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March 26, 2025
Edward Farrell
Chief Financial Officer
Cipher Mining Inc.
1 Vanderbilt Avenue, Floor 54
New York, New York 10017
Re: Cipher Mining Inc.
Form 10-K for Fiscal Year Ended December 31, 2024
File No. 001-39625
Dear Edward Farrell:
We have limited our review of your filing to the financial statements
and related
disclosures and have the following comments.
Please respond to this letter within ten business days by providing the
requested
information or advise us as soon as possible when you will respond. If you do
not believe a
comment applies to your facts and circumstances, please tell us why in your
response.
After reviewing your response to this letter, we may have additional
comments.
Form 10-K for the Fiscal Year Ended December 31, 2024
Critical Accounting Policies, and Use of Estimates, page 59
1. Please represent to us that you will include in future filings
qualitative and
quantitative information necessary to understand the estimation
uncertainty and the
impact your critical accounting estimates have had or are reasonably
likely to have on
your financial condition and results of operations. Your disclosure
should explain why
each critical accounting estimate is subject to uncertainty and, to the
extent the
information is material and reasonably available, discuss how much each
estimate
and/or assumption has changed over a relevant period and the sensitivity
of reported
amounts to the underlying methods, assumptions and estimates used, to
the extent
applicable. The disclosures should supplement, not duplicate, the
description of
accounting policies or other disclosures in the notes to the financial
statements. Refer
to Item 303(b)(3) of Regulation S-K and SEC Release No. 33-10890.
March 26, 2025
Page 2
Notes to Consolidated Financial Statements
Note 2. Summary of Significant Accounting Policies
Revenue recognition, page F-16
2. Please respond to the following with respect to your revenue recognition
policy under
ASC 606 and in future filings make any applicable revisions to your
disclosures:
You disclose that the contract is terminable at any time by either
party with no
substantive termination penalty and the contract term is 24 hours.
Tell us your
consideration of whether the duration of the contract for accounting
purposes is
less than 24 hours because the contract continuously renews
throughout the day. If
you agree, revise your accounting policy to state this. If you
disagree, tell us why
considering that each decision to not terminate appears to create a
new contract
for accounting purposes. Refer to Question 7 of the FASB Revenue
Recognition
Implementation Q&As.
You disclose that you recognize revenue over the contract term as
hashrate is
provided. ASC 606-10-25-23 indicates that recognition occurs upon
the transfer
of control of the service. Tell us your consideration of whether you
recognize
revenue on the same day that control of the contracted service
transfers to the
mining pool operator, which is the same day as contract inception
and revise your
disclosure accordingly.
You disclose that you measure the noncash consideration at fair
value at contract
inception. Revise your disclosure in future filings to indicate the
specific time that
you measure the noncash consideration recognized at the Bitcoin spot
price, i.e.,
whether it is at the beginning of the 24-hour period used to
determine contract
payments (midnight UTC time). In addition, assuming that continuous
renewal
throughout the day results in multiple accounting contracts, revise
your disclosure
in future filings to indicate that the time that noncash
consideration is recognized
is on the date of contract inception, consistent with the guidance
in ASC 606-10-
32-21.
Note 4. Derivative Assets, page F-21
3. You refer to Note 1. Organization for information regarding
out-of-period
adjustments you recorded during the year ended December 31, 2023, which
affected
cost of power, power sales, net operating loss and net loss. We are
unable to find the
referenced disclosure. Please tell us the nature and amount of these
adjustments and
how you considered the disclosures required, if any, in ASC 250. Refer
to SAB Topic
1.M and 1.N.
Note 7. Investment in Equity Investees, page F-23
4. We note that you account for your 49% equity interests of the three Data
Center LLCs
under the equity method of accounting. Please address the following
comments:
Given that you operate these LLCs as indicated on page 1 and
elsewhere, please
provide us your analysis as to why you do not consolidate these
entities. As
part of your response, specifically tell us whether each of the
underlying LLCs are
variable interest entities as well as whether they are similar to
limited partnerships
in the context of ASC 810-10-05-3 and explain why or why not.
March 26, 2025
Page 3
Regardless of whether consolidation or equity method accounting is
appropriate,
provide us your analysis supporting your determination to not impair
the miners
contributed to the LLCs before they were contributed as part of your
investments
in the LLCs.
Assuming that equity method accounting for your investments with
no
impairment of miners before being contributed is appropriate,
explain to us
why there is a basis difference upon contribution of the miners.
Elaborate on why
the LLCs recorded the contributed miners at your historical cost and
not at their
fair value.
In closing, we remind you that the company and its management are
responsible for
the accuracy and adequacy of their disclosures, notwithstanding any review,
comments,
action or absence of action by the staff.
Please contact Kate Tillan at 202-551-3604 or Mark Brunhofer at
202-551-3638 with
any questions.
Sincerely,
Division of
Corporation Finance
Office of Crypto
Assets
cc: J. David Stewart