Newmoon Capital

$CIFR confirms some of our worst fears (and echo of $CRWV call). Full note link below where we called out what happened from 1998 - 2001 during the merchant power build out. From the $CIFR call, tons of change orders and now don't know what build out will cost them...they project that without getting an amendment to their contracts (which they had to put up more money to get), the yield on cost would have fallen to 13% (from 15%). This is the problem...when the sector sees cost of debt rise, along with capex / change orders surging, its unclear of many of these guys will be economic. $NBIS $CRWV $APLD $HUT $CORZ $WULF $GLXY $ORCL $IREN -- "In exchange for those improved economics, Cipher elected to invest additional capital in the project. There were two principal components to that investment. The first component was change orders. Our tenants requirements evolved in real time during construction, resulting in approximately $409 million in change orders. Under the lease, those costs would have been the tenant's responsibility and reimbursable to Cipher. As part of the amendment, the tenant will reimburse approximately $50 million, while Cipher agreed to invest the remaining $359 million in exchange for the 10-year lease extension and the significant incremental revenue that comes with it. We view that as an attractive exchange of near-term reimbursement for substantially greater long-term asset value. The second component was higher construction costs driven by scope evolution, inflation and rising labor costs. Under the amendment, we are sharing these costs equally with our tenant and recovering our tenant share through rentalization at a contracted rate of return over the life of the lease. The right side of the slide shows why we believe this was the right capital allocation decision. When Barber Lake was originally underwritten, our guidance was $9 million to $11 million per IT megawatt. We ultimately financed the project at $10.4 million per IT megawatt, supporting an average yield on cost of roughly 15%. Without the amendment, the combination of reimbursed tenant-directed change orders paired with general scope evolution and inflationary pressures would have resulted in cost to Cipher of $12.3 million per IT megawatt and reduced our average yield on cost to approximately 13%... ...So I say that because the implication of moving very quickly was that we had design sets that were not very far advanced. And what that has meant and the tenants were willing to work with is that there have been more change orders, I think, over the last year than we would have expected. Now my priority is, I think we work with the very best long-term leasing tenants in the world. And so we are trying to accommodate what the tenants want. But if they are making very substantial change orders, that has knock-on effects to cost and schedule. And when you are repricing those changes in an environment that's evolving, that's where the sort of thematically that exposure comes from. So you may need to hire additional crews to deal with an adjusted schedule to accommodate something that changed in the tenant's design around the cooling infrastructure or something. And then that has cascading effects throughout the building process..."