CLEANSPARK, INC. Q4 FY2024 earnings call

• Strategic Execution: Successfully leveraged the halving event with optimized power contracts, infrastructure, and mining fleet. • Infrastructure Growth: Relied on three growth engines – greenfield development, organic expansion of existing sites, and strategic acquisitions. Added over 425 megawatts of operational power capacity. • Hash Rate Progress: Reached 33.5 exahash per second, on track to hit 37 exahash per second by year-end and aiming for 50 exahash per second in 2025. • Operational Efficiency: Fleet efficiency improved to 19 joules per terahash, down from 28.4 joules per terahash the prior year. • Community Engagement: Engaged with local communities in regions like Georgia, Tennessee, tailoring approaches to rural areas. • Acquisition Strategy: Capitalized on counter-cyclical opportunities, consolidating over 178 megawatts in private asset acquisitions, including 9 sites acquired in September.

CleanSpark generated over $378.9 million in revenue for the fiscal year, a significant increase from the $164.8 million reported in the previous fiscal year. The adjusted EBITDA for the year was $245.8 million, representing an 882% year-over-year growth. The hash rate reached 33.5 exahash per second, with a goal to achieve 37 exahash per second by year-end. Power capacity expanded to over 726 megawatts, and all-in power costs were $0.046 per kilowatt hour, lower than the prior year's $0.048 per kilowatt hour. Revenue contribution was primarily driven by Bitcoin mining activities, with the company's hash rate and infrastructure growth being key drivers.

• Goal to achieve 37 exahash per second by year-end. • Aim to reach 50 exahash per second in 2025. • Focus on organic growth within the existing portfolio, with plans to exceed 1 gigawatt of contracted capacity. • Continue to optimize operations and infrastructure for sustained growth and efficiency.

• Market Volatility: Fluctuations in Bitcoin price and mining difficulty can impact financial performance. • Tariffs: Potential impact on ASIC pricing and acquisition costs, posing a barrier to growth for smaller miners. • Competitor Actions: Some competitors may engage in capital destructive activities, affecting the industry landscape. • Operational Disruptions: Extreme weather events (e.g., Hurricane Helene) can disrupt operations and reduce revenues.

Q: Why have miners lagged Bitcoin this year despite CleanSpark's outperformance?

A: Zach Bradford noted it's a temporary plateau before another upswing, with miners including CleanSpark continuing to outperform over the long term.

Q: How is CleanSpark approaching the ASIC market?

A: Zach Bradford mentioned locked-in price certainty with purchases like the S21 Pro and XP, having price certainty through 63 exahash and a track record of best-in-class purchasing.

Q: What are the paths to generate yield on Bitcoin HODL?

A: Gary Vecchiarelli stated they'll pursue a crawl-walk-run strategy, focusing on capital preservation first, with potential strategies like covered calls and lending.

Q: Thoughts on HPC opportunities?

A: Zach Bradford said they still focus on Bitcoin mining, seeing it as having a quicker payback period to revenue compared to HPC.

Q: CapEx and liquidity?

A: Zach Bradford mentioned open capital markets, with flexibility to leverage Bitcoin or use other capital sources, and infrastructure investment between here and 63 exahash is roughly $200 million.

Q: Impact of tariffs on ASICs?

A: Zach Bradford said tariffs could affect smaller miners, creating a barrier to growth, while CleanSpark benefits from scale and diversified manufacturing locations.

Q: Buying vs. building Bitcoin?

A: Zach Bradford said they see buying assets to produce Bitcoin as having better return on capital, but remain open to strategic buying of Bitcoin.