10-K: CleanSpark's Strategic Shift to AI/HPC Fuels Record Growth

CleanSpark reports significant revenue and net income growth in fiscal year 2025, driven by bitcoin mining expansion and a strategic pivot into AI and high-performance computing.

Summary

• CleanSpark achieved a net income of $364,464 thousand for the fiscal year ended September 30, 2025, a substantial turnaround from a net loss of $145,777 thousand in the prior year.
• Bitcoin mining revenue, net, increased by 102% to $766,314 thousand in fiscal year 2025, up from $378,968 thousand in fiscal year 2024.
• The company mined 7,873 bitcoins (net of mining pool fees) in fiscal year 2025, an 11% decrease from 7,092 bitcoins in fiscal year 2024, primarily due to the April 2024 bitcoin halving event.
• The average bitcoin price during fiscal year 2025 was $97,337, significantly higher than $53,434 in fiscal year 2024.
• Operational hashrate averaged 45.6 exahash per second (EH/s) and peaked at 50 EH/s as of September 30, 2025, a notable increase from 27.6 EH/s in fiscal year 2024.
• The number of miners in service grew by 28% to 241,934 as of September 30, 2025, compared to 188,500 in the prior year.
• Total contracted power capacity reached approximately 1,027 megawatts (MW) across its data centers in Georgia, Tennessee, Mississippi, and Wyoming.
• CleanSpark is strategically diversifying into AI and high-performance computing (HPC) hosting and leasing, including the acquisition of 271 acres in Austin County, Texas, with 285 MW of power capacity in October 2025.
• An institutional-grade in-house trading function was launched in April 2025 to manage bitcoin holdings, including the use of bitcoin-linked derivative contracts for hedging and liquidity.
• The direct energy cost to mine one bitcoin in owned facilities increased to $42,956 in fiscal year 2025 from $21,401 in fiscal year 2024.
• Total assets stood at $3,183,631 thousand and working capital at $1,004,276 thousand as of September 30, 2025.
• The company issued $650,000 thousand in 0% convertible senior notes due 2030 in December 2024 and $1,150,000 thousand in 0% convertible senior notes due 2032 in November 2025 (subsequent event).
• All four material weaknesses in internal control over financial reporting identified in fiscal year 2024 were successfully remediated as of September 30, 2025.

Sentiment

Score: 8

Explanation: The company demonstrated a strong financial turnaround with significant net income and revenue growth, coupled with aggressive expansion in bitcoin mining and a strategic pivot into the high-growth AI/HPC sector. Operational efficiencies and proactive treasury management are positive indicators. While challenges like increased costs and the bitcoin halving impact exist, the overall strategic direction and financial performance are very positive.

Positives

• Achieved a significant net income of $364,464 thousand in fiscal year 2025, reversing a net loss of $145,777 thousand in the prior year.
• Bitcoin mining revenue increased by 102% to $766,314 thousand in fiscal year 2025, demonstrating strong top-line growth.
• Successfully expanded operational hashrate to an average of 45.6 EH/s, peaking at 50 EH/s, showcasing scalability and resilience despite the bitcoin halving.
• Increased the number of miners in service by 28% to 241,934, contributing to higher computing power.
• Strategic diversification into the high-growth AI and HPC hosting market, including a significant land acquisition in Texas with 285 MW power capacity, positions the company for future revenue streams.
• Launched an institutional-grade in-house bitcoin trading function to optimize liquidity and manage bitcoin holdings, including derivative contracts for hedging.
• Maintained a strong balance sheet with total assets of $3,183,631 thousand and robust working capital of $1,004,276 thousand.
• Reported a substantial gain on fair value of bitcoin, net, of $425,646 thousand in fiscal year 2025.
• Successfully remediated all four material weaknesses in internal control over financial reporting identified in the prior fiscal year, indicating improved operational maturity.
• Secured new generation miners through agreements with Bitmain, allowing payment in bitcoin at negotiated premiums and embedded repurchase options, strengthening the infrastructure growth pipeline.

Negatives

• Bitcoin mined decreased by 11% to 7,873 bitcoins in fiscal year 2025, primarily due to the April 2024 halving event which cut per-block rewards by 50%.
• The direct energy cost to mine one bitcoin in owned facilities increased to $42,956 in fiscal year 2025 from $21,401 in fiscal year 2024, impacting profitability per bitcoin.
• Average power prices increased to $0.057/kWh in fiscal year 2025 from $0.046/kWh in fiscal year 2024, contributing to higher operating costs.
• Payroll expenses increased by 41% to $104,379 thousand and general and administrative expenses increased by 74% to $52,625 thousand, reflecting significant growth-related costs.
• Depreciation and amortization expense increased by 125% to $348,335 thousand, largely due to increased miners and a reduction in the estimated useful life of miners from five to three years.
• The company faces a potential tariff liability of approximately $185,000 thousand (excluding interest) from U.S. Customs and Border Protection (CBP) on previously imported miners, which it is vigorously contesting.
• Cash and cash equivalents decreased to $42,966 thousand as of September 30, 2025, from $121,222 thousand in the prior year.
• The company has a history of cumulative net losses totaling $125,894 thousand from inception through September 30, 2025.
• Increased indebtedness with $650,000 thousand in 2030 Convertible Notes and $1,150,000 thousand in 2032 Convertible Senior Notes (subsequent event).

Risks

• Volatile and unpredictable cycles in the emerging and evolving bitcoin mining, data center, and AI/HPC industries.
• Reliance on the management team and potential failure to properly manage growth, including hiring and retaining skilled personnel.
• Expansion into AI and HPC services may divert resources from core bitcoin mining, limit power capacity for mining, and introduce operational complexity.
• Difficulties in timely completing strategic growth initiatives or staying within anticipated cost estimates, especially for AI/HPC infrastructure development.
• Future strategic acquisitions could disrupt business, cause dilution to stockholders, reduce financial resources, and harm operating results.
• Need for additional financing in the future to sustain and expand operations, with no assurance of obtaining it on acceptable terms.
• Current dependence on the volatile price of bitcoin to achieve profitability.
• Limited operating history and a history of operating losses and negative cash flow, with no assurance of consistent profitability.
• Reliance on a single third-party mining pool service provider (Foundry Digital) for mining revenue payouts, with terms subject to change.
• Bitcoins held by the company are not subject to FDIC or SIPC protections and are exposed to loss, theft, or restriction on access.
• Potential for malicious actors or botnets to obtain control of more than 50% of the processing power on the bitcoin network.
• Loss or destruction of private keys required to access bitcoins may be irreversible.
• Digital asset exchanges and custodians (like Coinbase) are relatively new and largely unregulated, exposing the company to fraud and failure risks.
• The possibility that mining costs may exceed mining revenues due to increasing expenses or decreasing bitcoin prices.
• Damage to properties from natural disasters or other events, with potential for inadequate insurance coverage.
• Need for significant electrical power and risks associated with power outages, restrictions, or increased costs.
• Increased scrutiny and changing expectations from stakeholders regarding Environmental, Social, and Governance (ESG) practices and climate change.
• The possibility that large holders of bitcoin may sell large amounts, creating downward pressure on the market price.
• Uncertainty in financial accounting for digital assets, including bitcoin, and potential for future accounting requirements to impact reported results.
• Limited insurance protection for bitcoin holdings, exposing the company to losses not covered by insurance.
• Technological obsolescence of mining equipment, vulnerability of the global supply chain for hardware, and potential trade restrictions or difficulty in obtaining new hardware.
• Risks associated with the bitcoin treasury function, including speculative trading activities, dependence on financial intermediaries, and counterparty insolvency risks.
• Potential changes in laws and regulations applicable to bitcoin mining, bitcoin itself, or interpretations thereof, including banking and securities regulations.
• Risk that the SEC or another regulatory body considers bitcoin to be a security, leading to significant compliance requirements.
• Changing environmental regulation and public energy policy, potentially increasing costs or restricting operations.
• Failure to qualify for certain state government tax incentives or comply with local tax regulations.
• Future developments regarding the treatment of digital assets for U.S. federal income and applicable state, local, and non-U.S. tax purposes.
• Interactions with the bitcoin network may inadvertently expose the company to Specially Designated Nationals (SDN) or blocked persons.
• U.S. political and economic environment, including potential regulatory and policy changes by the current presidential administration (e.g., strategic bitcoin reserve, CLARITY Act, stablecoin regulation, tariffs), could materially impact operations.
• Regulatory developments surrounding AI and HPC may negatively impact expansion efforts into these sectors.
• The price of common stock may be volatile and fluctuate widely, potentially resulting in substantial losses for investors.
• Future issuance of preferred stock may adversely affect holders of common stock by reducing voting rights, liquidation preferences, or causing dilution.
• Ongoing shareholder class action and potential future litigation, which can be expensive to defend and divert management attention.
• Financing strategic growth primarily by issuing new shares of common stock and convertible debt, which dilutes current stockholders' ownership interests.
• Provisions in Nevada Revised Statutes and company bylaws could make it difficult for investors to bring legal actions against directors or officers or require the company to pay their expenses.
• Capped call transactions may affect the value of the 2030 Notes and the market price of common stock.
• Counterparty risk with respect to the capped call transactions, as option counterparties are financial institutions whose default or insolvency could harm the company.
• The issuance, conversion, or exercise of convertible notes and other convertible securities, options, and warrants will dilute stockholders' ownership.
• The accounting treatment for convertible debt securities may materially impact reported financial results, including higher non-cash interest expense and potential reclassification as a current liability.

Future Outlook

CleanSpark expects to continue increasing its computing power through calendar year 2025 and beyond by expanding infrastructure at its owned sites in Tennessee, Georgia, Mississippi, and Wyoming, while also pursuing regional expansion opportunities and evaluating strategic acquisition targets. The company is actively developing plans for additional capacity in these states and other domestic regions. It intends to continue its bitcoin mining operations while reallocating resources, including power capacity and capital investment, toward supporting its new AI and HPC initiatives. CleanSpark anticipates funding a portion of these expenditures through the strategic use of bitcoin holdings and Digital Asset Management activities, potentially supplementing these sources with external financing depending on market conditions and project timing. Management believes that existing cash, bitcoin, and cash generated from operations and future financing activities will be sufficient to meet anticipated cash requirements for the next 12 months and the reasonably foreseeable future until consistent profitability is achieved. The company does not anticipate paying any cash dividends in the foreseeable future, intending to retain future earnings to finance business expansion. It also plans to continue its Spot+ and yield strategies at measured levels relative to its total bitcoin balance and operating requirements.

Management Comments

• "We intend to continue our growth in these regions and are actively developing plans for additional capacity in these states and other domestic regions."
• "We have no intention to mine, purchase or hold any crypto assets other than bitcoin at this time or in the foreseeable future, and we did not hold any other crypto asset as of September 30, 2025."
• "We design our infrastructure to efficiently, profitably and responsibly secure and support both bitcoin mining and AI and HPC workloads."
• "We expect to continue increasing our computing power through calendar year 2025 and beyond as we expand infrastructure at our owned sites in Tennessee and across our portfolio of data centers in Georgia, Mississippi, and Wyoming, while also pursuing regional expansion opportunities and evaluating strategic acquisition targets."
• "Despite the halving, we nearly matched our prior-year production by significantly expanding our operational footprint, demonstrating the scalability and resilience of our mining strategy."
• "This diversification strategy reflects our commitment to leveraging our expertise in energy management, data center operations and large-scale computing infrastructure to address rapidly growing demand in AI and HPC markets."
• "We believe this transaction positions us to deliver scalable, resilient, and energy-efficient capacity to meet accelerating demand from AI, cloud, and enterprise workloads." (Regarding Texas acquisition)
• "The partnership is intended to enable us to focus on our core strengths in power and infrastructure while Submer delivers specialized cooling and deployment capabilities to support next-generation AI infrastructure at gigawatt scale." (Regarding Submer partnership)
• "We believe these arrangements strengthen our infrastructure growth pipeline, enhance optionality in treasury management, and reinforce the depth of our strategic supplier relationships." (Regarding Bitmain agreements)
• "We believe our principal competitive advantages include our energy background, and the efficiency of our mining fleet and our operational expertise in managing uptime of our owned and operated facilities."
• "We are committed to maintaining a proactive and adaptive approach to regulatory compliance."
• "Management views DAM activities as an integrated component of its treasury strategy and liquidity management, rather than as speculative trading."
• "Based on our current plans and business conditions, we believe that existing cash and cash equivalents and bitcoin, together with cash generated from operations and our future investing and financing activities, will be sufficient to satisfy our anticipated cash requirements for the next 12 months and for the reasonably foreseeable future until we reach consistent profitability."

Industry Context

The bitcoin mining industry is highly competitive and global, having seen a significant shift of operations to North America following China's ban in 2021. The recent bitcoin halving event in April 2024 significantly reduced block rewards, intensifying the need for miners to increase hashrate and operational efficiency to maintain profitability. Concurrently, there is a rapidly growing demand for high-performance computing (HPC) and AI data centers, driven by the increasing electricity requirements of AI workloads. This trend presents a strategic diversification opportunity for companies with expertise in energy management and large-scale computing infrastructure. The regulatory landscape for digital assets, AI, and HPC is evolving rapidly, with increased scrutiny and potential new legislation, such as the CLARITY Act and stablecoin regulations, alongside ongoing concerns about energy consumption. Global economic conditions, including inflation and geopolitical events, continue to impact energy prices and the supply chain for mining equipment.

Comparison to Industry Standards

• CleanSpark's average operational hashrate of 45.6 EH/s (4.30% of global hashrate) positions it as a significant player among publicly traded bitcoin miners.
• The company's average operating energy efficiency of 16.7 W/TH is a key competitive advantage, indicating a more efficient mining fleet compared to some industry peers.
• CleanSpark competes with major publicly traded bitcoin miners such as Marathon Digital Holdings, Inc. (MARA), Riot Platforms, Inc. (RIOT), Core Scientific, Inc., Bitfarms Ltd. (BITF), IREN Limited, Cipher Mining Inc. (CIFR), and TeraWulf Inc. (WULF).
• In the emerging AI and HPC hosting market, CleanSpark faces competition from established data center operators and infrastructure providers like Equinix, Inc., Digital Realty Trust, Inc., and CoreWeave, Inc., which often possess greater capital resources and long-term power supply commitments.
• The company's strategy to leverage its energy background and operational expertise is a direct response to the competitive pressures and high energy demands characteristic of both the bitcoin mining and AI/HPC sectors.

Management Changes

Corporate Governance

Legal Proceedings

• **Hasthantra v. CleanSpark, Inc. et al.**: A shareholder class action filed on January 20, 2021, alleging material misstatements and omissions related to the acquisition of ATL Data Centers LLC and anticipated bitcoin mining expansion. The court granted Plaintiffs' motion for class certification on September 24, 2025. The company believes the claims are without merit and intends to defend vigorously, but is currently unable to estimate potential losses.
• **Consolidated Smith Derivative Actions**: Four shareholder derivative actions filed between February 21, 2023, and March 8, 2023, against current and former officers and directors, asserting breach of fiduciary duty, unjust enrichment, and corporate waste. A Special Litigation Committee (SLC) was formed to investigate, and the case was stayed through November 30, 2024. An evidentiary hearing on the SLC's findings concluded on November 5, 2024. The company believes the claims are without merit and intends to defend vigorously, but is currently unable to estimate potential losses.
• **U.S. importation tariffs**: On or about May 27, 2025, the company began receiving invoices from U.S. Customs and Border Protection (CBP) asserting Chinese origin import tariffs on certain miners imported from April 2024 through June 2024. The total potential tariff liability could rise to approximately $185,000 thousand, not including statutory interest. The company believes the CBP allegation is without merit and intends to defend vigorously; no provision was recorded as of September 30, 2025, as a future cash outflow is not deemed probable.

Related Party Transactions

• Indemnification agreement with S. Matthew Schultz (Chairman and Chief Executive Officer) and the S M Schultz Irrevocable Trust, dated November 24, 2025, regarding lost share certificates.
• Employment agreements with S. Matthew Schultz, Gary A. Vecchiarelli, Scott E. Garrison, and Taylor Monnig, dated September 4, 2025.
• Stock-based awards granted to certain employees and executives as a significant portion of payroll-related costs, including restricted stock units to senior leadership and board members.

Stakeholder Impact

• **Shareholders**: Potential for dilution from ongoing equity and convertible debt offerings. Share price volatility is highly correlated to bitcoin prices. Exposure to legal proceedings (class action, derivative suits) and potential tariff liabilities could impact shareholder value. Positive impact from strong financial performance and strategic growth into new markets.
• **Employees**: Increased headcount and generous compensation, including equity incentive plans, reflect company growth. Impact of CEO severance agreement and granting of restricted stock units to all employees for contributions.
• **Customers**: The company's sole customer for bitcoin mining revenue is a third-party mining pool operator (Foundry Digital), creating concentration risk. New customer relationships are being developed for AI and HPC hosting services.
• **Suppliers**: Reliance on a limited number of ASIC manufacturers (e.g., Bitmain) creates supply chain risk. Potential impact of U.S. import tariffs on mining equipment costs and availability.
• **Creditors**: Increased indebtedness from convertible notes and lines of credit, with bitcoin pledged as collateral for some loans, exposing the company to counterparty risk and potential margin calls if bitcoin value declines.
• **Communities**: Company's efforts to stabilize energy usage and work with utilities to reduce power rates for residential purchasers. Potential for community opposition due to noise pollution from large-scale data center operations.

Next Steps

• Continue increasing computing power through calendar year 2025 and beyond by expanding infrastructure at owned sites.
• Actively develop plans for additional capacity in Georgia, Tennessee, Mississippi, Wyoming, and other domestic regions.
• Evaluate portfolio and pipeline of potential new developments and expansions for maximum return on investment, including bitcoin mining, AI and HPC hosting and leasing.
• Complete a definitive agreement to fully establish a partnership with Submer Technologies for AI center design and construction.
• Continue to integrate in-house trading function strategies into regular treasury management activities, including bitcoin-linked derivative contracts.
• Monitor tariff developments closely and utilize strategies such as bonded-warehouse staging or sourcing from alternative manufacturing locations to mitigate potential impacts.
• Monitor existing and pending climate change legislation, regulation, and international treaties or accords for material effects on the business.
• Continue to identify, hire, motivate, and retain qualified managerial personnel, including additional senior members of management.
• Evaluate emerging technologies like AI, machine learning, and generative AI for incorporation into the business.
• Monitor legislative and regulatory developments in the HPC, AI, and bitcoin mining sectors.
• File the definitive proxy statement to stockholders in connection with the 2025 Annual Meeting of Stockholders within 120 days after the end of the fiscal year.
• Continue to evaluate the impact of recently issued and proposed accounting pronouncements (ASU 2025-07, 2025-06, 2025-03, 2025-04, 2024-03, 2024-04, 2023-09) on its consolidated financial statements.
• Defend vigorously against the U.S. Customs and Border Protection (CBP) allegations regarding Chinese origin import tariffs on miners.
• Continue to defend against the shareholder class action (Hasthantra v. CleanSpark, Inc. et al.) and the Consolidated Smith Derivative Actions.
• Consider further developing specific cybersecurity oversight functions and protocols as cyber threats evolve and the cybersecurity program matures.

Key Dates

Recommendation

CleanSpark's fiscal year 2025 results demonstrate a remarkable financial turnaround, moving from a significant net loss to substantial net income, driven by robust bitcoin mining revenue growth and operational expansion. The company's aggressive strategic pivot into the high-demand AI and HPC data center market, supported by major land acquisitions and partnerships, positions it for long-term diversification and enhanced revenue streams beyond bitcoin mining. Improvements in operational efficiency, significant hashrate growth, and proactive treasury management further strengthen its financial foundation. While risks such as bitcoin price volatility, regulatory uncertainties, and increased operating costs exist, the company's strong performance, clear strategic vision, and successful remediation of internal control weaknesses indicate a compelling growth trajectory and improved operational resilience, making it a strong investment opportunity.

Keywords

Bitcoin mining, AI hosting, HPC data centers, Cryptocurrency, Digital assets, Energy management, Infrastructure development, SEC filing, 10-K, CLSK, Blockchain, Convertible notes, Hashrate, Data center operations, Corporate governance, Risk management