CleanSpark(US:CLSK)2023-05-11 05:36Financial Data and Key Metrics - The company ended Q2 2023 with a hash rate of 6.7 exahashs per second, nearly triple the rate from the same period last year [4] - 1,871 Bitcoins were mined in Q2 2023, doubling the production from the same quarter last year [4] - Revenues increased by 14% to $42.5 million compared to the previous year, with revenue per Bitcoin at approximately $22,700, down from $41,000 last year [20] - Adjusted EBITDA turned positive at $12.7 million, reversing the negative adjusted EBITDA of $2 million in Q1 2023 [10][25] - The company held $10.3 million in cash and 196 Bitcoins, with total liquidity exceeding $15 million [26] Business Line Data and Key Metrics - The fleet average efficiency is currently 31 watts per terahash, with expectations to improve to 26 watts per terahash as new XPs are deployed [5] - The company secured 99% of the machines needed for its expansion projects in Washington and Sandersville [9] - The Washington expansion is expected to add 2 exahash per second, while the Sandersville expansion will add 6.3 exahash per second, bringing total capacity to 8.6 exahash per second [16][17] Market Data and Key Metrics - Bitcoin prices have recovered, leading to a 50% sequential increase in revenues [21] - The company expects to more than double its hash rate by the end of the calendar year, reaching 16 exahash per second [12] - The cost to mine Bitcoin decreased by 16% compared to Q1 2023, with power costs at $0.059 per kilowatt-hour [22] Company Strategy and Industry Competition - The company is focusing on mindful growth and maximizing profitability through efficiency gains and scale [12][39] - The acquisition of 45,000 XPs is expected to significantly improve efficiency and reduce costs, positioning the company well for the upcoming Bitcoin halving [15][27] - The company is closely monitoring policy and regulatory developments in the US, expecting state-level mining policies to protect the industry [18] Management Commentary on Operating Environment and Future Outlook - Management emphasized the importance of efficiency as the company prepares for the Bitcoin halving in April 2024 [37] - The company is confident in its ability to meet infrastructure build-out timelines and manage supply chain risks [59] - Management expects transaction fees to normalize but views them as a bonus rather than a core part of the business model [30][57] Other Important Information - The company paid down 11% of its long-term debt in Q2 2023, reducing it to $17.6 million [26] - A legal reserve of $2.7 million was set aside for the settlement of litigation related to the discontinued energy business [50] - The company disclosed enhanced cost of revenue details in its Form 10-Q, providing more transparency on mining costs [49] Q&A Session Summary Question: How is the company thinking about capital allocation and funding operations given Bitcoin price levels? - The company plans to fund operations and growth through margins and operational cash flow, with a focus on increasing the HODL balance as Bitcoin prices recover [61][73] Question: What are the risks related to infrastructure build-out and supply chain constraints? - The company is confident in its ability to manage construction timelines and supply chain risks, with 99% of machines secured and infrastructure projects on schedule [59] Question: How are transaction fees impacting the business, and what is the long-term outlook? - Transaction fees are seen as a bonus, with expectations that they will normalize but remain a part of Bitcoin's long-term sustainability [30][57] Question: What is the outlook for energy costs in Georgia? - The company is actively managing energy costs and has the flexibility to hedge power prices when the time is right, with current wholesale prices as low as $0.013 per kilowatt-hour [62][75] Question: What is the cadence of the Sandersville build-out and associated CapEx? - The Sandersville expansion is expected to be completed by early to mid-Q4 2023, with CapEx spread evenly over the next few quarters [65][79]