CleanSpark shares surged Thursday afternoon after the company announced it has fully funded its planned increase of computational power across its six campuses in Georgia.
“This takes the uncertainty off of the table, and removes the perceived ‘overhang’ of the need to raise additional (capital expenditure spending) through debt or dilution,” executive chair Matt Schultz wrote in an email to Forbes. “Relative to our peer group, we’re still dramatically undervalued based on hash rate, production, energy cost, infrastructure, efficiency and balance sheet strength.”
Hash rate is the number of attempts per second a cryptocurrency miner makes to guess an alphanumeric code. The miner with the first correct guess is allowed to add a block to the chain and is rewarded with cryptocurrency. The higher the hash rate, the higher probability to earn more bitcoin than a competitor. CleanSpark announced during its fiscal Q3 earnings call late on Wednesday that its goal is to reach 16 exahash per second by the end of the year will be met and that financing is complete. The company has been financing most of its growth with proceeds from bitcoin sales.
The company’s current rate is 9 exahash per second and a planned campus expansion in Sandersville, Georgia, will increase the hash rate by 6 exahash/ second. An exahash is 1 quintillion guesses.
CleanSpark also reported a net loss of $14.2 million, narrower than analysts’ expectations of $15.3 million on a generally accepted accounting principle basis, as increasing efficiencies brought costs below Wall Street’s forecast, according to Brian Dobson, a Chardan Capital Markets equity analyst.
On the adjusted basis used by Wall Street, CleanSpark lost 12 cents a share, beating the consensus of 17 cents, according to consensus data accumulated by FactSet. The company’s shares rose 16% to $5.87 from $5.05 on Wednesday. They remain below the year’s closing high of $7.47 on July 13.
Revenue increased by 47% to $45.5 million in the latest quarter, which slightly trailed expectations of $47.7 million.
CFO Gary Vecchiarelli pointed out a decline in power costs due to a mild spring in Georgia. Electricity costs fell 11% from Q2, he said.
Schultz added CleanSpark can gain efficiency advantages on the mining rigs by intentionally slowing machines based on market conditions.
The company has been expanding in preparation for the bitcoin halving, when the reward for mining bitcoin will be cut to 3.125 tokens from 6.25, which is part of cryptocurrency’s program to limit the number of tokens ever minted to 21 million and is likely to come this spring. The resulting revenue reduction means inefficient miners will struggle to exceed their costs. The potential for a spot-market bitcoin exchange-traded fund could also be contributing to the rally in the Henderson, Nevada-based company’s shares. CEO Zach Bradford said such an ETF could be approved within six months. Chardan Capital’s Dobson pointed out that once such funds are allowed, demand for bitcoin could come from a broadened audience, potentially increasing the cryptocurrency’s price.
