Good Works Acquisition Corp has agreed to a reverse takeover of Cipher Mining Technologies. Cipher is a newly-formed US-based Bitcoin mining company that is being carved out of New York-based Bitfury Group. Bitfury provides Bitcoin mining hardware and other blockchain software and services.
Good Works went public in October 2020 with an initial public offering of $150 million.
The transaction values the combined group at $2 billion. In addition, the business will have $500 million of cash on hand (and no debt). That will allow Cipher to build out its operations.
Currently there are about 18.6 million Bitcoins in circulation out of a maximum supply of 21 million. That was set in 2008 by its inventor, Satoshi Nakamoto (probably a pseudonym for unknown persons). As part of its records creation process, more and more computing power is needed to create new Bitcoins. Currently China accounts for about 65% of all Bitcoins mined globally.
Cipher intends to initially build 4 data centers (3 in Texas, 1 in Ohio) with a power capacity of 445 MW. These will be built in 2021 and 2022. The business plans to expand these data centers between 2023-2025 with an additional 300 MW of power. By 2025, the business intends to mine 21,000 Bitcoins.
The company states that it has 5 year supply contracts with CloudHQ and Vistra for Texas at an average price of 2.7 cents per kWH. However, the small print in the investor presentations state these are letter of intent prices. It will be interesting to see if proposed solutions to the recent Texas power grid problems will significantly impact the rate.