8-K: CleanSpark Secures 100,000 Upgraded Bitcoin Miners, Boosting Hashrate by 17%

CleanSpark has amended its agreement with Bitmain to purchase 100,000 upgraded S21 Pro bitcoin miners, increasing its total hashrate by 17% to 23.4 EH/s.

Summary

• CleanSpark has entered into a supplemental agreement with Bitmain to upgrade its previously agreed purchase of 100,000 bitcoin miners from the S21 model to the more efficient S21 Pro model.
• This upgrade increases the company's total hashrate by 17%, from the originally planned 20 EH/s to 23.4 EH/s.
• The total purchase price for the 100,000 S21 Pro miners is $374.4 million.
• The S21 Pro miners have a hashrate of 234 terahashes each, a power consumption of 3,510 watts, and a joules per terahash (J/T) value of 15.
• The new miners are scheduled for delivery between June and December 2024.
• CleanSpark has already paid $32 million towards the call option fee, with a remaining balance of $5.44 million due within seven days of the agreement.

Sentiment

Score: 9

Explanation: The document conveys a very positive sentiment due to the upgrade to more efficient miners, increased hashrate, and strategic positioning for the Bitcoin halving. The company is clearly making moves to improve its competitive position.

Positives

• The upgrade to S21 Pro miners increases CleanSpark's hashrate by 17% without increasing energy consumption.
• The S21 Pro miners are more energy-efficient, operating at 15 J/TH compared to the S21's 17.5 J/TH.
• CleanSpark maintains a low cost per terahash of $16.
• The company expects to increase its market share after the Bitcoin halving as older, less efficient miners go offline.
• CleanSpark is positioned to be the most efficient publicly traded bitcoin miner at scale in North America.

Risks

• Delivery dates and operating specifications of the purchased miners may vary.
• The electrical power available to CleanSpark's facilities may not increase as expected.
• The success of digital currency mining activities is subject to volatile and unpredictable cycles.
• Increasing difficulty rates for bitcoin mining could impact profitability.
• Bitcoin halving may impact revenue.
• New or additional governmental regulations could affect operations.
• The company is dependent on third-party power providers for expansion efforts.

Future Outlook

CleanSpark expects to cement its lead as the most efficient publicly traded bitcoin miner at scale in North America and to increase its market share after the Bitcoin halving.

Management Comments

• Zach Bradford, CEO, stated that the upgrade to the new S21 Pro will cement their lead as the most efficient publicly traded bitcoin miner at scale in North America.
• Zach Bradford also noted that their scale has allowed them to make meaningful gains in bitcoin production without increasing energy use.

Industry Context

The move to upgrade to more efficient miners is a strategic one, especially with the upcoming Bitcoin halving, which will reduce mining rewards and increase the importance of energy efficiency. This positions CleanSpark to be more competitive in the market.

Comparison to Industry Standards

• CleanSpark is consistently outpacing its peers in terms of bitcoin produced per exahash of operating hashrate, according to publicly available data.
• The S21 Pro operates at 15 J/TH, which is a 14% improvement over the S21 miner, currently the most efficient miner available on the market at 17.5 J/TH.
• The company maintains a cost per terahash of $16, which is considered an industry low price.

Stakeholder Impact

• Shareholders will benefit from the increased hashrate and efficiency, potentially leading to higher revenue and profitability.
• Employees will be involved in the deployment and operation of the new miners.
• The company's customers will benefit from the increased capacity and efficiency of the mining operations.
• Suppliers will benefit from the continued business relationship with CleanSpark.
• Creditors will be impacted by the financial obligations of the purchase agreement.

Next Steps

• CleanSpark will receive delivery of the 100,000 S21 Pro miners between June and December 2024.
• The company will pay the remaining $5.44 million of the call option fee within seven days of the agreement.

Key Dates

Keywords

Bitcoin Mining, CleanSpark, Bitmain, S21 Pro, Hashrate, Cryptocurrency, Data Centers, Exahash, Miner, Energy Efficiency