Not long ago, CleanSpark (CLSK) was a company offering integrated microgrid solutions. Then it added another arrow to the quiver: it began mining Bitcoin.
Typical of many who go down the BTC rabbit hole, the mining business now overshadows the prior main concern as evidenced in CleanSpark’s fiscal year-end results (September).
The Crypto mining contribution made up more than 80% of the reported top-line ($27.1 million) in Q4, and just a touch under 80% for the full 2021 fiscal year ($49.4 million in total).
As such, given that the company generated no crypto-related revenue in its 2020 fiscal year, H.C. Wainwright’s Kevin Dede argues year-over-year comparisons are “no longer relevant,” and suggests CleanSpark is now a full-time Bitcoin miner.
But don’t take the claim to be so from this second-hand source, the admission comes straight from the horse’s mouth. “Aside from the obvious shift in revenue source,” said the analyst, “Management eliminated all doubt by clearly proclaiming on the accompanying earnings call last week that CleanSpark is now a bitcoin mining company, and we add, an industrial one at that, exiting the Sept. quarter at 1.3EH/s (exahash) exclusively dedicated to bitcoin.”
The question now, says Dede, is what happens to the approximately $10 million in annual revenue related to CleanSpark’s energy business. It seems that a “wait and see” approach is the one taken for now, although Dede suspects a “sale of some sort” next year and expects the company to discuss the matter early in 2022.
In any case, the transformation is what has drawn Dede with a “strongly bullish lean” to the company. Due to the current environment’s “lucrative economics,” Dede is bullish on bitcoin mining in general, and expects conditions to stay much the same through calendar 2023. The fact CleanSpark’s two Georgia, U.S. facilities boast “highly attractive energy rates,” – each is less than three cents per kWhr – further adds to the appeal.
Dede also thinks the company is planning other deals which complement the mining endeavors. The analyst believes “energy generation or energy transportation (think pipelines)” companies could make a good fit down the line, and will help CleanSpark shift to a “more defensible position come the next halving.”
Accordingly, then, with a “solid mining footprint, one of the most efficient mining networks we know at 1.3EH/s on mid-40s MW of power, and contracts in place to drive mining capacity toward 3.4EH/s through calendar 2022,” the analyst rates CleanSpark a Buy along with a $16 price target. Investors could be sitting on returns of 37%, should his thesis bear fruit over the next 12 months. (To watch Dede’s track record, click here)
Some stocks elude Wall Street’s gaze and CLSK seems to be one right now; Dede’s review is the only one posted over the past 3 months. (See CLSK stock forecast 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.
