CleanSpark(CLSK) - 2026 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q1 2026, CleanSpark reported revenue of over $180 million, a year-over-year increase of approximately $19 million or nearly 12% [15][17] - Bitcoin production remained relatively flat, with revenue per Bitcoin rising to almost $100,000 compared to $84,000 in the same quarter last year [15][16] - Gross margins declined from approximately 57% a year ago to 47% this quarter, primarily due to increased network difficulty and slightly higher power prices [16][18] - The company recognized a net loss of approximately $379 million compared to a net income of approximately $247 million a year ago, driven by mark-to-market adjustments [17][20] - Adjusted EBITDA was negative $295 million, compared to positive $322 million a year ago, also influenced by mark-to-market adjustments [17][19] Business Line Data and Key Metrics Changes - CleanSpark's Bitcoin mining operations continue to generate strong cash flows, with a hashing capacity of over 50 exahash per second [5][6] - The Digital Asset Management (DAM) strategy generated over $13 million in premiums and cash, representing about 24% of normalized adjusted EBITDA [13][22] - The DAM strategy achieved an annualized return of 4.2% on the average HODL balance, surpassing the target of 4% [23] Market Data and Key Metrics Changes - Power prices increased marginally to $0.056 per kWh from $0.049 per kWh a year ago [16] - The company has seen improving economics per megawatt in the AI market, driven by scale and power quality [5][10] Company Strategy and Development Direction - CleanSpark is evolving into a digital infrastructure and data center development company, expanding beyond Bitcoin mining to include AI monetization and digital asset management [4][5] - The company is focused on securing scarce power and land, with a strategy that includes tenant-driven technical and commercial alignment [5][10] - CleanSpark aims to build a diversified infrastructure platform with multiple independently valuable earning streams, anchored by utility-grade power [4][5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand for AI infrastructure, citing significant investments from major companies like Amazon [33][39] - The company is strategically positioned to capitalize on the demand for larger sites and is in advanced discussions with potential tenants [10][41] - Management emphasized a disciplined approach to capital deployment and the importance of maintaining flexibility in a volatile market [11][19] Other Important Information - CleanSpark completed a $1.15 billion convertible offering, using part of the proceeds to repurchase $460 million worth of shares, totaling over $600 million since December 2024 [6][7] - The company has a cash balance of over $400 million, with approximately $1.15 billion in Bitcoin value as of the end of Q1 [20][21] Q&A Session Summary Question: Demand environment for HPC and attributes sought in leasing partners - Management noted that demand is escalating, with interest from trillion-dollar balance sheet companies for long-term leases [31][33] Question: Demand for specific sites (Sealy, Sandersville, Brazoria) - Sandersville currently has the highest demand due to its energized status and existing infrastructure [35] Question: Rising demand for AI data centers and sector-wide implications - Management confirmed that demand is rapidly increasing, with ongoing inquiries from hyperscalers [39] Question: Confidence in signing contracts with tenants - Management expressed high confidence in securing quality leases within a shorter timeframe than initially expected [40] Question: Impact of owning land on negotiations - Owning additional land at Sandersville enhances the company's position in negotiations and project timelines [63] Question: ERCOT's proposed large load batch study process - Management indicated that their projects are in favorable positions relative to ERCOT's new processes, with significant progress already made [67][70] Question: Long-term power market attractiveness - CleanSpark is evaluating opportunities in various power markets, maintaining a diverse portfolio [74] Question: Status of potential HPC tenants - There are multiple potential tenants, with one clear front-runner in discussions for the Sandersville site [78]