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What changed in CLEANSPARK, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of CLEANSPARK, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+361 added−322 removedSource: 10-K (2024-12-03) vs 10-K (2023-12-01)

Top changes in CLEANSPARK, INC.'s 2024 10-K

361 paragraphs added · 322 removed · 213 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

45 edited+21 added−34 removed21 unchanged
Biggest changePercentage of energy usage by each owned location (4) College Park, GA (3) Norcross, GA (3) Washington, GA Sandersville, GA Dalton, GA Non-Carbon (1) 88.0 % 100.0 % 68.4 % 63.5 % 21.0 % Carbon (2) 12.0 % 0.0 % 31.6 % 36.5 % 79.0 % Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % (1) Non-carbon usage includes hydro, nuclear, wind and solar (2) Carbon usage includes coal and natural gas 9 (3) Norcross and College Park are offset by renewable energy credit purchases (4) Energy reported by grid operators as uncategorized is excluded from the percentages above We purchase energy from the electrical grid, and as a result our energy mix will vary from period to period based on a variety of factors including weather, temperature, demand, and how the grid operator ultimately procures and utilizes energy resources.
Biggest changeWe purchase energy from the electrical grid, and as a result our energy mix will vary from period to period based on a variety of factors including weather, temperature, demand, and how the grid operator ultimately procures and utilizes energy resources.
In fiscal year 2023, for example, the CFTC brought 47 actions involving conduct related to digital asset commodities, representing more than 49 percent of all actions filed by the CFTC during that time period. This increased enforcement by agencies like the SEC and CFTC has resulted in part from the failure of FTX Trading Ltd.
In fiscal year 2023, for example, the CFTC brought 47 actions involving conduct related to digital asset commodities, representing more than 49 percent of all actions filed by the CFTC during that time period. Increased enforcement by agencies like the SEC and CFTC has resulted in part from the failure of FTX Trading Ltd.
Other Business Activities Through our wholly owned subsidiary ATL Data Centers LLC ("ATL"), we previously provided traditional data center services to a small number of remaining clients, such as providing customers with rack space, power and equipment, and offered several cloud services including virtual services, virtual storage, and data backup services.
Other Business Activities Through our wholly owned subsidiary ATL Data Centers LLC (“ATL”), we previously provided traditional data center services to a small number of remaining clients, such as providing customers with rack space, power and equipment, and offered several cloud services including virtual services, virtual storage, and data backup services.
Markets, Geography and Major Customers Bitcoin is a global store and exchange of value used by people across the world as an asset and to conduct daily transactions. Mining bitcoin supports the global bitcoin blockchain and the millions of people that depend on it for economic security and other benefits.
Markets, Geography and Major Customers Bitcoin is a global store of value and a medium of exchange used by people across the world as an asset and to conduct daily transactions. Mining bitcoin supports the global bitcoin blockchain and the millions of people that depend on it for economic security and other benefits.
We face significant competition in certain operational aspects of our business, including, but not limited to, the acquisition of new miners, obtaining low-cost electricity, obtaining clean energy sources, obtaining access to energy sites with reliable sources of power and evaluating new technology developments in the industry.
We face significant competition in certain operational aspects of our business, including, but not limited to, the acquisition of new miners, obtaining low-cost electricity, obtaining access to energy sites with reliable sources of power and evaluating new technology developments in the industry.
The variable consideration is constrained until we can reasonably estimate the amount of mining rewards by the end of a 6 given day based on the actual amount of computing power provided to the mining pool operator.
The variable consideration is constrained until we can reasonably estimate the amount of mining rewards by the end of a given day based on the actual amount of computing power provided to the mining pool operator.
In addition, the SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including the Company.
In addition, the SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including the Company. 11
Additionally, because we sell our bitcoin on exchanges, we may also be potentially impacted by exchange failures in that respect.
Additionally, because we sell our bitcoin on exchanges, we may also be impacted by exchange failures in that respect.
(“FTX”) in November 2022 and the resulting market turmoil that failure caused. While these statements tend to focus more on digital asset exchanges and other players in the digital asset space and less on bitcoin miners, the failure of large exchanges may impact the adoption and value of bitcoin.
(“FTX”) in November 2022 and the resulting market turmoil that such failure caused. 9 While these statements tend to focus more on digital asset exchanges and other players in the digital asset space and less on bitcoin miners, the failure of large exchanges may impact the adoption and value of bitcoin.
As of September 30, 2023, ATL no longer provides data center services to external customers and all capacity of the location is now dedicated to bitcoin mining activities. 12 Company Information CleanSpark, Inc. was incorporated in 1987 and is headquartered in Henderson, Nevada. It is incorporated in Nevada.
As of September 30, 2023, ATL no longer provided data center services to external customers and all capacity of the location is now dedicated to bitcoin mining activities. Company Information CleanSpark, Inc. was incorporated in 1987 and is headquartered in Henderson, Nevada. It is incorporated in Nevada.
Some policymakers have expressed concerns over the high energy consumption of data centers, including bitcoin miners, and the ancillary effects on the environment from that energy consumption. Many media reports focus exclusively on the energy requirements of bitcoin mining and cite it as an environmental concern.
Some local, state and federal policymakers have expressed concerns over the high energy consumption of data centers, including bitcoin miners, and the ancillary effects on the environment from that energy consumption. Many media reports focus exclusively on the energy requirements of bitcoin mining and cite it as an environmental concern.
A company’s hashrate determines its market share and is therefore generally considered one of the most important metrics for evaluating bitcoin mining companies. We obtain bitcoin as a result of our mining operations by contributing all of our computing power (both owned locations and hosted locations) to one mining pool operator who is our sole customer.
A company’s hashrate when compared to global hashrate determines its market share and is therefore generally considered one of the most important metrics for evaluating bitcoin mining companies. 5 We obtain bitcoin as a result of our mining operations by contributing all of our computing power (both owned locations and hosted locations) to one mining pool operator who is our sole customer.
The Company was formerly known as Stratean Inc. and changed its name to CleanSpark, Inc. in November 2016. We maintain a corporate website at: www.cleanspark.com. The contents of our website are not incorporated in, or otherwise to be regarded as part of, this Annual Report on Form 10-K.
The Company was formerly known as Stratean Inc. and changed its name to CleanSpark, Inc. in November 2016. We maintain a corporate website at: www.cleanspark.com. The contents of our website are not incorporated in, or otherwise to be regarded as part of, this Annual Report on Form 10-K. We file reports with the SEC.
As the regulatory and legal environment evolves, we may become subject to new laws, such as further regulation by the SEC, CFTC and other agencies, which may affect our mining and other activities. For additional discussion regarding our belief about the potential risks existing and future regulation pose to our business, see Part I, Item 1A.
As the regulatory and legal environment evolves, we may become subject to new laws and regulations, including by the SEC, CFTC and other agencies, which may affect our mining and other activities. For additional discussion regarding our belief about the potential risks existing and future regulation pose to our business, see Part I, Item 1A.
“Risk Factors” beginning on page 13 of this Annual Report on Form 10-K. Cybersecurity Our share of bitcoins mined from our pool are initially received by us in wallets we control, which are maintained by Coinbase Inc. (“Coinbase”), a U.S.-based digital assets exchange.
“Risk Factors” beginning on page 13 of this Annual Report on Form 10-K. Protection of Bitcoin Assets Our share of bitcoins mined from our pool is initially received by us in wallets we control, which are maintained by Coinbase Inc. (“Coinbase”), a U.S.-based digital assets exchange.
Within North America, our major competitors include: • Marathon Digital Holdings • Riot Blockchain, Inc. • Core Scientific, Inc. • Bitfarms LTD. • Iris Energy Limited • Cipher Mining Inc. • Terawulf Inc. In addition to the foregoing, we compete with other companies that focus all or a portion of their activities on mining activities at scale.
Within North America, our major competitors include: • MARA Holdings, Inc.; • Riot Platforms, Inc.; • Core Scientific, Inc.; • Bitfarms Ltd.; • Iris Energy Limited; • Cipher Mining Inc.; and, • Terawulf Inc. In addition to the foregoing, we compete with other companies that focus all or a portion of their activities on mining activities at scale.
Human Resources We believe that our future success depends, in no small part, on our ability to continue to attract, hire, and retain qualified personnel. As of September 30, 2023, we had 131 staff members, all located in the United States, and 130 of which were full time.
Human Resources We believe that our future success depends, in no small part, on our ability to continue to attract, hire, and retain qualified personnel. As of September 30, 2024, we had 270 staff members, all located in the United States, of which 256 were full time.
The majority of our mining facilities are located in Georgia, which is one of the most favorable regulatory environments for bitcoin miners. However, we also have co-location operations in New York, which has generally been more aggressive in its regulation of bitcoin mining.
The majority of our mining facilities are located in Georgia, Mississippi and Tennessee, which have favorable regulatory environments for bitcoin miners. However, we also have co-location operations in New York, which has generally been more aggressive in its regulation of bitcoin mining.
We have exposure to market fluctuations in energy prices through our power providers. We actively manage these risks through activities such as the deployment of advanced software solutions to increase unit efficiency and energy curtailment when appropriate. These energy market prices may be significantly impacted by market conditions and geopolitical events.
We actively manage these risks through activities such as the deployment of advanced software solutions to increase unit efficiency and energy curtailment when appropriate. These energy market prices may be significantly impacted by market conditions and geopolitical events.
We design our proprietary infrastructure to responsibly support bitcoin, the world’s most important digital commodity and an essential tool for financial independence and inclusion. Through CleanSpark and our wholly owned subsidiaries, we have operated in the bitcoin mining sector since December 2020.
We design our proprietary data center infrastructure to operate at high uptime and efficiency in support of bitcoin, the world’s most important digital commodity and an essential tool for financial independence and inclusion. Through CleanSpark and our wholly owned subsidiaries, we have operated in the bitcoin mining sector since December 2020.
We recognize the revenue when the variable consideration is no longer constrained and the performance obligation of providing computing power has been satisfied. As a result, we do not present disaggregated revenue information on block rewards and transaction verification fees. We sell bitcoin from time to time, to support our operations and strategic growth.
We recognize the revenue when the variable consideration is no longer constrained and the performance obligation of providing computing power has been satisfied. As a result, we do not present disaggregated revenue information on block rewards and transaction verification fees.
Bitcoins we mine or hold for our own account may be subject to loss, theft or restriction on access. Hackers or malicious actors may launch attacks to steal, compromise or secure bitcoins, such as by attacking the bitcoin network source code, exchange miners, third-party platforms (including Coinbase), cold and hot storage locations or software, or by other means.
Hackers or malicious actors may launch attacks to steal, compromise or secure bitcoins, such as by attacking the bitcoin network source code, exchange miners, third-party platforms (including Coinbase), cold and hot storage locations or software, or by other means.
Dollar amounts presented in this Annual Report on Form 10-K are presented in thousands, except per share amounts, bitcoin price, and information set forth under the heading “Bitcoin Mining Operations”. Overview CleanSpark is a bitcoin mining company. We independently own and operate five data centers in Georgia for a total developed capacity of 230 megawatts (“MW”).
Dollar amounts presented in this Annual Report on Form 10-K are presented in thousands, except per share amounts, bitcoin price, and information set forth under the heading “Bitcoin Mining Operations”. Overview CleanSpark is a bitcoin mining company. We independently own and operate a large portfolio of data centers across the United States with locations in Georgia, Tennessee, Mississippi and Wyoming.
We own and operate our own facilities and do not lease mining space to other mining companies or private individuals that mine. Our wholly-owned mining operations are located in the State of Georgia in the United States. We also have a relationship with a facility located in New York State that hosts a portion of our miners.
We own and operate our own facilities and do not lease mining space to other mining companies or private individuals that mine. Our wholly-owned mining operations are located in the State of Georgia, Tennessee, Mississippi and Wyoming in the United States.
Insurance We have property insurance coverage for our bitcoin miners under a multi-tiered insurance program with 18 different underwriters for a total of $100,000 in limits. This insurance coverage covers all the Company’s bitcoin miners and includes Earthquake/Flood insurance with a $5,000 limit and Storm/Wind/Hail coverage with a limit of 3% Value at Risk of Time of Loss.
Insurance We have property insurance coverage for our bitcoin miners under a multi-tiered insurance program with 21 different underwriters for a total of $200,000 in limits. This insurance coverage covers all of our bitcoin miners and includes earthquake and flood insurance with a $5,000 limit. Storm, wind, and hail coverage is also included within the $200,000 policy limit.
As of the date of this filing, we have deployed approximately 16,400 total miners pursuant to the co-location mining services agreement at Coinmint’s facility in New York. 8 Pursuant to the agreement, as consideration for its services, we pay Coinmint certain services fees, which are based on the operating costs incurred by Coinmint in performing its services, and a variable fee calculated based on the profitability of the bitcoin mined during the relevant payment period, subject to uptime performance commitments.
Pursuant to the agreement, as consideration for its services, we pay Coinmint certain services fees, which are based on the operating costs incurred by Coinmint in performing its services, and a variable fee calculated based on the profitability of the bitcoin mined during the relevant payment period, subject to uptime performance commitments.
We sell portions of the bitcoin we mine and utilize hot wallets to hold this bitcoin immediately prior to selling for working capital purposes. We hold any remainder of our bitcoin in cold storage.
We sell portions of the bitcoin we mine and utilize hot wallets to hold this bitcoin immediately prior to selling for working capital purposes. We hold any remainder of our bitcoin in cold storage. Bitcoin held in cold storage is reconciled monthly and associated with unique blockchain addresses, with their activity recorded on the blockchain.
Most of the machines we purchased this year were manufactured by Bitmain, one of the top three preeminent manufacturers of bitcoin mining rigs. Bitmain manufactures ASICs throughout Asia, and is headquartered in China with subsidiaries in the United States, Singapore, Malaysia, Kazakhstan and other locations.
These specialized computers, often called miners, have few manufacturers. Most of the machines we purchased this year were manufactured by Bitmain Technologies Delaware Limited (“Bitmain”), one of the top three preeminent manufacturers of bitcoin miners. Bitmain manufactures ASICs throughout Asia with subsidiaries in the United States, Singapore, Malaysia, Kazakhstan and other locations.
We may be in control and possession of substantial holdings of bitcoin, and as we increase in size, we may become a more appealing target of 11 hackers, malware, cyberattacks or other security threats.
We may be in control and possession of substantial holdings of bitcoin, and as we increase in size, we may become a more appealing target of hackers, malware, cyberattacks or other security threats. See Part I, Item 1C. “Cybersecurity” of this Annual Report on Form 10-K.
Historically, our methodology and operations have been efficient and resilient enough to withstand market pressures and global events, but there can be no certainty that we will not be negatively affected in the future.
Historically, our methodology and operations have been efficient and resilient enough to withstand market pressures and global events, but there can be no certainty that we will not be negatively affected in the future. Inflationary pressures impact virtually all aspects of our materials and suppliers, including power prices, and could impact our fiscal year ending September 30, 2025.
Our custody agreement with Coinbase provides that Coinbase will obtain and maintain at its sole expense insurance coverage in such types and amounts as are commercially reasonable for the custodial services provided under the custody agreement. We do not carry additional insurance coverage on our bitcoin holdings.
For security reasons, Coinbase does not disclose the geographic location of its cold storage wallets to its customers. Our custody agreement with Coinbase provides that Coinbase will obtain and maintain at its sole expense insurance coverage in such types and amounts as are commercially reasonable for the custodial services provided under the custody agreement.
Business Activity Bitcoin mining is our principal revenue generating business activity. As of September 30, 2023, we operated 88,954 bitcoin mining machines, with a hashrate capacity of approximately 9.6 exahashes per second (“EH/s”) and a fleetwide efficiency of 28.4 joules per terahash (“J/TH”).
Business Activity Bitcoin mining is our principal revenue generating business activity. As of September 30, 2024, we operated approximately 188,500 bitcoin mining machines, with a hashrate capacity of approximately 27.6 EH/s and a fleetwide efficiency of 21.94 joules per terahash (“J/TH”).
The agreement had an initial term of one year, after which it renews automatically for three-month periods until terminated in accordance with its terms. Materials and Suppliers We engage in high efficiency bitcoin mining by using ASICs. These specialized computers, often called mining rigs, have few manufacturers.
The agreement had an initial term of one year, after which it renews automatically for three-month periods until terminated in accordance with its terms. On October 1, 2024, we agreed to a non-renewal of the agreement, which is scheduled to expire January 1, 2025. 7 Materials and Suppliers We engage in high efficiency bitcoin mining by using ASICs.
Discontinued Operations As of June 30, 2022, we deemed our energy operations to be discontinued operations due to our strategic decision to strictly focus on bitcoin mining operations and to divest or dispose of the remaining energy assets.
We cultivate trust and transparency among our employees, the communities we operate in, and the people around the world who depend on bitcoin as we jointly strive to build the infrastructure of the future. 10 Discontinued Operations As of June 30, 2022, we deemed our energy operations to be discontinued operations due to our strategic decision to strictly focus on bitcoin mining operations and to divest or dispose of the remaining energy assets.
Coinmint On July 8, 2021, our subsidiary CleanBlok, Inc., a wholly owned subsidiary of the Company ("CleanBlok"), entered into a services agreement with Coinmint. Pursuant to the agreement, Coinmint has agreed to house and power certain of our bitcoin mining equipment in its facilities, and to use commercially reasonable efforts to mine bitcoin on our behalf.
Pursuant to the agreement, Coinmint has agreed to house and power certain of our bitcoin mining equipment in its facilities, and to use commercially reasonable efforts to mine bitcoin on our behalf. All bitcoin mining services performed by Coinmint are conducted using our own mining equipment.
We define our principal competitors as other publicly traded bitcoin miners because there is widely available information about their operations.
Our competitors include large, publicly listed mining companies, large private mining companies, and, in some cases, independent, individual miners who pool resources. We define our principal competitors as other publicly traded bitcoin miners because there is widely available information about their operations.
We also maintain equipment breakdown coverage, with a property damage limit of $100,000. We do not maintain Business Interruption Coverage, which is currently not being provided by underwriters to any bitcoin mining companies. The policies also exclude coverage of our bitcoin holdings and cybersecurity coverage.
We do not maintain Business Interruption Coverage, which is currently not commercially available for bitcoin mining companies. The policies also exclude coverage of our bitcoin holdings and cybersecurity coverage.
We make every effort to establish our facilities in locations serviced by utilities that source a substantial portion of their energy from clean and renewable sources. We supplement a portion of the energy mix provided by our utility providers by purchasing renewable energy credits as the precise ratio of renewable energy in local energy mixes is not within our control.
We make every effort to establish our facilities in locations serviced by utilities that source a substantial portion of their energy from clean and renewable sources. We have exposure to market fluctuations in energy prices through our power providers.
Decisions to hold or sell bitcoins are determined by management by analyzing forecasts and monitoring the market in real time. Through our wholly owned subsidiaries CSRE Properties, LLC, CSRE Property Management Company, LLC, CSRE Properties Norcross, LLC, CSRE Properties Washington, LLC, CSRE Properties Sandersville, LLC, CSRE Properties Dalton, LLC, and CleanSpark HQ, LLC, we maintain real property holdings.
Through our wholly owned subsidiaries CSRE Properties, LLC, CSRE Property Management Company, LLC, CSRE Properties Norcross, LLC, CSRE Properties Washington, LLC, CSRE Properties Sandersville, LLC, CSRE Properties Dalton, LLC, CSRE Properties Mississippi, LLC, CSRE Properties Wyoming, LLC, CSRE Properties Tennessee, LLC, and CleanSpark HQ, LLC, we maintain real property holdings.
Distribution, Marketing and Strategic Relationships We have developed strategic relationships with well-established companies in key areas, including utilities, traditional and renewable energy, infrastructure, construction, and bitcoin mining equipment procurement. In addition to operating our own mining facilities, we may engage with third-parties to host and operate mining equipment on our behalf.
Two of the five owned Tennessee locations were operational as of September 30, 2024. Distribution, Marketing and Strategic Relationships We have developed strategic relationships with well-established companies in key areas, including utilities, traditional and renewable energy, infrastructure, construction, and bitcoin mining equipment procurement.
The table breaks out energy sources as reported to the Company by the grid operators. Competition Bitcoin mining is a global activity. During fiscal year 2021, a majority of bitcoin mining occurred in China. After China banned bitcoin mining in May 2021, the center of mining moved to North America.
During fiscal year 2021, a majority of bitcoin mining occurred in China. After China banned bitcoin mining in May 2021, the center of mining moved to North America. Bitcoin mining by its nature is a competitive business; all miners compete for the same number of bitcoin rewards.
We do not currently plan to engage in regular trading of bitcoin (other than as necessary to convert our bitcoin to U.S. dollars) or to engage in hedging activities related to our holding of bitcoin; however, our decisions to hold or sell bitcoin at any given time may be impacted by the bitcoin market, which has been historically characterized by significant volatility.
We have historically and may in the future sell bitcoin from time to time, to support our operations and strategic growth. Our decisions to engage in hedging, lending, borrowing activities, to hold or sell bitcoin at any given time may be impacted by the bitcoin market, which has been historically subject to significant volatility.
We believe our principal competitive advantages include our energy background, a combination of owned, operated, and co-located miners and facilities, our strategic use of the bitcoin we mine to fund operational growth and our commitment to responsible business practices, including building in communities that source renewable energy.
We believe our principal competitive advantages include our energy background, and the efficiency of our mining fleet and our operational expertise in managing uptime of our owned and operated facilities. We strategically use bitcoin we mine as a store of value, to fund operational growth and the use of bitcoin as collateral for borrowing activities.
We have since sold or disposed of the majority of our software and intellectual property assets related to the Energy Segment (including mPulse, mVoult and GridFabric LLC) and sold all additional inventory and other assets.
Through our discontinued operations segment, we previously provided energy solutions and we have since sold or disposed of the related assets.
Further we are not aware of any insurance providers or other third parties (e.g. auditors) having inspection or other verification rights associated with digital assets held in storage. We recognize the importance of assessing, identifying and managing material risks associated with cybersecurity threats, as such term is defined in Item 106(a) of Regulation S-K.
We do not carry additional insurance coverage on our bitcoin holdings. Further we are not aware of any insurance providers or other third parties (e.g. auditors) having inspection or other verification rights associated with digital assets held in storage. Bitcoins we mine or hold for our own account may be subject to loss, theft or restriction on access.
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We are developing an additional 150 MW at our data center in Sandersville, GA, which is expected to energize in early 2024. We do not currently host miners for any other companies. A partner in Massena, NY, hosts 50 MW for us.
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As of October 31, 2024, we have with 676 megawatts (“MW”) of developed capacity and has 50 MWs of hosted machines in New York, which supports approximately 31.5 exahash per second (“EH/s”) of bitcoin mining computational power. We are currently developing an additional 211.5 MW across the portfolio, which is expected to support approximately 50 EH/s of mining capacity.
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From March 2014 to June 30, 2022, we provided advanced energy technology solutions to commercial and residential customers to solve modern energy challenges in the alternative energy sector. As of June 30, 2022, we discontinued our energy operations due to our strategic decision to strictly focus on our bitcoin mining operations.
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We do not host miners for any other companies. A partner in Massena, NY, hosts 1.5 EH/s for us. However, following a non-renewal, the agreement governing such hosting of our miners is scheduled do expire on January 1, 2025 and we plan to move all operational capacity to wholly owned sites to maximize operational efficiency.
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In fiscal year 2023, we mined 6,903 bitcoins, an 84% increase over the 3,752 bitcoins we mined in fiscal year 2022. We expect to continue increasing our computing power through 2024 and beyond as we expand our infrastructure at our owned sites in the State of Georgia, seek strategic acquisition targets, and through strategic co-location agreements.
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In fiscal year 2024, we mined 7,092 bitcoins, net of mining pool fees, a 3% increase over the 6,903 bitcoins we mined in fiscal year 2023.
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College Park, GA Facility CleanSpark’s first ever bitcoin mining facility is in College Park, GA. It sits on six acres near the Hartsfield-Jackson Atlanta International Airport and features at its heart 48 new generation air-cooled pods. Machines are also housed in 20 Ant boxes, an annex building and within the original data center.
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We expect to continue increasing our computing power through 2024 and beyond as we expand our infrastructure at our portfolio of data centers across the United States with locations in Georgia, Tennessee, Mississippi and Wyoming. We intend to continue growing our capacity and plan to pursue additional capacity through both organic growth and strategic acquisitions.
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As of September 30, 2023, the facility maintained an operational hashrate of 1.7 EH/s. Norcross, GA Facility An 87,000-square-foot data center in Norcross, GA was purchased and transformed into CleanSpark’s second bitcoin mining facility. Situated on over seven acres, the immersion-cooled site participates in Georgia’s Flex REC program and is 100% net carbon-neutral.
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Decisions to hedge, lend, borrow, hold or sell bitcoins are determined by management by analyzing forecasts and monitoring the market in real time.
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There are two large rooms that house 20 MW of single-phase immersion—about 4,300 machines. Liquid immersion cooling, where bitcoin mining machines are fully immersed in a specialized oil, has proven to significantly improve efficiency by reducing power consumption and extending the life of the machines—thereby maximizing financial gains.
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We also have a relationship with a facility located in New York State that hosts a portion of our miners. However, on October 1, 2024, we and our hosting partner, Coinmint, LLC, agreed to a non-renewal of the agreement governing the hosting of our miners, which is scheduled to expire January 1, 2025. See Note 19 - Subsequent Events.
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As of September, 30, 2023, the facility maintained an operational hashrate of 0.5 EH/s. Washington, GA Facility Nestled between Augusta and Athens, the historic town of Washington is home to CleanSpark’s third bitcoin mining facility. It was purchased during the summer 2022 bear market from another bitcoin miner as an already-operational site.
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Georgia Operations As of September 30, 2024, our Georgia facilities have a developed data center infrastructure backed by approximately 483 MW, which supports an operational hashrate of 20.6 EH/s. Our Georgia operations are geographically spread across eight cities.
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Bitcoin mining machines are set up in multiple air-cooled buildings. A completed 50 MW expansion in July 2023 created four more buildings filled with an additional 14,000 latest-generation miners. It draws power predominantly from low-carbon sources, such as nuclear energy. As of September 30, 2023, the facility maintained an operational hashrate of 3.0 EH/s.
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Mississippi Operations As of September 30, 2024, our Mississippi facilities have a developed data center infrastructure backed by approximately 44 MW, which supports an operational hashrate of 2.0 EH/s.
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Sandersville, GA Facility 7 CleanSpark’s fourth bitcoin mining site (and second to be purchased during the summer 2022 bear market) is the largest facility in our portfolio. The turnkey operation in Sandersville, GA was acquired from another bitcoin miner with room to almost triple its capacity.
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Our Mississippi operations are located in three cities and a fourth location is currently under construction. 6 Tennessee Operations As of September 30, 2024, our Tennessee facilities have a developed data center infrastructure backed by 79 MW, which supports an operational hashrate of 3.5 EH/s. We have five owned locations, two of which were operational as of September 30, 2024.
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The site is undergoing a 150 MW expansion with expected completion early in our second fiscal quarter ending March 2024. Each building will house thousands of high-performance bitcoin mining machines and, once completed, will add over 6.0 EH/s to our hashrate. As of September 30, 2023, the facility maintained an operational hashrate of 2.1 EH/s.
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Our Tennessee operations are located in six cities. Additionally, we had three locations operating through a co-location hosting agreement with GRIID. Effective October 30, 2024, each of these co-locations became fully owned after completing the acquisition of GRIID (see Note 5 - Acquisitions). The Company also closed on the acquisition two of additional Tennessee locations in October 2024.
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Dalton, GA Facility Dalton marks CleanSpark’s fifth campus in Georgia. It collaborates closely with the local utility, which is owned and operated by the City of Dalton. This campus is made of two separate sites a few miles from each other. As of September 30, 2023, the facility maintained an operational hashrate of 0.8 EH/s.
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Wyoming Operations As of September 30, 2024, we have two separate mining locations in Wyoming that are under construction and are expected to be operational between the first and second quarter of fiscal year 2025.
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Massena, NY Hosting Site We also co-locate some of our machines at the facilities of Coinmint, LLC ("Coinmint") in Massena, NY. The facility runs on hydroelectric power. As of September 30, 2023, our machines there maintained an operational hashrate of 1.5 EH/s.
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These locations will include miners that are cooled through immersion technology, a method of submerging mining hardware in a non-conductive fluid to cool the equipment and improve its efficiency, and are expected to have approximately 75 MW of data center infrastructure power under contract. The table below summarizes our portfolio of operating locations as of September 30, 2024.
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Working Capital Items The bitcoin mining industry is highly competitive and dependent on specialized mining machines that have few manufacturers. Machine purchases often require large down payments and miner deliveries often arrive many months after initial orders are placed. However, over the last 12 months, we have seen a significant improvement in the availability and pricing of bitcoin mining machines.
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State MWs Operational EH/s Operational Number of mining locations Georgia 483 20.6 12 Mississippi (1) 44 2.0 4 New York (2) 50 1.5 1 Tennessee (3) 79 3.5 8 Total 656 27.6 25 (1) One of Mississippi locations is currently under construction and is expected to begin operation in December 2024.
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In addition to purchasing directly from manufacturers, the current market conditions have provided opportunities to purchase both new and used machines on the spot-market from other miners or retail-dealers of machines for better financial terms and delivery terms, but there can be no guarantee that such opportunities will continue on a long-term basis.
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(2) The New York location is a hosted location subject to the Coinmint co-location agreement (discussed below). (3) Three of the Tennessee locations were previously hosted locations subject to the GRIID co-location agreement which became fully owned effective October 30, 2024 after the completion of the GRIID acquisition.
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We purchase mining machines through re-sellers and directly from manufacturers. Whether re-sellers or manufacturers have better purchase and delivery terms or more/superior inventory available is likely to change from time to time.
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In addition to operating our own mining facilities, we may engage with third-parties to host and operate mining equipment on our behalf. Coinmint On July 8, 2021, our subsidiary CleanBlok, Inc., a wholly owned subsidiary of the Company, entered into a services agreement with Coinmint, LLC (“Coinmint”).
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In addition to the approximate 88,000 miners (application-specific integrated circuits or “ASIC”) in operation as of the date of this filing, the Company has received, and will be installing in the coming months approximately 45,000 more miners in our soon-to-be-completed 150 MW expansion of our Sandersville location.
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All computing power generated by our ASICs (Application-Specific Integrated Circuits) is contributed to our mining pool operator, Foundry Digital. As of the date of this filing, we have deployed approximately 16,400 total miners pursuant to the co-location mining services agreement at Coinmint’s facility in New York.
Removed
The Company entered into an additional agreement to purchase 4.4 EH/s of S21 miners in October 2023 and is scheduled to receive these miners beginning in January 2024. Most miners we operate and expect to operate once received are the latest generation of miners manufactured by Bitmain Technologies Ltd. (“Bitmain”), including the S19-Pro, S19j-Pro, S19j-Pro+, S19 XP and S21.
Added
Historically, one of our strategies had been to prioritize sustainable and environmentally friendly sources of energy, including nuclear energy sources. However, as we have accelerated our expansion efforts, including through multiple acquisitions of companies and assets, where we have focused on reliability and cost of the power, our overall energy source mix has changed, subject to the factors mentioned above.
Removed
All bitcoin mining services performed by Coinmint are conducted using our own mining equipment. All computing power generated by our ASICs is contributed to our mining pool operator, Foundry Digital.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to Our Business • our dependence on the price of bitcoin to achieve profitability, which has historically been volatile; • our limited operating history and history of operating losses and negative cash flow; • volatile and unpredictable cycles in the emerging and evolving industries in which we operate; • competition in the markets in which we operate; • our reliance on and ability to manage our construction contractors and suppliers to meet our expansion efforts in keeping with planned timelines and cost estimates; • our reliance on our management team, and any failure by management to properly manage growth; • future strategic acquisitions and other arrangements that we engage in, which could disrupt our business, cause dilution to our stockholders, reduce our financial resources and harm our operating results; • our ability to timely complete our future strategic growth initiatives or within our anticipated cost; • increased compliance costs as a result of our strategic acquisitions; • our need for financing in the future to sustain and expand our operations and any inability to obtain such financing on acceptable terms, or at all; • we maintain our cash at financial institutions, often in balances that exceed federally insured limits; • the uncertain impact of geopolitical and economic events on the demand for bitcoin; • our exposure to pricing risk and volatility associated with the value of bitcoin because we do not hedge our investment in bitcoin; 13 • the development and acceptance of competing blockchain platforms or technologies; • the reward for successfully solving a block will halve in the future, and its value may not adjust to compensate us for the reduction in the rewards we receive from our mining efforts; • our reliance on a third-party mining pool service provider for our mining revenue payouts; • forks in the bitcoin network; • the open-source structure of the bitcoin network protocol and any failure to properly monitor and upgrade the protocol; • the possibility that banks and financial institutions may not provide services to businesses that engage in cryptocurrency-related activities; • the lack of limitations of FDIC or SIPC protections for the bitcoin we hold; • bitcoins we mine or hold for our own account may be subject to loss, theft, or restriction on access; • potential actions of malicious actors or botnets; • the loss or destruction of private keys required to access our bitcoins and potential data loss relating to our bitcoins; • potential failures of digital asset exchanges and custodians; • risks due to disruptions in the digital asset markets, including, but not limited to, the risk from depreciation in our stock price, financing risk, risk of increased losses or impairments in our investments or other assets, risks of legal proceedings and government investigations, and risks from price declines or price volatility of digital assets; • inadequate sources of recovery if our bitcoin holdings are lost, stolen or destroyed; • our ability to adopt technology in response to changing security needs or trends and reliance on a third party, Coinbase, for custody of our bitcoin holdings; • security threats to us; • a loss of confidence in our security systems, or a breach of our security systems; • the irreversibility of incorrect or fraudulent bitcoin transactions; • potential Internet disruptions; • the limited rights of legal recourse available to us following any loss of our bitcoins; • the sale of our bitcoins to pay for expenses a time of low bitcoin prices; • the possibility that a cryptocurrency other than bitcoin could be more desirable to the digital asset user base; • the possibility that our mining costs may exceed our mining revenues; • damage to the properties included in our mining operation and potential inability to get adequate insurance coverage for same; • our need for significant electrical power to support our mining operations; • increased scrutiny and changing expectations from stakeholders with respect to ESG practices and the impacts of climate change; • our operations and profitability may be adversely affected by competition from other methods of investing in cryptocurrencies; • the possibility that large holders of bitcoin may sell bitcoin into the market in large amounts all at once, thereby impacting the growth of the price of bitcoin; • the potential that, in the event of a bankruptcy filing by a custodian, bitcoin held in custody could be determined to be property of a bankruptcy estate and we could be considered a general unsecured creditor thereof; • risks related to technological obsolescence, the vulnerability of the global supply chain for cryptocurrency hardware disruption and difficulty in obtaining new hardware; • the limited precedent for financial accounting of digital assets, and the possibility of future accounting requirements for transactions involving digital assets; • the possibility of our failure to grow our hashrate; • risks arising from pandemics, epidemics or an outbreak of diseases, such as the COVID-19 pandemic; • global economic conditions, including continuing or worsening inflationary issues and associated changes in monetary policy and potential economic recession, and geopolitical events such as the Russia-Ukraine conflict and the subsequent imposition of sanctions as a result of the Russia-Ukraine conflict, and the Israeli-Palestinian conflict, could adversely affect our business, financial condition and results of operations; 14 • potential product defect or liability suits, or any recall of our products, particularly those in the discontinued operations; and • our limited insurance protection exposes us and our stockholders to the risk of loss of our bitcoin for which no person is liable.
Biggest changeRisks Related to Our Business • our dependence on the price of bitcoin to achieve profitability, which has historically been volatile; • our limited operating history and history of operating losses and negative cash flow; • volatile and unpredictable cycles in the emerging and evolving industries in which we operate; • our reliance on our management team, and any failure by management to properly manage growth; • future strategic acquisitions and other arrangements that we engage in, which could disrupt our business, cause dilution to our stockholders, reduce our financial resources and harm our operating results; • our ability to timely complete our future strategic growth initiatives or within our anticipated cost; • increased compliance costs as a result of our strategic acquisitions; • our need for financing in the future to sustain and expand our operations and any inability to obtain such financing on acceptable terms, or at all; • our exposure to pricing risk and volatility associated with the value of bitcoin because we do not hedge our investment in bitcoin; • our reliance on a third-party mining pool service provider for our mining revenue payouts; • the possibility that banks and financial institutions may not provide services to businesses that engage in cryptocurrency-related activities; • bitcoins we mine or hold for our own account may be subject to loss, theft, or restriction on access; • potential actions of malicious actors or botnets; • the loss or destruction of private keys required to access our bitcoins and potential data loss relating to our bitcoins; • potential failures of digital asset exchanges and custodians; • our ability to adopt technology in response to changing security needs or trends and reliance on a third party, Coinbase, for custody of our bitcoin holdings; • the limited rights of legal recourse available to us following any loss of our bitcoins; • the possibility that our mining costs may exceed our mining revenues; • damage to the properties included in our mining operation and potential inability to get adequate insurance coverage for same; • our need for significant electrical power to support our mining operations; • increased scrutiny and changing expectations from stakeholders with respect to ESG practices and the impacts of climate change; • the possibility that large holders of bitcoin may sell bitcoin into the market in large amounts all at once, thereby impacting the growth of the price of bitcoin; 12 • the potential that, in the event of a bankruptcy filing by a custodian, bitcoin held in custody could be determined to be property of a bankruptcy estate and we could be considered a general unsecured creditor thereof; • the limited precedent for financial accounting of digital assets, and the possibility of future accounting requirements for transactions involving digital assets; and • our limited insurance protection exposes us and our stockholders to the risk of loss of our bitcoin for which no person is liable.
We rely on third-party manufacturing warranties, warranties provided by our manufacturing partners and our general liability insurance to cover product liability claims and have not obtained separate product liability insurance. Such warranties and insurance coverage may not be adequate to cover all potential claims.
We rely on third-party manufacturing warranties provided by our manufacturing partners and our general liability insurance to cover product liability claims and have not obtained separate product liability insurance. Such warranties and insurance coverage may not be adequate to cover all potential claims.
Utilizing those sources may be more challenging in the current financial market conditions, in particular where trading volume is diminished. We may not be able to obtain additional debt or equity financing on favorable terms, if at all, which could impair our growth and adversely impact our existing operations.
Utilizing those sources may be more challenging in the current financial market conditions, in particular where trading volume is diminished. We may not be able to obtain additional debt or equity financing on favorable terms, if at all, which could impair our growth and adversely impact our existing operations.
Future acquisitions may also expose us to 17 potential risks, including risks associated with entering markets in which we have no or limited prior experience, especially when competitors in such markets have stronger market positions, the possibility of insufficient revenues to offset the expenses we incur in connection with an acquisition and the potential loss of, or harm to, our relationships with employees and suppliers as a result of integration of new businesses.
Future acquisitions may also expose us to potential risks, including risks associated with entering markets in which we have no or limited prior experience, especially when competitors in such markets have stronger market positions, the possibility of insufficient revenues to offset the expenses we incur in connection with an acquisition and the potential loss of, or harm to, our relationships with employees and suppliers as a result of integration of new businesses.
In response to these and other similar events (including significant activity by various regulators regarding digital asset activities, such as enforcement actions, against a variety of digital asset entities, including Coinbase and Binance), the digital asset markets, including the market for bitcoin specifically, have experienced extreme price volatility and several other entities in the digital asset industry have been, and may continue to be, negatively affected, further undermining confidence in the digital asset markets and in bitcoin.
In response to these and other similar events (including significant activity by various regulators regarding digital asset activities, such as enforcement actions, against a variety of digital asset entities, including Coinbase, Kraken and Binance), the digital asset markets, including the market for bitcoin specifically, have experienced extreme price volatility and several other entities in the digital asset industry have been, and may continue to be, negatively affected, further undermining confidence in the digital asset markets and in bitcoin.
The claims made in the Class Complaint appear to be derived from a short seller report that was published about us. We have financed our strategic growth primarily by issuing new shares of our common stock in public offerings, which dilutes the ownership interests of our current stockholders, and which may adversely affect the market price of our securities.
The claims made in the Class Complaint appear to be derived from a short seller report that was published about us. 34 We have financed our strategic growth primarily by issuing new shares of our common stock in public offerings, which dilutes the ownership interests of our current stockholders, and which may adversely affect the market price of our securities.
The holders of our Series A Preferred Stock are entitled to have the Company redeem each share of Series A Preferred Stock for three shares of our common stock only if a change of control event (as defined in the certificate of designation) occurs, and they are entitled to vote together with the holders of the Company’s common stock on all matters submitted to stockholders at a rate of forty-five (45) votes for each share of Series A Preferred Stock held.
The holders of our Series A Preferred Stock are entitled to have the Company redeem each share of Series A Preferred Stock for three shares of our common stock only if a change of control event (as defined in the certificate of designation) occurs, and they are entitled to vote together with the holders of our common stock on all matters submitted to stockholders at a rate of forty-five (45) votes for each share of Series A Preferred Stock held.
Supply chain disruptions resulting from factors such as inflation, labor supply and shipping container shortages and the COVID-19 pandemic have impacted, and may continue to impact, us and our third-party manufacturers and suppliers. We are reliant on third parties for our expansion efforts, including construction contractors and suppliers of infrastructure, to provide accurate 16 estimates and timelines.
Supply chain disruptions resulting from factors such as inflation, labor supply and shipping container shortages and the COVID-19 pandemic have impacted, and may continue to impact, us and our third-party manufacturers and suppliers. We are reliant on third parties for our expansion efforts, including construction contractors and suppliers of infrastructure, to provide accurate estimates and timelines.
To the extent that such events may happen to us, they could have a material adverse effect on our business, prospects or operations and potentially the value of any bitcoin or other cryptocurrencies we mine or otherwise acquire or hold for our own account. Bitcoins held by us are not subject to FDIC or SIPC protections.
To the extent that such events may happen to us, they could have a material adverse effect on our business, prospects or operations and potentially the value of any bitcoin or other cryptocurrencies we mine or otherwise acquire or hold for our own account. 19 Bitcoins held by us are not subject to FDIC or SIPC protections.
If such an event were to occur, it could have a material adverse effect on our business, prospects or operations and potentially the value of any bitcoin we mine or otherwise acquire or hold for our own account and harm investors. The loss or destruction of private keys required to access our bitcoins may be irreversible.
If such an event were to occur, it could have a material adverse effect on our business, prospects or operations and potentially the value of any bitcoin we mine or otherwise acquire or hold for our own account and harm investors. 20 The loss or destruction of private keys required to access our bitcoins may be irreversible.
We cannot assure you that the measures we plan to take will in fact be sufficient to remediate the control deficiencies that led to the material weakness in our internal control over financial reporting or that such measures will prevent or avoid potential future material weaknesses, and our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business.
We cannot assure you that the measures we plan to take will in fact be sufficient to remediate the control deficiencies that led to the material weaknesses in our internal control over financial reporting or that such measures will prevent or avoid potential future material weaknesses, and our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business.
Although currently cryptocurrencies generally are not regulated or are lightly regulated in most countries, several countries, such as China, India and Russia, may continue taking regulatory actions in the future that could severely 31 restrict the right to mine, acquire, own, hold, sell or use cryptocurrency assets or to exchange any such cryptocurrency assets for local currency.
Although currently cryptocurrencies generally are not regulated or are lightly regulated in most countries, several countries, such as China, India and Russia, may continue taking regulatory actions in the future that could severely restrict the right to mine, acquire, own, hold, sell or use cryptocurrency assets or to exchange any such cryptocurrency assets for local currency.
The Class Complaint alleges that, between December 31, 2020 and January 14, 2021, we and 34 certain members of our executive management team failed to disclose certain material information to investors and that, as a result of the foregoing, our positive statements about our business, operations and prospects were materially misleading and/or lacked a reasonable basis.
The Class Complaint alleges that, between December 31, 2020 and January 14, 2021, we and certain members of our executive management team failed to disclose certain material information to investors and that, as a result of the foregoing, our positive statements about our business, operations and prospects were materially misleading and/or lacked a reasonable basis.
To the extent that we are unable to seek redress for such error or theft, such loss could adversely affect an investment in us. We may face risks of Internet disruptions, which could have an adverse effect on not only the price of bitcoin but also our ability to mine bitcoin.
To the extent that we are unable to seek redress for such error or theft, such loss could adversely affect an investment in us. 23 We may face risks of Internet disruptions, which could have an adverse effect on not only the price of bitcoin but also our ability to mine bitcoin.
If such banking institutions were to fail, we could lose all or a portion of the amounts held in excess of such insurance limitations. The FDIC recently took control of three such banking institutions, Silicon Valley Bank on March 10, 2023, Signature Bank on March 12, 2023 and First Republic Bank on May 1, 2023.
If such banking institutions were to fail, we could lose all or a portion of the amounts held in excess of such insurance limitations. The FDIC took control of three such banking institutions, Silicon Valley Bank on March 10, 2023, Signature Bank on March 12, 2023 and First Republic Bank on May 1, 2023.
If we are deemed to be subject to such additional regulatory oversight and registration 30 or licensing requirements, we may be required to substantially alter our bitcoin mining activities and possibly cease engaging in such activities. Any such action may adversely affect our business operations and financial condition and an investment in our company.
If we are deemed to be subject to such additional regulatory oversight and registration or licensing requirements, we may be required to substantially alter our bitcoin mining activities and possibly cease engaging in such activities. Any such action may adversely affect our business operations and financial condition and an investment in our company.
While current IRS guidance creates 32 a potential tax reporting requirement for any circumstance where the ownership of a bitcoin passes from one person to another, it preserves the right to apply capital gains treatment to those transactions, which is generally favorable for investors in bitcoin.
While current IRS guidance creates a potential tax reporting requirement for any circumstance where the ownership of a bitcoin passes from one person to another, it preserves the right to apply capital gains treatment to those transactions, which is generally favorable for investors in bitcoin.
We may also be subject to lawsuits and other claims in the future if our legacy products or installed systems malfunction, 29 including, for example, if any of our energy system offerings (such as installed racking systems, photovoltaic modules, batteries, inverters, or other products) causes injuries.
We may also be subject to lawsuits and other claims in the future if our legacy products or installed systems malfunction, including, for example, if any of our energy system offerings (such as installed racking systems, photovoltaic modules, batteries, inverters, or other products) causes injuries.
Because we do not currently hedge our investment in bitcoin and do not intend to for the foreseeable future, we are directly exposed to bitcoin’s price volatility and surrounding risks." Demand for bitcoin is driven, in part, by its status as a prominent and secure cryptocurrency.
Because we do not currently hedge our investment in bitcoin and do not intend to for the foreseeable future, we are directly exposed to bitcoin’s price volatility and surrounding risks.” Demand for bitcoin is driven, in part, by its status as a prominent and secure cryptocurrency.
The operation of a bitcoin mining facility requires significant amounts of electrical power. Any mining site we currently operate or establish in the future can only be successful if we can continue to obtain sufficient electrical 25 power for that site on a cost-effective basis.
The operation of a bitcoin mining facility requires significant amounts of electrical power. Any mining site we currently operate or establish in the future can only be successful if we can continue to obtain sufficient electrical power for that site on a cost-effective basis.
We maintain our cash at financial institutions, often in balances that exceed federally insured limits. We maintain the majority of our cash and cash equivalents in accounts at banking institutions in the United States that we believe are of high quality. Cash held in these accounts often exceed the Federal Deposit Insurance Corporation (“FDIC”) 18 insurance limits.
We maintain our cash at financial institutions, often in balances that exceed federally insured limits. We maintain the majority of our cash and cash equivalents in accounts at banking institutions in the United States that we believe are of high quality. Cash held in these accounts often exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits.
The malicious actor or botnet could control, exclude or modify the order of transactions, though it could not generate new units or transactions using such control. The malicious actor or botnet could also “double-spend,” or spend the same 21 bitcoin in more than one transaction, or it could prevent transactions from being validated.
The malicious actor or botnet could control, exclude or modify the order of transactions, though it could not generate new units or transactions using such control. The malicious actor or botnet could also “double-spend,” or spend the same bitcoin in more than one transaction, or it could prevent transactions from being validated.
This means that if one were able to enforce an action against our directors or officers, in all likelihood, we would be required to pay any expenses our directors or officers incur in defending the lawsuit and any judgment or settlement they otherwise 37 would be required to pay.
This means that if one were able to enforce an action against our directors or officers, in all likelihood, we would be required to pay any expenses our directors or officers incur in defending the lawsuit and any judgment or settlement they otherwise would be required to pay.
The emergence of other financial vehicles and exchange-traded funds have increased scrutiny on cryptocurrencies, and such scrutiny could be applicable to us and impact our 26 ability to successfully establish or maintain a public market for our securities.
The emergence of other financial vehicles and exchange-traded funds have increased scrutiny on cryptocurrencies, and such scrutiny could be applicable to us and impact our ability to successfully establish or maintain a public market for our securities.
Specifically, the trading price of our common stock has already been correlated, and, in the future, as we continue to expand our bitcoin mining business, may be increasingly correlated, to the trading prices of bitcoin. The stocks of 33 bitcoin mining companies have shown volatility relative to bitcoin.
Specifically, the trading price of our common stock has already been correlated, and, in the future, as we continue to expand our bitcoin mining business, may be increasingly correlated, to the trading prices of bitcoin. The stocks of bitcoin mining companies have shown volatility relative to bitcoin.
New legislation and increased regulation regarding climate change could impose significant costs on us and our suppliers, including costs related to increased energy requirements, capital equipment, environmental monitoring and reporting, and other costs to comply with such regulations.
New legislation and increased regulation regarding climate change could impose significant costs on us and our suppliers, including costs related to increased renewable energy requirements, capital equipment, environmental monitoring and reporting, and other costs to comply with such regulations.
The lack of guaranteed financial incentives for contributors to maintain or develop the bitcoin network and the lack of guaranteed resources to adequately address 20 emerging issues with the bitcoin network may reduce incentives to address the issues adequately or in a timely manner.
The lack of guaranteed financial incentives for contributors to maintain or develop the bitcoin network and the lack of guaranteed resources to adequately address emerging issues with the bitcoin network may reduce incentives to address the issues adequately or in a timely manner.
This process is scheduled to occur once every 210,000 blocks. It is estimated that bitcoin will next halve in April 2024 and then approximately every four years thereafter until the total amount of bitcoin rewards issued reaches 21 million, which is expected to occur around 2140. Once 21 million bitcoin are generated, the network will stop producing more.
This process is scheduled to occur once every 210,000 blocks. It is estimated that bitcoin will next halve in April 2028 and then approximately every four years thereafter until the total amount of bitcoin rewards issued reaches 21 million, which is expected to occur around 2140. Once 21 million bitcoin are generated, the network will stop producing more.
If we are unable to remediate our material weakness and otherwise implement and maintain effective internal control over financial reporting, our ability to record, process and report financial information accurately, and to prepare financial statements and satisfy our public reporting obligations within required time periods, could be adversely affected.
If we are unable to remediate our material weaknesses and otherwise implement and maintain effective internal control over financial reporting, our ability to record, process and report financial information accurately, and to prepare financial statements and satisfy our public reporting obligations within required time periods, could be adversely affected.
If we fail to remediate the material weakness or if we otherwise fail to establish and maintain effective control over financial reporting, our ability to accurately and timely report our financial results may be affected, and such failure may adversely affect investor confidence and business operations.
If we fail to remediate the material weaknesses or if we otherwise fail to establish and maintain effective control over financial reporting, our ability to accurately and timely report our financial results may be affected, and such failure may adversely affect investor confidence and business operations.
These events have also negatively impacted the liquidity of the digital asset markets as certain entities affiliated with FTX and platforms such as Coinbase and 22 Binance have engaged, or may continue to engage, in significant trading activity.
These events have also negatively impacted the liquidity of the digital asset markets as certain entities affiliated with FTX and platforms such as Coinbase, Kraken and Binance have engaged, or may continue to engage, in significant trading activity.
In addition, the physical risks of climate change may impact the availability and cost of materials and natural resources, sources and supplies of energy, and demand for bitcoin and other cryptocurrencies, and could increase our insurance and other operating costs, including, potentially, to repair damage incurred as a result of extreme weather events or to renovate or retrofit facilities to better withstand extreme weather events.
The physical risks of climate change may also impact the availability and cost of materials and natural resources, sources and supplies of energy, and demand for bitcoin and other cryptocurrencies, and could increase our insurance and other operating costs, including, potentially, to repair damage incurred as a result of extreme weather events or to renovate or retrofit facilities to better withstand extreme weather events.
Any failure by management to properly manage growth, including hiring and retaining competent and skilled management and other personnel, could have a material adverse effect on our business, operating results and financial condition. We currently have three executive officers — our Chief Executive Officer and President, Zachary Bradford, our Chief Financial Officer, Gary Vecchiarelli, and S.
Any failure by management to properly manage growth, including hiring and retaining competent and skilled management and other personnel, could have a material adverse effect on our business, operating results and financial condition. We currently have six executive officers — our Chief Executive Officer and President, Zachary Bradford, our Chief Financial Officer, Gary Vecchiarelli, our Executive Chairman, S.
Future acquisitions may require us to issue common stock that would dilute our current stockholders’ percentage ownership, assume or otherwise be subject to liabilities of an acquired company, record goodwill and non-amortizable intangible assets that will be subject to impairment testing on a regular basis and potential periodic impairment charges, incur amortization expenses related to certain intangible assets, incur large acquisition and integration costs, immediate write-offs, and restructuring and other related expenses and become subject to litigation.
Previous acquisitions have required, and future acquisitions will likely require, us to issue common stock that would dilute our current stockholders’ percentage ownership, assume or otherwise be subject to liabilities of an acquired company, record goodwill and non-amortizable intangible assets that will be subject to impairment testing on a regular basis and potential periodic impairment charges, incur amortization expenses related to certain intangible assets, incur large acquisition and integration costs, immediate write-offs, and restructuring and other related expenses and/or become subject to litigation.
For example, we depend on Bitmain, MicroBT, Canaan Crypt Solutions and Sunnyside Digital for our mining rigs and any change in their ability to manufacture or distribute and deliver these products could have a significant impact on our results of operations.
For example, we depend on Bitmain, MicroBT, Canaan Crypt Solutions and Sunnyside Digital for our miners and any change in their ability to manufacture or distribute and deliver these products could have a significant impact on our results of operations.
We sell our bitcoins to pay for operating expenses and growth on an as-needed basis. Consequently, we may sell our bitcoins at a time when bitcoin prices are low, which could adversely affect an investment in us.
The sale of our bitcoins to pay for expenses at a time of low bitcoin prices could adversely affect an investment in us. We sell our bitcoins to pay for operating expenses and growth on an as-needed basis. Consequently, we may sell our bitcoins at a time when bitcoin prices are low, which could adversely affect an investment in us.
To address our material weakness, we need to make changes to our program and controls as set forth in Part II, Item 9A “Controls and Procedures.” We will not be able to remediate this material weakness unless and until these steps 36 have been completed and have been operating effectively for a sufficient period of time.
To address our material weaknesses, we need to make changes to our program and controls as set forth in Part II, Item 9A “Controls and Procedures.” We will not be able to remediate these material weaknesses unless and until these steps have been completed and have been operating effectively for a sufficient period of time.
Risks Related to Governmental Regulation and Enforcement Operations • potential changes in laws and regulations applicable to mining bitcoin, bitcoin itself or interpretations thereof, including, without limitation, banking regulations and securities regulations and regulations governing mining activities, both in the U.S. and in other countries; • we may incur additional compliance costs if deemed subject to the Commodity Exchange Act; • the risk that the SEC or another regulatory body considers bitcoin or any other cryptocurrency to be a security; • changing environmental regulation and public energy policy; • future developments regarding the treatment of digital assets for U.S. federal income and applicable state, local and non-U.S. tax purposes; and • potential exposure to specifically designated nationals or blocked persons as a result of our interactions with the bitcoin network.
Risks Related to Governmental Regulation and Enforcement Operations • potential changes in laws and regulations applicable to mining bitcoin, bitcoin itself or interpretations thereof, including, without limitation, banking regulations and securities regulations and regulations governing mining activities, both in the U.S. and in other countries; • we may incur additional compliance costs if deemed subject to the Commodity Exchange Act; • the risk that the SEC or another regulatory body considers bitcoin or any other cryptocurrency to be a security; • changing environmental regulation and public energy policy; • if we fail to qualify for certain state government tax incentives or to comply with local tax regulations, we may suffer financial losses; • future developments regarding the treatment of digital assets for U.S. federal income and applicable state, local and non-U.S. tax purposes; and • potential exposure to specifically designated nationals or blocked persons as a result of our interactions with the bitcoin network.
For instance, our plans and strategic initiatives for expansion are based, in part, on our understanding of current environmental and energy regulations, policies and initiatives enacted by federal, New York State and Georgia State regulators.
For instance, our plans and strategic initiatives for expansion are based, in part, on our understanding of current environmental and energy regulations, policies and initiatives enacted by federal and state regulators.
Our reliance on a third-party mining pool service provider for our mining revenue payouts may adversely affect an investment in us. We currently rely on Foundry Digital’s open access mining pool ("pool") that supports bitcoin to receive our mining rewards and fees from the network.
Such events may adversely affect our activities and an investment in us. 18 Our reliance on a third-party mining pool service provider for our mining revenue payouts may adversely affect an investment in us. We currently rely on Foundry Digital’s open access mining pool (“pool”) that supports bitcoin to receive our mining rewards and fees from the network.
As of September 30, 2023, $11,730 in principal was outstanding and due to Trinity Capital Inc. The borrowings under the Financing Agreement are collateralized by 3,336 S19j Pro miners, which are located at our College Park, GA and Norcross, GA sites.
As of September 30, 2024, $5,171 in principal was outstanding and due to Trinity Capital Inc. The borrowings under the Financing Agreement are collateralized by 3,336 S19j Pro miners, which are located at our College Park, GA and Norcross, GA sites.
In addition, the accounting policies of many companies are being subjected to heightened scrutiny by regulators and the public, and we have received comments from the staff of the SEC’s Division of Corporation Finance Office of Crypto Assets (the “Staff”) during fiscal year 2023 related to the accounting of our bitcoin-related operations. See Item 1B, Unresolved Staff Comments.
In addition, the accounting policies of many companies are being subjected to heightened scrutiny by regulators and the public, and we have received comments from the staff of the SEC’s Division of Corporation Finance Office of Crypto Assets (the “Staff”) during fiscal year 2023 related to the accounting of our bitcoin-related operations, which have been resolved.
Halving is a process designed to control the overall supply and reduce the risk of inflation in cryptocurrencies using a Proof-of-Work consensus algorithm. In an event referred to as bitcoin “halving,” the bitcoin reward for mining any 19 block is cut in half. For example, the mining reward for bitcoin declined from 12.5 to 6.25 bitcoin on May 11, 2020.
Halving is a process designed to control the overall supply and reduce the risk of inflation in cryptocurrencies using a Proof-of-Work consensus algorithm. In an event referred to as bitcoin “halving,” the bitcoin reward for mining any block is cut in half. For example, the mining reward for bitcoin declined from 6.25 to 3.125 bitcoin on April 19, 2024.
We have raised capital to finance our strategic growth of our business through public offerings of our common stock, including through our at-the-market offering program, and we expect to need to raise additional capital through similar public offerings to finance the completion of current and future expansion initiatives.
We have raised capital to finance our strategic growth of our business through public offerings of our common stock, including through our current and former at-the-market offering programs, and we expect to need to raise additional capital through similar public offerings to finance the completion of our expansion initiatives and any expansion initiatives we may undertake in the future.
Miners ceasing operations would reduce the collective processing power on the network, which would adversely affect the confirmation process for transactions and make the bitcoin network more vulnerable to malicious actors or botnets obtaining control in excess of 50% of the processing power active on the blockchain. Such events may adversely affect our activities and an investment in us.
Miners ceasing operations would reduce the collective processing power on the network, which would adversely affect the confirmation process for transactions and make the bitcoin network more vulnerable to malicious actors or botnets obtaining control in excess of 50% of the processing power active on the blockchain.
In May 2021, the SEC proposed rule changes that would require public companies to include certain climate-related disclosures in their periodic reports, including information about climate-related risks that are reasonably likely to have a material impact on their business, results of operations, or financial condition, and certain climate-related financial statement metrics in a note to their audited financial statements.
In May 2021, the SEC proposed rule changes that would require public companies to include certain climate-related disclosures in their periodic reports, including information about climate-related risks that are reasonably likely to have a material impact on their business, results of operations, or financial condition, and certain climate-related financial statement metrics in a note to their audited financial statements noting that such rule changes were proposed in response to investor demands for consistent and comparable data on climate change.
Should we fail to satisfy our obligations with respect to our indebtedness, and should Trinity Capital Inc. foreclose on the miners collaterizing our indebtedness, we could potentially lose up to 0.33 exahashes of computing power, or 3.3% of our current computing power.
Should we fail to satisfy our obligations with respect to our indebtedness, and should Trinity Capital Inc. foreclose on the miners collateralizing our indebtedness, we could potentially lose up to 0.33 EH/s of computing power, or 1% of our current computing power.
Accordingly, our indemnification obligations could divert needed financial resources and may adversely affect our business, financial condition, results of operations and cash flows and the prevailing market prices for our common stock.
Accordingly, our indemnification obligations could divert needed financial resources and may adversely affect our business, financial condition, results of operations and cash flows and the prevailing market prices for our common stock. 37 Item 1B. Unresolved Staff Comments None.
Such continued uncertainty with regard to financial accounting matters, particularly as they relate to the Company, the financial accounting of our bitcoin-related operations and the SEC comments we have received in respect of such matters, could negatively impact our business, prospects, financial condition and results of operations and our ability to raise capital. 27 If we fail to grow our hashrate, we may be unable to compete, and our results of operations could suffer.
Such continued uncertainty with regard to financial accounting matters, particularly as they relate to the Company, the financial accounting of our bitcoin-related operations and the SEC comments we have received in respect of such matters, could negatively impact our business, prospects, financial condition and results of operations and our ability to raise capital.
Although we had no direct exposure to FTX or any of the above-mentioned cryptocurrency companies (with the exception of Coinbase, which is discussed in “—Potential that, in the event of a bankruptcy filing by a custodian, bitcoin held in custody could be determined to be property of a bankruptcy estate and we could be considered a general unsecured creditor thereof”), nor any material assets that may not be recovered or may otherwise be lost or misappropriated due to the above-mentioned bankruptcies, the failure or insolvency of large exchanges like FTX or other significant players in the digital asset space may cause the price of bitcoin to fall and decrease confidence in the ecosystem, which could adversely affect an investment in us.
These events are continuing to develop and it is not possible to predict at this time all of the risks that they may pose to us, our service providers or on the digital asset industry as a whole. 21 Although we had no direct exposure to FTX or any of the above-mentioned cryptocurrency companies (with the exception of Coinbase, which is discussed in “—Potential that, in the event of a bankruptcy filing by a custodian, bitcoin held in custody could be determined to be property of a bankruptcy estate and we could be considered a general unsecured creditor thereof”), nor any material assets that may not be recovered or may otherwise be lost or misappropriated due to the above-mentioned bankruptcies, the failure or insolvency of large exchanges like FTX or other significant players in the digital asset space may cause the price of bitcoin to fall and decrease confidence in the ecosystem, which could adversely affect an investment in us.
We will continue to monitor for developments in state-level legislation, guidance or regulations applicable to us. Such additional federal or state regulatory obligations in the United States or obligations that could arise under the regulatory frameworks of other countries may cause us to incur significant expenses, possibly affecting our business and financial condition in a material and adverse manner.
Such additional federal or state regulatory obligations in the United States or obligations that could arise under the regulatory frameworks of other countries may cause us to incur significant expenses, possibly affecting our business and financial condition in a material and adverse manner.
In the course of preparing our financial statements for fiscal 2023, we and our independent registered public accounting firm have identified a material weakness in our internal control over financial reporting.
In the course of preparing our fiscal year 2024 financial statements, we and our independent registered public accounting firm have identified material weaknesses in our internal control over financial reporting.
We have previously engaged in strategic transactions, including acquisitions of companies, technologies and personnel, such as our recent asset and business acquisitions related to our Dalton, GA, Sandersville, GA and Washington, GA facilities, and, as part of our growth strategy, in the future, we may seek additional opportunities to grow our mining operations, including through purchases of miners and facilities from other operating companies, including companies in financial distress.
We have regularly engaged in strategic transactions, including acquisitions of companies, technologies and personnel, such as our recent asset and business acquisitions related to our Georgia, Mississippi, Wyoming and Tennessee properties, and, as part of our growth strategy, in the future, we expect to seek additional opportunities to grow our mining operations, including through purchases of miners and facilities from other operating companies, including companies in financial distress.
The value of bitcoin has historically been subject to wide swings. Because we do not currently hedge our investment in bitcoin and do not intend to for the foreseeable future, we are directly exposed to bitcoin’s price volatility and surrounding risks.
Because we do not currently hedge our investment in bitcoin and do not intend to for the foreseeable future, we are directly exposed to bitcoin’s price volatility and surrounding risks.
In addition, to the extent the value of the miners securing our borrowings under the Financing Agreement decreases and falls the below the aggregate amount of our obligations under the Financing Agreement, the lender thereunder would be our unsecured creditor in respect of the difference in the value of the collateral and our obligations. 35 In addition, our indebtedness could: • increase our vulnerability to general adverse economic and industry conditions; • require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions, research and development efforts and other general corporate purposes; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • place us at a competitive disadvantage compared to our competitors that have less debt; • result in greater interest rate risk and volatility; • limit our ability to borrow additional funds; and • make it more difficult for us to satisfy our obligations with respect to our debt, including our obligation to repay our Financing Agreement under certain circumstances, or refinance our indebtedness on favorable terms or at all.
The borrowings under the Master Loan are collateralized by approximately $78,125 of bitcoin as of September 30, 2024. 35 Our indebtedness could: • increase our vulnerability to general adverse economic and industry conditions; • require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions, research and development efforts and other general corporate purposes; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • place us at a competitive disadvantage compared to our competitors that have less debt; • result in greater interest rate risk and volatility; • limit our ability to borrow additional funds; and • make it more difficult for us to satisfy our obligations with respect to our debt, including our obligation to repay our Financing Agreement under certain circumstances, or refinance our indebtedness on favorable terms or at all.
The market price of one bitcoin in our principal market ranged from approximately $15,460 to $31,862 during the fiscal year ended September 30, 2023 and ranged from approximately $17,567 to $69,000 during the fiscal year ended September 30, 2022.
The market price of one bitcoin in our principal market ranged from approximately $26,500 to $73,800 during the fiscal year ended September 30, 2024, $15,500 to $31,900 during the fiscal year ended September 30, 2023 and ranged from approximately $17,600 to $69,000 during the fiscal year ended September 30, 2022.
To the extent that we are unable to recover our losses from such action, error or theft, such events could have a material adverse effect on our business, prospects or operations and potentially the value of any bitcoin we mine or otherwise acquire or hold for our own account. 24 The sale of our bitcoins to pay for expenses at a time of low bitcoin prices could adversely affect an investment in us.
To the extent that we are unable to recover our losses from such action, error or theft, such events could have a material adverse effect on our business, prospects or operations and potentially the value of any bitcoin we mine or otherwise acquire or hold for our own account.
Bitcoins we mine or hold for our own account may be subject to loss, theft or restriction on access. Hackers or malicious actors may launch attacks to steal, compromise or secure bitcoins, such as by attacking the bitcoin network source code, exchange miners, third-party platforms (including Coinbase), cold and hot storage locations or software, or by other means.
Hackers or malicious actors may launch attacks to steal, compromise or secure bitcoins, such as by attacking the bitcoin network source code, exchange miners, third-party platforms (including Coinbase), cold and hot storage locations or software, or by other means.
From the Company’s inception through September 30, 2023, we sustained $332,643 in cumulative net losses, and we had a net loss from our continuing operations for the fiscal year ended September 30, 2023 of $132,160.
From the Company’s inception through September 30, 2024, we sustained $479,218 in cumulative net losses, and we had a net loss from our continuing operations for the fiscal year ended September 30, 2024 of $145,777.
In the future, we may require additional financing to sustain and expand our operations, and we may not be able to obtain financing on acceptable terms, or at all, which would have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
Such increased costs and compliance burdens could affect our ability to realize the anticipated benefits of such strategic acquisitions, and our business, results of operations and financial condition may suffer as a result. 16 In the future, we may require additional financing to sustain and expand our operations, and we may not be able to obtain financing on acceptable terms, or at all, which would have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
Our primary focus on our bitcoin mining operations and our associated expansion efforts is largely based on our assumptions regarding the future value of bitcoin, which has been subject to significant historical volatility and may be subject to influence from malicious actors, real or perceived scarcity, political, economic, and regulatory conditions, and speculation making its price more volatile. 15 It is difficult to accurately predict the future market price of bitcoin, which may inhibit consumer trust in and market acceptance of bitcoin as a means of exchange, thereby potentially limiting the future adoption of bitcoin and resulting in our assumptions proving to be incorrect.
Our primary focus on our bitcoin mining operations and our associated expansion efforts is largely based on our assumptions regarding the future value of bitcoin, which has been subject to significant historical volatility and may be subject to influence from malicious actors, real or perceived scarcity, political, economic, and regulatory conditions, and speculation making its price more volatile.
Testing and maintaining internal control over financial reporting involves significant costs and could divert management’s attention from other matters that are important to our business. Additionally, we may not be successful in remediating any deficiencies that may be identified.
Testing and maintaining internal control over financial reporting involves significant costs and could divert management’s attention from other matters that are important to our business.
Matthew Schultz, our Executive Chairman — who are responsible for our management functions and are responsible for strategic development, financing and other critical functions. Our future success depends significantly on the continued service and performance of our existing management team.
Matthew Schultz, our Chief Operating Officer, Scott Garrison, our Chief Technology Officer, Taylor Monnig, and our Chief Accounting Officer, Brian Carson — who are responsible for our management functions and are responsible for strategic development, financing and other critical functions. Our future success depends significantly on the continued service and performance of our existing management team.
If we are unable to acquire sufficient numbers of new miners or access sufficient capital to fund our acquisitions, our results of operations and financial condition may be adversely affected, which could adversely affect investments in our securities.
As a result, positive bitcoin economics may negatively impact our future equipment costs and increase the competition to secure mining equipment. If we are unable to acquire sufficient numbers of new miners or access sufficient capital to fund our acquisitions, our results of operations and financial condition may be adversely affected, which could adversely affect investments in our securities.
A significant part of our success will depend on our reliance on and ability to manage our construction contractors and suppliers, including mining equipment suppliers, in order to meet our expansion efforts in keeping with planned timelines and cost estimates, and any failure to do so could materially and adversely affect our results of operations and relations with our customers.
The success of our bitcoin mining business will be dependent upon our ability to purchase additional miners, adapt to changes in technology in the industry, and to obtain sufficient energy at reasonable prices, amongst other things. 14 A significant part of our success will depend on our reliance on and ability to manage our construction contractors and suppliers, including mining equipment suppliers, in order to meet our expansion efforts in keeping with planned timelines and cost estimates, and any failure to do so could materially and adversely affect our results of operations and relations with our customers.
Further, even if our expenses remain the same or decline, our revenues may not exceed our expenses to the extent the price of bitcoin decreases without a corresponding decrease in bitcoin network difficulty. Increases in our costs without corresponding increases in our revenue would adversely affect our profitability and could seriously harm our business and an investment in us.
Further, even if our expenses remain the same or decline, our revenues may not exceed our expenses to the extent the price of bitcoin decreases without a corresponding decrease in bitcoin network difficulty.
We have engaged in, and in the future may engage in, strategic acquisitions and other arrangements that could disrupt our business, cause dilution to our stockholders, reduce our financial resources and harm our operating results.
Any failure by management to manage growth and to respond to changes in our business could have a material adverse effect on our business, financial condition and results of operations. 15 We have engaged in, and in the future may engage in, strategic acquisitions and other arrangements that could disrupt our business, cause dilution to our stockholders, reduce our financial resources and harm our operating results.
Furthermore, we believe that, as our assets grow, we may become a more appealing target for security threats such as hackers and malware. 23 We rely on Coinbase’s security systems, derived from established, industry-best practices, to safeguard our bitcoin holdings from theft, loss, destruction or other issues relating to hackers and technological attack.
We rely on Coinbase’s security systems, derived from established, industry-best practices, to safeguard our bitcoin holdings from theft, loss, destruction or other issues relating to hackers and technological attack.
Moreover, if our mining activities or transactions in bitcoin were deemed by the CFTC to constitute a collective investment in derivatives for our stockholders, we may be required to register as a commodity pool operator with the CFTC through the National Futures Association.
Any requirements imposed by the CFTC related to our mining activities or our transactions in bitcoin could cause us to incur additional extraordinary, non-recurring expenses, thereby potentially materially and adversely impacting an investment in the Company. 30 Moreover, if our mining activities or transactions in bitcoin were deemed by the CFTC to constitute a collective investment in derivatives for our stockholders, we may be required to register as a commodity pool operator with the CFTC through the National Futures Association.
Our management has identified a material weakness in its internal control over financial reporting and may identify additional material weaknesses in the future.
Additionally, we may not be successful in remediating any deficiencies that may be identified. 36 Our management has identified material weaknesses in its internal control over financial reporting and may identify additional material weaknesses in the future.
We currently have five fully-owned campuses and operate additional miners under one active hosting agreement, each of which have unique power agreements. Geopolitical events including the war in Ukraine and inflationary impacts have caused power prices to increase worldwide; if power prices continue to increase while bitcoin prices decrease, our ability to profitability mine bitcoin would be negatively impacted.
Geopolitical events including the war in Ukraine and inflationary impacts have caused power prices to increase worldwide; if power prices continue to increase while bitcoin prices decrease, our ability to profitability mine bitcoin would be negatively impacted.
As a result of such dispositions, bitcoin mining is now the sole driver of our business and revenues and is expected to continue to be the source of substantially all of our revenues for the foreseeable future, which has the effect of increasing our exposure to the risks described in this Annual Report on Form 10-K.
As a result of such dispositions, bitcoin mining is now the sole driver of our business and revenues and is expected to continue to be the source of substantially all of our revenues for the foreseeable future, which has the effect of increasing our exposure to the risks described in this Annual Report on Form 10-K. 28 Further, in the course of our discontinued operations, we may become subject to legal actions based on a claim that our legacy energy products are or were defective in workmanship or have caused personal or other injuries.
In addition, future technological and operational developments that may arise with respect to digital currencies may increase the uncertainty with respect to the treatment of digital currencies for U.S. federal income and applicable state, local and non-U.S. tax purposes.
In addition, future technological and operational developments that may arise with respect to digital currencies may increase the uncertainty with respect to the treatment of digital currencies for U.S. federal income and applicable state, local and non-U.S. tax purposes. 32 Our interactions with the bitcoin network may expose us to SDN or blocked persons or cause us to violate provisions of law that did not contemplate distributed ledger technology.
In addition, there continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty for our business because the bitcoin mining industry, with its high energy demand, may become a target for future environmental and energy regulation.
If new regulations are imposed, or if existing regulations are modified, the assumptions we made underlying our plans and strategic initiatives may be inaccurate, and we may incur additional costs to adapt our planned business, if we are able to adapt at all, to such regulations. 31 In addition, there continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty for our business because the bitcoin mining industry, with its high energy demand, may become a target for future environmental and energy regulation.
Risks Related to Governmental Regulation and Enforcement Operations If regulatory changes or interpretations of our activities require our registration as an MSB under the regulations promulgated by FinCEN under the authority of the BSA, or otherwise under state laws, we may incur significant compliance costs, which could be substantial or cost-prohibitive.
While the Company strives to be a good corporate citizen and mitigate noise impacts where possible, the inherently noisy nature of large-scale cryptocurrency Mining operations presents ongoing risks to the Company’s business that may negatively affect its financial condition and results of operations. 29 Risks Related to Governmental Regulation and Enforcement Operations If regulatory changes or interpretations of our activities require our registration as an MSB under the regulations promulgated by FinCEN under the authority of the BSA, or otherwise under state laws, we may incur significant compliance costs, which could be substantial or cost-prohibitive.
There are risks related to technological obsolescence, the vulnerability of the global supply chain for cryptocurrency hardware disruption and difficulty in obtaining new hardware which may have a negative effect on our business.
If we are treated as a general unsecured creditor, we may not be able to recover our bitcoin in the event of a Coinbase bankruptcy or a bankruptcy of any other custodian we may use in the future. 26 There are risks related to technological obsolescence, the vulnerability of the global supply chain for cryptocurrency hardware disruption and difficulty in obtaining new hardware which may have a negative effect on our business.
Accordingly, to compete in this highly competitive industry, we believe we will need to continue to acquire new miners, both to replace those lost to ordinary wear and tear and other damage, and to increase our hashrate to keep up with a growing global network hashrate.
Accordingly, to compete in this highly competitive industry, we believe we will need to continue to acquire new miners, both to replace those lost to ordinary wear and tear and other damage, and to increase our hashrate to keep up with a growing global network hashrate. 27 During the fiscal year ended September 30, 2024, we grew our hashrate, in part, by acquiring newer, more powerful and energy-efficient miners through sales and purchase agreements with suppliers, and we plan to continue to acquire new miners to compete effectively in the market.
To the extent we are unable to obtain sustainable sources of energy on a cost-effective basis and execute on this strategy, our business could be adversely affected. Increased scrutiny and changing expectations from stakeholders with respect to our ESG practices and the impacts of climate change may result in additional costs or risks.
To the extent we are unable to receive adequate power supply and are forced to reduce or cease our operations due to the availability or cost of electrical power, our business would be adversely affected. 25 Increased scrutiny and changing expectations from stakeholders with respect to our ESG practices and the impacts of climate change may result in additional costs or risks.
Currently, the New York State Department of Financial Services maintains a comprehensive “BitLicense” framework for businesses that conduct “virtual currency business activity.” In July 2020, Louisiana enacted the Virtual Currency Businesses Act. In October 2023, California enacted the Digital Financial Assets Law, which requires registration for certain digital financial asset business activities.
Currently, the New York State Department of Financial Services maintains a comprehensive “BitLicense” framework for businesses that conduct “virtual currency business activity.” Effective August 2020, Louisiana enacted the Virtual Currency Businesses Act. The implementing regulations were formally adopted in late 2022.
We observed the price of these new miners followed changes in demand, resulting in elevated machine prices when bitcoin mining economics are high and significantly lower prices when these economics are strained. As a result, positive bitcoin economics may negatively impact our future equipment costs and increase the competition to secure mining equipment.
Demand for new miners increased in response to increased bitcoin prices in 2021 followed by a decreased in demand due to falling bitcoin prices in 2022. We observed the price of these new miners followed changes in demand, resulting in elevated machine prices when bitcoin mining economics are high and significantly lower prices when these economics are strained.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Company believes its existing facilities and equipment are in good operating condition and are suitable for the conduct of its business.
Biggest changeWe believe our existing facilities and equipment are in good operating condition and are suitable for the conduct of our business. Please refer to the discussions contained in our Item 1. – “Business” for additional information.
Removed
Item 2. Properties On June 21, 2023, the Company acquired the outstanding membership interest in Coinmaker Miners LLC, a Georgia limited liability company that holds two lease agreements for real property in Dalton, GA and certain tangible property.
Added
Item 2. Properties Our corporate headquarters is located in Henderson, Nevada and is owned by us. In addition, we own and lease air-cooled bitcoin mining facilities in Georgia, Mississippi and Tennessee.
Removed
Coinmaker Miners LLC was later renamed to CSRE Properties Dalton LLC. 38 On April 7, 2023, CleanSpark HQ, LLC, a single member limited liability company and subsidiary wholly owned by the Company, purchased certain real property located at 10424 South Eastern Avenue, Suite 200, Henderson, Nevada 89052 for $4,100. The property consists of approximately 15,000 square feet of office space.
Added
We own a property in College Park, Georgia that mines bitcoin through immersion technology and we own two parcels of land in Cheyenne, Wyoming that are currently under construction to develop immersion, bitcoin mining facilities. The leases have expiration dates between July 2026 through June 2039.
Removed
The Company intends to utilize this office space as its new corporate headquarters. On October 8, 2022, the Company, through its wholly owned subsidiary CSRE Properties Sandersville, LLC, closed on the acquisition of a lease for real property and the purchase of tangible property located at 2015 George J. Lyons Parkway, Sandersville, Georgia 31082.
Removed
The property is located in Washington County, Georgia and consists of 41 existing modular data centers. The Company intends to utilize the property to conduct its bitcoin mining activities. On August 17, 2022, the Company, through its wholly owned subsidiary, CSRE Properties Washington, LLC, closed on the purchase of real property located at 197 Dixie Wood Road, Washington, Georgia 30673.
Removed
The total purchase price was $15,000 and the seller conveyed fee simple title by limited warranty deed. The property is located in Wilkes County, Georgia and contains approximately 27 acres. The Company intends to utilize the property to conduct its bitcoin mining activities.
Removed
On August 6, 2021, the Company, through its wholly owned subsidiary CSRE Properties Norcross, LLC, closed on the purchase of real property located at 5295 Brook Hollow Parkway, Norcross, Georgia 30071 (the “Norcross Property”). The total purchase price was $6,550 and the seller conveyed fee simple title by limited warranty deed.
Removed
The Norcross Property consists of an office building of approximately 86,000 square feet on approximately seven acres of land. The Norcross Property is utilized by CleanBlok to conduct bitcoin mining activities.
Removed
On May 20, 2021, the Company, through its wholly owned subsidiary ATL, closed on the purchase of real property located at 2380 Godby Road, College Park, Georgia 30349 (the “College Park Property”), which it had been leasing prior to the purchase. The total purchase price was $4,712 and the seller conveyed fee simple title by limited warranty deed.
Removed
The College Park Property consists of an office/warehouse building of approximately 41,387 square feet on approximately six acres of land. The College Park Property is utilized by ATL and CleanBlok to conduct bitcoin mining activities. On June 15, 2021, the Company entered into a lease for warehouse and office space at 2042 Corte Del Nogal, Suite C, Carlsbad California, 92011.
Removed
The 5-year lease is for an approximately 12,704 square foot industrial unit and part of a larger 47,744 square foot multi-tenant industrial flex building and requires monthly base rent payments of $11.
Removed
The leased property was previously utilized by our energy business, and in September 2023, we entered into a lease termination agreement with the lessor for approximately $200, which is recorded in "Current liabilities held for sale" in our consolidated balance sheets and the amount was paid in full in October 2023.
Removed
On August 26, 2021, the Company entered into a lease for office space at 2370 Corporate Circle, Suite 160, Henderson, Nevada 89074. The 65-month lease is for 4,552 rentable square feet and an initial base rent of $11, increasing 3% each year. The Corporate Circle space is currently utilized as the CleanSpark corporate and executive headquarters.
Removed
We also have an office located at 1185 S. 1800 W, Suite 3, Woods Cross, Utah 84087. We are currently on a year-to-year lease agreement that calls for us to make payments of $2 per month. This property is utilized by corporate employees.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIf one or more legal matters were resolved against the Company in a reporting period 39 for amounts above management’s expectations, the Company’s financial condition and operating results for that reporting period could be materially adversely affected. Item 4. Mine Safety Disclosures Not applicable. 40 PART II
Biggest changeIf one or more legal matters were resolved against us in a reporting period for amounts above management’s expectations, our financial condition and operating results for that reporting period could be materially adversely affected. Item 4. Mine Safety Disclosures Not applicable. 39 PART II
Item 3. Legal Proceedings For a description of our material pending legal proceedings, refer to Note 17—Commitments and Contingencies included in our Notes to Consolidated Financial Statements. The Company is subject to other legal proceedings and claims that have not been fully resolved and that have arisen in the ordinary course of business.
Item 3. Legal Proceedings For a description of our material pending legal proceedings, refer to Note 18 - Commitments and Contingencies included in our Notes to Consolidated Financial Statements. We are subject to other legal proceedings and claims that have not been fully resolved and that have arisen in the ordinary course of business.
The Company routinely is subject to and resolves matters that do not individually or in the aggregate have a material impact on the Company’s financial condition or operating results. The outcome of litigation is inherently uncertain.
We routinely are subject to and resolve matters that do not individually or in the aggregate have a material impact on our financial condition or operating results. The outcome of litigation is inherently uncertain.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock, par value $0.001 per share, is listed on The Nasdaq Capital Market under the ticker symbol “CLSK.” Holders of Our Common Stock As of December 1, 2023, we had 195 registered holders of record of our common stock.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock, par value $0.001 per share, and redeemable warrants exercisable for shares of our common stock are listed on The Nasdaq Capital Market under the ticker symbols “CLSK” and “CLSKW,” respectively.
During the quarter ended September 30, 2023, there were no other unregistered sales of our securities that were not reported in a Current Report on Form 8-K or our Quarterly Reports on Form 10-Q.
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities During the quarter ended September 30, 2024, there were no unregistered sales of our securities that were not reported in a Current Report on Form 8-K or our Quarterly Reports on Form 10-Q.
Repurchases The Company has not made any repurchases of shares or other units of any class of the Company’s equity securities during the fourth quarter of the fiscal year covered by this Annual Report. Item 6. [Reserved] 41
Repurchases We have not made any repurchases of shares or other units of any class of our equity securities during the fourth quarter of the fiscal year covered by this Annual Report on Form 10-K. Item 6. [Reserved] 41
Dividends There are no restrictions in our articles of incorporation and bylaws or agreements to which we are currently party, that prevent us from declaring dividends.
Historically, we have not declared or paid cash dividends on our common stock. 40 Dividends There are no restrictions in our articles of incorporation and bylaws or agreements to which we are currently party that prevent us from declaring dividends.
The holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of our common stock have no preemptive rights and no right to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable to our common stock.
Holders of our common stock have no preemptive rights and no right to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable to our common stock.
Removed
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities In the quarter ended December 2021, we issued an aggregate of 8,404 unregistered shares of our common stock to the sellers of GridFabric in accordance with the Membership Interest Purchase Agreement entered into on August 31, 2020, based upon the achievement of certain milestones.
Added
Holders of Our Common Stock As of December 3, 2024, we had 241 registered holders of record of our common stock, and 2 registered holder of record for our redeemable warrants. The holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders.
Removed
The shares had a deemed aggregate value of $150. The shares of common stock were issued in a transaction not involving a public offering in reliance upon an exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated thereunder.
Added
Stock Performance Graph This performance graph shall not be deemed "filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference into any filing of the Company under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Added
The following graph shows a comparison over a five-year period from September 30, 2019 through September 30, 2024, of the cumulative total return on our common stock (CLSK), the NASDAQ Composite Index ("NASDAQ Composite”), RUSSELL 2000, the price of bitcoin, and to equally-weighted average return of our self-constructed Peer Group assuming an aggregate initial investment in each of $100 on September 30, 2019.
Added
Our self-constructed Peer Group Index consists of the members of our peer group with available publicly traded market data as of, and subsequent to, September 30, 2019, and consists of: Marathon Digital Holdings, Inc. (MARA), Riot Platforms, Inc. (RIOT), HIVE Digital Technologies, Ltd. (HIVE), Bitfarms Ltd. (BITF), Terawulf Inc. (WULF), Cipher Mining Inc.
Added
(CIFR) , Iris Energy Limited (IREN) and Hut 8 Corp. (HUT), . Such returns are based on closing stock price of each entity on September 30th or the last trading day prior to September 30th of each year. The results are not intended to suggest future performance.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe table below describes the average cost of mining each bitcoin for the years ended September 30, 2023 and 2022 and the total energy usage and cost per each kilowatt hour (“KWH”) utilized within both our five owned facilities and our hosted facility. 44 For the Year Ended Cost of Revenues - Analysis of costs to mine one bitcoin (per bitcoin amounts are actual) September 30, 2023 September 30, 2022 Cost of Mining - Owned Facilities Cost of energy per bitcoin mined $ 12,668 $ 6,818 Other direct costs of mining - non energy utilities per bitcoin mined 75 277 Cost to mine one bitcoin - Owned facilities $ 12,743 $ 7,097 Cost of Mining - Hosted Facilities Hosting fees expense per one bitcoin $ 15,797 $ 14,885 Weighted average cost of mining one bitcoin (1) $ 13,498 $ 10,825 Average revenue of each bitcoin mined (2) $ 24,355 $ 34,916 Cost of mining one bitcoin as % of average bitcoin mining revenue 55.4 % 31.0 % Statistics Owned Facilities Total bitcoin mined at owned facilities 5,196 1,956 Bitcoin mining revenue - Owned facilities- ($ in thousands) $ 127,827 $ 67,999 Total miners in service in owned facilities - as of the periods ended 71,620 30,506 Total KWHs utilized 1,360,287,814 321,919,602 Total energy expense - ($ in thousands) $ 65,824 $ 13,334 Cost per KWH $ 0.048 $ 0.041 Energy expense as percentage of bitcoin mining revenue, net 51.5 % 19.6 % Other direct costs of mining - non energy utilities - ($ in thousands) $ 391 $ 542 Hosted Facilities Total bitcoin mined at hosted facilities 1,707 1,796 Bitcoin mining revenue - Hosted facilities- ($ in thousands) $ 40,294 $ 63,001 Total miners in service in hosted facilities - as of the periods ended 16,325 16,439 Total KWHs utilized 420,585,554 273,560,450 Total hosting fee expense - ($ in thousands) $ 26,965 $ 26,736 Hosting fee per KWH $ 0.064 $ 0.098 Hosting fee expense as percentage of bitcoin mining revenue, net 66.9 % 42.4 % (1) Weighted average cost of mining one bitcoin is calculated by dividing the sum of total energy expense and other direct costs of mining non-energy utilities (owned facilities) and total hosting fee expense (hosted facilities) by the total bitcoin mined during the respective periods.
Biggest changeFor the Year Ended Cost of Revenues - Analysis of costs to mine one bitcoin (per bitcoin amounts are actual) September 30, 2024 September 30, 2023 September 30, 2022 Cost of mining - Owned facilities Cost of energy per bitcoin mined $ 21,308 $ 12,668 $ 6,818 Other direct costs of mining - non energy utilities per bitcoin mined 93 75 277 Cost to mine one bitcoin - Direct energy cost - Owned facilities $ 21,401 $ 12,743 $ 7,095 Miner depreciation per bitcoin mined (excluding accelerated depreciation and impairment) 17,156 8,208 11,630 Financing costs per bitcoin mined 209 411 508 Direct cost to mine including direct energy costs, non-cash depreciation and financing costs - Owned facilities $ 38,766 $ 21,362 $ 19,233 Accelerated depreciation per bitcoin mined 1,170 4,764 - Direct cost to mine including direct energy costs, non-cash depreciation, financing costs and accelerated depreciation - Owned facilities $ 39,936 $ 26,126 $ 19,233 Average revenue of each bitcoin mined (1) $ 53,708 $ 24,601 $ 34,764 Direct cost to mine one bitcoin as % of average bitcoin mining revenue - Including direct energy cost only 39.8 % 51.8 % 20.4 % Direct cost to mine one bitcoin as % of average bitcoin mining revenue - Including direct energy costs, miner depreciation expense and financing costs 72.2 % 86.8 % 55.3 % Direct cost to mine one bitcoin as % of average bitcoin mining revenue - Including direct energy costs, miner depreciation expense, financing costs and accelerated depreciation expense 74.4 % 106.2 % 55.3 % Statistics Owned Facilities Total bitcoin mined at owned facilities 6,204 5,196 1,956 Bitcoin mining revenue - Owned facilities - ($ in thousands) $ 333,187 $ 127,827 $ 67,999 Total miners in service in owned facilities - as of the period ended 160,200 71,620 30,506 Total KWHs utilized 2,871,574,570 1,360,287,814 321,919,602 Total energy expense - ($ in thousands) $ 132,192 $ 65,824 $ 13,334 Cost per KWH $ 0.046 $ 0.048 $ 0.041 Energy expense as percentage of bitcoin mining revenue, net 39.7 % 51.5 % 19.6 % Other direct costs of mining - non energy utilities - ($ in thousands) $ 579 $ 391 $ 542 Depreciation Expense - Miners Only - ($ in thousands) $ 106,434 $ 42,651 $ 22,749 Accelerated Depreciation Expense - Miners Only - ($ in thousands) $ 7,261 $ 24,754 $ — Direct miner financing costs - ($ in thousands) $ 1,295 $ 2,138 $ 995 (1) Average revenue of each bitcoin mined is calculated by dividing the sum of bitcoin mining revenue for our owned facilities by the total number of bitcoin mined by our owned facilities during the respective periods.
Based on our current plans and business conditions, we believe that existing cash and cash equivalents and bitcoin, together with cash generated from operations, will be sufficient to satisfy our anticipated cash requirements for the next 12 months and for the reasonably foreseeable future until we reach profitability, and we are not aware of any trends or demands, commitments, events or uncertainties that are reasonably likely to result in a decrease in liquidity of our assets.
Based on our current plans and business conditions, we believe that existing cash and cash equivalents and bitcoin, together with cash generated from operations, will be sufficient to satisfy our anticipated cash requirements for the next 12 months and for the reasonably foreseeable future until we reach profitability, and we are not aware of any trends or demands, commitments, events or uncertainties that are reasonably likely to result in a decrease in the liquidity of our assets.
We do not currently plan to engage in regular trading of bitcoin (other than as necessary to 42 convert our bitcoin into U.S. dollars) or to engage in hedging activities related to our holding of bitcoin; however, our decisions to hold or sell bitcoin at any given time may be impacted by the bitcoin market, which has been historically characterized by significant volatility.
We do not currently plan to engage in regular trading of bitcoin (other than as necessary to convert our bitcoin into U.S. dollars) or to engage in hedging activities related to our holding of bitcoin; however, our decisions to hold or sell bitcoin at any given time may be impacted by the bitcoin market, which has been historically characterized by significant volatility.
Other professional fees, namely accounting, audit and consulting, were $3,193 for the year ended September 30, 2023 as compared to $3,755 for the year ended September 30, 2022, a decrease of $562. Payroll expenses Payroll expenses increased to $45,714 for the year ended September 30, 2023 from $40,920 for the same period ended September 30, 2022.
Other professional fees, namely accounting, audit and consulting, were $3,193 for the year ended September 30, 2023 as compared to $3,755 for the year ended September 30, 2022, a decrease of $562. 52 Payroll expenses Payroll expenses increased to $45,714 for the year ended September 30, 2023 from $40,920 for the same period ended September 30, 2022.
Amortization expense for the year ended September 30, 2023 was $2,113, an increase of $150, or 8%, from $1,963 for the prior year ended September 30, 2022. Other Income (Expenses) Other expense was $260 for the year ended September 30, 2023, compared with $2,225 for the year ended September 30, 2022, which is a variance of $1,965.
Amortization expense for the year ended September 30, 2023 was $2,113, an increase of $150, or 8%, from $1,963 for the prior year ended September 30, 2022. 53 Other Income (Expenses) Other expense was $260 for the year ended September 30, 2023, compared with other expense of $2,225 for the year ended September 30, 2022, which is a variance of $1,965.
The energy efficiency of a mining fleet helps drive profitability, because the most significant direct expense for bitcoin mining is power. We measure efficiency by the watts of energy required to produce each terahash of 43 processing power. We believe we operate a highly efficient fleet of miners.
The energy efficiency of a mining fleet helps drive profitability, because the most significant direct expense for bitcoin mining is power. We measure efficiency by the watts of energy required to produce each terahash of processing power. We believe we operate a highly efficient fleet of miners.
Realized gain on sale of bitcoin Realized gain on sale of bitcoin decreased to $1,357 for the year ended September 30, 2023 from a realized gain of $2,567 for the year ended September 30, 2022. Realized gains on sale of bitcoin is the difference between the sales proceeds of bitcoin and the carrying amount.
Realized gain on sale of bitcoin Realized gain on sale of bitcoin decreased to $1,357 for the year ended September 30, 2023 from a realized gain of $2,567 for the year ended September 30, 2022. Realized gain on sale of bitcoin is the difference between the sales proceeds of bitcoin and the carrying amount.
In particular, rising inflation and interest rates, and the conflict between Russia and Ukraine, have resulted in, and may continue to result in, significant disruption and volatility in the global financial markets, reducing our ability to access capital.
In particular, rising inflation and changes in interest rates, and the conflict between Russia and Ukraine, have resulted in, and may continue to result in, significant disruption and volatility in the global financial markets, reducing our ability to access capital.
Interest expense in the fiscal year ended September 30, 2023 also increased by $1,899 to $2,977 from $1,078 in the prior year comparable period.
Interest expense in the fiscal year ended September 30, 2023 increased by $1,899 to $2,977 from $1,078 in the prior year comparable period.
All of our wholly owned and operated sites in the State of Georgia and our hosted miners in New York State are currently subject to variable prices and market rate fluctuations with respect to wholesale power costs. Such prices are governed by power purchase agreements which vary by location and said prices can change hour to hour.
All of our wholly owned and operated sites in Georgia and Mississippi and our hosted miners in New York State are currently subject to variable prices and market rate fluctuations with respect to wholesale power costs. Such prices are governed by power purchase agreements which vary by location, and said prices can change hour to hour.
The table below describes our fleet as of September 30, 2023 and 2022 and describes our miner efficiency and computing power as compared to the global computing power.
The table below describes our fleet as of September 30, 2024, 2023 and 2022 and our miner efficiency and computing power as compared to the global computing power.
The increases in energy costs within our owned facilities relates to the full-year or approximate full-year, as applicable, of mining operations in fiscal year 2023 in our Washington and Sandersville locations which were acquired in August 2022 and October 2022, respectively.
The increase in energy costs within our owned facilities relates to the full-year or approximate full-year, as applicable, of mining operations in fiscal year 2023 in our Washington and Sandersville locations which were acquired in August 2022 and October 2022, respectively.
The value of bitcoin has historically been subject to wide swings. The following table provides a range of intraday low and intraday high bitcoin prices between October 1, 2021 through September 30, 2023.
The value of bitcoin has historically been subject to wide swings. The following table provides a range of intraday low and intraday high bitcoin prices between October 1, 2021 through September 30, 2024.
Decreases in bitcoin prices for periods subsequent to the mining date are recorded as impairment expense. Impairment expense is measured utilizing the intraday low bitcoin price during the holding period of bitcoin.
Decreases in bitcoin prices for periods subsequent to the mining date are recorded as impairment expense. Impairment expense was measured utilizing the intraday low bitcoin price during the holding period of bitcoin.
This increase was primarily related to the Financing Agreement, which was issued in April 2022 and was outstanding for approximately five months in the fiscal year ended September 30, 2022 as compared to being outstanding during the entire fiscal year ended September 30, 2023.
This increase was primarily related to the Financing Agreement, which was entered into in April 2022 and was outstanding for approximately five months in the fiscal year ended September 30, 2022 as compared to being outstanding during the entire fiscal year ended September 30, 2023.
Our payroll expenses include all compensation related expenses for our employees and mainly includes salaries, wages, payroll-related taxes and benefits and non-cash stock-based compensation. Payroll expenses, excluding non-cash stock-based compensation, were $21,572 the year ended September 30, 2023, representing an increase of 127% from $9,493 in the prior year ended September 30, 2022.
Our payroll expenses include all compensation related expenses for our employees, consisting primarily of salaries, wages, payroll-related taxes and benefits and non-cash stock-based compensation. Payroll expenses, excluding non-cash stock-based compensation, were $21,572 the year ended September 30, 2023, representing an increase of 127% from $9,493 in the prior year ended September 30, 2022.
Currently, we do not use a formula or specific methodology to determine whether or when we will sell bitcoin that we hold, or the number of bitcoins we will sell. Rather, decisions to hold or sell bitcoins are currently determined by management by analyzing forecasts and monitoring the market in real time.
Currently, we do not use a formula or specific methodology to determine whether or when we will sell bitcoin that we hold, or the number of bitcoins we will sell. Rather, decisions to hold or sell bitcoins are currently determined by management by analyzing the need for working capital, forecasts and monitoring the market in real time.
As of September 30, 2023, our operating mining units were capable of producing over 9.6 EH/s of computing power. In bitcoin mining, “hashrate” is a measure of the computing and processing power and speed by which a computer processes transactions on the bitcoin network.
As of September 30, 2024, our operating mining units were capable of producing over 27.6 EH/s of computing power. In bitcoin mining, “hashrate” is a measure of the computing and processing power and speed by which a computer processes transactions on the bitcoin network.
Our non-GAAP "Adjusted EBITDA" excludes (i) impacts of interest, taxes, and depreciation; (ii) our share-based compensation expense, unrealized gains/losses on securities, and changes in the fair value of contingent consideration with respect to previously completed acquisitions, all of which are non-cash items that we believe are not reflective of our general business performance, and for which the accounting requires management judgment, and the resulting expenses could vary significantly in comparison to other companies; (iii) non-cash impairment losses related to long-lived assets (including goodwill); (iv) realized gains and losses on sales of equity securities, the amounts of which are directly related to the unrealized gains and losses that are also excluded; (v) legal fees related to litigation and various transactions, which fees management does not believe are reflective of our ongoing operating activities; (vi) gains and losses on disposal of assets, the majority of which are related to obsolete or unrepairable machines that are no longer deployed; (vii) gains and losses related to discontinued operations that would not be applicable to our future business activities; and (viii) severance expenses. 48 We previously excluded non-cash impairment losses related to bitcoin and realized gains and losses on sales of bitcoin from our calculation of adjusted EBITDA but have determined such items are part of our normal ongoing operations and will no longer be excluding them from our calculation of adjusted EBITDA.
Our non-GAAP "Adjusted EBITDA" excludes (i) impacts of interest, taxes, and depreciation; (ii) our share-based compensation expense, unrealized gains/losses on securities, and changes in the fair value of contingent consideration with respect to previously completed acquisitions, all of which are non-cash items that we believe are not reflective of our general business performance, and for which the accounting requires management judgment, and the resulting expenses could vary significantly in comparison to other companies; (iii) non-cash impairment losses related to long-lived assets; (iv) realized gains and losses on sales of equity securities, the amounts of which are directly related to the unrealized gains and losses that are also excluded; (v) legal fees related to litigation and various transactions, which fees management does not believe are reflective of our ongoing operating activities; (vi) gains and losses on disposal of assets, the majority of which are related to obsolete or unrepairable machines that are no longer deployed; (vii) gains and losses related to discontinued operations that would not be applicable to our future business activities; and (viii) severance expenses.
Therefore, negative swings in the market price of bitcoin could have a material impact on our earnings and on the carrying value of our bitcoin.
Therefore, decreases in the market price of bitcoin could have a material impact on our earnings and on the carrying value of our bitcoin.
Net Loss Net loss for the year ended September 30, 2023 was $136,589, an increase of $79,263 compared to a net loss of $57,326 for the year ended September 30, 2022. Non-GAAP Measure We present adjusted EBITDA, which is not a measurement of financial performance under generally accepted accounting principles in the United States ("GAAP").
Net Loss Net loss for the year ended September 30, 2023 was $138,148, an increase of $80,822 compared to a net loss of $57,326 for the year ended September 30, 2022. Non-GAAP Measure We present adjusted EBITDA, which is not a measurement of financial performance under generally accepted accounting principles in the United States ("GAAP").
While this renders energy prices less predictable, it also gives us greater ability and flexibility to actively manage the energy we consume with an eye towards increasing profitability and energy efficiency. Energy prices are also highly sensitive to weather events, such as heat waves, winter storms and polar vortices, which increase the demand for power regionally.
While this renders energy prices less predictable, it also gives us greater ability and flexibility to actively manage the energy we consume with a goal of increasing profitability and energy efficiency. Energy prices are also highly sensitive to weather events, such as winter storms, polar vortices and hurricanes, which increase the demand for power regionally.
Energy prices can be highly volatile and global events (including the war in Ukraine and the resulting natural gas shortage) have caused power prices to increase nationwide over the past year.
Energy prices can be highly volatile and global events (including the war in Ukraine and the resulting natural gas shortage) caused power prices to increase nationwide in 2022.
When such events occur, we may curtail our operations to avoid using power at increased rates. The average power prices we paid in our 45 owned facilities for the years ended September 30, 2023 and 2022 was $0.048 and $0.041 per kilowatt hour, respectively.
When such events occur, we may curtail our operations to avoid using power at increased rates. The average power prices we paid in our owned facilities for the years ended September 30, 2024, 2023 and 2022 were $0.046, $0.048 and $0.041 per KWH, respectively.
For our co-locations, hosting fees (which comprise direct operating costs of the third-party operator with energy as the largest cost) and profit sharing were a combined 66.9% and 42.4% of bitcoin mining revenues for the fiscal years ended September 30, 2023 and 2022, respectively.
For our hosted facilities, hosting fees (which comprise direct operating costs of the third-party operator with energy as the largest cost) and profit sharing were a combined 71.5%, 66.9% and 42.4% as a percentage of bitcoin mining revenues for the years ended September 30, 2024, 2023 and 2022, respectively.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements The following discussion of our financial condition and results of operations for the years ended September 30, 2023 and 2022 should be read in conjunction with our consolidated financial statements and the notes to those statements that are included elsewhere in this Annual Report on Form 10-K.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes to those statements that are included elsewhere in this Annual Report on Form 10-K.
The miners owned as of September 30, 2023 have a range of energy efficiency (watts per terahash – “w/th”) of 21.5 to 38 w/th with an average energy efficiency of 28.4 w/th. We obtain bitcoin as a result of our mining operations, and we sell bitcoin from time to time, to support our operations and strategic growth.
The miners owned as of September 30, 2024 have a range of energy efficiency (watts per terahash – “w/th”) of 15.0 to 34 w/th with an average energy efficiency of 21.9 w/th. We obtain bitcoin as a result of our mining operations, and we sell bitcoin from time to time to support our operations and strategic growth.
There are a variety of factors that influence our ability to mine bitcoin profitability. Our ability to mine profitability is dependent on successfully navigating these fluctuating variables, which include bitcoin’s value in USD (the volatility of which is described above), mining difficulty, global hashrate, power prices, fleet energy efficiency, data center energy efficiency and other factors.
Our ability to mine profitability is dependent on successfully navigating these fluctuating variables, which include bitcoin’s value in USD (the volatility of which is described above), mining difficulty, block rewards and halving, global hashrate, power prices, fleet energy efficiency, data center energy efficiency and other factors.
We also incurred hosting fees of $22,974 and profit sharing fees of $3,991 for the year ended September 30, 2023, an increase of $266 and a decrease of $37, respectively, as compared to $22,708 and $4,028, respectively for the year ended September 30, 2022.
We also incurred hosting fees of $22,974 and profit-sharing fees of $3,991 for the year ended September 30, 2023, an increase of $266 and a decrease of $37, respectively, as compared to $22,708 and $4,028, respectively, for the year ended September 30, 2022. The hosting fees and profit-sharing fees were primarily the result of our co-location agreement with Coinmint.
A company’s computing power measured in hashrate is generally considered to be one of the most important metrics for evaluating bitcoin mining companies. We owned approximately 113,500 miners as of September 30, 2023, of which approximately 88,000 were in service and the remainder mainly pertains to new machines ready to install in the Sandersville expansion.
A company’s computing power measured in hashrate is generally considered to be one of the most important metrics for evaluating bitcoin mining companies. 42 We owned approximately 235,000 miners as of September 30, 2024, of which approximately 189,000 were in service and the remainder mainly pertains to new machines ready to install in the expansion in Wyoming, Mississippi and Tennessee.
Depreciation and amortization Depreciation and amortization expense increased to $120,728 for the year ended September 30, 2023 from $49,045 for the same period ended September 30, 2022, an increase of $71,683. 47 Depreciation expense increased by $71,533, or 152%, during the year ended September 30, 2023, to $118,615 from $47,082 due to an increase in miners and mining-related equipment being placed in service during the comparative period.
Depreciation expense increased by $71,533, or 152%, during the year ended September 30, 2023, to $118,615 from $47,082, due to an increase in miners and mining-related equipment being placed in service during the comparative period.
Our payments on miner equipment purchase and deposits of $239,416, purchase of fixed assets of $61,460, purchase of Mawson of $22,518, purchase of Coinmaker LLC of $9,389, and land acquisition in Sandersville, GA of $1,430 were the main components of our investing cash flow for the year ended September 30, 2023.
Our purchase of fixed assets of $61,460, payments on mining equipment (including deposits) of $239,416 and purchase of Mawson for $22,518, and the acquisition of Coinmaker LLC for $9,389 were the main components of our negative investing cash flow for the year ended September 30, 2023.
Results of Operations Bitcoin mining revenue We earned $168,121 in revenues during the year ended September 30, 2023, which was an increase of $37,121, or 28%, as compared with $131,000 in revenues for the year ended September 30, 2022 primarily due to increase in revenues from our bitcoin mining operations.
Net Loss Net loss for the year ended September 30, 2024 was $145,777, an increase of $7,628 compared to a net loss of $138,148 for the year ended September 30, 2023. 51 Results of Operations for the Fiscal Years Ended September 30, 2023 and 2022 Bitcoin mining revenue We earned $168,121 in revenues during the year ended September 30, 2023, which was an increase of $37,121, or 28%, as compared with $131,000 in revenues for the year ended September 30, 2022 primarily due to increase in revenues from our bitcoin mining operations.
Users have full control over remitting bitcoin from their own sending addresses. All transactions on the bitcoin blockchain are transparent, allowing those running the appropriate software to confirm the validity of each transaction.
The authenticity of each bitcoin transaction is protected through digital signatures that correspond with addresses of users that send and receive bitcoin. Users have full control over remitting bitcoin from their own sending addresses. All transactions on the bitcoin blockchain are transparent, allowing those running the appropriate software to confirm the validity of each transaction.
ASC Topic 350 - Goodwill and Other that requires subsequent increases in bitcoin prices are not allowed to be recorded (unrealized gains) unless the bitcoin is sold, at which point the gain is recognized.
ASC Topic 350 - Goodwill and Other that requires subsequent increases in bitcoin prices are not allowed to be recorded (unrealized gains) unless the bitcoin is sold, at which point the gain is recognized. As described above, the Company adopted ASC 350-60 - Crypto Assets on October 1, 2023.
We use words such as anticipate, estimate, plan, project, continuing, ongoing, expect, believe, intend, may, will, should, could, and similar expressions to identify forward-looking statements. See "Forward-Looking Statements." Business Overview We are a bitcoin mining company. We independently own and operate five data centers in Georgia for a total developed capacity of 230 MW.
We use words such as anticipate, estimate, plan, project, continuing, ongoing, expect, believe, intend, may, will, should, could, and similar expressions to identify forward-looking statements. See "Forward-Looking Statements." Business Overview We are a bitcoin mining company.
Net Loss from Continuing Operations Net loss from continuing operations for the year ended September 30, 2023 was $132,160 as compared to net loss of $40,089 for the year ended September 30, 2022 for the reasons discussed above. Results of Discontinued Operations Revenues from our former energy segment decreased year over year as expected to $158 from $9,667.
Results of Discontinued Operations Revenues from our former energy segment decreased year over year as expected to $158 for the year ended September 30, 2023 from $9,667 for the year ended September 30, 2022.
Results of Operations for the Fiscal Years Ended September 30, 2023 and 2022 ($ presented in 000’s, except for bitcoin price and information set forth under the heading “Bitcoin Mining Operations”) Bitcoin Mining Operations Overview We operate a fleet of servers commonly known as miners or ASICs (Application-Specific Integrated Circuits), which are computer chips customized for a specific use.
We maintain real property holdings through our wholly owned and consolidated subsidiaries. 43 Results of Operations ($ presented in 000’s, except for per share amounts, bitcoin price and information set forth under the heading “Bitcoin Mining Operations”) Bitcoin Mining Operations Overview We operate a fleet of servers commonly known as miners or ASICs (Application-Specific Integrated Circuits), which are computer chips customized for a specific use.
Financing Activities from Continuing Operations Cash flows generated by financing activities during the year ended September 30, 2023 amounted to $371,075, as compared with $141,960 for the year ended September 30, 2022.
Financing Activities from Continuing Operations Cash flows generated by financing activities during the year ended September 30, 2024 amounted to $1,249,123, as compared with $357,928 for the year ended September 30, 2023.
We expect to continue increasing our computing power through 2024 and beyond as we expand our infrastructure at our owned sites in the State of Georgia, seek strategic acquisition targets, and through strategic co-location agreements. As of the date of this filing, December 1, 2023, we are capable of producing 10.0 EH/s of computing power.
We expect to continue increasing our computing power through the end of 2024 and beyond as we expand our infrastructure at our owned sites in Wyoming, Tennessee, and Mississippi, seek strategic acquisition targets, and through strategic co-location agreements. As of October 31, 2024, we are capable of producing 31.5 EH/s of computing power.
See the table "Range of intraday bitcoin prices" for information on the range of intraday bitcoin prices for quarterly periods since October 1, 2021. Power prices are the most significant cost driver for our wholly owned locations, and energy costs represented 51.5% and 19.6% of bitcoin mining revenues for the years ended September 30, 2023 and 2022, respectively.
Power prices are the most significant cost driver for our wholly owned locations, and energy costs represented 39.7%, 51.5% and 19.6% as expressed as a percentage of bitcoin mining revenues for the years ended September 30, 2024, 2023 and 2022, respectively.
These miners range in age from 1-37 months and have an average age of approximately 12 months. We do not have scheduled downtime for our miners. We periodically perform unscheduled maintenance on our miners, but such downtime has not historically been significant. When performing unscheduled maintenance, we will typically replace the miner with a substitute miner to limit overall downtime.
We periodically perform unscheduled maintenance on our miners, but such downtime has not historically been significant. When performing unscheduled maintenance, we will typically replace the miner with a substitute miner to limit overall downtime.
The following is a reconciliation of our non-GAAP adjusted EBITDA to its most directly comparable GAAP measure (i.e., net (loss) income) for the periods indicated: For the Year Ended September 30, ($ in thousands) 2023 2022 Reconciliation of non-GAAP adjusted EBITDA Net loss $ (136,589 ) $ (57,326 ) Loss on discontinued operations 4,429 17,237 Impairment expense - other — 250 Impairment expense - goodwill — 12,048 Depreciation and amortization 120,728 49,045 Share-based compensation expense 24,142 31,466 Other income (11 ) (308 ) Change in fair value of contingent consideration (2,484 ) (306 ) Realized gain on sale of equity security — (1 ) Unrealized loss of equity security — 2 Unrealized loss of derivative security 259 1,950 Interest income (481 ) (190 ) Interest expense 2,977 1,078 Loss (gain) on disposal of assets 1,931 (643 ) Income tax expense 857 — Legal fees related to litigation & settlement related expenses 7,872 522 Legal fees related to financing & business development transactions 697 827 Severance expenses 701 405 Non-GAAP adjusted EBITDA* $ 25,028 $ 56,056 49 The following is a reconciliation of the fair market value of our bitcoin holdings to the current carrying value at September 30, 2023 and 2022: September 30, 2023 September 30, 2022 Carrying Value (1) Fair Market Value (2) Carrying Value (1) Fair Market Value (2) Number of bitcoins held 2,243 2,243 595 595 Value per bitcoin (1) (2) $ 25,075 $ 26,961 $ 18,735 $ 19,426 Total $ 56,241 $ 60,471 $ 11,147 $ 11,559 (1) Value per bitcoin is the average book value per bitcoin determined by the number of bitcoins held as of the balance sheet date divided by the carrying value.
The following is a reconciliation of our non-GAAP adjusted EBITDA to its most directly comparable GAAP measure (i.e., net (loss) income) for the periods indicated: For the Year Ended September 30, ($ in thousands) 2024 2023 2022 Reconciliation of non-GAAP adjusted EBITDA Net income (loss) $ (145,777 ) $ (138,148 ) $ (57,326 ) Loss (income) on discontinued operations — 4,429 17,237 Impairment expense - fixed assets 197,041 — — Impairment expense - other 716 — 250 Impairment expense - goodwill — — 12,048 Depreciation and amortization 154,609 120,728 49,045 Share-based compensation expense 29,555 24,142 31,466 Other income — (11 ) (308 ) Change in fair value of contingent consideration — (2,484 ) (306 ) Realized gain on sale of equity security — — (1 ) Unrealized loss on equity security — — 2 Unrealized loss (gain) of derivative security 965 259 1,950 Interest income (8,555 ) (481 ) (190 ) Interest expense 2,455 2,977 1,078 Loss (gain) on disposal of assets 5,466 1,931 (643 ) Income tax expense 3,344 2,416 — Fees related to financing & business development transactions 4,059 697 827 Litigation & settlement related expenses 1,970 7,872 522 Severance and other expenses — 701 405 Non-GAAP adjusted EBITDA $ 245,848 $ 25,028 $ 56,056 55 Liquidity and Capital Resources Our primary requirements for liquidity and capital are working capital, capital expenditures, loan payments, public company costs and general corporate needs.
Range of intraday bitcoin prices Quarterly Reporting Periods Ended Minimum Price Maximum Price December 31, 2021 $ 42,333 $ 69,000 March 31, 2022 $ 32,933 $ 48,240 June 30, 2022 $ 17,567 $ 47,469 September 30, 2022 $ 18,153 $ 25,215 December 31, 2022 $ 15,460 $ 21,479 March 31, 2023 $ 16,490 $ 29,190 June 30, 2023 $ 24,750 $ 31,444 September 30, 2023 $ 24,900 $ 31,862 As of September 30, 2023, we held approximately 2,243 bitcoins.
Range of intraday bitcoin prices Quarterly Reporting Periods Ended Minimum Price Maximum Price December 31, 2021 $ 42,333 $ 69,000 March 31, 2022 $ 32,933 $ 48,240 June 30, 2022 $ 17,567 $ 47,469 September 30, 2022 $ 18,153 $ 25,215 December 31, 2022 $ 15,460 $ 21,479 March 31, 2023 $ 16,490 $ 29,190 June 30, 2023 $ 24,750 $ 31,444 September 30, 2023 $ 24,900 $ 31,862 December 31, 2023 $ 26,521 $ 45,000 March 31, 2024 $ 38,501 $ 73,836 June 30, 2024 $ 56,500 $ 72,777 September 30, 2024 $ 49,050 $ 68,244 As of September 30, 2024, we held approximately 6,819 bitcoins and had a receivable for 1,229 bitcoin that was posted as collateral and recorded on our Consolidated Balance Sheets as “Receivable for bitcoin collateral”.
We will evaluate a variety of sources of capital in connection with financing any future possible acquisitions, including the incurrence of debt, sales of stock or bitcoin, or using cash on hand. We may also use the Company’s stock as transaction consideration, as we have done in the past.
We regularly evaluate opportunities to expand our business, including through potential acquisitions of businesses or assets. We will evaluate a variety of sources of capital in connection with financing any future possible acquisitions, including the incurrence of debt, sales of stock or bitcoin, or using cash on hand.
(2) Watts of energy required to produce each terahash of processing power.
(2) Watts of energy required to produce each terahash of processing power. Based on miner fleet operating at period end.
Management believes that providing this non-GAAP financial measure that excludes these items allows for meaningful comparisons between the Company's core business operating results and those of other companies, and provides the Company with an important tool for financial and operational decision making and for evaluating its own core business operating results over different periods of time.
We previously excluded non-cash impairment losses related to bitcoin and realized gains and losses on sales of bitcoin from our calculation of adjusted EBITDA but have determined such items are part of our normal ongoing operations and will no longer be excluding them from our calculation of adjusted EBITDA. 54 Management believes that providing this non-GAAP financial measure that excludes these items allows for meaningful comparisons between the Company's core business operating results and those of other companies, and provides the Company with an important tool for financial and operational decision making and for evaluating its own core business operating results over different periods of time.
Our contractual obligations primarily consist of cancelable purchase commitments with various parties to purchase goods or services, primarily miners and equipment, entered into in the normal course of business, loans and both finance and operating leases. We regularly evaluate opportunities to expand our business, including through potential acquisitions of businesses or assets.
Certain contractual obligations are reflected on the consolidated balance sheet as of September 30, 2024, while others are considered future commitments. Our contractual obligations primarily consist of cancelable purchase commitments with various parties to purchase goods or services, primarily miners and equipment, entered into in the normal course of business, loans and both finance and operating leases.
Legal expenses were $7,676 for the year ended September 30, 2023, as compared to $2,714 in the prior year. This increase was primarily attributable to $3,800 in litigation settlement with Darfon America Corp and additional activity in litigation and transactional costs.
This increase was primarily attributable to $3,800 in litigation settlement with Darfon America Corp. and additional activity in litigation and transactional costs.
Our cash flows from financing activities for the year ended September 30, 2023 consisted primarily of proceeds from our at-the-market offering facility of $383,776 (98,829,525 shares at a weighted average price of $3.88 per share).
Our cash flows from financing activities for the year ended September 30, 2023 consisted of $376,200 in proceeds from offerings (98,829,525 shares at a weighted average price of $3.88 per share less 7,576 net collections on receivable for equity offerings) partially offset by payments on loans of $14,466.
The bitcoin network is the first decentralized peer-to-peer payment network, powered by users participating in the consensus protocol, with no central authority or middlemen, that has wide network participation. The authenticity of each bitcoin transaction is protected through digital signatures that correspond with addresses of users that send and receive bitcoin.
Bitcoin is a form of digital currency that depends upon a consensus-based network and a public ledger called a “blockchain,” which contains a record of every bitcoin transaction ever processed. The bitcoin network is the first decentralized peer-to-peer payment network, powered by users participating in the consensus protocol, with no central authority or middlemen, that has wide network participation.
The hosting fees remained consistent for both fiscal years since the increase in KWHs utilized was offset by the decrease in the rate charged per KWH. 46 Professional fees Professional fees, which consists primarily of legal, accounting and consulting fees, were $10,869 for the year ended September 30, 2023, an increase of $4,400, or 68%, from $6,469 for the year ended September 30, 2022.
Professional fees Professional fees, which consists primarily of legal, accounting and consulting fees, were $10,869 for the year ended September 30, 2023, an increase of $4,400, or 68%, from $6,469 for the year ended September 30, 2022. Legal expenses were $7,676 for the year ended September 30, 2023, as compared to $2,714 in the prior year.
We are developing an additional 150 MW at our data center in Sandersville, GA. We have a partner in Massena, NY, that hosts 50 MW for us. We design our infrastructure to responsibly support bitcoin, the world’s most important digital commodity and an essential tool for financial independence and inclusion.
We have an independent data center operation in Massena, NY that hosts 50 MW for us, which agreement will terminate on January 1, 2025. We design our infrastructure to responsibly secure and support bitcoin, the world’s most recognized digital commodity.
Our proceeds from the sale of bitcoin of $116,271 and adding back non-cash expenses, such as depreciation and amortization of $120,728, stock-based compensation of $24,142 and impairment of bitcoin of $7,163 were the main components of net cash provided by operating activity for the year ended September 30, 2023, offset primarily by the net cash used in operating activities of bitcoin mining of $168,121, net loss of $136,589, and increase in prepaid and other current assets of $4,320.
Net cash used in operating activities was $18,573 for the year ended September 30, 2023 primarily due to net loss of $138,148, adjusted by adding non-cash adjustment to reconcile net loss to net cash of depreciation and amortization of $120,728, stock based compensation of $24,142, impairment of bitcoin of $7,163 and loss on disposal of assets of $1,931 and subtracting non-cash bitcoin mining revenues of $168,121.
For the year ended September 30, 2023, our primary sources of liquidity came from existing cash and cash equivalents and bitcoin.
We expect these needs to continue as we further develop and grow our business. For the year ended September 30, 2024, our primary sources of liquidity came from existing cash and cash equivalents, bitcoin and proceeds from our at-the-market ("ATM") equity offering program.
As of the fiscal periods ended Combined facilities September 30, 2023 September 30, 2022 Period ended Global hashrate (in terms of EH/s) (1) 391.8 244.8 Period ended miner efficiency (w/th) (2) 28.4 30.1 Period ended CleanSpark hashrate (in terms of EH/s) 9.6 4.2 Period ended CleanSpark percentage of total global hashrate 2.45 % 1.70 % Coinbase closing bitcoin price - high $ 31,862 $ 69,000 Coinbase closing bitcoin price - low $ 15,460 $ 17,567 (1) Total global hashrate obtained from YCHARTS (https://ycharts.com/indicators/bitcoin_network_hash_rate).
As of September 30, Combined facilities 2024 2023 2022 Global hashrate (in terms of EH/s) (1) 627.0 391.8 244.8 Miner efficiency (w/th) (2) 21.9 28.4 30.1 CleanSpark hashrate (in terms of EH/s) 27.6 9.6 4.2 CleanSpark percentage of total global hashrate 4.40 % 2.45 % 1.72 % (1) Total global hashrate obtained from mempool (https://mempool.space/graphs/mining/hashrate-difficulty ).
Investing Activities from Continuing Operations Cash flows used by investing activities during the year ended September 30, 2023 was $334,179 as compared with $210,981 for the year ended September 30, 2022.
We also generated cash proceeds from selling bitcoin of $116,271. Changes in operating assets and liabilities generated a net total of $15,232 of cash. Investing Activities from Continuing Operations Cash flows used by investing activities during the year ended September 30, 2024 was $920,398 as compared with $334,179 for the year ended September 30, 2023.
Impairment losses cannot be recovered for any subsequent increase in fair value. The carrying value of each bitcoin we held at the end of each reporting period reflects the lowest price of one bitcoin quoted on the active exchange at any time since its acquisition.
As a result, the carrying value of each bitcoin we held at October 1, 2023 and each subsequent reporting period reflects the price of one bitcoin quoted on the active exchange, Coinbase, at the end of the reporting period.
As of September 30, 2023, we had total current assets of $102,172, primarily consisting of cash and cash equivalents, bitcoin, inventory, and prepaid expenses and other current assets, and total assets in the amount of $761,578. Our total current liabilities and total liabilities as of September 30, 2023 were $74,055 and $84,351, respectively.
As of September 30, 2024, we had total current assets of $705,430, primarily consisting of cash and cash equivalents, bitcoin, receivable from bitcoin collateral, the note receivable from GRIID, and prepaid expenses and other current assets, and total assets in the amount of $1,962,662.
Cash Flows from Discontinued Operations Cash provided by discontinued operations was based on the winding down of operations, which includes receipt of payments from accounts receivable, payments of accounts payable and cash generated from the sale of assets during the fiscal year September 30, 2023.
Cash Flows from Discontinued Operations Cash used in discontinued operations of $508 for the year ended September 30, 2024 was primarily based on the winding down of operations, which includes payments on warranty service.
For example, as of September 30, 2023, our operating hashrate was approximately 2.45% of the total global hashrate, and we received approximately the same percentage of the global blockchain rewards, which as of that date, equaled approximately 20-22 bitcoins per day. Ultimately, in order to mine profitably, we work to ensure that these mining rewards cover our direct operating costs.
As of September 30, 2024, our operating hashrate was approximately 4.40% of the total global hashrate, and we received approximately the same percentage of the global blockchain rewards, which as of that date equaled approximately 19-21 bitcoin per day, excluding the bitcoin earned from network transaction fees.
At our hosting facilities, the hosting fee as compared to KWHs utilized in the hosted facilities was $0.064 and $0.098 per kilowatt hour for such periods, respectively. The management team makes real-time determinations on the need and timing during which we should curtail energy use.
At our hosted facilities, the hosting fee as compared to KWHs utilized in the hosted facilities was $0.067, $0.064 and $0.098 per KWH for the years ended September 30, 2024, 2023 and 2022, respectively.
We curtail when power prices exceed the value we would receive for the corresponding fixed bitcoin reward. This means if bitcoin’s value decreases or energy prices increase, our curtailment will increase; likewise, when bitcoin’s value increases and energy prices decrease, our curtailment will decrease.
This means if bitcoin’s value decreases or energy prices increase, our curtailment will increase; likewise, when bitcoin’s value increases and energy prices decrease, our curtailment will decrease. The management team manages this decision on an hour-by-hour basis across all our sites, both wholly owned and hosted.
Our cash flows from financing activities for the year ended September 30, 2022 consisted of $125,048 in proceeds from offerings (17,740,081 shares at a weighted average price of $7.05 per share), and proceeds from equipment backed loan of $19,620.
Our cash flows from financing activities for the year ended September 30, 2024 consisted primarily of proceeds from our at-the-market offering facility of $1,231,834 (106,969,819 shares at a weighted average price of $11.43 per share and $9,590 collections from receivable from equity offerings) and borrowings under our credit facility with Coinbase of $50,000.
The more hashing power we produce and contribute to the total global hashrate, the higher our percentage of the block reward.
The more terahash we produce and contribute into the mining pool, the higher our percentage of the blockchain reward. There are a variety of factors that influence our ability to mine bitcoin profitability.
For information regarding our contractual obligations, see Contractual Obligations below and refer to Note 17, Commitments and Contingencies included elsewhere in our Notes to Consolidated Financial Statements. 50 Operating Activities from Continuing Operations Net cash used in operating activities was $31,720 for the year ended September 30, 2023, as compared to net cash provided by operating activities of $77,806 for the same period ended September 30, 2022.
For information regarding our contractual obligations, refer to Note 18 - Commitments and Contingencies included elsewhere in our Notes to Consolidated Financial Statements. 56 Operating Activities from Continuing Operations The Company generates non-cash revenue through mining Bitcoin, which it retains based on its long-term value strategy, while funding all operating expenses with cash.
Removed
We strive to leave the planet better than we found it by investing in communities that source low-carbon energy, like wind, solar, nuclear, and hydro. We endeavor to cultivate trust and transparency among our employees, the communities we operate in, and the people around the world who depend on bitcoin.
Added
We have no intention to mine, purchase or hold any other cryptocurrency at this time or in the foreseeable future, and we did not hold any other cryptocurrency as of September 30, 2024.
Removed
Bitcoin Mining Bitcoin was introduced in 2008 with the goal of serving as a digital means of exchanging and storing value. Bitcoin is a form of digital currency that depends upon a consensus-based network and a public ledger called a “blockchain,” which contains a record of every bitcoin transaction ever processed.
Added
We independently own and operate a large portfolio of data centers across the United States with locations in Georgia, Mississippi and Tennessee for a total developed power capacity of approximately 552 MW as of September 30, 2024. We are currently finalizing the developments of 75 MW in Wyoming and 16.5 MW in Mississippi.
Removed
The carrying value of our bitcoins as of September 30, 2023 was $56,241 on our Consolidated Balance Sheet. We account for our bitcoin as indefinite-lived intangible assets, which are subject to impairment losses if the fair value of our bitcoin decreases below their carrying value at any time since their acquisition.
Added
We have also had a hosting arrangement with GRIID Infrastructure, Inc. to host up to 54 MW of our bitcoin miners in Tennessee, which hosting arrangement terminated when we closed on our acquisition of GRIID Infrastructure, Inc. on October 30, 2024, and the 54 MW continued as our owned and operated facilities.
Removed
Through our wholly owned subsidiaries CSRE Properties, LLC, CSRE Property Management Company, LLC, CSRE Properties Norcross, LLC, CSRE Properties Washington, LLC, CSRE Properties Sandersville, LLC, CSRE Properties Dalton, LLC and CleanSpark HQ, LLC, we maintain real property holdings.
Added
We cultivate trust and transparency among our employees, the communities we operate in and the people around the world who depend on bitcoin. Bitcoin Mining Bitcoin was introduced in 2008 with the goal of serving as a digital means of exchanging and storing value.
Removed
(2) Average revenue of each bitcoin mined is calculated by dividing the sum of bitcoin mining revenue for both owned and hosted facilities by the total number of bitcoin mined during the respective periods. The Company determines Coinbase as the principal market for valuing bitcoin transactions and uses the daily closing prices as the source of recording revenue.
Added
These miners range in age from 1-45 months and have an average age of approximately 12 months. Effective, May 2024, we estimate the useful lives of our miners to be 3-years (see Note 2 - Summary of Significant Accounting Policies). We do not have scheduled downtime for our miners.
Removed
The management team manages this decision on an hour-by-hour basis across all our sites, both wholly owned and hosted. In the quarter ended December 31, 2022, energy prices spiked nationwide due to weather events and, as a result, we curtailed a total of 15% of our fleet, with December being the month in fiscal year 2023 with the greatest curtailment.
Added
We also will utilize our bitcoin as collateral for lending arrangements.
Removed
Our active curtailment strategy allowed us to avoid excessive cost during these events, but it also resulted in decreased production. During the remainder of our fiscal year ended September 30, 2023, the Company did not have significant curtailment due to weather events or energy price spikes.
Added
The fair value of our bitcoin as of September 30, 2024 was $431,661 on our Consolidated Balance Sheets and the fair value of our Receivable for bitcoin collateral was $77,827. Effective October 1, 2023, we adopted Accounting Standards Codification (“ASC”) 350-60 - Accounting for and Disclosure of Crypto Assets, which requires bitcoin to be measured at fair value.

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