Q1 2024 CleanSpark Inc Earnings Call

Okay.

Greg: Good afternoon, my name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to CleanSpark's first quarter fiscal year financial results conference call. All lines have been placed on mute to prevent any background noise.

Good afternoon. My name is Greg and I will be your conference operator today at this time I would like to welcome everyone to clean Sparks first quarter of fiscal year financial results Conference call.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad once again, starwood and if you'd like to withdraw your question again.

Operator: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. Once again, press star one. And if you'd like to withdraw your question again, simply hit star one again.

Simply its star one again, thank you.

Isaac Holyoake: Thank you. And at this time, I would like to turn the floor over to Isaac Holyoke, Chief Communications Officer. You may begin. Hey, thanks, Greg, and thank you for joining us today for our first quarter fiscal year financial results call covering the period October 1st through December 31st, 2023. Our press release was issued about 30 minutes ago and is available on our website at www.cleanspark.com. Today's call is also being webcast, and a replay and transcript will be available on our website. On the call with me today are Zach Bradford, our Chief Executive Officer, and Gary Vecchiarelli, our Chief Financial Officer. Keep in mind that some of the statements we make today are forward-looking and based on our best view of the world and our business as we see them today.

And at this time I would like to turn the floor over to Isaac Colo Chief.

<unk> Officer, you may begin.

Hey, Thanks, Greg and thank you for joining us today for our first quarter fiscal year financial results call covering the period October one through December 31 2023.

Our press release was issued about 30 minutes ago and is available on our website at clean spark Dot com.

Today's call is also being webcast and a replay and transcript will be available on our website.

On the call with me today exact Bradford, our Chief Executive Officer, and Gary Vecchiarelli, Our Chief Financial Officer.

Keep in mind that some of the statements. We make today are forward looking and based on our best view of the world and our business as we see them today. These statements and information provided remains subject to the risk factors disclosed in our most recently filed annual report we will also discuss certain non-GAAP financial measures concerning our performance during today's call.

Isaac Holyoake: The statements and information provided remain subject to the risk factors disclosed in our most recently filed annual report. We will also discuss certain non-GAAP financial measures concerning our performance during today's call. You can find the reconciliation of non-GAAP financial measures in our press release, which is available on our website. And with that, it is my pleasure to turn the call over to Zach.

You can find the reconciliation of non-GAAP financial measures in our press release, which is available on our website.

And with that it is my pleasure to turn the call over to Zack.

Zach Bradford: Thank you for joining us this afternoon as we discuss our business and financial results from the first quarter of our fiscal year. I'm looking forward to walking you through an exceptional quarter. Today we will highlight our key achievements, focusing on our outstanding quarterly revenue performance, strategic machine acquisitions, and our roadmap to achieving 20 exahash per second in mining capacity during the first half of this year and our pathway to 50 exahash per second. I'm also looking forward to providing additional details about the ongoing Sandersville energization and our just-announced move into Mississippi. Our financial performance this quarter has been exceptional. We achieved the highest revenue in our company's history, a testament to our team's hard work and the strategic decisions we've made over the past few months. Our revenue soared to $74 million, a 90% increase from our year-ago first quarter revenue. For perspective, our annual revenue for fiscal year 2023 was $168 million. In a single quarter, we have covered nearly half the distance to reach our total revenue from last year. This achievement is more than just a number.

Thank you for joining us this afternoon, as we discuss our business and financial results from the first quarter of our fiscal year.

I'm looking forward to walking you through an exceptional quarter today, we will highlight our key achievements focusing on our outstanding quarterly revenue performance.

T J machine acquisition, and a roadmap to achieving 20 extra half per second in mining capacity. During the first half of this year and our pathway to 50 <unk> for a second I'm also looking forward to providing additional detail about the ongoing standards Ville <unk> and our just announced move in.

Mississippi.

Our financial performance. This quarter has been exceptional we achieved the highest revenue in our company's history, a testament to our team's hard work and the strategic decisions. We've made over the past few months.

Our revenue sort to $74 million, a 90% increase from our year ago first quarter revenue.

For perspective, our annual revenue for fiscal year 2023, with a $168 million in a single quarter, we have covered nearly half the distance to reach our total revenue from last year.

This achievement is not just a number it's.

Zach Bradford: It's a reflection of our growing efficiency, our strategic acquisitions, and our deep commitment to smart growth. It underscores our position as leaders in the Bitcoin mining industry and fortifies the trust that you, our investors, place in us. What's more, our quarter ended with a net income of $26 million, and our adjusted EBITDA, an essential measure of our operational efficiency and financial health, also saw remarkable growth, reaching $69 million for the quarter

It's a reflection of our growing efficiency, our strategic acquisitions, and our deep commitment to smart growth.

It underscores our position as leaders in the bitcoin mining industry and fortify the trust that you our investors place in us.

What's more our quarter ended with a net income of $26 million and our adjusted EBITDA and a central measure of our operational efficiency and financial health also saw remarkable growth, reaching $69 million for the quarter.

Zach Bradford: This figure represents not just profitability but our ability to generate significant cash flow while investing in future growth. In addition to our financial metrics, our operational achievements this quarter have continued to build on our track record of success. We finished our infrastructure for our Sandersville expansion, and as of this moment, machines have already started hashing.

This figure represents not just profitability, but our ability to generate significant cash flow, while investing in future growth.

In addition to our financial metrics, our operational achievements. This quarter have continued to build on our track record of success. We finished our infrastructure for our standard fill expansion.

And as of this moment machines have already started hashing on the sixth our first day of <unk>, we set a record racking over 7000 machines in 24 hours and then successfully started hashing with over 8900 miners, which produced approximately one two <unk> per second.

Zach Bradford: On the 6th, our first day of energization, we set a record, racking up over 7,000 machines in 24 hours, and then successfully started hashing with over 8,900 miners, which produced approximately 1.25 exahash per second. We are now on our third day of energization, and we have exceeded 3X a half. This is an additional 3 exahash per second under 72 hours.

We are now in our third day of amortization and we have exceeded three ex ash. This is an additional <unk> <unk> per second under 72 hours, we expect to have the full $4 two <unk> per second of additional hash rate live within the coming days.

Zach Bradford: We expect to have the full 4.2 exahash per second of additional hash rate live within the coming day. This is a testament to our strategies and the teams behind them coming together at the optimal time. While maintaining our operational effectiveness during high growth is challenging, it's a challenge we've embraced. We have excelled at hitting all the marks we set out to reach.

This is a testament to our strategies and the teams behind them coming together at the optimal time, while maintaining our operational effectiveness during high growth is challenging it's a challenge we've embraced.

We have excelled at hitting all the marks we set out to reach.

Zach Bradford: We've also worked hard to optimize our energy consumption through strategic machine purchases that position us well for the future, and by deploying the best software on the market. Each of these steps has been carefully aligned with our long-term vision, ensuring that we continue to deliver value to our shareholders while leading the way in what a strategic, community-focused, and transparent Bitcoin mining company looks like. This quarter has been a period of significant achievement for CleanSpark.

We've also worked hard to optimize our energy consumption through strategic machine purchases that position us well for the future.

And by deploying the best software on the market.

Each of these steps have been carefully aligned with our long term vision, ensuring that we continue to deliver value to our shareholders, while leading the way and what our strategic community focused and transparent bitcoin mining company looks like.

This quarter has been a period of significant achievement for clean spark a record breaking revenue alongside substantial improvements in efficiency and profitability have laid a solid foundation for our future growth.

Zach Bradford: Our record-breaking revenue, alongside substantial improvements in efficiency and profitability, have laid a solid foundation for our future growth. Now, let's delve into the specifics of our path to 20, 32, and 50 ExaHash per second and our strategic initiatives that will drive our success in the coming quarters. Last month we announced a strategic purchase agreement for up to 160,000 Bitmain S21 miners, which, if fully exercised, provides us with the servers needed to reach 50 Exahash per second. This purchase is made up of two parts, and I want to spend some time describing our thoughts around this substantial purchase. The first part of the agreement includes an initial purchase of 60,000 units at $16.10 per terahash, which will begin delivery in April of 2024.

Now, let's delve into the specifics of our path to 2030 to 50 <unk> per second and our strategic initiatives that will drive our success in the coming quarters.

Okay.

Last month, we announced a strategic purchase agreement for up to 160000 bit, Maine as 'twenty, one miners, which if fully exercised provides us the servers needed to reach 50 <unk> per second.

This purchase is made of two parts and I want to spend some time, describing our thoughts around the substantial purchase.

The first part of the agreement includes an initial purchase of 60000 unit at $16 10 per tear hash, which will begin delivery in April of 24.

Zach Bradford: The second part of the agreement is an option to buy an additional 100,000 units at $16 per terahertz. We've already paid 10% down for this option as a demonstration of our commitment to our growth prospects. Put this in plain language; you see a lot of bluster and press release headlines when a bull market is on the horizon, and I want to be clear that we aren't being rhetorical. With that in mind, we paid $32 million to secure 100,000 units at an even lower price than the initial units we acquired.

The second part of the agreement has an option to buy an additional 100000 units at $16 per <unk>.

We've already paid 10% down for this option as a demonstration of our commitment to the to our growth prospects for this.

In plain language, you see a lot of bluster in press release headlines when a bull market is on the horizon and I want to be clear that we arent being rhetorical with that in mind, we paid $32 million to secure a 100000 units at an even lower price than the initial units we acquired this.

Zach Bradford: This move is intended to provide us with maximum flexibility as we position the company for expansion in anticipation of a bull market. Crucially, it provides cost certainty and allows us to be strategic about our growth time, are approached focused on the certainty of cost and expectations for robust growth positions us uniquely in the market. The S21 is the most efficient miner, and it aligns well with our focus on energy efficiency and high uptime. But to be useful, of course, machines need to be plugged in.

This move is intended to provide us with maximum flexibility as we position the company for expansion in anticipation of a bull market.

Crucially it provides cost certainty and allows us to be strategic about our growth timing.

Our approach focused on the certainty of cost and expectations for robust growth position.

Positions us uniquely in the market.

'twenty one is the most efficient miner and it aligns well with our focus on energy efficiency and high uptime.

But to be useful of course machines need to be plugged in so allow me to spend some time discussing how we expect to make good on our plans.

Zach Bradford: So allow me to spend some time discussing how we expect to make good on our plan. The first step is a robust milestone to reach 20 exahash per second in the first half of 2024. We have previously guided to 16 exahash per second with the expansion of Sanders.

The first step is a robot is a robust milestone to reach 20 <unk> per second in the first half of 2024.

We have previously guided of 16 <unk> per second with the expansion of Sanderson.

Zach Bradford: So the 20 exahash per second is a 25% increase in hash rate over 16, and a 100% increase from where we started in 2024. This ambitious growth is propelled by several key expansions and acquisitions that we have recently announced. Energization, as I mentioned, commenced earlier this week in Sanderson. This development is a significant milestone in our growth journey, and I want to pause a moment to thank the city, the county, and the various trades on our teams at CleanSpark that have executed on this remarkable build. This massive site, capable of hashing at over 8x hash per second, is one of the largest Bitcoin mining sites in the United States. As I stated earlier, as of this week, a majority of the site has been energized, and we expect about 4.6 exahash per second of operating hash rate to come online in the next few days. As you know, we have got it to 6 exahash per second for the full expansion, and thus there's a small gap of 1.4 exahash per second. We have learned that a utility substation transformer has not passed its most recent inspection, and we are eagerly awaiting a timeline for it coming online.

So the 20 <unk> per second is a 25% increase in hash rate over 16, and 100% increase from where we started 2024.

This ambitious growth is propelled by several key expansions and acquisitions that we recently announced.

Yes.

<unk> as I mentioned commenced earlier this week and standards, though.

This development is a significant milestone in our growth journey and I want to pause a moment to thank the city the county, the various trades on our teams at clean spark that have executed on this remarkable build.

This massive site capable of hashing it over a <unk> per second is one of the largest bitcoin mining sites in the United States.

As I stated earlier as of this week a majority of the site has been energized and we expect about four six <unk> per second half operating half rate to come online in the next few days.

As Youre aware, we have guided to six <unk> per second for the full expansion and thus there is a small gap of $1 <unk> per second.

We have learned that a utility substation transformer has not passed its most recent inspection and we are eagerly awaiting a timeline to it coming online will provide an update as soon as possible.

Zach Bradford: We'll provide an update as soon as possible, and although we don't have a specific timeline, we are still planning for the remaining power to be delivered within the first half of 2024. Even then, we are positioned to continue our growth without missing a beat because of our newly announced Mississippi acquisition and Dalton acquisition. These facilities are slated to get us over 17 exahash per second by April of 2024. These, along with the expansion of our existing Dalton facilities and the final megawatts from Sandersville, are expected to propel us over 20 exahash per second again in the first half of this calendar year. We've begun the permitting process to expand our existing Dalton campus. Currently at 0.8 exahash per second, the canvas will double to 1.6 exahash per second once complete.

And although we don't have a specific timeline, we are still planning for the remaining power to be delivered within the first half of 2024.

Even then we are positioned to continue our growth without missing a beat because of our newly announced Mississippi acquisition and Dalton acquisition. These facilities are slated to get us over 17 <unk> per second by April of 2024.

These along with the expansion of our existing Dalton facilities and the final megawatts from Sander sale are expected to propel us over 20 <unk> per second again in the first half of this calendar year.

Yes.

We have begun the permitting process to expand our existing Dalton campus.

Currently at <unk> <unk> per second the campus will double to one six <unk> per second once complete.

Zach Bradford: We are calling this campus Dalton 1 to distinguish it from our newly announced acquisition of a second Dalton campus, which we'll refer to as Dalton 2 during the construction process. This, too, is an investment in our future in Dalton, Georgia. Although not a large site, it is expected to deliver about 0.8 exahash per second and will contribute to a cluster of sites in Georgia that are now supplying a critical need for the community that goes beyond Bitcoin mining. We have a unique relationship with the City of Dalton, which owns and operates its own utility.

We're calling this campus Dalton one to distinguish it from our newly announced acquisition of a second Don campus, which will referred to as Dalton too during the construction process.

Dalton too is an investment in our future in Dalton, Georgia.

While not a large site. It is expected to deliver about eight <unk> per second and will contribute to a cluster of sites in Georgia that are now supplying a critical need for the community that goes beyond bitcoin mining.

We have a unique relationship with the city of Dalton, which owns and operates its own utility.

Zach Bradford: We are currently the city's only interruptible load customer, meaning we have signed an agreement that in the case of a grid emergency, we will shut off, making the power we use available to other grid users. We earn a fixed power credit for performing the service, which supports the grid and its stability. We view this as a best-in-class partnership and as an example of some of the creative ways that Bitcoin miners are working with utilities to improve grid performance, even in regulated markets like Georgia. We expect the Dalton 2 site to start hashing this coming April.

We are currently the city's only interruptible low customer, meaning we have signed an agreement then in the case of a grid emergency we will shut off.

Making the power we use available to other grid users.

We earn a fixed power credit for performing the service, which supports the grid and its stability.

We view this as a best in class best in class partnership and as an example of some of the creative ways to bitcoin miners are working with utilities to improve grid performance.

Even in regulated markets like Georgia.

We expect adult and two site to start hashing this coming April.

Zach Bradford: In addition to the Dalton expansion, we are marking a significant milestone by venturing into new territory with the acquisition of three sites in Mississippi. Mississippi is a logical place for us to expand given our familiarity with the energy landscape in the southern United States. The expansion not only diversifies our operational footprint but also enhances our resiliency and capacity for innovation. Our Mississippi expansion consists of three turnkey acquisitions. Two acquisitions are in central Mississippi, along the I-20, one in the Delta in Vicksburg and another in the Pines in Meridian. The third campus is in southern Mississippi in Wigan.

In addition to the adult <unk> expansion, we are marking a significant milestone by venturing into new territory with the acquisition of three sites in Mississippi.

Mississippi is a logical place for us to expand given our familiarity with the energy landscape in the southern United States.

The expansion not only diversifies, our operational footprint, but also enhances our resiliency and capacity for innovation.

Our Mississippi expansion consists of three turnkey acquisition too.

Two acquisitions aren't central Mississippi, along the I 21, and the Delta in Vicksburg, and another in the Pines and Meridian.

The third campus.

He is in southern Mississippi and Wiggins.

Zach Bradford: These three campuses draw power from two utilities. One is Mississippi Power, which is a sister company to Georgia Power and is owned by Southern Company. The second utility is... All the acquired sites come with a favorable fixed five-year power purchase agreement and an all-in power cost in the five cent range. We expect to formally close the purchase before the end of February. We will immediately begin rack-mounting our own machines, which will start hashing just as soon as they are plugged in. The combined hash rate in Mississippi will be about 2.4 exahash per second, or just over 10% of our operations once we reach our 20 exahash per second milestone.

These three campuses drop power from two utilities.

One is Mississippi power, which is a sister company to Georgia power and is owned by Southern company the.

Second utility is entergy.

All of the acquired sites come with a favorable fixed five year power purchase agreements and an all in power cost in the <unk> range.

We expect to formally close the purchase before the end of February.

We will immediately begin racking our own machines, which will start hashing just as soon as they are plugged in the.

The combined hash rate in Mississippi will be about two four <unk> per second or just over 10% of our operations. Once we reach our 20 <unk> per second milestone.

Zach Bradford: Already, our deployment teams are finalizing plans, including staffing and hiring, property improvements, community relations, and other core initiatives that have come to be part of what we call the CleanSpark way. We are confident in our ability to execute in this new environment and look forward to passing these gains on to our shareholders. Looking ahead, the next time we discuss our financial results with you will be in May, and the halving event will have passed. We view the halving event as an important moment, and I'd like to take a moment to discuss how we believe it will impact our operation. The most obvious impact is that the blocked award will be cut in half.

Already our deployment teams are finalizing plans, including staffing and hiring property improvements community relations and other core initiatives that have come to be part of what we call the clean spark way.

We are confident in our ability to execute in this new environment and look forward to passing these gains onto our shareholders.

Looking ahead. The next time, we discuss our financial results with you will be may the.

Having event will have passed we view the happening event as an important moment and I'd like to take a moment to discuss how we believe it will impact our operations.

The most obvious impact is the block award will be cut in half our margins are in an excellent place to navigate this happening as last quarter, we mined at greater than 60% margins are.

Zach Bradford: Our margins are in an excellent place to navigate this halving, as last quarter we mined at greater than 60% margin, are cost-to-miner industry leading, and we are prepared for this momentary drop. I say momentary because it is not exactly true that our production will be cut in half. While it is true that block rewards are halved, we also anticipate a 15-30% drop in the overall hash rate, which means our share of the global hash rate will grow without any additional cost on our part. This is a naturally accretive moment for a miner of our scale. As we approach the Bitcoin halving event, we anticipate a significant shift in the mining landscape. The halving will naturally phase out less efficient miners, allowing CleanSpark to increase its share of the global hash rate.

Our cost of minor industry, leading and we are prepared for this momentary drop I say momentary because it is not exactly true that our production will be cut in half.

It is true the block rewards or <unk>, we also anticipate a 15% to 30% drop in the overall hatch rate, which means our share of global hash rate will grow without any additional cost on our part. This is a naturally accretive moment for a miner of our scale.

As we approach the bitcoin happening event, we anticipate a significant shift in the mining landscape.

<unk> will naturally phase out less efficient miners, allowing clean spark to increase its share of the global hash rate.

Zach Bradford: This organic growth in market share means we can capture a larger portion of Bitcoin rewards without additional infrastructure investment, leading to enhanced returns for our shareholders. This strategic advantage highlights our commitment to efficiency and positions us favorably for sustained growth in a post-halfing environment. This scenario is only possible because of our obsession with preparation.

This organic growth and market share means we can capture a larger portion of bitcoin reward without additional infrastructure investments.

Leading to enhanced returns for our shareholders.

This strategic advantage highlights our commitment to efficiency and positioned us favorably for sustained growth and a post <unk> environment.

This scenario is only possible because of our obsession with preparation our focus on efficiency will continue to drive down our production cost, especially when paired with our best in class power rate.

Zach Bradford: Our focus on efficiency will continue to drive down our production, especially when paired with our best-in-class power range. Furthermore, this halfing is not just a challenge but a catalyst for positive price action in Bitcoin. I'd like to conclude with a few additional considerations that make us different amongst our peers and the broader market opportunities as they relate to Bitcoin. With the approval of the ETFs and the parade of miners going public over the past few years, investors have a lot of options for how they invest in this extraordinary industry. Our differentiation lies in our strategic approach to energy and geography, leveraging a low-cost active power management strategy.

Furthermore, this happening is not just a challenge, but a catalyst for positive price action in decline.

I would like to conclude with a few additional considerations that make us different amongst our peers and the broader market opportunities as they relate to bitcoin.

With the approval of the Etfs and the parade of miners going public over the past few years investors have a lot of options for how they invest in this extraordinary industry.

Our differentiation lies in our strategic approach to energy and geography, leveraging our low cost.

Our low cost active power management strategy.

Zach Bradford: Our mining rigs are among the most efficient, and our infrastructure and scale, wholly owned and operated by us, sets us apart. Our cost to mine remains amongst the industry's lowest, providing a stark contrast to our competitors, especially when compared to the cost to acquire Bitcoin directly versus ETFs, which must purchase the Bitcoin at the spot market price. As I've said numerous, numerous times before,

Our mining rigs are among the most efficient on our infrastructure and scale wholly owned and operated by us sets us apart.

Our cost of mine remains amongst the industry's lowest providing a stark contrast to our competitors, especially when compared to the cost to acquire a bitcoin directly versus Etfs, which must purchase the bitcoin at spot market prices.

As I've said numerous numerous times before.

Zach Bradford: Bitcoin is a critical technology for our digital age. It is both a powerful commodity and a transformation in the history of money. This fact can sometimes get lost.

Bitcoin is critical technology for our digital age it is both a powerful commodity and a transformation in the history of money.

This fact can sometimes get lost but we believe the true value of bitcoin. The reason for its adoption by millions of people and the reason for its consistent price appreciation lies in bitcoin fundamentals. It is digital money for a digital age, which the history books will one day show is only just.

Zach Bradford: But we believe the true value of Bitcoin, the reason for its adoption by millions of people and the reason for its consistent price appreciation, lies in its fundamentals. It is digital money for a digital age which the history books will one day show is only just beginning. I want to take a moment to thank our shareholders for their continued support. I would also like to thank our incredible team, especially our teams in Sanders.

Beginning.

I want to take a moment to thank our shareholders for their continued support.

I would like to thank our incredible team, especially our teams and standards. So the work accomplished this quarter has set new standards for the industry and it's all thanks to our dedicated employees you're.

Zach Bradford: The work accomplished this quarter has set new standards for the industry, and it's all thanks to our dedicated employees. Your hard work and commitment have not gone unnoticed. Now I'll hand it over to Gary to delve deeper into our financials and provide a detailed outlook for the coming quarter. Thank you, Zach.

Your hard work and commitment have not gone unnoticed.

Now I'll hand, it over to Gary to delve deeper into our financials and provide a detailed outlook for the coming quarters.

Thank you Zack Zack mentioned, our first fiscal quarter was record setting for clean spark, let's dive directly into the numbers, which I'm excited to share with you.

Gary Vecchiarelli: Zach mentioned our first fiscal quarter was record-setting for CleanSpark. Let's dive directly into the numbers, which I'm excited to share with you. Diving right into the numbers, our revenues for the quarter were $73.8 million, an increase of $46 million, or 165% over the same quarter last year. This increase was primarily driven by an increase in our Bitcoin production and an overall increase in the average Bitcoin price. This quarter, we produced 32% more Bitcoin compared to the same quarter last year. It's also important to note that this quarter, the average Bitcoin price was a little over $36,000, whereas last year the average Bitcoin price was approximately $18,000, or less than half.

So I think right into the numbers our revenues for the quarter were $73 8 million, an increase of $46 million or 165% over the same quarter last year. This increase was primarily driven by the increase in our bitcoin production and an overall increase in average bitcoin price.

This quarter, we produced 32% more bitcoin compared to the same quarter last year. It is also important to note that this quarter. The average bitcoin price was a little over 36000, whereas last year. The average bitcoin price was approx approximately 18000 were less than half.

Gary Vecchiarelli: Looking at the immediate preceding fiscal fourth quarter, our revenues increased $21.3 million, or 40% between the periods. While our hash rate was relatively consistent during the first quarter, the average Bitcoin price increased almost 30% from $28,000 in the fourth quarter to $36,000 in the first quarter. The increases in Bitcoin prices and our consistently high uptime percentage of greater than 98% translated to higher gross profit margins as well. As you can see on the right side of this slide, our margins increased $37.5 million year over year with a profit margin of 61%. It's important to note that of the $46 million increase in revenue, $37.5 million, or 82%, was recognized as margin. This demonstrates our efficiency at scale. Comparing the first quarter versus the prior quarter, you see an increase of 22.8 million. This was primarily attributed to lower power costs in the first quarter of 4.4 cents per kilowatt hour compared to 5.2 cents per kilowatt hour in the preceding quarter, paired with higher revenues, again pointing to the benefits of scale. This quarter, we recognized a net income of $25.9 million, which is a significant improvement from prior periods.

Looking at the immediate preceding fiscal fourth quarter, our revenues increased $21 3 million or 40% between the periods. Our hash rate was relatively consistent during the first quarter. The average <unk> price increased almost 30% from 28000 in the fourth quarter to 36000 in the first quarter.

The increases in bitcoin prices and our consistent high uptime percentage of greater than 98% translated to higher gross profit margins as well.

As you can see on the right hand side of this slide our margins increased $37 $5 million year over year with a profit margin of 61%. It is important to note that up to $46 million increase in revenue $37 5 million or 82% was recognized as margin. This.

Demonstrates our efficiency at scale.

Comparing the first quarter versus the prior quarter, we see an increase of $22 8 million.

This was primarily attributed to lower power cost in the first quarter of four four per kilowatt hour compared to $5.02 per kilowatt hour in the preceding quarter paired with our higher revenues again, pointing to the benefits of scale.

This quarter, we recognized net income of $25 9 million, which is a significant improvement from prior periods. This represents 35 cents of every dollar of revenue dropping to the bottom of the bottom line.

Gary Vecchiarelli: This represents $0.35 of every dollar of revenue dropping to the bottom line. This is an exciting time. We are amongst the first to adopt the new accounting fair value measurement rules.

This is an exciting time were amongst the first to adopt the new accounting fair value measurement rules. This now allows us to show the actual fair value of the bitcoin held on our balance sheet and better represents the value we are delivering to our shareholders in our opinion this new accounting standard repairs to Pryor.

Gary Vecchiarelli: This now allows us to show the actual fair value of the Bitcoin held on our balance sheet and better represents the value we are delivering to our shareholders. In our opinion, this new accounting standard repairs the prior broken rules and provides better clarity to investors and readers of our financial statements. Turning our attention to Adjusted EPITHER, management uses this non-gap metric to evaluate the performance of its mining operation. The theme continues with $69.1 million of positive adjusted EBITDA this quarter.

Broken rules and provides better clarity to investors and readers of our financial statements.

Turning our attention to adjusted EBITDA management uses this non-GAAP metric to evaluate the performance of its mining operations.

The theme continues with $69 1 million of positive adjusted EBITDA This quarter.

Gary Vecchiarelli: I want to highlight that this quarter our efforts to optimize costs directly contributed to our professional fees decreasing 24% and our G&A expenses decreasing 35% compared to our fourth quarter. This again is attributable to the benefit of operating at our scale. I want to take a moment to discuss our power costs for the quarter in a little more detail. Our cost of power for the first quarter was 4.4 cents a kilowatt hour, which is lower than both the same quarter last year and the immediately preceding fourth quarter.

Want to highlight that this quarter, our efforts to optimize costs directly contributed to our professional fees decreasing 24% and our G&A expenses decreasing 35% compared to our fourth quarter as well. This again is attributable to the benefit of operating at our scale.

One take a moment to discuss our power costs for the quarter and a little more detail.

Our cost of power for the first quarter was $4.04 a kilowatt hour, which is lower than both the same quarter last year and the immediately preceding fourth quarter, we recognized that reporting on components of power costs are not consistent within the industry. So we'd like to provide this breakdown to not only show what our wholesale electricity cost is.

Gary Vecchiarelli: We recognize that reporting on components of power costs is not consistent within the industry, so we like to provide this breakdown to not only show what our wholesale electricity cost is but also the contributions our business makes to the community through vitally important taxes and profit margins to the cities and communities we operate in. I also want to point your attention to our cost to mine Bitcoin, which includes direct power costs. As Zach has stated before, we believe we are the best operator in space, and the cost of mining at our wholly owned facilities is a testament to that. Our cost at our wholly owned facilities is almost half of what it is at our co-location partner. This is due to several reasons, including the fact that having control over our own machines results in greater uptime, efficiency, and control over the technology staff. On a final note, I want to talk about our balance sheet and our liquidity position. As of today, we have $229 million in liquidity, which includes $62.5 million in cash and over 3,700 bitcoins, representing approximately 167 million in bitcoin value.

But also the contributions our business mix to the community through vitally important taxes and profit margins to the cities and communities we operate in.

I also want to point your attention to our cost to mine decline, which includes direct power costs.

As <unk> stated before we believe we are the best operator in this space and the cost of mine at our wholly owned facilities is a testament to that.

Our costs at our wholly owned facilities as almost half of what it is at our co location partner. This is due to several reasons, including the fact that having control over our own machines results in greater uptime efficiency and control over the technology stack.

On a final note I want to talk about our balance sheet and our liquidity position.

As of today, we have $229 million of liquidity, which includes $62 5 million of cash and over 3700, bitcoin representing approximately $167 million of bitcoin value.

Gary Vecchiarelli: Additionally, as of the end of the quarter, we had over 860 million in assets and just 14.5 million in total debt. Our balance sheet is one of the strongest in the industry and provides us with great flexibility going into the halving. We expect to remain prudent in our operations and capital strategy while maintaining sufficient liquidity to take advantage of the opportunities that will present themselves post-halving. Until the halving, we remain laser focused on execution and look forward to bringing Sandersville fully online, ramping up our new locations in Dalton, Georgia and throughout Mississippi as we move towards exceeding 20 exahashes per second and beyond. With that, I'll turn the call back over to Isaac to open the floor for questions.

Additionally, as of the end of the quarter, we had over $860 million of assets and just $14 5 million of total debt. Our balance sheet is one of the strongest in the industry and provides us great flexibility going into the having we expect to remain prudent in our operations and capital strategy.

While maintaining sufficient liquidity to take advantage of the opportunities that will present themselves post having until we're having we remain laser focused on execution and look forward to bringing standards will fully online.

Ramping up our new locations in Dalton, Georgia and throughout Mississippi, as we move towards exceeding 20 extra cash as per second and beyond with that I'll turn the call back over to Isaac to open the floor for questions.

Isaac Holyoake: Thank you, Gary, for that detailed financial overview. We will now open the floor to questions from our analysts. Operator, please provide instructions and manage the queue for the Q&A session.

Thank you Gerry for that detailed financial overview, we will now open the floor to questions from our analysts operator, please provide instructions and manage the queue for the Q&A session.

Operator: Great. Thanks, Isaac. Ladies and gentlemen, at this point, we will begin the Q&A session. As Isaac mentioned, to ask a question, you may press the star and the number one on your touchtone phone.

Great. Thanks, guys.

And gentlemen at this point, we will begin the Q&A session as Isaac mentioned to ask a question you May press star and the number one on your Touchtone phone and then to withdraw your question simply press Star. One again, if you are using a speaker phone. We do ask that you. Please pickup your handset prior to pressing the numbers to ensure the best sound quality once again star and the number one.

Mike Colanese: And then to withdraw your question, simply press star one again. If you are using a speakerphone, we do ask that you please pick up your handset prior to pressing the numbers to ensure the best sound quality. Once again, star and number one. And our first question today comes from Mike Colanese with HC Wainwright. Mike, please go ahead. Hey, good afternoon, guys. And congratulations on the main deal, the recent acquisitions, and getting Sandersville energized here. Really exciting times for CleanSpark. Just a couple questions for me.

And our first question today comes from Mike <unk> with HC Wainwright, Mike. Please go ahead.

Hey, good afternoon, guys and congratulations on the bid being deal the recent acquisitions and getting Centerville energized here really exciting times for clean spark.

Just a couple a couple of questions for me. So you talked about receiving the <unk> 'twenty ones call. It through the first half of the year. So I was just curious how you guys are thinking about the additional infrastructure needed to support the new rigs that are going to be delivered in the coming months are you seeing other attractive acquisition opportunities out there in the market today.

Zach Bradford: So you talk about receiving the 12X to hash, the best 21s, call it through the first half of the year or so. I was just curious how you guys are thinking about the additional infrastructure needed to support the new rigs that are going to be delivered in the coming months. Are you seeing other attractive acquisition opportunities out there in the market? Or would you consider building out an entirely new facility, be it in Georgia or another market outside? Hey Mike, thanks for joining us. Yeah, with that additional infrastructure, you know, maybe the best example to give is in December when we did our earnings call, I let everybody know that we were 72 megawatts short of what we needed to get to 20 based on what we had ordered the prior month. And we sit here today, just 60 days later, with the answers for how we filled that.

Or would you consider building out an entirely new facility be it in Georgia or another market out there.

Hey, Mike Thanks for joining us.

Yes with that additional infrastructure, maybe the best example to give is in December when we did our earnings call I, let everybody know that we were 72 megawatts short of what we needed to get to 'twenty based on what we had ordered the prior month.

And we sit here today to 60 days later with the answers for how we fill that.

Zach Bradford: So I would point to our track record to show how confident we are in some of the statements we're making. But really, how we're looking at this is that there are a lot of incredible opportunities out there. And so we are evaluating a queue of opportunities, many of which do include M&A opportunities. And I believe that's likely where we'll turn first as the place where we would put the first 12 exahash of machines.

I would point to first our track record.

To show how confident we are in some of the statements, we're making but really how we're looking at this is there's a lot of incredible opportunities out there.

And so we are evaluating a queue of opportunities.

Many of which do include M&A opportunities.

And I believe that's likely where we'll turn to first.

As the place where we would put the first 12 <unk> of machines.

Zach Bradford: The following 20, there's a lot of flexibility in that option and how we exercise it. And for some of that, we would certainly be building, either adding on to existing facilities, expanding, or even building out new greenfield opportunities. So we're going to look at it from the total of the full option from both sides. But we really do think that there is plenty of opportunity out there, including things that we're actively looking at that will create a nice home for the 12 X a hash of additional growth that we plan to hit before the end of the calendar year. Very helpful. And just to follow up for me, you know, if we look at the entire 160,000 deal with BitPay for the S21s, what would need to happen for CleanSpark to really consider exercising that full option? If you could just speak to some of the specific factors or market conditions that would influence your decision and really be comfortable with transacting on the full $160,000. Yeah, I don't think that there's any specific Bitcoin price that we would be looking for or anything like that, that I could point to.

Following 20, there's a lot of flexibility in that auction and how we exercise it.

And for some of that we would certainly be building, either adding onto existing facilities, expanding or even building out new greenfield opportunities.

So we're going to look at it from a total of the full option from both sides, but we really do think that there is plenty of opportunity out there, including things that we're actively looking at that will create a nice home for the 12 extra hash of additional growth that we planned to hit before the end of the calendar year.

Very helpful and just a follow up for me.

If we look at the entire 160000.

Deal with big pain for the 'twenty ones.

Would need to happen for clean spark to really consider exercising the call option. If you could just speak to some of the specific factors and market conditions that would influence your decision and really be comfortable with transacting on the 460000.

Yes, I don't think that Theres any specific bitcoin price that we would be looking for or anything like that that I could point to but instead, it's going to be how the chips fall really on a post <unk> basis, because thats when were going to be looking at it the closest.

Zach Bradford: But instead, it's going to be how the chips fall really on a post-taffing basis, because that's when we're going to be looking at it the closest. You know, we're going to be factoring in where the difficulty actually dropped to, where it recovered to, and what Bitcoin's price is. It's really going to be a measure of what the ROI is. And, you know, we're also going to keep an eye on, you know, anything else that's going on in the market, just in general. A key thing about that option is, you know, we can wait to exercise it all the way to the very last day of the year and take some of those into 25. So one thing I can say is we feel highly confident that we will exercise the option, as I said, during the call. It's really about when.

We're going to be factoring in where the difficulty actually dropped to where does it recover too what is bitcoins price.

It's really going to be a measure of what's the ROI and.

We're also going to keep an eye on or anything else that's going on in the market. It just in general.

A key thing on that option is we can wait to exercise that all the way to the very last day of the year and take some of those into 25. So one thing I can say is we feel highly confident that we will exercise the option as I said during the call it's really about when.

Zach Bradford: Another key component of that is we can exercise it in parts. So if we get opportunities, the warrants pulling down 10, 20, 30,000 of the 100, we can exercise that option earlier, and we could hold the rest until later at the end of the year. That flexibility is really important when you consider the fact that as soon as options like this are exercised, it involves cash flow. So we always want to minimize the timing of spending cash and plugging machines in.

Another key component of that is we can exercise it in parts. So if we get opportunities.

Warrants pulling down 10, 20 30000 of the 100, we can exercise that option earlier and we could hold the rest until later to the end of the year that flexibility is really important when you consider the fact that as soon as the options like this or exercise that involves cash flow. So we always want to minimize the timing.

Spending cash and plugging machines in and so on as it relates to that auction I think that will what kind of switch directions, whereas right. Now we have looked to secure machines get them coming. We then look to the infrastructure second on the option will look to infrastructure first machine.

Zach Bradford: And so as it relates to that option, I think that we'll kind of switch directions, whereas right now we've looked to secure machines, get them coming, and we then look to the infrastructure second on the option. We'll look to infrastructure first, machines second, because the certainty of price and timing will be known. And that's the true value of the option.

The certainty of price and timing will be known and that's the true value of the option.

Mike Colanese: Great. Thank you for taking my question, Zach.

Great. Thank you for taking my question Jack.

Operator: Thanks, Mike. And our next question comes from the line of Josh Siegler with Cantor Fitzgerald. Josh, please go ahead.

Great. Thanks, Mike.

And our next question comes from the line of Josh <unk> with Cantor Fitzgerald, Josh. Please go ahead.

Josh Siegler: Yeah, hi guys. Thanks for taking my call today. Congratulations on the results.

Yes, hi, guys. Thanks for taking my call today, Congrats on the results I would like to dive a little bit deeper into the Mississippi acquisitions, because this marks a clear change in strategy from how you've been positioning your vertically integrated site, Georgia can you give us a little bit more detail on the rationale really expand the geography and how youre dealing.

Zach Bradford: I'd like to dive a little bit deeper into the Mississippi acquisitions because this marks a clear change in strategy from how you've been positioning your vertically integrated sites in Georgia. Can you give us a little bit more detail on the rationale to really expand the geography and how you're feeling about the new Mississippi move? Yeah, Josh, thanks for joining the call. How we're thinking about Mississippi is as another Georgia.

About the new Mississippi Mills.

Josh Thanks for joining the call.

How we're thinking about Mississippi is another Georgia.

Zach Bradford: It's a place that we're seeing a lot of opportunities based on how we view and interact with the grids that are located in that part of the U.S. We feel very comfortable with those systems and grids, and we see this as our first foray into Mississippi. Anywhere that we go, we're going to look to do similar things where we are going to be looking to expand our footprint, be a meaningful part of the communities, things like that. So this is an entry point for us in Mississippi, and we expect that there's a lot of opportunity there. If you think of headlines about reading about any minor right now, Mississippi is not a place that you're reading about.

It's a place that we're seeing a lot of opportunities based on how we view and interact with the grids that are located in that part of the U S. We feel very comfortable with with those systems in grids and we see this is our first foray into Mississippi.

Anywhere that we go we're going to look to do similar things, where we're going to be looking to expand our footprint the meaningful part of the communities and.

Things like that so this is an entry point for us in Mississippi, and we expect that there is a lot of opportunity there.

If you think of headlines about reading about any minor right now in Mississippi is not a place that you are reading about and.

Zach Bradford: That, for us, points to a lot of opportunities in the research we've been doing over the past several months. So, we're excited about it and see it as another home that will spin up and do similar things and gain the same efficiency. Yeah, absolutely. It will be interesting to see how it plays out. I guess as a follow-up to that would just be, you know, if we could dive a little bit deeper into the power structure for Mississippi, how are you thinking about fixed burst floating? And ultimately, where do you see your overall cost of electricity trending as we enter into the habit?

That for us points to a lot of opportunities in the research we've been doing over the past several months. So we're excited about it and see it as another home that will spin up and do similar things and gain the same efficiencies.

Yes, absolutely interested in seeing how it plays out I guess as a follow up to that would just be.

If we could dive a little bit deeper into the power structure for Mississippi, How are you thinking about fixed versus floating and ultimately where do you see your overall cost of electricity trending as we enter into the hobby.

Zach Bradford: Yeah, so we see it staying fairly stable. So all of these sites come with a fixed price power agreement in the five cent range. When you blend that into, you know, what last quarter's prices were to you throw this in on a percentage basis, it would shift our average power costs still into the mid-range. So that's what we're still looking at on a blended average.

Yes, so we see it staying fairly stable. So all of these sites come with a fixed price power agreement in the <unk> range. When you blend that into what last quarter. If prices were to throw this thing on a percentage basis. It would shift our average power costs still into the mid fours. So.

That's what we're still looking at a blended average we're also watching the market. The market is pointing to a continued flatness or even a slight decrease in power prices in the state of Georgia, because they do share parent companies.

Zach Bradford: We're also watching the market. The market is pointing to, you know, a continued flatness or even a slight decrease in power prices in the state of Georgia because they do share parent companies. We think that we're going to see similar availability. I would expect us, actually, as we expand and use this foundation of a fixed price power in Mississippi, to actually look towards more market-based power rates, because we've been incredibly successful in basically beating the fixed price rates, which usually represent, you know, a hedge price on the other side. But you know, we're going to climb that hill as we continue to grow in Mississippi and thought that an entry point with a fixed price five-year power agreement was a great place to start. Great, appreciate the color there, and congratulations again to everyone.

We think that we're going to see similar availability I would expect us actually as we expand and use this foundation of the fixed price power in Mississippi to actually look towards more <unk>.

Market based power rates, because we've been incredibly successful in basically beating the fixed price rates, which usually represents a hedge price on the other side.

But we're going to climb that hill as we continue to grow in Mississippi and thought that an entry point with the fixed price five year power agreement was a great place to start.

Great I appreciate the color there and congratulations again on the results.

Josh Siegler: Thank you. Great, thanks Josh. Again, ladies and gentlemen, a reminder, if you'd like to ask a question, press one on your touch-tone phone. Once again, press one on your telephone keypad. And our next question comes from Greg Lewis at BTIG. Greg, please go ahead. Yeah, hey, thank you. And good afternoon, everybody.

Thank you.

Thanks, Josh.

Again, ladies and gentlemen reminder, if you'd like to ask a question star one on your Touchtone phone once again star one on your telephone keypad.

And our next question comes from Greg Lewis at BTG, Greg. Please go ahead.

Yeah. Thank you and good afternoon everybody.

Gregory Robert Lewis: Um, you know, Zach, congrats on Mississippi. Um, you know, just kind of curious, was that how competitive of a process was that? Um, were you looking at that acquisition against others? And really, when did that kind of first come across?

Zach Congrats on Mississippi.

Just kind of curious.

Is that how competitive.

Our process was to that.

Were you looking at that at that acquisition against others.

And really when did that kind of first come across.

Gregory Robert Lewis: you know, are coming to your guys' purview as a potential acquisition opportunity. You know, what I'm trying to understand is you mentioned lots of M&A opportunities. You know, we're hearing some of that, you're probably seeing more than we're hearing about, but just kind of any kind of color around the Mississippi opportunity and how that evolves. You know, what I can say is relationships are the first thing that matters. This site was owned by a party that we'd already acquired a site from.

In our come into your guys' purview as a potential acquisition opportunity.

What I'm trying to understand as you mentioned lots of M&A opportunities. We are hearing some of that.

You are probably seeing more than we're hearing about just.

And any kind of color around around the Mississippi opportunity and how that evolves.

What I can say is relationships. So the first thing that matter.

This site was owned by a party that we had already acquired a site from and so it was where we got basically a first an early look at it now we actually looked at it.

Zach Bradford: And so it was where we got basically a first and early look at it. Now, we actually looked at it in a prior quarter, and at the time, all things considered, we didn't move on it because we were highly focused on what we were doing. We're now in a situation where we have lots of machines coming, and it makes all the sense in the world. And so getting the first look and first opportunity on this allowed us to engage in negotiations on an exclusive basis, which is what we bargained for as part of the process.

The prior quarter and at the time, all things considered we didn't move on it because we are highly focused.

On what we're doing we're now in a situation, where we have lots of machines coming and it made all the sense in the world and so getting the first look in first.

Opportunity on this allowed us to engage in negotiations on an exclusive basis, which is what we bargained for as part of the process. So again.

Zach Bradford: So again, I believe it would have been competitive had we not had the relationship we already had. So we did leverage our relationships to make sure it went very smoothly and quickly. Okay, great. And then I would be curious, just because it's something that we're thinking about, you mentioned the halving potentially knocking off 15 to 30% of global hash. You know, I don't know how detailed you need to get on the call, but, you know, kind of if you could give us maybe, broad strokes, how you're kind of coming up with that number.

I believe it would have been competitive had we not had the relationship we already had so we did leverage our relationships to make sure.

Went very smoothly and quickly.

Okay, Great and then and then I would be curious just because it's something that we're thinking about.

You mentioned, the having potentially knocking off.

<unk> to 30% of global Ash I don't know how detailed you need to get on the call, but kind of if you could give us maybe some broad strokes. How you are kind of coming up with that number.

Zach Bradford: Yeah, you know, I'm going to give you some broad strokes. One thing that nobody knows is really the exact percentage of what machines are where and what their power rates are. But what we do know and what we can see is that there are a lot of machines that are still plugged in that are not nearly as efficient as they're going to need to be. An easy example of that is, you know, there are public companies that are still openly running mines that have an efficiency between 38 and 44.

Yes, I'm going to give you some broad strokes, what one thing that nobody knows is really the exact percentage of what machines are where and what their power rates are behind that.

What we do know and what we can see is that there are a lot of machines that are still plugged in that or not nearly as efficient as theyre going to need to be.

And easy example of that is.

There's public companies that are still open they running miners to have an efficiency between 38% and 44.

Zach Bradford: And so I really believe, whether it's, you know, immediately at halving or, you know, sometime plus or minus a month around halving, I'm a believer that, you know, everything on the above average side is going to start to struggle. And, you know, as much as public companies may have balance sheets that can allow them to last a little while through some of these tough times, everybody else, they, you know, they're kind of going day by day on their cash flow.

And so I really believe whether it's immediately having or sometime plus or minus a month around having.

I'm a believer that.

Everything on the above average side is going to start to struggle.

And as much as public companies may have balance sheets that can allow them to last a little while through.

Some of these tough times everybody else they.

They're kind of go in day by day on their cash flows. So we point to that and we say, okay. We know that even theres. Some public companies running 38% to 44 that means also that there are other assets out there that are significantly higher what percentages, we don't know and that's where our estimate comes into it.

Zach Bradford: So we point to that, and we say, OK, we know that is the global hash rate, there's at least 15-30% that's less efficient than a 38 watt per terahash. Very helpful, thank you very much. All right. Thank you, Greg. And our next question comes from Reggie Smith at J.P. Morgan. Reggie, please go ahead. Hey, everyone. This is Charlie. I'm for Reg

15% to 30% so.

In our opinion.

Global hash rate there is at least 15% to 30% that's less efficient than a 38 watt per tear hashed machine.

Super helpful. Thank you very much.

Alright, Thank you Greg.

And our next question comes from Reggie Smith at Jpmorgan. Please go ahead.

Hey, everyone. This is Charlie on for Rajeev. Thanks for taking the question.

Reggie Smith: Thanks for taking the question. I know you provided some details on under and overclocking efficiency last quarter, and I realize it's early days on the S21s, but I was wondering if you had a sense of how reliable, how efficient, and kind of how flexible from an overclocking and underclocking perspective these machines are straight out of the box. I know some earlier models, specifically, I think the XP's had some performance issues kind of on the first go around, so any context there would be helpful.

I know you provided some details on under and over clocking efficiency last quarter and I realize it's early days on the F. 'twenty one, but I was wondering if you had a sense of how reliable power efficient and kind of how flexible from an from a overclock under Clarkson perspective.

These machines are straight out of the box.

I know some earlier models, specifically I think like the XP has had some performance issues kind of on the first go around.

Zach Bradford: Thanks. Yeah, I'm going to give you some broad strokes on that. So we have taken units in, and we have tested those. The good news is the S21 is very flexible, is what we're finding so far. And you were right. The XP is one of the less efficient miners.

Any context, there would be helpful. Thanks.

Yes, I'm going to give you some broad strokes on that so.

We have taken units and we have tested those the good news is the <unk> 21 is very flexible is what we're finding so far and you are right. The XP is one of the less efficient miners.

Zach Bradford: It's because it was already released at the lower end of its physical, I'll call it physical levels of efficiency. So pushing that to get it more efficient creates some challenges in the XP. The S21, on the other hand, has some flexibility built in that we've been able to extract, using some of our tech stack and our firmware.

Does it was already released at the lower end of it.

Physical I'll call it physical.

Levels of efficiency, so pushing that to get it more efficient to create some challenges in the XP. The F. 'twenty one on the other hand has some flexibility built in that we've been able to extract.

Using some of our tech stack and our firmware and so we've been able to get the F. 'twenty one to perform at a level of 15 eight.

Zach Bradford: And so we've been able to get the S21 to perform at a level of 15.8 joules per terahash, and we've also been able to push it, even in an air-cooled environment, to as high as 220 terahashes. So we're happy. It's still early days, though. We need to see how it behaves on a fleet-wide basis, but we're very happy with what we're seeing, the ability to push efficiency out of it, and also the ability to actually push it a little bit higher. You know, to get to 220, it costs us a watt or two, but it's very, very little.

Joules per Terra Ash, and we've also been able to push it even in an air cooled environment.

Two as high as 220.

Tara Ash. So we're happy it's still early days, we need to see how it behaves on a fleet wide basis, but we're very happy with what we're seeing the ability to push efficiency out of it and also the ability to actually push it a little bit higher.

To get to 220, it costs us a water too, but it's very very little so we're really happy with that from a temperature point of view, we're seeing it to be fairly resilient. So it is five five degree Celsius higher rated than the XP also.

Zach Bradford: So we're really happy with that. From a temperature point of view, we're seeing it to be fairly resilient. So it is five degrees Celsius higher rated than the XP also. We, of course, haven't gone through a summer yet with the S21, but all the testing we're doing where we are introducing heat into that as part of our R&D process, we're really happy with the results we're seeing

We of course, Havent gone through a summer yet with the F. 'twenty, one, but all the testing we're doing where we are introducing heat into that as part of our R&D process. We're really happy with the results. We're seeing so we expect I guess in summary to have the F. 'twenty, one b represent the flexibility and benefits similar.

Reggie Smith: So we expect, I guess, in summary, to have the S21 represent the flexibility and benefits similar to a JPRO, except for already almost nearly double the efficiency. Got it. That's great to hear. Thanks for taking the time to ask the question. Absolutely, thanks for joining the call. All right. Thank you, Reggie. And one more queue for questions. Last call. If you'd like to ask a question, press one on your touchstone phone. Once again, type one on your telephone keypad. Otherwise, our final question will come from Brian Dobson at Chardin Capital Market. Brian, please go ahead.

Two a J pro except for already almost nearly double the efficiency.

Got it that's great to hear thanks for taking my question.

Absolutely thanks for joining the call.

Alright, Thank you Reggie and one more Q4 questions last call if you'd like to ask a question star one on your Touchtone phone once again star one on your telephone keypad otherwise our final question will come from Brian Dobson at short and capital markets Excuse me Brian. Please go ahead.

Brian H. Dobson: Hey guys, thanks for taking the question. And congratulations on the very efficient monthly metrics you guys put in during the quarter. So I suppose, let's talk about your new mining facilities. You know, in the past, you've mentioned that Georgia offers a variety of natural climate advantages for Bitcoin mining. Do you believe your new facilities share these same advantages? Yeah, we do. So actually, you know, if you compare it to the, you know, middle of the road kind of temperatures in Georgia and Mississippi, we're actually getting, on average, a few degrees cooler weather where these are located.

Hey, guys. Thanks for taking the question.

And congratulations on the very efficient monthly metrics you guys did during the quarter.

I suppose.

Let's talk about your new money in the past you've mentioned that Georgia offers a variety of natural climate advantages for bitcoin mining.

Do you believe your new facilities shared these some advantages.

Yes, we do so actually if you compare it to the.

Middle of the road kind of temperatures in Georgia, and Mississippi, We're actually getting on average a few degrees cooler weather, where these are located so where we are looking forward to what they are were also as part of these facilities, where we didn't get a lot into is really what the physical infrastructure looks like so these are buildings. These are not pods. These are.

Zach Bradford: So, we're, we are looking forward to what they are. We also, you know, as part of these facilities, what we didn't get a lot of into is really what the physical infrastructure looks like. So these are buildings. These are not pods.

Zach Bradford: These are buildings that have very robust exhaust fan systems built in that help with, and additionally with, what the miners are already pushing out and handling. They're still very low PUE buildings, and we're really happy with how we expect them to perform, but we did make sure, of course, you know, in addition to the weather advantages that we expect to also carry through, we made sure that the infrastructure was ready and set up for it. These facilities, as we mentioned, are turnkey in the sense that we're bringing our miners into a facility that will be empty, but there is over a year of runtime data that we were able to look at to watch how these facilities run and function over an entire year of data.

Buildings that have very robust exhaust fan systems built in to help with.

Additionally, with what the miners are already pushing out and handling.

Still very low <unk> buildings, and we're really happy with how we expect them to perform but we did make sure of course in addition to the weather advantages that we expect to also carried through.

We made sure that the infrastructure was ready and set up for it. These facilities as we mentioned our turn key in the sense that we're bringing our miners into a facility that will empty out but there is over a year of runtime data that we were able to look at to watch how these facilities run and function over an entire year.

Zach Bradford: So, all in all, really happy and looking forward to the results we expect them to generate. Yeah, good to hear. During your prepared remarks, you also mentioned just briefly that the halving may lead to a stronger price performance for Bitcoin. Now, I agree with that, because at the very least, your daily selling pressure from the mining industry is going to be reduced by half for those not hodling. But do you think you could kind of elaborate on what you see as potential positive catalysts for the coin post-halving? Yeah, I think that the selling pressure, of course, is one of those ETFs, I think, are helping with the buying. So you think about how many coins are going to be taken off the shelf, essentially on a permanent or semi-permanent basis. To me, that's a big part of that. Do I think it's going to happen the day after halving occurs? No. Just like all supply and demand shocks work, when you look at anything in a commodities market or any general economic market, basically, the longer that the supply is less than it was before, the more likely you're going to see a price impact.

Data so all in all really happy and looking forward to the results, we expect them to generate.

Yes, good to hear.

During your prepared remarks, you also mentioned just briefly that the having may lead to a stronger price performance for clients.

I agree with that because at the very least you daily selling pressure from the mining industry is going to be reduced by half for those not modeling.

If you could kind of elaborate on what you see is <unk>.

Potential positive catalyst.

For the client channel.

Yes, I think that the selling pressure of course is one of those the Etfs I think are helping with the buying so you think about how many how many coins are going to be taken off the shell shelf essentially on a permanent or semi permanent basis to me is a big part of that.

Do I think it's going to happen the day after having occurs no.

Just like all supply and demand shocks work when you look at anything in a commodities market or any general economic market basically the longer that the supply is less than it was before the more likely you're going to see a price impact. So it could take 30 days or it could take nine months before we see those catalysts fully.

Brian H. Dobson: So, you know, it could take 30 days, or it could take nine months before we see those catalysts fully kick in. But you know, there's a lot of things that we can point to. But I'm a big fan of thinking simple and supply and demand curves on an economic basis, pointing to the largest driver. You pair that with what I also think is going to be higher adoption, both in, you know, a traditional sense of users of Bitcoin and corporations, they're going to now be willing to put it on their balance sheets due to the new accounting rules to layer twos. And, you know, whether it's ordinals or anything else, which is good for us by creating more fees. But in addition to the fees, it's people using the blockchain for more things. So I think you first look at supply and demand economics, and you second look at, you know, the use cases being a catalyst for additional demand, not just reductions in supply.

Kick in but there's a lot of things that we can point to but I am a big fan of thinking simple supply and demand curves on an economic basis, pointing to being the largest driver you pair that with what I also think it's going to be higher adoption. Both in a traditional sense of users of <unk>.

Bitcoin.

<unk>, they're going to now be willing to put it on their balance sheet due to the new accounting rules to layer twos, and whether it's <unk> or anything else, which.

Which is good for us by creating more fees, but in addition to the fees. It's people using the blockchain for more things. So I think your first look to the supply and demand economics in your second look too.

The use cases being a catalyst for additional demand not just reductions in supply.

Brian H. Dobson: Yeah, very good. Thanks very much. Thank you for calling. And with that, I would now like to turn the call back over to Isaac Holyoake for closing remarks. Isaac, the floor is yours. Thank you. I appreciate it. And thank you for joining us on today's earnings call. We look forward to sharing more of our journey with you in the coming quarters. Stay tuned for more groundbreaking achievements from CleanSpark. Thank you. Thank you, Isaac. Ladies and gentlemen, that concludes today's call. Thank you for joining us, and you may now go to, www. CleanSparkCenter.com

Okay very good thanks very much.

Thank you Veronika.

Yeah.

And with that.

I would now like to turn the call back over to Isaac Holyoke for closing remarks, Isaac the floor is yours.

Okay.

Thank you I appreciate it and thank you for joining today's earnings call. We look forward to sharing more of our journey with you in the coming quarters stay tuned for more groundbreaking achievements from clean spark. Thank you.

Thank you Isaac ladies and gentlemen that concludes today's call. Thank you for joining and you may now disconnect.

Yeah.

Okay.

Yeah.

Yeah.