CLEANSPARK, INC. Q2 FY2025 earnings call

• Operational Resilience: Focused on margin rather than single metrics, operating across four states (Georgia, Tennessee, Wyoming, Mississippi) to balance risks and tap into reliable power markets. Added over 3 exahash of capacity in Wyoming in Q2. Fleet efficiency improved from 18 joules per terahash in December to less than 17 joules per terahash by April.
• Financials: Revenue grew due to higher average revenue per Bitcoin and increased hash rate. Gross profit increased with a 53% margin. Net loss was primarily due to Bitcoin price decline, but normalized EBITDA was positive at approximately $70 million.
• Capital Strategy: Transitioned from near-100% HODL to using monthly Bitcoin production to support operations, avoiding equity dilution. Expanded line of credit with Coinbase.
• Growth: Targeting 50 exahash by mid-2025, with ongoing projects to reach over 57 exahash. Has infrastructure in place or under contract for over 60 exahash. Intends to grow opportunistically with strong ROI potential.
• Digital Asset Management: Developing institutional-grade function, exploring covered calls on Bitcoin to generate value and create a treasury flywheel.

In the second quarter of fiscal 2025, CleanSpark's revenue was $181.7 million, a 62.5% year-over-year increase and a 12% quarter-over-quarter increase. Gross profit reached nearly $100 million, up almost 5% sequentially and more than 24% year over year with a gross margin of 53%. The company produced 1,957 Bitcoins in Q2, 3.6% fewer than the same quarter last year but nearly at pre-halving levels due to increased Exahash and fleet efficiency. Average revenue per Bitcoin in Q2 was $92,811, a 69% year-over-year increase. Marginal cost per coin was approximately $42,600, a 26% increase from the first quarter, driven by mining difficulty and rising power prices. The company ended the quarter with over $1 billion in liquidity, $97 million in cash, and 11,869 Bitcoins.

• Targets: Aiming to reach 50 exahash by mid-2025, with projects to push towards 57 exahash and vendor option supporting growth to 65 exahash.
• Growth Approach: Moving from time-bound growth guidance to disciplined, opportunistic growth funded by non-dilutive sources. Sees potential acquisition opportunities if tariffs create challenges for peers.
• Expansion: Active projects in Wyoming, Tennessee, Georgia, and Mississippi, with infrastructure and ASICs already stateside for future growth.

• Bitcoin Price Volatility: Net loss was driven by quarter-end Bitcoin price decline. Unrealized losses reversed in April but remain a risk.
• Mining Difficulty and Power Prices: Marginal cost per coin increased due to rising mining difficulty and power prices.
• Tariffs: Could impact less prepared operators, but CleanSpark is insulated due to scale, planning, and proactive procurement.

Q: Mike Colonnese asked about network cash rate growth in 2025 and CleanSpark's market share.

A: Zach Bradford responded that there's a plateau effect in the network, CleanSpark has ~5% market share and intends to maintain/grow it.

Q: Mike Colonnese asked about digital asset management generating shareholder value.

A: Gary Vecchiarelli explained covered calls on Bitcoin with juicy premiums, creating a treasury flywheel for cash generation.

Q: Greg Lewis asked about rig pricing impact and OpEx coverage.

A: Zach Bradford said less buying from larger competitors led to rig price discounts; Gary Vecchiarelli noted monthly OpEx is ~$35M, covered by April Bitcoin sales.

Q: Brian Dobson asked about Bitcoin-backed facilities and M&A.

A: Zach Bradford said there's interest in Bitcoin-backed facilities and CleanSpark is open to bolt-on acquisitions for advantageous valuations.

Q: Paul Golding asked about cooling infrastructure and tariffs.

A: Zach Bradford said prepaid infrastructure is mostly immersion cooled, and CleanSpark is ahead in the supply chain due to growth.

Q: John Todaro asked about yield forecasting and power access.

A: Gary Vecchiarelli mentioned targeting mid-single digits annualized yield; Zach Bradford said hyperscaler co-location cancellations don't reduce power access in CleanSpark's operating areas