10-K: CleanSpark Reports Fiscal Year 2024 Results, Highlights Growth in Bitcoin Mining Operations

CleanSpark's 2024 annual report reveals a 125% increase in bitcoin mining revenue, driven by higher bitcoin prices and increased mining capacity.

Summary

• CleanSpark is a bitcoin mining company that owns and operates data centers across the United States.
• As of October 31, 2024, the company has a developed capacity of 676 megawatts supporting 31.5 exahash per second of bitcoin mining computational power.
• The company is developing an additional 211.5 MW, expected to support approximately 50 EH/s of mining capacity.
• In fiscal year 2024, CleanSpark mined 7,092 bitcoins, a 3% increase over the 6,903 bitcoins mined in fiscal year 2023.
• The company's hashrate capacity was approximately 27.6 EH/s with a fleetwide efficiency of 21.94 joules per terahash as of September 30, 2024.
• The company's Georgia facilities have a developed data center infrastructure backed by approximately 483 MW, supporting an operational hashrate of 20.6 EH/s.
• Mississippi facilities have a developed data center infrastructure backed by approximately 44 MW, supporting an operational hashrate of 2.0 EH/s.
• Tennessee facilities have a developed data center infrastructure backed by 79 MW, supporting an operational hashrate of 3.5 EH/s.
• Two mining locations in Wyoming are under construction and are expected to be operational between the first and second quarter of fiscal year 2025 with approximately 75 MW of data center infrastructure power under contract.
• The company's bitcoin mining revenue increased by 125% to $378.968 million in fiscal year 2024, compared to $168.121 million in fiscal year 2023.
• The average cost to mine one bitcoin in owned facilities was $39,936, while the average revenue per bitcoin mined was $53,708.
• The company reported a net loss from continuing operations of $145.777 million for the fiscal year ended September 30, 2024.

Sentiment

Score: 5

Explanation: The document presents a mixed sentiment. While the company shows strong revenue growth and increased mining capacity, it also reports a significant net loss and faces various risks and challenges. The material weaknesses in internal control over financial reporting are also a concern.

Positives

• Bitcoin mining revenue increased by 125% year-over-year.
• The company increased its bitcoin production by 3% year-over-year.
• The company is expanding its infrastructure with additional capacity under development.
• The company has a high operational hashrate and fleet efficiency.
• The company is strategically using bitcoin as a store of value and for funding growth.

Negatives

• The company reported a net loss from continuing operations of $145.777 million for the fiscal year ended September 30, 2024.
• The company's mining costs are significantly impacted by energy prices.
• The company is exposed to the volatility of bitcoin prices.
• The company relies on a third-party mining pool service provider for revenue payouts.
• The company has identified material weaknesses in its internal control over financial reporting.

Risks

• The company's profitability is highly dependent on the price of bitcoin, which is volatile.
• The company has a limited operating history and a history of operating losses.
• The company faces competition in the bitcoin mining industry.
• The company relies on a limited number of suppliers for mining equipment.
• The company is subject to potential regulatory changes and enforcement actions.
• The company's bitcoin holdings are subject to loss, theft, or restriction on access.
• The company's operations require significant electrical power and are subject to energy price fluctuations.
• The company may require additional financing in the future to sustain and expand operations.
• The company is subject to risks associated with strategic acquisitions.
• The company is subject to risks associated with cybersecurity threats.

Future Outlook

The company expects to continue increasing its computing power through 2024 and beyond as it expands its infrastructure and pursues strategic acquisitions. The company also plans to move all operational capacity to wholly owned sites to maximize operational efficiency.

Management Comments

• The company cultivates trust and transparency among its employees, the communities it operates in, and the people around the world who depend on bitcoin.
• Decisions to hold or sell bitcoins are currently determined by management by analyzing forecasts and monitoring the market in real time.

Industry Context

The document highlights the competitive nature of the bitcoin mining industry, with a focus on the company's competitive advantages, including its energy background, fleet efficiency, and operational expertise. The document also notes the shift of bitcoin mining from China to North America after China banned bitcoin mining in May 2021.

Comparison to Industry Standards

• CleanSpark's hashrate of 27.6 EH/s represents approximately 4.40% of the total global hashrate as of September 30, 2024.
• The company's main competitors include publicly traded bitcoin miners such as MARA Holdings, Inc., Riot Platforms, Inc., Core Scientific, Inc., Bitfarms Ltd., Iris Energy Limited, Cipher Mining Inc., and Terawulf Inc.
• The company's fleetwide efficiency of 21.94 joules per terahash is a key competitive advantage.
• The company's average cost to mine one bitcoin in owned facilities was $39,936, which should be compared to the average cost of its competitors to assess its efficiency.
• The company's average revenue per bitcoin mined was $53,708, which should be compared to the average revenue of its competitors to assess its profitability.

Legal Proceedings

• The company is currently the subject of a shareholder class action, and may be subject to shareholder litigation in the future.
• The company is subject to other legal proceedings and claims that have arisen in the ordinary course of business.

Stakeholder Impact

• Shareholders are exposed to the volatility of bitcoin prices and the company's operational risks.
• Employees are subject to the company's stock-based compensation plans and are expected to adhere to the company's insider trading policy.
• Customers are primarily the mining pool operator, which is the sole customer for the company's mining operations.
• Suppliers are primarily manufacturers of mining equipment and utility providers.

Next Steps

• The company plans to continue expanding its infrastructure at its owned sites in Wyoming, Tennessee, and Mississippi.
• The company plans to seek strategic acquisition targets.
• The company plans to move all operational capacity to wholly owned sites to maximize operational efficiency.

Key Dates

Keywords

bitcoin mining, cryptocurrency, data centers, hashrate, energy, blockchain, mining equipment, financial results, infrastructure, digital assets