Earnings Call Insights: CleanSpark, Inc. (CLSK) Q1 2026
Management View
- CEO Matthew Schultz described the quarter as “a meaningful step forward in CleanSpark’s evolution into a digital infrastructure and data center development company,” emphasizing that CleanSpark is now pursuing multiple independently valuable earning streams anchored by “scarce utility grade power.” He highlighted, “Bitcoin mining funds the platform. AI monetizes it and digital asset management optimizes it across all cycles.”
- Schultz detailed CleanSpark’s entry into the AI infrastructure market, stating, “we acquired 271 acres in Austin County, Texas, along with 285 megawatts of contracted power fully approved by ERCOT.” He further announced a second development in Brazoria County, Texas, with “an initial 300-megawatt demand load expandable to 600 megawatts,” forming a Houston-area hub with almost “900 megawatts of aggregate potential utility capacity.”
- Schultz reported, “during the quarter, despite challenging bitcoin price action and rising network difficulty, we generated more than $180 million in revenue at a gross margin exceeding 47%.”
- He highlighted the completion of a $1.15 billion convertible offering and the repurchase of $460 million in shares, bringing total share repurchases to over $600 million since December 2024, reducing shares outstanding by approximately 20%.
- President & CFO Gary Vecchiarelli stated, “For the quarter, our revenue grew year-over-year by approximately $19 million, an increase of almost 12%.” He added, “Our gross margins declined slightly from approximately 57% a year ago to 47% this quarter,” attributing the decline to increased network difficulty.
- Vecchiarelli noted a net loss of approximately $379 million, compared to net income of $247 million a year ago, primarily due to “mark-to-market adjustments to Bitcoin’s fair value.”
Outlook
- Schultz explained, “we expect to move from portfolio formation into commercialization milestones,” including “site-specific announcements, development partnerships and structured long-term offtake agreements.”
- He stated, “Our assets are being pulled into the AI market not pushed. We believe that over time, as those options convert into contracted visible cash flows, the market will increasingly recognize the embedded option value in our power and land portfolio.”
- Vecchiarelli emphasized that the AI data center business brings “stable cash flows and high margins, both of which will help CleanSpark through the peaks and valleys of Bitcoin mining economics.”
Financial Results
- Vecchiarelli reported, “revenues declined approximately $43 million or 19% to $181 million” quarter-over-quarter, citing “rising network difficulty and softer Bitcoin prices” as the main causes.
- He stated, “gross margins remained healthy at 47%.”
- Adjusted EBITDA was negative $295 million compared to positive $182 million for the fourth quarter, with the change “primarily due to noncash mark-to-market adjustments.”
- On a normalized basis, excluding these adjustments, “normalized EBITDA would be $55 million or approximately 30% normalized margin for this quarter.”
- Cash balance increased by over $400 million compared to Q4, attributed to the $1.15 billion convertible transaction.
- Vecchiarelli highlighted that the outstanding share count decreased by almost 20% in the last 15 months, with “not issued a single share of equity on the ATM or other offerings.”
- Digital asset management generated $13 million in premiums and cash during the quarter, representing about 24% of normalized adjusted EBITDA.
Q&A
- Mike Grondahl, Northland Capital Markets, asked about the demand environment for HPC and lease partner attributes. Schultz responded, “we’ve now been entertaining multiple trillion balance sheet companies that are interested in long-term leases on some of these assets. So we’re seeing the demand continuing to escalate.”
- Brian Dobson, Clear Street LLC, asked if rising CapEx from tech giants signals sector-wide demand. Schultz said, “demand is escalating rapidly,” and noted confidence in signing a contract soon, stating, “the delay in — I wouldn’t even call it a delay…we would expect to sign a quality lease in less than a year. And I would say that, that’s highly accelerated.”
- Dobson asked if expansion into HPC affects mining operations. Schultz explained, “we can operate 11 exahash to a profitable Bitcoin mining up until the day we cut the power over to support the data center for our end-use clients.”
- Michael Colonnese, H.C. Wainwright, questioned milestones and timelines for AI campus development. Schultz highlighted the partnership with Submer for modular MEP solutions, which “shortens the timeline” and enables flexibility for different chip architectures.
- Colonnese inquired about changes in the HODL approach due to bitcoin price downturn. Vecchiarelli responded, “that’s not something we’re planning on doing even at these levels.”
- Gregory Lewis, BTIG, asked about employee growth and SG&A. Vecchiarelli stated, “we’ve been pretty measured about bringing on people right around the time we will need them.”
- Lewis also asked about land acquisition at Sandersville. Chief Business Officer Harry Sudock confirmed, “the closing of the land expansion at Sandersville [is] a very orderly process in progressing the AI data center project there.”
- Stephen Glagola, KBW, asked about ERCOT process risks. Sudock stated, “we feel very, very positively about where these 2 assets sit within the system and how they’re going to be treated. But until ERCOT comes out with final language, we can’t have 100% visibility into that yet.”
- John Todaro, Needham & Company, asked about power market diversification. Schultz indicated ongoing expansion in existing and new markets, including behind-the-meter opportunities.
- Paul Golding, Macquarie, questioned counterparty selection. Vecchiarelli replied, “it’s very important to us to have that Grade A credit quality tenants because we think that’s the most financeable and the best cost of capital.”
- James McIlree, Chardan, asked how much of the mining fleet is economic at current prices. Schultz answered, “less than 10% of our fleet at the current $30 hash price is not profitable.”
- McIlree also asked about CapEx allocation. Vecchiarelli said, “our focus is going to be on deploying capital towards AI…the overwhelming percentage…is related to AIDC.”
Sentiment Analysis
- Analysts showed strong interest and optimism about AI infrastructure demand, but also pressed for specifics on contract timing, risk mitigation, and capital allocation, reflecting a slightly positive but probing tone.
- Management maintained a confident and disciplined tone, repeatedly emphasizing “discipline is not a strategy, discipline is,” and expressing certainty in AI monetization opportunities: “We are very confident, Brian.”
- Compared to the previous quarter, management demonstrated even greater confidence in AI strategy execution and commercialization timelines, while analysts’ tone shifted from curiosity to more direct questioning about execution and financial risks.
Quarter-over-Quarter Comparison
- Guidance language shifted from describing CleanSpark’s position as “AI-ready” to emphasizing active commercialization and tenant-driven design in AI infrastructure.
- The strategic focus has advanced from portfolio analysis and site acquisition to active development and partnership discussions, with management now highlighting advanced tenant conversations and imminent lease signings.
- Analysts in the current quarter focused more on contract timing, risk management, and profitability under tougher bitcoin market conditions, compared to broader strategic questions in the prior quarter.
- Key metrics show revenue declined $43 million quarter-over-quarter, gross margin decreased from 56.5% to 47%, and adjusted EBITDA swung from positive $182 million to negative $295 million due to mark-to-market adjustments.
- Management’s tone has shifted from enthusiastic but cautious optimism to assertive confidence in AI commercialization, while analysts have become more focused on execution risk and contract specifics.
Risks and Concerns
- Management cited rising network difficulty and bitcoin price volatility as significant external headwinds, impacting revenue and gross margins.
- The company noted that AI expansion will increase professional fees, payroll, and G&A expenses.
- ERCOT regulatory changes are still pending, introducing some uncertainty in Texas project timelines.
- Management highlighted, “until ERCOT comes out with final language, we can’t have 100% visibility into that yet.”
- Analysts questioned the economic viability of mining assets under current hash prices and the timing of AI lease conversions, reflecting ongoing concerns about operational profitability and execution risk.
Final Takeaway
CleanSpark’s first quarter of 2026 marks a pivotal transition toward diversified digital infrastructure, with significant advances in AI campus development and a strengthened position through disciplined capital deployment. Despite near-term revenue and margin pressures from bitcoin market dynamics, management highlights strong operational cash flows, a growing digital asset management program, and robust demand for large-scale AI infrastructure. The company’s focus remains on executing commercialization milestones, disciplined capital allocation, and maintaining flexibility across bitcoin and AI cycles, aiming to deliver sustained shareholder value as new high-margin revenue streams come online.