Cipher Digital Inc.CIFR
Cipher Digital Inc. Fair Value Disclosure
FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities measured at fair value are classified and disclosed in one of the following categories based on the inputs used to derive the fair value:
Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 — Quoted prices in markets that are not active and financial instruments for which all significant inputs are observable, either directly or indirectly; or
Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable
The Company’s financial assets and liabilities subject to fair value measurement on a recurring basis and the level of inputs used for such measurements were as follows as of the dates indicated (in thousands):
| Fair Value Measured as of December 31, 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets included in: | |||||||||||||||||||||||
| Cash and cash equivalents | |||||||||||||||||||||||
| Money market securities | $ | 535,085 | $ | - | $ | - | $ | 535,085 | |||||||||||||||
| Restricted cash | |||||||||||||||||||||||
| Money market securities | 2,035,631 | - | - | 2,035,631 | |||||||||||||||||||
| Bitcoin | 125,400 | - | - | 125,400 | |||||||||||||||||||
| Accounts receivable | 687 | - | - | 687 | |||||||||||||||||||
| Derivative asset | - | - | 56,810 | 56,810 | |||||||||||||||||||
| $ | 2,696,803 | $ | - | $ | 56,810 | $ | 2,753,613 | ||||||||||||||||
| Liabilities included in: | |||||||||||||||||||||||
| Warrant liability | - | - | 525,160 | 525,160 | |||||||||||||||||||
| $ | - | $ | - | $ | 525,160 | $ | 525,160 | ||||||||||||||||
| Fair Value Measured as of December 31, 2024 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets included in: | |||||||||||||||||||||||
| Cash and cash equivalents | |||||||||||||||||||||||
| Money market securities | $ | 4,314 | $ | - | $ | - | $ | 4,314 | |||||||||||||||
| Restricted cash | |||||||||||||||||||||||
| Money market securities | 14,392 | - | - | 14,392 | |||||||||||||||||||
| Bitcoin | 92,651 | - | - | 92,651 | |||||||||||||||||||
| Receivable for bitcoin collateral | - | 32,248 | - | 32,248 | |||||||||||||||||||
| Accounts receivable | 596 | - | - | 596 | |||||||||||||||||||
| Derivative assets | - | - | 85,670 | 85,670 | |||||||||||||||||||
| $ | 111,953 | $ | 32,248 | $ | 85,670 | $ | 229,871 | ||||||||||||||||
| Liabilities included in: | |||||||||||||||||||||||
| Short-term borrowings | |||||||||||||||||||||||
| Bitcoin loan payable | $ | 7,330 | $ | - | $ | - | $ | 7,330 | |||||||||||||||
| $ | 7,330 | $ | - | $ | - | $ | 7,330 | ||||||||||||||||
The Company’s financial assets and liabilities not subject to fair value measurement on a recurring basis and the level of inputs used for such measurements were as follows as of the dates indicated (in thousands):
| December 31, 2025 | |||||||||||||||||||||||||||||
| Total carrying value | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
| Liabilities included in: | |||||||||||||||||||||||||||||
| Long-term borrowings | |||||||||||||||||||||||||||||
| 2030 Convertible Notes | $ | 167,643 | $ | - | $ | 591,768 | $ | - | $ | 591,768 | |||||||||||||||||||
| 2031 Convertible Notes | $ | 870,842 | $ | - | $ | 1,547,533 | $ | - | $ | 1,547,533 | |||||||||||||||||||
2030 Senior Secured Notes | $ | 1,673,163 | $ | - | $ | 1,769,514 | $ | - | $ | 1,769,514 | |||||||||||||||||||
| $ | 2,711,648 | $ | - | $ | 3,908,815 | $ | - | $ | 3,908,815 | ||||||||||||||||||||
There were no financial assets and liabilities not subject to fair value measurement on a recurring basis as of December 31, 2024.
The carrying values reported in the Company’s consolidated balance sheets for cash (excluding cash equivalents which are recorded at fair value on 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.
Power purchase agreement
The Company’s power purchase agreement, related to the Luminant Power Agreement, is divided between current and noncurrent assets, and was 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 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 1.6 years. The valuations performed by the third-party valuation firm engaged by the Company utilized pre-tax discount rates of 4.80% and 5.96% as of December 31, 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 and losses 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 power purchase agreement measured using significant unobservable inputs (Level 3) for the year ended December 31, 2025 and 2024 (amounts in thousands):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Opening balance | $ | 85,670 | $ | 93,591 | |||||||
| (28,860) | (7,921) | ||||||||||
| Ending balance | $ | 56,810 | $ | 85,670 | |||||||
Level 3 liabilities
Google Warrants
The Company’s Google Warrants (as defined in Note 18. Warrants) were 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
Google Warrants used assumptions and estimates the Company believes would be made by a market participant in making the same valuation. The initial valuation of the Google Warrants was recorded to Warrant liability on the Company’s consolidated balance sheets, and subsequent changes in fair value are also recorded to Change in fair value of warrant liability in the Company’s consolidated statements of operations.
The Company engaged a third-party valuation firm to determine the fair value of the Google Warrants 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 Google Warrants as of the date indicated:
| December 31, 2025 | |||||
| Risk-free rate | 3.54% | ||||
| Dividend yield rate | 0.00% | ||||
| Volatility | 107.00% | ||||
| Contractual term (in years) | 4.75 | ||||
The following table presents changes in the estimated fair value of the Google Warrants (amounts in thousands):
| Balance as of December 31, 2024 | — | ||||
Fair value of warrants as of issuance date | 544,450 | ||||
| (19,290) | |||||
| Balance as of December 31, 2025 | $ | 525,160 | |||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Mar 5, 2024 | |
| 2022 | Mar 14, 2023 | |
| 2021 | Mar 4, 2022 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.