Cipher Mining has strategically positioned itself for significant growth with the recent acquisition of 16,700 new Bitcoin miners from Canaan. The delivery of these miners is slated for the second quarter, aligning with the anticipated Bitcoin halving event expected in April. The miners, belonging to the latest generation Avalon A1466 series, will find homes in Cipher’s Bear and Chief Mountain facilities in Texas.
Cipher Mining to increase its capacity with new purchases
This acquisition is set to propel Cipher’s self-mining capacity to an impressive 8.4 exahashes per second (EH/s). Facilitating this transaction were Canaan, the provider of the Avalon A1466 miners, and the joint venture firms Bear LLC and Chief Mountain LLC. Cipher holds a 49% stake in this joint venture. The plan is to evenly distribute the new miners between the Bear and Chief facilities, contributing to a substantial expansion of 30 megawatts (1.25 EH/s) at each mining center. The company’s CEO Tyler Page strategically timed this purchase with the upcoming Bitcoin halving event.
The halving involves a reduction in Bitcoin mining rewards by half, a mechanism designed to control the issuance of new coins into the network. Historically, these events have coincided with notable increases in Bitcoin’s price. Page expressed confidence that these expansions position the firm as a strong contender in the industry, anticipating positive outcomes post-halving. While specific financial details of the deal remain undisclosed, Cipher emphasized that the agreement was reached on “very favorable terms.”
Page highlighted the significance of making this purchase in the current machine market cycle, indicating a strategic move for the company in navigating market dynamics. This marks Cipher Mining’s second collaboration with Canaan, having previously purchased machines from the company. Page noted the successful performance of Canaan machines in the challenging conditions of the Texas summer heat, where temperatures soared as high as 119 degrees Fahrenheit (48.3 degrees Celsius) in 2023.
Navigating the landscape ahead of the halving event
In addition to the recent Canaan acquisition, Cipher Mining had previously secured 37,396 units of the latest generation Antminer T21 miners from Bitmain. This substantial purchase, totaling $99.5 million, represents 7.1 EH/s of self-mining capacity. However, these miners are expected to be delivered only in the first half of 2025, showcasing Cipher’s long-term commitment and strategic planning. Cipher Mining reported mining 465 BTC in December, reflecting a 7.4% increase from November, according to the latest operational update.
The company currently holds 796 BTC on its balance sheet, valued at $34 million. In terms of market performance, the company’s share price (CIFR) experienced a significant rebound in 2023, surging 638% from $0.56 to $4.13. This positive trajectory followed a challenging 2022, during which CIFR fell by 88%. Cipher’s market capitalization presently stands at $1.01 billion, positioning it among the prominent players in the cryptocurrency mining sector, trailing behind Marathon Digital Holdings, Riot Platforms, CleanSpark, and Hut 8 Mining.
Cipher Mining’s strategic acquisition of 16,700 Bitcoin miners not only expands its mining capacity significantly but also positions the company strategically in the competitive cryptocurrency mining landscape. The careful timing of this purchase about the Bitcoin halving event and previous successful ventures showcase Cipher’s commitment to navigating market dynamics and emerging as a key player in the industry.
