What happened
Shares of energy and cryptocurrency mining company CleanSpark (CLSK 3.56%) spiked higher on Thursday, following the release of financial results for the first quarter of its fiscal 2022. It was an eventful quarter and the market appears to like what it sees, sending the stock up 20% as of noon ET.
So what
CleanSpark generated record quarterly revenue of $41.2 million in Q1. Almost 90% of this revenue came from mining Bitcoin (BTC 0.95%). This revenue stream barely existed last year -- CleanSpark started as an energy management company. And given the rapid growth of its Bitcoin mining business, overall revenue was up around 1,800% from the same quarter of fiscal 2021.
Image source: Getty Images.
I would say this revenue growth is the primary driver for CleanSpark stock today. However there are a couple of others areas to note. First, the company is thinking about selling its energy business. This could boost the amount of cash it has for growing its mining business, without sacrificing much in revenue. Second, BTIG analyst Gregory Lewis lowered his price target for CleanSpark stock from $35 per share to $30 per share, according to The Fly. The price target may be lower but this is still roughly three times where the stock trades right now.
Another short-term catalyst could be coming from the Valkyrie Bitcoin Miners ETF. This new fund was launched earlier this week and one of its largest holdings is CleanSpark stock. Considering CleanSpark is a small-cap stock, buying pressure from an exchange-traded fund can have a positive impact on the stock price, at least temporarily.
CleanSpark stock's performance over the past year, compared to Bitcoin and the S&P 500. CLSK data by YCharts
Now what
CleanSpark closed Q1 with $5.2 million in cash, $30.2 million in digital currency, and no long-term debt. In my opinion, the company has been fiscally disciplined, selling a portion of Bitcoin mining income to support ongoing growth rather than asking for shareholders to foot the bill via issuing stock like many of its peers. So long as the price of Bitcoin stays steady or rises -- not a guaranteed future -- CleanSpark looks like it will keep growing its top line in a disciplined way.
