Q – Bill Papanastasiou: Thank you and congrats, guys on the quarter and the attractive unit economics once again, Tyler, for my first question, you spoke on M&A opportunities and how there’s been an uptick in the need for some subscale peers to re strategize their plans. I’m curious to hear what are — or where the most appealing opportunities are today. Is it operations that are connected to ERCOT? And would there be any appetite to target other geographies? Or is Texas still your main priority?
Tyler Page: So Texas, obviously, has a lot of upside for us in that. We believe we have a lot of strength in monetizing that very unique characteristic of bitcoin mining, which is that it is instantly curtailed. And so in a place like Texas with volatile markets at power prices, there’s a lot of value in being able to use a lot of power and then turn it off very quickly. And it’s a wonderful benefit for us from a return perspective, it’s also for strengthening the grid in general. On that said, we’re very concentrated in Texas, so we would love to expand to other geographies. And we have looked at opportunities in other places in the United States and in other countries. And I think we do want to be mindful of what the risks are in any jurisdiction.
We typically start with what the power dynamics are, are there demand response opportunities and ways for us to monetize our flexibility. And then we do a risk assessment of what the jurisdiction like both from — if it’s overseas a rule of law in respect of contract, et cetera, property rights perspective, physical environment, was it a good place to operate computers, et cetera. But in general, I think we would love to diversify, but we also still think Texas is great, and it’s a big place. It can be diversified within Texas as well.
Bill Papanastasiou: Awesome. Thanks for that. And just as a follow-up, maybe can you remind us again of the power strategy plan at Black Pearl? I’m just curious to hear whether it’s going to be as attractive as the vessel and kind of what you’re expecting as the average fleet-wide per megawatt costs power?
Tyler Page: Sure. So the forward curve for power in general in Texas has been going up. You can see that in that even though we keep losing time value on our contract at Odessa, it keeps going up every quarter seemingly in value. But again, what’s interesting about Texas is the wide dispersion of those prices and the high volatility of those prices. And so some we would expect Black Pearl to look a lot like beer and cheap in that it’s a front of the meter site. So it’s going to be paying market prices. But if you effectively recreate what we do at Odessa, which is, recall that in the Odessa contract, our power counterparty has a 5% curtailment option. So 5% of the time they can curtail our use to keep the power. And that’s because 5% of the time, prices are very elevated in Texas.
We create effectively the same thing when we manage a front of the meter site, which is if we avoided those most expensive times, which is what we do at Bear and Chief, you’ll get prices that we would forecast to be in the mid, call it $0.03 to $0.04 per kilowatt hour range, $0.035, something like that would be what we would expect. Then beyond that being such a large site, it will have opportunities for to participate in ancillary services down in Texas, which is making your capacity available for curtailment to the grid operator, and you could potentially get paid quite a bit for doing that. And there’s a fair amount of nuance to that doing it, and when day-ahead markets are real-time. And so let’s call it the active management and trading of that capacity, we think will produce value above and beyond just avoiding those high prices.
And when you net out the payments, we hope to make there, we would hope to drive the overall power price at Black Pearl down to close to what our portfolio averages today. So sub-$0.03, but that will require active management and trading and we won’t always get there, but we’re confident we will be able to get.
Bill Papanastasiou: Appreciate the color, and again, congrats on the quarter.
Operator: Thank you. This concludes our question-and-answer session. I’d now like to turn it back to Tyler Page for closing remarks.
Tyler Page: Thank you, everyone, for your time and continued interest in Cipher Mining. This is the moment we’ve been waiting for. So we’re very excited about all the opportunities we’ve got in front of us, and I look forward to speaking to you again soon.
Operator: This concludes today’s conference call. Thank you for participating, and you may now disconnect.
