Company: CIFRW
Filing Date: 2025-02-25
Form Type: 10-K
Source: 0001819989-25-000005
Chunk: 79

Company: Cipher Mining Inc.
Filing Date: 2025-02-25
Form: 10-K
Item: Item 16
Chunk 79
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, the initial term of which is five years, and a remaining term of approximately 2.6 years. The valuations performed by the third-party valuation firm engaged by the Company utilized pre-tax discount rates of 5.96% and 6.11% as of December 31, 2024 and December 31, 2023, respectively, and include observable market inputs, but also include unobservable inputs based on qualitative judgment related to company-specific risk factors. Unrealized gains associated with the derivative asset within the Level 3 category include changes in fair value that were attributable to amendments to the Luminant Power Agreement, changes to the quoted forward electricity rates, as well as unobservable inputs (e.g., changes in estimated usage rates and discount rate assumptions). The following table presents the changes in the estimated fair value of the derivative asset measured using significant unobservable inputs (Level 3) for the year ended December 31, 2024 and 2023 (amounts in thousands):Year Ended December 31,20242023Opening balance$93,591 $66,702 Change in fair value(7,921)26,889 Ending balance$85,670 $93,591 Level 3 liabilityThe Company’s Private Placement Warrants (as defined in Note 15. Warrants) were its only liability classified within Level 3 of the fair value hierarchy because the fair value is based on significant inputs that are unobservable in the market. The valuation of the Private Placement Warrants used assumptions and estimates the Company believes would be made by a market participant in making the same valuation. As of March 31, 2024, all Private Placement Warrants were converted to Public Warrants, and as such no Private Placement Warrants were outstanding as of December 31, 2024.The Company engaged a valuation firm to determine the fair value of the Private Placement Warrants using a Black-Scholes option-pricing model and the quoted price of Common Stock. The following table presents significant assumptions utilized in the valuations of the Private Placement Warrants as of the dates indicated: December 31, 2023Risk-free rate4.00%Dividend yield rate0.00%Volatility124.0%Contractual term (in years)2.7Exercise price$11.50

F-32

CIPHER MINING INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents changes in the estimated fair value of the Private Placement Warrants (