Ed Farrell: And certainly as we make more rig purchases, I mean as I indicated on the call, this is a cyclically favorable time to do rig purchases. As we add more, I would expect, obviously, that efficiency will drop lower and lower in terms of joules per terahash.
Unidentified Analyst: Got it. Thanks.
Operator: And one moment for our next question. Our next question will be coming from Gregory Lewis of BTIG. Gregory, your line is open.
Gregory Lewis: Yes. Hey, thanks. And good morning, everybody. And thanks for taking my question. Tyler I just wanted to follow up on the last question around the 1.2 exahash. Any sense for the timing of how we should be thinking about those rigs coming online and generating hash capacity?
Tyler Page: Sure. Thanks for the question. The delivery schedule is the first half of next year. So it’s monthly batches January to June. That’s when they ship. So figured delivery the following month, and those orders are backloaded. So it’s about one-third in the first quarter and two-thirds in the second quarter. I think if you do the math, it’s about 6,000 rigs or so. And so as those arrive, we will certainly make sure they are plugged in as soon as possible, just because they’re so powerful. And as I indicated earlier on the call, I mean I think the main point on that rig purchase is that at $14 a terahash, and I should also mention the last 20% of the purchase price on that contract is actually financed basically by Bitmain and is not due until a year after the rigs arrive.
So it’s really a fabulous deal. I mean, I think it’s just a very accretive purchase. But at the scale at which they will arrive and the number of rigs, I think we’ll start with a prioritization that, look, when you run a 70,000 rig fleet, there’s always a couple of hundred rigs in repairs. So we will make sure to get all the most powerful rigs plugged in. And then I think we would look to prioritize as they arrive, swapping out, in all likelihood, our least efficient rigs to make sure the most efficient ones are plugged in.
Gregory Lewis: That’s super helpful, Tyler, and I didn’t realize that. Could you talk a little bit more how that dynamic has changed with at least Cipher in terms of the ability, the timing of payments for rigs and how that’s shifting? And is that something that kind of you’re seeing across the market or was that kind of specific to this transaction?
Ed Farrell: I think it’s in this case. Well, let me speak more broadly about it, because I think it’s helpful for any investor in this space to understand, because this is what drives the big CapEx number on a site and ultimately drives the ROIs that we all care so much about. And as you probably remember, in the bull market of a year, two years ago, really two years ago at this point, these rigs were five times, six times, seven times as expensive, crazy more expensive and very hard to earn an ROI. And with that pricing also, it was very much a seller’s market. Right. And so it was really about how do we get access to these rigs? And that was really the story two years ago. I think what’s evolved, and certainly been a very high priority for me personally has been to develop a relationship with the C-suite of the three big rig manufacturers that are all Chinese companies.
And Canaan, I think is relocated to Singapore at this point, but wasn’t easy in the days of COVID and in the bull market. And so what I’d say is Cipher has struck some deals in the past that I think others have not. Certainly people in the industry know about and we have talked about in previous calls, our deal with Canaan, where we got some financing on those rigs, which was really first of its kind, where rigs were delivered in advance of being fully paid for. I think the reputation we’ve built with the rig manufacturers is one where they understand we are going to be around for a long time. When you think about what’s most important to a rig manufacturer, it’s the stability of purchases over time so that they can reserve capacity at the fab.
I think it speaks very highly of Cipher that we’ve consistently been able to strike deals indicating a belief in us as a counterparty. And so now to this specific deal. I do think there’s been a couple other folks that struck similar deals. I think that you had to be a big known purchaser to Bitmain to be offered these terms and you had to move quickly. But I do think these terms were offered to a few of our competitors as well. So very favorable for large, well known counterparties of Bitmain. This one in particular is not individual to Cipher, but it would not surprise me if going forward in the near future we do find deals that are particular to Cipher because we are in regular contact with the C-suite of all three rig manufacturers.
Gregory Lewis: Okay, super helpful, thanks. And realizing it sounds like the ink on the Black Pearl acquisition was really just signed yesterday. As we think about the infrastructure in lead times, any kind of rough estimates? Because I think you mentioned the 2025 startup target. How should we be thinking about long lead items and when we probably need to order those to be able to. And then maybe this is for Black Pearl, but across the industry as well. How are we thinking about supply chain and the ability to source things like transformers and things that will be needed to power up Black Pearl?
Tyler Page: Great question. I would say that generally the longest lead items for a greenfield site are identifying and acquiring, building the substation. I think we hear estimates across the industry that can be 12 months to 18 months. I will say, not unlike the rig manufacturers, we have focused a lot on building relationships over the last year or two, and I think we can get that timeline significantly shortened based on our relationships. Now from a deployment of Black Pearl, again, it’s really early. Like we’re still going through the different scheduling and options and how much do you build in each phase, et cetera. But I think our goal would be to get it online and like the first piece energized probably second quarter of 2025.
It’s very early on that that’s subject to move around. I mean, literally the ink is still dry, but that’s when we would hope to have something energized. And that gives us plenty of time to appropriately lay out and frankly negotiate attractive prices on both the infrastructure and the rigs. You may remember, Greg, during the bull market, we got a really, really cheap price for our fleet. At times when the spot prices for rigs were $90, $100 a terahash, we were sub 40 [ph] and that’s because we leveraged our longer lead time for a greenfield site that we were building. So I think, again, that consistency of a future order is a great thing to have and think about that’s very valuable from the rig manufacturer’s perspective. Also value for the other info, we have time to stretch it out.
