CleanSpark , Inc. (NASDAQ:CLSK) reported a significant increase in its first quarter fiscal year 2023 financial results with record-breaking revenue and net income. The company announced plans for aggressive expansion in its bitcoin mining capacity and infrastructure, despite the anticipated challenges of the upcoming bitcoin halving event.
Key Takeaways
- CleanSpark achieved a 90% increase in revenue to $74 million, compared to the same quarter last year.
- Net income stood at $26 million, with an adjusted EBITDA of $69 million.
- The company plans to reach 20 exahash per second in mining capacity soon and aims for 50 exahash per second.
- CleanSpark is expanding its operations into Mississippi and has secured favorable electricity pricing.
- The company has a strong balance sheet with $229 million in liquidity, including over 3,700 bitcoins.
- CleanSpark anticipates a drop in block rewards due to the bitcoin halving but expects to grow its share of the global hash rate.
Company Outlook
- CleanSpark is on track to achieve 20 exahash per second in mining capacity in the first half of the year.
- The company is expanding its existing facilities and acquiring new sites to reach its hash rate goals.
- Acquisitions in Dalton and Mississippi are expected to contribute to the company's hash rate.
- Despite the upcoming halving event, CleanSpark is positioned favorably due to its low cost of mining and efficient operations.
Bearish Highlights
- The bitcoin halving event is expected to result in a 15% to 30% drop in the overall hash rate and a halving of rewards.
- The company anticipates a drop in block rewards, which may impact profitability.
Bullish Highlights
- CleanSpark's aggressive expansion plans could increase its share of the global hash rate without additional costs.
- The company's strategic acquisition of mining units at competitive prices positions it well for future growth.
- CleanSpark's efficient new mining machines, the S21, can be overclocked and underclocked for optimal performance.
Misses
- There were no specific financial misses reported in the earnings call.
Q&A Highlights
- CEO Zachary Bradford discussed the option to pull down 10,000 to 30,000 machines out of the 100,000 available to the company.
- CleanSpark aims to minimize cash flow spending by strategically plugging in machines.
- The company expects the cost of electricity to remain stable in Mississippi with a fixed price power agreement in the $0.05 range.
CleanSpark's first quarter fiscal year 2023 has set a new precedent for the company's financial performance with a record revenue of $74 million, indicating a robust growth trajectory. The company's strategic investments and operational efficiencies have laid the groundwork for continued expansion in the competitive bitcoin mining sector. As CleanSpark navigates the challenges and opportunities presented by the bitcoin halving event, its strong financial position and proactive approach to scaling its operations position it as a noteworthy player in the digital currency mining industry.
InvestingPro Insights
CleanSpark, Inc. (CLSK) has demonstrated impressive financial growth, as highlighted in the recent quarterly report. To further understand CleanSpark's market position and future potential, we can delve into key metrics and insights from InvestingPro.
InvestingPro Data:
- Market Cap: CleanSpark's market capitalization stands at $2.06 billion, reflecting the company's substantial size and investor confidence in its growth prospects.
- Revenue Growth: The company's revenue growth for the last twelve months as of Q4 2023 was 28.04%, showcasing its ability to expand its operations and market share.
- Price Performance: Over the last three months, CleanSpark has seen a strong return, with a total price return of 184.55%, indicating a significant investor enthusiasm around the stock.
InvestingPro Tips:
- Analysts have noted that CleanSpark's stock trades with high price volatility, which could mean potential opportunities for investors with a tolerance for risk.
- Despite the volatility, CleanSpark has shown a significant return over the last year, with a 224.07% price total return, highlighting the potential for substantial gains for shareholders.
For readers looking to gain a deeper understanding of CleanSpark's potential and to access more tailored InvestingPro Tips, there are additional insights available at https://www.investing.com/pro/CLSK. In total, there are 13 InvestingPro Tips listed, offering a comprehensive overview of the company's financial health and stock performance.
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Full transcript - CleanSpark (CLSK) Q1 2024:
Operator: Good afternoon. My name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to CleanSpark's First Quarter Fiscal Year Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. [Operator Instructions] And at this time, I would like to turn the floor over to Isaac Holyoak, Chief Communications Officer. You may begin.
Isaac Holyoak: Hey, thanks Greg and thank you for joining us today for our first quarter Fiscal Year Financial Results Call, covering the period October 1 through December 31, 2023. Our press release was issued about 30 minutes ago and is available on our website at cleanspark.com. Today's call is also being webcast, and a replay and transcript will be available on our website. On the call with me today is Zach Bradford, our Chief Executive Officer; and Gary Vecchiarelli, our Chief Financial Officer. Keep in mind that some of the statements we make today are forward-looking and based on our best view of the world and our businesses, as we see them today. The statements and information provided remains subject to the risk factors disclosed in our most recently filed Annual Report. We will also discuss certain non-GAAP financial measures, concerning our performance during today's call. You can find the reconciliation of non-GAAP financial measures in our press release, which is available on our website. And with that, it is my pleasure to turn the call over to Zach.
Zachary Bradford: Thank you, for joining us this afternoon as we discuss our business and financial results from the first quarter of our fiscal year. I'm looking forward to walking you through an exceptional quarter. Today we will highlight our key achievements, focusing on our outstanding quarterly revenue performance, strategic machine acquisitions, and our roadmap to achieving 20 exahash per second in mining capacity during the first half of this year, and our pathway to 50 exahash per second. I'm also looking forward to providing additional details about the ongoing Sandersville energization and our just announced move into Mississippi. Our financial performance this quarter has been exceptional. We achieved the highest revenue in our company's history, a testament to our team's hard work and the strategic decisions we've made over the past few months. Our revenue soared to $74 million, a 90% increase from our year ago first quarter revenue. For perspective, our annual revenue for fiscal year 2023 was $168 million. In a single quarter, we have covered nearly half the distance to reach our total revenue from last year. This achievement is not just a number. It's a reflection of our growing efficiency, our strategic acquisitions, and our deep commitment to smart growth. It underscores our position as leaders in the bitcoin mining industry and fortifies the trust that you, our investors, place in us. What's more, our quarter ended with a net income of $26 million and our adjusted EBITDA, an essential measure of our operational efficiency and financial health, also saw remarkable growth, reaching $69 million for the quarter. This figure represents not just profitability, but our ability to generate significant cash flow while investing in future growth. In addition to our financial metrics, our operational achievements this quarter have continued to build on our track record of success. We finished our infrastructure for our Sandersville expansion and as of this moment, machines have already started hashing. On the 6th, our first day of energization we set a record, racking over 7000 machines in 24 hours, and then successfully started hashing with over 8900 miners, which produced approximately 1.25 exahash per second. We are now on our third day of energization and we have exceeded three exahash. This is an additional three exahash per second under 72 hours. We expect to have the full 4.2 exahash per second of additional hash rate live within the coming days. This is a testament to our strategies and the teams behind them coming together at the optimal time. While maintaining our operational effectiveness during high growth is challenging, it's a challenge we've embraced. We have excelled at hitting all the marks we set out to reach. We've also worked hard to optimize our energy consumption through strategic machine purchases that position us well for the future and by deploying the best software on the market. Each of these steps have been carefully aligned with our long-term vision, ensuring that we continue to deliver value to our shareholders while leading the way in what a strategic, community focused and transparent bitcoin mining company looks like. This quarter has been a period of significant achievement for CleanSpark. Our record breaking revenue, alongside substantial improvements in efficiency and profitability have laid a solid foundation for our future growth.
Bitmain: The first part of the agreement includes an initial purchase of 60,000 units at $16.10 per terrahash, which will begin delivery in April of 24. The second part of the agreement is an option to buy an additional 100,000 units at $16 per terrahash. We've already paid 10% down for this option as a demonstration of our commitment to our growth prospects. To put this in plain language, you see a lot of bluster in press release headlines when a bull market is on the horizon, and I want to be clear that we aren't being rhetorical. With that in mind, we paid $32 million to secure 100,000 units at an even lower price than the initial units we acquired. This move is intended to provide us with maximum flexibility as we position the company for expansion in anticipation of a bull market. Crucially, it provides cost certainty and allows us to be strategic about our growth timing. Our approach, focused on the certainty of cost and expectations for robust growth, positions us uniquely in the market. The S21 is the most efficient miner and it aligns well with our focus on energy efficiency and high uptime. But to be useful, of course, machines need to be plugged in, so allow me to spend some time discussing how we expect to make good on our plans. The first step is our robust milestone to reach 20 exahash per second in the first half of 2024. We have previously guided a 16 exahash per second with the expansion of Sandersville, so the 20 exahash per second is a 25% increase in hash rate, over 16 and 100% increase from where we started 2024. This ambitious growth is propelled by several key expansions and acquisitions that we recently announced. Energization, as I mentioned, commenced earlier this week in Sandersville. This development is a significant milestone in our growth journey and I want to pause a moment to thank the City, the County, the various trades, and our teams at CleanSpark that have executed on this remarkable build. This massive site, capable of hashing at over 8 exahash per second, is one of the largest bitcoin mining sites in the United States. As I stated earlier, as of this week, a majority of the site has been energized and we expect about 4.6 exahash per second of operating hash rate to come online in the next few days. As you're aware, we have guided to 6 exahash per second for the full expansion, and thus there's a small gap of 1.4 exahash per second. We have learned that a utility substation transformer has not passed its most recent inspection, and we are eagerly awaiting a timeline to it coming online. We'll provide an update as soon as possible, and although we don't have a specific timeline, we are still planning for the remaining power to be delivered within the first half of 2024. Even then, we are positioned to continue our growth without missing a beat because of our newly announced Mississippi acquisition and Dalton acquisition. These facilities are slated to get us over 17 exahash per second by April of 2024. These, along with the expansion of our existing Dalton facilities and the final megawatts from Sandersville, are expected to propel us over 20 exahash per second, again, in the first half of this calendar year. We have begun the permitting process to expand our existing Dalton campus. Currently at 0.8 exahash per second, the campus will double to 1.6 exahash per second once complete. We are calling this campus Dalton 1 to distinguish it from our newly announced acquisition of a second Dalton campus, which we'll refer to as Dalton 2 during the construction process. Dalton two is an investment in our future in Dalton, Georgia. While not a large site, it is expected to deliver about 0.8 exahash per second and will contribute to a cluster of sites in Georgia that are now supplying a critical need for the community that goes beyond bitcoin mining. We have a unique relationship with the city of Dalton, which owns and operates its own utility. We are currently the City's only interruptible load customer, meaning we have signed an agreement that in the case of a grid emergency, we will shut off making the power we use available to other grid users. We earn a fixed power credit for performing the service which supports the grid and its stability. We view this as a best-in-class partnership and as an example of some of the creative ways that bitcoin miners are working with utilities to improve grid performance even in regulated markets like Georgia. We expect the Dalton 2 site to start hashing this coming April. In addition to the Dalton expansion, we are marking a significant milestone by venturing into new territory with the acquisition of three sites in Mississippi. Mississippi is a logical place for us to expand given our familiarity with the energy landscape in the Southern United States. The expansion not only diversifies our operational footprint, but also enhances our resiliency and capacity for innovation.
Meridian: All the acquired sites come with a favorable fixed five-year power purchase agreements at an all in power cost in the $0.05 range. We expect to formally close the purchase before the end of February. We will immediately begin racking our own machines, which will start hashing just as soon as they are plugged in. The combined hash rate in Mississippi will be about 2.4 exahash per second, or just over 10% of our operations once we reach our 20 exahash per second milestone.
CleanSpark: Looking ahead, the next time we discuss our financial results with you will be May. The halving event will have passed. We view the halving event as an important moment and I'd like to take a moment to discuss how we believe it will impact our operations. The most obvious impact is that the blocked award will be cut in half. Our margins are in an excellent place to navigate this halving as last quarter we mined at greater than 60% margins. Our cost of mine are industry leading and we are prepared for this momentary drop. I say momentary because it is not exactly true that our production will be cut in half. What is true, the block rewards are halved. We also anticipate a 15% to 30% drop in the overall hash rate, which means our share of global hash rate will grow without any additional cost on our part. This is a naturally accretive moment for a miner of our scale. As we approach the bitcoin halving event, we anticipate a significant shift in the mining landscape. The halving will naturally phase out less efficient miners, allowing CleanSpark to increase its share of the global hash rate. This organic growth in market share means we can capture a larger portion of bitcoin rewards without additional infrastructure investments, leading to enhanced returns for our shareholders. This strategic advantage highlights our commitment to efficiency and positions us favorably for sustained growth in a post halving environment. This scenario is only possible because of our obsession with preparation. Our focus on efficiency will continue to drive down our production cost, especially when paired with our best-in-class power rates. Furthermore, this halving is not just a challenge, but a catalyst for positive price action in bitcoin.
ETFs: Our cost of mine remains amongst the industry's lowest, providing a stark contrast to our competitors, especially when compared to the cost to acquire bitcoin directly versus ETFs, which must purchase the bitcoin at spot market prices. As I've said numerous times before, bitcoin is critical technology for our digital age. It is both a powerful commodity and a transformation in the history of money. This fact can sometimes get lost. But we believe the true value of bitcoin, the reason for its adoption by millions of people, and the reason for its consistent price appreciation, lies in bitcoin's fundamentals. It is digital money for a digital age, which the history books will one day show is only just beginning. I want to take a moment to thank our shareholders for their continued support. I would like to thank our incredible team, especially our teams in Sandersville. The work accomplished this quarter has set new standards for the industry and it's all thanks to our dedicated employees. Your hard work and commitment have not gone unnoticed. Now I'll hand it over to Gary to delve deeper into our financials and provide a detailed outlook for the coming quarters.
Gary Vecchiarelli: Thank you, Zach. As Zach mentioned, our first fiscal quarter was record setting for CleanSpark. Let's dive directly into the numbers, which I'm excited to share with you. Diving right into the numbers, our revenues for the quarter were $73.8 million, an increase of $46 million or 165% over the same quarter last year. This increase was primarily driven by the increase in our bitcoin production and an overall increase in average bitcoin price. This quarter we produced 32% more bitcoin compared to the same quarter last year. It is also important to note that this quarter the average bitcoin price was a little over $36,000, whereas last year the average bitcoin price was approximately $18,000 or less than half. Looking at the immediate preceding fiscal fourth quarter, our revenues increased $21.3 million or 40% between the periods. While our hash rate was relatively consistent during the first quarter, the average bitcoin price increased almost 30% from $28,000 in the fourth quarter to $36,000 in the first quarter. The increases in bitcoin prices and our consistent high uptime percentage of greater than 98% translated to higher gross profit margins as well. As you can see on the right hand side of this slide, our margins increased $37.5 million year-over-year with a profit margin of 61%. It is important to note that of the $46 million increase in revenue, $37.5 million or 82% was recognized as margin. This demonstrates our efficiency at scale. Comparing the first quarter versus the prior quarter, you see an increase of $22.8 million. This was primarily attributed to lower power costs in the first quarter of $4.04 per kilowatt hour compared to $5.02 per kilowatt hour in the preceding quarter paired with our higher revenues, again pointing to the benefits of scale. This quarter we recognized net income of $25.9 million, which is a significant improvement from prior periods. This represents $0.35 of every dollar of revenue dropping to the bottom line. This is an exciting time. We are amongst the first to adopt the new accounting fair value measurement rules. This now allows us to show the actual fair value of the bitcoin held on our balance sheet and better represents the value we are delivering to our shareholders. In our opinion, this new accounting standard repairs the prior broken rules and provides better clarity to investors and readers of our financial statements. Turning our attention to adjusted EBITDA, management uses this non-GAAP metric to evaluate the performance of its mining operations. The theme continues with $69.1 million of positive adjusted EBITDA this quarter. I want to highlight that this quarter our efforts to optimize costs directly contributed to our professional fees decreasing 24% and our G&A expenses decreasing 35% compared to our fourth quarter as well. This again is attributable to the benefit of operating at our scale. I want to take a moment to discuss our power costs for the quarter in a little more detail. Our cost of power for the first quarter was $4.04 a kilowatt hour, which was lower than both the same quarter last year and the immediately preceding fourth quarter. We recognize that reporting on components of power costs are not consistent within the industry, so we like to provide this breakdown to not only show what our wholesale electricity cost is, but also the contributions our business makes to the community through vitally important taxes and profit margins to the cities and communities we operate in. I also want to point your attention to our cost to mine bitcoin, which includes direct power costs. As Zach has stated before, we believe we are the best operator in the space and the cost of mine at our wholly owned facilities is a testament to that. Our cost at our wholly owned facilities is almost half of what it is at our colocation partner. This is due to several reasons, including the fact that having control over our own machines results in greater uptime, efficiency and control over the technology stack. On a final note, I want to talk about our balance sheet and our liquidity position. As of today, we have $229 million of liquidity, which includes $62.5 million of cash and over 3700 bitcoin representing approximately $167 million of bitcoin value. Additionally, as of the end of the quarter we had over $860 million of assets and just $14.5 million of total debt. Our balance sheet is one of the strongest in the industry and provides us great flexibility going into the halving. We expect to remain prudent in our operations and capital strategy while maintaining sufficient liquidity to take advantage of the opportunities that will present themselves post halving. Until the halving, we remain laser focused on execution and look forward to bringing Sandersville fully online, ramping up our new locations in Dalton, Georgia and throughout Mississippi as we move towards exceeding 20 exahashes per second and beyond. With that, I'll turn the call back over to Isaac to open the floor for questions. Isaac?
Isaac Holyoak: Thank you, Gary for that detailed financial overview. We will now open the floor to questions from our analysts. Operator, please provide instructions and manage the queue for the Q&A session.
Operator: Great. Thanks Isaac. [Operator Instructions] Our first question today comes from Mike Colonnese with H.C. Wainwright. Mike, please go ahead.
Michael Colonnese: Hey, good afternoon guys and congratulations on the Bitmain deal, the recent acquisitions and getting Sandersville energized here. Really exciting times for CleanSpark. Just a couple of questions from me. So you talk about receiving the 12 exahash of S21 call it through the first half of the year. So I was just curious how you guys are thinking about the additional infrastructure needed to support the new rigs that are going to be delivered in the coming months. Are you seeing other attractive acquisition opportunities out there in the market today or would you consider building out an entirely new facility, be it in Georgia or another market out there?
Zachary Bradford: Hey Mike, thanks for joining us. Yes, with that additional infrastructure, maybe the best example to give is, in December when we did our earnings call, I let everybody know that we were 72 megawatts short of what we needed to get to 20 based on what we had ordered the prior month and we sit here today, just 60 days later with the answers for how we filled that. So I would point to first our track record to show how confident we are in some of the statements we're making, but really how we're looking at this is there's a lot of incredible opportunities out there. And so we are evaluating a queue of opportunities, many of which do include M&A opportunities. And I believe that’s likely where we’ll turn to first as the place where we would put the first 12 exahash of machines. The following 20, there’s a lot of flexibility in that option and how we exercise it. And for some of that, we would certainly be building either adding onto existing facilities, expanding, or even building out new greenfield opportunities. So, we’re going to look at it from a total of the full option from both sides. But we really do think that there is plenty of opportunity out there, including things that we’re actively looking at that will create a nice home for the 12 exahash of additional growth that we plan to hit before the end of the calendar year.
Michael Colonnese: Very helpful. And just to follow up from me. If we look at the entire 160,000 deal with Bitmain for the S21s, what would need to happen for CleanSpark to really consider exercising that full option? If you could just speak to some of the specific factors or market conditions that would influence your decision and really be comfortable with transacting on the full 160,000?
Zachary Bradford: Yes, I don’t think that there’s any specific bitcoin price that we would be looking for or anything like that that I could point to. But instead it’s going to be how do the chips fall really on a post halving basis, because that’s when we’re going to be looking at it the closest. We’re going to be factoring in where did difficulty actually drop to? Where does it recover to? What is bitcoin’s price? It’s really going to be a measure of what’s the ROI. And we’re also going to keep an eye on anything else that’s going on in the market just in general. A key thing on that option is, we can wait to exercise it all the way to the very last day of the year and take some of those into 2025. So one thing I can say is, we feel highly confident that we will exercise the option as I said during the call, it’s really about when. Another key component of that is, we can exercise it in parts. So if we get opportunities that warrants pulling down 10,000, 20,000, 30,000 of the 100,000 we can exercise that option earlier and we could hold the rest until later to the end of the year. That flexibility is really important when you consider the fact that as soon as options like this are exercised, that involves cash flow. So, we always want to minimize the timing of spending cash and plugging machines in. And so as it relates to that option, I think that we’ll kind of switch directions whereas right now we’ve looked to secure machines, get them coming, we’ve then looked to the infrastructure second on the option we’ll look to infrastructure first, machine second, because the certainty of price and timing will be known, and that’s the true value of the option.
Michael Colonnese: Great. Thank you for taking my questions, Zach.
Operator: Great. Thanks, Mike. And our next question comes from the line of Josh Siegler with Cantor Fitzgerald. Josh, please go ahead.
Josh Siegler: Yes. Hi, guys. Thanks for taking my call today. Congrats on the results. I’d like to dive a little bit deeper into the Mississippi acquisitions because this marks a clear change in strategy from how you’ve been positioning your vertically integrated sites in Georgia. Can you give us a little bit more detail on the rationale to really expand the geography and how you’re feeling about the new Mississippi move?
Zachary Bradford: Yes. Josh, thanks for joining the call. How we’re thinking about Mississippi is another Georgia. It’s a place that we’re seeing a lot of opportunities based on how we view and interact with the grids that are located in that part of the U.S. we feel very comfortable with those systems and grids, and we see this as our first foray into Mississippi. Anywhere that we go, we’re going to look to do similar things, where we’re going to be looking to expand our footprint, be a meaningful part of the communities, things like that. So this is an entry point for us in Mississippi, and we expect that there’s a lot of opportunity there. If you think of headlines about reading about any minor right now, Mississippi is not a place that you’re reading about. And that for us, points to a lot of opportunities in the research we’ve been doing over the past several months. So, we’re excited about it and see it as another home that will spin up and do similar things and gain the same efficiencies.
Josh Siegler: Yes, absolutely. Interested in seeing how it plays out. I guess as a follow up to that would just be if we could dive a little bit deeper into the power structure for Mississippi. How are you thinking about fixed versus floating? And ultimately, where do you see your overall cost of electricity trending as we enter into the halving?
Zachary Bradford: Yes. So we see it staying fairly stable. So all of these sites come with a fixed price power agreement in the $0.05 range. When you blend that into what last quarter’s prices were to you throw this in on a percentage basis, it would shift our average power cost still into the mid-fours. So that’s what we’re still looking at, a blended average. We’re also watching the market. The market is pointing to a continued flatness or even a slight decrease in power prices in the state of Georgia, because they do share parent companies. We think that we’re going to see similar availability. I would expect us actually, as we expand and use this foundation of a fixed price power in Mississippi to actually look towards more market based power rates, because we’ve been incredibly successful in basically beating the fixed price rates, which usually represents a hedge price on the other side. But we’re going to climb that hill as we continue to grow in Mississippi and thought that an entry point with a fixed price five-year power agreement was a great place to start.
Josh Siegler: Great. I appreciate the color there and congratulations again on the results.
Zachary Bradford: Thank you.
Operator: Great. Thanks, Josh. [Operator Instructions] And our next question comes from Greg Lewis at BTIG. Greg, please go ahead.
Gregory Lewis: Yes. Hey, thank you and good afternoon everybody. Zach congrats Mississippi. Just kind of curious was that – how competitive of a process was that? Were you looking at that acquisition against others? And really, when did that kind of first come across or come into your guys purview as a potential acquisition opportunity? What I’m trying to understand is you mentioned lots of M&A opportunities. We’re hearing some of that you’re probably seeing more than we’re hearing about, but just kind of any kind of color around the Mississippi opportunity and how that evolve?
Zachary Bradford: What I can say is relationships are the first thing that matter. This site was owned by a party that we’d already acquired a site from, and so it was where we got basically a first and early look at it. Now, we actually looked at it in a prior quarter. And at the time, all things considered, we didn’t move on it, because we were highly focused on what we were doing. We’re now in a situation where we have lots of machines coming, and it made all the sense in the world. And so getting the first look and first opportunity on this allowed us to engage in negotiations on an exclusive basis, which is what we bargained for as part of the process. So, again, I believe it would have been competitive had we not had the relationship we already had. So, we did leverage our relationships to make sure it went very smoothly and quickly.
Gregory Lewis: Okay, great. And then I would be curious, just because it’s something that we’re thinking about, you mentioned the having potentially knocking off 15% to 30% of global hash. I don’t know how detailed you need to get on the call, but kind of, if you could give us maybe some broad strokes, how you’re kind of coming up with that number.
Zachary Bradford: Yes, I'm going to give you some broad strokes. One thing that nobody knows is really the exact percentage of what machines are where and what their power rates are behind that. What we do know and what we can see is that there are a lot of machines that are still plugged in that are not nearly as efficient as they're going to need to be. An easy example of that is there's public companies that are still openly running miners that have an efficiency between 38 and 44. And so I really believe, whether it's immediately at halving or sometime plus or minus a month around having, I'm a believer that everything on the above average side is going to start to struggle. And as much as public companies may have balance sheets that can allow them to last a little while through some of these tough times, everybody else, they're kind of going day by day on their cash flows. So we point to that and we say, okay, we know that even there's some public companies running 38 to 44. That means also that there are other assets out there that are significantly higher. What percentages, we don't know. And that's where our estimate comes into, 15% to 30%. So in our opinion, global hash rate, there's at least 15% to 30% that's less efficient than a 38 watt per terahash machine.
Gregory Lewis: Super helpful. Thank you very much.
Operator: All right, thank you, Greg. And our next question comes from Reggie Smith at JPMorgan. Reggie, please go ahead.
Unidentified Analyst: Hey, everyone, this is Charlie on for Reggie. Thanks for taking the question. I know you provided some details on under and overclocking efficiency last quarter, and I realized it's early days on the S21s, but I was wondering if you had a sense of how reliable, how efficient, and kind of how flexible. From an overclocking, underclocking perspective, these machines are straight out of the box. I know some earlier models, specifically, I think, like the XPs had some performance issues kind of on the first go around. So any context there would be helpful. Thanks.
Zachary Bradford: Yes, I'm going to give you some broad strokes on this. So we have taken units in. We have tested those. The good news is the S21 is very flexible is what we're finding so far. And you were right, the XP (NASDAQ:XP) is one of the less efficient miners. It's because it was already released at the lower end of its physical, I'll call it physical levels of efficiency. So pushing that to get it more efficient creates some challenges in the XP. The S21, on the other hand, has some flexibility built in that we've been able to extract using some of our tech stack and our firmware. And so we've been able to get the S21 to perform at a level of 15.8 joules per terahash. And we've also been able to push it, even in an air cooled environment, to as high as 220 terahash, so we're happy. It's still early days. We need to see how it behaves on a fleet wide basis but we're very happy with what we're seeing. The ability to push efficiency out of it and also the ability to actually push it a little bit higher. To get to 220 it cost us lot too, but it's very, very little. So we're really happy with that. From a temperature point of view, we're seeing it to be fairly resilient. So it is 5 degrees Celsius higher rated than the XP also. We, of course, haven't gone through a summer yet with the S21, but all the testing we're doing where we are introducing heat into that as part of our R&D process, we're really happy with the results we're seeing. So we expect, I guess, in summary, to have the S21 represent the flexibility and benefits similar to a jPro [ph], except for already, almost, nearly double the efficiency.
Unidentified Analyst: Got it. That's great to hear. Thanks for taking the question.
Zachary Bradford: Absolutely. Thanks for joining the call.
Operator: All right, thank you, Reggie. [Operator Instructions] Our final question will come from Brian Dobson at Chardan Capital Markets. Excuse me, Brian, please go ahead.
Brian Dobson: Hey, guys, thanks for taking the question and congratulations on the very efficient monthly metrics you guys posted during the quarter. So I suppose let's talk about your new mining facilities. In the past, you've mentioned that Georgia offers a variety of natural climate advantages for bitcoin mining. Do you believe your new facilities share these same advantages?
Zachary Bradford: Yes, we do. So actually, if you compare it to, middle of the road kind of temperatures in Georgia, in Mississippi, we're actually getting, on average, a few degrees cooler weather where these are. So we're, we are looking forward to what they’re, we’re also as part of these facilities. What we didn't get a lot into is really what the physical infrastructure looks like. So these are buildings, these are not pods. These are buildings that have very robust exhaust fan systems built in that help with. Additionally, with what the miners are already pushing out and handling, they're still very low PUE [ph] buildings and we're really happy with how we expect them to perform. But we did make sure, of course, in addition to the weather advantages that we expect to also carry through, we made sure that the infrastructure was ready and set up for it. These facilities, as we mentioned, are turnkey in the sense that we're bringing our miners into a facility that will empty out. But there is over a year of runtime data that we were able to look at to watch how these facilities run and function over an entire year of data. So all-in-all, really happy and looking forward to the results we expect them to generate.
Brian Dobson: Yes. Good to hear. During your prepared remarks, you also mentioned just briefly that the having may lead to a stronger price performance for bitcoin. Now, I agree with that because at the very least, your daily selling pressure from the mining industry is going to be reduced by half for those not huddling. But do you think you could kind of elaborate on what you see as potential positive catalysts for the coin post having.
Zachary Bradford: Yes, I think that the selling pressure, of course, is one of those. The ETFs, I think are helping with the buying. So you think about how many coins are going to be taken off the shelf, essentially on a permanent or semi-permanent basis, to me is a big part of that, so I think it's going to happen the day after halving occurs? No. Just like all supply and demand shocks work when you look at anything in a commodities market or any general economic market, basically, the longer that the supply is less than it was before, the more likely you're going to see a price impact. So it could take 30 days or it could take nine months before we see those catalysts fully kick in. But there's a lot of things that we can point to. But I'm a big fan of thinking simple and supply and demand curves on an economic basis, pointing to being the largest driver. You pair that with what I also think is going to be higher adoption, both in a traditional sense of users of bitcoin, of corporations that are going to now be willing to put it on their balance sheet due to the new accounting rules to layer twos and whether it's ordinals or anything else, which is good for us by creating more fees. But in addition to the fees, it's people using the blockchain for more things. So I think you first look to the supply and demand economics, and you second look to the use cases being a catalyst for additional demand, not just reductions in supply.
Brian Dobson: Yes, very good. Thanks very much.
Zachary Bradford: Thanks for joining the call.
Operator: And with that, I would now like to turn the call back over to Isaac Holyoak for closing remarks. Isaac, the floor is yours.
Isaac Holyoak: Thank you. I appreciate it. And thank you for joining today's earnings call. We look forward to sharing more of our journey with you in the coming quarters. Stay tuned for more groundbreaking achievements from CleanSpark. Thank you.
Operator: Thank you, Isaac. Ladies and gentlemen, that concludes today’s call. Thank you for joining and you may now disconnect.
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