An Energy Intelligence Platform Paving the Way for Rapid Savings in Bitcoin Mining through Microgrid Solutions



KEY POINTS
  • CleanSpark is a diversified software and services company aligned to the fast-growing market for microgrids and bitcoin mining. The company’s software intelligently controls and manages microgrids to save money and optimize performance, providing an attractive ROI for its energy customers.
  • According to Guidehouse Insights, the global market for microgrids is expected to grow at a CAGR of 28% through 2029. They also ranked CleanSpark among the Top 15 microgrid controller companies in the world.
  • Management is pushing to drive higher margins (targeting ~85%) by migrating the business model toward bitcoin mining and related energy solutions.
  • CleanSpark reported a record 2Q21 with revenues doubling for the second consecutive quarter along with achieving profitability for the first time, largely driven by the company’s bitcoin mining operation, CleanBlok.
  • Management expects the company to generate revenues of $47-67 million in FY21 with $16-20 million from the energy business, $1.0 million in digital agency, and $30-40 million in bitcoin mining.
  • CleanSpark and Coinmint are collaborating on the ecofriendly mining of bitcoin. The partnership will enable CleanSpark to bring additional bitcoin mining capacity online and will help the company increase its overall hashrate capacity to its goals of 1.2 EH/s upon installation around mid-September.
  • Our prior content on CLSK can be accessed HERE.

CATALYST MONITOR

  • Bitcoin mining production milestones.
  • Margin improvement from higher SaaS and bitcoin mix.
  • Synergistic M&A announcements or partnerships.
  • Strong corporate earnings results.
OUR INSIGHTS

The Opportunities

The market for microgrids is in a long-term secular growth trend, and CleanSpark is well-positioned to capitalize on this as it offers a differentiated, vendor agnostic software and hardware solution that provides significant ROI for customers. Additionally, CleanSpark is focused on scaling its bitcoin mining operation using ~100% low carbon energy and believes this business can contribute $30-40 million in revenue in FY21 and over $325 million in annualized revenue by September 2022. Currently, CleanSpark contributes ~1% of the global bitcoin capacity.

The Obstacles

The company is a smaller player in an industry dominated by much larger, well-capitalized competitors. CleanSpark has proven its ability to compete effectively but will need to continue to expand its sales network and ensure its technology agnostic software platform evolves with the industry. On the bitcoin side of the equation, an increase in mining difficulty rates would reduce the company’s bitcoin yield and associated revenue, and bitcoin price fluctuations would impact the profitability of the operation.

CleanSpark is a diversified software and services company aligned to the fast-growing market for microgrids and bitcoin mining. The company’s software intelligently controls and manages microgrids to save money and optimize performance, providing an attractive ROI for its energy customers.

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