CleanSpark(CLSK) - 2026 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for the quarter grew year-over-year by approximately $19 million, an increase of almost 12% [17] - Bitcoin production was relatively flat, with revenues of almost $100,000 per Bitcoin compared to $84,000 in the same quarter last year [17] - Gross margins declined from approximately 57% a year ago to 47% this quarter, primarily due to increased network difficulty [17] - The company recognized a net loss of approximately $379 million compared to net income of approximately $247 million a year ago, driven by mark-to-market adjustments [18] - Adjusted EBITDA was negative $295 million, compared to positive $322 million a year ago, also influenced by mark-to-market adjustments [18][20] - Cash balance increased over $400 million compared to Q4, due to a $1.15 billion convertible transaction [21] - Total debt is approximately $1.8 billion, with a net debt-to-liquidity ratio of approximately 1.1 [22] Business Line Data and Key Metrics Changes - The company continues to operate a large-scale Bitcoin mining business, generating strong cash flows from a scaled mining footprint of more than 50 exahash per second [7] - Digital Asset Management (DAM) generated over $13 million in premiums and cash, representing about 24% of normalized adjusted EBITDA [15] - The DAM strategy achieved an annualized return of 4.2% on the average HODL balance, surpassing the target of 4% [25] Market Data and Key Metrics Changes - Power prices increased marginally to $0.056 per kWh, up from $0.049 per kWh a year ago [17] - The company is seeing improving economics per megawatt driven by scale, power quality, and contracting structures [6] Company Strategy and Development Direction - The company is evolving into a digital infrastructure and data center development company, building an infrastructure platform with multiple earning streams [5] - Bitcoin mining funds the platform, AI monetizes it, and digital asset management optimizes it across all cycles [5] - The company is focused on securing scarce power and land, with a strategy to capitalize on the demand for larger sites [10] - The company aims to move from portfolio formation into commercialization milestones, reflecting the demand for AI infrastructure [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand for AI infrastructure, citing significant investments from major players like Amazon [34] - The company is focused on disciplined capital deployment and optimizing for durability rather than velocity [12] - Management believes that Bitcoin mining will always be core to the business, providing a strategic advantage in power acquisition [13] Other Important Information - The company completed a $1.15 billion convertible offering, part of which was used to repurchase $460 million worth of shares, totaling over $600 million since December 2024 [9] - The company has over 13,000 Bitcoin, with a strategy to use Bitcoin as a productive capital asset [24] Q&A Session Summary Question: Can you talk about the 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 [34] Question: How does owning additional land at Sandersville impact conversations with potential tenants? - Management confirmed that owning the land allows for a more orderly process in progressing the AI data center project and enhances the specificity of the compute and power ramp [66] Question: What milestones should be expected in the HPC tenant discussions? - Management indicated that there are multiple potential offtake tenants, with a specific front-runner in discussions for the Sandersville site [79] Question: How does the recent downturn in Bitcoin prices affect the HODL approach? - Management stated that the strategy remains intact, with no plans to dip into the HODL despite current market conditions [55] Question: What is the expected timeline for power availability at the new Texas sites? - The Sealy project is expected to have power available in the first half of 2027, while the Brazoria project is anticipated to energize around Q4 2027 to Q1 2028 [82]