CleanSpark’s Q3 2026 Call: ERCOT Audit Uncertainty and Bitcoin-AI Capital Priorities Clash

Date of Call: Aug 6, 2026

Financials Results

• Revenue: $138M, up 1% sequentially
• Gross Margin: 38%, compared to 40% in the second quarter

Business Commentary:

Landmark Lease Agreement:

• CleanSpark completed a significant 20-year triple net lease agreement for its Sandersville, Georgia campus, valued at $6.6 billion in contracted revenue, with potential to scale to $11.6 billion including extensions.
• The lease is considered a milestone due to its triple net structure, which is expected to yield near 100% net operating income margin.
• The agreement was strategically pursued to leverage CleanSpark's land and power assets, as well as the scarcity of large-scale, grid-connected power for AI campuses.

Texas Portfolio and ERCOT Developments:

• CleanSpark's entire Texas portfolio, comprising 718 acres and up to 885 megawatts of secured and planned capacity, is under exclusivity with the same counterparty as the Sandersville lease.
• Recent regulatory developments in ERCOT, including Governor Abbott's directive for an audit of data center projects, have been viewed as an opportunity for CleanSpark to advance its projects.
• The company continues to invest in its Celium Brazoria sites and remains confident in its energization timelines despite the regulatory review process.

Legacy Bitcoin Mining Business:

• CleanSpark's Bitcoin mining operations reported an average revenue per Bitcoin mined of $72,000 in Q3, reflecting a 5% decrease from the prior quarter.
• The company's Bitcoin treasury serves as a strategic capital asset, providing financial flexibility for future opportunities without forcing equity sales.
• The mining operations continue to support land and power acquisitions, playing a crucial role in the company's evolution into a digital infrastructure platform.

Capital Strategy and Financing:

• CleanSpark plans to finance the majority of its Sandersville project build-out with project-based debt financing, targeting high loan-to-cost ratios typical in the industry.
• The company already has its equity portion funded and will not be raising capital via equity or equity-linked instruments for the Sandersville project.
• The strategic use of debt financing is facilitated by the high credit quality of the lease counterparty, allowing for favorable financing terms without credit wrappers.

Digital Asset Management:

• CleanSpark's digital asset management activities generated approximately $8.6 million in cash for Q3, contributing to a total of $25.8 million for the fiscal year.
• The company's strategy involves using its Bitcoin holdings as a capital asset to generate cash and as collateral for borrowing, maintaining a non-dilutive capital position.
• Sales of Bitcoin production exceeded spot prices by 7%, showcasing effective management and strategic sales execution.

Sentiment Analysis:

Overall Tone: Positive

• Management expressed strong conviction: 'This is a triple net lease... we expect near 100% net operating income margin.' They highlighted strategic advantages: 'We believe on a risk-adjusted basis the economics are among the best in the space.' Progress is on track: 'The first data hall remains on track to be ready for service in the fourth quarter of calendar 2027.'

Q&A:

• Question from Paul Golding (Macquarie Capital): I wanted to ask first on the 10 to 12 million per megawatt CapEx range, is there a benefit baked into that from the existing infrastructure at the site and how should we think about that cost per megawatt versus say Texas where maybe there's a little more greenfield development to do...
  Response: The Sandersville build is a true greenfield project with minimal accretive value from existing infrastructure, but the already built and energized substation was a key commercial advantage.

• Question from Paul Golding (Macquarie Capital): How should we think about behind-the-meter versus grid-connected opportunities? Are you exploring behind the meter, or is it not even necessary, given what you're seeing around grid-connected opportunities?
  Response: Behind-the-meter deployments will be necessary to meet data center growth forecasts, and the company is actively looking at them strategically, ensuring end-to-end project clarity.

• Question from Greg Lewis (BT IG): Could we see some of those locations actually move more to the forefront and have customers shown an increasing interest in those, just realizing that Texas seems to be in a little bit of a holding pattern?
  Response: Interest in non-Texas assets like Washington, Georgia, and Wyoming has increased due to the Texas uncertainty, but the scale and progress in Texas remain the primary focus.

• Question from John Todaro (Needham & Company): Can you just very explicitly walk through your unsigned Texas capacity? What still needs any ERCOT-related approvals, and what capacity and sites do not need any that you can go out and sign?
  Response: The Sealy site has batch zero go status but needs final ERCOT determination; the first 300 MW at Brazoria have go status, while the second 300 MW awaits baseload vs. studied load designation.

• Question from John Todaro (Needham & Company): Just wondering is there any kind of hyperscalers and chip manufacturers that are getting more aggressive in looking at sites, any that have maybe pulled back and become less aggressive...
  Response: No pullback; inbound inquiries have ramped up, with significant interest in the Washington project due to its capacity to scale quickly.

• Question from Brian Dobson (Clear Street): Is Governor Abbott's memorandum indicative of what we might see in other large utility areas? And do you think ultimately it favors established players such as yourself?
  Response: The audit is Texas-specific, but established players with proven track records and balance sheets are favored as the market educates itself, and the situation may spur more responsible development.

• Question from Brian Dobson (Clear Street): As you're looking at your portfolio, are there any regions where you think you'd like to enter in the call it medium term without being too specific?
  Response: The company is dynamic and evaluates projects at the individual level across all power markets, leveraging its deal-sourcing strength rather than focusing on broad regions.

• Question from Mike Colonies (HC Wainwright): Based on your discussions with your candidate, Sandersville, would you say that getting a final green light on batch zero for Celia and Brazario phase one would be a gating factor for the counterparty to sign a lease?
  Response: The Texas exclusivity is strong due to the asset quality and advanced pad-ready status; should the lease fall out, another company would likely move in quickly due to pent-up demand.

• Question from Mike Colonies (HC Wainwright): What are some of the characteristics that you'd be most interested in pursuing as it relates to the sites that are coming to you?
  Response: The company will maintain its high rigor on site selection, focusing on high-quality assets that fit its criteria, not just acquiring any available project.

• Question from Nathan (Cantor Fitzgerald): Could you just walk us through how mining potentially could be incorporated into future site acquisitions and development?
  Response: Bitcoin mining can secure interruptible power as a stepping stone, allowing the company to later switch to firm data center loads, utilizing existing modular mining pods to monetize underutilized megawatts.

• Question from Stephen Glagola (KBW): Can you provide more color on the expected timeline for gaining clarity around the audit process and... what should investors expect to learn by then and Maybe what are the next milestones we should be watching?
  Response: Beyond the August 20 PUCT hearing, there is not much certainty, but the governor is actively communicating the importance of data centers to Texas, and the company's assets may be differentiated as they don't require controversial high-tension lines.

• Question from Stephen Glagola (KBW): Gary, you mentioned targeting high loan-to-cost on the project debt side. You know, it'd be great to unpack that more and what you're seeing in the funding markets today...
  Response: The target is above 90% loan-to-cost to maximize returns; demand for project debt remains robust, as indicated by recent oversubscribed deals, despite some spread widening.

• Question from Bill Papanastasia (Chardon Capital): In the remarks, there was mention that the team is looking at new opportunities in the multiple of gigawatts across the country. Can we just double click there where you see the most value today?
  Response: The company is disciplined and conservative, only counting projects with contractual certainty in its pipeline, and evaluates opportunities across all four time zones with a focus on quality.

• Question from Bill Papanastasia (Chardon Capital): Secondly, I appreciate the update on the exclusivity agreement. Just curious, has there been any discussion with the tenants on modifying the deadline for that exclusivity...
  Response: The exclusivity remains intact with no change in conversations; the tenant is still interested, and the company would run a market-clearing exercise if needed, likely creating even greater value.

• Question from Henry Hurl (B Riley Securities): Did the Sandersville tenant also have an option to take exclusivity on Atlanta Metro, Washington, Georgia, Jackson, Tennessee, or Cheyenne, Wyoming, or were they just offered Texas?
  Response: The tenant initially focused on Sandersville and Texas in the VDR, but later showed overwhelming interest in the other sites, indicating a broad strategic appetite for the entire portfolio.

• Question from Henry Hurl (B Riley Securities): Aside from Governor Abbott's pause, I believe Austin County also adopted a county-wide moratorium on AI data centers on July 27th. Would this theoretically impact the Sealy site?
  Response: The county moratorium is temporary and has likely been overturned in court; the company remains constructive and believes a positive resolution is achievable with the community.

• Question from Matthew Galenko (Maxim Group): Can you maybe give us a little bit more color on the state of the digital asset management strategy? Is it still a priority to operate or are you really shifting all focus to the transitions?
  Response: The Bitcoin HODL balance is a strategic capital asset used to generate cash, provide non-dilutive funding, and as a flexible source of capital for creative opportunities, not just an operational priority.

• Question from Matthew Galenko (Maxim Group): How do you kind of think of your mining fleet if economics turn less favorable, particularly post halving?
  Response: The company focuses on deploying capital for the highest shareholder returns, currently prioritizing AI data centers; the mining fleet is a means to an end and will be managed accordingly.

• Question from Nathan (Cantor Fitzgerald): Just one from us today. We are now call it 20 to 25 days into this exclusivity period. Can you guys maybe just touch on what you learned from leasing Sandersville and how you are applying that to this process for the Texas sites?
  Response: The successful Sandersville lease demonstrated the company's deep energy market expertise and collaborative approach, which built trust; the Texas exclusivity agreement mirrored many terms from Sandersville, reinforcing confidence.

• Question from John Hickman (Leidenberg): Can you elaborate a little bit on exactly what is your, what do you have to deliver to your counterparty in this triple mint lease?
  Response: The company is responsible for delivering a powered data center with the power run from existing substations, but not the ongoing maintenance of that infrastructure or the white space inside the data center.

• Question from John Hickman (Leidenberg): Is there a point in time when we're going to find out who the counterparty is?
  Response: The tenant's identity remains confidential per their request, but it is a high-investment-grade global technology company; the high credit rating and lack of credit wrappers are the key differentiators.

Contradiction Point 1

Timeline for ERCOT Audit Clarity and Project Milestones

Contradiction on the expected timeline for ERCOT approval clarity and next major milestones.

Stephen Glagola (KBW) - Stephen Glagola (KBW)

2026Q3: Beyond the August 20 hearing, there is no certainty. - Matt Schultz(CEO)

Can you provide clarity on the ERCOT audit timeline and expectations for the August 20 PUC hearing, as well as unpack the rationale behind the high loan-to-cost target for project debt financing? - Bill Papanastasia (Chardon Capital)

2026Q3: The governor's team is aggressively seeking to communicate... A potential differentiator for CleanSpark is that its sites do not require controversial 765 kV transmission lines. - Matt Schultz(CEO)

Contradiction Point 2

Strategic Priority and Capital Allocation to Bitcoin Mining

Contradiction on the strategic importance and capital allocation priority for the digital asset (Bitcoin) management strategy.

Matthew Galenko (Maxim Group) - Matthew Galenko (Maxim Group)

2026Q3: The Bitcoin HODL balance is a strategic capital asset. ... The current highest and best use of capital is AI data centers and land/power acquisition. Mining is seen as a means to an end. - Gary Vaccarelli(CFO)

What is the current state and priority of the digital asset management strategy, particularly in light of potential changes in mining economics post-halving? - Nathan (Cantor Fitzgerald, on behalf of Brett)

2026Q3: Mining can be a useful tool... It also allows for rapid monetization... The modular mining pods can be repurposed for future developments, similar to what will happen at Sandersville. - Matt Schultz(CEO)

Contradiction Point 3

Demand Environment and Hyperscaler Interest in Texas

Contradiction on the level of inbound demand and hyperscaler interest in Texas projects.

What were John Todaro's key points during the earnings call? - John Todaro (Needham & Company)

2026Q3: Inbound inquiries have ramped up, especially regarding the Washington, Georgia project... Demand remains strong. - Matt Schultz(CEO)

Mike Colonies (HC Wainwright) - Mike Colonies (HC Wainwright)

2026Q3: The company maintains the same rigorous site selection criteria. They look for high-quality assets that fit the demand profile, not the other way around. - Matt Schultz(CEO)

Contradiction Point 4

Status and Clarity of Texas Site Approvals

Contradiction on the progress and certainty of ERCOT approvals for Texas projects.

John Todaro (Needham & Company) - John Todaro (Needham & Company)

2026Q3: 1) **Sealy, Texas**: Came with ERCOT approval (Batch Zero go status) in 2025; final interconnection determination still needed. 2) **Brazoria, Texas**: The first 300 MW of Phase 1 capacity received go status in 2026; the second 300 MW is awaiting baseload vs. studied load status. - Harry Sudock(CBO)

Could you provide details on your unsigned Texas capacity and clarify which components require ERCOT approvals and which do not? - Paul Golding (Macquarie Capital)

2026Q2: The Brazoria review process is advanced due to early market engagement and a strong track record. ERCOT and CenterPoint are in a “bad zero” territory for the additional 300 MW, indicating a constructive outlook. - Harry, Investor Relations

Contradiction Point 5

Evaluation and Prioritization of Non-Texas Assets

Shifts in strategic focus and value assessment for projects outside Texas.

Greg Lewis (BT IG) - Greg Lewis (BT IG)

2026Q3: While Texas discussions are progressed, other assets are highly compelling. For example, the Sandersville campus (86 MW of energized capacity) has an option to expand by up to 500 MW. Assets in Tennessee and Wyoming are also valuable. Due to ERCOT uncertainty, the value of these non-Texas assets has increased significantly. - Matt Schultz(CEO)

Could locations like Wyoming, Georgia, and Tennessee become more prominent as Texas remains in a holding pattern, and has customer interest in these areas increased? - Mike Grondahl (Northland Securities)

20260206-2026 Q1: Demand is highest for Sandersville... The Texas (Brazoria) site is appealing but less mature. - Matt Schultz(CEO)