Good afternoon. My name is Jeannie, and I will be your conference operator today. At this time, I would like to welcome everyone to the CleanSpark Fiscal Year Third Quarter 2025 Earnings Conference Call. Thank you. Harry, you may begin your conference.

Thanks, Jeannie, and thank you for joining us today for the Third Quarter Fiscal Year Financial Results for CleanSpark, America's Bitcoin Miner, covering the period April 1, 2025, through June 30, 2025. Our press release was issued about 30 minutes ago and is available on our website at CleanSpark.com. Additionally, the 10-Q will be filed shortly. Today's call is also being webcast, and a replay and transcript will be available on our website. On the call with me are: Zach Bradford, our Chief Executive Officer; and Gary Vecchiarelli, our Chief Financial Officer. Keep in mind that some of the statements we make today are forward-looking and based on our best view of the world and our business as we see them today. The statements and information provided remain subject to the risk factors disclosed in our most recently filed annual report and 10-Q. We will also discuss certain non-GAAP financial measures concerning our performance during today's call. You can find the reconciliation of non-GAAP financial measures in our press release, which is available on our website. And with that, it's my pleasure to turn the call over to Zach.

Thanks, Harry, and good afternoon. I'm pleased to welcome you to our call reviewing CleanSpark's fiscal third quarter 2025 performance. This quarter was our most successful to-date across a multitude of metrics and reaffirms the strength of our strategy. The stage is set for continued growth, supported by world-class operations, a strong balance sheet, and supportive macro and policy tailwinds. While sustained Bitcoin strength was a contributing factor, our performance is grounded in strategic discipline and the tireless efforts of our entire team. Behind our record-setting revenue and earnings per share of $0.90 is billions of dollars of investments across four states, over 1 gigawatt of contracted power, and at today's price, approximately $1.5 billion worth of Bitcoin. As America's Bitcoin miner, we operate with high standards and set aggressive yet achievable targets. Our achievement of 50 exahash of operational hash rate was a key contributor to our outstanding results and a milestone made possible only through disciplined execution. Our third quarter revenue was nearly $200 million, up 94% compared to the same period last year and more than 9% over our prior quarter. We achieved earnings per basic share of $0.90, thanks to healthy gross margins of 54.6%. Importantly, we produced 2,012 Bitcoin and our treasury grew in value to approximately $1.08 billion by the end of the quarter, an increase of more than $100 million since last quarter. This was driven by both production and Bitcoin price appreciation, all while self-funding operations, further validating our prudent accumulation strategy. Our total Bitcoin in treasury stood at 12,608 at the close of the quarter, demonstrating our escape velocity, allowing us to scale without relying on a single share of equity funding since early November 2024. June 30 marked the highest quarterly close for Bitcoin in its history, driven by global adoption, rising institutional investment, and the maturation of the asset class. Additionally, we remain the only large-scale holder to have mined every Bitcoin we hold in treasury. We do this because we can generate Bitcoin below spot market rates. Our cost per Bitcoin in the third quarter was $44,806, which was far below the average spot price of approximately $98,500 during the same period. Turning to our fully self-operated infrastructure. Our team met our 50 exahash target on June 24. We were the first publicly-traded company to reach that milestone exclusively with American infrastructure. Our fleet's average power efficiency was just over 16 joules per terahash at quarter's end, and we have continued to improve that figure. This further cements our fleet as one of the most efficient in the world. When our scale and fleet efficiency are paired with our flexible operating model, this enables us to manage towards profitability, not arbitrary power costs. Our fully contracted power portfolio comprises over 1 gigawatt. Importantly, we are currently utilizing about 80% of that total, leaving over 200 megawatts available for immediate expansion. In the fiscal third quarter, our all-in cost per kilowatt hour was $0.056, nearly $0.005 lower than in the second quarter. This decrease reflects an easing of seasonal power prices as we transition from winter to spring. We also energized additional sites in our power portfolio, further improving our average power cost and demonstrating the benefits of our diversified and flexible energy strategy. Just as our fleet efficiencies improved over time, our goal remains to reduce power costs across the portfolio and growth pipeline, always with an eye towards profitability. As I mentioned, we reached 50 exahash in June, a major milestone in the history of our company. It reflects years of focused strategy, disciplined execution, and a relentless commitment to doing things the CleanSpark way. This growth wasn't accidental. It's the result of building and operating our own infrastructure from the ground up, giving us the control, resilience, and scalability to lead the industry. But we have never pursued growth for its own sake. Every new megawatt and every additional exahash has been developed with the intention of delivering long-term shareholder value and advancing our vision of becoming the global leader in Bitcoin mining, built, owned and operated in rural America. Consider the speed at which we achieve this goal. At the end of fiscal 2024, our operational hash rate stood at 27.6 exahash. In just nine months, we nearly doubled that figure to 50, while improving fleet efficiency and the overall operational performance. Here's how we did it. Tennessee became our second largest source of hash rates, thanks to two acquisitions and a 60-megawatt greenfield development. It was the fastest state-level ramp-up in our history. Our growth in the state demonstrates our land and expand strategy in action. We also launched two sites in Wyoming, a state with low-cost, reliable energy and supportive leadership at the local, state, and federal levels. Leaders who understand the value of our business can deliver to their communities. While our operations in Wyoming are currently smaller than Georgia and Tennessee, we have the opportunity to evaluate hundreds of additional megawatts in the region. We also continue to optimize and expand our operations in Mississippi and Georgia, with Georgia contributing significantly to reaching our 50 exahash milestone. I want to take the time to spotlight an example of rapid execution. We closed on a new plot of land in rural Georgia in mid-May. And just five weeks later, we had immersion-cooled mining live and hashing at the site. That kind of speed to revenue is made possible by tight collaboration across our construction, deployment, operations, and growth teams. This project exemplifies our relentless focus on speed to revenue. This is just one example of how we set the industry standard every day and embody the values and mission of CleanSpark. This is CleanSpark at its best, disciplined, fast, and unified. Our team is our greatest asset. And when they execute our battle-tested playbook, we're nearly unstoppable. Looking forward, we will apply our years of experience to drive our next phase of mining and power expansion. As we shared on our last call, we moved away from time-based exahash guidance. Instead, we're focused on capturing a greater share of global hash rate as a key metric, which we believe is a more meaningful measure of our market competitiveness. At the end of fiscal 2024, we held 4.3% of global hash rate with 27.6 exahash. When we hit 50 in June, our share rose to 5.6%, reflecting our ability to outpace the broader mining landscape and earn more Bitcoin over time. And we are not slowing down. We are taking steps to rapidly deliver an additional 10 exahash of operational hash rate on a cost-effective timeline. All miners required for this growth have already been secured, nearly half of the necessary infrastructure is in place, and we are finalizing plans for the remainder. At today's difficulty, this expansion would represent approximately a 1% increase in global hash rate, further expanding our competitive position and demonstrating continued execution at scale. Now a core tenet of Bitcoin is its decentralized nature. Mining is broadly distributed by design, ensuring no single participant dominates the network's hash rate. With 5.8% global hash rate of 50 exahash, CleanSpark is amongst the largest miners in the world, an excellent position for us and a healthy signal for the Bitcoin ecosystem overall. We have ample room to grow while remaining responsibly sized within the decentralized landscape. The scarcity of Bitcoin is also by design, and there are a limited amount of Bitcoin available to miners each day. This is why we are laser-focused on responsibly delivering the proof of work required to grow our share of the network, supporting the world's hardest money on behalf of our shareholders. We have multiple proven pathways to capture additional market share, develop new power pipeline capacity to expand our infrastructure portfolio, optimize our mining fleet to extract more hash rate from existing resources, build new sites through greenfield development, and acquire capacity through opportunistic mergers and acquisitions. These strategies are not theoretical. We have executed each of them at scale. Together, they form the foundation of our growth playbook as we continue driving long-term value. We have consistently focused on being the best pure-play vertically-integrated Bitcoin mining company in the industry by design. While alternative compute models like AI and HPC have drawn attention, repurposing a mining infrastructure for these applications is far more complex than it may appear. Operators must navigate higher capital intensity, customer uncertainty, and a rapidly evolving hardware environment that can threaten project ROI. By contrast, Bitcoin mining remains a proven and scalable business model, especially in today's constructive market environment that we have optimized unlike any other company. Thanks to this focus, CleanSpark stands apart as the only large-scale pure-play Bitcoin miner with wholly self-operated infrastructure, a position earned through deliberate strategy, not rigid ideology. We have followed this course because up to this point, we have determined that our power contracts and land assets are being put to their optimal use in our mining operations. That said, we have always understood that power has value, no matter how it's used. We have always viewed our real estate portfolio, power contracts, and geographic positioning as assets that hold significant value independent of their utilization for Bitcoin mining. Some sites both in our current operational footprint and in our pipeline have potential alternative value through other use cases. To that extent, we remain flexible and open to evaluating monetization options that enhance shareholder value. Today, CleanSpark has a significant power pipeline that can fuel continued growth. We are currently evaluating approximately 1.2 gigawatts of potential near-term power opportunities, primarily in areas where we have already operated or with proven partners we have successfully scaled with in the past. The value proposition for utilities in these areas is clear. In tight power markets, flexible customers like us help balance demand and improve grid resiliency. In addition to our near-term pipeline, we are also exploring an additional 1.7 gigawatts of long-term power opportunities. These longer horizon projects would require utility-level infrastructure investments. This layered pipeline ensures we have a long-term access to scalable, low-cost power and gives us the opportunity to execute with precision, speed, and capital efficiency when the time is right. As our pipeline moves from evaluation to project implementation, we will execute our growth plans to best utilize these opportunities to continue delivering operational excellence at every point of the growth cycle. Our track record speaks for itself. We know how and when to pull the trigger on high-return opportunities. This discipline allows us to grow with speed and efficiency while keeping capital stewardship at the heart of every decision. The good news for us and for the broader Bitcoin ecosystem is that we are now enjoying significant regulatory tailwinds, both in Washington and in state capitals across the country. On July 18, I was honored to attend a White House ceremony where President Trump signed the GENIUS Act into law. This legislation championed in the U.S. Senate by Senator Bill Hagerty of Tennessee establishes a clear regulatory framework for U.S. dollar-backed stablecoins. That clarity is expected to drive increased demand for both U.S. treasuries and Bitcoin. Earlier that same week, the U.S. House of Representatives passed another milestone bill, the Clarity Act. This bipartisan legislation would establish a comprehensive federal framework for non-stablecoin digital assets like Bitcoin. It further solidifies Bitcoin's treatment as a commodity, potentially unlocking trillions in capital flows and paving the way for deeper integration with mainstream financial markets. Beyond Washington, momentum is building at the state level as well. Senator Cynthia Lummis of Wyoming continues to be one of our industry's strongest champions, advocating for the creation of a federal strategic Bitcoin reserve. Both Texas and New Hampshire have already taken steps to establish similar reserves at the state level. Just today, we saw a new executive order on the President's desk making Bitcoin a qualified asset in 401(k) accounts. Together, these developments reflect the growing recognition of Bitcoin's role in U.S. innovation, energy policy, and monetary resilience, and they represent real tailwinds for CleanSpark's continued growth. Progress in this sector isn't limited to Washington. Wall Street and capital markets are increasingly providing tailwinds for Bitcoin adoption. One emerging trend we're watching closely is the rise of Bitcoin treasury companies, public companies that accumulate Bitcoin on the balance sheet for direct purchases rather than production. These entities represent a growing cohort of capital activity competing for a scarce resource, and their participation is helping drive spot prices higher. As this dynamic unfolds, CleanSpark's business model becomes even more valuable. We generate Bitcoin below market rates through our mining operations. And unlike treasury companies, we don't have to compete for coins in the open market. We produce them ourselves efficiently at lower cost than spot prices and at scale. In a market where the race to accumulate Bitcoin is accelerating, we believe that mining remains the most strategic and scalable path to long-term value. Bitcoin is not a passive asset on our balance sheet. We have a dedicated digital asset management team operating an institutional-grade trading desk to support our operations and generate responsible risk-adjusted yield. Since inception, our approach has been measured and disciplined. In late May, the team executed our first derivatives trade. June marked the first full month of trading activity, and we treated it as a proof of concept focused on execution quality, counterparty betting, and operational security. This crawl, walk, run approach is designed to build a sustainable strategy that responsibly harnesses Bitcoin's natural volatility while preserving our capital and protecting shareholder value. While the program is still in its early stages, I'm pleased to report that our initial results were strong and aligned with our expectations. We will measure success over quarters and cycles, not single months, while maintaining tight feedback loops to ensure continuous learning and improvement. Before I hand the call over to Gary, I want to highlight a few foundational concepts that continue to drive our performance and define who we are. Our four strategic pillars, energy, Bitcoin, operational excellence, and capital stewardship anchor everything we do. We focus on the KPIs that matter most: percentage of global hash rate, operational hash rate, fleet efficiency, marginal cost to mine, uptime, and Bitcoin and treasury. These are the real drivers of scale, performance, and long-term business health. We call this disciplined approach the CleanSpark Way, which is executed through the everyday grit of our team. It's more than a philosophy. It's embedded in how we work and how we win. This quarter, that combination of strategy, execution, and culture came together to deliver record-setting results, our strongest quarter in company history. I want to thank every member of our team for embracing this vision and driving CleanSpark to its position as the leading publicly traded Bitcoin miner in the world. With that, I'll now turn the call over to our CFO, Gary Vecchiarelli, for a closer look at the financials. Gary, over to you.

Thank you, Zach. As we've mentioned, our fiscal third quarter was record-setting in so many ways. But as we dive into the numbers, please keep in mind that our success this quarter has been the logical result of our focus on bringing traditional bottom-line business discipline to one of the newest and most innovative industries in the world. Our revenues for the third quarter were approximately $199 million, an increase of $95 million or 91% over the same quarter last year. We produced 2,012 Bitcoin for the quarter, 436 more than the same quarter last year or an increase of 28%. Notably, this was also a few Bitcoins shy of our all-time high production of 2,031 Bitcoin in fiscal Q2 '24, which immediately preceded the halving event. This is representative of the significant growth we've achieved in a short 15-month time frame and especially impressive given the impact of the mid-April 2024 halving. Our average revenue recognized per Bitcoin produced in Q3 was approximately $99,000 each, which is an increase of approximately $33,000 or 50% over the same quarter last year. Looking at our margins, our gross profit increased by approximately $50 million year-over-year with a profit margin of 55% for this quarter. When compared to the immediately preceding second quarter, our gross profit increased $12 million or 13% during the period. This quarter's increase in gross profit was primarily due to the combination of greater Bitcoin production at higher Bitcoin prices and lower energy costs, significantly outpacing difficulty. This quarter, we recognized net income of approximately $257 million. Our adjusted EBITDA was $378 million for the quarter. On a normalized basis, when taking out non-cash items, it was $78 million, which represents the cash generated from our mining operations net all cash expenses. Notably, our marginal cost per coin was $44,806, which represents an increase of only 5% over the immediately preceding second quarter. The slight increase in our marginal cost per coin is primarily attributed to an increase in mining difficulty. However, it is important to note that we have made investments in acquiring and maintaining one of the world's most efficient mining fleets, for which we have seen an increase in efficiency and corresponding decrease in energy usage per terahash. Prioritizing fleet efficiency has always been a core strategic theme for CleanSpark, and it is one of the reasons why we have been so successful at driving shareholder value through counter-cyclical investment. Our all-in cost per kilowatt hour decreased during the quarter to $0.056. As we have mentioned on prior calls, we intentionally manage to profitability rather than to a specific cost per kilowatt hour. This maximizes our Bitcoin production numbers and may result in us occasionally mining Bitcoin at higher prices per kilowatt hour. Looking at our overhead and expenses, our total cash overhead, which we consider to be professional fees, salaries and wages, and G&A expenses less stock-based compensation, increased approximately $4.6 million or 17% over Q2. This was primarily driven by an accrual due to a true-up on our local property taxes and property and casualty insurance policy. I've spoken on prior calls about our risk-averse approach to safeguarding our assets. As a result, ensuring our top-of-the-line fleet comes at a cost. And since we have significantly grown the value of our miners, mining equipment, and infrastructure by approximately $420 million since last fiscal year-end, we have chosen to also right-size the insurance policy to protect our investment in miners and infrastructure, which now stands at well over $1.3 billion in fair value. We are taking steps to minimize costs related to our insurance program, which I expect to be realized in the coming quarters. The other increases were largely seasonal or related to growth. We ended the quarter with $35 million in cash and over 12,600 Bitcoin representing a fair value of approximately $1 billion. In total, the company had more than $1 billion of liquidity at the end of Q3. I'll have more to share about our Bitcoin treasury activities in a few moments. Total debt as of the end of the quarter stands at approximately $820 million. Note that this amount is net debt issuance costs of approximately $16 million, which were incurred as part of the company's $650 million convertible transaction in December. As a reminder, this issuance has a 0% coupon and an effective conversion price of $24.66 per share. When it comes to our Bitcoin treasury, you've heard us talk about our efforts, which internally we refer to as the digital asset management team. I am pleased to report that in the third quarter, we onboarded several high-quality counterparties and completed our first derivative transaction at the end of May. We have previously discussed our conservative approach and strategy to monetizing our HODL balance, which we describe as a crawl, walk, run strategy. We're currently in the crawl phase. And while the volume of the derivative transactions is still ramping up, we are happy to see the proof of concept come to life. These results are just as good, if not better, than what we had initially projected. We completed a number of derivative transactions through our selected partners, solely comprising the writing of covered calls. While the total dollar value of these premiums aren't large enough to separately present on the income statement, I will tell you, on a risk-adjusted basis, the cash-on-cash returns look quite promising. For example, we have written and we will continue to write short-term calls slightly out of the money. If these get called away, great. We use the proceeds to fund our operating expenses, and we likely sold at amounts greater than what we would have sold at spot at the time we wrote the calls. They expire out of the money, we keep the premium and roll the strategy forward. Additionally, we are writing low delta calls also on a short or midterm basis, which have a low likelihood of expiring in the money. These premiums are used to generate the yield we set out to achieve. We expect to use approximately 40% of our HODL balance to generate a target yield of 4% on the entire Bitcoin treasury. We also expect the volume and complexity of our strategies to increase as time goes on. I also want to point out that we feel very comfortable with the risk-reward relationship of our derivative strategies. However, we are not comfortable with lending out our Bitcoin, a practice some of our peers engage in. We find that lending out Bitcoin is typically on an unsecured basis and often only borrowed for speculative purposes. We have internalized the lessons learned from stories such as FTX, Three Arrows, and Celsius and have incorporated risk management best practices as part of our institutional-grade efforts. More importantly, the yield generated from derivative strategies appears to be greater than lending activities and on a risk-adjusted basis, performs far better. We will continue to have a conservative yet opportunistic approach for our Bitcoin treasury and believe our strategy will generate appropriate returns for the risk we take. Bringing my comments regarding our treasury function to a close, I want to drive home an important point. We have a structural advantage due to two factors: One, we have a reliable Bitcoin production operation; and two, our capital strategy, which includes funding operational expenditures with production. This gives us a unique strategic advantage amongst our peers, where we can achieve a better risk-adjusted portfolio yield while transferring fewer Bitcoin to counterparties using derivative products versus lending. Looking deeper into our balance sheet, there are some other deals I would like to highlight. We have the ability to self-fund operations and grow our Bitcoin balance while enhancing shareholder value. In April, we were proud to expand our relationship with Coinbase through their Bitcoin collateralized lending program as part of our broader strategic approach to capital management and increasing our line of credit with Coinbase Prime to $200 million. Given our clean balance sheet and conservative approach to debt, we have significant additional capacity to raise cost-effective and non-dilutive capital. Our current Bitcoin holdings of over 12,700 are valued at approximately $1.5 billion at today's spot price, representing a source of liquidity and opportunity. And we believe this quarter was the right time to evolve from a nearly 100% HODL strategy. We have been long on the record that the 100% HODL strategy was not sustainable for the long term, and our current capital strategy is rooted in business fundamentals and with the intention of limiting dilution as much as possible. We view our approach as deliberately strategic rather than ideological, particularly now that we've reached our current scale and escape velocity. While we remain committed to Bitcoin as a long-term hardened asset, we believe a more effective way to increase shareholder value is through a balanced approach between monetizing new production and growing and monetizing our treasury. As a part of this strategy, we intend to further diversify our capital stack. As we have consistently emphasized, our focus is on ROI and our ability to make real-time decisions in the market. Given today's market environment, we view the revolving line of credit as the most efficient and responsible path to supporting accretive growth. Our strong balance sheet positions us to take full advantage of that opportunity and others. It's our intention to continue to use proceeds from the revolver for accretive CapEx purposes and intend to manage the business on a net debt basis to ensure proper liquidity to cover all debt obligations. I want to take a moment to discuss our investment in growth past 50 exahash. We have approximately 20,000 of the latest generation immersion units paid for and in hand, which represents 6 exahash of compute. We have over 1 gigawatt under contract and a little over 800 megawatts currently operational, which equates to over 200 megawatts contracted and not yet energized or operating. For these 200 megawatts, as of today, we have approximately $75 million of CapEx cash needs left to build out all 200 megawatts, which we expect could come over the next six months. Additionally, as we have discussed on prior calls, we have historically been successful in rolling our contracted options for machines with Bitmain into the latest generation machines. We have approximately $17 million on deposit with Bitmain as of today and have received an extension on the option as we negotiate what the size and terms of the next order are. Looking ahead, we remain confident in CleanSpark's ability to lead through innovation, discipline, and scale. As we chart our path forward, we are energized by the opportunities in front of us and remain committed to creating lasting value for our shareholders, our partners, and the communities we serve. With that, I'll turn the call back over to Harry to open the floor for questions. Harry?

Thank you, Gary, for that detailed financial overview. We will now open the floor to questions from the analyst community. Operator, please provide instructions and manage the queue for the Q&A session.

And your first question comes from the line of Mike Colonnese with H.C. Wainwright.

Congrats on a really strong quarter here. First one for me, Zach, you mentioned that you have over 200 megawatts of additional contracted power available in the existing pipeline. Could you just unpack that a bit and speak to how you envision bringing those megawatts online over the coming quarters?

Yes, absolutely. Mike, thanks again for joining the call. Appreciate your support. Yes, that 200 megawatts is in areas that we operate in. Some of these contracts come as a result of expanding on existing operations or getting something nearby. How we're looking at that from a rollout is, our first focus is going to be on that 10 exahash. We have some optionality beyond that. So we really only require a portion of the 200 megawatts to roll out this next piece of infrastructure, leaving 100 megawatts of optionality in addition to the pipeline. We are still really building on what that's going to look like after that. Again, the focus is on maintaining and outpacing difficulty while acquiring additional market share from a percentage of global hash rate. So I do expect the next 10 exahash to come up quickly, and we will have more news on the balance of that in the near term.

Great. Appreciate the color there, Zach. And obviously, some really good organic growth opportunities over the near term here. But just curious to get your views on the current M&A landscape and your appetite for potential deals here.

Yes. We're still seeing a very robust pipeline in the private space in particular. And frankly, we think that there's opportunity elsewhere too, as miners rotate out of mining into high-performance computing and they evaluate the assets they have on hand. Many miners are going to be faced with the decision of going all in one direction or the other. And we are ready and willing to be the first call that comes in. So I'd say it's very robust. There's great opportunity in the M&A landscape, and we look forward to hopefully taking advantage of some of that in the future.

Your next question comes from the line of Nick Giles with B. Riley Securities.

Nice job here. My first question was just on the Digital Asset Management side. I mean, when would you expect to reach targeted run rates? Or maybe in your words, Gary, when would you expect to be kind of fully running here? I just want to kind of make sure I understand the cadence of this new strategy.

Nick, thanks for the question. So we expect it's going to ramp in the coming quarters. As you can probably respect, there's a lot to consider when you're establishing an institutional-grade desk such as what we're doing, right? And we want to make sure that the trades that we're doing, not only the strategies are coming out the way we expect, but there's a lot of financial reporting, internal control, tax considerations as well. And so far, everything is going just as good, if not better, than what we expected. So for us, we, again, are taking a very measured approach to this. And as we start to onboard additional counterparties and look at more complex strategies, I'd expect that we'll probably ramp to that really over the next year.

Got it. That's helpful. My next question was just on the growth pipeline. You have relied on building strong relationships with your utility partners. I was wondering if you could speak to what those conversations look like today. Have you seen lead times for interconnections shift at all? Are you competing with HPC sites to any extent? Any insights would be great.

Yes, that's a great question. It's important to consider the context when we approach a utility; we keep flexible load in mind, which is an asset in our portfolio. There are only a few hours each year when utilities reach their peak capacity, which carries the risk of requiring curtailments. Being positioned to be that curtailable party sets us apart from data centers that are seeking large mega sites with firm load requirements. Data centers typically prefer to operate at maximum capacity consistently and are not incentivized to indicate willingness to be flexible. While there is competition regarding capacity and availability in the market, we are seen as a collaborative partner. We have a significant opportunity ahead, with a pipeline that encompasses multiple gigawatts. This pipeline includes utilities where we feel confident moving forward swiftly, and our flexible approach enhances that opportunity.

Your next question comes from the line of Brian Dobson with Clear Street.

So you spoke in pretty great detail about yield generation. Just a follow-up question there. So 4% on your HODL would do a lot to cover operating expense. Would you give us just a little bit of color on what percentage of your HODL you're thinking about putting to work? And the time frame that, that percentage of the HODL might be out so we can kind of back into what types of returns you're looking at on a short-term basis?

Brian, thanks for the question. So in my comments, I specifically called out actually that we plan on using 40% of the HODL balance for yield generation. And so if you extrapolate that based on a 4% return on the entire HODL balance, it's probably closer to 10%, which we believe is very reasonable and achievable, if not a number that we can exceed, at least based on the small sample size that we have in June. So in terms of the ramp, again, we're going to grow the team. We're going to grow the complexity and volume of those transactions, and we think we'll grow it within the next year, growing it to a 2% to 4% target within the next year.

Yes. Excellent. So at the beginning of your prepared remarks, you also kind of opened the door for selling power assets. Are you encouraged by recent M&A that we've seen? And I know it's early days, but how do you view demand for those assets?

Yes. Let me clarify that the underlying assets we own, along with our land and power contracts, provide us with valuable control, whether we use them for Bitcoin or not. We are always open to considering different use cases, which doesn't necessarily mean we will buy or sell them. We continuously evaluate our options. We strongly believe, as the numbers demonstrate, that the returns we achieve from combining our infrastructure with power for Bitcoin mining exceed any alternative uses available. If circumstances change in the future, we are open to exploring that. Additionally, the geographic location of many of our sites positions us advantageously, but our focus remains on maximizing the cash returns from those assets, no matter the use. We are not interested in downsizing, exiting, trading, or transitioning; our goal is to maximize the utilization of our assets.

If I could add one more thing. I think the point to drive home here is that the value of our assets on our balance sheet is not reflective of fair value. The fair value of those assets and access to energy is far greater than that. And I think that's something that may not be accounted for in the current valuation.

Yes. That's very helpful. And then just one last comment on the treasury models. You called them out as a macro positive. I agree. Do you see these companies as an accelerant in bringing more Bitcoin-related ownership into portfolio management and also, call it, wealthy individual portfolios?

Yes, I'll take that one first. Look, the more people buying Bitcoin, the merrier. I think that anything that leads to greater adoption of Bitcoin is good for the Bitcoin ecosystem and really the whole traditional financial system. What we're seeing now is that there's a number of these treasury companies that are coming to market or looking to come to market, and there's billions of dollars locked up waiting for their SEC statements to go effective. And we think that type of buying power is only going to push Bitcoin prices higher. But ultimately, I mean, just as we saw today with the executive order crossing the President's desk, Bitcoin is going to start to infiltrate other areas of the traditional financial networks such as 401(k)s, pensions, and all of that. And we've been waiting really for this moment, and we're here to really capture those tailwinds and upside.

Yes. And in addition to that, the upside trends further. Not only are these treasury companies existing, but with how SAB121 and the changes that were around the repeal of it are taking place, it creates massive additional opportunities. Everything from not only just banks holding it, but you now see institutions allowing leverage against Bitcoin-based assets, such as treasury companies, such as ETFs and things like that. And so all of these changes coming together creates more capital in the space, which we see as nothing but positive tailwinds.

Your next question comes from the line of Greg Lewis with BTIG.

Gary, it seems you have laid out your thoughts clearly regarding the ability to be opportunistic with the HODL strategy and mentioned how it relates to the derivative strategy. However, I'm more curious about July rather than Q2. It appeared that a significant portion of the production was sold during that month. While it can be interpreted as us selling the Bitcoin we produced, I'm specifically wondering if the sharp increase in Bitcoin price in July perhaps led to some of the covered calls being exercised. Could that be the reason we observed more Bitcoin sold in July compared to the average in Q2?

Yes. Thanks for the question. I'll tell you foremost that with this new capital strategy, our focus is on no dilution, right? And so we're willing to sell the entire month's production if need be. But I think we've hit a sort of a Goldilocks zone where not only do we get to sell to cover operational expenditures, cover some CapEx and/or service the line of credit, but we also added to the HODL. So we didn't sell everything. If you see we've increased it by, I don't know, 90 to 100. I'd like to continue to stair-step that. But at the end of the day, we really see this as an area of non-dilutive capital, and we would rather sell the production than issue equity or take on additional debt or whatnot. But for right now, I think that we could hit the trifecta in terms of all three areas.

Okay. That's great to hear. And then just on the pipeline, the 1.7 gigawatts of potential out there. I guess a couple of questions around that. Just given the lead times that we're hearing multiyear, some states 3, some places we're hearing 4 or even longer. Realizing you might not want to get too specific, but as we think about that 1.7 gigawatts, any kind of structure in terms of how we should be thinking about maybe in baskets, when some of that could potentially come online maybe in '26, '27 or '28?

I see this as a matter of optionality. It's important to emphasize that. Additionally, I want to highlight our strategy compared to others, not just in Bitcoin mining but also in the data center sector. Many companies seeking power tend to look for large amounts in single locations. In contrast, we have the flexibility to tap into power ranging from 20 to 50 megawatts, with some options even larger. Notably, about 30% to 40% of our pipeline consists of power that we could quickly access without substantial long-term infrastructure investments. However, the remaining portion does require such investment. We are being strategic about where we invest, particularly in rural areas, which often have shorter lead times because they have been planning for years to enhance their distribution networks. There are lead times involved, but most of ours are measured in months. For significant investments, we anticipate a timeframe of 12 to 24 months. We typically do not consider timelines beyond that, focusing instead on the specific areas we are targeting. I believe we have a strategic advantage; for example, if we wanted to construct a substantial amount of megawatts near Chicago, our discussions with the utility regarding lead times would be significantly different.

Your next question comes from the line of Paul Golding with Macquarie Group.

I wanted to ask, given the recent deal with Canaan for more Avalon immersion miners that was announced. I wanted to ask how you're thinking about price of hash rate. You have this 10 exahash prepurchase. And just trying to think through how you're approaching the hash rate price dynamics in the context of so many institutional miners pausing and pivoting to high-performance computing and just thinking about opportunistic deals going forward or backward-looking given this 10 exahash to come.

Appreciate the question. Thanks for joining the call. We said over a year ago, we welcome when we see miners exit the space to pursue other avenues because it creates counter-cyclical opportunities. So the benefit we're seeing as we get into the tail end of this year and we optimally see the trend continue into 2026 is a softening of demand for those miners. And that softening creates opportunities for us as one of the largest buyers for the majority of the manufacturers to strike a deal, to push power prices in our favor because there's just not as many customers as maybe they expected there would be this time of the year or there was the year before. So we're seeing really great movement in the pricing that we think will benefit us over the next 12 months, in particular, due to that softening. So we're pretty enthusiastic about what we see.

I'd also add that with the increase in competition because you now have more miners, more manufacturers in the space that also helps contribute to the softening. So you have an increase in supply and reduction in demand, and we know what that does with prices.

Is there a possibility that you might consider proactively placing deposits or securing capacity, even if you don't have visibility on the power yet, just to take advantage of a potentially counter-cyclical pricing situation, and later find the power or possibly resell it, or get ahead of the existing capacity pipeline?

Yes, we've done that in the past. I think any mining company would recognize that over different cycles, you either invest in infrastructure and power or focus on mining operations. It's a cycle that changes over time. When conditions are favorable, as we did last year, we executed a significant option order that allowed us to secure pricing when we believed the timing was right. We would consider doing that again when we find the right moment to lock in long-term options to acquire large quantities of miners and develop the necessary infrastructure, depending on whether we are positioned for growth or contraction at that time. So, when the timing is appropriate, that's always been part of our strategy.

Your next question comes from the line of Bill Papanastasiou with Keefe, Bruyette, & Woods.

Maybe for the first one, perhaps you can give us an update on how you're weighing the existing tariff environment today when it comes to future fleet expansion? And hoping you could walk us through some of your options to prevent or mitigate these impacts? And how might that change your strategy going forward? I think we heard from a peer of yours today that secondary market purchases of hardware are being more heavily considered this day. So just curious to hear your thoughts as well.

Yes, purchasing from the secondary market is always an option since you're ultimately looking at the net pricing by the time the equipment reaches you. The tariff situation is quite unclear on a daily basis. We have observed improvements and fluctuations in the tariffs, but they are definitely part of our considerations. Our aim is to acquire miners at the best possible price. Fortunately, almost every manufacturer has announced they either have or will have production capabilities in North America. This shift is pushing manufacturing back to the U.S. For large-scale buyers like us, this is advantageous because these manufacturers will require anchor clients for U.S.-made equipment as they invest in local production, and we are prepared to purchase domestically produced items. This is the most effective way to handle tariffs in the current environment—by sourcing directly when possible.

Appreciate that color, Zach. And then maybe just speaking to the Bitcoin treasury strategy. It appears that CleanSpark was selling at peak, I think, this last quarter, 85% of monthly production, while still funding obviously all of the OpEx. Maybe you can give us like a little bit of a scenario analysis on how that could change depending on upward or downward price movements to Bitcoin and whether the thought that we might be in the tail end of a crypto cycle may adjust any of your strategy?

Yes, Bill. In situations where the price of Bitcoin rises, we tend to sell less of our Bitcoin because our costs remain relatively fixed and are not directly linked to fluctuations in Bitcoin's price. For example, power prices won't necessarily increase just because Bitcoin's price jumps by 10% overnight. We welcome higher Bitcoin prices because it allows us to hold onto more of our assets. This gives us the flexibility to either maintain our HODL balance or utilize our line of credit, which is a priority for us. If Bitcoin's price were to fall, we would have to sell more than we would in a rising price scenario. Ultimately, we are comfortable selling up to our production level. This is where digital asset management becomes important because by monetizing the price volatility, we can use any premiums earned to help offset our operational expenses and potentially add to our HODL balance. I believe that as we progress through the current cycle, which I do not think is nearing its end right now, our digital asset management initiatives will not only provide premiums and returns but will also allow us to use some of that profit for downside protection on our overall HODL balance.

Your next question comes from the line of Brent Knoblauch with Cantor Fitzgerald.

Regarding the sale of some Bitcoin production, is the ability to sell Bitcoin to cover cash costs dependent on scale? With greater scale, could you potentially sell less Bitcoin to meet the same cash needs? How are you approaching this dynamic? I think if the investors we talk to gain more confidence in your capacity to sell Bitcoin while also accumulating it on the balance sheet, the narrative changes significantly.

Great question. I'll tell you that, that's one of our distinct competitive advantages is the operating leverage we have. So every new exahash that we bring online, the majority of that is dropping to the bottom line, which means that we have to sell less Bitcoin to cover that monthly nut. I think that's the best way I could put it.

Yes, that clarifies things. Regarding the pace of growth, you mentioned aiming to exceed network hash growth, which is often quite unpredictable on a day-to-day and month-to-month basis. What are your expectations for network hash growth for the remainder of this year or into next year? This could help us understand how to model your mining hash growth.

It's always difficult to predict the network hash rate. However, I believe we are witnessing a general slowdown as public miners have historically driven significant hash rate growth over the past three to five years. While capital-miners like us are still investing in this area, some of our peers are either investing less or not at all, contributing to the slowed growth of the hash rate. Additionally, as miners upgrade for better efficiency, the same energy output can result in significantly more hash rate. We anticipate that this upgrade cycle will contribute more to global hash rate growth over the next year than new Bitcoin mining data center build-outs. Interestingly, we observed at the end of last quarter that if we look at the entire quarter, it effectively balanced out with an 8% increase followed by an 8% decrease, resulting in flat growth. We expect to see more of that steady trend, though we anticipate some gradual upward movement. We will continue enhancing our facilities and growing. In summary, while we aren't making specific predictions, we feel confident in our ability to exceed global hash rate growth. Furthermore, one advantage of mergers and acquisitions in this field is that acquiring existing hash rate can directly contribute to our total without dilution. Overall, these various factors are on our radar, and it’s encouraging to see investments in alternative computing methods as this trend also slows global hash rate growth.

Your next question comes from the line of John Todaro with Needham & Company.

Can you just help me understand the risks in the yield-generating strategy? Just kind of where could the model break down just given it is a large portion of the stack, right, it's 40%. So just help me frame that up a little bit better.

So, similar to any other option, like covered calls, there are several factors to consider, including duration and strike price. These factors are linked to volatility and delta. We take more risks on the short end, such as writing a 1, 2, or 5-day call, which might have a higher delta. Delta can be seen as the probability that a call will be exercised; the higher the delta, the higher the premium. We refer to this internally as our Spot Plus program. Instead of just selling at the current market price, we should be selling at a strike price equal to the current price for the next day. This strategy allows us to stay ahead of the spot market due to the premiums. In the short term, the risk isn't very high because we are aware of our cash needs weekly and write high delta calls that do not exceed those needs. In the long term, we generally write lower delta calls for about 4 to 6 weeks out. These deltas generate a small premium, and we can increase volume and close out calls if they become profitable. Comparing this to lending, when you lend out 100 Bitcoin on an unsecured basis, the derivative strategy is preferable because we have negotiated agreements requiring only a percentage of collateral, usually between 30% and 45% of the total contracts. We manage counterparty risk by performing thorough due diligence to ensure our counterparties can responsibly maintain that collateral, often confirming they are licensed or registered with regulatory authorities.

Got it. Okay. That's very helpful. I appreciate that. And then just one quick one, on M&A. I think from where we're all sitting on the sell side, it seems like these opportunities would be coming up here in the next couple of quarters. But just kind of any sense on timeline of these opportunities? Like are you already looking at some pretty closely? And are the assets looking fairly attractive out there now versus some of these opportunities that presented themselves a couple of years ago?

Yes. I can't really comment on time lines, of course, by any means. I can just say that there's a robust pipeline of opportunities. And just like all things, some are looking better than others. We say no to nine deals out of ten. That's what we've always done from a historical basis because capital is always finite. And our goal to have the best capital stewardship to generate the best ROI means that we only want to take the best deals that are out there. So again, as much as there's a very robust pipeline, it's about finding the best ones, and that's going to happen in the right time, right place concept.

If I could add one other thing, Zach is absolutely correct. ROI is our top priority for any acquisition we consider. However, we are not interested in paying the premium that comes with acquiring another public company. That premium could be better invested in infrastructure, upgrading our fleet, and achieving a better ROI. Therefore, we expect to see fewer public-to-public acquisitions. Any future acquisitions will likely be in the private sector or involve greenfield opportunities.

Your next question comes from the line of Stephen Glagola with Jones Trading.

Zach, I wanted to dig into more on your prepared and Q&A remarks around the potential flexibility of certain sites for alternative uses. I mean, I think it's clear that CleanSpark has consistently shown its prowess in mining as an operator and strong long-term commitment to Bitcoin mining. At the same time, your hybrid peers are seeing higher valuation multiples by pivoting toward AI/HPC. So are there specific sites you view as particularly well suited for non-mining applications such as AI/HPC? And additionally, have you engaged any preliminary discussions with potential partners in these areas so far? I'm just trying to gauge what would have to change in your calculus or the company's calculus for any strategic shifts here. Appreciate it.

Yes. We have consistent returns of 55% based on the types of investments we make, and our capital outlay is very predictable, significantly less than many alternative compute spaces. From a geographic perspective, being closer to major areas like Atlanta, Georgia or Cheyenne, Wyoming adds more value. Data centers prefer locations with low latency opportunities, so being about 100 miles from a major metro area significantly enhances the value of our power assets. It's not solely about alternative forms of compute; any place where power is the main source of value is how we are approaching this. Regions with lower power costs create their own considerations for our portfolio. While I can't provide specifics about ongoing discussions, geography is crucial, and we need to ensure any potential investments generate even greater returns than what we’re currently achieving. We also have our outlook on Bitcoin. Considering the direction of Bitcoin and the returns we believe it can generate in the near term is another factor we need to account for before contemplating any change. I'm going to add one more thing. I don't think it can ever be underestimated. The fact that if we were to take down any one of our sites, major metro or not for two or three years to do a full rebuild, how much revenue we're going to miss out on? That is also something I just want to call out is very important to us is what is that revenue cost going to be to us. It's an opportunity cost that goes away. And so there's always an uphill battle for any other opportunity.

Thank you, Zach, for that information; it was very helpful. I just want to clarify if you are considering this option to some degree. If something were to develop or if you decided to pursue opportunities in Georgia or similar areas, would that be communicated during an earnings call in advance? Or would it be more of a surprise announcement when a deal is made for another purpose? I'm interested to know if you can provide any additional insight on that.

Yes, I want to reiterate what I have always said. We are focused on delivering on our commitments rather than making promises about future plans that we are still exploring. We will announce any real deals and opportunities when they materialize because we want to ensure our shareholders are informed about existing customers.

Your next question comes from the line of Jon Hickman with Ladenburg.

Most of my questions have been addressed. I was curious about the transaction fees associated with each award. What is the current situation regarding that?

Jon, I'll take that. So those have been relatively low. So I think they've been between 1% to 3% of the block size. I'd point you to a website that we use, it's mempool.space/mining. It's a great reliable place. You could see even what the last block was and what the reward was, knowing that every block right now is 3.125 Bitcoin. If you see something that's greater than that, the delta obviously is going to be transaction fees. With transaction fees, there's going to be an ebb and a flow. It's really hard to predict those. I think that when you look at the theory of hyper Bitcoinization and really the life cycle of Bitcoin, the miners in coming decades, I think it's going to be a while until we get there. But in coming years, the miners are going to flip from actually being paid by the subsidy to the transaction fee. I think we got ways to go there. But with Bitcoin adoption increasing in greater volumes, we'll see that tick up. But it is hard to really forecast that because when you look at the halving, I mean, there were some transaction fees that were in excess of what was it like 4x, 5x or 10x what the subsidy was. But the great thing about mining is that if and when that uptick in transaction fees does come, there is no incremental cost to us. So that's just additional gravy.

Okay. Then one last question. As you upgrade your fleet to the latest miners, is there still a market for the older equipment, or do you need to write it off? What is your strategy for that?

No, there's a very robust market, in fact, that's always existed. And actually, these tariffs as were mentioned earlier, potentially make it more robust. So we are seeing some of the older generation miners continuing to have a more long-term, I'll call it, terminal value as they're sold to third parties because there's a lot of groups that don't want to deal with either whether it's shipping timing or the tariffs or the unknowns around that, you can get certainty by buying it from your neighbor. So it's a very, very robust. And so we absolutely expect to extract value and have each and every quarter over the past couple of years as we rotate out of miners, we definitely pull dollars out of the market.

Which I'll add really helps us with the ROI calculation for future investments, too. So that's why keeping our finger on the pulse of the secondary market is very important because that's part of our calculus.

Your next question comes from the line of Jim McIlree with Chardan Capital.

Yes. Gary, you talked about 40% of your HODL balance used for asset management. And I'm wondering if that is limited by the 40%, if that's limited by your risk tolerance or the market depth or liquidity or your internal expertise? If you can just comment on that, please?

Yes. Great question. I think through all of our comments, regardless whether it's digital asset management or how we run the business, there's a certain prudence and conservatism that we take in all regards. So the 40% is just what we would allocate the greatest amount of the HODL balance that we would put at some risk. And remember, I had answered this actually in a prior question. Only a percentage of that gets posted as collateral. So the amount that that's actually at risk is less than that. But again, with low delta options and derivatives, we're able to get some additional juice and continue that low risk. We're always able to take out derivatives with cash if we need to close out this position because we don't want them to get called because maybe it has a low tax basis, things like that. But at the end of the day, that's really meant more for risk management, and that's going to increase and decrease as we see opportunities and as our experience in this area kind of tracks on.

You raised a relevant question regarding the administration's energy strategy. The evolving policies suggest a focus on medium- and long-term considerations, particularly in energy generation. While there is some emphasis on natural gas production that could potentially lower prices, the primary goal is to enhance production overall. This will result in more power available in the markets, although we likely won't see the effects for about 3 to 10 years. Different energy sources will play varying roles in this timeline, with nuclear being the most distant and natural gas being more immediate. In the medium to long term, this gives us increased confidence in the U.S.'s strategic position for maintaining power costs, reinforcing its appeal for growth. I don't expect the administration to resolve all issues promptly, but we are well-positioned as miners with adaptable operations to manage short-term price fluctuations. Ultimately, the policies seem to be paving the way for a strong energy future in the U.S.

There are no further questions at this time. Harry, I turn the call back over to you.

Thank you again for joining today's earnings call. We look forward to staying in touch and sharing future results with you in the coming quarters. Stay tuned for more groundbreaking achievements from CleanSpark, America's Bitcoin miner.

This concludes today's conference call. You may now disconnect.