What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2021-12-14 compared with 2020-12-17 · 445 added, 426 removed, 25 unchanged (97% 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.

CleanSpark, Inc.

is a Nevada corporation.

are in the business of providing advanced software and controls technology solutions to solve modern energy challenges.

a suite of software solutions that provide end-to-end microgrid energy modeling, energy market communications and energy management

Our offerings consist of intelligent energy monitoring and controls, intelligent microgrid design software, middleware

communications protocols for the energy industry, energy system engineering and software consulting services.

The software platforms (the “Platforms”)

which are integral to our business are summarized as follows:

· mVSO Platform:

Energy modeling software for microgrid design and sales

· mPulse Platform:

Patented, proprietary controls platform that enables integration and optimization of multiple energy sources.

used by Grid Operators and Aggregators to administrate load shifting programs.

used by Controls and IoT Product Companies to participate in load shifting programs

The Platforms are designed to allow customers

to design, build, and operate distributed energy systems and microgrids which efficiently manage energy generation assets, energy

storage assets, and energy consumption assets.

Our software products enable users to implement software solutions to execute on

these strategies.

These strategies are generally targeted to operate distributed energy assets in a manner that provides resiliency

and economic optimization and/or revenue generation through wholesale market activities.

We also offer digital agency services through

p2kLabs, Inc.

including creative design, marketing/digital content, technical development, and engineering.

We also own patented gasification technologies.

Our technology converts any organic material into SynGas which can be used as fuel for a variety of applications and as feedstock

a leading bitcoin mining and diversified energy company incorporated in Nevada, whose common stock is listed

on the Nasdaq Capital Market .

We sustainably mine bitcoin;

we also provide advanced energy technology

solutions to commercial and residential customers to solve modern energy challenges.

The Company, through itself and its wholly owned

subsidiaries, has operated in the digital currency mining sector since December 2020, and in the alternative energy sector since March

We are currently working with industry leaders and

other advisors in developing a long-term sustainability and clean energy plan.

We are also using all available clean and renewable energy

resources that we currently have reasonable access to in all of our bitcoin mining locations in order to further support our sustainability

Digital Currency Mining Segment

our wholly owned subsidiaries, ATL Data Centers LLC (“ATL”) and CleanBlok, Inc.

(“CleanBlok”) , we mine bitcoin.

We entered the bitcoin mining industry through our acquisition

of ATL in December 2020.

We acquired a second data center in August 2021 and have had a co-location agreement with N ew York-based

Coinmint in place since July 2021.

Bitcoin mining has now become our principal revenue generating

business activity.

We currently intend to continue to acquire additional facilities,

equipment and infrastructure capacity to continue to expand our bitcoin mining operations.

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

Bitcoin is a form of digital currency

that depends upon 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 middlemen, that has wide network participation.

The authenticity of each bitcoin

transaction is protected through digital signatures that correspond with addresses of users that send and receive bitcoin.

full control over remitting bitcoin from their own sending addresses.

All transactions on the bitcoin blockchain are transparent, allowing

those running the appropriate software to confirm the validity of each transaction.

To be recorded on the blockchain, each bitcoin transaction

is validated through a proof-of-work consensus method, which entails solving complex mathematical problems to validate transactions and

post them on the blockchain.

This process is called mining.

Miners are rewarded with bitcoins, both in the form of newly-created bitcoins

and fees in bitcoin, for successfully solving the mathematical problems and providing computing power to the network.

as access to computer processing capacity, interconnectivity, electricity cost, environmental factors (such as cooling capacity) and location

play important roles in mining.

As of the date of this filing, our mining units are currently capable of producing over 1.3 exahash/s

(“EH”) in hash rate capacity.

In cryptocurrency mining, “hash rate” is a measure of the processing capacity and

speed by which a mining computer mines and processes transactions on the bitcoin network.

Our activities in this area are complemented

by our energy background and planning is underway to deploy our portfolio of energy technologies to advance our bitcoin mining business,

with the goal of maximizing energy savings, increasing total power capacity, providing resilient electricity, and reducing greenhouse

gas emissions.

We are expanding our bitcoin mining business with the goal of reaching 2.0 EH/s in hashrate capacity at or near the end

of December 31, 2021.

We expect to exceed 3 EH/s in capacity by mid-to-late 2022.

Hash rate capacity is one of the most important

metrics for evaluating bitcoin mining companies.

We obtain bitcoin

as a result of our mining operations;

while we retain a significant portion of the bitcoin, we have sold, and intend to 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;

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.

Currently, we do not use a formula or specific methodology to determine whether or when we will sell bitcoin

that we hold, or the number of bitcoins we will sell.

Rather, decisions to hold or sell bitcoins are currently determined by analyzing

forecasts and monitoring the market in real time.

Through our recently formed wholly owned subsidiaries,

CSRE Properties, LLC, CSRE Property Management Company LLC, and CSRE Properties Norcross, LLC, we maintain real property holdings for

ATL and CleanBlok.

Energy Segment

We provide energy

solutions through our wholly-owned subsidiaries CleanSpark, LLC, CleanSpark Critical

Power Systems, Inc., GridFabric, LLC, and Solar Watt Solutions, Inc.

These solutions consist of

engineering, design and software solutions , custom hardware solutions, Open Automated Demand response (“OpenADR”),

solar, energy storage for microgrid and distributed energy systems to military, commercial and residential

customers in Southern California and through the world .

Our solutions are supported by our proprietary suite

of software platforms (collectively, the “Platforms”) that include microgrid energy modeling, energy market communications

and energy management solutions as summarized below:

mPulse and mVoult:

Patented, proprietary controls platforms that enable integration and optimization of multiple energy sources.

Middleware used by grid operators and aggregators to administrate load shifting programs.

Middleware used by controls and IoT (internet-of-things) product companies to participate in load shifting programs.

Energy modeling software for internal microgrid design .

The Platforms were developed to enable the designing,

building, and operating of distributed energy systems and microgrids which efficiently manage energy assets.

These strategies are generally

targeted to achieve resiliency and economic optimization.

We also own patented gasification energy technologies.

Our technology converts organic material into synthesis gas, which can be used as fuel for a variety of applications and as feedstock

for the generation of DME (Di-Methyl Ether).

As previously disclosed, we plan to continue to focus on our other product offerings,

as opposed to expending significant efforts on the Gasifier side of the business.

Business Segment

CleanSpark, LLC, the Company provides microgrid engineering, design and software solutions to military, commercial and residential

Our services consist of distributed energy microgrid system engineering and design, and project consulting services.

CleanSpark Critical Power Systems, Inc., the Company provides custom hardware solutions for distributed energy systems that serve

military and commercial residential properties.

GridFabric, LLC the Company provides Open Automated Demand response (“OpenADR”) and other middleware communication

protocol software solutions to commercial and utility customers.

Agency Segment

p2kLabs, Inc., the Company provides design, software development and other technology-based consulting services.

Distributed Energy Management and Microgrid Industry

to our business is our Distributed Energy Management Business (the “DER Business”).

The main assets of our DER Business

include our propriety software systems (“Systems”) and also our engineering and methodology trade secrets.

The Distributed

Energy systems and Microgrids that utilize our Systems are capable of providing secure, sustainable energy with significant cost

savings for its energy customers.

The Systems allows customers to design, engineer, and then efficiently communicate with and manage

renewable energy generation, storage and consumption.

By having autonomous control over the multiple facets of energy usage and

storage, customers are able to reduce their dependency on utilities, thereby keeping energy costs relatively constant over time.

The overall aim is to transform energy consumers into intelligent energy producers by supplying and managing power in a manner

that anticipates their routine instead of interrupting it.

the world, the aging grid is becoming unstable and unreliable due to increases in loads and lack of new large-scale generation

This inherent instability is compounded by the push to integrate a growing number and variety of renewable but intermittent

energy generation assets and advanced technologies into outdated electrical grid systems.

Simultaneously, defense installations,

industrial complexes, communities, campuses and other aggregators across the world are turning to virtual power plants and microgrids

as a means to decrease their reliance from the grid, reduce utility costs, utilize cleaner power, and enhance energy security and

The convergence

of these factors is creating significant opportunities in the power supply optimization and energy management industry.

operating and managing the distributed energy management systems and microgrids of tomorrow, while maximizing the use of sustainable

energy to produce affordable, stable, predictable and reliable power on a large scale, is a significant opportunity that early-movers

can leverage to capture a large share of this emerging global industry.

is comprised of any number of energy generation, energy storage, and smart distribution assets that serve a single or multiple

loads, both connected to the utility grid and separate from the utility grid “islanded”.

In the past, distributed energy

management systems and microgrids have consisted of off-grid generators organized with controls to provide power where utility

lines cannot run.

Today, modern distributed energy management systems and microgrids integrate renewable energy generation systems

(REGS) with advanced energy storage devices and interoperate with the local utility grid.

Advanced autonomous cyber-secure microgrids

controls relay information between intelligent hardware and servers to make decisions in real-time that deliver optimum power where

it is needed, when it is needed.

software is an integrated distributed energy management control platform that seamlessly integrates and controls all forms of energy

generation with energy storage devices to provide energy security in real time free of cyber threats to service facility loads.

DER systems are able to interoperate with the local utility grid, and bring users the ability to choose when to buy or sell power

to and from the utility grid.

mPulse is ideal DER systems for commercial, industrial, defense, campus and residential users and

ranges in size from 4KW to 100MW and beyond.

mPulse Software Suite

is a modular platform that provides intelligent control of a Microgrid based on a systems operational goals, energy assets and

forecasted energy load and generation.

mPulse performs high-frequency calculations, threshold-based alarming, execution of domain-specific

business rules, internal and external health monitoring, historical data persistence, and system-to-operator notifications.

modular design increases system flexibility and extensibility.

In addition, the deployment of the mPulse system follows a security-conscious

posture by deploying hardware-based firewalls as well as encryption across communication channels.

mPulse allows configuration

for site-specific equipment and operation and provides a clean, informative user interface to allow customers to monitor and analyze

the data streams that describe how their microgrid is operating.

supports our innovative fractal approach to microgrid design, which enables multiple microgrids on a single site to interact in

a number of different ways, including as peers, in a parent-child relationship, and in parallel or completely disconnected.

grid can have different operational objectives, and those operational objectives can change over time.

Any microgrid can be islanded

from the rest of the microgrid as well as the larger utility grid.

The mPulse software can control the workflow required in both

the islanding steps as well as the reconnecting steps of this maneuver and coordinate connected equipment such that connections

are only made when it is safe to do so.

Microgrid Value Stream Optimizer (mVSO)

The Microgrid

Value Stream Optimizer (mVSO) software platform provides a robust distributed energy and microgrid system modeling solution.

takes utility rate data and load data for a customer site and helps automate the sizing and analysis of potential microgrid solutions

as well as providing a financial analysis around each grid configuration.

mVSO uses historical data to generate projected energy

performance of generation assets and models how storage responds to varying operational modes and command logics based upon predicted

generation and load curves.

mVSO analyzes multiple equipment combinations and operational situations to determine the optimal configuration

for a site based on the financial and economic results, equipment outlay, utility cost savings, etc., to arrive at payback and

This ultimately provides the user with data to design a distributed energy and/or microgrid system that will meet the

customers’ performance benchmarks.

The system also provides users with business development and proposal generation tools

to more efficiently present the results to end-customers.

Critical power switchgear and hardware solutions –

CleanSpark Critical Power Systems, Inc.

Through the Company’s wholly owned subsidiary,

CleanSpark Critical Power Systems, Inc.

we provide parallel switchgear, automatic transfer switches and related control and circuit

protective equipment solutions for commercial, industrial, defense, campus and residential

We utilize Pioneer Power Solutions, Inc.

for contract manufacturing, of our parallel switchgear, automatic transfer

switches and related control and circuit protective equipment.

OpenADR and communication protocol software

solutions – GridFabric

Through the Company’s wholly owned subsidiary,

GridFabric, LLC we offer Open ADR solutions to commercial and utility customers.

GridFabric provides middleware software solutions

for utilities and IoT (Internet of Things) products that manage energy loads.

OpenADR 2.0b is now the basis for the standard

to be developed by the International Electrotechnical Commission.

GridFabric's core products are Canvas and Plaid.

Canvas is an OpenADR 2.0b Virtual

Top Node ('VTN') built for testing and managing Virtual End Nodes ('VENs') that are piloting and running load shifting programs.

Canvas is offered to customers in the Cloud as a SaaS solution or as a licensed software.

Plaid is a licensed software solution that

allows any internet connected product that uses energy (i.e.

Solar, Storage & Inverters, Demand Response, EV Charging, Lighting,

Industrial controls, Building Management Systems, etc.) to add load shifting capabilities by translating load shifting

protocols into their existing APIs.

Companies that implement Plaid through GridFabric get a Certified OpenADR 2.0b Virtual

End Node (VEN) upon completion of the implementation process.

Digital Agency Segment – p2kLabs

Through the Company’s wholly owned subsidiary,

p2kLabs, Inc.

we provide a suite of digital services from creative design to technical development for products and services through

the entire product/service lifecycle.

P2k is made up of “labs” whereas each lab contains its own unique offering including

design, marketing/digital content, engineering & SalesForce development, and strategy services.

Legacy Gasifier Business

Our Gasification technologies

and prototype will need to undergo

further additional testing to further

establish its commercial capability of producing large

volumes of clean, renewable energy from any

carbon compound (Municipal Solid Waste (MSW), Coal, Sewage

Sludge) into clean Synthesis Gas(“ SynGas”) .

Our prototype Gasifier is still under development

and a commercially viable Gasifier is

not expected to be sellable until we expend

additional resources on its testing and

A third-party consulting

firm has independently tested the Gasifer's

performance and certified the results

of its performance.

Upon completion of

the testing, an initial white

paper was published outlining the results

and suggested improvements for commercialization.

We anticipate that the investment to complete

these improvements would b e between approximately

Upon completion of the improvements,

we would be required to conduct an extended

test run with an independent

third party to verify the results needed to prove its commercial viability, at

which time we could begin to actively market

our Gasifier units.

9,890,340B2, 9,359,567, 8,518,133 8,105,401 and

8,347,829 protecting our gasification

technology and process for using feedstock

comprising gaseous fuel Our patented process involves

the grinding, drying, separating, mixing, and

then pelletizing of solid waste.

pellets constitute the feedstock for the Gasifier.

Gasifying feedstock using our technology

converts waste and organic material into

SynGas can be converted into multiple

forms of fuel for power plants, motor

vehicles, jets, duel-fuel diesel engines, gas

turbines, and steam boilers and

as feedstock for the generation of DME (Di-Methyl

The SynGas produced is mostly

hydrogen and carbon monoxide which are

primary building blocks for many fuels and

Syngas is sufficiently clean that

it if processed directly it generally does not require costly hot-gas

As discussed above, we do not anticipate deploying

significant resources on the gasification business at this time.

As opportunities arise, we intend to utilize the gasification

assets and intellectual properties through licensing or sales agreements.

not engaged in any significant

negotiations to sell or license our Gasifier products to any

major customers.

As previously disclosed, we currently plan to continue to focus on our other offerings.

Other business

Through p2kLabs, Inc., we provide design, software

development, and other technology-based consulting services.

The services provided are generally hourly or fixed-fee project-based arrangements.

Through ATL, we also provide traditional data center

services, such as providing customers with rack space, power and equipment, and offer several cloud services including virtual services,

virtual storage, and data backup services.

Markets, Geography and Major Customers

Company’s products and services predominantly serve the North American and Latin American energy markets, and primarily

the commercial and industrial space.

Based on recent market experience, it appears there may be some seasonality with deliveries

decreasing in November and December each year, likely as a result of the US holiday season and as a result of varied customer

appropriation cycles;

however, we believe these market factors will continue to

evolve and the Company’s insight to these trends will improve with continued commercial success and time.

For the year ended September 30, 2020 and 2019,

respectively 58.3% and 34.8% of our total consolidated revenues were associated primarily with one customer.

A loss or decline

in business with this customer, could have an adverse impact on our business, financial condition, and results of operations.

We provide our

hardware products under contract manufacturing agreements.

we provide our software and services at customer locations and from

our offices located in Utah, Nevada and California .

Digital Currency Mining Segment

Bitcoin is a global store and exchange of value 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 operators as customers because they compensate us for providing processing power to the mining

pool (see Item 1A.

Risk Factors for more information on our mining pool operators).

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.

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

Energy Segment

Around the world, an aging energy infrastructure is

becoming unstable and unreliable due to increases in loads and limited new, large-scale generation facilities.

This inherent instability

is compounded by the push to integrate a growing number and variety of renewable but intermittent energy generation assets and advanced

technologies into outdated electrical grid systems.

Defense installations, industrial complexes, communities, campuses and other aggregators

across the world are turning to microgrids as a means to decrease their reliance on the grid, reduce utility costs, utilize cleaner power,

and enhance energy security.

The Company’s products and services predominantly

serve the energy markets throughout the Americas in the residential, commercial, and industrial sectors.

Federal, state and local governmental

bodies provide incentives to owners and system integrators of solar energy systems to promote renewable energy in the form of rebates,

tax credits, and other similar incentives.

These incentives help to catalyze customer acceptance of renewable energy systems as an alternative

to utility-provided power.

Over the most recent year, our energy business operated extensively in California’s residential energy

markets by participating in the state’s Self-Generation Incentive Program (“SGIP”).

For the years ended September 30, 2021 and 2020,

respectively, 61.2% and 64.8% of our total energy revenues were associated primarily with three customers.

A loss or decline in business

with these customers could have an adverse impact on our business, financial condition, and results of operations.

We provide our hardware

products under manufacturing and distribution agreements.

We provide our software and services at customer locations and from our office

located in Carlsbad, California .

Working Capital Items

We do not maintain significant inventory.

Our inventory levels are currently adequate for our short-term needs based upon present levels of demand.

We consider the

component parts of our different products to be generally available and current suppliers to be reliable and capable of satisfying

anticipated needs.

Digital Currency Mining Segment

The bitcoin mining industry is highly competitive

and dependent on specialized mining machines that have few manufacturers.

Machine purchases require large down payments and miner deliveries

often arrive many months after initial orders are placed.

At the time the Company

acquired ATL in December 2020, the Company had approximately 3,471 bitcoin mining units with application-specific integrated circuits

(“ASICs”) in operation, which produced approximately 190 petahash/s.

Since acquiring ATL, the Company has expanded its operations

and purchased additional ASICs.

The Company now has 12,900 ASICs (as of the date of this filing )

in daily operation, which are producing approximately 1.3 EH/s.

In addition to the ASICs in operation, the

Company has also entered into futures contracts, pursuant to which it has pre-paid significant down payments to acquire additional mining

The majority of miners we operate and expect to operate once received are the latest generation Antminers manufactured by Bitmain,

including the S19, S19-Pro, and S19j-Pro.

We believe that Bitmain’s miners are the most efficient and productive miners currently

on the market, though that may change as new manufacturers enter the market.

In addition to our currently deployed fleet of approximately

12,900 latest-generation miners (as of the date of this filing), we have purchased an additional 26,830 miners that are slated for delivery

over the next 12 months.

With the full deployment of these miners, our total fleet will consist of approximately 38,610 miners.

Energy Segment

We currently possess a significant amount of inventory,

however, our short-term demand currently exceeds our current inventory levels.

We are actively working with our current suppliers to satisfy

our short-term and anticipated long-term needs.

Due to current supply chain dynamics worldwide constraining our ability to secure certain

inventory, these constraints have resulting in a significant customer backlog.

Distribution, Marketing and Strategic Relationships

We have developed strategic relationships with

well-established companies in key areas including distribution and manufacturing.

We sell our products worldwide, with a primary

focus on North America and Latin America, through our direct product sales force, and partner networks.

Digital Currency Mining Segment

We have developed strategic relationships with well-established

companies in key areas including traditional and renewable energy, infrastructure, and bitcoin mining equipment procurement.

In addition to operating our own mining facilities,

we may engage with third-parties to operate mining equipment on behalf of the Company.

On July 8, 2021, CleanBlok entered into a services

agreement with Coinmint, LLC (“Coinmint”).

Pursuant to the agreement, Coinmint has agreed to house and power certain of our

cryptocurrency mining equipment in its facilities, and to use commercially reasonable efforts to mine bitcoin on our behalf.

mining services performed by Coinmint are conducted using mining equipment owned by the Company.

As of the date of this filing, we have

received and deployed approximately 6,700 total miners pursuant to the co-location mining services agreement at Coinmint’s facility

Pursuant to the agreement, as consideration for the

services, we pay Coinmint certain services fees, which are based on the operating costs incurred by Coinmint in performing the services,

and a variable fee calculated based on the profitability of the bitcoin mined during the relevant payment period, subject to uptime performance

The agreement has an initial term of one year, after which it will renew automatically for three-month periods until terminated

in accordance with the terms of the agreement.

Energy Segment

We have developed strategic relationships with well-established

companies in key areas including distribution and manufacturing.

We sell our products worldwide, with a primary focus on Southern California

and the Americas, through our direct product sales force, and partner networks.

Materials and Suppliers

Although most components essential to our

business are generally available from multiple sources.

We believe there are component suppliers and manufacturing vendors whose

loss to us could have a material adverse effect upon our business and financial condition.

The Company currently engages a contract

manufacturer, whereby they exclusively manufacture parallel switchgear, automatic transfer switches and related control and circuit

protective equipment for us.

Historically, we have not experienced significant

delays in the supply or availability of our key materials or components provided by our suppliers, nor have we experienced a significant

price increase for materials or components.

We do not anticipate any such delays or significant price increases in our fiscal year

Digital Currency Mining Segment

We engage in high efficiency bitcoin mining by using

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

A majority of the machines we purchased this year

were manufactured by Bitmain, a Chinese company and the preeminent manufacturer of bitcoin mining rigs.

In addition to ASICS, mining equipment includes networking

equipment, power cords, racking, other specialized storage, transformers, and energy.

We rely on utility providers for our power needs.

These utilities buy into local energy mixes to source power.

We make every effort to establish our facilities in locations serviced by

utilities that generate a substantial portion of their energy from clean and renewable sources.

We supplement the energy mix provided

by our partners with the purchase of renewable energy credits because the precise ratio of renewable energy in local energy mixes is not

within our control.

We also intend to generate a portion of our own power through renewable solar energy by installing our microgrid solutions

at our mining centers.

Historically, we have been able to manage our supply

chains effectively, but global supply chains are highly constrained, and we are experiencing substantial increases in shipping costs and

unprecedented logistical delays as we make efforts to ensure timely delivery of equipment.

There can be no certainty that we will not

be affected in the future, and we believe that there is significant risk that equipment supply chains will be affected in 2022.

pressures may also impact our fiscal year 2022.

Energy Segment

Although most components essential to our energy business

are generally available from multiple sources, we believe there are component suppliers and manufacturing vendors whose loss to us could

have an adverse effect on our business and financial condition.

The Company also currently engages a contract manufacturer, whereby they

exclusively manufacture parallel switchgear, automatic transfer switches and related control and circuit protective equipment for us.

The Company sources energy storage devices (batteries) from a variety of vendors based on availability, cost, and quality.

to maintain or expand our relationships with our suppliers and manufacturers, or if one or more that we rely upon to meet anticipated

demand reduces or ceases production, it may be difficult to quickly identify and qualify alternatives on acceptable terms.

equipment prices may increase in the coming years, or not decrease at the rates we historically have experienced, due to tariffs or other

In 2021, we experienced periodic supply chain constraints

around certain inventory items, most notably battery energy supply systems.

Global supply chains are highly constrained, and unprecedented

logistical delays have the potential to impact our abilities timely delivery of equipment.

There can be no certainty that we will not

be affected in the future, and we believe that there is significant risk that equipment supply chains will be affected in 2022.

pressures may also impact our fiscal year 2022.

Environmental Issues

No significant pollution or other types of

hazardous emission result from the Company’s operations and it is not anticipated that our operations will be materially

affected by federal, state or local provisions concerning environmental controls.

Our costs of complying with environmental,

health and safety requirements have not been material.

We do not believe that existing or pending

climate change legislation, regulation, or international treaties or accords are reasonably likely to have a material effect in

the foreseeable future on our business or markets that we serve, nor on our results of operations, capital expenditures or financial

We will continue to monitor emerging developments in this area.

experience competition in all areas of our business.

The markets we address for alternative energy and microgrid markets, energy

controls and communications systems are characterized by the presence of both new start-ups and well-established product providers.

We believe the principal competitive factors in the markets in which we operate include product features, including scalability,

relative price and performance, lifetime operating cost, including any maintenance and support, product quality and reliability,

safety, ease of use, rapid integration with new and existing distributed energy assets, customer support, design innovation, marketing

and distribution capability, service and support and corporate reputation.

of our competitors have substantially larger financial and

other resources.

Factors that could affect

our ability increase sales of our System

may include resource limitations, available information and

our standards established for projected

return on investment.

Distributed Energy Management Business

DER Business and software

platforms are set up to compete against larger companies.

We offer an end-to-end suite

of software solution that enables microgrids from design through operations and communication .Our integrated microgrid control

platform seamlessly integrates energy generation

with energy storage devices and

controls facility loads to provide energy

security in real time.

The platforms are

able to interoperate with the

local utility grid and allows

users the ability to obtain the most cost-effective power for a facility.

The systems are technology agnostic and

can incorporate into multiple vendors and

manufacturers products and legacy

The systems are ideal for

commercial, industrial, mining, defense,

campus and community users

ranging from 4 kw to 100 MW and beyond

and can deliver power at or below

the current cost of utility power.

these attributes contribute to our ability to

compete with the

larger, more established competitors that have rely on their own manufactured products

and hardware solutions.

The principal advantages of our Platforms are:

Technology agnostic approach allows customers to leverage aged legacy systems reducing implementation costs.

The automated process is user friendly and does not require highly qualified engineers to operate.

We believe our project proposal tool is more accurate than any other option on the market.

Energy and Microgrid control technologies

are fairly new to the market and

can be deployed in various formats.

Eight technologies that are predominantly

used in commercial applications and/or have

been extensively studied are:

Schneider Electric

Energy Modeling Business Competition

Energy Toolbase

Gasifier Business Competition

system is expected to compete against larger gasification projects.

modular concept allows for parallel processing

so a facility could be easily expanded

or reduced without risk or changing the

basic structure by simply adding

or removing module units;

it also allows for

multiple end product processing,

producing electricity, ethanol, and

fuels simultaneously, and

for universal parts which reduces

maintenance costs.

We expect a ll of these

attributes contribute to our ability to compete

with the larger, more established competitors

that have large systems that require

significant downtime for maintenance

As previously disclosed, we plan to continue to focus on our other

product offerings, as opposed to expending significant efforts on the Gasifier side of the business.

Digital Currency Mining and Energy Segments

No significant pollution or other types of hazardous

emission result from the Company’s direct operations and it is not anticipated that our operations will be materially affected by

federal, state or local provisions concerning environmental controls.

Our costs of complying with environmental, health and safety requirements

have not been material.

Starting in the fourth calendar quarter of 2021, we began to voluntarily purchase renewable energy credits to

offset a significant portion of our energy usage that is derived from non-renewable sources.

The Company has also engaged market professionals

to enhance and build a comprehensive environmental, social and governance (“ESG”) strategy.

We do not believe that existing or pending climate

change legislation, regulation, or international treaties or accords are reasonably likely to have a material effect in the foreseeable

future on our business or markets that we serve, nor on our results of operations, capital expenditures or financial position.

continue to monitor emerging developments in this area.

Digital Currency Mining Segment

Bitcoin mining is a global activity.

During our most

recent fiscal year, a majority of bitcoin mining occurred in China.

After China banned bitcoin mining in May 2021, the center of mining

moved to North America.

Although bitcoin mining by its nature is not a directly competitive business, all miners compete for bitcoin rewards;

based on this, we define competitors as other bitcoin miners.

Our competitors include large, publicly-listed mining companies, large private

mining companies, and, in some cases, independent, individual miners who pool resources.

We believe our principal competitive factors

include our energy technology background, a combination of owned, operated, and co-located miners and facilities, our strategic use of

the bitcoin we mine to fund growth, and our commitment to sustainable business practices, including sourcing renewable energy.

North America, our major competitors include:

1) Marathon Digital Holdings

2) Riot Blockchain, Inc.

3) Greenidge Generation Holdings

4) Bit Digital, Inc.

5) Hut 8 Mining Corp.

6) Hive Blockchain Technologies

7) Compute North

8) Core Scientific

9) Bitfarms LTD.

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 the lowest cost of electricity, obtaining

clean energy sources, obtaining access to energy sites with reliable sources of power, and evaluating new technology developments in the

Energy Segment

markets we address in our energy operations are characterized by the presence of both new start-ups and well-established product providers.

industry is capital intensive and highly competitive.

The ability to compete effectively is determined by product features, scalability,

relative price, lifetime operating cost, product durability and reliability, safety, ease

of integration, customer support, design innovation, marketing and distribution capability, service and support and corporate reputation.

We offer turnkey energy solutions which include

system design, installation and grid integration.

Our P latforms are capable of interoperating

with the local utility

grid to help users optimize power for their homes or businesses.

Our solutions are vendor agnostic .

Our solutions are ideal for commercial,

industrial, mining, defense, campus and

community users, both small and large,

with an aim to deliver power at or below the customers

cost of utility power.

These attributes contribute to our ability

to compete with larger,

more established competitors.

Our major competitors include:

5) PowerSecure

Intellectual Property

relation to our microgrid business, we own

the following patents:

Digital Currency Mining Segment

We do not currently own any patents in connection

with our existing and planned digital currency mining related operations.

We do rely, and expect to continue relying, upon trade secrets,

trademarks, service marks, trade names, copyrights and other intellectual property rights.

Energy Segment

to our microgrid business, we own

the following patent:

9,941,696 B2 “ Establishing

Communication and Power

Sharing Links Between Components of

a Distributed Energy System, awarded

April 10, 2018, is a revolutionary patent

that specifically addresses CleanSpark's

engineering and data-analytics technologies,

processes and procedures.

The patent covers

CleanSpark's ability to receive data

from a plurality of sources within a microgrid,

which is then analyzed to forecast

power needs across the microgrid, or

a combination of multiple 'fractal' microgrids,

and then determining whether

Sharing Links Between Components of a

Distributed Energy System,” awarded

April 10, 2018, which addresses our engineering and

data-analytics technologies, processes and procedures.

The patent covers our ability to receive

data from a plurality of sources within a

microgrid, which is then

analyzed to forecast power needs across the

microgrid, or a combination of multiple 'fractal'

microgrids, and then determining whether

or when to share power with

the requesting module.

In relation to our legacy gasifier

business, we own the following patents:

9,359,567 ‘Gasification Method Using Feedstock Comprising Gaseous Fuels’;

8,518,133 ‘Parallel Path, Downdraft Gasifier Apparatus and Method’;

and Patent No.

8,105,401 ‘Parallel

Path, Downdraft Gasifier Apparatus and Method.’ ;

8,347,829 Electrolytic Reactor and Related Methods for Supplementing

the Air Intake of an Internal Combustion Engine.

The second Patent, "Parallel Path Downdraft Gasifier Apparatus and Method,

US 9,890, 340 B2", awarded February 13, 2018, further enhances CleanSpark's patent portfolio surrounding its proprietary

gasification and waste-to-energy technologies.

In relation to our legacy gasifier business,

we own the following patents:

9,359,567 “Gasification Method Using Feedstock Comprising Gaseous Fuels;” Patent

8,518,133 “Parallel Path, Downdraft Gasifier Apparatus and Method;” Patent No.

8,105,401 “Parallel Path, Downdraft

Gasifier Apparatus and Method;” Patent No.

8,347,829 “Electrolytic Reactor and Related Methods for Supplementing the Air Intake

of an Internal Combustion Engine.” Another patent, "Parallel Path Downdraft Gasifier Apparatus and Method, US 9,890, 340 B2,"

awarded February 13, 2018, further enhanced our patent portfolio surrounding our proprietary gasification and waste-to-energy technologies.

Our patents begin to expire between 2028 and 2035.

Government Regulation

Digital Currency Mining and Energy Segments

We are subject to federal,

state and local laws

and regulations governing environmental

quality and pollution control.

It is anticipated that, absent the

occurrence of an extraordinary event, compliance with

existing federal, state

and local laws, rules

and regulations concerning the protection

of the environment and human

health will not have

a material effect upon us, our

capital expenditures, or earnings.

cannot predict what effect

additional regulation or legislation,

and regulations governing environmental quality

and pollution control.

It is anticipated

that, absent the occurrence of an extraordinary

event, compliance with existing federal,

state and local laws,

rules and regulations

concerning the protection of the environment and

human health will

not have a material effect upon us,

our capital expenditures, or earnings.

cannot predict the effects

of any additional regulation or legislation,

enforcement policies thereunder and claims

1 unchanged sentence

employees, other persons and the

environment resulting from our operations.

environment resulting from our

Our operations are subject to environmental

regulation by state and federal

authorities including the Environmental Protection Agency

This regulation has

not increased the cost of planning, designing

and operating to date.

believe that compliance with environmental

regulations will not have a material

regulation by state and federal authorities

including the Environmental Protection Agency (“EPA ” ).

This regulation has not increased

the cost of planning, designing and operating

Although we believe

that compliance with environmental regulations

will not have a material

adverse effect on our operations or results

of these operations, there can

be no assurance that significant costs and liabilities,

including criminal penalties, will not be incurred.

Moreover, it is possible that other developments,

including stricter environmental laws and

regulations, and claims

for damages for injuries to property

or persons resulting from our activities could

result in substantial costs and

of these operations, there can be no

assurance that significant costs and liabilities,

including criminal or civil penalties, will not

Moreover, it is possible that other

developments, including stricter environmental laws

and regulations, and

claims for damages for injuries

to property or persons resulting from our activities

could result in substantial costs and

conduct of our activities, our operations will

be subject to the requirements of the

federal Occupational Safety and Health

Act (“OSHA”) and comparable

state statutes.

The OSHA hazard communication

standard, the EPA community

right-to-know regulations under Title III of the

federal Superfund Amendment and

Reauthorization Act and similar

state statutes require us to organize information about hazardous

materials used, released or produced in its operations.

of this information must be provided

to employees, state and local governmental

authorities and local citizens.

are also subject to the requirements and reporting

set forth in OSHA workplace standards.

Other than the above regulations and

maintaining our good standing in the State of Nevada, complying with applicable local business licensing requirements, complying

with all state and federal tax requirements, preparing our periodic reports under the Securities Exchange Act of 1934, as amended,

and complying with other applicable securities laws, rules, and regulations, and our discussion related to our newly acquired

ATL Data Centers LLC subsidiary regarding bitcoin mining operations, we do not believe that existing or probably governmental

regulations will have a material effect on our operations.

We do not currently require the approval of any governmental agency

or affiliated program for our operations.

be subject to the requirements of the federal

Occupational Safety and Health

Act ( “ OSHA ” ) and

comparable state statutes.

The OSHA hazard

communication standard, the

EPA community right-to-know regulations under

Title III of the federal Superfund Amendment

and Reauthorization Act and

similar state statutes require us to organize

information about hazardous materials used,

released or produced in our operations.

Certain of this

information must be provided to employees, state

and local governmental authorities and

local citizens.

We are also subject to the requirements

and reporting set forth in OSHA workplace standards.

Blockchain technologies

and digital currencies, including bitcoin, are increasingly becoming subject to governmental regulation, both in the U.S.

and internationally.

B lockchain technologies and cryptocurrency are under review with a number of U.S.

governmental agencies,

including, without limitation, the SEC, the Commodity Futures Trading Commission, the Federal Trade Commission and the Financial Crimes

Enforcement Network of the U.S.

Department of the Treasury.

State and local regulations also may

apply to our digital currency mining.

Other governmental or quasi-governmental regulatory bodies have shown an interest in regulating

or investigating companies engaged in digital currency related business.

For instance, the Cyber-Digital Task Force of the U.S.

of Justice (the “DOJ”) published a report entitled “Cryptocurrency:

An Enforcement Framework” in October 2020.

This report provides a comprehensive overview of the possible threats and enforcement challenges the DOJ views as associated with the

use and prevalence of digital currencies, amongst other things.

Further, in early March 2021, the SEC chairperson nominee expressed an

intent to focus on investor protection issues raised by cryptocurrencies.

Presently, we do not believe any U.S.

or State regulatory

body has taken any action or position adverse to our digital currency mining activities;

however, future changes to existing regulations

or entirely new regulations may affect our business in ways it is not presently possible for us to predict with any reasonable degree

of reliability.

In addition, regulators and the media have

expressed concerns related to the potential environmental impacts of bitcoin mining, and its energy-intensive nature in particular.

are not materially impacted by any current regulations targeted toward the digital currency mining industry.

Other than the above regulations and maintaining

our good standing in the states in which we operate, complying with applicable local business licensing requirements, complying with all

state and federal tax requirements, preparing our periodic reports under the Securities Exchange Act of 1934, as amended, and complying

with other applicable securities laws, rules, and regulations, we do not believe that existing governmental regulations will have a material

effect on our operations.

Certain governmental and quasi-governmental bodies are considering additional regulations in the bitcoin mining

and energy industries;

it is not currently known whether any such regulations would have a material impact on our businesses.

currently require the approval of any governmental agency or affiliated program for our operations.

In the future we may become subject to new

laws and/or regulations, such as further regulation by the SEC and other agencies, which may affect our digital currency mining and other

For additional discussion regarding our belief about the potential risks existing and future regulation pose to our business,

see the Section entitled “Risk Factors,” below.

Product Development

Because the distributed energy and

related software industry is still in an early state of adoption, our ability to compete successfully is heavily dependent upon

our ability to ensure a continual and timely flow of competitive products, services, and technologies to the marketplace.

to develop new products and technologies and to enhance existing products in order to drive further commercialization.

expand the range of our product offerings and intellectual property through licensing and/or acquisition of third-party business

and technology.

Digital Currency Mining and Energy Segments

Because the distributed energy and related

software industry is still in a relatively early state of adoption, our ability to compete successfully is heavily dependent upon our

ability to ensure a continual and timely flow of competitive products, services, and technologies to the marketplace.

We continue to enhance

our existing products in order to drive further commercialization.

We may also expand the range of our product offerings and intellectual

property through licensing and/or acquisition of third-party business and technology.

Bitcoin mining by its nature has no products.

Human Capital Resources;

We believe that our future success will

depend, in part, on our ability to continue to attract, hire, and retain qualified personnel.

As of December 14, 2020, we had 62

staff members with 56 full time salaried employees.

We continue to seek additions to our staff, although the competition for such

personnel in our segments is significant.

None of our employees are represented by a labor union, and we have never experienced

a work stoppage.

We believe that our relations with our employees are good.

Digital Currency Mining and Energy Segments

We believe that our future success depends,

in part, on our ability to continue to attract, hire, and retain qualified personnel.

As of December 1, 2021, we had 87 staff members,

86 of which were full time.

Employees participate in equity incentive plans and receive generous compensation in the form of salary and

We continually seek to hire and retain talented professionals, although the competition for such personnel in our segments is

None of our employees are represented by a labor union, and we have never experienced a work stoppage.

Company Websites

We maintain a corporate Internet

www.cleanspark.com and informational websites for our subsidiaries at www.p2klabs.com and www.gridfabric.io.

The contents of these websites are

not incorporated in or otherwise to be regarded as part of this Annual Report.

We file reports with the SEC which are available on our website

free of charge.

These reports include annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K,

“Section 16” filings on Form 3, Form 4, and Form 5, and other related filings, each of which is provided on our website

as soon as reasonably practical after we electronically file such materials with or furnish them to the SEC.

In addition, the SEC

maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers

that file electronically with the SEC, including the Company.

We maintain a corporate website at:

www.cleanspark.com

and informational websites for our subsidiaries at www.cleanblok.com, www.gridfabric.io , and www.p2klabs.com.

The contents of these websites are not incorporated

in, or otherwise to be regarded as part of, this Annual Report.

We file reports with the SEC, which are available

on our website free of charge.

These reports include annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form

8-K, Section 16 filings on Form 3, Form 4, and Form 5, and other related filings, each of which is provided on our website as soon as

reasonably practical after we electronically file such materials with or furnish them to the SEC.

In addition, the SEC maintains a website

(www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically

with the SEC, including the Company.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business