Good morning, welcome to the Cipher Mining First Quarter 2023 Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the star one again. For operator assistance throughout the call, please press star zero. Finally, I'd like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Josh Kane with Investor Relations to begin the conference. Josh, over to you.
Good morning. Thank you for joining us on this conference call to discuss Cipher Mining's first-quarter 2023 business update. Joining me on the call today are Tyler Page, Chief Executive Officer, and Ed Farrell, Chief Financial Officer. Please note that you may also review our press release and presentation, which can be found on the investor relations section of the company's website. Please note that this call will also be simultaneously webcast on the investor relations section of the company's website. This conference call is the property of Cipher Mining. Any taping or other reproduction is expressly prohibited without prior consent.
Before we start, I'd like to remind you that the following discussion, as well as our press release and presentation, contain forward-looking statements, including, but not limited to, Cipher's financial outlook, business plans and objectives, and other future events and developments, including statements about market potential of our business operations, potential competition, and our goals and strategies. The forward-looking statements and risks in this conference call, including responses to your questions, are based on current expectations as of today, and Cipher assumes no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law. Additionally, the following discussion may contain non-GAAP financial measures. We may use non-GAAP measures to describe the way in which we manage and operate our business.
We reconcile non-GAAP measures to the most directly comparable GAAP measures, and you are encouraged to examine those reconciliations, which are found at the end of our earnings release issued earlier this morning. I'll now turn the call over to Tyler. Tyler?
Thanks, Josh. Hi, this is Tyler Page, CEO of Cipher Mining. Thank you very much for joining our first-quarter 2023 business update call. Let me start with some key developments since our last update. In the brief period since our Q4 call, we've achieved several milestones. Most importantly, we recently announced that Cipher has achieved over 6 EH/s of self-mining capacity across our portfolio. Over the last year and a half, we have financed, designed, built, and now operate one of the largest mining fleets in the world. With the completion of this first phase of growth, Cipher now operates over 59,000 machines. We're extremely proud that we have done this in the time frame that we set out and without having to dilute shareholders or take on the burdensome debt that crippled many others in the industry.
Following the successful completion of this first phase of growth, we are delighted to announce today that we recently agreed to purchase another 11,000 miners to finalize the Odessa data center. We expect to complete this final phase of the data center by the end of Q3, which will bring our self-mining capacity to over 7.2 EH/s across our portfolio. This purchase agreement secures rigs for Cipher in a very attractive pricing market and continues our track record of taking advantage of cyclical opportunities. We continue to evaluate the potential expansion at our Bear and Chief data centers, and we are also reviewing a broad range of new data center opportunities. We are very excited about the new opportunities we are seeing today.
With the experience and expertise across our team, from power origination to construction to operations to technology and finance, we are able to assess and potentially pursue transactions that would deliver similar returns to our existing portfolio. As a reminder, our weighted average cost of power is approximately $0.027 per kWh, and about 96% of our portfolio is energized through fixed-price power. Power represents roughly 80% of our operating costs and is a key driver of our best-in-class unit economics. Structuring favorable energy economics remains the most important element of any future opportunities we consider. This is a cyclical business. Managing through the cycle is a fundamental part of our philosophy and reflects the way we run every aspect of our business, whether that involves finding low-cost power or not overpaying for machines during bull markets or avoiding overly burdensome debt.
On page four, we give some key performance indicators that we currently observe in the business as we continue to ramp up. Our self-mining hash rate is 6 EH/s , and we expect to reach 7.2 EH/s by the end of Q3 as we plug in the recently purchased additional 11,000 new rigs. Should we decide to expand at Bear and Chief, we could bring our self-mining capacity to 8.2 EH/s by year-end 2023. We currently operate roughly 59,000 rigs, and our new purchase will bring our operating fleet to over 70,000 in the third quarter.
Using newer and efficient machines with a low cost of power makes us a low-cost producer of Bitcoin, giving us resilience in the bear market and also operational leverage in a bull market. On the bottom of this slide, you can see some of our current production numbers. We continue to apply prudence to the management of our Bitcoin treasury and generally sell enough Bitcoin every month to fund our operating expenses. Given current market conditions, we have also been funding our CapEx at Odessa through ongoing operations. We constantly assess the right approach to funding growth, but our best-in-class unit economics and strong balance sheet give us the flexibility to self-fund growth when debt and equity markets are less favorable. Before diving deeper into a market update, let me take a moment to remind everyone how our business model works.
On slide five, you will see a simple overview of a Bitcoin mining business. We operate the box in the middle of the drawing that says mining equipment, which represents our data centers and mining rigs. As I discussed earlier, we spend the majority of our operating expenses on electricity, which our data centers convert into computing output. Unlike traditional data centers which operate a similar model and sell their computing output to enterprise clients for dollars, Cipher sells its computing output, called hash rate, to the Bitcoin network for Bitcoins. To make this model operate profitably, a Bitcoin mining company needs to control both its electricity costs and the capital it spends to build its data centers, including what it spends to purchase mining equipment.
Controlling these costs enables a miner to be a lower-cost producer. Our focus at Cipher has always been on controlling these specific costs to produce the best possible unit economics. Let's now turn to page six and take a look at recent market events in the Bitcoin mining space and talk about Cipher's approach to these volatile markets. During the quarter, we have seen a rally in Bitcoin prices, which may be part of a flight to safe haven assets in times of banking stress. An increased correlation between Bitcoin and safe haven assets may lead to greater Bitcoin adoption in the coming years. However, accompanying this price increase has been a steady climb to an all-time high in Bitcoin network hash rate, which continues to suppress overall mining economics.
With this market backdrop, we continue to believe that it's a buyer's market for rigs for those who can afford them. As we announced, we have been focused on taking advantage of those conditions. On slide 7, we give a portfolio overview of our data centers. We have completed the build-out of our Alborz, Bear, and Chief data centers and expect full completion of Odessa by the end of the third quarter. Our costs of electricity per Bitcoin generated at our sites are some of the lowest in the industry. For those who are relatively new to the story, the chart on the right shows you the dramatic build-out in Cipher's overall hash rate from Q4 2022 through today, as well as the additional 1.2 EH/s that we expect to come online with the completion of Odessa in the near future.
Moving to more specific highlights on each data center. Slide eight shows an overview of operational highlights at our Alborz data center. Alborz is 100% powered by wind and is a joint venture that we share with our energy provider. It has a total operating capacity when the wind blows of 40 MW. That 40 MW powers roughly 1.3 EH/s of rigs. Alborz can mine roughly 3.5 Bitcoin per day, and year-to-date, the site has mined approximately 320 Bitcoin. Roughly half of that total capacity and production belongs to Cipher. Most importantly, our recent all-in electricity cost per Bitcoin at Alborz was approximately $6,747, demonstrating our resilient low-cost structure. Slide nine shows operational highlights from our Bear and Chief data centers. Bear and Chief were completed and made fully operational last October.
Combined, the sites operate 20 MW, which power approximately 0.65 EH/s and can generate roughly 1.76 Bitcoins per day in current market conditions. Bear and Chief are also structured as joint ventures with similar shared economics to Alborz. Unlike our other sites, which have behind-the-meter power arrangements, Bear and Chief are set up in front-of-the-meter in a location within Texas that typically features attractive market prices. Our recent all-in electricity cost per Bitcoin at the combined sites was approximately $5,927. Turning to our Odessa data center, slide 10 includes our most recent production numbers as well as a timeline for the completion of our site build-out. At the end of April, we reported a hash rate of approximately 5 EH/s at the site, generated using approximately 170 MW.
We have mined roughly 1,306 Bitcoins at the site year-to-date and had a recent daily mining capacity of approximately 13.6 Bitcoins per day. Our recent all-in electricity cost to produce a Bitcoin at Odessa was approximately $7,309. As previously discussed, we expect to energize our newly purchased 11,000 rigs by the end of the third quarter, which will bring the full capacity at the Odessa site to 6.2 EH/s . Turning to slide 11. I'd like to walk you through a case study that demonstrates some of the competitive advantages of our setup at Odessa. As the Odessa site ramps up, we are just beginning to see the tremendous positive impact that our power purchase agreement gives us in terms of mining economics and the upside potential from selling power.
Slide 11 is a case study showing how we operated the Odessa Data Center on March 28th and 29th. Our operations on these particular days illustrate how we monetize our flexibility on the power side. Under our Odessa contract, the power provider has the right to curtail our power use up to 5% of hours over the course of the year. They will generally try to do this when open market prices for power are high, so that they can reap larger returns from selling power in the market as opposed to selling it to us at our low contracted fixed price. We also have the right to self-curtail, shut down our machines, and sell the power we are then not using at our data center back into the market.
The graph on slide 11 has vertical bars that illustrate the open market floating price for power in 15-minute increments. It also features a blue horizontal line representing our fixed price for power, and an orange horizontal line showing the then current Bitcoin mining revenue priced in $ per MWh. It's worth looking at the spread between these two horizontal lines to get a sense of our very attractive operating margins at Odessa. As you can see, the market price for power fluctuates wildly during the two days between -$20 per MWh, all the way up to $2,000 and beyond. The white vertical lines show what the open market floating power prices were during times when Cipher was mining Bitcoin and paying the low fixed price represented by the blue horizontal line.
For many of our competitors without a fixed price power contract, those tall spikes shown in the white lines would result in either loss-inducing Bitcoin mining operations or having to shut down to avoid losses. During these two days, we had a stretch of time where the power provider curtailed Cipher's mining operations and have colored that time period in red. During this time period, we produced no revenue at the site. On the other hand, the green vertical lines represent the floating market power prices during times when Cipher opted to self-curtail, voluntarily shut down our machines, and sell power back into the market. By doing this, we realized excess power trading profits above Bitcoin mining of over $145,000 in a period of less than three hours.
On the whole, in this two-day period, Cipher missed out on roughly five hours of mining profits when it was curtailed by our power provider. We also made excess profits by self-curtailing and selling power back to the grid for two and a half hours. The net result was a particularly strong one for our operations, where we made more money through managing curtailment than if we had been Bitcoin mining for 100% of the time. In this one two -day period in March, you can see many of the favorable elements of our power arrangement at Odessa in action. You can see the value of locking in a cheap electricity price well below where floating prices can spike. You can also see the tremendous net value to Cipher of monetizing the flexibility of our data center.
Our operations benefit from this ability to mine Bitcoin or resell power and pursue whatever strategy is most profitable. Also, the times when we happen to resell power are not only profitable, but also coincide with the times when the grid needs that power the most. This phenomenon illustrates the tremendous symbiotic nature of adding flexible Bitcoin mining loads to grids overall. We expect to continue to see examples of this, especially in seasons like summer and winter, when there is a greater likelihood of spikes in the market's floating power prices. It's also worth noting that for those of you who follow our monthly production report, we are not like many other Bitcoin miners, where you can draw a straight line from Bitcoin production to revenues. In our case, a lower Bitcoin production number may reflect periods where we self-curtail and take advantage of power sales to increase profitability.
Even in cases where we are not mining because we are curtailed by the power provider, that ultimately means we will have more optionality to optimize our profits later in the year as our counterparty uses up their annual curtailment allotment. This complex optimization process is only possible because of the prodigious skills we have assembled on our team and the tremendous industrial and technological operations they have built. With that, I'd like to turn it over to our Chief Financial Officer, Ed Farrell.
Thank you, Tyler, and hello to everyone on the call. Tyler talked about the impressive ramp-up in our operations that we have seen over the past several quarters, and we are now beginning to see that flow through to the financials. I'm happy to report for the three months ended March 31, 2023, that our production at our Odessa facility mined 947 Bitcoin, resulting in Cipher reporting $21.9 million in revenue. This coupled with the 198 Bitcoin we earned at our JVs, resulted in a total of 1,145 Bitcoin mined in the 1st quarter. Please note that the financial impact of the Bitcoin mined at our JVs is included in the equity investee account on the income statement.
With the build-out of Odessa expected to be complete in the first half of 2023, we look forward to providing the market with greater detail on our financials, which we believe will highlight our best-in-class unit economics. At the corporate level, our philosophy towards our financial strategy mirrors our prudent approach to the rest of our business. This is a cyclical business, and we want to maintain a strong balance sheet and financial position that gives us maximum flexibility over the course of the cycle. We have no debt at the corporate level and one small equipment financing loan at the project level. As we have talked about in our monthly production reports, we are not managing our Bitcoin treasury to fund both the remaining CapEx at Odessa and the day-to-day operations with current Bitcoin production.
The ability to fund both capital expenditures and operating expenses while building a Bitcoin reserve reflects our best-in-class unit economics that will become more and more apparent as we get to a full run rate later in the year. Now I'd like to turn to the Odessa PPA. On slide 11, Tyler walked through a very helpful case on the business opportunity that we have structured with the Luminant power agreement. We believe the value of this PPA is not fully appreciated by the market. As a reminder, we began publishing a third-party mark for this agreement in the 3rd quarter of 2022, which we believe underlies the fundamental value in the business. This mark is shown as a derivative asset on the balance sheet. It gets revalued each reporting period.
It essentially reflects the in-the-money value of the contract relative to the current market for the power prices at Odessa. On March 31st, this asset was valued at $72 million, or an increase of $5.3 million, which is recorded as a gain in our income statement. Please note that this asset is in two components: $17 million as a current asset and $55 million as a non-current asset. For this period and future periods, the change in fair asset of this contract will flow through our GAAP earnings and will exclude the impact for non-GAAP reporting. Other significant assets include liquidity of $13.5 million. This includes $3.9 million in cash and Bitcoin of $9.6 million.
Property and equipment of $263 million is primarily related to the Odessa facility, which includes miners of $135 million, leasehold improvements of $118 million, and construction in progress of $24.3 million. These items are offset by $15.4 million of accumulated depreciation. In addition, we have security deposits of $17.7 million that primarily relate to the collateral for our Luminant Power Agreement. Our equity investments of $35.5 million relates to our JVs, Alborz, Bear, and Chief. Our current liquidity position is $14.8 million in cash and Bitcoin. To date, we have not utilized our $250 million ATM program because we believe it would be dilutive to shareholders in the current conditions.
Of our strong financial position and unit economics, we can fund our ongoing growth without tapping the ATM. We do believe the ATM is a useful tool which we can access for the right opportunity and the right market conditions, the hurdle for us is a project or opportunity that is accretive to the company and shareholders. Let's look at our GAAP operating results for the quarter ended March 31st. We had a net loss of $6.6 million, resulting in a net loss of $0.03 per share versus prior year quarter, where we had a net loss of $17.5 million or a net loss of $0.07 per share.
Bitcoin mining operations at our Odessa facility mined 947 Bitcoin and generated $21.9 million for the three months ended March 31, at an average price per Bitcoin of $23,000. On a comparative basis, the Odessa facility began mining operations in mid-November 2022. The company did not earn revenue from Bitcoin mining during the three months ended March 31, 2022. Cost of revenue for the three months ended March 31, 2023 was $8.1 million and consisted primarily of power costs at the Odessa facility, as well as maintenance expenses for mining operations. We did not incur power costs in the prior year's quarter as again, the Odessa facility mining operations did not begin until late 2022.
The change in fair value of our Odessa power agreement, which I mentioned earlier, resulted in a gain of $5.3 million. Equity and losses of equity investees totaled approximately $800,000 for the quarter ended March 31st, an increase of $600,000 from the three months ended March 31st, 2022. To remind everyone, equity and losses of equity investees consists of our 49% share in the earnings or losses generated by our three partially owned mining sites. General and administrative expenses of $17.4 million for the current quarter remained flat from the previous year's 1st quarter.
Within G&A, the primary drivers are stock-based compensation of $8.8 million in the current quarter versus $9.5 million in the prior year quarter. Compensation and benefits of $3.1 million versus $725,000 in the prior quarter. This increase is attributed to building out the team over the course of the year. Corporate insurance of $2 million in the current quarter versus $2.4 million in the prior year quarter. Professional fees of $1.5 million in the current quarter versus $2.6 million in the prior year quarter. Other G&A of $1.8 million that includes IT, occupancy, and other public company expenses versus $2.1 million for the three months ended March 31st, 2022.
Depreciation for the current quarter was $11.7 million versus an immaterial amount in the prior year quarter. This is the result of our Odessa facility being energized in mid-November 2022. We had a realized gain on the sale of Bitcoin of $4 million in the current quarter. As I mentioned earlier, we began selling a portion of our Bitcoin holdings at the start of 2023 to support our operations and cash requirements. We recognized a $1.8 million impairment on our Bitcoin holdings in the current quarter. Impairment of Bitcoin for the prior year quarter was immaterial. We recognized proceeds of approximately $2.3 million in the current quarter related to the sale of transferable coupons we received from a miner manufacturer. Let's move on to our non-GAAP financial measures.
We are providing supplemental financial measures for non-GAAP from operations that exclude the impact of depreciation of fixed assets, stock compensation, deferred tax expense, the non-recurring gain on the sale of machine coupons, and the non-cash change in fair value of our derivative assets. These supplemental financial measures are not measurements of financial performance in accordance with US GAAP, and as a result, these supplemental financial measures may not be comparable to similarly titled measures of other companies. We believe that these non-GAAP measures are useful to investors in comparing our performance across the reporting periods on a consistent basis. Management uses these non-GAAP financial measures internally to help understand, manage, and evaluate business performance and help make operating decisions.
For the three months ended March 31, 2023, we had a non-GAAP net income of $6.4 million, resulting in non-GAAP net income of $0.03 per share versus a non-GAAP loss of $7.9 million or a net loss of $0.03 per share for the three months ended March 31, 2022. We have provided a reconciliation of GAAP versus non-GAAP results detailing the items and related amounts. In conclusion, our team is very proud of the success we've had in executing the plan we presented back in 2021. We have delivered and executed on the initial four data centers we set out to build and now look forward to the next stages of growth for the company.
We believe our financial position and best-in-class unit economics will give us opportunities to take advantage of the volatile markets we may expect to see over the coming years. In closing, we look forward to updating you in greater detail on the financial results as Odessa is completed, and we begin to see the operations at a full run rate. I will pause. Tyler and I are happy to answer your questions.
At this time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of John Todaro of Needham. Your line is open.
Great. Thanks for taking my question, guys, and congrats on the quarter. I have two here for you. First, we're starting to see Bitcoin transaction fees as a percent of mining revenues increase quite a bit. It seems mostly on the back of these new tokens that have been issued on the Bitcoin blockchain, these new altcoins. Looks like total mining revenue was up around 60%, maybe a little bit more even over the past several days because of the higher fees. In your view, do you believe this is sustainable? Just kind of any general commentary on fees becoming a bigger revenue-generating item for miners? I have a second question.
Thanks, John. Look, I think we are watching like everyone else. Things happen so fast in this space that it's hard to keep up. If you file all your public company filings on time, you almost by definition in Bitcoin can't keep everything up to the minute. To give you some stats, I looked, we've had consecutively our highest days of revenue ever. The last two days, we mined about 21 Bitcoin on Sunday and about 24 yesterday. You know, I'm not sure that that trend is sustainable. I think we are watching it like everyone else. I think long term, it's very good for the Bitcoin network. You know, personally, JPEGs of wizards and things like that on the Bitcoin blockchain don't excite me all that much.
Increasing use cases and users, obviously fees going up for transactions are good for us as a business. I think long term, that also drives increased interest in second-layer solutions, not to have everything transacting on the base layer. Look, speculation has proven not only in this asset class, but in lots of asset classes, as a good early use case. You know, if you wanna come for the speculation and stay for the fundamentals.
I think that's fine with us. I think at the level the fees have gone up, that is just a very expensive marketing campaign, it seems like, for what's going on. I'm not sure that can be sustainable unless the appetite for these various other, you know, I guess I'll call them products, but alternative uses of block space, maintain at that same kind of speculative level. You know, we had days or blocks yesterday where there were more transaction fees than the coinbase reward.
It's hard for me to believe that is long-term sustainable, but what I hope we see is an increased interest in the network, and then maybe we do see a sustainable, reasonable increase in transaction fees as we start to figure out that maybe there's even more upside to the Bitcoin blockchain than everyone was pricing in, that a market for block space could develop with new use cases that vastly expand what we could see for the network. You know, in the short term, we love the extra revenue. That's great. And we'll just have to see, like everyone else, how it plays out.
Great. Gotcha. Thank you for that. That was super helpful. Second question here. This is more operational-based. Can you remind us outside of energy costs how much that direct operational overhead is there? It's around 25% of energy costs each quarter. Is there any levers you can pull to get that number down?
Yeah. I mean, I think we give a rough rounded estimate that I cite sometimes of about 20% is non-electricity related. Part of it has to do with the line-drawing exercise of where you allocate, you know, things like compensation for certain people's titles and so forth, because a large part of that is paying for our team. What I would point out is we are extremely competitive on what we pay for those non-electricity operating expenses in that, we're up to roughly 28 employees right now. I think if you look at any of our comps that operate anywhere near the amount of hash rate we operate, they do not have a workforce that looks like that. There are many multiples of that, and that's what will drive that expense up.
The reason for that is that, you know, from day one, we have tried to design a firm that leverages technology as best we can to squeeze efficiencies out of the operation. I do think over time, we will drive that down further, but I already think it's best in class. Again, it's a bit of a line-drawing exercise, which is why I like to say it's approximately 20% of the total cost because I could use different definitions to try to massage it. You know, overall, that's what I think the most fair look at it is.
Great. Thank you for that.
Your next question comes from the line of Joseph Vafi of Canaccord. Your line is open.
Hey, guys. Good morning. Nice to see the hash rate ramp here. Maybe we'll just start with the announcement on the new mining rig that looks like you're going with the, I guess it's Canaan or Canaan miners. I'm sure you did some due diligence on those miners before you chose to enter that agreement. I was wondering if you could just give us a little more color on what steered you that way with those rigs versus a couple of the other brands, and then a quick follow-up.
Sure. Thanks, Joe. Yeah, so I think building on a theme that we've had in the last few calls, it is a buyer's market for rigs, because so few miners have the capital to spend on rigs, and even fewer have attractive places to plug those miners in if they could get them. We spent a lot of focus recently on trying to drive, candidly, a better relationship with all the rig manufacturers. Our COO and I made a multi-week trip to Asia this past month. We met with the C-suite of Canaan, MicroBT, and Bitmain, to really try to talk to them about how we think Cipher should be judged differently than the other Bitcoin miners.
The reason for that is we try to stress our very sustainable business model and how we are, we think, the best in the world at identifying and operating facilities. That presents a very sustainable client to them. Having that reliable future purchaser that is a consistent buyer of rigs has extra value to a rig manufacturer. On the back of meeting with all three of them, I'm happy to say we were very pleased with Canaan. They expressed a desire that we become, you know, their number-one focus for a new industrial customer. We hosted them at Odessa. On the back of your question about diligence, we actually asked for test rigs to plug in at Odessa, and we've been testing them for over a month before committing to a purchase.
I'm happy to say that they understood that we didn't wanna go out and try to get a usurious loan to try to take advantage of this opportunity we've got at Odessa. I'm happy to say that both in terms of headline price that we paid and the payment terms in terms of scheduling when cash is due, it is by far the best deal we have ever done and frankly seen in the space. I'm very excited to have a third manufacturer of rigs involved at our site. I think one thing that was particularly interesting to us is that Canaan stressed that they believe their machines operate better in the heat than any other rigs in the world.
We're excited to have that plugged in this summer in Texas. And, and look, we still have a great relationship with MicroBT and Bitmain and plan to be huge customers of all of theirs, but very excited to have this new provider.
That's great color. Thanks, Tyler. Secondly, as you kinda look beyond, you know, completing the Odessa capacity, and you maybe look to the future, I know Bear and Chief. I mean, clearly, you've got cheap power kind of everywhere, but I mean, it does feel like the Bear and Chief power is pretty attractive. What, what do you think at this point would push you to a brand-new site versus, you know, building those out first? Thanks a lot.
Thanks, Joe. That's a great question. Bear and Chief are very attractive, and as I said on the call, we're going through the necessary steps to analyze, timelines and thinking about availability and the risk-return with our joint venture partner there. And they're both fabulous sites with a lot of potential. I also alluded to we have seen an uptick recently in very attractive opportunities. To give you color on the direction where I think it could go, you know, we showed the case study for a sort of a day in the life at Odessa, and that's really a day in the life that's pretty early on. We're really just developing our optimization tools to try to capture and maximize revenue as much as possible.
Building on that, a theme I've talked about really since we went public is that we see a future where there is upstream integration from the Bitcoin mining companies into the broader energy industry. You know, on the back of that, I would say we're looking at some opportunities now that would, like Odessa, allow us to participate in those energy markets. Our goal is to get to a point where our economics look like a best of option on Bitcoin mining or providing power when it's most dear back to the grid. You know, none of that is far enough along to be done, but you know, we are in multiple data rooms and negotiations looking at different opportunities, and I'm happy to say I think there's a lot of them.
As far as picking which one, you know, gets prioritized, we're pretty data-driven and numbers-driven. It'll really come down to sort of figuring out where we think the most long-term value can be generated for the company.
Great. thanks, Tyler, and nice to see the progress across the portfolio.
Thank you, Joe.
Your next question comes from the line of Will Carlson of Cantor Fitzgerald. Your line is open.
Thanks for taking the question, guys. I was curious if you could provide a little bit color on how you're thinking about the CapEx spend, to go from 7.2 EH/s to 8.2 EH/s with the Bear and Chief expansion? A second question would be, I know you guys mentioned that you're not looking to use the shelf offering, but what are you currently seeing in the debt markets and, if they're beginning to open up, as compared to earlier this year? Thanks.
Thanks, Will. Let me say on CapEx, I'll break that into a couple buckets. First of all, the expansion to finish Odessa out to build our 7.2 portfolio, we current model as being able to be done just out of the revenue production, and the lion's share of that CapEx will be finished in the third quarter. There will be some smaller lingering payments into the fourth quarter, but the overwhelming majority of that is in the third quarter. As far as expansion beyond that, whether that's Bear and Chief or something else, it's really a matter of looking at how accretive the opportunity can be when we analyze using the shelf. I think Ed alluded to that.
As we've demonstrated, we have a high bar, I'd say a higher bar than most of our competitors for tapping the shelf, that we are trying to drive as much shareholder value as possible to our shareholders. I think when we look at expansion, we would weigh our really our three main levers are selling Bitcoin, selling equity or selling debt. There's also some smaller derivative options, some interesting things being developed on kind of selling forward production and hash rate, things like that, but we have not done any of that yet, and I'm not sure it's at the scale that could pay for a sizable expansion, at least not yet. I'd say in the debt markets, what we've seen is more lenders have come looking.
I'm still not sure we've seen the terms that we feel great about. Generally, I would still say the interest rates are too high or they only come with some sort of conversion kicker or warrant offer that just isn't really that valuable to us. We are, you know, as I mentioned, you know, minting 24 Bitcoin yesterday with our low cost of power gives you a sense we're throwing off a lot of cash. Our option is always just to take our time, especially as we look towards the halving, which is less than one year out at this point. You know, I'd say weekly we're in contact with multiple potential lenders. We're always looking. On the shelf, you know, tapping the shelf, it's really just a matter of is this accretive.
I do think a lot of the opportunities we look at, if you look at the compelling cost of power, even through the halving, there are some big opportunities out there where it might make sense, but that's a little bit of a dynamic question, too. I think the stock has underperformed where we would like to see it. If anything, I think what's interesting about the recent spike in transaction fees, it demonstrates that I'm not sure the equity markets fully understand the business models of the miners. I think there's a lot of algorithms that see Bitcoin down a couple % and so the miners have a bad day, that the equities of the miners have a bad day like yesterday, when in fact, not only us, but probably most of our competitors had their biggest revenue day in over a year.
You know, that's kind of the part of the complex dynamic with tapping the shelf is trying to make sure that, you know, the stock is fairly valued before we sell it if possible.
Got it. Thanks for the color, guys.
If you would like to ask a question, press star then the number one on your telephone keypad. There are no further questions at this time. I'd like to turn the call back over to Tyler.
Thank you as always to everyone for your continuing support, and we look forward to updating you in August on the progress we've made then. Thanks again. Have a great day.
This now concludes today's conference call. You may now disconnect.