Water Tower Research says CleanSpark ‘well-positioned to capitalize’ on microgrid market growth while scaling its Bitcoin mining operations

Analysts at Water Tower Research said CleanSpark Inc (NASDAQ:CLSK) “is well-positioned to capitalize” on the long-term secular growth trend in the microgrid markets.
CleanSpark’s software – mPluse and mVSO (Microgrid Value Stream Optimizer) – enables a microgrid to be scaled to the user’s specific needs and can be used by agricultural, commercial, industrial enterprises as well as the military and municipal governments, and residential users.
“It offers a differentiated, vendor agnostic software and hardware solution that provides significant ROI for customers,” analysts said.
Water Tower Research also noted that Utah-based CleanSpark has launched Bitcoin mining operations using its technology for low carbon energy usage.
CleanSpark “believes this business can contribute $30-40 million in revenue in FY21 and over $325 million in annualized revenue by September 2022,” analysts said.
Water Tower Research also pointed out that China’s Bitcoin ban is expected to be a positive catalyst for CleanSpark and the Bitcoin mining industry outside of China.
“The company stated this has decreased mining difficulty by 28%, translating into a 28% top-line improvement for existing miners and direct flow-through to profitability as production costs remain unchanged,” analysts said. “CleanSpark expects difficulty rates to fall another 8-10% over the next couple of weeks.”
Nevertheless, Water Tower Research said CleanSpark faces a few obstacles as it scales its microgrid and Bitcoin mining operations.
“The company is a smaller player in an industry dominated by much larger, well-capitalized competitors,” analysts said. “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. “
Analysts added: “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.”

Patrick M. Graham @PatrickMGraham