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Date

Monday, May 11, 2026 at 4:30 p.m. ET

Call participants

  • Executive Chairman — Matthew Schultz
  • Chief Financial Officer — Gary A. Vecchiarelli
  • Chief Strategy Officer — Harry Sudock
  • Operator

Takeaways

  • Revenue -- $136 million for the quarter, down by $45 million, or 25%, sequentially from the prior quarter, driven primarily by a 24% drop in the average Bitcoin price.
  • Bitcoin production -- 1,799 Bitcoin mined, only 22 fewer than the previous quarter, indicating network hashrate growth has flattened and operational uptime remains high.
  • Gross margin -- Exceeded 40% in the quarter, compared to 47% in the previous quarter, reflecting margin pressure from lower Bitcoin prices.
  • Average power price -- 5.2¢ per kilowatt hour during the quarter, improving from 5.6¢ in the prior quarter and 6¢ in the same period last year.
  • Net loss -- Approximately $378 million, unchanged from the prior quarter, but included $263 million in non-cash GAAP mark-to-market adjustments on Bitcoin balances.
  • Adjusted EBITDA -- Negative $241 million, an improvement from negative $295 million in the prior quarter, reflecting the impact of lower Bitcoin prices early in the year.
  • HODL balance -- 13,561 Bitcoin held, worth $925 million at the quarter's end, with the balance increasing by almost 1,700 Bitcoin year over year.
  • Liquidity -- Nearly $1.2 billion, including $260 million in cash and the full $400 million available on Bitcoin-backed credit lines.
  • Digital asset management (DAM) cash returns -- $4 million generated in the quarter, contributing to a fiscal year-to-date total of $17.2 million, with less than 40% of the Bitcoin HODL balance actively deployed in DAM.
  • Contracted power capacity -- 1.8 gigawatts approved, contracted, and available, with a growth pipeline exceeding 5 gigawatts in potential capacity.
  • Portfolio expansion -- 25 megawatts of contracted capacity added to a Metro Atlanta location last month, fully approved and not included in the multigigawatt growth pipeline.
  • Sandersville development -- 250 megawatts live, and 122 acres recently acquired to support a full greenfield data center build, with one lead tenant in advanced negotiations.
  • Houston-area hub -- Sealy site has 285 megawatts approved, 200 megawatts energizing in 2027, with substation construction underway; Brazoria has 600 megawatts in two phases with the first 300 megawatts ERCOT-approved.
  • AI and high-performance compute (HPC) strategy -- Management stated that "[mining] funds the platform; AI monetizes it," and that both BTC mining and AI will be balanced in operations.
  • Tenant engagement -- Multiple high-credit quality tenants evaluating CleanSpark's portfolio, with a shift toward tenants seeking multisite deployments.

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Risks

  • Chief Financial Officer Gary A. Vecchiarelli said the net loss "includes unfavorable non-cash charges of approximately $263 million related to GAAP mark-to-market adjustments on Bitcoin balances," which significantly affected reported profitability.
  • Revenue decreased by $45 million, or 25%, sequentially, directly attributed to a 24% drop in average Bitcoin price from $100,000 to $76,000, pressuring cash flows.
  • Adjusted EBITDA remained negative at $241 million, despite improvement, underlining the challenging Bitcoin pricing environment.

Summary

CleanSpark (CLSK +0.70%) reported a revenue decline and ongoing net losses this quarter, primarily caused by a substantial drop in Bitcoin prices and related mark-to-market charges. The company emphasized having 1.8 gigawatts of contracted, grid-secured power capacity and nearly $1.2 billion in liquidity to support rapid digital infrastructure expansion. Discussions are ongoing with high-credit tenants, including advanced negotiations at Sandersville, while portfolio growth is bolstered by recent land acquisitions and approvals in key regions such as Metro Atlanta and Houston. CleanSpark leadership expressed commitment to a balanced transformation model, integrating high-performance computing with Bitcoin mining to monetize available capacity and retain operational flexibility.

  • Leadership confirmed taking a disciplined approach to capital deployment, stating that only minimal investment will be made at sites like Sandersville until lease agreements are finalized.
  • Factory-based modular data center construction reduces on-site labor requirements by up to 70%, addressing labor shortages and compressing timelines for delivery to 14-18 months post-lease signing.
  • Management is actively evaluating co-location strategies, seeking to pair Bitcoin mining with AI workloads to maximize utilization and maintain flexible site economics.
  • Lead tenant negotiations at Sandersville remain focused on a high-credit hyperscaler, and management confirmed that a multisite portfolio approach does not change the expected lease-execution timeline.
  • CleanSpark reported $4 million in net positive cash returns from digital asset management strategies this quarter, validating DAM's ability to generate yield in volatile or declining Bitcoin price environments.
  • Year over year, power costs declined to 5.2¢ per kilowatt hour from 6¢, supporting margins amid depressed revenue.
  • The company outlined expansion possibilities at Washington, Jackson (Tennessee), and Cheyenne (Wyoming), highlighting prospective conversion of existing assets for AI or HPC uses.
  • Management stated, "Bitcoin mining will allow us to land new opportunities because we will be able to monetize that energy near to 100% of the baseload," supporting the hybridized data center model.

Industry glossary

  • HODL: Industry term describing holding Bitcoin or other digital assets instead of selling, used by the company to refer to its retained Bitcoin balance.
  • DAM (Digital Asset Management): The company's desk dedicated to generating yield and cash returns from managed Bitcoin positions through financial and trading strategies.
  • ERCOT: Electric Reliability Council of Texas, the independent system operator managing Texas's power grid and interconnection approvals for large infrastructure projects.
  • PUE (Power Usage Effectiveness): Ratio used to measure data center energy efficiency: total facility energy divided by IT equipment energy.
  • Immersion miners: Bitcoin mining hardware submerged in a liquid coolant to improve energy efficiency and thermal performance.
  • HPC (High-Performance Compute): Computing environments and workloads that require substantial processing power, typically for AI, scientific computing, or advanced analytics.
  • Neocloud: Refers to cloud computing service providers other than the largest traditional hyperscalers, often specialized or emerging industry players.

Full Conference Call Transcript

Matthew Schultz: Thank you, Harry, and thank you everyone for joining us this afternoon. This quarter represents continued meaningful progress in CleanSpark, Inc.’s evolution into a digital infrastructure and data center development company, one that utilizes our heritage as energy natives, builds on the strength of our mining operations, and ultimately expands the set of opportunities our portfolio can support. I am going to take a few minutes to share what we are seeing in the market, how that informs our higher-level strategy, and then provide an update on Sandersville and the unique opportunity it represents, as well as our broader portfolio.

We are in the midst of a technology wave similar to the personal computer, the Internet, mobile phones, and cloud computing, except in this case, it has a larger potential total addressable market and an outsized impact on the infrastructure layer required to power it. AI is different because it is compute denominated, and compute is a function of access to energy and data center infrastructure. We have all watched the hyperscalers guide to higher CapEx this year, and the central question was if those investments would have a return profile sufficient to justify them. The revenues reported for the AI labs and the cloud service providers are proving this now in real time.

The commercial landscape for AI is converging across hyperscalers, chip manufacturers, neoclouds, and the AI labs themselves. Demand for compute continues to grow, but real-world constraints challenge their ability to secure what is required to continue scaling. Power and infrastructure are at the heart of the supply squeeze. Grids are rapidly adjusting, in conjunction with their largest customers, to meet the moment and deliver capacity for data centers while maintaining service reliability and price stability for households and businesses. That dynamic aligns directly with how we built CleanSpark, Inc. We spent years operating dynamic energy-intensive infrastructure. At a high level, there are four key activities that enabled our evolution into a large-scale digital infrastructure business.

These are in various stages of completion but cover the full scope of our activities. First is land and power. This has been the core of the business for years. We have cultivated a range of key relationships across the country that propelled our growth to 1.8 gigawatts of currently contracted capacity and will continue driving fundamental value as we add high-quality assets and projects to our portfolio. We are always striving to enhance or expand existing sites. I can proudly share that we added 25 megawatts of contracted capacity to one of our Metro Atlanta locations just last month, making the existing footprint more attractive for HPC utilization.

In keeping with our conservative and transparent approach, all of the megawatts are fully contracted and approved, and they do not include our multigigawatt growth pipeline, or potential expansions at our existing facilities that we are pursuing. Second is commercialization. We are focused on long-duration leases with high-quality tenants as our priority, but as the landscape for compute evolves, we will always stay nimble and aggressive. One important shift: we are seeing prospective tenants engage with us on a portfolio basis rather than just a single site. This is reflective of their demand for capacity and of our large, diverse set of assets. Third is financing.

Gary will share more detail on our capital strategy, but the markets are constructive, and we have a range of attractive options across the entire project life cycle. And finally, construction and delivery. We have spent a significant amount of time building out the internal talent and key relationships required to deliver projects on time and on budget. We are setting up the supply chain to create repeatable processes allowing us to rapidly scale up and scale out. Importantly, this includes working with suppliers that have manufacturing and fabrication processes that can reduce on-site labor by up to 70% by moving production out of the field and into the factory.

This business transformation is the largest endeavor CleanSpark, Inc. has ever embarked on. It pulls on the threads that made us a market leader in energy development and management, and also the discipline and operational excellence that propelled us to become the largest domestic producer of hashrate. And now we have the pieces in place to execute on building the AI factories that are required for the intelligence age. As we action our go-to-market efforts for the portfolio, Sandersville was the natural starting point, given that all 250 megawatts are live. We have a rock-solid community relationship, and in January, we closed on an additional 122 acres necessary to support full greenfield data center build.

In marketing the site, we received a range of indications of interest with several coming from high credit quality tenants. Among those, we are progressing with a lead prospective tenant. We understand their engineering requirements and their basis of design. In parallel, we have been negotiating the commercial relationship and the associated suite of contracts. While the process is complex, we are encouraged by the progress and confident that we can offer a compelling solution to their significant data center needs. Ultimately, we know how valuable Sandersville is in this environment, and we are committed to providing the right shareholder value through its monetization while also building a relationship with this tenant that can extend far beyond Georgia.

Our approach to counterparty selection is disciplined and prioritizes long-term risk-adjusted equity value creation. We are thinking about potential multidecade relationships and how to best deliver over those time horizons. At the heart of everything we have done in Sandersville is a commitment to win-win outcomes. That meant a power arrangement that protected residents on reliability and affordability while securing the volume and pricing we needed. It meant adding substantially to the local tax base. It meant hiring full-time staff and contractors locally, and it meant showing up for youth sports, holiday events, and local business patronage. When you put down roots in the American heartland, you join those communities, roll up your sleeves, and you contribute.

Our community focus is why the acquisition of the additional acreage was seamless. The local economic development authority knows what CleanSpark, Inc. has built over several years, and they have confidence in what comes next. We are working to replicate this model everywhere we operate. It is the right way to build infrastructure in this country because it creates structural advantages that protect and accelerate our projects for the long term. Looking beyond Sandersville, the same principles apply across the portfolio. We are building a platform, not a single-site strategy. On our last call, I described the formation of what we see as a Houston-area infrastructure hub.

Sealy and Brazoria together represent nearly 900 megawatts of current potential utility capacity, strategically selected to support multiphase AI campus deployments. Sealy has 285 megawatts approved, with just over 200 megawatts scheduled to energize in 2027. Substation construction is already underway. We have strong visibility into the energization timeline and are running a parallel commercialization process. Brazoria has 600 megawatts in two phases. ERCOT approval is already in hand for the first 300 megawatts, a meaningful milestone that reflects the scale of the opportunity and the coordination required to advance projects in the market. The second 300 megawatts is progressing through review, and we look forward to growing across the region.

I also want to highlight a capability that has continued to differentiate us in tenant conversations: our ability to expand within established grid relationships. Historically, we increased at Sandersville and Washington. More recently, we added 25 megawatts to our Metro Atlanta footprint. When a prospective tenant asks what the growth path looks like, we can show them a real track record of unlocking additional scale. We see significant expansion opportunities at several sites throughout our portfolio. Across the broader land and power portfolio, we hold 1.8 gigawatts of currently contracted capacity. Not every site will transition to HPC, and that is not the goal.

The goal is optionality—aligning the right assets with the right opportunities as demand evolves, with discipline around capital allocation and shareholder returns always at the center of the analysis. Access to grid-connected power at scale remains scarce, and we believe it will remain so. The ability to find, contract, and develop that power is what we spent years building, and it is exactly what is most necessary to meet the market’s relentless demand. As always, none of this is possible without our world-class teams working tirelessly to push the business forward. Their grit and their talent continue to inspire me every day. I will now turn the call over to Gary A. Vecchiarelli for the financial results.

Gary A. Vecchiarelli: Thank you, Matt, and good afternoon, everyone. Before diving into the numbers, I am going to briefly cover the role that mining continues to play in our operations and how we see its evolving role in our strategy. Mining remains foundational to our business. It generates the cash flow that allows us to develop our platform deliberately. It provides operational flexibility, and it continues to give us a strategic advantage competing for power in grid-constrained environments. Our thesis has remained the same for years now: energy production is not coming online fast enough, and our infrastructure-first approach to building our almost 2 gigawatt portfolio is reflective of that strategy.

As we expand into AI and HPC, we are building on mining, not moving away from it. Both businesses share the same foundation—power, land, and operations. Mining funds the platform; AI monetizes it. Together, they create a more balanced, durable business. And as we evolve, mining is the engine that funds our future growth. Turning to the numbers, the average Bitcoin price in Q2 was approximately $76,000, which was a 24% difference from the prior quarter where the average Bitcoin price was $100,000. For the quarter, our revenue decreased compared to the immediately preceding first quarter by approximately $45 million, or 25%, directly attributable to the decrease in Bitcoin price.

For the quarter, we mined 1,799 Bitcoin, which was only 22 Bitcoin less than the prior quarter, indicating network hashrate growth has flattened, while our operations team has maintained its industry-leading uptime. Despite the lower revenues, we maintained a healthy gross margin of over 40% for the quarter, compared to 47% for the previous quarter. Power prices were more favorable this quarter at 5.2¢ per kilowatt hour, compared to 5.6¢. Our best-in-class team continues to execute and deliver regardless of market climate. This quarter, we recognized a net loss of approximately $378 million, which was flat compared to the net loss in the prior quarter of the same amount.

It is important to note that the current quarter’s net loss includes unfavorable non-cash charges of approximately $263 million related to GAAP mark-to-market adjustments on Bitcoin balances. Our adjusted EBITDA was negative $241 million compared to negative $295 million last quarter, which is indicative of the significant drop from the Bitcoin highs of approximately $126,000 in early Q1. Turning our attention to the performance of the second quarter versus the same quarter last year, revenues declined approximately $45 million, or 25%, to $136 million.

Our Bitcoin production for the current quarter decreased approximately 7% year-over-year due to difficulty, but we saw lower power prices of 5.2¢ per kilowatt hour compared to 6¢ in the same period last year, which helped margins in this lower Bitcoin price environment. Net income decreased year-over-year by approximately $240 million, which was almost entirely due to non-cash mark-to-market adjustments. I will also point out that the average Bitcoin price in the same quarter last year was higher at approximately $94,000, and our HODL balance increased by almost 1,700 Bitcoin year-over-year, which further amplified the mark-to-market adjustment. As of the March 31 balance sheet date, our liquidity remains strong with almost $1.2 billion of liquidity.

We had $260 million in cash and 13,561 Bitcoin worth $925 million. It is worth noting that as Bitcoin prices have started to recover since quarter end, the value of our HODL alone sits at approximately $1.1 billion as of today. Additionally, we have the entire $400 million capacity under Bitcoin-backed lines of credit available to us. The strength of our balance sheet is a key feature for CleanSpark, Inc., as we have sufficient capital to acquire land and power while also preparing our sites for long-term tenancy. We have always taken a disciplined approach to capital stewardship, as demonstrated by the significant reduction in our share count over the last 18 months.

This evolution into AI and HPC infrastructure development is exciting because it opens the door to long-term, predictable, and high-margin cash flows along with access to capital at much lower costs than we have seen historically in the mining business. You have heard us use the word optionality in our prior calls, and that approach has not changed. We have designed our capital strategy to be flexible in order to take advantage of real-time opportunities in the marketplace. Multiple instruments are available for us to finance either CapEx for high credit quality tenant AI site builds or acquisition of new land and power sites. We believe we have a fundamental second-mover advantage.

For example, over the last year, pricing and terms have become significantly more favorable for data center landlords. Recent financings have been priced constructively, with investor demand far in excess of the offerings. Recent deals have been oversubscribed as much as 5x to 6x. Additionally, several of these deals have priced at slightly over 6%. This is a large reason why counterparty selection is so important and why we are taking a disciplined approach to commercialization. Next, I would like to provide an update on our digital asset management activities, where we continue to lead and innovate in the monetization of our Bitcoin HODL balance.

While Bitcoin and markets broadly experienced elevated volatility and a significant drawdown during the quarter, we were still able to drive net positive cash returns of approximately $4 million, bringing the total cash generated from DAM activities to $17.2 million for the fiscal year to date. I would note that these numbers are being generated while we are only activating less than 40% of our Bitcoin in DAM strategies. While our overall cash returns were lower this quarter, we view this as validation that our approach has durability across different market environments. Three considerations here. Foremost, we generated a yield on our Bitcoin balance in a down market.

Second, our active risk management and approach to trade execution allowed us to be nimble, flexible, and aggressive in managing downside risk. I would also note that the investments we are making in people, process, and technology in the DAM team will further enhance our capabilities and drive returns going forward. And lastly, the data and experience that we are capturing each day are enabling continued innovation across our institutional-grade desk. We have proven our DAM strategies produce meaningful cash flow to supplement our mining operations. During this last quarter, we saw elevated volatility in a much lower Bitcoin price, which, while challenging, proved that our institutional-grade 24/7 desk was able to both manage risk and monetize the volatility.

The actions taken this past quarter will further help us refine our trade execution and risk management, and since quarter end, we have already seen a resumption of returns similar to those we experienced in the first quarter. With that, I will hand it back to Harry to lead us into Q&A.

Harry Sudock: Thanks, Gary. We will now open the call for questions. Operator, please provide instructions and manage the Q&A session.

Operator: Thank you. We also ask that you limit yourself to one question and one follow-up. For any additional questions, please re-queue. Your first question comes from Nicholas Giles with B. Riley Securities. Please go ahead.

Nicholas Giles: Thank you, operator. Good afternoon, guys. Just thinking about your portfolio—Sandersville, Brazoria, Sealy—those seem to be the obvious targets. But when you zoom out, which other assets could be converted that you once thought might only be for Bitcoin, and how much expansion potential do those sites have? Thank you.

Matthew Schultz: Thanks for the question, Nick. Within our portfolio, we have a number of sites. When we started College Park, we had 5 megawatts of capacity. We expanded that to 50. When we started Washington, we had 36. It is now 86. We have duplicated that process across the portfolio. We have some phenomenal assets. Washington is probably the next highest probability in the pecking order. It has 86 megawatts of energized capacity right now, but we are in the process of completing a line study with significant expansion possibility. Additionally, we acquired 60 megawatts of capacity in Jackson, Tennessee that also looks very promising for AI development.

And last but not least, we have 110 megawatts in Cheyenne, Wyoming, and we are fence line neighbors with another hyperscaler, so there are tremendous opportunities to convert that from an interruptible load to a firm load to accommodate the needs of a potential data center client.

Nicholas Giles: Super helpful, Matt. I appreciate that. Maybe just as a follow-up, can you speak to how much capital you have deployed to date at Sandersville, and then what is really the threshold—the amount of capital that you are willing to deploy at any given site—before lease signing? Thank you.

Gary A. Vecchiarelli: We have deployed a couple million dollars, which includes the miners, and while we may be subject to some impairment like some of our peers are once we convert to AI, that is simply going to be a book adjustment. We feel pretty confident that we will be able to move some of that infrastructure and miners elsewhere. Until AI is up and energized, we are going to be able to monetize those megawatts at that point. Right now, the amount that we are actually investing in the site is minimal.

As you know, we acquired some additional acreage adjacent to the current Sandersville site, and really what we are doing is clearing trees and moving some dirt, but we are talking millions, not tens of millions of dollars, because we want to make sure that we have a lease signed before we deploy significant amounts of capital.

Operator: Your next question comes from the line of Gregory Lewis with BTIG. Please go ahead.

Gregory Lewis: Thank you and good afternoon, and thanks for taking my question. Matt, I was hoping you could elaborate more on the comment you made around some of the conversations about a potential multisite deployment with maybe one tenant. As we think about that, is that broad strokes in terms of the first deployment to the next deployment? Is there a target range of power these potential tenants are looking for? Any elaboration would be helpful.

Matthew Schultz: Good to hear from you, Greg. I will tell you how it got to be really interesting. We consider ourselves to be pretty experienced in land and power, but when it comes to fit-up and fit-out of the data centers, there are third-party vendors that provide a significant portion of that buildout. What we talked about in our comments was that 60% to 70% of the data center build we are contemplating takes place in a factory. It short circuits the time to market, but it also decreases the on-site build. In meeting with some of those vendors, they have strong working relationships with the hyperscale tenants, and as a result, they understand the demand for capacity.

It is through some of those relationships that the introductions have been made to potentially deploy a portfolio approach where we can meet the needs of a single tenant that has requirements across a diversity of geography. We have some low latency opportunities, and then we have larger scale opportunities. We have found that there are single tenants that require many of those characteristics. While it is still early, I can tell you those conversations have been very fruitful.

Gregory Lewis: Great. And my other question was around future power acquisition. Clearly, you already have a lot of power that you can deploy to build out the HPC business but also accentuate the Bitcoin mining business. As we sit here in May 2026, how is the company thinking about power acquisitions?

Matthew Schultz: That is a fantastic question. I want to be really clear about the way we disclose this. The 1.8 gigawatts is power that is approved, contracted, and available. When we sat down earlier this year with our leadership team and designed OKRs, we talked about the pipeline, and in our pipeline, there is greater than 5 gigawatts of capacity beyond what we shared on the call. However, that is speculative or potential. I think there are a lot of companies that disclose capacity they have had discussions about. We have had many of those same discussions.

We are in meaningful conversations about significant additional power, but we are very careful, and the number that we disclose is restricted only to what is already contracted. I would say that the future is bright for us. Everybody has seen the political headwinds on data centers. One of the positive comments that we received as we put these sites available to the market is that we have manageable amounts of power and meaningful amounts of land in different jurisdictions, so it does not create what we have seen with proposed sites in the 9 gigawatt range that have caught tremendous political headwinds based on scale.

Being disciplined and having a bite-sized approach with communities and utilities that actually want us there, based on prior experience with us, has created some interesting tailwinds.

Operator: Your next question comes from the line of John Todaro with Needham & Company. Please go ahead.

John Todaro: Congrats on the quarter. Matt, you mentioned earlier progressing with a lead prospective tenant. Is it still the advanced conversations that were framed before as an IG hyperscaler? Is that the right way to think about it, or has that evolved at all? And then I have a follow-up.

Matthew Schultz: That is consistent. We do not have another update beyond that, but our conversations remain consistent with the first tenants that we have been talking with.

John Todaro: Understood. Thank you. And then a housekeeping item for Gary on Bitcoin mining and the hashrate. As we think about more of the site portfolio going towards HPC, is there any range we should think about on hashrate moving forward?

Gary A. Vecchiarelli: Great question. As I mentioned in my comments, Bitcoin mining is really our functional currency going forward, and that is what is going to pay the bills until we get a stabilized lease. One of the benefits is having a very large fleet at scale, with one of the most efficient fleets among public miners in North America. We did see through our last contracted commitment with Bitmain that we have some immersion miners that have landed that we are going to be deploying at various sites. That is going to drop our efficiency even more from the 16 joules/terahash that we are currently posting, which will increase margins.

The best part is these are going to be in immersion pods that we can then pick up and move as part of our AI strategy. I think you will see hashrate start to tick up. Our Bitcoin production has broken 23 just recently. Some of that is going to depend on network difficulty and Bitcoin price, but you will probably start to see this trend to 55 through the end of the year.

Operator: Your next question comes from the line of Brett Anthony Knoblauch with Cantor Fitzgerald. Please go ahead.

Brett Anthony Knoblauch: Thank you for taking my question. Matt, on the tenant conversations and the evolution of the portfolio approach, is that the same tenant who was looking at Sandersville also looking at some of the other sites? And does this portfolio approach potentially push back when the first lease signing could be, or do you think it does not change the timing?

Matthew Schultz: Thanks for the question, Brett. It was good to connect with you at the Bitcoin conference. It does not change the timing whatsoever. The assets have value individually and independent of one another. First prize for us is having the right credit quality tenant that has interest across the portfolio. It does not change timing. I feel really good about where we are and the cadence we have had to date, and I think the portfolio approach is more frosting on the cake.

Brett Anthony Knoblauch: Understood. And then Gary, on the Bitcoin side, would you be looking at co-locating Bitcoin mining with AI? Is that something that you have discussed with tenants, or do you think every site is either going to be AI or Bitcoin mining?

Gary A. Vecchiarelli: We think we are innovators in pairing AI with Bitcoin mining. Bitcoin mining will allow us to land new opportunities because we will be able to monetize that energy near to 100% of the baseload. We are having conversations, and you can expect different flavors of AI and AI plus Bitcoin mining. One we are looking forward to is that builds right now are plus months for AI or HPC, and if the site is energized, we can place mining pods and monetize that energy while we are waiting for the AI site to be built. It is innovative and new to the market, so it will take some time and education for all parties.

That is part of our strategy, and we think it is viable.

Matthew Schultz: Maybe just to add a little flavor on that, Brett. We have a patent from our Bitcoin mining days. The patent basically says that the control module has the ability to make a decision if and when to distribute power to a requesting module. Back when we were in the microgrid business, we had a controller that would allocate power as requested based on a number of criteria. With many of these data center loads, the peak PUE—for example, on Sandersville, the peak PUE for the tenant would be in that 1.4 range, with the average annual PUE around 1.15. That leaves a significant amount of megawatts available 93%+ of the year.

The challenge then becomes, for the utility to have that power available to meet the five-nines requirement for a hyperscale tenant, what do they do with those non-monetized megawatts? The conversations we have had contemplate utilizing Bitcoin mining to make sure they meet the minimum utilization thresholds to ensure the pricing that is so important for the hyperscale tenants, while also having the ability to mine Bitcoin profitably and, in some instances, potentially subsidized, using that spare capacity. It is early in the discussion, but it creates a win-win scenario so the utility does not have on-demand available yet underutilized power. They still have the ability to monetize that to create the revenues to invest in future CapEx.

It is a hybrid approach, and we are excited about the potential.

Operator: Your next question comes from the line of Paul Alexander Golding with Macquarie Capital. Please go ahead.

Paul Alexander Golding: Thanks so much for taking the question. On the incremental capacity under review at Brazoria, the 300 megawatts, could you give some detail around how that review process is going and what it might signal for incremental power acquisition over time? Is the market tightening? Is the review process fairly stringent? How should we think about this review process and the current pipeline of interconnect capacity and the availability—or lack thereof—of powered land banking going forward for your portfolio?

Harry Sudock: Thanks, Paul. The most important piece is that our process by which we achieve contracted, approved power starts during our site evaluation and M&A process. We have a team that has done this many times across a diversity of markets. We have built a reputation for being an incredibly strong deal partner in the acquisition of powered land assets. The ability to work with the approval bodies, whether that is a cluster study or something else, begins early in the acquisition process. It is a function of our diligence and the way we engage cross-functionally throughout the full stack of not only the utility but also the approving body, the landowner, and adjacent parcels should we need additional capacity.

Relating that to Brazoria, we came into that process with a very clear view of the Greater Houston market. We closed on our Sealy asset just 60 days prior. We were already in market with ERCOT and CenterPoint. We understood the nuances, the zoning, the planning, etc. We came in from a position of strength. That is why we were able to strike a constructive deal there, close on the first 300 megawatts at full approval status, with the second 300 in a deeply progressed posture. Our sense from CenterPoint and ERCOT is that we are living in batch zero territory for the additional component.

It also signals our track record: we enter a market, we land there, and then we very rapidly expand there. It was the same playbook in Georgia—different power market—and the same in Tennessee, as different from ERCOT as you can get with a fully federally regulated utility. You are now seeing us do that in ERCOT in the Greater Houston area. We did not just trip on land there; it was about the transmission availability and the range of utility sophistication that we are excited to grow with.

Paul Alexander Golding: Thanks so much for that, Harry. Could you also comment on incremental acreage you would need to acquire at other sites if you think about the specs unfolding for Sandersville? You did the incremental acreage acquisition there. Are you looking at your portfolio and thinking about that spec as a blueprint for additional land you may need to acquire at other sites? Is that filtering out some sites from an HPC viability perspective?

Harry Sudock: Great question. I want to tackle it in pieces by region. In Texas, the land parcels we have acquired as part of the power acquisition are sufficient to build the AI campuses we have contemplated. That is the benefit of going in on a purpose-built acquisition trajectory in that market. Sandersville looks different because we were able to land 250 megawatts of mining on a 50-acre parcel, whereas the data halls and the adjacent required mechanical, electrical, and plumbing are going to be a much larger physical footprint. That is why we took down that additional acreage.

What is great—and you will hear this from us many times—is that community relationships are a business tool, as well as the right thing to do. Because we have built the community relationships that we have, the ability to acquire additional land where necessary is very low friction for us. Ultimately, we will evaluate this on a site-by-site basis. We have sites today where there is sufficient land, and others where we will look to get a little more elbow room to take down a full HPC deployment. We have the real estate chops and the development chops to do that seamlessly.

Matthew Schultz: And, Paul, just to give you a little color on how that works. When we met with the economic development director in Sandersville and told them what we were contemplating doing, not only did they assist us in securing the additional 122 acres, it is not a fence line neighbor parcel—it is a driver nine-iron away. They then assisted us in negotiating a right of way for the easement to pull the power across. We still have the ability to mine Bitcoin up until the day we cut it over, and then we can mine it in conjunction.

The reason that is important is this was the city taking the initiative to ensure that our requirements were met, and they were excited to do so based on our history. That is consistent across our portfolio. There have been times that we show up in a little town in Tennessee or a little town in Georgia wearing a CleanSpark, Inc. golf shirt, and I cannot pay for a cup of coffee because folks are happy about us being there and excited with what we have created. It is a differentiated approach to what you are seeing in the media.

Operator: Your next question comes from the line of Analyst with Clear Street. Please go ahead.

Analyst: Good evening, guys. Earlier you likened the AI data center buildout to that of personal computing. We are still in the very early stages. Can you articulate your vision for CleanSpark, Inc. in, say, 2030, a few years down the road once you have embarked on the buildout?

Harry Sudock: Thank you. What is important to understand about where AI buildouts are happening—and I differentiate it from the dark fiber wave of the Internet—is that dark fiber was an opportunistic, speculative buildout where the fiber was laid, and because you were digging the trench one time, it made sense to lay 50 strands, not 5. Ultimately, the users at the other end of those strands were not there yet, not because the Internet was not going to become valuable, but because there was a distribution curve the Internet had to go through. AI is building on the shoulders of giants because we are all walking around with connectivity.

Because the distribution rails were built 30 years ago, AI can proliferate much more rapidly. How does that read through to our portfolio and vision? Every megawatt that can be economically pushed into an intelligence posture is likely going to be, over time. In the short term, it means we do not have enough electrons, and the electrons available to be built into infrastructure will be very rapidly and aggressively bid for. That means 10, 20, 50 megawatt sites out of the gate if you look back to 2022–2023; it meant 250+ megawatt sites from 2022 to today; and it is going to look like gigawatt campuses if you look out into the future.

Just because gigawatt campuses today are providing tremendous economic value, the 250s are still producing, the 50s are still producing, and the 10s are still producing across the spectrum. The next phase is continued proliferation and distribution of intelligence as a fundamental economic good. Our job is to make sure that the communities that did not benefit from the proliferation of the smartphone and the Internet are not going to get left behind in this AI wave. These are the places where infrastructure will fundamentally change lives. If we can be the developer to bring and distribute that, we are going to, on behalf of the places where we work and the shareholders who supported us.

Matthew Schultz: One thing to note: there is a study called “Rethinking Load Growth” that Duke University published. It discusses that, as of today, in the 22 largest power grids in the nation, there is between 76 and 120 gigawatts of headroom that is unlocked and available, able to be curtailed between 0.5%–1.5% of the time. We hear that the grid is overtaxed and overstressed, but in reality, there is roughly 100 gigawatts of headroom that, if you can curtail 115 hours a year, you unlock that capacity. By working in some of these smaller jurisdictions and discussing the ability to add Bitcoin mining, which is a rapidly interruptible load, it changes these discussions.

We are excited about gigawatt campuses and the 250 megawatt campuses we are working toward deployment, and we are also very excited about the 20s, 50s, and 60s that we have. We have had conversations with tenants that have specifically asked how much they can buy—60 megawatts or above between now and 2027. The demand is “everything you have as fast as you can get it.” For us, it has become more of a sorting process to ensure that the financial capability of the offtake and the financeability of the project are well within scope.

Operator: Your next question comes from the line of Michael Anthony Colonnese with H.C. Wainwright. Please go ahead.

Michael Anthony Colonnese: Good afternoon, guys. Thank you for taking my questions. First, it sounds like you would be taking a unique approach to data center construction with your vendor relationships and strategy. What do you think your estimated data center deployment timeline could be once you sign your first lease, and the associated expected CapEx cost per megawatt for these builds? It sounds like you might have an edge here.

Harry Sudock: Thanks, Mike. You will get tired of us telling you that we are conservative in everything that we do and say, but from lease signing, we think you are looking at the 14- to 18-month range for delivery. That is a function of first data hall versus last data hall, project size, and other pieces. We want to be conservative and deliver aggressively on time and on budget out of the gate, then over time be able to smooth and innovate across supply chain and delivery to compress those timelines project by project. Like we saw with our Bitcoin mining deployment learning curve, we got a lot better by the nth build, not the first build.

We expect to integrate similar learnings and innovations here.

Michael Anthony Colonnese: Got it. And is there any CapEx advantage to using this more modular, factory-based data center construction approach, or is it pretty much in line with what you have seen in other builds?

Harry Sudock: These will be in line from a build and CapEx perspective, but we are looking to create an offering with the best total cost of ownership for the client over multiple refresh cycles. There is a component grounded in future-proofing because we want to meet their needs effectively across refreshes.

Michael Anthony Colonnese: Very helpful. Thank you for that, Harry. Second, when we look at GPU ownership versus colocation opportunities, would you still consider pursuing GPU cloud service opportunities based on current economics and implied return profiles? If so, which assets in the portfolio would make the most sense for you to own your own GPUs versus going the colocation route?

Harry Sudock: If you rewound four or five years when the first H100s hit the market, nobody would have thought they would be renting for today’s prices. That is a hugely positive sign for the GPU-as-a-service model and the overall demand profile for AI compute. Ultimately, we want to come to market with very high stability, high margin, and long-duration cash flows that colocation and tenant relationships deliver. We are not going to say “never,” but we want to put one foot in front of the other, execute on the opportunities directly in front of us, and then consider further-out opportunities. We have to deliver first.

Operator: Your next question comes from the line of Analyst with Maxim Group. Please go ahead.

Analyst: Thanks for taking my questions. First, how do you manage multisite risk across your portfolio? Would you be comfortable with a single tenant saturating your pipeline, or would you look to have multiple multisite agreements?

Matthew Schultz: It depends on the credit quality of the tenant. We have had a tremendous amount of inbound inquiry. If we do a neocloud deal, we can print a higher rent figure, but it requires a wrapper. Often the wrapper comes with a cost and can include a significant scrape of equity. As we look at this, it comes down to balancing credit quality and risk with the ultimate value and long-term cost for our shareholders. We do not have an aversion to concentration risk if it is the right trillion-dollar tenant, but it is case by case.

We certainly do not want overexposure to a neocloud and end up having to print a tremendous amount of warrants just to get the deal financed.

Analyst: That makes sense. As my follow-up, I think you mentioned you would be able to relocate some of the Sandersville fleet on conversion. Are you looking to retire some of the fleet there, or is it a lack of space elsewhere? How do you envision that moving?

Gary A. Vecchiarelli: We have XPs and the most recent S21s there, in addition to the newest immersion miners. Naturally, as time goes on, we will retire some of those ASICs, but we will do what we have always done—monetize those while they still have useful economic life. Ultimately, optionality and flexibility are key. If Bitcoin goes to $125,000 tomorrow, XPs will likely see a spike in price per terahash, and we could move some of those opportunistically. Our team is evaluating in real time the best use of those mining assets and which sites to have them at. It will be an ongoing part of operations as you have seen from us over the past couple of years.

Operator: Your next question comes from the line of Jon Robert Hickman with Ladenburg. Please go ahead.

Jon Robert Hickman: I am a little confused about the ability to provide 0.995 power for a hyperscaler and still meet the needs of a community that is used to getting all the power they want whenever you need to turn off or on your Bitcoin mining. How do you balance that?

Harry Sudock: Ultimately, we work hand in glove with the utilities and the communities as we go through a transition phase for some of the power contracts. Sandersville is the place to start. Thinking through how power is procured in Georgia, the utility goes to market and procures the power over duration directly for the contracted demand that we represent at that location. By moving into that procurement method, they mitigate the community risk for any pass back because they are procuring that power on the open market knowing exactly where it is going to get landed, which is with us.

On our side of the fence, we have a capacity factor obligation because we agree to consume a certain percentage of uptime on behalf of our tenant. Because of the way they go to market and the way we agree to consume for our tenant, there is no pass back into the community related to that contract migration. In Texas, the deregulated ERCOT market supports firm loads for large-scale AI data center campuses. In Georgia, it looks different, but the net result is that we provide firm, high uptime to the tenant and source power in a way that is low impact to the community and infrastructure.

Jon Robert Hickman: So the community in Sandersville that is used to this Bitcoin mining operation will be okay if you turn it into HPC?

Matthew Schultz: They are incredibly supportive of our business evolution.

Operator: Your next question comes from the line of Mike Grondahl with Northland Securities. Please go ahead.

Mike Grondahl: Thank you for taking the question. Just wanted to get an update on how demand has evolved for some of your smaller sites, and where does that demand sit today?

Matthew Schultz: We had a stand-up call today with a neocloud company, and their ask was, “Show me all your sites that have 60 megawatts of power or more available today or in the short term.” The demand is going nowhere but up. During that call, they commented that they are aggressively seeking 8 gigawatts of capacity. We are seeing the 500 megawatt or 1 gigawatt minimum thresholds start to drop because a lot of those megasites that are grid connected are years away or already under discussion or leasing. Secondly, there is real risk attributed to behind-the-meter power generation.

Many companies that have made behind-the-meter gas decisions are facing energization delays or utility costs double or triple what we are seeing for grid-connected sites. There have been constructive conversations at the White House with hyperscalers agreeing to generate additional power and push it back to the grid, but that contrasts with the Duke University study identifying roughly 100 gigawatts of headroom on the grid today. If you can balance that with a portfolio approach using incremental components to make up that demand and use interruptible loads to pair with firm loads for data centers, you can unlock a tremendous amount of previously unnoticed capacity.

Operator: We have time for one more question, and that question comes from James Patrick McIlree with Chardan. Please go ahead.

James Patrick McIlree: How are you looking at managing and securing talent for engineering as well as labor, particularly over the next 12 to 18 months in the next phase of buildout—talent specifically for building out the next wave of data centers?

Matthew Schultz: That is a fantastic question, and it is a very real concern. We have done some data center consulting and development with companies like McKinsey. One identified issue is labor bottlenecks in markets like Texas. The demand for plumbers and electricians over the next 36 to 48 months is significant. We have worked to mitigate that. For example, everyone has heard about the West Texas development for a major hyperscaler that has had challenges—stories of 4,000 to 6,000 workers on dirt roads and bringing in fresh portable restrooms just to keep it rolling. Our conversations with our development partners take about 70% of that out of the way.

For example, Sandersville will be a 494,000 square foot building, and it would be 400 full-time employees on the construction team rather than 4,000 to 6,000, because a significant component of the data center is built in a factory. It is duplicable and consistent—an assembly line process. You can meet the specific requirements from the chip manufacturers, build to suit that particular design, duplicate it, and simply install it in the field. The field crews handle construction, plumbing, and electrical to the point that it feeds the MEP that we are bringing in via a modular solution, decreasing risk. We have a robust team so far.

We have engaged with, as mentioned, McKinsey and a couple of others, including Accenture, to assist us with the roadmap. We have had a tremendous amount of inbound inquiry because we hire locally. In many jurisdictions where we operate, there are tradespeople not chasing data center builds around the country; they are looking for opportunities at home. We are finding significant local talent that can help support what we need.

Operator: That concludes our question-and-answer session. I will now turn it back over to the presenters for closing comments.

Harry Sudock: Everyone, thank you again for joining today’s earnings call. We look forward to staying in touch and sharing future results with you in the coming quarters. Stay tuned for more progress and exciting achievements ahead of us at CleanSpark, Inc.

Operator: Ladies and gentlemen, this does conclude today’s conference call. Thank you for your participation, and you may now disconnect.