Company: CIFRW
Filing Date: 2025-08-07
Form Type: 10-Q
Source: 0001819989-25-000081
Chunk: 108

Company: Cipher Mining Inc.
Filing Date: 2025-08-07
Form: 10-Q
Item: Part II, Item 1A
Chunk 108
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 initially recorded on its 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 

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CIPHER MINING INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(unaudited)

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 2.1 years. The valuations performed by the third-party valuation firm engaged by the Company utilized pre-tax discount rates of 5.33% and 5.96% as of June 30, 2025 and December 31, 2024, 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 six months ended June 30, 2025 and 2024 (amounts in thousands):Six Months Ended June 30,20252024Opening balance$85,670 $93,591 Change in fair value(8,150)29,339 Ending balance$77,520 $122,930 Level 3 liabilityThe Company’s Private Placement Warrants (as defined in Note 16. 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