CleanSpark Inc (NASDAQ:CLSK) provides software that manages microgrids and saves money on energy costs, but there’s much more to the company than just microgrid software. CleanSpark puts its software to use for its own operations as a bitcoin miner.
CleanSpark versus competitors
CleanSpark differs from other energy management companies because it combines its own solutions with bitcoin mining, giving it two different streams of revenue. Some of the company's competitors include Encycle, LO3 Energy, Telkonet, Spirae and QOS Energy, but they don't have bitcoin mining operations to supplement their energy management solutions.
CleanSpark entered the bitcoin mining business by acquiring ATL Data Centers in an all-stock transaction. The company's website doesn't even mention bitcoin mining, which suggests that the microgrid software business is the main segment. However, it's the bitcoin mining division that gets all the attention from both CleanSpark and its investors.
When the company acquired ATL, it had almost 3,500 bitcoin mining rigs. The addition of bitcoin mining serves a dual purpose. CleanSpark can raise cash by mining and selling bitcoin, and bitcoin mining also provides an opportunity to show its software in action. CleanSpark can demonstrate why its energy savings solutions work in a way that competing energy management companies can't.
The microgrid software firm also acquired GridFabric and p2klabs, both of which provide additional verticals for growth. GridFabric provides software to streamline load shifting on the power grid. p2klabs is a design consulting firm that specializes in applying design, technology and business processes to create digital experiences that can grow businesses.
What's next for CleanSpark?
Due to accelerating bitcoin demand, CleanSpark boosted its sales guidance to about $30 million, about a 300% increase from what it managed last year. To come up with the higher estimate, the company added more miners and factored in the recent increases in the bitcoin price.
CleanSpark plans to boost its bitcoin mining and reduce energy costs, maximizing profitability for the mining operation. The software firm claims it can mine bitcoins at what could be the lowest energy cost in America. It said in a recent press release that it expects to increase its petahash rate beyond previous expectations. A petahash is a unit of measurement for the number of hashes per second, while hashes are used to calculate verification of a bitcoin transaction.
The bitcoin mining business isn't the only part of the firm that's growing. In a study last year, Deloitte found that about 44% of surveyed business owners were considering microgrids, an increase of about nine percentage points from the year before.
Additionally, the Federal Energy Regulation Commission's September ruling could bring a major policy shift in favor of the distributed energy market and CleanSpark. Microgrid developers and owners could see new value streams for wholesale markets.
About the microgrid and bitcoin sectors
A microgrid is a self-sufficient energy system that serves large buildings or campuses like colleges, hospitals, business centers or a neighborhood. The size of the microgrid market surpassed $8 billion in 2019, and it's expected to see a compound annual growth rate of 24% between 2020 and 2026, according to Global Market Insights. Increasing demand for reliable, uninterrupted power and soaring electricity costs are giving the microgrid market a boost.
Revenue in the bitcoin mining market has especially been surging this year as the cryptocurrency's price repeatedly touches new highs. According to Statista, on Feb. 13 alone, crypto miners raised $53.95 million in revenue. They raised only $33.9 million in revenue in all of December, so the market has skyrocketed rapidly in the last few months.
CleanSpark has a wide trading range over the last year, as its 52-week high is $42.60, while its 52-week low is $1.03. As of the time of this writing, its market capitalization stands at around $617.3 million. The average daily volume over the last 30 days is 3.38 million shares.
CleanSpark's 20-day moving average stands at $26.75, while its 50-day average is $29.41. The stock's 100-day moving average is $21.72, and its 200-day moving average falls to $14.62. CleanSpark pulled back slightly from its double-top resistance line, which could set it up for a breakout, driven by microgrid demand and bitcoin mining.
This week, CleanSpark announced the closing of a previously announced underwritten public offering of more than 9 million shares at $22 each, bringing in about $200 million. The company planned to use the proceeds from the offering for working capital and general corporate purposes, such as the purchase of more crypto mining rigs and further development of its mVoult product lines.
One of the greatest challenges associated with bitcoin mining is the high cost of electricity. Crescent Electric estimates that it costs about $4,161 on average to mine a single bitcoin. CleanSpark has a unique opportunity by incorporating bitcoin mining into its operations. Not only does it have a chance to take advantage of soaring cryptocurrency prices, but it also provides a proof of concept for its software and energy solutions.
Disclosure: VALUEWALK LLC has been paid $1,000 by a third party to provide this article coverage on 03/31/2021 for CleanSpark Inc (NASDAQ:CLSK).
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