CleanSpark(US:CLSK)2024-02-07 16:00Cash and Cash Equivalents - Cash and cash equivalents increased to $48.458 million as of December 31, 2023, compared to $29.215 million as of September 30, 2023[24] - Cash and cash equivalents totaled $48.46 million as of December 31, 2023[62] - Cash balances in excess of FDIC limits were $36,484 and $28,965 as of December 31, 2023, and September 30, 2023, respectively[81] Bitcoin Holdings - Bitcoin holdings significantly increased to $126.951 million as of December 31, 2023, from $56.241 million as of September 30, 2023[24] - Bitcoin holdings measured at fair value were $126.95 million as of December 31, 2023[62] - Bitcoin custodian accounts totaled $126,951 and $56,241 as of December 31, 2023, and September 30, 2023, respectively, with no reported losses[81] - Bitcoin holdings of $126.95 million were classified as Level 1 assets under fair value hierarchy as of December 31, 2023[95] - As of December 31, 2023, the company held 3,002 bitcoins with a fair value of $126.95 million[146] - The company held approximately 3,002 bitcoins as of December 31, 2023, with a fair value of $127 million, based on a single bitcoin price of $42,290[193] Total Assets and Liabilities - Total current assets rose to $181.705 million as of December 31, 2023, up from $102.172 million as of September 30, 2023[24] - Total current assets as of December 31, 2023, were $181,705, with working capital of $139,312[180] - Total liabilities decreased to $52.170 million as of December 31, 2023, down from $84.351 million as of September 30, 2023[24] - Accounts payable and accrued liabilities decreased to $33.415 million as of December 31, 2023, from $65.577 million as of September 30, 2023[24] Property and Equipment - Property and equipment, net, increased to $637.481 million as of December 31, 2023, compared to $564.395 million as of September 30, 2023[24] - Property and equipment increased to $830.8 million as of December 31, 2023, up from $734.9 million as of September 30, 2023, primarily due to an increase in miners valued at $634.1 million[195] - The company placed $120.7 million of property and equipment into service during Q4 2023, including $114.0 million in miners[196] - Construction in progress for expanding mining operations in Georgia totaled $64.8 million as of December 31, 2023[195][198] Bitcoin Mining Revenue and Operations - Bitcoin mining revenue increased to $73.8 million in Q4 2023, up from $27.7 million in Q4 2022, representing a 166% year-over-year growth[29] - Total revenues for Q4 2023 reached $73.8 million, compared to $27.8 million in Q4 2022, a 165% increase[29] - Bitcoin mining revenue increased by 166% to $73.8 million in Q4 2023 compared to $27.7 million in Q4 2022, driven by a 32% increase in bitcoin mined (2,020 vs. 1,530) and a 102% increase in average bitcoin price ($36,535 vs. $18,129)[159] - The company's operating hashrate reached 10.0 EH/s as of December 31, 2023, representing 1.80% of the global hashrate, up from 6.2 EH/s and 2.26% in 2022[150] - Miner efficiency improved to 26.4 w/th in Q4 2023 from 31.7 w/th in Q4 2022, while the global hashrate nearly doubled to 558.4 EH/s from 274.2 EH/s[150] - The company mined approximately 15-17 bitcoin per day in Q4 2023, excluding transaction fees, representing 1.80% of global blockchain rewards[151] - Energy costs per bitcoin mined at owned facilities decreased to $12,808 in Q4 2023 from $13,047 in Q4 2022, while hosting fees per bitcoin increased to $22,621 from $13,565[154] - Total energy expense at owned facilities increased by 65% to $21.9 million in Q4 2023, representing 35.0% of bitcoin mining revenue, down from 71.8% in Q4 2022[155] - The company's total miner count increased by 39% to 88,500 as of December 31, 2023, compared to 63,700 in 2022[159] - Weighted average cost of mining one bitcoin increased to $14,308 in Q4 2023 from $13,221 in Q4 2022, representing 39.2% of average bitcoin mining revenue, down from 72.9%[157] - The company curtailed 15% of its mining fleet in Q4 2022 due to energy price spikes but had no significant curtailment in Q4 2023[156] Net Income and Earnings - Net income attributable to common shareholders was $25.3 million in Q4 2023, a significant improvement from a net loss of $29.0 million in Q4 2022[29] - Net income from continuing operations for the three months ended December 31, 2023, was $25.9 million, compared to a net loss of $29.0 million in the same period in 2022[48] - Income from continuing operations for Q4 2023 was $25.9 million, compared to a loss of $30.5 million in Q4 2022[86] - Basic and diluted income per share from continuing operations for Q4 2023 was $0.14, compared to a loss of $0.46 per share in Q4 2022[86] - Net income from continuing operations for Q4 2023 was $25,909, compared to a net loss of $30,488 in Q4 2022[173] - Non-GAAP adjusted EBITDA for Q4 2023 was $69,090, compared to a loss of $1,971 in Q4 2022[178] Stockholders' Equity and Share Issuance - Total stockholders' equity grew to $810.6 million as of December 31, 2023, up from $677.2 million as of September 30, 2023[36] - Additional paid-in capital increased to $1.11 billion as of December 31, 2023, up from $1.01 billion as of September 30, 2023[36] - Weighted average common shares outstanding (diluted) increased to 180.8 million in Q4 2023, compared to 66.4 million in Q4 2022, reflecting equity offerings[40] - Weighted-average common shares outstanding increased to 178.8 million in Q4 2023 from 66.4 million in Q4 2022[86] - The company issued 14,481,208 shares of common stock under its 2021 ATM Agreement, resulting in net proceeds of $41.344 million during the three months ended December 31, 2022[105] - As of December 31, 2023, the company had 10,025,740 shares available and authorized for issuance under its stock-based incentive compensation plan[110] - The company issued 12,457,651 shares under its 2024 ATM offering facility, resulting in net proceeds of approximately $122 million[134] Stock-Based Compensation - The company granted 65,000 stock options with a total fair value of $388,000 during the three months ended December 31, 2023[112] - The company recognized stock-based compensation expense of $8.141 million related to restricted stock units for the three months ended December 31, 2023[116] - Payroll expenses increased by 56% to $15.3 million in Q4 2023, driven by a 37% increase in employee headcount and a 69% increase in stock-based compensation[165] Depreciation and Amortization - Depreciation and amortization expenses increased to $29.8 million in Q4 2023, compared to $19.3 million in Q4 2022, due to expanded mining infrastructure[29] - Depreciation and amortization expense increased by $10,518 (54%) to $29,847 in Q4 2023, primarily due to increased mining equipment deployment[171] - Depreciation expense for Q4 2023 was $29.3 million, compared to $18.8 million in Q4 2022[195] - Amortization expense for intangible assets is projected to total $4.1 million over the next five years, with $1.5 million expected in 2024[202] Bitcoin Sales and Fair Value - The company reported a gain on fair value of bitcoin of $36.0 million in Q4 2023, compared to no such gain in Q4 2022[29] - Bitcoin sales generated $43.04 million in proceeds during the quarter ended December 31, 2023[62] - Bitcoin fair value gain for Q4 2023 is $36,041, driven by the adoption of ASC 350-60, which measures crypto assets at fair value[167] - Bitcoin is now measured at fair value each reporting period following adoption of ASC 350-60 in October 2023[90] - Bitcoin impairment expense was $83 in Q4 2022, with no impairment recognized in Q4 2023 due to the adoption of ASC 350-60[169] Operating and Investing Activities - Cash outflows from operating activities from continuing operations were $39.63 million for the three months ended December 31, 2023[62] - Operating activities used $39,626 in cash for Q4 2023, primarily due to bitcoin mining costs of $73,786[187] - Cash outflows from investing activities from continuing operations were $32.82 million for the three months ended December 31, 2023[48] - Investing activities used $32,818 in Q4 2023, mainly for miner payments ($48,858) and fixed asset purchases ($27,503)[188] - Financing activities generated $92,095 in Q4 2023, primarily from an underwritten offering of $99,336[189] Legal and Regulatory Risks - The company faces risks related to high volatility in the value attributable to its business and the rapidly changing regulatory and legal environment[10] - The company is dependent on continued growth in blockchain and bitcoin usage, and faces security and cybersecurity threats[10] - The company is defending against a class action lawsuit alleging material misstatements and omissions regarding its acquisition of ATL and bitcoin mining operations expansion[121] Mining Equipment and Infrastructure - Deposits on miners and mining equipment decreased to $25.048 million as of December 31, 2023, from $75.959 million as of September 30, 2023[24] - The company has a developed capacity of 230 MW across five data centers in Georgia, with an additional 150 MW under development in Sandersville, GA[54] - The company acquired two bitcoin mining facilities in Dalton, GA for $9.39 million in June 2023, adding 6,000 miners and 20 megawatts of power capacity[99] - The purchase price allocation for the Dalton acquisition included $1.33 million for buildings and $8.06 million for infrastructure[100] - The company entered into an agreement with Bitmain Technologies Delaware Limited to purchase up to 160,000 Bitmain S21 miners, with a net purchase price of $193.2 million for 60,000 miners and an option to purchase an additional 100,000 miners for $320 million[135][136] - The company's operating mining units were capable of producing over 10.0 exahash per second (EH/s) of computing power as of December 31, 2023, and increased to 12.5 EH/s by February 8, 2024[141] - The company owns approximately 146,000 miners as of December 31, 2023, with 88,500 in service and the remainder ready for installation in the Sandersville, GA expansion[142] - The company's miners have an average energy efficiency of 26.4 watts per terahash (w/th) as of December 31, 2023[143] - The company has $37.044 million in open purchase commitments for bitcoin mining equipment as of December 31, 2023[117] - Outstanding deposits for miners and mining equipment decreased to $25.0 million as of December 31, 2023, from $76.0 million as of September 30, 2023[200] Discontinued Operations - Data center services were discontinued as of September 30, 2023, with no external customer services provided thereafter[69] - The company reclassified its energy operations as discontinued operations to focus on bitcoin mining, selling most related assets[98][101] - Discontinued operations reported total current assets held for sale of $384 million as of December 31, 2023, compared to $445 million as of September 30, 2023[102] - Net income attributable to common shareholders from discontinued operations was $1.457 billion for the three months ended December 31, 2022[102] Other Financial Metrics - Cost of revenues (excluding depreciation and amortization) rose to $28.9 million in Q4 2023, up from $20.4 million in Q4 2022, reflecting increased mining operations[29] - Interest expense decreased by $343 to $546 in Q4 2023 due to lower average debt balances[172] - Operating lease costs for Q4 2023 were $46,000, down from $113,000 in Q4 2022[203] - Cash outflows for operating leases in Q4 2023 were $60,000, compared to $34,000 in Q4 2022[203] - Intangible assets totaled $10.3 million as of December 31, 2023, with net intangible assets of $4.1 million after amortization[201] - The company held $0.05 in USDC, a digital currency pegged 1:1 to the U.S. dollar, as of December 31, 2023[146] - Restricted cash of $1,716 was held as collateral for utility bonds as of December 31, 2023[78] - Inventory balances for bitcoin mining supplies were $732 and $809 as of December 31, 2023, and September 30, 2023, respectively[73] - Total contractual future payments as of December 31, 2023, amount to $60.815 million, including $38.754 million due in 2024[118] Revenue Recognition and Mining Pool - Revenue from Bitcoin mining is recognized based on the Full-Pay-Per-Share (FPPS) payout method, with mining pool fees at 0.19% of total daily bitcoin mined[65] - The company's bitcoin mining revenue is calculated daily from midnight-to-midnight UTC, with earnings credited at 1:00 AM UTC[68] - The company has one mining pool operator, Foundry Digital, which represented 100% of revenue for the three months ended December 31, 2023 and 2022[126] Internal Controls and Financial Reporting - The company is working to remediate a material weakness identified in its internal control over financial reporting[10] - The company early adopted ASC 350-60, resulting in a $4.18 million cumulative-effect adjustment to bitcoin holdings as of October 1, 2023[58] Acquisitions and Expansion - The company acquired land and assets in Dalton, GA for a combined purchase price of approximately $3.5 million with an additional $3.4 million of expected build-out costs[130] - The company entered into an agreement to acquire assets in three separate locations within Mississippi for a combined purchase price of $19.8 million[131]