CleanSpark's CEO Discusses The Company's Expansion Into Bitcoin

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

Last year closed on a high note for energy network and software company CleanSpark Inc. CLSK, which announced a 122% increase in annual revenue to just over $10M in 2020 over the $4.5M it posted in FY 2019. That marked the third year in a row the company doubled its revenue.

In addition to the earnings release, the company also closed out 2020 by announcing the acquisition of ATL Data Centers, LLC and its fleet of over 3,400 bitcoin mining units. The acquisition follows a streak of strategic M&A for CleanSpark through 2020, starting with the purchase of P2K Labs early in the year leading to its acquisition of software firm GridFabric in August and now ATL Data Centers, which was finalized in December.

“The energy business is growing very rapidly and, as part of that growth, we executed on an M&A strategy.” said CleanSpark CEO Zach Bradford in a recent interview with Benzinga. “We have the core energy business that's focused on energy optimization and efficiency solutions, and through this acquisition we intend to apply our solutions in bitcoin mining, while generating meaningful revenue from the bitcoin mining business.”

The acquisition comes at a time of renewed interest in the digital currency. Bradford expanded on how the acquisition will ideally serve as both a revenue driver for the company as well as a proof-of-concept for CleanSpark’s energy optimization solutions to be applied on other mining data centers to cut costs using  energy optimization.

A Game Of Cents

According to Bradford, the company and the ATL Data Center principals began discussions in early 2020 on the potential value Cleanspark’s energy management and microgrid software could bring to the energy-intensive business of bitcoin mining.

“Our goal with ATL Data Centers is to produce bitcoins at the lowest energy costs in the United States,” said Bradford. “Bitcoin mining is simply the business hosting the data on the blockchain that Bitcoin uses, and being compensated for the services.  This requires significant energy just like any data center and as a result the number one cost for bitcoin miners is energy.  We believe microgrids can have a meaningful impact on these energy costs and we intend to apply our solutions to achieve this goal.”

Energy dependence has only increased alongside the price and demand for bitcoin. According to Cambridge University’s Bitcoin Electricity Consumption Index, the energy expended in bitcoin mining has grown exponentially since last November, surging from an annualized rate of around 50 terawatt hours just three months ago to more than 110 terawatt hours as of this writing, roughly equivalent to the annual energy consumption of Pakistan or the Netherlands.

For individual mining operations, the profitability in mining bitcoin rests in utilizing the energy put toward mining as efficiently and affordably as possible. Current estimates show mining centers in the U.S.  average about $0.12 a kilowatt hour. Bradford’s ambition with the ATL acquisition is to illustrate, through CleanSpark’s microgrid mPulse software, how datacenters can optimize energy use and reduce their overhead to the low end of that range, setting a lofty goal of below $0.0285 per kilowatt hour.

“mPulse is a software and control platform that optimizes multiple distributed energy sources across a microgrid, including solar panels, batteries, generators and the utility provided power,” said Bradford. “The software manages these resources to ensure that the system is continually using the lowest cost power available at that time.” said Bradford.

Plans To Expand

At the time of the acquisition, the ATL facility had over 3,400 individual mining units that operate at approximately 200 Petahash per second(PH/s). According to Bradford, the facility produces roughly 1.4 bitcoins a day, since the completion of the acquisition on December 10, the Company had mined approximately 31 bitcoins by the start of 2021.

Bradford explained how he expects that baseline to grow in the coming months as CleanSpark initiates a multi-stage expansions and growth strategy, starting with installing additional mining units followed by infrastructure and energy expansion, including the implementation of the Company’s solutions to further optimize the operation’s energy costs.

“We are currently working on our initial expansion, which is expected to be complete near the end of January, we will be installing additional mining units that will bring production up about 30 percent to 300 Petahash per second,” said Bradford. “We are also in the process of bringing our facilities up to 50 megawatts in partnership with the local city and utility. We then plan to add our microgrid solutions to further increase the energy capacity. We expect this to include solar panels, batteries and other renewables implemented across multiple microgrids on site whose operations will be focused on energy optimization and resiliency, and also greenhouse gas reduction.”

Following the expansion, Bradford explained that CleanSpark was anticipating another substantial rise in revenue provided bitcoin’s price remains above a certain threshold. He anticipated the mining operations to remain profitable so long as the price of bitcoin remains above $6,000. The Company has most recently indicated an earnings target of $30 million for it’s 2021 fiscal year, including bitcoin mining revenues.

But while bitcoin remains a volatile and unpredictable asset, Bradford is confident that the ATL Data Centers acquisition will illustrate the key benefit of CleanSpark’s core software to miners and businesses hoping to reduce energy overhead.

“The entire point of what we're doing is to show profitable energy solutions at scale that can be taken worldwide. There is a very significant amount of data centers both for traditional uses and bitcoin mining and we see all of them as potential clients. We just think that the revenue around bitcoin mining creates a unique opportunity and, the key for increased profitability is to address energy costs.”

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.