily on such condensed consolidated financial statements to understand, manage and evaluate our business performance and use the non-GAAP financial measures only supplementally. The following is a reconciliation of our Adjusted EBITDA to the most directly comparable GAAP measure for the periods indicated (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Reconciliation of Adjusted EBITDA: Net loss $ (267,529) $ (45,781) $ (381,845) $ (84,756) Interest income (35,861) (296) (67,451) (486) Interest expense 66,736 1,137 125,894 1,914 Total income tax expense 367 917 774 1,061 Depreciation and amortization 19,365 44,086 38,379 87,553 EBITDA $ (216,922) $ 63 $ (284,249) $ 5,286 Change in fair value of power purchase agreement 5,900 15,480 34,130 8,150 Share-based compensation expense 30,526 10,493 57,574 19,625 Other losses - nonrecurring — 6,299 — 6,778 Change in fair value of warrant liability 150,510 — 106,900 — Loss on miners held for sale — — 7,437 — Adjusted EBITDA $ (29,986) $ 32,335 $ (78,208) $ 39,839 Critical Accounting Policies, and Use of Estimates For a description of our policies regarding our critical accounting estimates, see “Critical Accounting Policies and Estimates” of Part II, Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Form 10-K. As of June 30, 2026, there were no significant changes in our critical accounting policies and estimates or the application or the results of the application of those policies to our unaudited condensed consolidated financial statements from those previously disclosed in our 2025 Form 10-K. Recent Accounting Pronouncements 53 Information regarding recent accounting pronouncements applicable to us, adopted and not yet adopted as of the date of this report, is included in Note 2 to our condensed consolidated financial statements located in “Part I - Financial Information, Item 1. Financial Statements” in this Quarterly Report. 54

Risk Factors

Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to the risk factors as previously disclosed in Part I, Item 1A, “Risk Factors” of our 2025 Form 10-K, which is incorporated herein by reference. Other than the additional and updated risk factors set forth below, there have been no material changes to the risk factors previously disclosed in our 2025 Form 10-K. Our ability to successfully develop and operate projects is impacted by the availability of, and access to, interconnection facilities and transmission and generation systems, and is subject to third-party risks. In recent years, the time and costs required to secure and expand interconnection facilities and transmission systems have increased, complicating project planning and creating additional contractual and financial risk for projects under construction. We may face difficulties in securing access to interconnection facilities and transmission systems for our data centers in a timely manner and at a reasonable cost as well as may face curtailment resulting from transmission or generation facility downtime, which could materially and adversely affect our results of operations and cash flow. We are dependent on third parties for the construction of substations at our data centers and the delivery systems facilities, and timely performance by such third parties is critical to achieving target milestone dates and commencement of rent payments under our leases. Any failure by our contractors (or replacement contractors) to complete the necessary interconnection facilities and transmission and generation systems to operate our data centers may result in increased construction costs, delays in construction timeline, delay of rent commencement and potential breach and termination of our leases, any of which could materially and adversely affect our operations. We depend on third parties for our engineering, procurement and construction (“EPC”) work, including transmission and distribution utilities, grid operators, electric utility providers and manufacturers of certain critical and specialized equipment for the construction and operation of our data centers, and rely on components and raw materials that may be subject to price fluctuations or shortages. Although we have established an in-house team of dedicated EPC professionals, we have and will continue to engage third-party providers to carry out various services and to obtain necessary infrastructure equipment that are critical to the successful operation of our data centers. The availability of third parties and the successful and satisfactory completion of the relevant services and delivery of equipment are critical to our successful construction of our data centers and ultimately our ability to retain our tenants. There is no assurance that the third parties that we contract with will deliver equipment and/or services on a timely basis, within cost estimates, or at all, and we may incur significant additional costs to find alternative sources for the required EPC work in the case that the existing or planned contracted parties are unable to fulfill their obligations. We also depend on third parties, including transmission and distribution utilities like Oncor Electric Delivery Company LLC (“Oncor”) and American Electric Power (“AEP”), the Texas grid operator, ERCOT, and manufacturers of critical components for our mining equipment and our data centers, which may be subject to price fluctuations or shortages. For example, our operations require approval to operate from Oncor, AEP and/or ERCOT, which can be onerous to obtain. If Oncor, AEP and/or ERCOT delay in providing such approval, or change the requirements to operate HPC facilities, our business plans may be disrupted and our results of operations may be negatively affected. We are also reliant on critical equipment to supply power to our data center facilities and we are exposed to the risk of disruptions or other failures in the overall global supply chain for related data center hardware. See also “Item 1A. Risk Factors—Any unfavorable global economic, business or political conditions, such as geopolitical tensions, military conflicts, acts of terrorism, natural disasters, pandemics, trade restrictions, tariffs, or similar events could have material 56 adverse effect on our business, financial condition and results of operations.” included in our 2025 Form 10-K. If this critical equipment malfunctions or we have delays in the ability to fix such equipment, it could adversely affect our operations and financial results. We face significant risks related to the cost and availability of labor. Our success is heavily dependent on our ability to secure labor for the construction of our data centers within our timeline and budgeted costs. Construction, operation and maintenance of our data centers requires highly skilled personnel. There may be a limited supply of such personnel as a result of many factors, including intense competition to attract and retain the services of such persons. As a result, we and our contractors, including EPC contractors, may face shortages of qualified labor to construct, manage and operate our data centers, higher than anticipated labor costs or an inability to monitor, motivate and retain qualified personnel. An inability to recruit and retain such individuals could decrease productivity in the construction and operations of our data centers. Competition for skilled personnel could also require us and our contractors, including EPC contractors, to pay higher wages, which could also result in higher labor costs and result in our actual costs exceeding our budget estimate. This competition may increase as additional data center and other large-scale infrastructure projects are developed and constructed in the United States, including in West Texas where our data centers are located, and any labor shortages affecting the region may materially and adversely affect our ability to successfully construct our data centers within our current estimated timeline and budget. Labor is subject to external factors that are beyond our control, including our industry’s highly competitive market for skilled workers and leaders, cost inflation, overall macroeconomics, workforce participation rates, pandemics, epidemics, and other health risks and/or labor disputes or work stoppages. If we are not able to attract and retain qualified personnel for the construction of our data centers, this could have a material adverse effect on our business, results of operations and cash flow. The value of our data centers may be adversely affected by changes in government regulation possibly motivated by community opposition. We are focused on whether and how existing and changing federal, state and local laws, regulations and ordinances may affect our business. There can be no assurance that changing government policy and/or growing community opposition to data center development in the markets in which our data centers are located will not materially and adversely impact the development and/or operations of them. Any potential new community plan and any resulting zoning restrictions could impose stricter requirements on our data centers. Any such new ordinances and/or changes in government policy that prevent our data centers from operating or from continuing to develop as planned may reduce revenue. Concerns about the power and resources consumed by data centers have garnered organized opposition from environmental, agricultural preservation and anti-growth groups, and any such opposition that may impact data center development in the states in which our data centers will be operated may have an adverse effect on our data center operations. In addition, growing public skepticism and resistance to AI, including concerns about AI’s impact on employment, privacy, safety and broader societal implications, may intensify opposition to infrastructure projects that are perceived as enabling or accelerating AI development. Construction of our data centers may face heightened scrutiny and opposition from groups that are critical of the AI industry, even if otherwise receptive to data center development. Disapproval from local communities or other interested parties may lead to direct action that could impede our tenants’ ability to commence or carry out operations at our data centers, resulting in reputational damage and difficulty in developing and constructing our data centers or renewing or re-leasing our data centers in the event that our tenants decide not to extend their lease. There may be community opposition regarding concerns about power facilities, including the conversion of agricultural or open land to solar installations, the visual impact of large-scale solar arrays, potential impacts on local property values, perceived fire or safety risks associated with battery energy storage systems, and the routing of new transmission lines through residential or agricultural areas. Any resulting disruption in our power supply to our data centers as a result may result in our inability to meet our obligations under our leases. Any such community opposition may include undertaking legal proceedings (including challenges to required governmental approvals), seeking orders to prevent part or all of our operations, media campaigns and protests. If such community members are successful in any such campaigns, the construction and operation of our data centers may be delayed, suspended or abandoned, or we may not be able to obtain the permits and approvals needed to carry out commercial operations. These outcomes could adversely affect our ability to realize revenue from our data centers, including our tenants’ ability to satisfy their rent payment obligations, and therefore could impact our financial performance. 57 In response to such concerns and political opposition, a growing number of other state legislatures, county boards, city councils and other local governing bodies have enacted, or are considering enacting, temporary or permanent moratoria, restrictive zoning amendments, heightened permitting requirements and other land use limitations that prohibit or significantly constrain the development of new data centers, solar energy facilities, battery energy storage systems, gas-fired generation facilities or related infrastructure. These actions are often driven by concerns regarding potential for strain on local electrical grids and water supplies, visual and noise impacts, potential property devaluation, loss of agricultural land, fire risks and the perceived limited local economic benefit of such facilities after construction is completed. We cannot predict whether similar moratoria or restrictive land use regulations will be adopted in the states where our data centers will be operated. If any moratoria or restrictive regulations are adopted, we may be forced to abandon the project, relocate to alternative sites that may be less desirable or more costly to develop, or incur significant unrecoverable costs for land acquisition, permitting, engineering and equipment procurement. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and growth prospects. Construction of our data centers includes significant safety risks. Construction of our data centers may involve personal safety hazards for construction workers and other personnel on site, which could include electrocution, fire, mechanical failures, weather-related incidents, transportation accidents and damage to equipment. Any such incidents could result in personal injury and loss of life, severe damage to or destruction of our data centers or equipment and other consequential damages and could lead to delays in construction, large damage claims and, in extreme cases, criminal liability. Serious accidents may subject us to penalties, civil litigation or criminal prosecution. Claims for damages to property or persons, including claims for bodily injury or loss of life, could result in significant costs and liabilities, which could adversely affect our ability to complete construction of our data centers. Poor safety performance could also jeopardize our relationships with our tenants, negatively impact employee morale and harm our reputation. Our indebtedness and liabilities could limit the cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations and impair our ability to satisfy our debt obligations. As of June 30, 2026, our total consolidated indebtedness amounted to $6,016 million. In May 2025 and September 2025, we completed offerings of our 2030 Convertible Notes and 2031 Convertible Notes, from which we incurred $172.5 million and $1,300.0 million of additional indebtedness, respectively. Additionally, in November 2025, Cipher Compute LLC, our wholly owned indirect subsidiary, incurred $1,733.0 million of indebtedness from offerings of $1,400.0 million and $333.0 million of our senior secured notes due 2030. In February 2026, Black Pearl Compute LLC, our wholly owned indirect subsidiary, incurred $2.0 billion of 6.125% senior secured notes due 2031. In June 2026, Stingray Compute LLC, our wholly owned indirect subsidiary, incurred $810.0 million of 6.000% senior secured notes due 2031. We may also incur additional indebtedness to meet future financing needs. Our indebtedness could have significant negative consequences for our security holders and our business, results of operations and financial condition by, among other things: •increasing our vulnerability to adverse economic and industry conditions; •limiting our ability to obtain additional financing, such as in the event of adverse changes to our credit ratings; •requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes; •limiting our flexibility to plan for, or react to, changes in our business; •diluting the interests of our existing stockholders as a result of issuing shares of our common stock upon conversion of the Convertible Notes; and •placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital. Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not generate sufficient funds, and we may otherwise be unable to maintain sufficient cash reserves, to pay amounts due under our indebtedness, including the Convertible Notes, and our cash needs may increase in the future. In addition, future indebtedness that we may incur may contain financial and other restrictive covenants that 58 limit our ability to operate our business, raise capital or make payments under our other indebtedness. If we fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in default under that indebtedness, which could, in turn, result in that and our other indebtedness becoming immediately payable in full.

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