CleanSpark(US:CLSK)2023-11-30 16:00Bitcoin Mining Operations - Bitcoin mining has become the company's principal revenue-generating business activity, with plans to acquire additional facilities, equipment, and infrastructure capacity to expand operations[411] - The company acquired two bitcoin mining facilities in Dalton, GA for $9,389 thousand, with a combined capacity of 20 megawatts and approximately 6,000 miners[469] - As of September 30, 2023, the company held 2,243 bitcoin, compared to 595 bitcoin in 2022[512] - The company's total bitcoin balance at the end of fiscal year 2023 was $56,241 thousand, compared to $11,147 thousand in 2022[493] - The company's outstanding deposits for miners and mining equipment as of September 30, 2023 totaled $75,959 thousand, compared to $12,497 thousand in 2022[506] - The company recognized net bitcoin mining revenue of approximately $168.1 million for the year ended September 30, 2023[149] - The company's bitcoin holdings as of September 30, 2023, amounted to approximately $56.2 million, classified as current assets[150] - The company operates five data centers in Georgia with a total developed capacity of 230 MW and is developing an additional 150 MW in Sandersville, GA[69] - The company hosts 50 MW of capacity through a partner in Massena, NY[69] - The global network hashrate is increasing, requiring the company to acquire new miners to maintain competitiveness[48] Lease Obligations and Terms - The company's operating leases are primarily for office spaces and finance leases related to equipment used at its data center[407] - The company's weighted-average remaining lease term for operating leases is 3.8 years, with a weighted-average discount rate of 5.40%[409] - The company's weighted-average remaining lease term for finance leases is 0.9 years, with a weighted-average discount rate of 5.50%[409] - The company's total lease obligations for fiscal years 2024 to 2028 amount to $4,603 thousand[405] - The company's operating cash outflows from operating leases increased from $131 thousand in September 2022 to $274 thousand in September 2023[409] - The company's financing cash outflows from finance leases decreased from $519 thousand in September 2022 to $301 thousand in September 2023[409] - The company's present value of lease liabilities as of September 30, 2023 was $700 for operating leases and $140 for finance leases[472] - The company entered into a 65-month lease for 4,552 rentable square feet at an initial base rent of $11, increasing 3% annually[63] Financial Performance and Losses - The company's loss from continuing operations attributable to common shareholders increased from $40,425 thousand in September 2022 to $132,160 thousand in September 2023[439] - Bitcoin impairment loss for September 30, 2023 was $7,163 thousand, compared to $12,210 thousand in 2022[443] - Total impairment loss for September 30, 2023 was $7,163 thousand, compared to $24,258 thousand in 2022[443] - The company's goodwill impairment in fiscal 2022 was due to a sustained downturn in the price of bitcoin[445] - The company's total revenues for the twelve months ended September 30, 2023 were $158, compared to $9,667 for the same period in 2022[468] - The company's net loss attributable to common shareholders for the twelve months ended September 30, 2023 was $(4,429), compared to $(17,237) for the same period in 2022[468] - The company's loss from continuing operations before provision for income taxes for the year ended September 30, 2023 was $(131,303), compared to $(40,089) for the same period in 2022[484] - The company's effective income tax rate for the period ended September 30, 2023 was (0.65%), compared to 0% for the same period in 2022[484] Investments and Assets - The company's derivative investment asset and investment in debt security totaled $3,566 thousand as of September 30, 2022[432] - The company's derivative investment asset as of September 30, 2023 was $2,697 thousand, classified as Level 3[447] - The company's investment in debt security as of September 30, 2023 was $726 thousand[447] - The company's total investments as of September 30, 2023 were $3,423, compared to $3,566 as of September 30, 2022[494] - Total fair value of investment in Derivative assets as of September 30, 2023, is $2,697, compared to $2,956 in 2022[498] - The company purchased 1,000 shares of Series B Preferred Stock of ILAL for $500, accruing at 12% per annum[496] - The company recognized an unrealized gain or loss on the fair valuation of the embedded derivative feature of ILAL preferred stock as income in the Consolidated Statements of Operations and Comprehensive Loss[514] Property and Equipment - The company purchased the College Park Property for $4,712, which includes a 41,387 square feet office/warehouse building[45] - The company purchased 16.35 acres of land in Sandersville, GA, for $1,400, reclassified as a finance lease[505] - The company placed in service property and equipment worth $231,135 in 2023, including $175,558 in miners and mining equipment[518] - The company purchased the Eastern Property for $4,100, with an additional $560 in building improvements, expected to be completed in Q1 2024[504] - Depreciation expense for the year ended September 30, 2023, was $118,615, up from $47,082 in 2022[502] - Net intangible assets as of September 30, 2023, were $4,603, down from $6,485 in 2022[520] Risks and Legal Issues - The company does not maintain its own insurance for bitcoin holdings, relying on Coinbase's insurance, which may be insufficient[26] - The company faces risks from technological obsolescence and supply chain disruptions for cryptocurrency hardware[47] - The company may need to raise additional capital through public offerings, which could dilute existing stockholders' interests[37] - The company is vulnerable to legal actions due to potential defects in legacy energy products[51] - The company's stock price may be adversely affected by negative or discontinued analyst coverage[38] - The company is subject to a shareholder class action lawsuit, which may result in material adverse effects on its business and operations[59] - The company's stock price is increasingly correlated with bitcoin trading prices due to its expanding bitcoin mining business[58] - The company may incur additional compliance costs if subjected to CFTC regulations regarding bitcoin transactions[53] Compliance and Internal Controls - The company incurred significant costs due to compliance with public company regulations, including Sarbanes-Oxley Act Section 404 requirements[40] - The company revised its disclosures in response to SEC staff comments on revenue recognition, bitcoin impairment, and clean energy usage[74] - The company's internal control over financial reporting was deemed ineffective as of September 30, 2023, due to a material weakness[152] - The company recorded a valuation allowance of $54,608 for deferred tax assets as of September 30, 2023, up from $28,756 in 2022[528] Discontinued Operations - Cash provided by discontinued operations for the fiscal year ended September 30, 2023 was based on winding down operations, including receipt of payments from accounts receivable, payments of accounts payable, and cash generated from the sale of assets[156] - Cash used in the operating activities of the energy segment (discontinued operations) for the year ended September 30, 2022 was $6,362[156] Bitcoin Market and Halving - Bitcoin mining reward halved from 12.5 to 6.25 bitcoin on May 11, 2020, with the next halving estimated in April 2024[2] - Currently, more than 19 million bitcoin are in circulation, with a total cap of 21 million expected around 2140[2] Acquisitions and Financing - The total purchase price for the Mawson Property acquisition was $33,821, including $13,500 in cash, $4,803 in common stock, and $6,500 in seller financing[478] - The company's total consideration for the Property and miners acquisition was $23,892, including $19,772 in cash, $1,962 in financing, and $2,158 in mortgage assumption[490] - The company borrowed a net $1,937 against the equity of the real property purchased in April 2023, with a two-year term and 10% interest rate[476] Accounts Receivable and Payable - The company's accounts receivable, net, decreased from $27 thousand in September 2022 to $5 thousand in September 2023[433]