CleanSpark, Inc. (NASDAQ:CLSK) Q1 2024 Earnings Conference Call February 8, 2024 4:30 PM ET Company Participants Isaac Holyoak - Chief Communications Officer Zachary Bradford - President and Chief Executive Officer Gary Vecchiarelli - Chief Financial Officer Conference Call Participants Michael Colonnese - H.C. Wainwright Josh Siegler - Cantor Fitzgerald Gregory Lewis - BTIG Brian Dobson - Chardan Capital Markets Operator Good afternoon. My name is Greg, and I will be your conference operator today. At this ...

CleanSpark is America's Bitcoin Miner™ CleanSpark is America's Bitcoin Miner™ Copyright 2024 CleanSpark | 4 FY2024 First Quarter Earnings Call Zach Bradford Chief Executive Officer 1. Includes recent purchase of 12 EH/s of S21s. 3. Unaudited, projected as of January 31, 2024. 4. As of February 08, 2024 2. Includes infrastructure and newly purchased sites in Mississippi, Dalton, and full expansion of Sandersville and Dalton. 3. Includes 60K of the purchased S21s; requires additional infrastructure to support ...

Bitcoin miner stock CleanSpark, Inc. (NASDAQ:CLSK) is of interest to investors now. The stock, up 14.66% in the past five days, has been boosted by favourable stock market news this week. Technical indicators reinforce a building bullish momentum.On price dynamics, CleanSpark is down 14.43% YTD. This should be interpreted as a correction for the stock as it has registered 172.22% gains in the past year. Simply put, the latest increases in CleanSpark are a continuation of last year’s gains.  CleanSpark is an ...

Cash and Cash Equivalents - Cash and cash equivalents increased to $48.458 million as of December 31, 2023, compared to $29.215 million as of September 30, 2023[24] - Cash and cash equivalents totaled $48.46 million as of December 31, 2023[62] - Cash balances in excess of FDIC limits were $36,484 and $28,965 as of December 31, 2023, and September 30, 2023, respectively[81] Bitcoin Holdings - Bitcoin holdings significantly increased to $126.951 million as of December 31, 2023, from $56.241 million as of September 30, 2023[24] - Bitcoin holdings measured at fair value were $126.95 million as of December 31, 2023[62] - Bitcoin custodian accounts totaled $126,951 and $56,241 as of December 31, 2023, and September 30, 2023, respectively, with no reported losses[81] - Bitcoin holdings of $126.95 million were classified as Level 1 assets under fair value hierarchy as of December 31, 2023[95] - As of December 31, 2023, the company held 3,002 bitcoins with a fair value of $126.95 million[146] - The company held approximately 3,002 bitcoins as of December 31, 2023, with a fair value of $127 million, based on a single bitcoin price of $42,290[193] Total Assets and Liabilities - Total current assets rose to $181.705 million as of December 31, 2023, up from $102.172 million as of September 30, 2023[24] - Total current assets as of December 31, 2023, were $181,705, with working capital of $139,312[180] - Total liabilities decreased to $52.170 million as of December 31, 2023, down from $84.351 million as of September 30, 2023[24] - Accounts payable and accrued liabilities decreased to $33.415 million as of December 31, 2023, from $65.577 million as of September 30, 2023[24] Property and Equipment - Property and equipment, net, increased to $637.481 million as of December 31, 2023, compared to $564.395 million as of September 30, 2023[24] - Property and equipment increased to $830.8 million as of December 31, 2023, up from $734.9 million as of September 30, 2023, primarily due to an increase in miners valued at $634.1 million[195] - The company placed $120.7 million of property and equipment into service during Q4 2023, including $114.0 million in miners[196] - Construction in progress for expanding mining operations in Georgia totaled $64.8 million as of December 31, 2023[195][198] Bitcoin Mining Revenue and Operations - Bitcoin mining revenue increased to $73.8 million in Q4 2023, up from $27.7 million in Q4 2022, representing a 166% year-over-year growth[29] - Total revenues for Q4 2023 reached $73.8 million, compared to $27.8 million in Q4 2022, a 165% increase[29] - Bitcoin mining revenue increased by 166% to $73.8 million in Q4 2023 compared to $27.7 million in Q4 2022, driven by a 32% increase in bitcoin mined (2,020 vs. 1,530) and a 102% increase in average bitcoin price ($36,535 vs. $18,129)[159] - The company's operating hashrate reached 10.0 EH/s as of December 31, 2023, representing 1.80% of the global hashrate, up from 6.2 EH/s and 2.26% in 2022[150] - Miner efficiency improved to 26.4 w/th in Q4 2023 from 31.7 w/th in Q4 2022, while the global hashrate nearly doubled to 558.4 EH/s from 274.2 EH/s[150] - The company mined approximately 15-17 bitcoin per day in Q4 2023, excluding transaction fees, representing 1.80% of global blockchain rewards[151] - Energy costs per bitcoin mined at owned facilities decreased to $12,808 in Q4 2023 from $13,047 in Q4 2022, while hosting fees per bitcoin increased to $22,621 from $13,565[154] - Total energy expense at owned facilities increased by 65% to $21.9 million in Q4 2023, representing 35.0% of bitcoin mining revenue, down from 71.8% in Q4 2022[155] - The company's total miner count increased by 39% to 88,500 as of December 31, 2023, compared to 63,700 in 2022[159] - Weighted average cost of mining one bitcoin increased to $14,308 in Q4 2023 from $13,221 in Q4 2022, representing 39.2% of average bitcoin mining revenue, down from 72.9%[157] - The company curtailed 15% of its mining fleet in Q4 2022 due to energy price spikes but had no significant curtailment in Q4 2023[156] Net Income and Earnings - Net income attributable to common shareholders was $25.3 million in Q4 2023, a significant improvement from a net loss of $29.0 million in Q4 2022[29] - Net income from continuing operations for the three months ended December 31, 2023, was $25.9 million, compared to a net loss of $29.0 million in the same period in 2022[48] - Income from continuing operations for Q4 2023 was $25.9 million, compared to a loss of $30.5 million in Q4 2022[86] - Basic and diluted income per share from continuing operations for Q4 2023 was $0.14, compared to a loss of $0.46 per share in Q4 2022[86] - Net income from continuing operations for Q4 2023 was $25,909, compared to a net loss of $30,488 in Q4 2022[173] - Non-GAAP adjusted EBITDA for Q4 2023 was $69,090, compared to a loss of $1,971 in Q4 2022[178] Stockholders' Equity and Share Issuance - Total stockholders' equity grew to $810.6 million as of December 31, 2023, up from $677.2 million as of September 30, 2023[36] - Additional paid-in capital increased to $1.11 billion as of December 31, 2023, up from $1.01 billion as of September 30, 2023[36] - Weighted average common shares outstanding (diluted) increased to 180.8 million in Q4 2023, compared to 66.4 million in Q4 2022, reflecting equity offerings[40] - Weighted-average common shares outstanding increased to 178.8 million in Q4 2023 from 66.4 million in Q4 2022[86] - The company issued 14,481,208 shares of common stock under its 2021 ATM Agreement, resulting in net proceeds of $41.344 million during the three months ended December 31, 2022[105] - As of December 31, 2023, the company had 10,025,740 shares available and authorized for issuance under its stock-based incentive compensation plan[110] - The company issued 12,457,651 shares under its 2024 ATM offering facility, resulting in net proceeds of approximately $122 million[134] Stock-Based Compensation - The company granted 65,000 stock options with a total fair value of $388,000 during the three months ended December 31, 2023[112] - The company recognized stock-based compensation expense of $8.141 million related to restricted stock units for the three months ended December 31, 2023[116] - Payroll expenses increased by 56% to $15.3 million in Q4 2023, driven by a 37% increase in employee headcount and a 69% increase in stock-based compensation[165] Depreciation and Amortization - Depreciation and amortization expenses increased to $29.8 million in Q4 2023, compared to $19.3 million in Q4 2022, due to expanded mining infrastructure[29] - Depreciation and amortization expense increased by $10,518 (54%) to $29,847 in Q4 2023, primarily due to increased mining equipment deployment[171] - Depreciation expense for Q4 2023 was $29.3 million, compared to $18.8 million in Q4 2022[195] - Amortization expense for intangible assets is projected to total $4.1 million over the next five years, with $1.5 million expected in 2024[202] Bitcoin Sales and Fair Value - The company reported a gain on fair value of bitcoin of $36.0 million in Q4 2023, compared to no such gain in Q4 2022[29] - Bitcoin sales generated $43.04 million in proceeds during the quarter ended December 31, 2023[62] - Bitcoin fair value gain for Q4 2023 is $36,041, driven by the adoption of ASC 350-60, which measures crypto assets at fair value[167] - Bitcoin is now measured at fair value each reporting period following adoption of ASC 350-60 in October 2023[90] - Bitcoin impairment expense was $83 in Q4 2022, with no impairment recognized in Q4 2023 due to the adoption of ASC 350-60[169] Operating and Investing Activities - Cash outflows from operating activities from continuing operations were $39.63 million for the three months ended December 31, 2023[62] - Operating activities used $39,626 in cash for Q4 2023, primarily due to bitcoin mining costs of $73,786[187] - Cash outflows from investing activities from continuing operations were $32.82 million for the three months ended December 31, 2023[48] - Investing activities used $32,818 in Q4 2023, mainly for miner payments ($48,858) and fixed asset purchases ($27,503)[188] - Financing activities generated $92,095 in Q4 2023, primarily from an underwritten offering of $99,336[189] Legal and Regulatory Risks - The company faces risks related to high volatility in the value attributable to its business and the rapidly changing regulatory and legal environment[10] - The company is dependent on continued growth in blockchain and bitcoin usage, and faces security and cybersecurity threats[10] - The company is defending against a class action lawsuit alleging material misstatements and omissions regarding its acquisition of ATL and bitcoin mining operations expansion[121] Mining Equipment and Infrastructure - Deposits on miners and mining equipment decreased to $25.048 million as of December 31, 2023, from $75.959 million as of September 30, 2023[24] - The company has a developed capacity of 230 MW across five data centers in Georgia, with an additional 150 MW under development in Sandersville, GA[54] - The company acquired two bitcoin mining facilities in Dalton, GA for $9.39 million in June 2023, adding 6,000 miners and 20 megawatts of power capacity[99] - The purchase price allocation for the Dalton acquisition included $1.33 million for buildings and $8.06 million for infrastructure[100] - The company entered into an agreement with Bitmain Technologies Delaware Limited to purchase up to 160,000 Bitmain S21 miners, with a net purchase price of $193.2 million for 60,000 miners and an option to purchase an additional 100,000 miners for $320 million[135][136] - The company's operating mining units were capable of producing over 10.0 exahash per second (EH/s) of computing power as of December 31, 2023, and increased to 12.5 EH/s by February 8, 2024[141] - The company owns approximately 146,000 miners as of December 31, 2023, with 88,500 in service and the remainder ready for installation in the Sandersville, GA expansion[142] - The company's miners have an average energy efficiency of 26.4 watts per terahash (w/th) as of December 31, 2023[143] - The company has $37.044 million in open purchase commitments for bitcoin mining equipment as of December 31, 2023[117] - Outstanding deposits for miners and mining equipment decreased to $25.0 million as of December 31, 2023, from $76.0 million as of September 30, 2023[200] Discontinued Operations - Data center services were discontinued as of September 30, 2023, with no external customer services provided thereafter[69] - The company reclassified its energy operations as discontinued operations to focus on bitcoin mining, selling most related assets[98][101] - Discontinued operations reported total current assets held for sale of $384 million as of December 31, 2023, compared to $445 million as of September 30, 2023[102] - Net income attributable to common shareholders from discontinued operations was $1.457 billion for the three months ended December 31, 2022[102] Other Financial Metrics - Cost of revenues (excluding depreciation and amortization) rose to $28.9 million in Q4 2023, up from $20.4 million in Q4 2022, reflecting increased mining operations[29] - Interest expense decreased by $343 to $546 in Q4 2023 due to lower average debt balances[172] - Operating lease costs for Q4 2023 were $46,000, down from $113,000 in Q4 2022[203] - Cash outflows for operating leases in Q4 2023 were $60,000, compared to $34,000 in Q4 2022[203] - Intangible assets totaled $10.3 million as of December 31, 2023, with net intangible assets of $4.1 million after amortization[201] - The company held $0.05 in USDC, a digital currency pegged 1:1 to the U.S. dollar, as of December 31, 2023[146] - Restricted cash of $1,716 was held as collateral for utility bonds as of December 31, 2023[78] - Inventory balances for bitcoin mining supplies were $732 and $809 as of December 31, 2023, and September 30, 2023, respectively[73] - Total contractual future payments as of December 31, 2023, amount to $60.815 million, including $38.754 million due in 2024[118] Revenue Recognition and Mining Pool - Revenue from Bitcoin mining is recognized based on the Full-Pay-Per-Share (FPPS) payout method, with mining pool fees at 0.19% of total daily bitcoin mined[65] - The company's bitcoin mining revenue is calculated daily from midnight-to-midnight UTC, with earnings credited at 1:00 AM UTC[68] - The company has one mining pool operator, Foundry Digital, which represented 100% of revenue for the three months ended December 31, 2023 and 2022[126] Internal Controls and Financial Reporting - The company is working to remediate a material weakness identified in its internal control over financial reporting[10] - The company early adopted ASC 350-60, resulting in a $4.18 million cumulative-effect adjustment to bitcoin holdings as of October 1, 2023[58] Acquisitions and Expansion - The company acquired land and assets in Dalton, GA for a combined purchase price of approximately $3.5 million with an additional $3.4 million of expected build-out costs[130] - The company entered into an agreement to acquire assets in three separate locations within Mississippi for a combined purchase price of $19.8 million[131]

Company ventures into Mississippi with acquisition of three turnkey operations that are expected to generate operating hashrate of 2.4 EH/s Expands in Dalton, GA, with acquisition of third site and expansion of existing Dalton facilities to bring total expected hashrate there to 2.4 EH/s LAS VEGAS, Feb. 6, 2024 /PRNewswire/ -- CleanSpark Inc. (Nasdaq: CLSK), America's Bitcoin Miner™, today announced it has entered into definitive agreements to acquire three turnkey bitcoin mining facilities in Mississippi f ...

Announces expansion of Dalton, GA; site is expected to operate at 1.6 EH/s once complete LAS VEGAS, Feb. 2, 2024 /PRNewswire/ -- CleanSpark Inc. (Nasdaq: CLSK), America's Bitcoin Miner™, today released its unaudited bitcoin mining and operations update for the month ending January 31, 2024. "I'm excited to announce that we expect energization to begin at our Sandersville expansion next week, with approximately 4.6 EH/s of machines fully hashing by mid-month," said Zach Bradford, CEO. "I'm also pleased to an ...

The most recent trading session ended with CleanSpark (CLSK) standing at $8.42, reflecting a -1.29% shift from the previouse trading day's closing. The stock fell short of the S&P 500, which registered a loss of 0.06% for the day. Meanwhile, the Dow gained 0.35%, and the Nasdaq, a tech-heavy index, lost 0.76%.The company's shares have seen a decrease of 22.67% over the last month, not keeping up with the Finance sector's loss of 1.67% and the S&P 500's gain of 3.36%.Investors will be eagerly watching for th ...

CleanSpark (CLSK) ended the recent trading session at $7.09, demonstrating a -0.14% swing from the preceding day's closing price. This change lagged the S&P 500's daily gain of 0.29%. On the other hand, the Dow registered a loss of 0.25%, and the technology-centric Nasdaq increased by 0.43%.Shares of the company have depreciated by 40.29% over the course of the past month, underperforming the Finance sector's loss of 2.71% and the S&P 500's gain of 2.08%.Investors will be eagerly watching for the performanc ...

CleanSpark, Inc. (NASDAQ:CLSK) Q4 2023 Earnings Conference Call November 30, 2023 4:30 PM ET Company Participants Isaac Holyoak - Chief Communications Officer Zach Bradford - Chief Executive Officer Gary Vecchiarelli - Chief Financial Officer Conference Call Participants Michael Colonnese - H.C. Wainwright Joshua Siegler - Cantor Fitzgerald Gregory Lewis - BTIG Brian Dobson - Chardan Capital Markets Operator Good afternoon. My name is Krista, and I will be your conference operator today. At this time, I w ...

Bitcoin Mining Operations - Bitcoin mining has become the company's principal revenue-generating business activity, with plans to acquire additional facilities, equipment, and infrastructure capacity to expand operations[411] - The company acquired two bitcoin mining facilities in Dalton, GA for $9,389 thousand, with a combined capacity of 20 megawatts and approximately 6,000 miners[469] - As of September 30, 2023, the company held 2,243 bitcoin, compared to 595 bitcoin in 2022[512] - The company's total bitcoin balance at the end of fiscal year 2023 was $56,241 thousand, compared to $11,147 thousand in 2022[493] - The company's outstanding deposits for miners and mining equipment as of September 30, 2023 totaled $75,959 thousand, compared to $12,497 thousand in 2022[506] - The company recognized net bitcoin mining revenue of approximately $168.1 million for the year ended September 30, 2023[149] - The company's bitcoin holdings as of September 30, 2023, amounted to approximately $56.2 million, classified as current assets[150] - The company operates five data centers in Georgia with a total developed capacity of 230 MW and is developing an additional 150 MW in Sandersville, GA[69] - The company hosts 50 MW of capacity through a partner in Massena, NY[69] - The global network hashrate is increasing, requiring the company to acquire new miners to maintain competitiveness[48] Lease Obligations and Terms - The company's operating leases are primarily for office spaces and finance leases related to equipment used at its data center[407] - The company's weighted-average remaining lease term for operating leases is 3.8 years, with a weighted-average discount rate of 5.40%[409] - The company's weighted-average remaining lease term for finance leases is 0.9 years, with a weighted-average discount rate of 5.50%[409] - The company's total lease obligations for fiscal years 2024 to 2028 amount to $4,603 thousand[405] - The company's operating cash outflows from operating leases increased from $131 thousand in September 2022 to $274 thousand in September 2023[409] - The company's financing cash outflows from finance leases decreased from $519 thousand in September 2022 to $301 thousand in September 2023[409] - The company's present value of lease liabilities as of September 30, 2023 was $700 for operating leases and $140 for finance leases[472] - The company entered into a 65-month lease for 4,552 rentable square feet at an initial base rent of $11, increasing 3% annually[63] Financial Performance and Losses - The company's loss from continuing operations attributable to common shareholders increased from $40,425 thousand in September 2022 to $132,160 thousand in September 2023[439] - Bitcoin impairment loss for September 30, 2023 was $7,163 thousand, compared to $12,210 thousand in 2022[443] - Total impairment loss for September 30, 2023 was $7,163 thousand, compared to $24,258 thousand in 2022[443] - The company's goodwill impairment in fiscal 2022 was due to a sustained downturn in the price of bitcoin[445] - The company's total revenues for the twelve months ended September 30, 2023 were $158, compared to $9,667 for the same period in 2022[468] - The company's net loss attributable to common shareholders for the twelve months ended September 30, 2023 was $(4,429), compared to $(17,237) for the same period in 2022[468] - The company's loss from continuing operations before provision for income taxes for the year ended September 30, 2023 was $(131,303), compared to $(40,089) for the same period in 2022[484] - The company's effective income tax rate for the period ended September 30, 2023 was (0.65%), compared to 0% for the same period in 2022[484] Investments and Assets - The company's derivative investment asset and investment in debt security totaled $3,566 thousand as of September 30, 2022[432] - The company's derivative investment asset as of September 30, 2023 was $2,697 thousand, classified as Level 3[447] - The company's investment in debt security as of September 30, 2023 was $726 thousand[447] - The company's total investments as of September 30, 2023 were $3,423, compared to $3,566 as of September 30, 2022[494] - Total fair value of investment in Derivative assets as of September 30, 2023, is $2,697, compared to $2,956 in 2022[498] - The company purchased 1,000 shares of Series B Preferred Stock of ILAL for $500, accruing at 12% per annum[496] - The company recognized an unrealized gain or loss on the fair valuation of the embedded derivative feature of ILAL preferred stock as income in the Consolidated Statements of Operations and Comprehensive Loss[514] Property and Equipment - The company purchased the College Park Property for $4,712, which includes a 41,387 square feet office/warehouse building[45] - The company purchased 16.35 acres of land in Sandersville, GA, for $1,400, reclassified as a finance lease[505] - The company placed in service property and equipment worth $231,135 in 2023, including $175,558 in miners and mining equipment[518] - The company purchased the Eastern Property for $4,100, with an additional $560 in building improvements, expected to be completed in Q1 2024[504] - Depreciation expense for the year ended September 30, 2023, was $118,615, up from $47,082 in 2022[502] - Net intangible assets as of September 30, 2023, were $4,603, down from $6,485 in 2022[520] Risks and Legal Issues - The company does not maintain its own insurance for bitcoin holdings, relying on Coinbase's insurance, which may be insufficient[26] - The company faces risks from technological obsolescence and supply chain disruptions for cryptocurrency hardware[47] - The company may need to raise additional capital through public offerings, which could dilute existing stockholders' interests[37] - The company is vulnerable to legal actions due to potential defects in legacy energy products[51] - The company's stock price may be adversely affected by negative or discontinued analyst coverage[38] - The company is subject to a shareholder class action lawsuit, which may result in material adverse effects on its business and operations[59] - The company's stock price is increasingly correlated with bitcoin trading prices due to its expanding bitcoin mining business[58] - The company may incur additional compliance costs if subjected to CFTC regulations regarding bitcoin transactions[53] Compliance and Internal Controls - The company incurred significant costs due to compliance with public company regulations, including Sarbanes-Oxley Act Section 404 requirements[40] - The company revised its disclosures in response to SEC staff comments on revenue recognition, bitcoin impairment, and clean energy usage[74] - The company's internal control over financial reporting was deemed ineffective as of September 30, 2023, due to a material weakness[152] - The company recorded a valuation allowance of $54,608 for deferred tax assets as of September 30, 2023, up from $28,756 in 2022[528] Discontinued Operations - Cash provided by discontinued operations for the fiscal year ended September 30, 2023 was based on winding down operations, including receipt of payments from accounts receivable, payments of accounts payable, and cash generated from the sale of assets[156] - Cash used in the operating activities of the energy segment (discontinued operations) for the year ended September 30, 2022 was $6,362[156] Bitcoin Market and Halving - Bitcoin mining reward halved from 12.5 to 6.25 bitcoin on May 11, 2020, with the next halving estimated in April 2024[2] - Currently, more than 19 million bitcoin are in circulation, with a total cap of 21 million expected around 2140[2] Acquisitions and Financing - The total purchase price for the Mawson Property acquisition was $33,821, including $13,500 in cash, $4,803 in common stock, and $6,500 in seller financing[478] - The company's total consideration for the Property and miners acquisition was $23,892, including $19,772 in cash, $1,962 in financing, and $2,158 in mortgage assumption[490] - The company borrowed a net $1,937 against the equity of the real property purchased in April 2023, with a two-year term and 10% interest rate[476] Accounts Receivable and Payable - The company's accounts receivable, net, decreased from $27 thousand in September 2022 to $5 thousand in September 2023[433]