CleanSpark Inc. CLSK said Monday that much of its shareholder value is derived from investments in mining facilities, rather than adding Bitcoin BTC/USD to its balance sheet.
What Happened: During the company's fourth-quarter earnings call, CEO Zach Bradford noted that, while the firm is not against direct Bitcoin purchases, it believes that the highest returns for shareholders come from acquiring or building Bitcoin production facilities.
Bradford said that the company was producing Bitcoins at healthy margins, lowering the average value of the cost basis of its stash.
“So really, the way we look at it is you’re faced with the decision, do you buy assets to produce Bitcoin on a reoccurring basis, at what right now is better than 50% margins to spot price? Or do you go buy Bitcoin?” the company’s top executive said.
Bradford suggested that CleanSpark’s strategy provides a competitive edge, as miners who are buying Bitcoin operate at a loss or very slim margins.
Why It Matters: As of this writing, CleanSpark was the seventh-biggest corporate holder of Bitcoin, with a stash of 8,701 BTCs, worth $836.96 million at current market price, per data from bitcointreasuries.net.
The Bitcoin playbook, popularized by MicroStrategy Inc. MSTR, was first catching up on Wall Street, as companies resorted to different corporate maneuvers to add the leading cryptocurrency to their balance sheets.
Leading Bitcoin miner MARA Holdings Inc. MARA announced a private offering of $700 million of zero-interest convertible notes, the proceeds of which would be used to fund future Bitcoin purchases.
Meanwhile, despite missing estimates, CleanSpark’s total revenue increased by 125% on a year-over-year basis, as revealed in its fourth-quarter earnings report.
Price Action: CleanSpark shares closed up 1.18% to $14.52 on Monday and were down 3.58% in after-hours trading, according to Benzinga Pro.
The stock’s consensus price target was $19.23, based on 8 analyst opinions. The high is $27, issued by HC Wainwright & Co. on September 25, 2024. The low is $5.3, released by Bernstein on October 31, 2023.
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