CleanSpark Swings to $240mn Loss as Data Centre Pivot Deepens

BTC accounting swing

Much of the swing traced to Bitcoin accounting. Under ASC 350-60 fair-value rules, which require Bitcoin holdings to be revalued at market prices at the end of each quarter, CleanSpark booked $116.3mn in fair-value losses on its BTC holdings and a further $16.5mn on Bitcoin held as collateral, taking nine-month cumulative fair-value losses on its holdings to $587.2mn. The company noted in a footnote that it did not exclude these swings from its adjusted EBITDA.

CleanSpark's total Bitcoin holdings, which the company calls 'HODL value', were worth $814.9mn as of 30 Jun, down from about $1.48bn at fiscal year-end. The figure covers Bitcoin held directly by the company and Bitcoin pledged as collateral to counterparties.

"Despite currently challenging bitcoin mining economics, we have a portfolio of scarce, grid-connected power assets and multiple pathways to commercialization," president and chief financial officer Gary Vecchiarelli said in the release.

The Sandersville lease

Management led with diversification. The company described itself as a "market-leading data center developer" controlling more than 1.8GW of power, land and data centres across the US.

The centrepiece is a newly signed 20-year, $6.6bn triple-net lease, under which the tenant covers taxes, insurance and maintenance, at CleanSpark's Sandersville, Georgia site. The tenant, which CleanSpark did not name, was described by CleanSpark as "a high-investment grade, leading global technology company." CleanSpark said it had pre-paid all long-lead equipment for the project and fully funded its anticipated equity commitment.

Market reaction

Shares closed 5.6% lower at $12.75 on 6 Aug ahead of the release, then rose to about $13.06 in aftermarket dealings. The muted post-earnings move reflected Wall Street's earlier repricing of the story: after CleanSpark disclosed the Sandersville lease on 14 Jul, Cantor Fitzgerald raised its target to $26 from $17, Needham to $23 from $18, and B. Riley reaffirmed its Buy rating with a $19 target.

Revenue fell 30.5% to $138.0mn from $198.6mn, according to results released on 6 Aug. Adjusted EBITDA swung to a loss of $113.0mn from a positive $377.7mn a year earlier. The $0.89 per-share loss came in at roughly triple the $0.30 loss that analysts polled by Zacks Investment Research had expected, marking a sizeable miss against Wall Street forecasts. The result narrowed from a sequential loss of about $378mn in the previous quarter.

Debt funds the build

Long-term debt rose to $1.78bn from $644.6mn at fiscal year-end, reflecting the capital build. Cash climbed to $202.6mn from $43.0mn. Treasury stock holdings expanded to $608.2mn from $145.0mn as buybacks continued. Its August IR calendar tilts towards AI infrastructure rather than crypto venues, including the Needham AI Infrastructure 1x1 Conference on 12 Aug.