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CleanSpark has software that helps companies become more energy efficient and mines bitcoin

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  • Develops energy-control software and builds microgrids
  • Launching mVoult residential microgrid product
  • Successfully expanded into bitcoin mining with data centers acquisition

What CleanSpark does: 

CleanSpark Inc (NASDAQ:CLSK), based in Bountiful, Utah, has developed software to help companies and homes become more energy-efficient, and is also now big in bitcoin mining.

The company designs and builds microgrids while providing engineering, consulting and turn-key implementation services. It also offers software for energy monitoring and system controls.

CleanSpark’s software - mPluse and mVSO (Microgrid Value Stream Optimizer) - enables a microgrid to be scaled to the user’s specific needs and can be used by agricultural, commercial, industrial enterprises as well as the military and municipal governments, and residential users. Customers include not only energy consumers but independent power producers (renewable energy) and energy-storage vendors.

The company, founded in 1987, runs on a software-as-a-service (SaaS) distribution model. CleanSpark’s mPulse software and control suite operates on-site in real-time, providing economic dispatch controls to maximize performance and resiliency operations to back-up critical energy loads in the event of a utility disruption.

The company says its software is ideally suited for the rapidly expanding distributed energy resource (DER) market, which it has been targeting as a key revenue generator. 

The global energy infrastructure is ageing and unreliable due to increases in loads and lack of new large-scale generation facilities (nuclear and coal). Meanwhile, renewable energy resources like solar, batteries, fuel cells and clean-energy generators are connecting to the grid, sometimes intermittently, stressing it and making it more complex to manage.

But, at the same time, consumers such as defense installations, industrial complexes and campuses across the world are turning to virtual power plants and microgrids to decrease their reliance on the grid to tap directly into renewable energy providers and to strengthen their own energy security against blackouts. In a sense, these consumers become their very own utilities. 

As a result, CleanSpark’s mPluse and mVSO software and control solutions are designed to provide consumers of all sizes with the mission-critical technologies that can help integrate and operate DERs as reliable energy generators on the grid.

For those consumers who get energy off the main power grid, the company’s technology helps them modernize their own distribution microgrids while replacing fossil fuel generation with clean-energy suppliers. CleanSpark’s microgrids monitor energy rates continuously in 15-minute cycles, tapping the least expensive source.

How is it doing:

CleanSpark has made a very busy start to 2021, as it predicted in an annual letter to shareholders on December 31, 2020.

The company said then that it was aggressively seeking new acquisition opportunities for 2021 after realizing fiscal 2020 revenue of more than $10.0 million, the third-consecutive year of greater than 100% top-line growth.

The company also noted that it plans to identify partnerships and product enhancements in 2021, which it expects will expedite its growth. 

CleanSpark pointed out that one of its “significant wins” for 2020 was its acquisition of ATL Data Centers in early December, which the firm said will allow it to increase Bitcoin production while lowering total energy costs, thereby maximizing its overall profitability. Since the acquisition, Bitcoin has traded at record highs and CleanSpark has continued to grow the business. 

Most recently, on March 26, CleanSpark announced that it had ordered 4,778 additional Bitmain S19 model Bitcoin mining rigs. The company expects to receive 1,298 of the units for deployment this summer and the remaining 3,480 units in twelve equal monthly shipments beginning in November 2021. 

It said the rigs are expected to deliver an estimated 740 PH/s (petahashes per second) of additional mining capacity. To house them, CleanSpark has purchased 48 custom mobile mining data centers.

All told, CleanSpark currently operates Bitcoin mining rigs capable of processing approximately 315 PH/s within its Atlanta complex, and it intends to reach between 1 and 1.3 EH/s (exa hashes per second) by the end of the summer.

CleanSpark also said it had updated current energy data on the carbon impact of its facility, progressing towards its stated goal of being the lowest energy cost, cleanest Bitcoin miner in the US. The company’s local power supplier provided data this week on the current energy mix provided to its facilities. The power sources include nuclear, hydro-electric and solar, meaning 95% of the electricity utilized for mining qualifies as carbon-free, with only 5% provided by coal. 

Within the coming quarter, the company said it plans to reach 98% carbon-free energy by taking certain coal power sources offline and replacing them with carbon-free sources. Additionally, CleanSpark plans to install onsite renewable microgrids to further reduce its carbon footprint with the goal of offsetting the remaining coal sources to effectively mine Bitcoin carbon-free.

Away from bitcoin mining, a few days earlier in March, CleanSpark revealed that it had executed more than 50 new contracts under its residential microgrid initiative in less than one month following the completion of its acquisition of Solar Watt Solutions. The company noted the additional contracts for residential microgrids and battery energy storage solutions executed since February 24 had a face value exceeding $1.7 million.

Solar Watt, based in Carlsbad, California, provides solar and alternative energy solutions for homeowners and commercial businesses throughout Southern California. It has been focused on serving the fire-prone communities throughout California by utilizing the Self Generation Incentive Program (SGIP), which provides homeowners who have medical needs and reside in vulnerable zones with the opportunity to add energy storage to their homes at little or no cost. Based on the achievement of certain performance objectives, the total consideration for the Solar Watt Solutions acquisition will be up to 477,703 company shares and up to $3,850,000 in cash, the company said in February’s completion announcement.

CleanSpark said a substantial percentage of the new contracts announced in March were related to California’s SGIP. As well, the company said it and Solar Watt are currently running co-branded marketing campaigns to educate homeowners on the availability of these incentives for home microgrids and battery backup systems.

CleanSpark noted that it has experienced a 10-fold increase in residential microgrid inquiries and is planning additional marketing campaigns in support of both its residential initiative, as well as the launch of its planned mVoult software and controls solution, providing homeowners with a standalone energy management controller on February 17.

Designed for home microgrids, mVoult is capable of directing the operations of both existing and new energy assets. It will be offered as a smart controller and mobile app specifically built for residential applications. The company also said it plans to launch a fully integrated mVoult battery energy storage and control solution which will enable users to select optional add-ons, including solar integration or back-up generators. 

CleanSpark said it expects an expansion of government incentive programs to come under the new administration of President Joe Biden. That, along with energy assets decreasing in costs, means a home microgrid has become an even more viable option for homeowners to consider, the company added.

The company’s corporate microgrid business has also been growing in 2021. Notably, in early February, CleanSpark said it had received a new purchase order from a Houston, Texas-based microgrid developer. The group said the end-use customer is the world’s largest retail chain, operating more than 11,500 locations worldwide and dsaid the purchase order is expected to result in more than $1,500,000 of additional revenue for the company.

CleanSpark posted its fiscal first-quarter results on February 12, 2021, which saw its revenue more than double year-over-year, thanks to an expanded sales team and a newfound passion for bitcoin mining. 

The company reported revenue of nearly $2.3 million, well above the $920,000 it brought in during the same period a year earlier. Its adjusted loss narrowed to $591,975, $0.03 per share, year-over-year from more than $1.7 million, $0.37 per share.

Breaking it down, $1.2 million or 54%, of CleanSpark’s revenue, came from the company’s energy segment, its digital agency segment (p2klabs) contributed $300,000 or 13%, and its bitcoin mining operation (ATL Data Center) accounted for $730,000 (32%). 

Looking ahead, CleanSpark said it expects $30 million in revenue for its fiscal year ending September 30, 2021. The company. noted that its current backlog stands at $7.3 million, up from $800,000 at the end of the quarter, which it attributed to an expanded sales team.

In terms of working capital, the company said it had $25.6 million as of December 31, 2020, an increase of $22.5 million quarter-over-quarter, and roughly even year-over-year.

Adding to that on the financing front, on March 18, CleanSpark announced the closing of a previously announced underwritten public offering of 9,090,910 shares of common stock at a public offering price of $22.00 per share for aggregate gross proceeds of approximately $200 million.

The company said it intends to use the net proceeds from the offering for working capital and general corporate purposes, including infrastructure expansion, the acquisition of additional cryptocurrency miners and further development of its mVoult product lines, as well as acquisitions or strategic investments in complimentary businesses, products, services or technologies.

Inflection points:

  • Continuing increase in Bitcoin mining activity
  • News on mVoult residential microgrid progress
  • Further corporate microgrid orders

What the boss says:

In the company’s March 26 statement, CleanSpark CEO Zach Bradford said: “With capital provided by the funding completed last week, we’ve focused aggressively on securing additional locations, miners and facilities to rapidly expand our Bitcoin operations.”

He added: “The CleanSpark mining operations team is led by world-renowned operators, so identifying opportunities close enough geographically to leverage the knowledge base of our team has been a priority.

“We are extremely proud to have CleanSpark achieve what we believe to be the only Bitcoin miner to achieve 95% carbon-free operations at scale in the United States. We have a goal of pushing it further to achieve full carbon neutrality in the coming years.”

Contact the author at [email protected]

Story by ProactiveInvestors


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