Company: CIFRW
Filing Date: 2025-11-03
Form Type: 10-Q
Source: 0001819989-25-000112
Chunk: 253

Company: Cipher Mining Inc.
Filing Date: 2025-11-03
Form: 10-Q
Item: Part II, Item 3
Chunk 253
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 a recurring basis), accounts payable and accrued expenses and other current liabilities are reasonable estimates of their fair values due to the short-term nature of these items.There were no transfers of financial instruments between Level 1, Level 2 and Level 3 during the periods presented.Capped Call TransactionAs described in Note 4. Derivative Assets, the Company entered into capped call transactions to reduce the potential dilution of the Company’s common stock upon any conversion of the 2031 Convertible Notes and/or offset any potential cash payments the Company is required to make in excess of the principal amount of converted 2031 Convertible Notes. The Capped Call Transactions are classified as Level 2 and unrealized gains associated with the Capped Call Transaction are included in Other income on the condensed consolidated statement of operations.The Company engaged a valuation firm to determine the fair value of the Capped Call Transactions 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 Capped Call Transaction as of the date indicated: September 30, 2025Strike Price$16.03Cap Price$23.32Volatility59.9%Stock Price12.59Power purchase agreementThe Company’s power purchase agreement, related to the Luminant Power Agreement, is divided between current and noncurrent assets, and was initially recorded on its condensed consolidated balance sheets on the derivative asset’s effective date of July 1, 2022, with an offsetting amount recorded to change in fair value of derivative asset in costs and operating expenses on the consolidated statements of operations. Subsequent changes in fair value are also recorded to change in fair value of derivative asset. The Luminant Power Agreement was not designated as a hedging instrument. The estimated fair value of the Company’s derivative asset was derived from Level 2 and Level 3 inputs (i.e., unobservable inputs) due to a lack of quoted prices for similar type assets and as such, is classified in Level 3 of the fair value hierarchy. Specifically, the discounted cash flow estimation models contain quoted spot and forward prices for electricity, as well as estimated usage rates consistent with the terms of the Luminant Power Agreement, the initial term of which is five years, and a remaining term of approximately 1.8 years. The valuations performed by the third-party valuation firm engaged by the Company utilized pre-tax discount rates of 5.21% and 5.96% as of September 30, 2025