What changed in this filing

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Item 1. Business

2024-12-03 compared with 2023-12-01 · 94 added, 145 removed, 112 unchanged (68% of the section changed)

As used in this Annual Report on Form 10-K, the terms “we,”

“us,”

“our,”

the “Company,”

“CleanSpark, Inc.”

and “CleanSpark”

mean CleanSpark, Inc.

As used in this Annual Report on Form 10-K, the terms “we,” “us,” “our,” the “Company,” “CleanSpark, Inc.” and “CleanSpark” mean CleanSpark, Inc.

and its consolidated subsidiaries, unless otherwise indicated.

Dollar amounts presented in this Annual Report on Form 10-K are presented in thousands, except per share amounts, bitcoin price, and information set forth under the heading “Bitcoin Mining Operations”.

CleanSpark is a bitcoin mining company.

We independently own and operate five data centers in Georgia for a total developed capacity of 230 megawatts (“MW”).

We are developing an additional 150 MW at our data center in Sandersville, GA, which is expected to energize in early 2024.

We do not currently host miners for any other companies.

A partner in Massena, NY, hosts 50 MW for us.

We design our proprietary infrastructure to responsibly support bitcoin, the world’s most important digital commodity and an essential tool for financial independence and inclusion.

We independently own and operate a large portfolio of data centers across the United States with locations in Georgia, Tennessee, Mississippi and Wyoming.

As of October 31, 2024, we have with 676 megawatts (“MW”) of developed capacity and has 50 MWs of hosted machines in New York, which supports approximately 31.5 exahash per second (“EH/s”) of bitcoin mining computational power.

We are currently developing an additional 211.5 MW across the portfolio, which is expected to support approximately 50 EH/s of mining capacity.

We do not host miners for any other companies.

A partner in Massena, NY, hosts 1.5 EH/s for us.

However, following a non-renewal, the agreement governing such hosting of our miners is scheduled do expire on January 1, 2025 and we plan to move all operational capacity to wholly owned sites to maximize operational efficiency.

We design our proprietary data center infrastructure to operate at high uptime and efficiency in support of bitcoin, the world’s most important digital commodity and an essential tool for financial independence and inclusion.

Through CleanSpark and our wholly owned subsidiaries, we have operated in the bitcoin mining sector since December 2020.

From March 2014 to June 30, 2022, we provided advanced energy technology solutions to commercial and residential customers to solve modern energy challenges in the alternative energy sector.

As of June 30, 2022, we discontinued our energy operations due to our strategic decision to strictly focus on our bitcoin mining operations.

Business Activity

Bitcoin mining is our principal revenue generating business activity.

As of September 30, 2023, we operated 88,954 bitcoin mining machines, with a hashrate capacity of approximately 9.6 exahashes per second (“EH/s”) and a fleetwide efficiency of 28.4 joules per terahash (“J/TH”).

In fiscal year 2023, we mined 6,903 bitcoins, an 84% increase over the 3,752 bitcoins we mined in fiscal year 2022.

We expect to continue increasing our computing power through 2024 and beyond as we expand our infrastructure at our owned sites in the State of Georgia, seek strategic acquisition targets, and through strategic co-location agreements.

As of September 30, 2024, we operated approximately 188,500 bitcoin mining machines, with a hashrate capacity of approximately 27.6 EH/s and a fleetwide efficiency of 21.94 joules per terahash (“J/TH”).

In fiscal year 2024, we mined 7,092 bitcoins, net of mining pool fees, a 3% increase over the 6,903 bitcoins we mined in fiscal year 2023.

We expect to continue increasing our computing power through 2024 and beyond as we expand our infrastructure at our portfolio of data centers across the United States with locations in Georgia, Tennessee, Mississippi and Wyoming.

We intend to continue growing our capacity and plan to pursue additional capacity through both organic growth and strategic acquisitions.

Bitcoin was introduced in 2008 with the goal of serving as a digital means of exchanging and storing value.

Bitcoin depends on a consensus-based network and a public ledger called a “blockchain,”

which contains a record of every bitcoin transaction ever processed.

Bitcoin depends on a consensus-based network and a public ledger called a “blockchain,” which contains a record of every bitcoin transaction ever processed.

The bitcoin network is the first decentralized peer-to-peer payment network powered by users participating in the consensus protocol, with no central authority or intermediaries, that has wide network participation.

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Factors such as access to computer processing capacity, interconnectivity, electricity cost, environmental factors (such as cooling capacity) and location play important roles in mining.

In bitcoin mining, “hashrate”

is a measure of the computing and processing power and speed by which a mining computer mines and processes transactions on the bitcoin network.

A company’s hashrate determines its market share and is therefore generally considered one of the most important metrics for evaluating bitcoin mining companies.

In bitcoin mining, “hashrate” is a measure of the computing and processing power and speed by which a mining computer mines and processes transactions on the bitcoin network.

A company’s hashrate when compared to global hashrate determines its market share and is therefore generally considered one of the most important metrics for evaluating bitcoin mining companies.

We obtain bitcoin as a result of our mining operations by contributing all of our computing power (both owned locations and hosted locations) to one mining pool operator who is our sole customer.

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In exchange for providing computing power to the mining pool, we are entitled to bitcoin rewards from the mining pool operator, which is a variable consideration calculated based on a predetermined formula agreed to by us and the mining pool operator as a part of the arrangement.

The variable consideration is constrained until we can reasonably estimate the amount of mining rewards by the end of a

given day based on the actual amount of computing power provided to the mining pool operator.

The variable consideration is constrained until we can reasonably estimate the amount of mining rewards by the end of a given day based on the actual amount of computing power provided to the mining pool operator.

By then, we consider it a high probability that a significant reversal in the amount of revenue will not occur and include such variable consideration in the transaction price.

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As a result, we do not present disaggregated revenue information on block rewards and transaction verification fees.

We sell bitcoin from time to time, to support our operations and strategic growth.

We do not currently plan to engage in regular trading of bitcoin (other than as necessary to convert our bitcoin to U.S.

dollars) or to engage in hedging activities related to our holding of bitcoin;

however, our decisions to hold or sell bitcoin at any given time may be impacted by the bitcoin market, which has been historically characterized by significant volatility.

Decisions to hold or sell bitcoins are determined by management by analyzing forecasts and monitoring the market in real time.

Through our wholly owned subsidiaries CSRE Properties, LLC, CSRE Property Management Company, LLC, CSRE Properties Norcross, LLC, CSRE Properties Washington, LLC, CSRE Properties Sandersville, LLC, CSRE Properties Dalton, LLC, and CleanSpark HQ, LLC, we maintain real property holdings.

We have historically and may in the future sell bitcoin from time to time, to support our operations and strategic growth.

Our decisions to engage in hedging, lending, borrowing activities, to hold or sell bitcoin at any given time may be impacted by the bitcoin market, which has been historically subject to significant volatility.

Decisions to hedge, lend, borrow, hold or sell bitcoins are determined by management by analyzing forecasts and monitoring the market in real time.

Through our wholly owned subsidiaries CSRE Properties, LLC, CSRE Property Management Company, LLC, CSRE Properties Norcross, LLC, CSRE Properties Washington, LLC, CSRE Properties Sandersville, LLC, CSRE Properties Dalton, LLC, CSRE Properties Mississippi, LLC, CSRE Properties Wyoming, LLC, CSRE Properties Tennessee, LLC, and CleanSpark HQ, LLC, we maintain real property holdings.

Markets, Geography and Major Customers

Bitcoin is a global store and exchange of value used by people across the world as an asset and to conduct daily transactions.

Bitcoin is a global store of value and a medium of exchange used by people across the world as an asset and to conduct daily transactions.

Mining bitcoin supports the global bitcoin blockchain and the millions of people that depend on it for economic security and other benefits.

Strictly speaking, there is no customer market for mining bitcoin but we consider our mining pool operator a customer because it compensates us for providing processing power to the mining pool (see Part I, Item 1A., “Risk Factors”—“Our reliance on a third-party mining pool service provider for our mining revenue payouts may adversely affect an investment in us .

We own and operate our own facilities and do not lease mining space to other mining companies or private individuals that mine.

Our wholly-owned mining operations are located in the State of Georgia in the United States.

Our wholly-owned mining operations are located in the State of Georgia, Tennessee, Mississippi and Wyoming in the United States.

We also have a relationship with a facility located in New York State that hosts a portion of our miners.

College Park, GA Facility

CleanSpark’s first ever bitcoin mining facility is in College Park, GA.

It sits on six acres near the Hartsfield-Jackson Atlanta International Airport and features at its heart 48 new generation air-cooled pods.

Machines are also housed in 20 Ant boxes, an annex building and within the original data center.

As of September 30, 2023, the facility maintained an operational hashrate of 1.7 EH/s.

Norcross, GA Facility

An 87,000-square-foot data center in Norcross, GA was purchased and transformed into CleanSpark’s second bitcoin mining facility.

Situated on over seven acres, the immersion-cooled site participates in Georgia’s Flex REC program and is 100% net carbon-neutral.

There are two large rooms that house 20 MW of single-phase immersion—about 4,300 machines.

Liquid immersion cooling, where bitcoin mining machines are fully immersed in a specialized oil, has proven to significantly improve efficiency by reducing power consumption and extending the life of the machines—thereby maximizing financial gains.

As of September, 30, 2023, the facility maintained an operational hashrate of 0.5 EH/s.

Washington, GA Facility

Nestled between Augusta and Athens, the historic town of Washington is home to CleanSpark’s third bitcoin mining facility.

It was purchased during the summer 2022 bear market from another bitcoin miner as an already-operational site.

Bitcoin mining machines are set up in multiple air-cooled buildings.

A completed 50 MW expansion in July 2023 created four more buildings filled with an additional 14,000 latest-generation miners.

It draws power predominantly from low-carbon sources, such as nuclear energy.

As of September 30, 2023, the facility maintained an operational hashrate of 3.0 EH/s.

Sandersville, GA Facility

CleanSpark’s fourth bitcoin mining site (and second to be purchased during the summer 2022 bear market) is the largest facility in our portfolio.

The turnkey operation in Sandersville, GA was acquired from another bitcoin miner with room to almost triple its capacity.

The site is undergoing a 150 MW expansion with expected completion early in our second fiscal quarter ending March 2024.

Each building will house thousands of high-performance bitcoin mining machines and, once completed, will add over 6.0 EH/s to our hashrate.

As of September 30, 2023, the facility maintained an operational hashrate of 2.1 EH/s.

Dalton, GA Facility

Dalton marks CleanSpark’s fifth campus in Georgia.

It collaborates closely with the local utility, which is owned and operated by the City of Dalton.

This campus is made of two separate sites a few miles from each other.

As of September 30, 2023, the facility maintained an operational hashrate of 0.8 EH/s.

Massena, NY Hosting Site

We also co-locate some of our machines at the facilities of Coinmint, LLC ("Coinmint") in Massena, NY.

The facility runs on hydroelectric power.

As of September 30, 2023, our machines there maintained an operational hashrate of 1.5 EH/s.

Working Capital Items

The bitcoin mining industry is highly competitive and dependent on specialized mining machines that have few manufacturers.

Machine purchases often require large down payments and miner deliveries often arrive many months after initial orders are placed.

However, over the last 12 months, we have seen a significant improvement in the availability and pricing of bitcoin mining machines.

In addition to purchasing directly from manufacturers, the current market conditions have provided opportunities to purchase both new and used machines on the spot-market from other miners or retail-dealers of machines for better financial terms and delivery terms, but there can be no guarantee that such opportunities will continue on a long-term basis.

We purchase mining machines through re-sellers and directly from manufacturers.

Whether re-sellers or manufacturers have better purchase and delivery terms or more/superior inventory available is likely to change from time to time.

In addition to the approximate 88,000 miners (application-specific integrated circuits or “ASIC”) in operation as of the date of this filing, the Company has received, and will be installing in the coming months approximately 45,000 more miners in our soon-to-be-completed 150 MW expansion of our Sandersville location.

The Company entered into an additional agreement to purchase 4.4 EH/s of S21 miners in October 2023 and is scheduled to receive these miners beginning in January 2024.

Most miners we operate and expect to operate once received are the latest generation of miners manufactured by Bitmain Technologies Ltd.

(“Bitmain”), including the S19-Pro, S19j-Pro, S19j-Pro+, S19 XP and S21.

However, on October 1, 2024, we and our hosting partner, Coinmint, LLC, agreed to a non-renewal of the agreement governing the hosting of our miners, which is scheduled to expire January 1, 2025.

See Note 19 - Subsequent Events.

Georgia Operations

As of September 30, 2024, our Georgia facilities have a developed data center infrastructure backed by approximately 483 MW, which supports an operational hashrate of 20.6 EH/s.

Our Georgia operations are geographically spread across eight cities.

Mississippi Operations

As of September 30, 2024, our Mississippi facilities have a developed data center infrastructure backed by approximately 44 MW, which supports an operational hashrate of 2.0 EH/s.

Our Mississippi operations are located in three cities and a fourth location is currently under construction.

Tennessee Operations

As of September 30, 2024, our Tennessee facilities have a developed data center infrastructure backed by 79 MW, which supports an operational hashrate of 3.5 EH/s.

We have five owned locations, two of which were operational as of September 30, 2024.

Our Tennessee operations are located in six cities.

Additionally, we had three locations operating through a co-location hosting agreement with GRIID.

Effective October 30, 2024, each of these co-locations became fully owned after completing the acquisition of GRIID (see Note 5 - Acquisitions).

The Company also closed on the acquisition two of additional Tennessee locations in October 2024.

Wyoming Operations

As of September 30, 2024, we have two separate mining locations in Wyoming that are under construction and are expected to be operational between the first and second quarter of fiscal year 2025.

These locations will include miners that are cooled through immersion technology, a method of submerging mining hardware in a non-conductive fluid to cool the equipment and improve its efficiency, and are expected to have approximately 75 MW of data center infrastructure power under contract.

The table below summarizes our portfolio of operating locations as of September 30, 2024.

MWs Operational

EH/s Operational

Number of mining locations

Mississippi (1)

Tennessee (3)

(1) One of Mississippi locations is currently under construction and is expected to begin operation in December 2024.

(2) The New York location is a hosted location subject to the Coinmint co-location agreement (discussed below).

(3) Three of the Tennessee locations were previously hosted locations subject to the GRIID co-location agreement which became fully owned effective October 30, 2024 after the completion of the GRIID acquisition.

Two of the five owned Tennessee locations were operational as of September 30, 2024.

Distribution, Marketing and Strategic Relationships

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In addition to operating our own mining facilities, we may engage with third-parties to host and operate mining equipment on our behalf.

On July 8, 2021, our subsidiary CleanBlok, Inc., a wholly owned subsidiary of the Company ("CleanBlok"), entered into a services agreement with Coinmint.

On July 8, 2021, our subsidiary CleanBlok, Inc., a wholly owned subsidiary of the Company, entered into a services agreement with Coinmint, LLC (“Coinmint”).

Pursuant to the agreement, Coinmint has agreed to house and power certain of our bitcoin mining equipment in its facilities, and to use commercially reasonable efforts to mine bitcoin on our behalf.

All bitcoin mining services performed by Coinmint are conducted using our own mining equipment.

All computing power generated by our ASICs is contributed to our mining pool operator, Foundry Digital.

As of the date of this filing, we have deployed approximately 16,400 total miners pursuant to the co-location mining services agreement at Coinmint’s facility in New York.

All computing power generated by our ASICs (Application-Specific Integrated Circuits) is contributed to our mining pool operator, Foundry Digital.

As of the date of this filing, we have deployed approximately 16,400 total miners pursuant to the co-location mining services agreement at Coinmint’s facility in New York.

Pursuant to the agreement, as consideration for its services, we pay Coinmint certain services fees, which are based on the operating costs incurred by Coinmint in performing its services, and a variable fee calculated based on the profitability of the bitcoin mined during the relevant payment period, subject to uptime performance commitments.

The agreement had an initial term of one year, after which it renews automatically for three-month periods until terminated in accordance with its terms.

On October 1, 2024, we agreed to a non-renewal of the agreement, which is scheduled to expire January 1, 2025.

Materials and Suppliers

We engage in high efficiency bitcoin mining by using ASICs.

These specialized computers, often called mining rigs, have few manufacturers.

Most of the machines we purchased this year were manufactured by Bitmain, one of the top three preeminent manufacturers of bitcoin mining rigs.

Bitmain manufactures ASICs throughout Asia, and is headquartered in China with subsidiaries in the United States, Singapore, Malaysia, Kazakhstan and other locations.

These specialized computers, often called miners, have few manufacturers.

Most of the machines we purchased this year were manufactured by Bitmain Technologies Delaware Limited (“Bitmain”), one of the top three preeminent manufacturers of bitcoin miners.

Bitmain manufactures ASICs throughout Asia with subsidiaries in the United States, Singapore, Malaysia, Kazakhstan and other locations.

In addition to ASICs, mining equipment includes networking equipment, power cords, racking, other specialized equipment, transformers and energy equipment.

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We make every effort to establish our facilities in locations serviced by utilities that source a substantial portion of their energy from clean and renewable sources.

We supplement a portion of the energy mix provided by our utility providers by purchasing renewable energy credits as the precise ratio of renewable energy in local energy mixes is not within our control.

We have exposure to market fluctuations in energy prices through our power providers.

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Historically, our methodology and operations have been efficient and resilient enough to withstand market pressures and global events, but there can be no certainty that we will not be negatively affected in the future.

While some macro-economic indicators available as of the date of this filing suggest that inflation may be slowing, inflationary pressures impact virtually all aspects of our materials and suppliers, including power prices, and are likely to impact our fiscal year 2024.

Inflationary pressures impact virtually all aspects of our materials and suppliers, including power prices, and could impact our fiscal year ending September 30, 2025.

Environmental Issues

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Our costs of complying with environmental, health and safety requirements have not historically been material.

Starting in the fourth calendar quarter of 2021, we began to voluntarily purchase renewable energy credits to offset a portion of our energy consumption that is derived from non-renewable sources.

We have engaged market professionals to enhance and build a comprehensive corporate social responsibility strategy, which we began executing in 2023.

Some policymakers have expressed concerns over the high energy consumption of data centers, including bitcoin miners, and the ancillary effects on the environment from that energy consumption.

Some local, state and federal policymakers have expressed concerns over the high energy consumption of data centers, including bitcoin miners, and the ancillary effects on the environment from that energy consumption.

Many media reports focus exclusively on the energy requirements of bitcoin mining and cite it as an environmental concern.

We carefully monitor existing and pending climate change legislation, regulation, and international treaties or accords for any material effect on our business or markets that we serve, our operational results, our capital expenditures or our financial position.

The table below describes the energy sources of our electricity use for each of our owned locations as of September 30, 2023, as reported to us by our power providers.

Percentage of energy usage by each owned location (4)

College Park, GA (3)

Norcross, GA (3)

Washington, GA

Sandersville, GA

Non-Carbon (1)

(1) Non-carbon usage includes hydro, nuclear, wind and solar

(2) Carbon usage includes coal and natural gas

(3) Norcross and College Park are offset by renewable energy credit purchases

(4) Energy reported by grid operators as uncategorized is excluded from the percentages above

We purchase energy from the electrical grid, and as a result our energy mix will vary from period to period based on a variety of factors including weather, temperature, demand, and how the grid operator ultimately procures and utilizes energy resources.

The table breaks out energy sources as reported to the Company by the grid operators.

Historically, one of our strategies had been to prioritize sustainable and environmentally friendly sources of energy, including nuclear energy sources.

However, as we have accelerated our expansion efforts, including through multiple acquisitions of companies and assets, where we have focused on reliability and cost of the power, our overall energy source mix has changed, subject to the factors mentioned above.

As a result, our current sources of energy include a significant portion of both non-carbon sources (including hydro, nuclear, wind and solar) and carbon sources (including coal and natural gas).

We do not, however, currently have sufficient data to quantify the current energy mix at each of our sites, and any such data we receive is subject to the timing and details of the energy source mix information disclosed by our energy providers, including portions of the energy mix which is not disclosed by the energy providers.

Bitcoin mining is a global activity.

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We define our principal competitors as other publicly traded bitcoin miners because there is widely available information about their operations.

We believe our principal competitive advantages include our energy background, a combination of owned, operated, and co-located miners and facilities, our strategic use of the bitcoin we mine to fund operational growth and our commitment to responsible business practices, including building in communities that source renewable energy.

We believe our principal competitive advantages include our energy background, and the efficiency of our mining fleet and our operational expertise in managing uptime of our owned and operated facilities.

We strategically use bitcoin we mine as a store of value, to fund operational growth and the use of bitcoin as collateral for borrowing activities.

We are dedicated to working with communities to help stabilize energy usage to capture stranded power that can assist with reducing power rates for residential purchasers of power.

Within North America, our major competitors include:

Marathon Digital Holdings

Riot Blockchain, Inc.

• MARA Holdings, Inc.;

• Riot Platforms, Inc.;

• Core Scientific, Inc.;

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In addition to the foregoing, we compete with other companies that focus all or a portion of their activities on mining activities at scale.

We face significant competition in certain operational aspects of our business, including, but not limited to, the acquisition of new miners, obtaining low-cost electricity, obtaining clean energy sources, obtaining access to energy sites with reliable sources of power and evaluating new technology developments in the industry.

We face significant competition in certain operational aspects of our business, including, but not limited to, the acquisition of new miners, obtaining low-cost electricity, obtaining access to energy sites with reliable sources of power and evaluating new technology developments in the industry.

Intellectual Property

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State regulation of bitcoin mining is important with respect to where we conduct our mining operations.

The majority of our mining facilities are located in Georgia, which is one of the most favorable regulatory environments for bitcoin miners.

The majority of our mining facilities are located in Georgia, Mississippi and Tennessee, which have favorable regulatory environments for bitcoin miners.

However, we also have co-location operations in New York, which has generally been more aggressive in its regulation of bitcoin mining.

Current New York regulation, including a recent moratorium on certain bitcoin mining operations that run on carbon-based power sources signed into law on November 22, 2022, in our view, does not impact our decision to operate our miners at the Coinmint facility in New York in the foreseeable future;

however, if the regulatory landscape changes, we would evaluate whether to relocate our hosted miners to one of our facilities in Georgia or to other facilities outside of New York State, which could be costly and cause us to not be able to operate the miners while they are being relocated.

Further, in March 2022, the United States announced plans to establish a unified federal regulatory regime for cryptocurrency, and a group of United States Senators sent a letter to the United States Treasury Department (the “Treasury”) asking Treasury Secretary Janet Yellen to investigate the Treasury’s ability to monitor and restrict the use of cryptocurrencies to evade sanctions imposed by the United States.

We are unable to predict the impact that any new regulations may have on our business at the time of filing this Annual Report on Form 10-K.

In August 2021, the chair of the SEC stated that he believed investors using digital asset trading platforms are not adequately protected, and that activities on the platforms can implicate the securities laws, commodities laws and banking laws, raising a number of issues related to protecting investors and consumers, guarding against illicit activity, and ensuring financial stability.

The chair expressed a need for the SEC to have additional authority to prevent transactions, products, and platforms from “falling between regulatory cracks,”

as well as for more resources to protect investors in “this growing and volatile sector.”

The chair called for federal legislation centering on digital asset trading, lending, and decentralized finance platforms, seeking “additional plenary authority”

to write rules for digital asset trading and lending.

Since that time, Congress has considered a number of legislative proposals for regulating the digital asset industry.

We continue to monitor and proactively engage in dialogue on legislative matters related to our industry.

We have terminated our agreement with our hosting facility in New York and effective after January 1, 2025, we will no longer have co-location activities in the state.

In addition, federal regulators have increased their enforcement activity in the digital asset industry.

Federal agencies such as the SEC and Commodity Futures Trading Commission (“CFTC”) have brought a number of enforcement actions, including actions against significant players in the industry.

In fiscal year 2023, for example, the CFTC brought 47 actions involving conduct related to digital asset commodities, representing more than 49 percent of all actions filed by the CFTC during that time period.

This increased enforcement by agencies like the SEC and CFTC has resulted in part from the failure of FTX Trading Ltd.

(“FTX”) in November 2022 and the resulting market turmoil that failure caused.

Increased enforcement by agencies like the SEC and CFTC has resulted in part from the failure of FTX Trading Ltd.

(“FTX”) in November 2022 and the resulting market turmoil that such failure caused.

While these statements tend to focus more on digital asset exchanges and other players in the digital asset space and less on bitcoin miners, the failure of large exchanges may impact the adoption and value of bitcoin.

Additionally, because we sell our bitcoin on exchanges, we may also be potentially impacted by exchange failures in that respect.

Additionally, because we sell our bitcoin on exchanges, we may also be impacted by exchange failures in that respect.

For those reasons, we carefully vet the exchanges we use for adequate compliance with U.S.

laws as well as liquidity, using the information available to us, but we cannot be certain that we will be able to avoid the negative effects of a large exchange failure.

As the regulatory and legal environment evolves, we may become subject to new laws, such as further regulation by the SEC, CFTC and other agencies, which may affect our mining and other activities.

As the regulatory and legal environment evolves, we may become subject to new laws and regulations, including by the SEC, CFTC and other agencies, which may affect our mining and other activities.

For additional discussion regarding our belief about the potential risks existing and future regulation pose to our business, see Part I, Item 1A.

“Risk Factors”

beginning on page 13 of this Annual Report on Form 10-K.

Cybersecurity

Our share of bitcoins mined from our pool are initially received by us in wallets we control, which are maintained by Coinbase Inc.

(“Coinbase”), a U.S.-based digital assets exchange.

“Risk Factors” beginning on page 13 of this Annual Report on Form 10-K.

Protection of Bitcoin Assets

Our share of bitcoins mined from our pool is initially received by us in wallets we control, which are maintained by Coinbase Inc.

(“Coinbase”), a U.S.-based digital assets exchange.

We sell portions of the bitcoin we mine and utilize hot wallets to hold this bitcoin immediately prior to selling for working capital purposes.

We hold any remainder of our bitcoin in cold storage.

Bitcoin in cold wallets are reconciled monthly and are considered “on-chain.”

In other words, the cold wallets have a unique blockchain address and their activity is tracked through the blockchain by the Company if there are any reconciling issues.

Bitcoin held in cold storage is reconciled monthly and associated with unique blockchain addresses, with their activity recorded on the blockchain.

For security reasons, Coinbase does not disclose the geographic location of its cold storage wallets to its customers.

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auditors) having inspection or other verification rights associated with digital assets held in storage.

We recognize the importance of assessing, identifying and managing material risks associated with cybersecurity threats, as such term is defined in Item 106(a) of Regulation S-K.

Bitcoins we mine or hold for our own account may be subject to loss, theft or restriction on access.

Hackers or malicious actors may launch attacks to steal, compromise or secure bitcoins, such as by attacking the bitcoin network source code, exchange miners, third-party platforms (including Coinbase), cold and hot storage locations or software, or by other means.

We may be in control and possession of substantial holdings of bitcoin, and as we increase in size, we may become a more appealing target of

hackers, malware, cyberattacks or other security threats.

We have an established IT Steering Committee, formed of senior Company leadership, which evaluates all cybersecurity matters, with the purpose of meeting at least semi-annually and providing recommendations with respect to our information technology use and protection, including, but not limited to, data governance, privacy, compliance and cybersecurity.

We have implemented controls, policies, procedures and technological safeguards to maintain and protect the integrity, continuous operation, redundancy and security of our IT systems and data that we believe to be reasonably consistent with industry standards and practices, or as required by applicable regulatory standards.

We are also required to comply with applicable laws, rules, regulations and contractual obligations relating to the privacy and security of our IT systems and data and to the protection of such IT systems and data from unauthorized use, access, misappropriation or modification.

We may be in control and possession of substantial holdings of bitcoin, and as we increase in size, we may become a more appealing target of hackers, malware, cyberattacks or other security threats.

See Part I, Item 1C.

“Cybersecurity” of this Annual Report on Form 10-K.

We have property insurance coverage for our bitcoin miners under a multi-tiered insurance program with 21 different underwriters for a total of $200,000 in limits.

This insurance coverage covers all the Company’s bitcoin miners and includes Earthquake/Flood insurance with a $5,000 limit and Storm/Wind/Hail coverage with a limit of 3% Value at Risk of Time of Loss.

We also maintain equipment breakdown coverage, with a property damage limit of $100,000.

We do not maintain Business Interruption Coverage, which is currently not being provided by underwriters to any bitcoin mining companies.

This insurance coverage covers all of our bitcoin miners and includes earthquake and flood insurance with a $5,000 limit.

Storm, wind, and hail coverage is also included within the $200,000 policy limit.

We do not maintain Business Interruption Coverage, which is currently not commercially available for bitcoin mining companies.

The policies also exclude coverage of our bitcoin holdings and cybersecurity coverage.

We engage our insurance broker annually to solicit underwriters to provide proposals to renew our current coverage or update our policies to meet our needs, prior to the policies’

expiration on November 1st of each year.

We engage our insurance broker annually to solicit underwriters to provide proposals to renew our current coverage or update our policies to meet our needs, prior to the policies’ expiration on November 1st of each year .

Human Resources

We believe that our future success depends, in no small part, on our ability to continue to attract, hire, and retain qualified personnel.

As of September 30, 2023, we had 131 staff members, all located in the United States, and 130 of which were full time.

As of September 30, 2024, we had 270 staff members, all located in the United States, of which 256 were full time.

We believe that we have adequate personnel and resources with the specialized skills required to carry out our operations successfully.

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As of June 30, 2022, we deemed our energy operations to be discontinued operations due to our strategic decision to strictly focus on bitcoin mining operations and to divest or dispose of the remaining energy assets.

Through our discontinued operations segment, we previously provided energy solutions through our wholly owned subsidiaries CleanSpark LLC, CleanSpark II, LLC, CleanSpark Critical Power Systems, Inc., GridFabric, LLC, and ATL Solar Watt Solutions, Inc.

We have since sold or disposed of the majority of our software and intellectual property assets related to the Energy Segment (including mPulse, mVoult and GridFabric LLC) and sold all additional inventory and other assets.

Through our discontinued operations segment, we previously provided energy solutions and we have since sold or disposed of the related assets.

Other Business Activities

Through our wholly owned subsidiary ATL Data Centers LLC (“ATL”), we previously provided traditional data center services to a small number of remaining clients, such as providing customers with rack space, power and equipment, and offered several cloud services including virtual services, virtual storage, and data backup services.

As of September 30, 2023, ATL no longer provides data center services to external customers and all capacity of the location is now dedicated to bitcoin mining activities.

As of September 30, 2023, ATL no longer provided data center services to external customers and all capacity of the location is now dedicated to bitcoin mining activities.

What changed 10-K

Item 1. Business