CleanSpark, Inc. (CLSK) Earnings

Management highlights

### Strategic Business Transformation • CleanSpark is transitioning from a leading Bitcoin mining firm to a diversified digital infrastructure/HPC developer for AI, building on its existing core strengths in land, power contracting, and energy-intensive operations. Management frames AI as a transformative technology wave larger than prior computing revolutions, driven by massive unmet demand for grid-connected power and data center capacity that outpaces current supply. • The transformation retains Bitcoin mining as a foundational business: mining generates operating cash flow to fund infrastructure development, while AI enables higher-margin, long-term predictable monetization of the company's power portfolio, creating a more balanced, durable business model. ### Core Portfolio and Operational Progress • CleanSpark currently holds 1.8 gigawatts of fully contracted, approved power capacity across its portfolio, with over 5 gigawatts of additional speculative capacity in its growth pipeline that is not disclosed as contracted. • The 250 megawatt Sandersville, Georgia site (all live, with an additional 122-acre parcel acquired for full greenfield data center build) is the lead commercialization project. Advanced negotiations are ongoing with a high credit quality lead prospective tenant, with engineering and commercial terms progressing. The company has deep, positive community relationships in Sandersville that enable low-friction expansion. • The Houston-area hub (Sealy and Brazoria, Texas) totals nearly 900 megawatts of potential utility capacity for multi-phase AI campus deployments: Sealy has 285 megawatts approved, with 200+ megawatts scheduled for energization in H1 2027 and substation construction underway; Brazoria has already secured ERCOT approval for the first 300 megawatts, with the second 300 megawatts progressing through regulatory review. • The company has a track record of expanding capacity at existing sites: it recently added 25 megawatts of contracted capacity to its Metro Atlanta location, growing College Park from 5 megawatts to 50 megawatts and Washington from 36 megawatts to 86 megawatts, creating embedded expansion optionality across the portfolio. • CleanSpark uses a modular, factory-based construction model that moves 60-70% of data center build activity off-site, reducing on-site labor requirements by up to 70% and shortening time to market. ### Capital and Digital Asset Strategy • Liquidity remained strong as of Q2 end, with ~$1.2 billion in total liquidity ($260 million in cash + 13,561 Bitcoin valued at $925 million), plus the full $400 million capacity of its Bitcoin backstop lines of credit remains untapped and available. The company has reduced its share count significantly over the past 18 months, maintaining disciplined capital stewardship. • Current market conditions are favorable for data center infrastructure financing: recent deals have been 5-6x oversubscribed with pricing around 6%, giving CleanSpark multiple flexible financing options for AI development and new acquisitions. • The DAM strategy has proven durable across volatile market conditions, generating positive yield even in a down Bitcoin price quarter, with active downside risk management. Investments in DAM team, process, and technology will continue to enhance returns going forward.

Guidance

• Bitcoin hashrate and production is expected to trend upward through the end of 2026, reaching ~55 exahash, driven by the deployment of new immersion miners that will further improve energy efficiency to below 16 joules per terahash. Actual production will vary based on network difficulty and Bitcoin price movements. • From lease signing, first data hall delivery is expected to take 14-18 months, with the company targeting timeline compression over successive projects as it gains operational experience, similar to its learning curve in Bitcoin mining deployment. Capital costs per megawatt are expected to be in line with industry standard builds, with the modular approach delivering lower total cost of ownership across multiple hardware refresh cycles for tenants. • Management maintains that demand for AI compute capacity is growing rapidly, with demand outstripping available supply across all site sizes, from large gigawatt-scale campuses to 50-60 megawatt smaller sites.

Segment performance

CleanSpark operates two core segments: Bitcoin Mining and Digital Infrastructure/High Performance Computing (HPC) for AI. For Q2 2026, total company revenue was $136 million, 25% lower quarter-over-quarter and year-over-year, driven entirely by a 24% QoQ drop in average Bitcoin price to $76,000. Bitcoin mining produced 1,799 Bitcoin in the quarter, just 22 Bitcoin less than Q1 2026, with industry-leading operational uptime maintained despite network difficulty increases. Gross margin for the quarter remained healthy at over 40%, down from 47% in Q1, supported by lower average power costs of $0.052 per kilowatt hour (down from $0.056 in Q1 and $0.06 in Q2 2025). Digital Asset Management (DAM), a secondary segment focused on monetizing Bitcoin holdings, generated net positive cash returns of $4 million in Q2 2026, bringing total fiscal year-to-date DAM cash returns to $17.2 million, while only less than 40% of the company's Bitcoin balance was activated for DAM strategies. As of quarter end, CleanSpark held 13,561 Bitcoin in HODL reserves.

Risks & headwinds

• Labor and construction talent bottlenecks are a recognized industry-wide risk, particularly for large builds in high-demand markets like Texas. CleanSpark mitigates this via its modular factory-based construction model that cuts on-site labor requirements by ~70%, and by prioritizing hiring of local trade talent in the jurisdictions where it operates. • Large-scale, gigawatt-sized data center proposals have faced significant political and community headwinds. CleanSpark mitigates this via its disciplined, bite-sized approach to development, deep pre-existing positive community relationships, and a focus on markets where it already has contracted power and local support. Behind-the-meter gas power generation projects also face elevated risks of cost overruns and energization delays. • Concentration risk with a single tenant is managed on a case-by-case basis: the company is not averse to concentration with high credit quality investment-grade tenants, but avoids overexposure to unproven Neocloud tenants that require significant equity dilution or warrant concessions to close deals. • Bitcoin price volatility creates mark-to-market noncash accounting impacts on the company's Bitcoin HODL holdings: Q2 2026's $378 million net loss included $263 million in unfavorable noncash GAAP mark-to-market adjustments. The company's DAM strategy is designed to mitigate downside risk from volatility while generating incremental cash returns.

Analyst Q&A

• Q: Which additional portfolio sites beyond Sandersville, Sealy, and Brazoria could be converted to HPC, and how much expansion potential do they have? /

  A: Management identified Washington (86 megawatts of energized capacity, with significant expansion potential currently under line study), Jackson, Tennessee (60 megawatts of acquired capacity, looks promising for AI), and Cheyenne, Wyoming (110 megawatts, adjacent to an existing hyperscaler, with high potential to convert from interruptible to firm load for data center clients). The company has a long track record of expanding capacity at existing sites across the portfolio.

• Q: How much capital has been deployed at Sandersville to date, and how much will the company deploy before a lease is signed? /

  A: The company has deployed a couple hundred million dollars at Sandersville to date, including existing Bitcoin mining infrastructure. Minimal additional capital is being deployed ahead of lease signing: only clearing and pre-development work in the millions of dollars, not tens of millions, to preserve capital discipline. When conversion to AI occurs, existing mining infrastructure can be moved to other sites and continue to be monetized.

• Q: What is the timeline and capital cost per megawatt for your modular factory-built data centers? /

  A: From lease signing, delivery of the first data hall is expected to take 14 to 18 months. The company expects to compress this timeline over successive projects as it gains experience, similar to its Bitcoin mining deployment learning curve. Upfront capital costs per megawatt are in line with industry standard builds, but the modular approach delivers lower total cost of ownership across multiple hardware refresh cycles for tenants due to improved consistency and future-proofing.

• Q: Can you elaborate on the hybrid Bitcoin mining/AI co-location strategy? /

  A: Hybrid co-location leverages the company's existing microgrid power distribution patent, which dynamically allocates power between AI and mining loads. Most AI data centers have peak power utilization that leaves significant spare capacity unused most of the year: the average annual PUE for a Sandersville tenant would be ~1.15, leaving many megawatts of spare capacity. Bitcoin mining can monetize this spare capacity, helping meet minimum utilization requirements for favorable power pricing, and can be rapidly interrupted when AI demand rises. This creates a win-win for utilities, tenants, and CleanSpark, and also allows monetization of energized capacity while AI sites are under construction.