Q2 2024 CleanSpark Inc Earnings Call

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Regina: Ladies and gentlemen, good afternoon. My name is Regina, and I will be your conference operator today. I would like to welcome everyone to CleanSpark's second quarter fiscal year 2024 financial results conference call. All lines have been placed on mute to prevent any background noise.

Ladies and gentlemen, good afternoon. My name is Regina and I will be your conference operator today I would like to welcome everyone acute clean spark second quarter fiscal year 'twenty 'twenty four 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.

Regina: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. I would now like to turn the floor over to Isaac Holyoak, Chief of Communication.

Isaac Holyoak: Thanks, Regina. I appreciate it.

Isaac Holyoak: And answer session.

Isaac Holyoak: If you would like to ask a question. During this time simply press Star then the number one on your telephone keypad, if you'd like to withdraw your question Press Star One again I would now like to turn the floor over to Isaac Holyoke Chief Communications.

Isaac Holyoak: And thank you for joining us today for our second quarter fiscal year financial results call covering the period January 1 2024 through March 31 2024. Our press release was issued earlier this morning 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 is Zach Bradford, our Chief Executive Officer.

Isaac Holyoak: Thanks, Regina I appreciate it and thank you for joining us today for our second quarter fiscal year financial results call covering the period January one 2024 through March 31, 2024, our press release was issued earlier this morning and is available on our website at www.

Isaac Holyoak: <unk> dot clean spark Dot com today's call is also being webcast and a replay and transcript will be available on our website.

Zachary K. Bradford: On the call with me are <unk>.

Isaac Holyoak: Zach Bradford, our Chief Executive Officer, and Gary back to you really our Chief Financial Officer.

Isaac Holyoak: Chief Executive Officer, and Gary Vecchiarelli, our Chief Financial Officer.

Isaac Holyoak: 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. 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. Thank you.

Isaac Holyoak: 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.

Zach: 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 Zack.

Zach: Thank you Isaac.

Zachary K. Bradford: We've had an exceptional quarter, made possible by the hard work of the many quarters that preceded it. In fact, this quarter has been, in many ways, the payoff for what has been years of careful, measured, and patient building. But rather than see this as a place where we stop to celebrate, I see this as a beginning, a beginning in which we have already laid a strong foundation for the future.

Zach: We've had an exceptional quarter made possible by the hard work of the many quarters that preceded it in fact this quarter has been in many ways. The payoff for what has been years of careful measured and patient building.

Zachary K. Bradford: But rather than see this as a place where we stopped to celebrate I see this at the beginning.

Zachary K. Bradford: Beginning in which we have already laid a strong foundation for the future to come post passing this foundation of great commitment and importantly, the scale. We've developed over the last few years, we will continue to pay off as we work to deliver exceptional returns to our shareholders. During the next <unk>.

Zachary K. Bradford: Post-halfing, this foundation of grit, commitment, and importantly, the scale we've developed over the last few years will continue to pay off as we work to deliver exceptional returns to our shareholders during the next cycle. Our record-breaking revenue and adjusted EBITDA are a testament to our robust operational strategies and market positioning. We recorded $111.8 million in revenue and $181.8 million in adjusted EBITDA. These numbers are impressive on their own. Compared to past performance and the speed at which we have achieved it relative to our peers, they have become more so. Our revenue grew 52% quarter over quarter and 163% compared to the same prior year period. Adjusted EBITDA grew 163% quarter over quarter and then 12 times over the same prior year period.

Zachary K. Bradford: Michael.

Zachary K. Bradford: Our record breaking revenue and adjusted EBITDA are a testament to our robust operational strategies and market positioning we recorded one $111 8 million in revenue and $181 8 million and adjusted EBITDA.

Zachary K. Bradford: These numbers are impressive on their own compared to the past performance and the speed at which we have achieved them relative to our peers.

Zachary K. Bradford: Become more so.

Zachary K. Bradford: Our revenue grew 52% quarter over quarter, and 163% compared to the same prior year period.

Zachary K. Bradford: Adjusted EBITDA grew 163% quarter over quarter, and then 12 times over the same prior year period.

Zachary K. Bradford: Bitcoin production, despite global hash rate growth, stayed strong, even beating our prior quarter's production, placing us amongst the highest producers in the industry. Since the start of 2024, we've experienced exceptional growth, with our operating capacity increasing by an impressive 63% in what we believe is the most hash rate added amongst any public miner. Our growth is supported by our newest Bitcoin mining facilities in Mississippi and Georgia. And, as we announced moments before the call started, we plan to continue our growth in the great state of Wyoming, which I'll discuss in greater detail later in the call.

Zachary K. Bradford: The corn production, despite global hash rate growth stayed strong even beating our prior quarter's production, placing us amongst the highest producers in the industry.

Zachary K. Bradford: Since the start of 2024, we've experienced exceptional growth with our operating capacity increasing by an impressive 63% and what we believe is the most hash rate added amongst any public miner.

Zachary K. Bradford: Our growth is supported by our newest bitcoin mining facilities in Mississippi, and Georgia, and as we announced moments before the call started we plan to continue our growth in a great state of Wyoming, which I'll discuss in greater detail later in the call.

Zachary K. Bradford: Yes.

Zachary K. Bradford: I want to pause a moment here to underscore how important our growth has been. We've had a lot of talk lately about the program halving and its impact on low revenue. What ran under the radar is the fact that we experienced a halving of source already with global hash rates in a dramatic rise, and even given that rise, we still have grown our production outpacing global hash rates while some of our peers have languished. We expect to do the same with the program tasking that recently occurred.

Zachary K. Bradford: I want to pause a moment here to underscore how important our growth has been we've.

Zachary K. Bradford: We've had a lot of talk lately about the program, having and its impact on minor revenue.

Zachary K. Bradford: Ran under the radar is the fact that we experienced the happening of source already with global hash rates dramatic rise and even given that rise we still have grown our production outpacing global hash rate, while some of our peers have languished.

Zachary K. Bradford: We expect to do the same with the program tapping that recently occurred.

Zachary K. Bradford: Among the evidence for this claim is that we've achieved a significant milestone, securing our position as the second largest vertically integrated publicly traded Bitcoin mining company in North America. Our current total capacity stands at over 17 exahash per second, distributed across eight owned and operated data centers in Georgia and Mississippi, and co-location facilities in upstate New York, and we are not resting on our laurels. Our efficiency is amongst the best globally, emphasizing our commitment to innovation and operational excellence. Efficiency is a crucial metric in every aspect of our business, including our fleet, operations, and capital allocation. With capital on hand, we have fully funded all machine purchases.

Zachary K. Bradford: Among the evidence for this claim is that we've achieved a significant milestone securing our position as the second largest vertically integrated publicly traded bitcoin mining company in North America.

Zachary K. Bradford: Our current total capacity stands at over 17 <unk> per second.

Zachary K. Bradford: Distributed across eight owned and operated data centers in Georgia, and Mississippi and co location facilities in upstate New York and we are not resting on our laurels.

Zachary K. Bradford: Our efficiency is amongst the best globally.

Zachary K. Bradford: <unk>, our commitment to innovation and operational excellence efficiency is a crucial metric in every aspect of our business, including our fleet operations and capital allocation with.

Zachary K. Bradford: With capital on hand, we have fully funded all machine purchases.

Zachary K. Bradford: This positions us to continue to thrive post-halving and be highly active in the coming months. We expect to be one of the most measured and active acquirers in the industry. Speaking of machine purchases, we aggressively pursued machine purchase upgrades, notably the acquisition of the S21 Pro Miner, enhancing our mining capabilities significantly. We recently took advantage of an opportunity to upgrade our purchase of the already efficient S21 to the new, even more efficient S21 Pros at the same industry-low cost per terahertz. The effect of this upgrade is a 17% increase in our total purchased hash rate, adding 3.4x a hash per second.

Zachary K. Bradford: This positions us to continue to thrive post having and be highly active in the coming months, we expect to be one of the most measured and active acquirers in the industry.

Zachary K. Bradford: Speaking of machine purchases, we aggressively pursued machine purchases upgrade.

Zachary K. Bradford: Notably the acquisition of the F 'twenty, one pro minors, enhancing our mining capabilities significantly.

Zachary K. Bradford: We recently took advantage of an opportunity to upgrade our purchase of the Rd efficient as 'twenty, one to the new even more efficient as 'twenty one pros at the same industry low cost per Taro has the effect of this upgrade is a 17% increase in our total purchase tax rate, adding <unk>.

Zachary K. Bradford: $3 four <unk> per second.

Zachary K. Bradford: These machines are so efficient that we don't need to add more infrastructure to achieve and recognize these hashrate gains. These new rigs represent the latest advancements in mining technology, setting the stage for our continued success. Our shareholder returns this quarter have been impressive, reflecting our strong financial health and our commitment to shareholder value. Year to date, we have outpaced all our publicly held peers to become the second largest miner by market cap listed on the NASDAQ.

Zachary K. Bradford: These machines are so efficient that we don't need to add more infrastructure to achieve and recognize these hash rate game.

Zachary K. Bradford: These new rigs represent the latest advancements in mining technology setting the stage for our continued success.

Zachary K. Bradford: Our shareholder returns this quarter had been impressive reflecting our strong financial health on our commitment to shareholder value.

Zachary K. Bradford: Year to date, we have outpaced all our publicly held peers to become the second largest minor by market cap listed on the NASDAQ.

Zachary K. Bradford: Many of these achievements can be tied back to the benefits of scale. I want to drive this home as I think the benefits of scale are grossly overlooked. Many try and find a single metric that levels the playing field between small and large companies, but the playing field isn't level.

Zachary K. Bradford: Many of these achievements can be tied back to the benefits of scale.

Zachary K. Bradford: I want to drive this home as I think the benefits of scale are grossly overlooked.

Zachary K. Bradford: Many try and find a single metric that levels, the playing field between small and large miners, but the playing field isn't level.

Zachary K. Bradford: A company that has scale can achieve higher skate velocity with much lower incremental inputs. Consider this. Because we have scale, we can cover all of our overhead costs with the margins from our Bitcoin production, and as a result, all new capacity we add and the resulting Bitcoin goes directly to our bottom line. No matter how you slice it, no argument about unit economics matters until scale and the resulting escape velocity are reached.

Zachary K. Bradford: A company that has scale can achieve escape velocity with much lower incremental inputs consider this because we have our scale. We can cover all of our overhead cost with the margins from a bitcoin production and as a result, all new capacity, we add and the resulting bitcoin goes directly to our bottom line.

Zachary K. Bradford: No matter, how you slice it no argument about unit economics matters until scale and the resulting escape velocity is reached.

Zachary K. Bradford: Pairing this scale with our solid cash balance, minimal debt, and our significant cash flows, we are set to grow at a lower cost of capital, faster, and stronger than many of our peers. I continue to believe that we will have fewer public minors at the end of this year than we started with.

Zachary K. Bradford: This scale with our solid cash balance minimal debt and our significant cash flows we are set to grow at a lower cost of capital faster and stronger than many of our peers.

Zachary K. Bradford: I continue to believe that we will have fewer public miners at the end of this year than we started with.

Zachary K. Bradford: The miners that have not reached the escape velocity of scale, lacking the ability to cover all their overhead costs through Bitcoin production, will be pulled back down to earth. Now, this also creates opportunities for CleanSpark, which we intend to continue to capitalize on in our journey to 50 Exahash per second and beyond. Building upon our scale, our unique advantage also lies in our deep understanding of infrastructure needs and the ability to control our own destiny.

Zachary K. Bradford: The miners that have not reached the escape velocity of scale lacking the ability to cover all their overhead cost by bitcoin production will be pulled back down to earth.

Zachary K. Bradford: Now this also creates opportunities for clean spark, which we intended to continue to capitalize on in our journey to 50 <unk> per second and beyond.

Zachary K. Bradford: Building upon our scale our unique advantage also lives and our deep understanding of infrastructure needs and the ability to control our own destiny being.

Zachary K. Bradford: Being a vertically integrated company, or said another way, asset heavy, from the outset, we have always recognized the value that this control provides us as we navigate halving and other market events. There are a lot of variables out of our control, such as Bitcoin price, global hash rate, machine prices, and ultimately, energy prices. Our strategic approach sets us apart in an industry where variables are constantly changing, allowing us to produce the best results.

Zachary K. Bradford: Being a vertically integrated company or said in another way asset heavy from the outset, we have always recognized the value that this control provides us as we navigate having on other market events. There are a lot of variables out of our control such as bitcoin price global hash rate machine.

Zachary K. Bradford: <unk> prices and ultimately energy prices, our strategic approach sets us apart in an industry, where variables are constantly changing allowing us to produce the best results.

Zachary K. Bradford: I also want to mention the value of holding Bitcoin. Our operations produce strong, positive cash flows, and we've been using those cash flows over the past several months to hold Bitcoin. Or said another way... We have used them to buy Bitcoin at a price less than spot. We view our cost of production as a measure equal to the purchase price.

Zachary K. Bradford: I also want to mention the value of holding bitcoin.

Zachary K. Bradford: Our operations produced strong positive cash flows and we've been using those cash flows over the past several months to hold bitcoin or said another way.

Zachary K. Bradford: We have used it to buy bitcoin at a price less than spot.

Zachary K. Bradford: We view our cost of production as a measure equal to our purchase price.

Zachary K. Bradford: And our low cost of production has allowed us to not only grow our treasury dramatically but also benefit our shareholders through recent and future price appreciation. We believe setting ourselves up to benefit from future appreciation is an important strategy as it's the easiest way to pave the way for a large amount of non-dilutive capital for our shareholders in the future. To do this, we have prioritized the use of equity in our growth because it's the right way to build long-term value.

Zachary K. Bradford: And our low cost of production has allowed us to not only grow our treasury dramatically, but also benefit our shareholders through the recent and future price appreciation.

Zachary K. Bradford: We believe setting ourselves up to benefit from the future appreciation is an important strategy as it is the easiest way to pave the way towards a large amount of non dilutive capital for our shareholders in the future to do this we have prioritized the use of equity in our growth because it's the right.

Zachary K. Bradford: Way to build long term value.

Zachary K. Bradford: We've successfully turned equity capital into assets that have provided our long-term shareholders with a significant return on capital. We also believe that Bitcoin will play an important role in not just our balance, but the growing adoption of Bitcoin on others' balance sheets will continue to lead to increased value in the future. Gary will speak more about this later. Of course, a lot has happened since the quarter ended.

Zachary K. Bradford: We have successfully turned equity capital into assets that have provided our long term shareholders with a significant return on capital. We also believe that bitcoin will play an important role in not just our balance sheet, but the growing of adoption of bitcoin on others' balance sheets will continue to lead to increased value in the future Gary.

Zachary K. Bradford: We'll speak more about this later.

Zachary K. Bradford: Principally, Bitcoin's price action as well as the hat. The recent Bitcoin halving is a pivotal event for the entire industry. For those unfamiliar, a Bitcoin halving is a scheduled reduction in the reward that Bitcoin miners receive for adding new blocks to the blockchain.

Zachary K. Bradford: Of course, a lot has happened since the quarter ended principally the coins price action as well as to having the.

Zachary K. Bradford: The recent bitcoin happening as a pivotal event for the entire industry for those unfamiliar bitcoin happening is a scheduled reduction and the reward that bitcoin miners receive for adding new blocks to the blockchain. It occurs approximately every four years effectively <unk> the number of new bitcoins.

Zachary K. Bradford: It occurs approximately every four years, effectively halving the number of new bitcoins created and earned by miners before each transaction. It's crucial to understand what that means for CleanSpark. Halving has the impact of compressing margins, which means only the most efficient miners can support profitable operations after the halving and prior to any meaningful price appreciation of Bitcoin. For some minors, it is a half.

Zachary K. Bradford: Creating and earned by minors before transaction fees.

Zachary K. Bradford: It is crucial to understand what that means for clean spark.

Zachary K. Bradford: <unk> has the impact of compressing margins, which means only the most efficient miners can support profitable operations after the <unk> and prior to any meaningful price appreciation of bitcoin for.

Zachary K. Bradford: For some miners it is happening.

Zachary K. Bradford: For some miners, it's an opportunity. And for other miners, miners like CleanSpark, it's an opportunity because the reduction in Bitcoin rewards is partially offset by changes in the hash rate across the network, which takes time. But we've begun to see decreases.

Zachary K. Bradford: For some minor, it's an offering and for other miners minors like clean spark, it's an opportunity.

Zachary K. Bradford: It is an opportunity because the reduction in bitcoin rewards is partially offset by changes in the hash rate across the network, which takes time.

Zachary K. Bradford: But we've begun to see decreases.

Zachary K. Bradford: Miners with efficient and profitable operations can take advantage of this decrease in hash rate as they organically grow their market share. Then, as Bitcoin's price appreciates, this halving adjustment can benefit those who are efficient enough to operate through the difficult times.

Zachary K. Bradford: Miners with efficient and profitable operations can take advantage of this decrease in hatch rate as they organically grow their market share then as big wins price appreciates. This having adjustment can benefit those who are efficient enough to operate through the difficult times.

Zachary K. Bradford: But I want to zoom into let alone the opportunity for clean spark isn't just in the amount of past rate that drops off but in the data centers that become available as a result, it's easy to get lost thinking about the sheer size of global hatch rate.

Zachary K. Bradford: The opportunity for CleanSpark isn't just in the amount of hash rate that drops off, but in the data centers that become available as a result. It's easy to get lost thinking about the sheer size of the global hash rate, but consider that. We are about 3% of the global network. That means that the most recent decreases in the network cash rate of about 15% mean data center space equal to approximately five times the size of our company has become available, which we can then optimize and upgrade at a multiple with our superior operations if we choose to acquire it.

Zachary K. Bradford: But consider this week.

Zachary K. Bradford: We were about 3% of the global network that means that the most recent decreases in the network hash rate of about 15%. It means data center space equal to approximately five times the size of our company has become available that.

Zachary K. Bradford: That we can then optimize and upgrade at a multiple with our superior operations, if we choose to acquire.

Zachary K. Bradford: This represents the potential size of the opportunity for turnkey growth, in addition to the organic growth plans we already have. At CleanSpark, we are navigating this new era with our characteristic discipline and focus on returning value to our shareholders. We built and maintained our strength through advanced strategic planning and active power management at our operations. For example, in addition to actively managing our power, we continually optimize our operations through hardware and software improvements to keep the cost of mining, or hash cost, below the revenue generated per hash or hash price, ensuring profitability despite market fluctuations. We see hash costs becoming an increasingly important and easy-to-digest variable for shareholders to use when they are evaluating publicly traded miners. HashCost considers primarily fleet efficiency and power cost to deliver a more standardized metric.

Zachary K. Bradford: This represents the potential size of the opportunity for turnkey growth. In addition to the organic growth plans, we already have.

Zachary K. Bradford: At clean spark, we are navigating this new era with our characteristic discipline and focus on returning value to our shareholders. We built and maintained our strength through advanced strategic planning and active power management at our operations.

Zachary K. Bradford: For example, in addition to actively managing our power, we continually optimize our operations through hardware and software improvements to keep the cost of mining or hash cost below the revenue generated per hash or hashed price.

Zachary K. Bradford: Ensuring profitability despite market fluctuations.

Zachary K. Bradford: We see hash costs, becoming an increasingly important and easy to digest the variable for shareholders to use when they are evaluating publicly traded miners.

Zachary K. Bradford: Cash cost considers primarily fleet efficiency and power cost to deliver a more standardized metric.

Zachary K. Bradford: And of course, the best power prices and the most efficient fleets are meaningless if the operator cannot maintain exceptional uptime across their portfolio. Our existing data centers have performed exceptionally well, each designed to maximize output and efficiency. What that means is that we have an industry-leading hash cost and a track record of effectively managing that cost. Our internal analysis places our current hash cost around $32.

Zachary K. Bradford: And of course, the best power prices in the most efficient fleets are meaningless, if the operator cannot maintain exceptional uptime across their portfolio.

Zachary K. Bradford: Our existing data centers have performed exceptionally well.

Zachary K. Bradford: Designed to maximize output and efficiency.

Zachary K. Bradford: What that means is that we have an industry, leading cash cost and a track record of effectively managing that cost our internal analysis places our current cash cost around $32. We're not just expanding our fleet with additional machines. We're also upgrading existing equipment a recent exercise.

Zachary K. Bradford: We're not just expanding our fleet with additional machines; we're also upgrading existing equipment. A recent exercise of the option for 100,000 S21 Pro miners is a testament to this approach and aligns with our long-term strategic goals. Importantly, it will exert significant downward pressure on our hashclocks, giving us an expected hash cost as low as just under $28 once the S21 Pros we have ordered have arrived and are deployed. Comparing that to the hash price, which as of this call is around $50.

Zachary K. Bradford: <unk> have the option for 100000 F. 'twenty one pro miners is a testament to this approach and aligns with our long term strategic goals in.

Zachary K. Bradford: Importantly, it will exert significant downward pressure on our hash cost, giving us an expected hash cost is lowest just under $28. Once the F. 'twenty one pros we have ordered have arrived in our deployed.

Zachary K. Bradford: Compare that to the hash price, which as of this call is around $50.

Zachary K. Bradford: We expect to see continued hash price improvement, but in the interim, we see the current hash price as a meaningful correction in a very crowded market while we wait for continued price appreciation. Although Hasbrite is a good measure.

Zachary K. Bradford: We expect to see continued hash price improvement, but in the interim.

Zachary K. Bradford: We see current half price as a meaningful correction in a very crowded market, while we wait for the continued price appreciation.

Zachary K. Bradford: Although <unk> price is a good measure.

Zachary K. Bradford: We think it's ever more important to consider the all-in hash cost, or said another way, the all-in cash cost to operate the business, including overhead, to produce the hash rate. I'll repeat what I said earlier; a company must be capable of covering its costs with its production post-happening to achieve escape velocity, and Miners Lacking Scale or with Less Efficient Corporate Overhead Practice will never beat miners operating at large scales that cover these costs without requiring outside capital input.

Zachary K. Bradford: It's ever more important to consider the all in cash cost or said another way the all in cash cost to operate the business, including overhead to produce hash rate I'll repeat what I said earlier, our company must be capable of covering its cost with its production post happening too.

Zachary K. Bradford: Achieve escape velocity and miners lacking scale or with less efficient corporate overhead practices will never beat miners operating at large scale that cover these costs without requiring outside capital inputs and.

Zachary K. Bradford: In summary, as we move forward in this new phase of Bitcoin's life cycle, CleanSpark is exceptionally well-positioned to continue thriving. Our proactive strategies and relentless pursuit of operational excellence are key differentiators that set us apart in this competitive landscape. We've grown tremendously over the quarter and over the last year, and we plan to continue to grow. As of this time last year, we were operating at 6.7 exahash per second, meaning we've grown at an annual rate of over 150 percent.

Zachary K. Bradford: In summary, as we move forward in this new phase of bitcoins lifestyle lifecycle.

Zachary K. Bradford: Clean spark is exceptionally well positioned to continue thriving.

Zachary K. Bradford: Proactive strategies and relentless pursuit of operational excellence are key differentiators that set us apart in this competitive landscape.

Zachary K. Bradford: We've grown tremendously over the quarter and over the last year and we plan to continue to grow.

Zachary K. Bradford: As of this time last year, we were operating at six seven <unk> per second meaning we've grown at an annual rate of over 150% and we have no intention of slowing down as evidenced by the announcement, we just made.

Zachary K. Bradford: And we have no intention of slowing down, as evidenced by the announcement we just made. I'm particularly pleased to discuss in greater detail our expansion into Wyoming. With this acquisition, our geographic footprint is expanded, and it's the next step to meet our growth target. We announce a definitive agreement for two sites just outside of Cheyenne, Wyoming. The first site will provide 45 megawatts, and the second site will provide 30 megawatts.

Zachary K. Bradford: Im, particularly pleased to discuss in greater detail our expansion into Wyoming.

Zachary K. Bradford: With this acquisition our geographic footprint has expanded and is the next step to meet our growth targets.

Zachary K. Bradford: We announced definitive agreements for two sites just outside of Cheyenne Wyoming the.

Zachary K. Bradford: The first site will provide 45 megawatts in the second site will provide 30 megawatts.

Zachary K. Bradford: Upon completion, this is expected to support a total of approximately 4.2 exahash per second, and the company will promptly break ground on infrastructure with a target of having the sites operational in the second half of 2024. In addition to the megawatts already in place, we are working with the utility on a load study that is already underway that we believe will allow us to expand the site by an additional 55 megawatts, for a total of 130 megawatts and an expected 7.4 exahash per second of operational hash rate in Wyoming.

Zachary K. Bradford: Upon completion. This is expected to support a total of approximately $4 two <unk> per second.

Zachary K. Bradford: We will promptly break ground on infrastructure with a target of having the sites operational in the second half of 2024.

Zachary K. Bradford: In addition to the megawatts already in place we are working with the utility on a load study that is already underway that we believe will allow us to expand the sites by an additional 55 megawatts for a total of 130 megawatts and an expected seven four <unk> per second of operational hash rate in Wyoming.

Zachary K. Bradford: Our approach to acquiring rack space and deploying the machines as meticulous and strategic.

Zachary K. Bradford: Our approach to acquiring rack space and deploying machines is meticulous and strategic. The upcoming expansion in Wyoming exemplifies our ability to identify and capitalize on opportunities that meet our stringent criteria for efficiency and scalability. Once we close the Wyoming deal, assuming we obtain the megawatts under the expansion, we expect our capacity under management to be over 550 megawatts. This new low-cost capacity will continue to support our mission to have a portfolio that ranks amongst the lowest average cost of energy in the entire industry.

Zachary K. Bradford: Upcoming expansion in Wyoming exemplifies our ability to identify and capitalize on opportunities that meet our stringent criteria for efficiency and scalability.

Zachary K. Bradford: Once we close the Wyoming deal, assuming we obtained the megawatts under the expansion, we expect our capacity under management to be over 550 megawatts.

Zachary K. Bradford: This new low cost capacity will continue to support our mission to have a portfolio that ranks amongst the lowest average cost of energy and the entire industry.

Zachary K. Bradford: We have a solid track record of buying quality sites and then expanding them, and we expect Wyoming to be no different. For example, Washington, Standersville, and Dalton are the most recent examples of successful expansion, and we plan to do the same with Wyoming. Before transitioning to how we see the next few quarters developing, I'd like to provide an update on Sanders. As you are aware, the facility is operating at 180 of the 230 megawatts that we expected. The utility's 50 megawatt transformer has not yet passed the required test before it can be shipped to the newly built substation next to our operation.

Zachary K. Bradford: We have a solid track record of buying quality sites, and then expanding them and expect Wyoming to be no different for example, Washington standards fill and Dalton are the most recent examples of successful expansion and we plan to do the same with Wyoming.

Zachary K. Bradford: Before transitioning to how we see the next few quarters developing.

Zachary K. Bradford: Like to provide an update on Sanderson.

Zachary K. Bradford: As you are aware the facilities operating at 180 of the 230 megawatts that we expected. The utilities' 50 megawatt transformer has not yet passed the required test before it can be shipped to the newly built substation next to our operations.

Zachary K. Bradford: While we do not have a specific time estimate for energization, the City of Sandersville is working in earnest to ensure the work needed is completed as promptly as possible, and we will share more updates as soon as we receive them. Meanwhile, as we look ahead, the dynamics within the Bitcoin mining industry are shifting. We anticipate significant consolidation in the coming years, a trend that will likely widen the performance gap between the top-tier miners and the rest of the field. But this shift isn't only about scale. It's about strategic positioning and operational efficiency, which are areas where CleanSpark continues to excel. The ongoing consolidation in our industry is necessary. It's akin to market bloodletting.

Zachary K. Bradford: While we do not have a specific time estimate for <unk>. The city of Sanders Ville is working in earnest to ensure the work needed is completed as promptly as possible and we will share more updates as soon as we receive them.

Zachary K. Bradford: As we look ahead the dynamics within the bitcoin mining industry are shifting we.

Zachary K. Bradford: We anticipate significant consolidation in the coming years, a trend that will likely widen the performance gap between the top tier miners and the rest of the field.

Zachary K. Bradford: This shift isn't only about scale, it's about strategic positioning and operational efficiency, which are areas, where clean spark continues to excel.

Zachary K. Bradford: The ongoing consolidation in our industry is necessary, it's a key.

Zachary K. Bradford: <unk> to our market bloodletting.

Zachary K. Bradford: While this process won't occur overnight, it's an inevitable step towards a more mature and economically sustainable sector. As less-equipped miners struggle to keep pace, well-positioned companies like ours will thrive. At CleanSpark, we favor growth through targeted acquisitions over mergers. Our approach allows us to integrate operations seamlessly and leverage our existing efficiency. A prime example of this strategy is our recent acquisition in Wyoming, which not only expanded our operational footprint but did so under favorable economic terms, reflecting our commitment to smart growth. Our M&A strategy, the CleanSpark way, is rigorous. We review dozens of opportunities but choose only those that meet our strict criteria.

Zachary K. Bradford: While this process won't occur overnight, it's an inevitable step towards a more mature and economically sustainable sector as less equipped minor struggled to keep pace well positioned companies like ours will thrive.

Zachary K. Bradford: Clean spark, we favor growth through targeted acquisitions over mergers our approach allows us to integrate operations seamlessly and leveraging our existing efficiencies a.

Zachary K. Bradford: A prime example of this strategy is our recent acquisition in Wyoming, which not only expanded our operational footprint, but did so under favorable economic terms, reflecting our commitment to smart growth.

Zachary K. Bradford: Our M&A strategy, the clean spark way as rigorous we reviewed dozens of opportunities, but choose only those that meet our strict criteria.

Zachary K. Bradford: Efficiency, valuation, power accessibility, and Community Engagement. Allow me to spend a moment addressing each. Efficiency. Our operations are designed to maximize output, with our watts producing, in some cases, as much as twice the bitcoin as some competitors. Valuation. We pursue acquisitions that offer substantial value, not just on paper, but in real operational terms. Power Accessibility.

Zachary K. Bradford: Efficiency valuation.

Zachary K. Bradford: Power accessibility and community engagement.

Zachary K. Bradford: Allow me to spend a moment addressing each of them.

Zachary K. Bradford: Efficiency.

Zachary K. Bradford: Our operations are designed to maximize output.

Zachary K. Bradford: With our what's producing in some cases as much as twice the bitcoin as some competitors.

Zachary K. Bradford: Valuation, we pursue acquisitions to offer substantial value not just on paper, but in Rio operational terms.

Zachary K. Bradford: Access to current and future low-cost power resources is crucial, ensuring sustainability and scalability, and community engagement. We prioritize acquisitions that allow us to maintain and enhance relationships within local communities, allowing our growth with broader social value. With that in mind, we are reaffirming our path to 50 exahasks per second in 2025 and continuing to target 32 exahasks per second coming online at the end of this year.

Zachary K. Bradford: Power accessibility access to current and future low cost power resources is crucial ensuring sustainability and scalability.

Zachary K. Bradford: Community engagement, we prioritize acquisitions that allow us to maintain and.

Zachary K. Bradford: And enhance relationships within local communities, allowing our growth with broader social values.

Zachary K. Bradford: With that in mind, we are reaffirming our path to 50 <unk> per second in 2025 and continue to target 30, <unk> per second coming online at the end of this year.

Zachary K. Bradford: We expect to reach those goals through the acquisition of facilities that we can then put our machines into. I'd like to conclude by thanking our teams for their incredible work over the quarter. I believe our team set records for the fastest deployment time in our industry at Sandersville, racking and energizing machines with an expediency that showed the type of grit and resiliency that has become central to our culture. In line with that grit and resolve, I'm especially pleased to welcome two key colleagues to the Executive Management Team.

Zachary K. Bradford: We expect to reach those goals through the acquisition of facilities that we can then put our machines and <unk>.

Zachary K. Bradford: I'd like to conclude by thanking our teams for their incredible work over the quarter I believe our team set records for the fastest deployment time in our industry at standards still racking and energizing machines with an expediency that showed the type of grit and resiliency that has become central to our culture.

Zachary K. Bradford: As announced yesterday, we promoted Scott Garrison to Chief Operations Officer and Taylor Monarch to Chief Technology Officer. Scott and Taylor are examples of CleanSpark's commitment to excellence and the CleanSpark way. Their leadership and grit have been instrumental in positioning CleanSpark as a top operator at scale in the industry. I speak often about our best-in-class teams, and Scott and Taylor have both helped build and lead these teams to great heights. They are instrumental in our continued success as our teams grow and gain even greater expertise to match the task ahead of us on our path to 50X to Hashes and beyond.

Zachary K. Bradford: In line with that Gritten resolve I'm, especially pleased to welcome two key colleagues to the executive management team.

Zachary K. Bradford: As announced yesterday, we promoted Scott garrisons of cheap offer operations officer, and Taylor monarch to Chief Technology Officer.

Zachary K. Bradford: Scott Taylor are examples of clean Sparks commitment to excellence and the clean spark way.

Zachary K. Bradford: Their leadership and grit have been instrumental in positioning clean spark as a top operator at scale in the industry.

Zachary K. Bradford: I speak often about our best in class teams and Scott Taylor had both help build and lead these teams to great Heights.

Zachary K. Bradford: They are instrumental in our continued success is our teams grow and gain even greater expertise to match. The task ahead of us on our path to <unk> and beyond.

Zachary K. Bradford: I greatly look forward to this next phase in CleanSpark's journey as we work together to continue delivering value to our shareholders and the greater Bitcoin ecosystem. With that said, I'd now like to turn the time over to Gary to review the quarter's financial results in greater detail.

Zachary K. Bradford: Great I look forward to this next phase and clean Sparks journey as we work together to continue delivering value to our shareholders and the greater bitcoin ecosystem.

Zachary K. Bradford: With that I'd now like to turn the time over to Gary to review the quarter's financial results in greater detail.

Gary A. Vecchiarelli: Thank you, Zach. Hopefully, you have all seen our press release and Forum 10Q released early this morning. I'm happy to review our record results for the fiscal second quarter, which is a direct result of our thoughtful strategy and the grit in execution of our many team members. For the second quarter, we recognized $111.8 million in revenue, an increase of 163% over the same quarter last year. Compared to the preceding first quarter, we saw revenues increase 52%, or $38 million.

Gary: Thank you Zack.

Gary A. Vecchiarelli: You have all seen our press release and Form 10-Q released early this morning I'm happy to review our record results for the fiscal second quarter, which is a direct result of our thoughtful strategy and the grit and execution of our many team members for the second quarter, we recognized $111 8 million of revenue an increase of 163.

Gary A. Vecchiarelli: 3% over the same quarter last year compared to the preceding first quarter. We saw revenues increased 52% were 38 million. These increases in revenue were not only driven by increases in bitcoin prices, but also increases in our history, which yielded increased bitcoin production to.

Gary A. Vecchiarelli: These increases in revenue were not only driven by increases in Bitcoin prices but also increases in our hash rate, which yielded increased Bitcoin production. To give you context, at the end of Q2 last year, we had almost 68,000 machines in operation, representing 6.7 Exahab. At the end of Q2 this year, we had approximately 134,000 machines deployed, representing 16.4 x.

Gary A. Vecchiarelli: To give you context at the end of Q2 last year, we had almost 68000 machines in operation representing six seven exit cash at the end of Q2. This year, we had approximately 134000 machines deployed representing 16 four extra cash the average revenue per.

Gary A. Vecchiarelli: The average revenue per bitcoin more than doubled during the year-over-year period. In our Q2 2023, our average revenue was approximately $23,000, and this quarter, our average was $55,000. When compared to our immediately preceding first quarter, our hash rate increased over 60%, from 10.1 exahash to 16.7. Our revenue per bitcoin in Q2 increased over 50% to $55,000, as our revenue for Bitcoin in Q1 was almost $37,000. CleanSpark's mining economics remained healthy through the second quarter as we saw gross profit improve 21 points over the same quarter last year and 8 points over the first quarter. Our market-based approach to power has helped with our margins as we saw wholesale power costs as low as 1.3 cents per kilowatt hour in the second quarter.

Gary A. Vecchiarelli: <unk> more than doubled.

Gary A. Vecchiarelli: The year over year periods.

Gary A. Vecchiarelli: And so our Q2 2023 average revenue was approximately $23000 and this quarter. Our average was $55000 when compared to the immediately preceding first quarter, perhaps rate increased over 60% from $10, one exit hash to $16 seven or revenue per bitcoin in Q2.

Gary A. Vecchiarelli: <unk> increased over 50% to 55000 as our revenue per bitcoin in Q1 was almost 37000.

Gary A. Vecchiarelli: <unk> mining economics remained healthy through the second quarter as we saw gross profit improved 21 points over the same quarter last year and eight points over the first quarter. Our market based approach to power has helped with our margins as we saw wholesale power cost as low as one three.

Gary A. Vecchiarelli: <unk> kilowatt hour in the second quarter for our wholly owned locations are all in costs for the second quarter were a favorable $4 three per kilowatt hour. This all in costs represents wholesale cost of energy plus transmission and delivery costs plus.

Gary A. Vecchiarelli: For our wholly owned locations, our all-in costs for the second quarter were a favorable 4.3 cents per kilowatt hour. This all-in cost represents the wholesale cost of energy plus transmission and delivery costs plus the margins and sales taxes to the utilities and communities we operate. We did experience slightly higher hosting fees of 7.5 cents per kilowatt hour at our co-location. But it is important to note that this agreement includes a profit share, which is due to the rise in Bitcoin price, which drove most of this cost. However, our co-location is less than 10% of our total operating hash rate and 12% of our total megawatts operation.

Gary A. Vecchiarelli: The margins in taxes sales taxes to the utilities and communities we operate in.

Gary A. Vecchiarelli: We did experience slightly higher hosting fees of seven five per kilowatt hour at our co location, but it is important to note. The disagreement includes a profit share, which Duke which is due to the ryzen <unk> price, which drove most of this cost. However, our co location is less than 10%.

Gary A. Vecchiarelli: Of our total operating cash rate and 12% of our total megawatts operational. This further underscores the importance of our infrastructure first strategy, where we want to own and operate our own facilities.

Gary A. Vecchiarelli: This further underscores the importance of our Infrastructure First strategy, where we want to own and operate our own facilities. The company posted record net income of $126.7 million, or $0.59 earnings per share, compared to a net loss of $18.5 million, or a loss of $0.23 per share, in the same quarter last year. Our net income in the first quarter was approximately $26 million, or $0.14 earnings per share, which is an improvement of over $100 million, or $0.45 per share between the two quarters.

Gary A. Vecchiarelli: The company posted record net income of $126 7 million or <unk> 59 earnings per share compared to a net loss of $18 5 million or a loss of 23 per share in the same quarter last year. Our net income in the first quarter was approximately $26 million or <unk> 14 earnings per share, which is an improvement of over 100 million.

Gary A. Vecchiarelli: Or <unk> 45 per share between the two quarters.

Gary A. Vecchiarelli: I want to point out that the company early adopted fair value accounting for Bitcoin in Q1 of this year, which marks the company's Bitcoin holdings to their fair value as of the balance. In the second quarter, we recognized a gain on fair value of almost $120 million.

Gary A. Vecchiarelli: Point out that the company early adopted fair value accounting for <unk> in Q1 of this year, which marks the Companys Bitcoin holdings to the fair value as of the balance sheet date in the second quarter, we recognized a gain on fair value of almost 120 million. While this amount is unrealized and noncash I want to call out.

Gary A. Vecchiarelli: While this amount is unrealized and non-cash, I want to call out our HODL strategy. We saw our total bitcoin holdings grow by over 2000 bitcoin in the second quarter alone as we kept nearly 100% of our bitcoin production for the period. Since we can produce Bitcoin at prices lower than it can be bought on the spot market, we see our HODL strategy as another strategic move in acquiring assets, which will provide shareholders with accretive value, particularly in this bull market, where we expect price appreciation.

Gary A. Vecchiarelli: Our whole strategy.

Gary A. Vecchiarelli: We saw a total of <unk> holdings grow by over 2000, and bitcoin and the second quarter alone as we kept nearly 100% of our big Horn production for the period.

Gary A. Vecchiarelli: Since we can produce bitcoin at prices lower than it can be bought on the spot market, we see our huddle strategy as another strategic move in acquiring assets, which will provide shareholders with accretive value, particularly in this bull market, where we expect price appreciation.

Gary A. Vecchiarelli: Our adjusted EBITDA for the second quarter was approximately $182 million, which is an improvement of 1.6x over the preceding first quarter. Included in the second quarter adjusted EBITDA was approximately $120 million related to the fair value adjustment, which when removed, shows our mining operations contributed approximately $60 million to adjusted EBITDA and represents a 50% cash adjusted EBITDA margin. Looking at specific line items on the income statement, our payroll expense did increase by approximately $1.5 million, or 10%, in the second quarter compared to the immediately preceding first quarter.

Gary A. Vecchiarelli: Our adjusted EBITDA for the second quarter was approximately $182 million, which is an improvement of one six X over the preceding first quarter included in the second quarter. Adjusted EBITDA was approximately $120 million related to the fair value adjustment, which when removed shows our mining operations contributed approximately $60 million to adjusted EBITDA.

Gary A. Vecchiarelli: And represents 50% cash adjusted EBITDA margins.

Gary A. Vecchiarelli: At specific line items on the income statement, our payroll expense did increase approximately $1 5 million or 10% in the second quarter compared to the immediately preceding first quarter. This is due to additional hiring at our wholly owned locations and several new positions at our corporate office and note that our total megawatts operational increased fee.

Gary A. Vecchiarelli: This is due to additional hiring at our wholly owned locations and several new positions at our corporate office. Note that our total megawatts operational increased 51% between the quarters with the Sandersville expansion and Mississippi acquisitions coming online. In the second quarter, we saw an increase in our G&A expenses of approximately $1.8 million, or 36% compared to the first quarter. As I've mentioned in previous calls, we have achieved scale whereby we do not expect our corporate and G&A expenses to grow parallel to our revenue. However, as we continue to grow our megawatts owned and expand our footprint, we do expect increases in our indirect expenses.

Gary A. Vecchiarelli: 1% between the quarters with the San Jose expansion, and Mississippi acquisitions coming online.

Gary A. Vecchiarelli: In the second quarter, we saw an increase in our G&A expenses of approximately $1 8 million or 36% compared to the first quarter. So I've mentioned in previous calls we have achieved scale, whereby we do not expect our corporate and G&A expenses to grow parallel to our revenue. However, as we continue to grow our megawatts owned.

Gary A. Vecchiarelli: <unk> and expand our footprint, we do expect increases in our indirect expenses with G&A, specifically on a call. It two items, which comprise the majority of this one node $1 $8 million increase foremost we expense approximately $5 million relate.

Gary A. Vecchiarelli: With G&A specifically, I want to call out two items which comprise the majority of this $1.8 million increase. First, we've spent approximately half a million dollars related to shipping miners from a storage facility, the standards of location. We stored many of our XP machines in a secure facility prior to racking them for the energization at Sandersville.

Gary A. Vecchiarelli: Related to shipping miners from the storage facility of the standards of location.

Gary A. Vecchiarelli: Many of our XP machines in the secured facility prior to racking them for the <unk> <unk>. So this is an expense that will not recur in future quarters.

Gary A. Vecchiarelli: So this is an expense that will not recur in future quarters. Also included in the $1.8 million variance is an additional $1.2 million of property tax expenses related to our estimated property tax for the 2024 tax year. This was driven by the large amount of assets, primarily minors, that we owned on January 1st, 2024, the moment in time for which jurisdictions assess tax and the value of personal property owned. We will see increases in property taxes throughout this calendar year in excess of the prior calendar year due to the significant increase in assets we have acquired and deployed. However, any new assets acquired after January 1st of this year will not have assessments and the associated expenses until next year.

Gary A. Vecchiarelli: Also included in the $1 8 million variance is an additional $1 2 million of property tax expenses related to our estimated property taxes for the 2020 for tax year.

Gary A. Vecchiarelli: This was driven by the large amount of assets.

Gary A. Vecchiarelli: Primarily miners that we owned on January one 2020 for the moment in time for which jurisdictions assess tax from the value of personal property owned we will see increases in property taxes throughout this calendar year in excess of the prior calendar year due to the significant increase in assets, we've acquired and deployed.

Gary A. Vecchiarelli: However in the new assets acquired after January 1st of this year will not have assessments and the associated expense until next year as we continue to grow our asset base. This expense will also grow which I estimate to be between $1 25, and one 4% of the book value of property and equipment as we expand into new jurisdictions, where take.

Gary A. Vecchiarelli: As we continue to grow our asset base, this expense will also grow, which I estimate to be between 1.25 and 1.4 percent of the book value of property and equipment. As we expand into new jurisdictions, we are taking advantage of tax incentives where available, and we are optimistic, given the conversations we have been having with current and new jurisdictions, that incentives will be available with our further investment. I want to take a moment to review our balance sheet, which we believe is one of the strongest in the industry.

Gary A. Vecchiarelli: <unk> advantage of tax incentives were available and we are optimistic given the conversations we've been having with current and new jurisdictions that incentives will be available with our further investment.

Gary A. Vecchiarelli: I wanted to take a moment to review our balance sheet, which we believe is one of the strongest in the industry.

Gary A. Vecchiarelli: We had total liquidity of $681 million as of March 31st, of this amount, with 323 million in cash and 5,021 Bitcoin valued at 358 million. Additionally, we had 161 million in cash paid deposits for minors in transit and total assets of over $1.5 billion. Our balance sheet remains very healthy with virtually no debt. As we continue to pay down our loans payable, which now total less than 13.

Gary A. Vecchiarelli: We had total liquidity of $681 million as of March 31.

Gary A. Vecchiarelli: Of this amount, we had $323 million cash and 5021 bitcoin valued at $358 million. Additionally, we had $161 million of cash pay deposits reminders in transit and total assets of over $1 $5 billion, our balance sheet remains very healthy.

Gary A. Vecchiarelli: Virtually no debt as we continue to pay down our loans payable, which now total less than $13 million.

Gary A. Vecchiarelli: As we've been discussing for well over a year now, we've been preparing the company for the halving event, not just operationally, but financially. Operationally, we have one of the most efficient fleets in the world currently, and we only expect that efficiency to get better as we deploy the latest generation of S-21 miners. This new generation of miners will not only increase our hash rate but also increase our efficiency and decrease the cost of energy per terahertz.

Gary A. Vecchiarelli: We have been discussing for well over a year now we've been preparing the company for having event not just operationally but financially.

Gary A. Vecchiarelli: Operationally, we have one of the most efficient fleets in the world currently and we only expect that efficiency to get better as we deploy the latest generation as 'twenty. One miners. This new generation of miners will not only increase our hash rate, but also increase our efficiency and decrease the cost of energy per tier house.

Gary A. Vecchiarelli: We've also discussed in prior calls that our financial preparation for HABing will not only give us the ability to weather the decrease in block rewards but also take advantage of opportunities that present themselves after the HAB. As we predicted, we are seeing distress among smaller miners who have less efficient fleets or do not have liquidity or access to capital. Let me underscore the importance of access to capital and being good stewards of that capital.

Gary A. Vecchiarelli: We are also discussed in prior calls that our financial preparation for having will not only gives us the ability to weather the decrease in block rewards, but also take advantage of opportunities that present themselves after the having.

Gary A. Vecchiarelli: As we predicted we are seeing distress amongst smaller miners, who have less efficient fleets are do not have liquidity or access to capital.

Gary A. Vecchiarelli: Let me underscore the importance of access to capital and being good stewards of that capital. For example, we have raised approximately $1 4 billion. Since we entered the bitcoin mining business in December 2020, using this capital we have grown this company to a market cap of almost $4 billion.

Gary A. Vecchiarelli: For example, we have raised approximately $1.4 billion since we entered the Bitcoin mining business in December 2020. Using this capital, we have grown this company to a market cap of almost $4 billion, which represents our ability to find accretive means to deploy capital. We continue to see opportunities for tuck-in acquisitions, which are creative, and where we will be able to bring our operational expertise and strong balance sheet to grow our hash rate and efficiency even further.

Gary A. Vecchiarelli: Which represents our ability to find accretive means to deploy capital.

Gary A. Vecchiarelli: We continue to see opportunities for tuck in acquisitions, which are accretive and where we will be able to bring our operational expertise and strong balance sheet to grow our hatch rate and efficiency, even further with that I'll turn the call back over to Isaac to open the floor for questions.

Gary A. Vecchiarelli: With that, I'll turn the call back over to Isaac to open the floor for questions. Thanks, Gary. We will now open the floor to questions from the analyst community. Operator, please provide instructions and manage the queue for the Q&A.

Isaac Holyoak: Thanks, Gary we will now open the floor to questions from the analyst community operator, please provide instructions and manage the queue for the Q&A session.

Isaac Holyoak: Thank you. Ladies and gentlemen, at this point, we will begin the question and answer session. To ask a question, you may press star 1. To withdraw your question, press star 1 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, that is star number one. And your first question comes from the line of Mike Colonnese with H.C. Wainwright. Your line is open.

Isaac Holyoak: Thank you ladies and gentlemen at this point, we will begin the question and answer session.

Michael Anthony Colonnese: To ask a question you May press Star one to withdraw your question Press Star one again.

Michael Anthony Colonnese: 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 quality.

Michael Anthony Colonnese: Once again that is star one.

Michael Anthony Colonnese: And your first question comes from the line of Mike <unk> with H C. Wainwright. Your line is open.

Michael Anthony Colonnese: Hi, good afternoon guys. Great quarter and congratulations on the new acquisitions. Great to see you here. First for me, if you could just walk us through the expected construction and energization timelines for these newly acquired sites in Wyoming and really how you guys are thinking about the power strategy and electricity costs for these facilities.

Michael Anthony Colonnese: Hi, good afternoon, guys, great quarter, and congrats on the new acquisitions are great to see here.

Michael Anthony Colonnese: First for me if you could just walk us through the expected construction and <unk> timelines for these newly acquired sites in Wyoming and really how you guys are thinking about our strategy and the electricity cost for these facilities.

Zachary K. Bradford: Yeah, hey Mike, thanks for joining the call. So, as we mentioned, there are two sites, one at 45 megawatts and one at 30 megawatts. One of those sites is already partially ready, where the utility lines are in place for us to drop transformers right on top of it and continue to build. So we think that the 45 megawatts can happen optimally in quite a short period of time. I don't have anything specific on that, but we do think it can happen, you know; inside of 120 days is our target right now.

Speaker Change: Yeah, Hey, Mike Thanks for joining the call. So as we mentioned there's two sites 145 megawatts 30 megawatts.

Zachary K. Bradford: One of those sites is already partially ready wear.

Zachary K. Bradford: Where the utility the lines are in place for us to drop Transformers right on top of it and continue to build so we think that the 45 megawatts.

Zachary K. Bradford: Optimally can happen in quite a short period of time I don't have anything specific on that but we do think it can happen inside of a 120 days is our target right now.

Zachary K. Bradford: More to come on that where I can provide a more detailed timeline, probably in the next three weeks. After that, the 30 megawatts, it's totally greenfield. The utility is available basically at the property line. So it'll be a little bit more construction, but we're gonna run both of these projects in parallel, is the plan. So the target is to have all 75 megawatts built out before winter kicks in. That is the goal.

Zachary K. Bradford: More to come on that where I can provide a more detailed timeline probably in the next.

Zachary K. Bradford: I caught in the next three weeks.

Zachary K. Bradford: After that the 30 megawatts, it's totally greenfield the utility is available basically at the property line, so it'll be a little bit more construction, but we're going to run both of these projects in parallel is the plan. So the target is to have all 75 megawatts built out.

Zachary K. Bradford: Before the winter kicks in is the goal obviously, Wyoming one of the reasons, we really like it is for the ambient air temperature year round is much cooler, but with that also comes winter and snow. So our goal is to get everything built before a winter freeze happens in late October early November.

Zachary K. Bradford: Obviously, Wyoming, one of the reasons we really like it is that the ambient air temperature year round is much cooler, but with that also comes winter and snow. So our goal is to get everything built before a winter freeze happens in late October or early November.

Zachary K. Bradford: That's great, super helpful, Color. And, you know, how has the M&A landscape and conversations you've had evolved since the acquisition and the subsequent drop in hash prices we've seen? Is there a general profile of potential sellers that you've observed in your conversations? And then also, I would be curious to see if there is a specific range you're looking for as it relates to the scale of these mining facilities? Could we see, you know, I know, you mentioned additional tuck-ins in the future, but how should we think about the megawatt of power capacity for any potential future acquisitions that you look at?

Speaker Change: That's great Super helpful color and how.

Zachary K. Bradford: How has the M&A landscape and conversations you've had evolved since the having in the subsequent drop in house prices. We've seen is there a general profile of potential sellers that you've observed in your conversations and then also be curious to see your specific range youre looking for as it relates to the scale of these money facilities could we see.

Zachary K. Bradford: <unk>.

Zachary K. Bradford: I know you mentioned additional tuck ins in the future, but how should we think about the megawatt power capacity for any potential future acquisitions that you look at it.

Zachary K. Bradford: Yeah, so the landscape has opened up quite a bit. You know, we have historically always kept, you know, a dozen names in a pipeline that we kind of rotate through, saying no to a lot of opportunities. I'd say that the opportunities are continuing to grow. It was interesting because, you know, at the halving, there was the fee event where, for a few days, transaction fees spiked. And I think it breathed some hope into some miners that were less efficient. And, you know, now that a few days or weeks have gone by, we've seen kind of a few of them give up.

Speaker Change: Yes, so the landscape has opened up quite a bit.

Zachary K. Bradford: We have historically always kept a dozen names in our pipeline that would kind of rotate through saying no to a lot of opportunities.

Zachary K. Bradford: I'd say that the opportunities are continuing to grow it was interesting because at the half thing there was the fee events, where for a few days transaction fee Spike and I think it breeds. Some hope into some miners that were less efficient and now that a few days or weeks have gone by.

Zachary K. Bradford: Sure.

Zachary K. Bradford: We've seen kind of the.

Zachary K. Bradford: A lot of incoming calls, a lot of opportunities that exist. Now, as it relates to size, we're really open to anything. Now, the benefit we have is access to capital and the tools we have in place. Big or small, it works great for us. We've already proven that we can accomplish a lot with a little. If you look at how we did Dalton, we started that location with 20 megawatts and have since added on top of it and will continue to grow. Same thing in Mississippi.

Zachary K. Bradford: A few of them give up.

Zachary K. Bradford: A lot of incoming calls a lot of opportunities that exist now as it relates to size.

Zachary K. Bradford: We are really open to anything now the benefit we have is with the access to capital and the tools, we have in place big or small works great for us we've already proven that we can accomplish a lot with a little if you look at how we did Dalton, we started that that location with 20 megawatts and <unk>.

Zachary K. Bradford: <unk> added on top of it and we'll continue to grow same thing in Mississippi. We have three sites. Some are small some are large and we have the ability to continue to grow in Mississippi.

Zachary K. Bradford: We have three sites. Some are small, some are large, and we have the ability to continue to grow in Mississippi. So for us, I think that the importance is, if it's a small site, what is its ability to grow in the surrounding area?

Zachary K. Bradford: So for US I think the importance is if its a small site what is the ability to grow in the surrounding area.

Zachary K. Bradford: Or if it's a large site, what scale are we going to get? What I will say is that I made the comment about how we prefer acquisitions over mergers, and that's because sometimes mergers are harder to do. In order to gain the efficiencies that need to come from a merger, it means that there's likely going to be overhead that needs to come off. And so I think that that is still a conversation that is open and happening.

Zachary K. Bradford: Or if it's a large site what scale are we going to get what I will say I made the comment about how we prefer acquisitions over mergers and thats, because sometimes mergers are harder to do.

Zachary K. Bradford: In order to gain the efficiencies that need to come from a merger it means that the.

Zachary K. Bradford: There is largely going to theres likely going to be overhead that needs to come off and so I think that that is still conversations that are open and happening they are happening, but it's going to be something with a more large scale companies that you have a lot of overhead they're going to be they're slower coming to the table because of course, it means that part of their.

Zachary K. Bradford: They are happening, but it's going to be something where the more large-scale companies that do have a lot of overhead are slower coming to the table because, of course, it means that part of their overhead operations won't exist afterwards because we are positioned to absorb that. So how we're thinking about it is I think private is the quickest path to adding megawatts. The public will come later, but it's going to come when the other side is ready to let go of some of the overhead and, ultimately, the salaries that are involved in that.

Zachary K. Bradford: Overhead operations won't exist afterwards, because we are positioned to absorb that so how we're thinking about it is I think private is the quickest path to adding megawatts public will come later, but it's going to come when.

Zachary K. Bradford: The other side is ready to let go of some of the overhead and ultimately the salaries that are involved in that.

Zachary K. Bradford: Really interesting color. Thanks for taking my questions, Zach. Absolutely.

Speaker Change: Really interesting color thanks for taking my questions.

Zachary K. Bradford: Absolutely.

Zachary K. Bradford: Okay.

Brian H. Dobson: And your next question comes from the line of Brian Dobson with Chardin Capital Markets. Your line is open.

Zachary K. Bradford: And your next question comes from the line of Brian Dobson with Chardan capital markets. Your line is open.

Brian H. Dobson: Thanks so much for taking my question. I guess just to follow up on your investment in Wyoming, can you speak a little bit about the, call it, relationship with the utility or local municipality that may have led you to choose this as a site for expansion? Yeah.

Brian H. Dobson: Thanks, So much for taking my question I guess just to follow up on your investment in Wyoming can you speak a little bit to the Colgate relationship with utility or local municipality that may have led you to choose this as a site for expansion.

Zachary K. Bradford: Yeah, Brian, thanks for joining us. You know, Wyoming has been a state where there's been a lot of support. You know, you have Senator Lummis there, who, you know, has really been an outspoken supporter of Bitcoin and really blockchain technologies. In the state of Wyoming, there's actually a blockchain rate that we are going to get access to as part of this. And so, you know, in addition to that, there's a lot of abundant power, so wholesale power prices are incredibly low.

Speaker Change: Yeah, Brian Thanks for joining Wyoming has been in a state where there is a lot of support you have Senator alumnus there who has really been an outspoken supporter of bitcoin and really blockchain technologies.

Zachary K. Bradford: In the state of Wyoming, Theres actually a blockchain right that we are going to get access to as part of this and so in addition to that Theres lot of abundant power. So wholesale power prices are incredibly low cost and that's really what drew if there is a very strong.

Zachary K. Bradford: And, you know, that's really what drew us there. There is a very strong political environment in support of Bitcoin, and then a utility that is so welcoming to it that there are rates established around it. So, you know, from a relationship side, we've had conversations off and on with, you know, many utilities, but this is one of those utilities that we spoke to as far back as three years ago.

Zachary K. Bradford: The political environment in support of Bitcoin and then a utility that is so welcoming to it that there are rates established around it so.

Zachary K. Bradford: From a relationship side, we've had conversations off and on with.

Zachary K. Bradford: Many utilities, but this is one of those utilities that we've spoken to.

Zachary K. Bradford: And we put down our conversations, picked them back up, and decided now was the right time. So, you know, this is another benefit that we don't speak about often enough: we spend a lot of time building relationships and the credibility that we've been able to gain in the communities we do operate in. It then carries over so that when those communities are ready to embrace Bitcoin mining and QueenSpark, we're one of the first calls that can come in.

Zachary K. Bradford: For as far back as three years ago, and we put down conversations pick them back up and we decided now is the right time so.

Zachary K. Bradford: I think that's another benefit.

Zachary K. Bradford: We don't speak about often enough is we spend a lot of time building relationships and the credibility that we have been able to gain in the communities. We do operate in it didn't carries over so that when the communities are ready to embrace bitcoin mining and clean spark where we're one of the first call if that can come in.

Brian H. Dobson: Excellent. Thank you very much. That's a great color.

Speaker Change: Excellent. Thank you very much that's great color.

Brian H. Dobson: As you're as you're thinking about the M&A environment in the back half of the year.

Zachary K. Bradford: You know, as you're thinking about the M&A environment in the back half of the year, you know, do you think you could elaborate on potential funding sources for an acquisition? Would you be looking at equity? Would you be looking to use coins? Or would it be potentially a mixture of both? We would probably look...

Zachary K. Bradford: Do you think you could elaborate on potential funding sources for an acquisition would you be looking at equity would you be looking to use coin.

Zachary K. Bradford: Or would it be potentially a mix mixture of both.

Zachary K. Bradford: We would probably look at cash on the balance sheet and also equity. We're at stage two where there are small groups, private, public, both sides, and what is of interest to them is not selling and giving up, but really joining the team. And as part of joining the team, they would take equity. Historically, almost all of our transactions where we've acquired companies have been in the form of cash, because the other parties needed cash to pay off debts or obligations, things like that.

Zachary K. Bradford: We would probably look at cash on the balance sheet and also equity.

Zachary K. Bradford: Yeah.

Zachary K. Bradford: We're at a stage to where there are small groups private public both sides that of interest to them is not selling and giving up but it's really joining the team and as part of joining the team. They would take equity historically almost all of our transactions, where we've acquired companies it's been in the form of cash.

Zachary K. Bradford: Cash because the other parties needed cash to pay off debts or obligations things like that so they didn't have a choice. Some of these operations now again, it's about joining the team and so I think that we could see an acquisition, even where equity is the soul.

Zachary K. Bradford: So they didn't have a choice. Some of these operations now, again, it's about joining the team. And so I think that we could see an acquisition even where equity is the sole use that we have, where they become shareholders. It's not an issuance of, you know, a raise, but instead, where they fold in and become part of the CleanSpark team.

Zachary K. Bradford: Use that we have where they become shareholders, it's not an issuance of into arrays, but instead, where they fold in and become part of the clean spark team.

Brian H. Dobson: Yeah, very good. Thanks. I'll have it back to the cube. Thanks very much. Thanks, Brian.

Speaker Change: Yeah very good thanks.

Speaker Change: I'll hop back in the queue. Thanks, very much thanks, Brian.

Reggie Smith: And your next question comes from the line of Reggie Smith with J.P. Morgan. Your line is open.

Brian H. Dobson: And your next question comes from the line of Reggie Smith with Jpmorgan. Your line is open.

Charlie: Hey, thanks for taking the question. This is Charlie. I'm for Reggie.

Reggie Smith: Hey, Thanks for taking the question this is Charlie on for Rajeev.

Charlie: I was hoping to get a few more details on the two Wyoming sites.

Charlie: First is the 40 megawatt site was that site already being used for bitcoin mining.

Charlie: Then second question related to the 30 megawatt site.

Charlie: Have you guys built out facility from scratch before I know your recent acquisitions have been turnkey.

Charlie: I'm just wondering what experience you have in building out a greenfield site.

Charlie: I was hoping to get a few more details on the two Wyoming sites. First, the 40 megawatt site; was that site already being used for Bitcoin mining? And then, second question related to the 30 megawatt site: Have you guys built out a facility from scratch before? I know your recent acquisitions have been turnkey. Just wondering what experience you have in building out a greenfield site.

Charlie: Hey, Charlie Thanks for joining the call I'll address the build out we just finished 150 megawatt build out.

Speaker Change: Before that we built out 80 megawatts before that it was 20 megawatts and before that it was 30. So we have quite a few megawatts and a lot of different locations under our belt. So I'd consider us pros on the on the build out side.

Charlie: As it relates to these sites to 45 megawatt site, yes has been used for bitcoin mining.

Charlie: But as part of the purchase the seller is taking the equipment with them, which we're okay with because we like this site to be built at the clean spark way as we mentioned, we prioritize high uptime as one of our key tenants.

Charlie: And so we will be adding in infrastructure to support that tenant of high uptime and again the benefit though is some of the utility side has already done. So our goal is to be able to come in and drop transformers dropped the infrastructure quickly and so even though the other party will be removed.

Charlie: Their infrastructure, which is in the form of pods.

Charlie: We should be able to drop things in right on the back end of it very quickly.

Charlie: Got it and then in terms of longer lead time items.

Mike: Mike Transformers.

Charlie: Maybe I just missed it but are those staying on site or do you have those on hand, and you're going to be bringing in your own.

Charlie: Any details there would be great.

Speaker Change: Yes, we stay ahead of the curve by actually buying more infrastructure than we have immediately going on so we have over 50 megawatts of transformer and switchgear is already ready to go so that will be our jumping off point.

Charlie: Strong relationship with these manufacturers with the ability to ramp up their supply chain. So in this case as of right now we do not see supply chain constraints impacting these at all because we already have a very large portion of the 75 megawatts already secured.

Speaker Change: Perfect. Thanks for taking the question.

Speaker Change: I appreciate it thanks Charlie.

Charlie: Yes.

Charlie: And with no further questions I would now like to turn the call back to Mr. Isaac Julio for closing remarks.

Zachary K. Bradford: Thanks. Hey, Charlie, thanks.

Speaker Change: Thank you Regina and thank you to all who joined our earnings call. Today, we look forward to sharing more of our journey with you in the coming quarters stay tuned for more groundbreaking event from Clinton's Mark.

Zachary K. Bradford: Hey Charlie, thanks for joining the call. I'll address the build-out, you know, we just finished a 150 megawatt build-out Before that we built out 80 megawatts before that it was 20 megawatts and before that it was 30 So, you know, we we have quite a few megawatts and a lot of different locations under our belt So I consider us pros on the on the build-out side As it relates to these sites the 45 megawatt site.

Zachary K. Bradford: Yes has been used for Bitcoin mining But as part of the purchase the seller is taking the equipment with them which we're okay with because we like the sites to be built the CleanSpark way as we mentioned we prioritize high uptime as you know One of our key tenants and so we will be adding in infrastructure to support That tenant of high uptime and again, the benefit though is some of the utility side is already done So our goal is to be able to come in drop transformers drop the infrastructure quickly And so even though the other party will be removing their infrastructure, which is in the form of pods We should be able to drop things in right on the back end of it very quickly

Charlie: Got it. And then, in terms of longer lead time items, light transformers. Maybe I just missed it, but are those staying on site, or do you have those on hand, and you're going to be bringing your own? Any details there would be great.

Zachary K. Bradford: Yeah, we stay ahead of the curve by actually buying more infrastructure than we have immediately going on. So we have over 50 megawatts of transformers and switch gears already ready to go. So that will be our jumping off point. We have strong relationships with these manufacturers and the ability to ramp up their supply chains. So in this case, as of right now, we do not see supply chain constraints impacting this at all because we already have a very large portion of the 75 megawatts already secured.

Charlie: Perfect. Thanks for taking the question. Hey, I appreciate it. Thanks.

Zachary K. Bradford: Hey, I appreciate it. Thanks, Charlie.

Isaac Holyoak: And, with no further questions, I would now like to turn the call back to Mr. Isaac Holyoak for closing remarks.

Speaker Change: Ladies and gentlemen, this concludes today's call and we thank you for your participation you may now disconnect.

Isaac Holyoak: Thank you, Regina, and thank you to all who joined our earnings call today. We look forward to sharing more of our journey with you in the coming quarters. Stay tuned for more groundbreaking events from CleanSpark.

Operator: And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

Operator:

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Operator: Okay.