Thank you, everyone, for coming back to the afternoon session. You know, today we're grateful to host CleanSpark Co-Founder and Executive Chairman, Matthew Schultz. Thanks, Matt, for being here. Appreciate it.
Thanks for having me. It's been a great conference.
Thank you. Today, the title of this discussion is The Bitcoin Mining Edge: CleanSpark's PurePlay Investment Case. Let's start, Matt, you know, in January, CleanSpark marked its five-year anniversary of listing on the NASDAQ by ringing the bell. The company achieved another milestone in March by joining the S&P SmallCap 600 Index. Maybe just for those that might be less familiar here in the audience, could you discuss the company's evolution over the past five years?
Yeah, happy to. Thanks for the question. We were born as an energy company. Zach and I founded the company together, and we built a portfolio of patents and IP surrounding distributed energy resource management systems. Think energy generation plus energy storage. What was our secret sauce was basically the control mechanism.
We worked with Military, Industrial, and Commercial clients. For example, at Marine Corps Base Camp Pendleton, we built microgrids that served mission-critical loads, meaning navigation, guidance, and communications. We had both the infrastructure—energy storage, energy generation—but also the control platform that enabled that to stay live regardless of what was happening with the grid. You know, we always—we hear a lot about the instability of the California GRIID.
We built a system that would allow those mission-critical functions to work even in an extended period of energy disruption. We then built a supporting control platform that operated under certain vectors. If a commercial client wanted to use our system and avoid peak energy costs, they could use that software, and it would do peak shaving and load balancing. We evolved it further and developed an open virtual top node, virtual end node communications protocol. Long answer, but it makes sense.
In California, if you participated in demand response at an industrial level, you used our communications protocol. We were really about enabling large power users to minimize their cost exposure and maximize the resiliency of their operations. Learning about the opportunity that Bitcoin presented seemed like a really natural fit.
You know, after we grew one of our immersion-cooled facilities, there was a journalist from Axios that came, and Axios has historically not been very pro-Bitcoin. Brady Dale wrote an article, and he said, "What differentiates CleanSpark is that it's a—rather than being a team of Bitcoin bros trying to understand energy markets, it's a team of energy professionals iterating in the digital asset space." We feel like that's kind of—that was our jumping-off point, and that's kind of where our differentiation started, and we feel like we've grown it since then.
Great. And, you know, as you derive 100% of your revenue from Bitcoin mining, today, you know, I'd like to just maybe talk a little bit about the total addressable market around aggregate mining revenue first and the drivers there before going into some company-specific questions. You know, we've seen growth in aggregate mining revenue over 2023 and 2024.
It's still slightly down from the 2021 peak. You know, obviously you have the block rewards revenue, and then you have the transaction fee, revenue side. So maybe just high-level talk about how you kind of see aggregate mining revenue, and that TAM over the next 5 to 10 years.
You know, the beauty of the network is everybody knows what the new Bitcoin produced every day is. I mean, it's $4.50 no matter what, right? With the kind of the variability, the question being, what percentage of the daily revenue can you derive from block rewards? It's really a function of a multitude of different questions, but really it goes back to adoption.
With the new administration, we're seeing greater adoption. If you were to create a chart and you were to chart the growth in adoption, Bitcoin price appreciation over time, the regulatory environment, and I guess maybe the energy relationships, each one of those charts would go up and to the right. We've taken a long-term view by building energy first.
We feel like what's going to be the differentiator as difficulty continues to go up, a larger number of less efficient miners are forced to unplug, which organically grows our share of the Bitcoin network. As we continue to reinvest to make sure we have the most efficient fleet and the best or among the best, most competitive energy prices, we feel like it'll be a continued differentiator.
I mean, if you look at our last queue, we have the lowest SG&A of any miner in the space. We really focus more on austerity and ensuring that we're making the decisions at the right time that support the best return, being the, I guess, highest possible stewards of investor capital.
Great. And, you know, maybe on just, you know, Bitcoin, I mean, over its history, right, it's only experienced one sort of NBER-defined recession, right, which was in 2019, during COVID, and it was very short, shortest, I think, recession on record. And, you know, just given there might be some risk arising, today, you know, obviously things were positive, but, you know, some concerns around potential recession risk and so forth. I think Polymarket has higher odds there. You know, how do you see, envision Bitcoin price sort of performing in a, you know, recessionary environment?
You know, the answer to the question would be entirely different if we were talking 12 months ago. I think the four-year cycle pricing is somewhat broken, but more importantly, if you go back for the last 10 days since everything started with the tariffs and, you know, the global financial markets in crisis, Bitcoin has significantly outperformed the MAG 7 and every other group.
I think we're starting to see a paradigm shift that Bitcoin uniquely, I mean, it didn't, it didn't translate to Ether. It hasn't, there hasn't been a correlation with other digital assets, but Bitcoin seems to have begun a pivot from a risk-off asset to more of a risk-on asset. To see that, it kind of brings full circle, I think, the vision of what Bitcoin could ultimately be.
Great. You know, one more sort of on an industry look, on hash price, right, with the interplay between aggregate miner revenue and network hash rate, you know, you've seen that decline pretty significantly through each halving cycle. You know, I'm just curious to ask you, you know, I talked to your team, I had the privilege of meeting a lot of your team yesterday, which was really nice. You know, Taylor, I've asked the question, right?
They said they don't think so. I'm curious to get your view around, you know, do you think that, you know, that trend of downward in each halving cycle continues over time? Do you think you can see some stabilization, whether we get some activity on the transaction fee side or so forth? Curious to hear your views here.
You know, I think it's going to be a challenging environment for the space in general, just because it is so CapEx heavy. I think what we're seeing is many of our peers have started to talk about other lines of revenue. We're HPC- AI, we're, you know, zero-cost power. We're going to get start dabbling in other markets.
What that ultimately means is, and I had an opportunity to do a podcast with a guy, Dr. Lewis, and we talked about that, you know, kind of the old story, right? Two guys asleep in a tent and a bear comes wandering into the campsite, and the one guy starts to panic and the other guy puts on his shoes. The first guy's like, "Why are you, why do you put your shoes on?
You cannot outrun a bear." He said, "I don't have to outrun the bear. I just have to outrun you." That is kind of the way we look at the Bitcoin network. If we have among the highest, so there are really five factors in Bitcoin mining that we look at, and it is total hash rate, uptime, fleet efficiency, Bitcoin HODL, and what is the other one? I am forgetting,
Gary.
It does not matter. The point is we have never endeavored to be number one at everything. What we have always focused on is making sure we are one of the top two or three. If I have the highest uptime, which I think is what CleanSpark has long been known for, and if I have the number one or number two most efficient fleet and we're one of the two or three highest liquidity stocks, so we have access to capital, we have a really strong balance sheet, I think that begins to be a differentiator.
What we're seeing more and more is many of our peers are looking to focus elsewhere on stable revenue streams. I think that only benefits us long term. You know, the knock that you had, the operation or the opportunity to go in yesterday, for a lot of our peers, forever this business was asset light versus owned and operated. There was an argument either way. Now it's, are you AI or are you pure play?
But.
The argument for asset light versus owned and operated is the flexibility and the autonomy that we have with regard to our operations. When you walk in the knock, you can see energy prices in real time in all of the jurisdictions in which we operate.
You can see ambient temperature and relative humidity, which on facilities that are air-cooled, that becomes a factor. If you were an asset light model, you take your computers, you drop them off at a data center and you say, "Run them," they plug them in and operate them. Ours are not, it is not so much an on-off switch. It is more like a rheostat, right? You can turn them up a little bit, turn them down a little bit. We can modify the performance of our fleet based on environmental and economic conditions. That is a huge differentiator.
The guys you met, you know, Taylor and Tyler and the team of professionals that they have, the cool thing for us as a management team is we've surrounded ourselves with much smarter people when it comes to those specific technology skill sets and operations. They have the ability to get more juice out of the squeeze. They can operate more efficiently.
As that separates us, you know, we're now one of the two largest Bitcoin miners, and we have more domestic hash rate than, than I think anybody else. What that's enabled us to do is to be more efficient and to produce at a higher level, more Bitcoin per exahash, more exahash per megawatt than many of our peers.
Aside from that, we talked briefly about SG&A, you know, we have 31 data centers and almost a gigawatt of power, and we only have 300 employees. You know, you compare that to many of our peers, and they have double that headcount. Being able to, you know, be extremely focused and efficient on what we're doing and not chasing shiny keys kind of offsets the volatility in hash price because it's really a function of what everyone else is doing. As long as we control what we can control, I think we win.
You know, the mining industry is consolidating, yet remains fragmented globally. You know, you talked about your leading in domestic hash rate in the United States. You are the largest United States Bitcoin miner. You know, we estimate your market share grew from, you know, around 0.4% in 2021 to now slightly over 5% in Q1. You know, public miners, I think in the aggregate account for somewhere over 30% of the market.
You know, you have China and Russia miners that are probably also represent a significant, you know, slug. Maybe just discuss why does CleanSpark prioritize scaling U.S. operations, and how do you see market share trends and consolidation evolving during this halving cycle and after?
You know, we've been pretty inquisitive over the last few years. You know, we bought the assets of one public company, Mawson Infrastructure. We did a public-to-public transaction with Grid. We've continued to buy a lot of sites that make sense. We've analyzed and investigated opportunities in South America, in Africa, even in Europe.
If I could, you know, just take a little bit of a segue and talk about a differentiator, we, when we rang the bell, they did a kind of a show and tell video about CleanSpark. We had a film crew go to this little town in Sandersville, Georgia. The mayor sat down to talk about the impact that CleanSpark's had in their community. Fifty years ago, Southern Company goes bankrupt, 49 small communities throughout Georgia each sell a bond.
They make their investment in this new Plant Vogtle Nuclear Power Plant. Now, 50 years ago, a lot of these small communities had timber mills and manufacturing and, you know, heavy industry that, you know, our country's done a pretty poor job of maintaining that. We've offshored a lot of that. What that means is these little municipalities have pockets of power that was allocated to them, and it's less efficient to transport that power.
Additionally, like for example, in Georgia, a lot of the, we have a ton of hash rate there, a lot of megawatts. I think we're, you know, 20% of the MEAG network. If the state of Georgia exports that power to Florida, like they do, those municipalities that bonded the construction of Plant Vogtle receive no benefit.
What we did is we designed a relationship where rather than focusing on, "I need fixed cost power and you have to sell it to me at that," what that does, we saw from the last time the cycle went bad, it puts utilities and hosting companies at risk and it becomes an existential threat.
Instead, what we negotiated is a fixed power agreement where we pay their absolute cost for power and then we allow the cities to make a little margin. That means if power prices are up, we make the economic decision whether we're going to curtail or underclock or remain the status quo. What our operations do is we manage to profitability. We don't manage to an energy price.
Jimmy, the mayor of Sandersville, Georgia, sat down with us at a diner and he's telling the guy on this show and tell video, he said, "I've been between City Council and being a Mayor, I need to have my head examined because I've been involved for 44 years." And for 42 years, we entered every single fiscal year in the red.
He said, "For the last two years, we've ended up with a surplus." He talks about the splash pads and the walking trails and the bike paths and all the things that they built because in the state of Georgia, the margin on those revenues stays in those communities. He then had an opportunity to be interviewed by an Atlanta TV station because sales tax on utilities also stays in the community.
They've created this surplus in sales tax and it's very specific how it can be allocated. We've not only allowed the citizens of these communities to participate in like the Costco model of buying power, but we've created this surplus. Not only are we growing and developing and improving the communities, but the sales tax has now created the surplus.
In the interview with the Atlanta TV station, they said they have no choice but to apply it to property taxes in the community. Really long answer to your question, but here's why. Those 49 Mayors, City Managers, Economic Development Directors get together four times a year to talk about strategy. That kind of information doesn't remain in a vacuum. It gets shared.
The Mayor of Sandersville is friends with the mayor of Washington, is friends with the Mayor of Dalton, is friends with the Mayor of Pick a City. These small communities are now saying, "Hey, can you do that here?" The differentiator is that we have greater favorability in those transactions than, say, a hyperscaler might, because the expectation of power that's up to 99 and five nines puts an unrealistic burden on the community to fill and to meet the terms of those MSAs.
We said, "Hey, we'll be the first guys to shut off." When the hurricanes hit, the little city of Washington, Georgia, we have 86 mg there. A town was named after the president of the country when it was founded in 1780.
The city hall, the foundation, there's a historical marker in that foundation. That's the, the same building exists today where they signed the documents that abolished the Confederacy. These are really rural, really blue-collar, not sophisticated towns, but they have access to power and they just want somebody to treat them fairly. When you go in there and you create the relationships like we've done, it becomes contagious.
Why would I have the counterparty risk of, you know, popping up a facility? Eric Trump spoke earlier about, you know, they're using surplus power in the wintertime to mine Bitcoin in the Emirates. Counterparty risk. Let's talk about that from an analyst perspective. If I have a disagreement with my operating partner in the Emirates and it's a sovereign wealth fund, to whom do I litigate that matter?
What are the likelihood that I prevail? What I know about doing business in Wyoming and Tennessee and Georgia and Mississippi, and as we continue to grow throughout the country, these relationships are a win-win. There is pull-through demand. We get invited to come into the city. You know, I have a team of professionals that works with me. Nobody goes and knocks on doors and asks, "Can we come there?" People invite us to come do what we do there.
Yeah, no, that was great. Maybe just touch on again, I'm going to ask you again, just on, you know, how you see sort of the market concentration and market shares sort of evolving. I mean, do you think we have, you know, more or less public miners, you know, in 2028? Do you think, you know, let's start there.
Yeah, I think the number decreases rapidly. I mean, Zach talks about the fact that three of anything is the right number. You know, you look at big companies, and everybody can name the top three manufacturers of TVs or automobiles or cell phones. But once you get beyond that, it starts to get confusing. This business is about access to capital.
As the spreads increase where they're the, you know, the top three and then everybody else is kind of an also ran, a lot of the companies that aren't the biggest, that don't have the liquidity, that can't do a 0% bond, that can't, you know, raise capital in that same way, that don't have a balance sheet, they're now talking about AI. They're talking about other things.
I think that consolidation, what really happens, you know, we heard the Trump family talk today. They're working with Hut sounds to me like they're going to step away from the Bitcoin side, focus on the HPC AI. One of the things they discussed on your panel this morning is that they see their stack of Bitcoin as capital to grow the AI business.
That's great for them. I think it's a wonderful opportunity. If they can monetize those megawatts, then absolutely more power to them. What that means is the companies like that are looking to remove the mining assets from their balance sheet because, I mean, look, we have just under a gigawatt of power, a thousand megawatts. And there's some Digital Realty has 1.2 gw. I have a $2.5 billion market cap. They have a $90 billion market cap.
When you look at the disconnect between valuation, the companies that are looking to pivot or are trying to straddle that fence, they're really looking to kind of divest of the Bitcoin mining assets to focus more on AI. I think there are fewer mining companies. I think that that creates greater opportunity. It increases organically our share of the network.
You know, I think the U.S. government is going to continue to focus on domestic hash rate because just like the SWIFT system, I mean, if there were, if hypothetically there are OFAC restrictions on block space, if there's not block space in the U.S., all these U.S. companies now are challenged with access to the blockchain.
I think it becomes a matter of national security that the U.S. has predictable, secure Bitcoin block space. I think that gets narrowed down to the top two or three guys, and everybody else continues to chase other opportunities.
One more on this. I mean, do you think that increasing concentration comes from more M&A or attrition?
I would say C, all the above. There are companies that, you know, we meet with, with private operators all the time and, you know, they have a fleet of, you know, blend of S17s and S19s and they have cheap power and they continue to operate. But, you know, they had a $20 million CapEx investment five years ago. The question is, do we take the profits that we've had? Do we sell our infrastructure to somebody else that's going to refresh the fleet?
Do we go deep on debt and try and duplicate it again? An increasing percentage of those small operators are calling companies like CleanSpark and others and saying, "Hey, you know, what are my megawatts and infrastructure worth to you?" I think it's going to be a combination of both. I think you'll see more, continued acquisitions.
You know, there are some big players in the space that have made it abundantly clear they're not going to grow hash rate anymore. They want to talk about compute, but they have assets and rack space that are valuable for Bitcoin mining that maybe not so much for HPC due to latency or geography or whatever the case may be. Those are relationships and calls that we receive on a daily basis.
The Bitcoin mining industry, you know, faces challenging economics due to its global competition, you know, capital intensity, you know, commodity-like revenue streams. Many competitors, as you just mentioned, are diversifying into high performance computing, co-location, or attempting to. You know, CleanSpark operates, I think, 29 owned and operated data centers at the end of Q4. Why does CleanSpark maintain its focus on Bitcoin mining? Let's start there.
You had an opportunity to meet Taylor. We get inbound solicitation all the time from companies, hyperscalers that are interested in what we do. The argument has always been the same. If you look at what your revenue is per kilowatt as a Bitcoin miner, it is X. We compare it to what the MSA would call for on a relationship with a hyperscaler, it is Y.
There is a differentiator. If you look at it on its face, it is like, okay, if I am currently making $0.17 a kilowatt hour and a hyperscaler is worth $0.24 a kilowatt hour, why would I not do that? If you consider it from the perspective that you are only looking through a fiat lens, then it would make more sense to pursue those relationships because the ROI is better.
If you look at the value of our kilowatts from 2023, when we were mining Bitcoin at a 55% margin and Bitcoin was, you know, $60,000 just a year ago, my cost to mine it is at $20,000. Now I have 12,000 of those Bitcoin on my balance sheet and I have all that appreciation of that value. You have to factor in what is my real return on those kilowatts compared to something else.
As we see a significant increase in competition for the hyperscalers, there are a couple of models, right? Do you do GPU as a service? We have peers in our space that went really aggressively at securing megawatts and they are now talking about GPU as a service and spent tens of millions of dollars on H100s.
Rental on an H100 one year ago this month was $8 and change per hour. You know, H200s are out and now Blackwells. H100s are antiquated. The Moore's Law cycle is accelerated in GPU service far faster than in the Asicspace . What that really means is now you've got all this CapEx invested in assets that it was $8 an hour, now it's $1.25. What's the ROI for my shareholders? What's the cap call necessary to refresh that fleet? At the end of the day, if my power contracts really don't provide that 99 and five nines uptime, am I really attracting a creditworthy tenant in these relationships?
For us, it's a measurement, kind of like talking about international expansion, really heavy measurement on counterparty risk, analysis of the long-term return on investments, and then using technology that we have at our disposal to maximize the value of what we have and, you know, doing what we know best has just been, it's been justification for our focus.
Never say never. We deployed 75 mw of immersion-cooled facilities from the time we bought the facility, scraped it to the ground and started over. We were hashing in six months. That attracts a lot of attention from hyperscalers saying, it's a five-year process for us. How could we, you know, collaborate, work together? We see those opportunities, but for right now, at least today, the measurement is that we're going to focus on what we do best.
I think, you know, CleanSpark, you know, you've, you've often spoken your team around, you know, on differentiation, right, versus your peers. You know, you often talk about operational excellence and your capital stewardship. So maybe just, I know you've, you've been discussing this as we've been talking, but maybe just put some finer points on maybe those two areas and, you know, why you view, you know, your company as this differentiated miner.
Eighty percent of our growth going forward is immersion cooled. We've secured the entire supply chain of that equipment. It's quieter. It's almost a set it and forget it with the exception of the firmware that we make those adjustments regarding, you know, global market conditions. By focusing on that, focusing on uptime, we believe that we can, I don't mean to sound condescending to the industry, but we're trying to be the adult in the room. I think the days of, hey guys, guess what? It's a new $2 billion ATM, but it's not bad news for you. Investors have become really weary about that.
To have $2.8 billion in assets on our balance sheet, a billion of which is Bitcoin, $650 million in long-term debt at a 0% coupon, we have a lot of flexibility that many of our peers do not have. You had the opportunity to meet with our digital asset management team. I think after that meeting, if you did not come away from that with a pretty strong thesis that this is a pretty adult way to manage these assets that maybe has not been considered before, you know, we look at it that way. We look at non-dilutive forms of capital for continued growth.
I think it's only a matter of time before the institutional investors kind of recognize that we, you know, recently there were some 13Ds that came out that BlackRock is now a 15.5% holder of CleanSpark, got a lot of feedback, both retail and institutional, but the single biggest component that people reached out to our team and complimented us on is in that peer, in that entire quarter period, CleanSpark's issued and outstanding shares grew by zero. It shows that by being disciplined stewards of capital and having a focus on returning shareholder value, it may not have resulted short term in the best price appreciation.
If you look, we talk about this in the office and it's a bad thing to say, but we're the least bad, you know, I mean, year to date, we're down, but we're not down nearly as far as many of our peers and especially some that have kind of bet the farm on focusing on AI operations.
In February, a major peer suggested that many grid-connected miners may struggle to remain economically viable after the 2028 halving. CleanSpark operates with a mix of grid-connected power agreements, as you know, Matt, including variable and fixed contracts across its facilities. You know, notably, I mean, we estimate CleanSpark has the second lowest hash costs. And this was as of Q1 2025, you know, in our coverage.
Maybe just address sort of, and you have obviously above average, than peer, fleet efficiency. Just address sort of the concerns about economic viability and future halvings and, you know, maybe discuss how fleet efficiency and energy costs will play into those dynamics.
Sure. So, you know, as Bitcoin miners, we fancy ourselves as really sophisticated. So we have to use joules instead of watts, which is normal, you know, normal English vernacular. You look at the measurement of our fleet and that last quarter we were 17 joules per terahash. What that means is for one terahash of processing power, we consume 17 joules. The average of the fleet a year ago, the vast majority of the public miners, it was in the high 20s, low 30s. Smaller operators that have a higher fleet efficiency, it costs them more power to do the same amount of processing.
When you combine that with basically kind of escape velocity, which is where we see ourselves, and that is that we're, we're now, we've reached the tipping point that we can choose to continue a 100% HODL strategy, or we can start to use the Bitcoin that we mine that we have tremendous margins on to sell that Bitcoin or use that Bitcoin in a digital asset management strategy to generate income. We're not strictly tied to leveraging equity for continued growth.
I think the fleet efficiency question is really relevant because the companies that are talking more about AI aren't making the CapEx investment in the new, like we just, in order to get to 50, we exercised part of the option that we had from Bitmain and we've got, I don't know, several million dollars worth of machines coming that are 13.5 joules a terahash.
Those will arrive and that'll drive our fleet efficiency even lower. We are now kind of less impacted by energy cost and by Bitcoin price because it kind of locks in our margins. When you add that to 99.8% uptime, it gives us kind of a distinct advantage that, you know, the guys that are talking more about AI are content with 22 joules a terahash or 23.
As those fleets kind of age out and there's another refresh, I think, increasingly likely that many of those, many of those operators focus more on other revenue streams because the cap call is just too, too, too big. You know, to my point I made earlier, I think organically that grows our share of the global hash.
We track cash SG&A as a percentage of revenue, across the industry. In 2024, CleanSpark had the second lowest average quarterly cash SG&A among our coverage, on that percentage basis. You're guiding towards more, you know, modest, you know, cash SG&A growth in 2025. I mean, can you discuss, you know, how CleanSpark plans to maintain sort of this lean cost structure or leaner cost structure as we go forward, and keep cash SG&A growth muted?
You know, back to the comment I made about the austerity, you know, our board, we had our entire board fly in town this week and they have a different approach, you know, like our, one of our lead directors spends his normal job in a bunker with the nuclear button in Hawaii, you know, PhD, very analytically minded guy. You know, one of our other directors is the chairman of a chain of credit unions.
And so when we make decisions that are material, the way that Gary and his team present this, we have to have an expectation that costs are continually being managed. It is simple things like managing our headcount and keeping our benefits in check and being prudent with the use of RSUs and PSUs as an incentive, being mindful of those other operating expenses that can run away.
Now, you know, we've had a couple of quarters where there were some outsized stuff, legal or whatever the case may be during big M&A that, that's kind of an outlier, but having a focus on that has been a differentiator for us and it's definitely impacted our financials. I think, you know, we see the growth of the institutional investor base on our stock. It's now, you know, close to 60%.
You have to believe that, you know, the exodus of retail investors is being offset largely by the inflow of new institutional investors. At some point, that's going to kind of stabilize and I think have an outsized return, but it really comes down to being mindful and disciplined.
You know, in some of those meetings, if you, you know, at a conference or a trade show or an earnings call, you're going to see all of our team locked arms and smiling and happy and everything's like the Brady Bunch. In some of those meetings in our office, doors get slammed and voices get raised and people advocate very passionately about a position and why. We've matured as a management team to the point that we can hear and analyze these arguments and perspectives and then make an informed decision rather than a knee-jerk reaction, which I think is why we've remained focused the way we have.
Big topic of conversation these days are tariffs. You know, CleanSpark sources its mining rigs from Bitmain, manufactures them, I think primarily in Southeast Asia. In your March update, you mentioned that the newly announced tariffs might temporarily increase industry-wide growth costs. Obviously, it's a fluid situation, but maybe you could just elaborate on this impact and how CleanSpark is positioned to navigate these challenges.
Yeah. One of the things we talked about recently in the news was that we've onshored the vast majority of what we need to get to 50. You know, we were joking earlier that with the 90-day postponement of tariffs, it's almost disappointing.
I know I'm saying that tongue in cheek, but we've created a bit of a moat because we've got the scale and we have the machines that are already onshored that will continue to allow us to separate from the balance of our industry to increase our efficiency, scale up our hash rate, you know, to continue to pad our balance sheet. We look at it generally favorably. It's kind of cool that, you know, a lot of the manufacturers have already begun to spin up operations domestically.
You know, one of the, one of the manufacturers of miners, in fact, one of Riot's suppliers, they've begun to import a lot of equipment, a lot of the components, and they do the bulk of manufacturing on certain model numbers domestically to circumvent that. So it's a win for everybody, right? I mean, the whole idea behind the tariffs is to strengthen the base for U.S. Workers.
It's a painful pill to swallow, but I mean, if today's pivot was an accident, I'd be surprised. I quite frankly think that, you know, the president took a mess around and find out approach rather than threatening we might do this. They threw everything at it. The Financial Markets cratered.
You know, according to what Bessent said on TV today, 75 countries have reached out and said, hey, how can we make nice? I think ultimately it benefits our country. For CleanSpark, I think, you know, it's a negative, probably a neutral point because we do have so much onshored already that, you know, it maybe negates some of the moat and the lead that we have, but, you know, we're prepared to manage around it because it's going to impact everybody the same.
Are you in a position yet to like quantify any impact on the tariffs or is that still just fluid and in terms of price increases or any, you know, anything around shipping costs and stuff like that?
You know, Bitmain does its worldwide digital conference every year towards late fall. They've just announced that they're going to accelerate that. It's going to be the week after BTC 25 here in Vegas, which generally means there's a drop of equipment. They're highly profitable. Bitmain could absorb a significant amount of the tariff impact in order to continue their dominance in the space.
If they're, I think it's probably likely that they're looking over their shoulder at some other manufacturers that are going to threaten that 13.5 joules per terahash machine that we're most recently buying. You know, before anybody said, hey, us too, I think they're kind of a step on the neck kind of approach.
Matt, management has emphasized the long-term margin benefits of increasing scale. You know, you achieved 42.4 exahash at the end of March. You're aiming to get to 50 exahash by the end of Q2. How does, you know, sort of the current weaker hash price backdrop influence your plans for scaling beyond, you know, maybe 50 exahash? Could you compare and contrast maybe your approach to scaling in both bull and bear markets? Yeah, thank you.
Yeah. So during the last bear market when Bitcoin was under a tremendous amount of pressure, a lot of our peers, you know, Bitmain launched the S19 XP and that was revolutionary, you know, a 144 terahash machine, much more efficient. And they were selling it at the time in that, you know, $80-$100 a T threshold. And a lot of the Bitcoin mining space, smaller players kind of FOMOed in and placed those orders.
The way our industry works is you put a deposit on this equipment and you get delivery two or three orders later. What happened to the price of Bitcoin between the peak and the market when everybody was FOMOing into these orders and when they started to onshore and arrive, the price of Bitcoin had fallen out.
The guys that had levered up were now facing margin calls or were capital constrained and could not pay the balance of these rigs. CleanSpark bought thousands, tens of thousands of rigs that had been pre-ordered at $80, $85, $90 a T. We picked those up at $15 a T for the same machines, new in boxes. It was kind of countercyclical.
When we bought the Washington, Georgia facility, same thing. They blew through a couple of opportunities to curtail and really smart, really nice guys, but they got so far behind that they were paying their power bill in cash daily and it was not sustainable. You know, we acquired some of these facilities. We use our balance sheet to be able to bond those deposits so it is not tying up a bunch of cash.
I think that strength, that exit velocity that we talk about has begun to pay more dividends. The idea that we were not afraid of countercyclical growth, in fact, we focus on it and we feel like it's really been advantageous for us. I think, you know, regardless of the time, we've secured the right machines. I mean, we have machines options up to, I think, 63 exahash, at the lowest prices they've ever been imported in the country.
The beauty is, you know, being Bitmain's largest customer right now, if and when at WWDC they drop a lower price, we have the ability to flip that option into the newer, later, greater stuff. I think it just continues to drive the separation between, you know, industrial scale, highly efficient, low leverage operators and everybody else. I think it creates opportunities for, you know, kind of a creative M and A.
Great. Investors have asked, you know, me, you know, how CleanSpark plans to fund growth beyond 50 exahash. And historically, you know, the company has relied on equity capital markets. And, you know, in December, you raised the $650 million zero Q bond converts. You have your, I think your current fair value of, of the Bitcoin HODL, you know, debt to the fair value of that is roughly like or close to 70%.
That was before going into today. What is sort of CleanSpark's appetite for taking on additional debt to support growth here? And, you know, would you consider establishing another at the market offering at some point?
We have not used equity since November of last year. We've been really clear on messaging that we do not feel like we think an ATM is a tremendous tool when valuations are outsized and you really receive a premium in your value. There was a period of time that we were trading at a premium. It made terrific sense to use a 2.5% instrument to pull down equity capital.
Under the current valuation, like I mentioned, $2.8 billion in assets and a billion of that is Bitcoin, to draw down equity when you have, you know, a $2.2 billion market cap does not make sense. What we have talked about and what Gary has, you know, slammed the table and stomped his feet about is non-dilutive equity or non-dilutive capital.
You know, Gary and I do dozens of calls with different institutions on a weekly basis. You know, the market is starting to open up to the concept of baby bonds and rating agencies are more favorable to disciplined Bitcoin mining companies. We've had opportunities to do another bond. You know, we did $650 million at 0% coupon price, you know, convert up $100. We paired that with a share buyback to kind of offset the hedges that bought into that.
We've now had opportunities to go back in and do another convert. You know, it maybe has a 1% or 2% coupon, which, you know, cost of doing business, it just makes sense if we can deploy that right. What we did different, you know, Bitcoin was what, $79,000 this morning.
In the same period of time that we did a bond and we chose to buy equipment to mine Bitcoin at $34,000 a coin, a lot of our peers went in and bought Bitcoin at $108,000. You look at, yes, we have 12,000 Bitcoin on our balance sheet and on, you know, bitcoin treasuries.net, that's the fourth biggest in the world of any public company.
We have mined every single one of those. We never, we did not buy one. Fear of market pressure and potential margin calls and the overarching concerns that may exist when you lever up to do that really do not apply to us. I think our approach is going to be, we are going to use Bitcoin to continue to grow.
What that means, we'll talk about more in the future, but you know, everybody knows we have a line of credit that's backed by Bitcoin, single digit interest. It's a revolver. We can use it when it makes sense and pay it off. You know, we've talked about the fact on our earnings calls that there'll be a time in the future that we maybe sell a percentage of our production.
We're, you know, we're going to hold on to the HODL, because of our underlying thesis on Bitcoin. I think going forward, you may see us be more pragmatic about growing the HODL instead of 700 coins a month, maybe 300 or 400 coins a month, and using the balance of that production to offset OpEx and to put some of that towards CapEx and to manage the debt that we have. Again, trying to be the grownup in the room and run it like a proper business.
Yeah. On that, sort of last point you made, I mean, historically, you know, CleanSpark has had taken an opportunistic approach with regards to its Bitcoin holdings. And you know, how, how, you know, would you consider selling, you know, down some of your Bitcoin stack here to fund future growth, like when we're talking about past 50 exahash and so forth?
We're pretty well positioned and, you know, Zach and Gary both talked on our last earnings call. They used the phrase exit velocity. What we mean by that is we've now reached the point that we can continue to grow our stack and sell a percentage of our production to offset the CapEx needed for growth. We have a lot of flexibility there.
The cool thing is with the Bitcoin backed line of credit, we don't have the tax impact. I mean, we're mining Bitcoin at $30,000. We start moving that Bitcoin into the market at $85,000. Now we're paying taxes on it. It makes it all that much more difficult to regain those sats that we sold to cover short-term CapEx.
I think you're going to see us use debt that's secured by Bitcoin on an increasing level, you know, continue to explore the bond market, even potentially look into baby bonds. I think we're going to be flexible. Will there be a time that we use, you know, equity again? Certainly. I mean, that's why every company is public. At this valuation, I think it's safe to say not in the near future.
You know, you kind of talked about this or alluded to it or briefly mentioned it throughout this conversation. I met with Rory on your team yesterday. It was great to meet him and what you're doing there. You know, last quarter, CleanSpark mentioned you're gathering RFPs to explore yield generation options for your Bitcoin holdings. I just want to see if you can elaborate on any strategies that are being considered and the potential for developing additional revenue streams that aren't dependent on hash price.
Yeah. So, you know, keeping it under, in the domain of what's already been publicly discussed, you know, we've developed a digital asset management team. We have a strategy. We circulated 19 RFPs for counterparties. We slimmed that down to about nine companies that we would work with. We're looking at companies that could partner with us on Bitcoin holding, on treasuries, on derivatives, on a number of different strategies.
You had an opportunity to meet Rory. I mean, I feel like I'm surrounded by really smart people. And then he starts to talk and I feel like I'm in middle school. There's just a level of the, I think how far in the future he thinks and the value he gives to everything from vol to market conditions to energy costs.
You know, he presented to our board a strategy that involves using this trading component of our company to generate yield, but not just based on the price of Bitcoin, based on global hash rate, based on the price of energy, based on, you know, global and geopolitical events. They have a number of levers to pull. It is such a thoughtful approach.
I mean, there are Bitcoin miners right now that have a HODL that are lending out Bitcoin unsecured for a 6% return. That looks great for a period of time until it is no long, it is not secured and does not come back. Much the same that, you know, forever, not forever, but for the last seven months, it has been really kind of in vogue to talk about Bitcoin yield.
When you're now leaning hard into equity and Bitcoin is flat or down, yield vaporizes. Now that's no longer part of a monthly discussion. Investors aren't stupid. You can't say this is a measurement criteria that I'm going to use as long as it's in my favor, but as soon as it shifts, we're not going to talk about it anymore because people don't have that, they're not that shortsighted.
I think, you know, being disciplined with that treasury management strategy, generating a legitimate yield. I mean, on a billion dollars worth of Bitcoin, if you make 3% a year, that covers a significant portion of your annual OpEx. You know, we're not swinging for the fence. The way that Gary and Rory presented it was a crawl, walk, run strategy. I think you'll start to see that roll out.
Yeah. I never got the whole Bitcoin yield term for just increasing Bitcoin per share, you know, but that's been how we presented. Yeah, I mean, it's another way to approach it, I guess. How do you view, you know, I guess let me just wrap this up. We got a couple minutes left and thank you guys for staying. It's been a good conversation, Matt. You know, how do you, you know, how, when you make the investment case for owning a miner like CleanSpark versus alternatives, you know, owning Bitcoin outright, owning ETFs, you know, what's, you know, what is the case that you make for the investment case?
I think, owning Bitcoin outright or buying an ETF is strictly predicated on the price of Bitcoin. If you're making an investment based on a thesis that the world's hardest money is going to appreciate over time and your expectation is to generate a return on that investment, it's a great place to go.
We like to think of ourselves as a disciplined leverage play on Bitcoin because, you know, as reported in our last quarter, our cash cost to mine a Bitcoin is about $34,000. We have a lot of pent-up demand and we get a lot of inbound from hyperscalers because of the fact that we have those relationships that I talked about. Finding, sourcing, and securing power is an art form.
We have a team of guys that have used our history and our reputation to get invites to use power rather than make requests to, to post up somewhere. I think you have exposure to what we believe the best Bitcoin mining operations in the world.
We've taken extensive consideration to counterparty risk, to managing our HODL, to our yield generation from Bitcoin trading, our energy relationships, the efficiency of our fleet, even something that seems as benign as the relationship between a small city, College Park, Georgia, there's a, you know, corner of a little piece of power, a little, a little piece of real estate and some power that's excess. They didn't call hyperscaler.
They called CleanSpark and said, "Hey guys, when can you be here?" You know, I think what you're getting when you invest in a company like CleanSpark is a disciplined and thoughtful approach to a leverage play on Bitcoin.
Thank you, Matt. This has been great. Appreciate you.
Thanks for your time.