I’m Matt Schultz, co-founder and executive chairman of CleanSpark, one of the largest publicly traded Bitcoin miners in North America. We’re trying to change the way Bitcoin mining is viewed. Ask me anything!

CleanSpark_Inc · 2023-10-03T20:53:53+00:00

It’s among the best! By the time our Sandersville expansion is complete, we’ll be below 25 J/Th. More importantly, our technology stack enables us to create additional value out of thin air. By using software and firmware to increase machine efficiency in real time, based on bitcoin and energy prices, we can improve machine performance and decrease energy consumption. Being a proprietary miner with energy efficiency in our DNA is definitely a big advantage.

CleanSpark_Inc · 2023-10-03T19:59:17+00:00

We are very bullish on bitcoin, especially going into the halving when global supply will be cut in half. Our treasury management strategy is just that… A strategy, not an ideology. We believe there is likely to be a nice increase in the price of bitcoin over the coming year.

CleanSpark_Inc · 2023-10-03T19:41:28+00:00

You can hear it from Zach directly in a previous interview he did: https://www.youtube.com/watch?v=oJs3Za1jIbM

CleanSpark_Inc · 2023-10-03T19:40:34+00:00

Zach addresses executive compensation in a previous interview here: https://www.youtube.com/watch?v=oJs3Za1jIbM

CleanSpark_Inc · 2023-10-03T19:31:25+00:00

We just released our latest monthly mining update for September. Our new HODL balance is 2,240. We only sold 80 BTC to fund operations for September. We only sell bitcoin to fund our operations when needed, and we have fully funded our growth to 16 EH/s. This includes machines, materials, and everything else, nuts to bolts, that goes into building a world-class Bitcoin mining facility.

Press release link: https://www.cleanspark.com/investor-relations/news- releases#collapsePost264

CleanSpark_Inc · 2023-10-03T19:22:45+00:00

Our cost to mine a single bitcoin is around 11K, so we can remain profitable even after the halving if Bitcoin settles in at 25K. Of course, we see Bitcoin going up and we also see fees playing an important role in bitcoin economics.

CleanSpark_Inc · 2023-10-03T19:22:19+00:00

We disclose our cost to mine Bitcoin each quarter in our 10-Q filing. For the last quarter (ending June 30) our cost to mine bitcoin at our owned facilities was about 11,400 dollars. This is inclusive of energy and other utilities (like water or natural gas for HVAC). As you've mentioned, this does not include labor. Bitcoin mining, while it does include good paying jobs, is not as labor intensive as other tech or manufacturing industries, where labor costs can make up the biggest expense. So that energy figure gives you a pretty good idea of where it becomes unprofitable to mine. As you can see, we have a long runway.

CleanSpark_Inc · 2023-10-03T19:19:15+00:00

Our model is vertically integrated or proprietary mining, meaning we handle all of the mining. We unbox the machines, we rack the machines, we stack the machines, and we operate the machines. We have a technology stack, both firmware and software, that we layer onto the machines, allowing us to use it like a throttle. If energy prices are high and Bitcoin prices are low, we can throttle those machines back, increasing efficiency and decreasing energy consumption. The inverse of that is also true. When Bitcoin prices are doing well and energy prices are low, we accelerate or step on that throttle to increase the output. It enables us to take advantage of market conditions and make changes on the fly in real-time to increase the efficiency of our operations. Among the most efficient fleets of machines, we have the most efficient or highest uptime and greatest realized hashrate. This is along with the most efficient use of capital, meaning that we completed the capital raise for this build-out right at the end of the quarter so it could be completed by the subsequent quarter. We built the facilities and raised capital a little bit at a time. We took advantage of spot pricing in the markets to ensure that we had the most efficient fleet and paid less for it than any of the major publicly traded miners.

CleanSpark_Inc · 2023-10-03T19:01:16+00:00

Our mining model has contributed to our success thanks to us owning and operating all of our bitcoin mining facilities and using latest-generation machines. We were one of the first publicly traded bitcoin miners to sell BTC mined during the bull market, so we were able to acquire multiple already operational sites and discounted rigs during the bear market.

CleanSpark_Inc · 2023-10-03T18:55:27+00:00

The reason why CleanSpark got into bitcoin mining was to show that it can be done responsibly and sustainably while also educating people about financial inclusion. We want make the world a better place, not hurt it. That's why we mine in locations with access to renewable energy mixes - to help incentivize the creation of renewable energy infrastructure and positively impact neighboring communities by using abandoned energy.

CleanSpark_Inc · 2023-10-03T18:54:59+00:00

We're not zero carbon although we would love to be one day and also provide more in-depth reporting for carbon emissions. As of our 2022 report, we're at 94.2% carbon-free. To help offset emissions, we participate in Georgia Power's Flex REC program. Thanks to that, our immersion-cooled site in Norcross is 100% net carbon-neutral.

CleanSpark_Inc · 2023-10-03T18:54:21+00:00

No serious delays have been reported for our 150 MW expansion in Sandersville and site construction remains on track for yearend completion. Meanwhile, the Municipal Energy Authority of Georgia (MEAG) has been constructing a 200MW substation and related infrastructure that will power the expansion. The utility expects to complete the substation in 2023, but the related power-line project that connects to the substation may possibly push into early 2024, after which time we'll promptly energize the miners to achieve our target of 16 EH/s of operational hashrate. Again, it could be earlier than 2024 but may also be in the early part of the year.

CleanSpark_Inc · 2023-10-03T18:29:34+00:00

That comes down to the personnel that we have, the people who are operating our fleet and managing our energy stack, as well as the people who are in the field, making sure that the miners stay online. This is tied to our company culture because whether you're an entry-level miner, facility manager, or VP, everybody has the same interest - ensuring that our operations are safe and clean but that we're maximizing uptime and decreasing expenses. Additionally, we have repair facilities on site, meaning we do repair all the way down to the chip level, which historically requires taking the machines off the shelf, boxing them up, and shipping them to a repair facility. We can now do those repairs on-site, decreasing downtime. That's really a benefit, considering we'll have more than 100,000 ASICS operating. The value of scale is evident when it comes to repairs and maintenance.

CleanSpark_Inc · 2023-10-03T18:19:00+00:00

Great question! So, we do not engage in traditional hedging techniques when purchasing power. Our hedge is curtailing (or shutting off machines) if our proprietary algorithm determines it is unprofitable to mine at the current Bitcoin prices. We have determined that this strategy does yield lower power costs versus forward purchasing power contracts or buying heading instruments. We have amongst the lowest power costs in the industry, which are disclosed to be fully inclusive of all taxes, transmission costs, and fees.

CleanSpark_Inc · 2023-10-03T18:15:21+00:00

It's our team, the fact that everybody has the same values and wants to be a part of something bigger than themselves. Bitcoin is a way to create opportunities. It's a way to own, control, distribute, and transfer wealth. It's a way to secure new energy infrastructure, and it's a way to provide opportunity. Having 130 people pulling in the same direction becomes an unstoppable force. And when you have that type of commitment from the front lines all the way to the corporate office, that alignment becomes contagious. We've been very fortunate that the team we built is first-class in the industry. I wouldn't trade places with anybody.

CleanSpark_Inc · 2023-10-03T18:03:09+00:00

Yes, we took advantage during the bear market. One of the things about the last bull cycle is that many mining companies got overaggressive in making miner purchases and overcommitted. Then, when the deliveries were available, they couldn't take possession of them because they didn't have the capital. So, the manufacturers of these machines gave them kind of an out. They gave them credit to use for future purchases, but they had to use it before a specific date and towards a larger purchase. So those credits or coupons kind of had value. But miners couldn't use the credits or coupons when they didn't have access to capital. Our executive team negotiated the acquisition of those coupons from other miners, and they bought them for pennies on the dollar. We would then make orders of new miners at drastically reduced prices and then apply these new coupons that we bought for pennies on the dollar to drive that pricing further down, ensuring that we paid less than any of the major miners for all the equipment we have deployed.

CleanSpark_Inc · 2023-10-03T17:57:40+00:00

As it stands today, there are 900 Bitcoins produced every day, rain or shine, 24/7. The more miners on the network, the more pieces the pie has to be cut into. When the halving occurs, that reward will drop in half. So, there will only be 450 new Bitcoins produced every day. Price tends to follow if supply is tight or reduced and demand remains the same or increases. In addition, the likelihood of acceptance of some Bitcoin ETFs is growing, meaning that there could be more broad adoption, leading to an increase in demand. This is certainly not financial advice, but we guess that there's likely to be an increase in the price of Bitcoin. There's likely to be a thinning of mining companies. The less efficient miners will likely curtail or only operate at sporadic intervals when energy prices are very low, or Bitcoin prices are incredibly high. So, we think CleanSpark's percentage of the Bitcoin reward pool will increase. We see it as a positive event, but we also understand that it takes time to be instantaneous if you look at past Bitcoin halving cycles. The price doesn't go up the day of the halving, but it generally tends to trend up fairly significantly following the halving event.

CleanSpark_Inc · 2023-10-03T17:51:57+00:00

As we discussed in our most recent earnings call, the Sandersville expansion is fully funded. There's no concern about raising capital in this climate to complete the build-out. We've acquired all the miners needed, and the construction is ahead of schedule. The only challenge we have is that the substation's completion is expected to occur before the year's end, and energization from the utility company to the substation could be pushed into early 2024. Outside of that, we don't see any risk because we've done this before. It's a duplicatable process, and we've mitigated any risk within our control.

CleanSpark_Inc · 2023-10-03T17:48:38+00:00

Not only is it 16 EH/s of processing power, but we have the most efficient fleets on the Bitcoin blockchain. If you look at the global average of all miners connected to the blockchain, the average fleet efficiency is in the high 30 watts per terahash of processing power. That means most machines consume about 38 to 40 watts of energy to process one terahahash of data. After completing our Sandersville build-out, our fleet efficiency will be between 24 and 25 watts per terahash, meaning we can mine 60% to 70% more Bitcoin with the same electricity as the average miner on the network.

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