CLEANSPARK, INC. Q2 FY2024 earnings call

Zachary Bradford's Remarks

• The quarter was exceptional, with record revenue and adjusted EBITDA. Growth in operating capacity by 63% since the start of 2024. New facilities in Mississippi and Georgia, and plan to expand in Wyoming. Upgraded to S21 Pro miners, increasing total purchased hashrate by 17% (3.4 exahash per second). Hash cost around $32, expected to be under $28 with S21 Pro's. Shareholder returns were impressive, with CleanSpark becoming the second largest miner by market cap on Nasdaq. Sandersville facility operating at 180 MW of 230 MW, awaiting utility transformer. Promoted Scott Garrison to Chief Operations Officer and Taylor Monnig to Chief Technology Officer.

Gary Vecchiarelli's Remarks

• Financial results: Revenue of $111.8M, up 163% year-over-year and 52% quarter-over-quarter. Hashrate increased from 10.1 exahash to 16.7 exahash quarter-over-quarter. Gross profit improved, with wholesale power costs as low as 1.3 cents/kWh. Net income was $126.7M, EPS $0.59. Bitcoin holdings grew over 2,000 in Q2. Adjusted EBITDA $182M, with mining operations contributing ~$60M. Payroll and G&A expenses increased, but G&A included non-recurring items. Balance sheet strong with $681M liquidity and virtually no debt.

In the second quarter of Fiscal Year 2024, CleanSparks recorded $111.8 million in revenue and $181.8 million in adjusted EBITDA. Revenue grew 52% quarter-over-quarter and 163% compared to the same prior year period. Adjusted EBITDA grew 163% quarter-over-quarter and 12 times over the same prior year periods. Bitcoin production remained strong despite global hashrate growth, and operating capacity increased by an impressive 63%. The company's current total capacity stands at over 17 exahash per second, distributed across eight owned and operated data centers in Georgia and Mississippi and co-location facilities in upstate New York.

CleanSparks reaffirmed its path to 50 exahash per second in 2025 and targets 32 exahash by the end of 2024. The company expects to continue growth through acquisitions, including the newly acquired sites in Wyoming. It plans to reach over 550 MW capacity under management once the Wyoming deal is closed.

• Halving compresses margins, only efficient miners can profit post-halving. - Market fluctuations in Bitcoin price and global hashrate changes. - Potential supply chain constraints, though currently not seeing impact on Wyoming site plans.

Q: Could you walk us through the expected construction and energization timelines for the newly acquired sites in Wyoming and your power strategy?

A: There are two sites, 45 MW and 30 MW. The 45 MW site can be completed in under 120 days, and the 30 MW site is greenfield. The goal is to have all 75 MW built out before winter. Wyoming is favorable due to cool ambient temperatures and supportive utility and political environments.

Q: How has the M&A landscape evolved since the halving, and what's your profile of potential sellers and megawatt range for acquisitions?

A: The M&A landscape has opened up with more opportunities. CleanSparks is open to any size of acquisitions, leveraging its access to capital. There are many incoming calls and opportunities, with the benefit of being able to handle both large and small deals effectively.

Q: Could you provide details on the two Wyoming sites and your experience in building out greenfield sites?

A: The 45 MW site was previously used for Bitcoin mining, but the equipment will be removed. The 30 MW site is greenfield. CleanSparks has experience in building out megawatts, having completed 150 MW, 80 MW, 20 MW, and 30 MW buildouts in various locations. They have over 50 MW of transformer and switch gears already ready to go, with no supply chain constraints currently impacting the projects