Mike Colonnese: Hi, good morning, guys. Congrats on Black Pearl and thank you for taking my questions this morning. Can you talk to the expected timeline for the organic expansion projects at Alborz Bear and Chief to ensure that you have sufficient capacity to really take in those net new rigs that will get you to the quoted 8.7 exahash you have in your deck there over the 7.2 deployed today?
Tyler Page: Yes. So I think on the JV side, again, the priority is the backseat at Alborz, which is no new rigs. That’s just producing more bitcoin from the rigs that are already there. I’d love to flip it on tomorrow. I know we’ve got hundreds of pages of agreements that our team’s got to go through and negotiate to get that, but we’re confident that’ll be done sometime in the first half of 2024. Beyond that, again, no time pressure for expansion on any of those, and that’ll be a joint decision based on market conditions with our JV partner WindHQ. So again, the new rigs we will probably look to cycle in own 100% of the hash rate of at Odessa and we will do – it’ll become sort of a total fleet management exercise.
But I think the real strong point for those rig purchases is that a net price of $14 per terahash is an awesome price to buy rigs. And so we’re very excited to have those efficient rigs in front of the having. But again, current plans would be to cycle them in at Odessa actually. Subject to modification, if we decide we’re going to expand or we have a new site or something like that, we can always reposition them. They’ll be delivered January to June of next year.
Mike Colonnese: Great, great. Appreciate that clarification, Tyler. So it sounds like maintaining that optionality at some of the JV sites there. And second one for me, in your conversations with investors and potential Cipher’s shareholders, how are you positioning your approach to ESG? You have Alborz, which is 100% powered by Wind, but great connections at other sites. So the power mix is naturally a bit more diverse. So it’d be good to get a refresher on Cipher’s ESG strategy here.
Tyler Page: That’s a great question. Thanks, Mike. I think, always answering this question, let me start by saying that two-thirds of those initials, the S and the G, Cipher, is very strong on as a company. And I think bitcoin and bitcoin mining is an incredibly strong industry. So usually the question behind the question there is on the E part, and so I can highlight how we think about that. Yes, as you mentioned, we’re very proud that as far as I know, we run the only off grid wind farm co located data center on Earth, as far as I know, bitcoin mining or otherwise. And that’s a live example of what a lot of folks in this industry talk about as the future ESG credential of this industry. That it is a way to make the returns on investing in more renewables more viable without government subsidies.
Right. This is a free market solution to produce better investment returns for greater renewables. So overall, the industry, and Cipher in particular is really leading the charge on that, I think for the industry overall and our innovations at such a site show what can be done. Overall, again, we’re now expanding further in Texas, just I know everyone thinks of Texas as the energy capital of the United States, if not the world. Keep in mind, there’s over 40 gigawatts of wind, and I think about 13 gigawatts of solar in Texas. It’s over a quarter of the United States wind energy production. So this is a grid with lots of renewable, and a lot of the questions around the peak demand over the summer have to do with the intermittent nature of renewables.
And so by expanding in Texas and being able to offer our capacity from our sites, the sort of utilizing the instantly curtailable nature of a bitcoin mining data center further supports decarbonization of the grid overall. So, I think overall in the industry and Cipher’s approach is extremely strong based on our location, and how we’re developing, I would say as a further note, we’ve talked about in the past things like carbon offsets. We have done a fair amount of research into that space. At this point, we’re not purchasing offsets. If you look at our carbon output across our portfolio, it’s about one half of the typical carbon output of an electricity user in the United States. So the legitimate output, the actual physical output of carbon from our sites is lower than average in the United States.
And so we haven’t loved what we’ve seen in the carbon offset market and so we are not pursuing that currently just to round out that question, because I know lots of miners talk about that in their ESG strategy, but really it’s just an offset strategy.
Mike Colonnese: That’s great. Thanks, Tyler.
Operator: [Operator Instructions] Our next question will be coming from Joseph Vafi of Canaccord. Joseph, your line is open.
Joseph Vafi: Hey guys, good morning. Nice progress on the business. So my congrats on that as well. Just congrats on Black Pearl. And just at a high level, 300 megawatts is a lot. There is the having event coming up. You do have some lead time here, I think I know the answer to the question, but I thought I’d throw it out anyway. Other miners are starting to explore some optionality to the business model, including perhaps HPC and AI for some of their power. And I was just wondering if you’re at all considering that optionality with Black Pearl, given its size. And then I’ll have a quick follow up.
Tyler Page: Sure, that’s a great question. So I would say this, I will get to the actual answer, but let me take a little bit of a roundabout way to get there. One of the priorities for our construction team is to think about the evolution of bitcoin mining data centers over time and how they evolve and how do we make them more future proof. I had the privilege of going to look at Bitfury’s original immersion facility this last quarter, I went to Tbilisi and I saw and one of the things that that was a very innovative design data center. But one of the things that struck me is, how do you make things less customized and more standardized so that you can swap out things. For example, evolving bitcoin minings to more of like a standard rack mount in the design over time.
So that you could do things like potentially swap out other users of HPC, et cetera, and have a very standardized value proposition at the data center? We are certainly doing that in the design, I think with 300 megawatts of capacity keep in mind we can take that down over time. So of course, its not how do you scale this 300 megawatt mountain? It’s sort of, what are the bite sizes you’re going to take piece by piece. But I think we are considering all kinds of optionality. I mean, Joe, I think we’ve talked about in the past, we are not the biggest fans, or have not been the biggest fans of the hosting business, for example, in mining, but post having with three years, four years before the next having, and new generations of rigs and frankly, growth in hash rate, and not necessarily a commensurate growth in plugs available for them.
That’s a strategy we could also consider. With 300 megawatts, there’s all kinds of flexibility. But yes, we have had some early discussions about what if part of this data site was dedicated to other uses for compute. I don’t know if we’ll get there. I don’t think that’s core to our business strategy. We’re really more focused on the intersection of power generation sort of trading and bitcoin generation. But that said, certainly, as we talk to investors, folks like to see that optionality. So that door is open. I just don’t know where it’s going to lead yet.
