CleanSpark, Inc.

Good afternoon. My name is Jeannie, and I will be your conference operator today. At this time, I would like to welcome everyone to the CleanSpark fiscal year second quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star 1 on your telephone keypad. In order to withdraw your question, simply press star 1 again. Thank you. Harry, you may begin your conference.

Thanks, Jeanne. And thank you for joining us today for the second quarter fiscal year financial results for CleanSpark, America's Bitcoin miner, covering the three and six months ended March 31st, 2025. Our press release was issued about 30 minutes ago and is available on our website at www.cleanspark.com. Additionally, the 10Q will be filed shortly. Today's call is also being webcast, and a replay and transcript will be available on our website. On the call with me are Zach Bradford, our Chief Executive Officer, and Gary Vaccarelli, 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 business as we see them today. The statements and information provided remain subject to the risk factors disclosed in our most recently filed annual report and 10-Q. We will also discuss certain non-GAAP financial measures concerning our performance during today's call. You can find the reconciliation of non-GAAP financial measures in our press release, which is also available on our website. And with that, it's my pleasure to turn the call over to Zach.

Thank you, Harry, and thanks to everyone for joining us today. Our second quarter of fiscal 2025 demonstrated our ability to deliver strong, consistent results across all operating environments. Because we focused on the fundamental, cash on cash returns, and managed to margin, rather than any single metric, our scale, strategy, and operational excellence resulted in increased cash rate, improved efficiency, higher revenue, and laid the groundwork for continued growth. In Q2, revenue increased 12% quarter over quarter, and 62.5% higher than the same period last year. Gross profit reached nearly $100 million, up almost 5% sequentially, and more than 24% year over year, with a gross margin of 53%. While we reported a net loss, this was primarily driven by the quarter-end decline in Bitcoin's spot price and not by changes in our mining operations. Our Bitcoin production increased slightly compared to the prior quarter, outpacing difficulties. As a result of our strong margins, our Bitcoin treasury has grown to over 12,000 as of April 30th. Average revenue per Bitcoin was up 10.5% quarter over quarter and nearly 69% year over year, while our marginal cost per coin rose, reflecting both increased network difficulty and higher nationwide power prices. We remain focused on margin and long-term performance rather than any single metric. I want to be clear on what that means. That means we do not manage to power prices. And when margins are healthy, we run through slightly elevated power prices, as long as this drives more value to the bottom line. As a result, the average power price printed higher while delivering increased gross profit. This resilience is the result of our infrastructure-first, portfolio-based strategy. By operating across four diverse states, Georgia, Tennessee, Wyoming, and Mississippi, we are able to balance regional price volatility and maintain consistent operations and production. The rise in power costs this quarter largely stemmed from higher prices in the southeast, related to elevated demand charges and weather-related increases in January and February due to winter storms. Since March, we have experienced improved prices in the region. In addition, we were still implementing software to support a lower blockchain-specific tariff in Wyoming at the end of March, which is now fully implemented and we successfully moved to lower pricing in April. As we navigated the quarter, rather than curtailing operations to chase the lower per kilowatt price, we elected to maximize production and bottom line impact, a decision made possible by our leading fleet efficiency and strong revenue per Bitcoin. As a result, we delivered a gross margin exceeding 53%. We ended the quarter with a total liquidity position of over $1 billion. Given our scale, We've evolved from the near 100% HODL strategy adopted in late 2023 and have begun using a portion of monthly Bitcoin production to support operations. This marks a deliberate and disciplined shift, in contrast to peers who continue to fund operations through equity dilution. I want to reiterate, we concluded our outstanding ATM in November last year and have since not issued a single share to capitalize the business. We have no plans to initiate an equity offering given the accretive opportunities available to a company with a strong balance sheet like ours. We remain committed to Bitcoin as a core long-term asset. We believe shareholder value is best served by balancing treasury growth with strategic monetization. To that end, we are continuing to diversify our capital structure. and our strong balance sheet gives us the flexibility to act decisively. As we move beyond 50X a hash, CleanSpark is well positioned to sustain long-term growth and shareholder value through focused execution and prudent capital management. We navigated this quarter not by chasing headlines, but by focusing on business fundamentals and delivering results. Some key highlights include revenue increased in both Bitcoin and USD terms, while cash overhead decreased 16% quarter over quarter. Although a mark-to-market adjustment to Bitcoin price created a gap net loss, this has since been offset by price recovery in April, and even now, Bitcoin sits above $100,000. Our scale also continues to yield competitive advantages. Fleet efficiency improved significantly from an average of 18 joules per terahash in December to less than 17 joules per terahash at the end of April, largely mitigating higher energy prices and rising network difficulty. Our power under contract is approaching one gigawatt, providing opportunities for future expansion. We remain on track to reach 50 exahash by mid-2025 on our position to pursue additional capacity where we see strong ROI, whether through organic growth, site expansion, or opportunistic acquisitions. Beyond our nearly one gigawatt of power currently under contract, we also have an extensive pipeline of additional energy opportunities that we believe will support our growth into the future. Our Bitcoin treasury now exceeds 12,100, the third largest among public miners. and every coin was mined by us here in the United States and not bought in the open market. We've begun strategically and systematically monetizing new production to fund operations and are advancing a rigorous, accretive approach to digital asset management, all while preserving our commitment to shareholder value. Our disciplined approach to capital allows us to grow without equity dilution, supported instead by tools like our expanded line of credit with Coinbase. We're especially proud of how our fundamentals held strong amid a triple challenge, rising energy prices, declining Bitcoin spot prices, and increasing mining difficulty. At quarter end, Bitcoin traded at roughly $81,000, down from $93,000 at the start of the calendar year, requiring a mark-to-market adjustment to our treasury under GAAP accounting rules. Encouragingly, these unrealized losses were reversed by price appreciation April. Mining difficulty rose 3.6% during the quarter, while power costs increased. Yet, thanks to improved fleet efficiency, our gross margin compression nearly matched the difficulty change, demonstrating our ability to absorb external pressures through operational gains. Our approach has never been about chasing the lowest cost per kilowatt hour. Instead, we manage to margin, making deliberate decisions, including running through higher price periods when doing so generates positive cash flow. At the core of this capability is our best-in-class power management team, empowered by advanced technology, real-time analytics, and dedicated operations staff. This deep internal expertise allows us to maximize marginal profitability across our diverse portfolio. Only a flexible load like Bitcoin mining can respond with such agility, something traditional data centers simply cannot achieve. It's one of the most compelling advantages of our pure play Bitcoin mining model. Let me now address tariffs, a topic of increased relevance across all global markets. Thanks to proactive procurement, CleanSpark is well insulated from near-term tariff risk. The machines needed to reach our 50 exahash target are already in the U.S., giving us both certainty and flexibility as trade negotiations worldwide continue to evolve. While tariffs could create significant headwinds for less prepared operators, we have positioned ourselves ahead of the curve. Our scale, planning, and disciplined execution allow us to continue expanding towards our near-term targets without disruption. In fact, if tariffs persist, we may see opportunities to acquire smaller miners at attractive valuations, particularly those unable to afford next-generation hardware under the new cost structures. This is a clear example of how our infrastructure-first, counter-cyclical strategy continues to generate strategic advantages over peers. Now let's turn to growth. where our portfolio-based approach continues to deliver real advantages. Today, we operate 32 mining sites across four geographically diverse states. This footprint helps us mitigate weather-related risk while tapping into reliable power markets, particularly in states that are net electricity exporters. In Q2, we added more than 3x the hasher capacity in Wyoming alone. The remaining EXAHASH needed to deliver on our mid-year target will include the completion of ground-up development in Wyoming and Tennessee, paired with the expansion and optimization of several of our operations in Georgia and Mississippi. Looking beyond mid-year, we have active projects ongoing with miners and infrastructure paid for that will push us over for 57 EXAHASH. For long-term expansion, We've already secured infrastructure in hand or under contract to support growth beyond 60 EXAHASH. We intend to put this infrastructure into use in the lowest cost and most advantageous areas. We currently view Tennessee and Wyoming as particularly attractive places to continue to grow. Looking ahead, we intend to modify how we provide growth guidance. we will reduce the use of time-bound guidance related to hash rate expansion. Our growth will remain disciplined and opportunistic, pursued where and when we see strong ROI positive potential, primarily funded through non-dilutive sources. This approach aligns with our proven counter-cyclical strategy and reflects our commitment to preserving shareholder value. In today's more volatile market environment, strategic flexibility is essential, and we are focused on avoiding unnecessary, time-bound commitments that could undermine long-term value creation. To be clear, CleanSpark will continue to grow, and our current projects are expected to increase hash rate towards 57x a hash, and our vendor option can support growth to 65x a hash. And I look forward to providing more updates in the months and quarters to come. While we hold ourselves in high internal standards, we're also proud to be recognized externally for our growth and leadership. CleanSpark was recently ranked number 35 in the Financial Times 2025 list of the 500 fastest growing companies in the Americas. This is a reflection of our growth over the past five years and shows the value of our strategic discipline and our team's grit and adaptability in a rapidly evolving sector. We were also added to the S&P Small Cap 600 Index, a milestone that enhances our visibility in public markets and broadens access to our business model for institutional investors. Following our inclusion, institutional ownership in our common stock increased to nearly 64%, a strong vote of confidence from some of the world's most respected asset managers. While others may focus on headlines, we remain committed to substance. building a resilient, vertically integrated Bitcoin mining company grounded in operational discipline and long-term vision. As the only remaining public, pure play, vertically integrated Bitcoin mining company, we're building an enduring business, applying traditional discipline to one of the world's newest industries and most important assets. Because of the investments and decisions we have made, We are well positioned to capitalize on the improving landscape. We've established a strong track record of market leadership. CleanSpark has consistently led with foresight. We've invested early in infrastructure. We pioneered a capital strategy that will minimize dilution. We secured ASICs through counter-cyclical buying. And now we're setting the standard for responsible digital asset management. Each of these moves has delivered real measurable value, and we are confident our latest steps now and in the future will do the same. I often use the term escape velocity to describe CleanSpark's current trajectory. In a business context, it means we've reached a critical inflection point where our scale, operational performance, and financial discipline combine to generate sustainable, positive cash flow well in excess of our costs. Our operations, anchored by market-leading data centers and energy infrastructure powered by best-in-class miners, are not only profitable but also self-funding. This marks our transition from growth dependence on external capital to a model capable of being driven by internally generated returns. It also reflects a deeper momentum. We are expanding our lead in operational efficiency, capital stewardship, and market adaptability. And that separation from the pack is accelerating. As the last pure play Bitcoin miner, we are creating a durable competitive advantage and reinforcing strong market fit. Our role as a flexible energy load adds even more strategic value, enabling us to support power grids while scaling nationwide. Escape velocity for us means optionality, the ability to invest in ourselves, adapt to changing conditions, and compound growth without compromising our core. We are achieving disruption through discipline, and we're just getting started. Finally, I want to recognize the incredible work of the CleanSpark team across the country. Your execution, dedication, and belief in our mission continue to set us apart one block at a time. With that, I'll turn it over to Gary for a closer look at the financials. Gary?