2021 has mostly been a rough ride for investors of Cleanspark (CLSK). The dual microgrid solutions provider and bitcoin miner’s stock has dropped by ~60% on a year-to-date basis. And the company’s latest earnings haven’t helped matters either.
Shares were sliding in Tuesday’s session, after the company missed on top-line expectations. Although sales were up 47% sequentially and up by 247% year-over-year, FYQ3 revenue came in at ~$12 million, below the consensus estimate of $15 million.
While revenue might have come in soft, it still represents a big leap from last year’s performance and BTIG’s Gregory Lewis reminds investors that the company is just getting started with its bitcoin mining operations, as they only began generating revenue in CY4Q20.
“More importantly in FYQ3,” Lewis says, “CLSK mined 191 BTC which was up 32% sequentially and generated $8.6M in BTC mining revenue which was up 29% sequentially.”
Going by current mining figures, that should increase in the next quarter. In FYQ3, Cleanspark mined ~2.1 BTC a day, but management noted the company was generating 3 BTC a day by the end of the quarter (June 30) and is currently mining 6-7 BTC a day which suggests a weighted average number of ~530 BTC generated in FYQ4 (September quarter). At the current BTC price of ~$46,000 this implies about $24.38 million.
Additionally, the company recently announced it splashed out ~$6.6 million on an 87,000 sq foot data center in Georgia. The Former Sprint/Nextel facility is anticipated to give Cleanspark ~20 MW of power access, enough to support ~6,000 S19 mining machines, which tranlates to approximately 650 PH/s.
“This was a strategic acquisition in the race to secure infrastructure which should allow CLSK the ability to plug in its equipment as it is delivered,” Lewis noted. “We expect a lack of infrastructure to be an ongoing problem across the BTC mining sector over the next two years.” Via the center’s participation in Georgia’s Simple Solar program, the new facility’s mining operations are expected to be 100% net carbon neutral.
All in all, Lewis reiterated a Buy rating on CLSK shares, although the price target gets a haircut, and is trimmed from $45 to $35. Even so, there’s still upside of a hefty 155% from current levels. (To watch Lewis’ track record, click here)
CLSK has slipped under most analysts’ radar; the stock’s Moderate Buy consensus is based on just two recent ratings. With shares trading at $11.96, the $42.50 average price target suggests room for ~255% upside. (See CLSK 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.
