Cipher Mining Announces SPAC Merger with Good Works Acquisition

Cipher Mining Inc., a Bitcoin mining company, said today that it would merge with Good Works Acquisition Corp. (Nasdaq: GWAC), a special purpose acquisition company (SPAC). The combined merger will allow Cipher to become a publicly-traded company.

Good Works’ co-chairman, Doug Wurth, said that his company was attracted to Cipher Mining because the company “represents a compelling way to gain risk-adjusted exposure to the growing crypto ecosystem.”

The companies expect the merger deal to close in the second quarter of this year.

Cipher Mining is Valued at $2 Billion in the Merger

Good Works and Cipher Mining will combine for a total enterprise value of $2 billion, according to the press release. The deal includes a $425 million PIPE (private investment in public entity) investment, of which $50 million will come from Cipher’s parent company, Bitfury Group.

The combined company will receive about $595 million in gross cash from the deal, including $170 million from Good Works’ trust account.

Cipher’s CEO, Tyler Page, said in a statement. “With this transaction, we will be able to combine the formidable skill sets and technologies developed by Bitfury Group over the past 10 years with what we believe will be a leadership position on the global cost curve, and thereby create a true leader in the Bitcoin mining industry,”

Here’s How the Current Shareholder Ownership Will be Structured

Cipher said that current shareholders of the company will become majority owners of the combined company at closing, with about 70% ownership. The company added that “all existing shareholders and investors will continue to hold their equity ownership subject to a two-year lock-up period.”

Additionally, the PIPE investors will own about 15% of the new company, with Good Works taking 7.5% and Cipher employees taking about 7%. Until the merger closes you can effectively own Cipher Mining via purchasing shares of GWAC stock.

Cipher Has a Multi-year Plan for Bitcoin Mining Expansion

Bitfury, Cipher’s parent company, was started back in 2011 and has mined more than 600,000 Bitcoin since it began. As a subsidiary of Bitfury, Cipher’s business focuses on the U.S. Bitcoin mining market and the company said that it has the potential to reach a cumulative deployed capacity of 745 megawatts (MW) of mining power by the end of 2025.

Cipher said that its U.S.-based data centers will come online between the fourth quarter of 2021 and the second quarter of 2022. Those data centers will have a maximum power capacity of about 445MW. An additional 300MW of power will be added sometime between 2023 and 2025, according to the company.

Bitcoin Continues to Gain Momentum

Bitcoin, and companies involved in buying, selling, and mining cryptocurrency, have gained a lot of attention from investors as the price of Bitcoin has surged over the past year. The price of one Bitcoin is currently $48,200, up from about $6,500 in March 2020.

With Cipher going public through the Good Works SPAC, investors have yet another avenue to invest in the highly sought-after, yet volatile, cryptocurrency market.

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