Stock Analysis & Ideas

CleanSpark Stock: The Pivot Toward Bitcoin Mining Is Reaping Rewards

CleanSpark (CLSK) has been transitioning from an microgrid solutions provider to a fully-fledged bitcoin miner and going by investors’ reaction to its latest quarterly results, the plan seems to be working.

Shares trended higher last week after the company delivered revenue of $41.2 million in FQ1, amounting to a new record. On the back of rising BTC mining revenue ($37 million), revenue jumped by 52% sequentially – with BTC mining revenue growing by 63% quarter-over-quarter. The year-over-year comparison shows a mighty 1733% jump.

It should be noted that CleanSpark has only been generating BTC mining revenue since December 2020, and BTIG analyst Gregory Lewis believes the progress is indicative of a company making all the right moves.

“With ~90% of total 1Q22 revenue coming from BTC mining, management has quickly transitioned the company from a microgrid solutions company to a BTC mining company,” Lewis said, before adding, “With another 0.2 EH of mining capacity already online in January and a current hash rate of 2.1 EH and our CY2022 year-end target of 275 EH, we expect CLSK to continue to execute on its growth strategy.”

With ~1.9 EH on order and deliveries ongoing until the end of October, the company should see out the year with a hash rate of ~4 EH. The remaining CAPEX stands at an estimated $40 million, as the rig growth is being matched with further build-out to the infrastructure, and the company looking to boost infrastructure capacity with the addition of another 40MW by the middle of this year. CleanSpark prefers owning the infrastructure – i.e., “controlling their own destiny,” but if needed, they will also deploy rigs at co-location facilities.

Management also indicated their preferred source of funding for the $40 million in CAPEX required for this year’s targeted growth is via debt, including “rig-backed financing” and are presently in talks over financing. Sales of BTC – as the company did in December when it offloaded 414 BTC for roughly $21 million to fund rig purchases – could provide another source of funding. “We note a sale of the energy business has the potential to flip the script and drive incremental growth,” Lewis further added.

All in all, Lewis rates CleanSpark shares a Buy, although the price target drops from $35 to $30. Not to worry, there’s still upside of 192% from current levels. (To watch Lewis’ track record, click here)

Only one other analyst is currently tracking CleanSpark’s progress, but they are also bullish. With an extra Buy in tow, the stock has a Moderate Buy consensus rating, while the $23 average target suggests shares will climb by ~124% in the year ahead. (See CleanSpark stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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