CleanSpark, Inc.

Good afternoon. My name is David and I'll be your conference operator today. At this time, I'd like to welcome everyone to the CleanSpark fiscal year 2022 Q3 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question and answer session. If you'd like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one once again. At this time, I'd like to turn the floor over to Isaac Hollyoak, Chief Communications Officer.

Thanks, David, and thank you for joining us today for CleanSpark's third quarter fiscal year 2022 financial results call. Our press release was issued about 30 minutes ago and is available on our website at www.cleanspark.com forward slash investors. Today's call is also being webcast, and a replay and transcript will be available on our website. I'm here with Zach Bradford, our Chief Executive Officer, and Gary Beccarelli, our Chief Financial Officer. Keep in mind that some of the statements we make today are forward-looking and based on our best view of the world and our businesses as we see them today. As described in our SEC filings and on our website, those elements may change as the world changes. We will also discuss certain non-GAAP financial measures about our performance during today's call. You can find the reconciliation of GAAP financial measures in our press release, which is available on our website. Now, it is my pleasure to turn the call over to Zach.

Thanks, Isaac. Good afternoon and thank you for joining our call. The CleanSpark team spent our third quarter executing on the vision we set out at the beginning of this calendar year to be a top five Bitcoin miner. I'm pleased to report that when compared to all public Bitcoin mining companies that we track, CleanSpark finished the quarter by mining the fourth highest amount of Bitcoin of any public miner in the month of June. We were also the fourth highest for the quarter as a whole. In fact, we had our most productive quarter ever in terms of Bitcoin mined, minting 964 Bitcoin, which is a 7% increase over the previous quarter and a 400% increase over the same prior year quarter. In terms of hash rate, we started the quarter with 2.3x the hash. And as of this call, our hash rate is 2.9x the hash. representing a 26% increase in our hash rate. Last year at this time, we were just under one exahash. With the significant operational progress we are seeing at our state-of-the-art immersion cool facility in Norcross, Georgia, and the newest site we announced this morning, we expect our growth to continue, and with that growth, the amount of Bitcoin we mine. Georgia is a wonderful place to live and work, We enjoy the strong support of the business and civic community. Our growth in Georgia is a testament to the teams we've assembled at CleanSpark and within the communities we operate in. Will we have mined more Bitcoin than ever before? Our reported revenues were lower because the price of Bitcoin was lower. All companies building the new economy faced serious headwinds last quarter as macro conditions and the irresponsible financial decisions of a few bad actors reverberated through our ecosystem. We believe that Bitcoin is extremely undervalued at current prices, and we continue to see it as one of the most valuable and sustainable assets in the world, both in terms of its social utility and the economic rewards it promises. Markets rise and fall, but block creation continues like clockwork. releasing into the world every 10 minutes another batch of Bitcoin, themselves the result of hundreds of thousands of miners securing transactions on the most important network to emerge since the Internet's first nodes came online in the second half of the last century. Bitcoin is the next stage in the evolution of Internet money, and CleanSpark is proud to be part of it. We anticipated the potential for market volatility and have built these market risks into our operating model. Importantly, we see these headwinds as cyclical. They are important elements of market dynamics, and companies that prepare for them, including their shareholders, can anticipate the rewards that traditionally come when we emerge from a bear market. One way we prepare for this market is through the strategic deployment of Bitcoin. While this summer, the industry was rocked by headlines of public miners liquidating their Bitcoin holdings, we were able to stay true to our long-held course of selling a portion of our Bitcoin to fund our growth and operations, which we've done since the early days of 2021. This strategy paid off and will continue to pay off. We believe great companies use bear markets to grow. Despite harsh economic realities, we've assembled the teams, tools, and ideas to make the most of this bear market. We've taken impressive steps to grow in this bear market, both during our third quarter and subsequent to the quarter's end. In June, we made headlines by being one of the first in our space to begin buying distressed assets. We took over an existing contract for 1800 Amp Miner S19 XP, the leading edge of digital infrastructure. which will add an additional 252 petahash to our hash rate. The machines are expected to arrive in batches at our facilities beginning later this month. We were able to secure the contract at an exceptional price because of our strategic relationships and the unique circumstances that current market conditions have created. We simultaneously announced in June a new partnership with TMG Corp to acquire 257 units of their proprietary immersion-cooled tanks that are designed to improve the performance of mining machines while substantially decreasing their failure rates over long-term use. Each tank fits 28 AmpMiner S19J Pro mining machines. These units will be deployed in batches at our College Park, Georgia property and other locations as we determine. The partnership also provided us with two megawatts of co-location capacity at TMG Core's state-of-the-art immersion-cooled mining facility in Plano, Texas. Then, in July, we acquired more machines, an additional 1,061 Wattminer M30S units that were already mining at CoinMid's renewable power co-location facility. The move added about 93 petahash of instant computing power. The move continued our tried and true hybrid approach of co-locating our machine while expanding our own mining facility, which we believe puts us in an excellent position to sustainably grow our Bitcoin mining capacity and what is shaping up to be an incredible market for builders. Speaking of expanding our own mining facility, I'm pleased to reiterate this morning's big news that we have entered into an agreement to acquire an existing mining facility in the beautiful city of Washington, Georgia, a small community about one and a half hours outside of the Atlanta metro region. The city council met last night to unanimously approve in a public meeting the transfer of the power purchase agreement. And this morning, before market opened, we released over the wire the full details of our new campus. We met with the city council, city manager, and other civic leaders last week. and I'd like to take a moment to thank them for their trust in us, our industry, and the future of the new economy. This acquisition is a great example of how industry and community can come together for the benefit of both. This active mining facility is located on a 27-acre site with 36 megawatts of low-carbon, plug-in-ready infrastructure. The total purchase also includes 3,400 S19 series machines. The machines will deliver about 340 petahash immediately upon closing, bumping our hash rate up 12%. That 36 megawatts in total will add about 1.1 exahash to our processing power, increasing our overall hash rate to about 4 exahash, further securing our position as a top five publicly traded miner. We have miners on hand to immediately fill that shelf space and expect to have the facility at capacity soon after closing. The total purchase was $25.1 million for land, infrastructure, and machines, making this our third wholly-owned facility. We saw this as a unique, accretive opportunity that was financing using two levers available to us, equity and debt. Consideration includes $5.3 million in debt comprised of a seller finance note and assumption of a mortgage. The remainder of the consideration will be paid in cash. As Gary and I have discussed on our previous call, our capital strategy draws on three levers, selling Bitcoin, obtaining debt, and deploying equity. We carefully calibrated these three levers to secure a significant and almost instant growth opportunity that is a first-class outcome for our shareholders. The Washington, Georgia site continues our infrastructure-first approach to mining, where we seek to own and operate a majority of our facility. Importantly, our new Georgia site has significant growth opportunities baked into its future. The site includes exclusive rights to an additional 50 megawatts of development. The new substation is being built next to the property as we speak, That 50 megawatt expansion will add an additional 1.55 exahash, providing for a total of 2.65 exahash at the facility once completed. All in, we expect the facility to have a substantial impact on how much Bitcoin we mine. We estimate right now that the initial 36 megawatts will increase our daily production by about 5 Bitcoin, increasing our overall daily production to about 18 Bitcoin at current difficulty rates. While we are in the initial stages of planning how to most effectively deploy the additional 50 megawatts of power, we envision adding state-of-the-art infrastructure to continue our operational strategy focused on efficiency, uptime, and execution. I'd like to also take a moment to update you on our partnership with Lancia. We recently traveled to Fort Stockton, Texas to inspect which features a well-run, immersion-cooled Bitcoin mining operation. Since then, Lantium has alerted us that they're a little behind schedule on the deployment of the first 50 megawatts we've contracted with them. Those megawatts, originally expected to come online by the end of 2022, are now likely to go live in the first quarter of 2023 calendar year. We're not concerned by the delays Lantium is experiencing because, we have had more than enough near-term opportunities to capture additional hash rates. We remain excited about the relationship with Lancium because of the favorable pricing structure it allows. Now, for the long-awaited update on our energy business, we have made the formal decision to sell the assets of our energy business. Let me share with you what this looks like and some of our reasons for doing so. First and foremost, We are pursuing the sale of our software technology, mainly impulse and grid fabric. We are working with our customers, and upon the conclusion of any outstanding commitment, we will discontinue all energy business activities. I'd like to take a moment to reiterate our reasoning behind this decision. CleanSpark has long been focused on the vision of abundant, clean, affordable energy, and mining Bitcoin gets us closer to that vision. We believe that sustainable Bitcoin mining is our best hope for a more resilient North American grid. You could say that if we were previously in the microgrid business, we have since transitioned to the macrogrid business. And the macrogrid business, that is, Bitcoin mining, is absolutely the right decision for our shareholders. Perspective is important in this decision. As we've mentioned before, Over 90% of our revenues now come from mining, yet the company was still spending a disproportionate amount of time and working capital focused on a segment that provided 10% of our revenue and resulted in negative cash flows. Gary will provide more information on the financial impact of this decision during his remarks. But before I transition to Gary, I'd like to take a moment to thank all of the CleanSpark employees for the work they've done over the quarter. In all the discussion about hash rate, ASICs, megawatt efficiency, and production, it's easy to lose sight that the point of Bitcoin is the people behind it and the people that use it. Our teams belong to both those groups, to the many employees who are listening now. Thank you. With that, I'll turn it over to Gary to provide additional detail and commentary on our financial results. Gary, the floor is yours.