The recent halving of Bitcoin has created ripples for miners such as CleanSpark (CLSK), the second-largest public miner by deployed capacity. The company saw a noticeable dip in the top-line for Q2, falling short of $110.88 million expectations with revenues of $102.1 million. As a result, the stock dropped roughly 30% in the past three months. Despite these challenges, a recent analyst report from H.C. Wainwright labeled it a “must-own” stock poised to shine in the next phase of the cycle, which helped to drive a 20% rebound in the stock over the past week.
CleanSpark has been on a growth trajectory and has focused on bolstering efficiency, acquiring smaller miners, and improving sustainability as critical signposts on its road to fulfilling ambitious growth goals. With several near-term catalysts in sight, including the upcoming November election, the company is hopeful about a Bitcoin surge, which could help catalyze the share price further. It is a compelling option for investors interested in exposure to the Bitcoin mining industry.
CleanSpark’s Growth Strategy Yielding Results
CleanSpark is a leading Bitcoin mining company that owns and runs data centers predominantly powered by low-carbon energy.
The company has announced significant growth in its operational hashrate, which has expanded by 200% since October 2023 to reach 30 EH/s (exahashes per second). This surge is attributed to organic growth, strategic acquisitions, and a fleet upgrade, which improved overall efficiency by approximately 20%. The company is on track to surpass 37 EH/s by the end of this year and has an ambitious target of 50 EH/s and beyond by 2025.
CleanSpark’s expansion isn’t limited to computational power. It has also made significant strides in terms of physical infrastructure. With the acquisition of its first Bitcoin mining site in Wyoming, the company added 75 MW of power contracts to its resources. Additionally, CleanSpark has confirmed that it will procure seven more Bitcoin mining facilities in Knoxville, Tennessee, boosting their operational hashrate by over 22%. These expansions align with CleanSpark’s growth strategy and have contributed to a robust Bitcoin treasury, which has grown to over 8,049.
Analysis of CleanSpark’s Recent Financial Results
The company recently posted third-quarter results for 2024. CLSK’s revenue of $104.11 million fell short of analyst expectations of $110.88 million, though it marked an impressive 129% year-over-year increase from $45.5 million posted in the same period the previous year. Despite the revenue growth, the company’s net loss was substantial at $236.2 million, or $1.03 per share, starkly contrasting with the $14.1 million loss, or $0.12 per share, from the prior year. Adjusted EBITDA also decreased to negative $12.7 million from a positive $13.3 million in the previous year, driving earnings per share (EPS) of -$0.01, which exceeded analyst expectations of -$0.04.
As of the quarter’s end, the company held cash assets worth $129.2 million and Bitcoin assets valued at $413 million. In addition, total mining assets (including prepaid deposits & deployed miners) were $625.8 million. The total assets tally came to $1.48 billion. Meanwhile, current liabilities were $67.0 million, with its total liabilities at $73.4 million.
What Is the Price Target for CLSK Stock?
Despite the recent ups and downs, the stock has been on an upward trend overall, climbing 196% over the past year. It trades near the midpoint of its 52-week price range of $3.46 – $24.72 and shows positive price momentum as it trades above the 20-day (9.62) and 50-day (10.64) moving averages. With a P/S ratio of 6.65x, the stock appears to trade at a premium to the Capital Markets industry, where the average P/S ratio sits at 2.75x.
Analysts following the company have been bullish on the stock. For example, Macquarie analyst Paul Golding has initiated coverage of CleanSpark, assigning it an Outperform rating with a $20 price target. He highlighted the company’s effective strategy of acquiring smaller miners, focusing on sustainability, and upscaling its sites.
Overall, CleanSpark is rated a Strong Buy, based on four analysts’ recent recommendations. The average price target for CLSK stock is $21.88, which represents a potential upside of 86.69% from current levels.
CleanSpark in Summary
Despite facing challenges from the recent Bitcoin halving and a slump in Q2 revenues, CleanSpark has been navigating the market turbulence and implementing a growth strategy that has led to an impressive operational hashrate increase of 200% since October 2023. With significant infrastructure expansion, CleanSpark is poised for further growth, with a target of reaching 50 EH/s by 2025. Investors seeking exposure to the Bitcoin mining industry might find CleanSpark an attractive option.
