CLEANSPARK INC 2026 Q3 Earnings Call

Thank you for joining us today to review the third quarter 2026 financial results for CleanSpark. We encourage you to review our earnings result press release, which was issued today and is available on our website. Our 10-Q will be filed shortly. A webcast replay and transcript of today's call will be added to our website once available. On the call today, I'm joined by Matt Schultz, our Chairman and Chief Executive Officer, and Gary Vecchiarelli, our President and Chief Financial Officer. Some of the statements we make today will be forward-looking 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 10-K. 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 the press release, which is available on our website. With that, take it away, Matt.

Thanks, Harry. Good afternoon, everyone, and thank you for joining us. To begin, I'd like to discuss how we're putting our operations and balance sheet to work as we continue our evolution into a diversified digital infrastructure platform. Following the close of this quarter, we completed an agreement that is the most significant transaction in CleanSpark's history. A 20-year triple net lease at our Sandersville, Georgia campus with a high investment grade leading global technology company. That agreement marks the start of our evolution into a diversified digital infrastructure platform and begins the monetization of our power portfolio at an institutional scale. The lease represents $6.6 billion in contracted revenue to the business, with the ability to scale to $11.6 billion with the execution of two five-year extensions. Being a true triple net structure, we expect near 100% net operating income margin.

We have also forged a partnership with a vertically integrated mechanical, electrical, and plumbing manufacturer and design builder and added 885 megawatts of commercial growth. Taken together, these developments bring our second-mover advantage fully to bear. Many of you joined us for our investor update on July 14th. Today I would like to recap three things. First, I want to spend some time on why we believe this lease is not just a milestone, but among the absolute best commercial outcomes in the sector. Second, I'll update you on execution at Sandersville, across our Texas portfolio under exclusivity, and across the broader platform. Third, I want to talk briefly about our legacy Bitcoin mining business and how the optionality it provides is a strategic advantage as we enter this next phase of evolution and growth. Let me start with the market.

The demand for compute continues to outpace the industry's ability to supply it. The constraint is not chips. It is not capital. It is energized, grid-connected power at scale, sitting on land that can support a full AI campus build. That combination is scarce today, and we believe it will remain scarce for years to come. The agreement is a 20-year triple net lease covering the entirety of our Sandersville campus. Nearly 250 megawatts of gross capacity and 175 megawatts of critical IT load. The initial term carries approximately $6.6 billion of contracted revenue, with two five-year extension options that bring the total to approximately $11.6 billion over 30 years. We expect an average annual NOI of approximately $330 million. We project our cost per critical IT megawatt at the $10 million-$12 million range, in line with the market for this generation of data center.

Here are two things I want everyone to take away from those numbers. First, we believe on a risk-adjusted basis, the economics are among the best in the space. Headline comparisons across data center deals can be misleading, as different contract durations, different lease structures, different risk allocations, and different financing packages can obscure actual returns. Next, this is a triple net lease. Taxes, insurance, and importantly, maintenance CapEx all sit with the tenant, which means our contracted revenue converts to net operating income at effectively 100%. The benefit goes beyond that. The triple net structure is a powerful risk mitigant on the finance side. Lenders underwriting this project are looking at two decades or more of clean, predictable, high-margin cash flows backed by a high investment-grade counterparty, with no operating cost volatility sitting between the rent check and the debt service.

This is why we're able to structure this deal without credit wrappers and why we expect most of this build-out Pardon me. We expect to finance most of this build-out with attractively priced project-based financing. Gary will speak to the capital markets backdrop. The short version is this: The structure of this lease was engineered to make financing straightforward and support a high loan-to-cost, protecting our equity. We deliberately went after a longer duration lease. We deliberately targeted a triple net structure, and we deliberately chose a high investment-grade counterparty as our tenant. Each of these choices was made with the strategic intention to protect and enhance shareholder value. As we sit here today, we have already fully funded the equity portion of the Sandersville project. On execution, the project is advancing according to plan.

Site preparation work has been underway for months on the 122-acre Greenfield parcel that we acquired earlier this year, which allows us to build without disturbing our Bitcoin mining footprint just down the road. We're working with our tenant's preferred engineering procurement and construction management firm and general contractor. A partner with a proven track record in domestic manufacturing capability across key mechanical, electrical, plumbing, and cooling components. That familiarity meaningfully de-risks the supply chain and the long lead equipment timeline. It's also another step in shifting construction out of the field and into the factory, reducing on-site labor and delivering a faster, more repeatable build. The first data hall remains on track to be ready for service in the fourth quarter of calendar 2027, and we've already ordered and prepaid for all data center long lead items for RFS. Let's turn to Texas. In conjunction with the Sandersville lease, our entire Texas portfolio, 718 acres and up to 885 megawatts of secured and planned capacity across our Sealy and Brazoria campuses, is under exclusivity with the exact same counterparty.

As I said on July 14th, we are in an exclusivity window, not at the finish line. The scope of this discussion reflects the portfolio dynamic we described to you last quarter. Sophisticated compute buyers are not looking for a single data hall. They want a growth path measured in gigawatts and a developer they can trust across a multi-decade relationship. Sandersville is the first chapter. Exclusivity across 885 megawatts in Texas shows how our counterparty views the rest of our portfolio. Outside of CleanSpark's work in Texas, there's been a broader policy discussion this week.

As many of you have likely seen, Governor Abbott directed the Public Utility Commission of Texas and ERCOT to audit and verify all data center projects seeking a grid connection before they can move forward. While this may be seen as uncertainty or a short-term setback, we don't see it that way. We commend the Governor for his thoughtful attention to one of the nation's most important power markets and the broader impact of ERCOT's upcoming actions. The operational rigor and financial commitments required to progress through the next phases of development and energization in Texas align exactly with how CleanSpark already plans and operates. While a formal batch process is now expected to extend beyond August 7th, our campus quality, discipline, site selection, and project readiness remain unchanged.

ERCOT has notified large load applicants that final Batch Zero determinations will be delayed, with the next key milestone, the August 20 PUCT open hearing. In the meantime, the state agencies are mobilizing to address the Governor's directive, which underscores the critical role our sector plays in the Texas economy. CleanSpark's historical growth through counter-cyclical acquisitions provides a strong basis for us to run a similar playbook in the ERCOT market. As an example, you may recall that we acquired the original Sandersville campus during challenging political and economic times for the prior owner. We anticipate similar opportunities might develop in Texas in the near term. It's critically important for everyone to know that our previously discussed exclusivity agreement remains intact. We continue to invest in our Sealy and Brazoria sites, and there is no anticipated change to our energization timelines.

Across a broader portfolio, we hold 1.8 gigawatts of contracted capacity today with a high degree of confidence in growing beyond 2.1 gigawatts in the near term through the ERCOT review process. We are evaluating multiple gigawatts of projects as we look to scale and diversify our digital infrastructure across the U.S. Our land and power engine has not slowed down because of this lease. If anything, this transaction sharpens our conviction. Powered land is the scarce asset of our era. Finding it, contracting it, and developing it is what our team does better than anyone else. Before I hand it to Gary, I want to spend a moment on our legacy Bitcoin mining business and the role it plays as we evolve into something profoundly different.

When speed to power matters to a utility, we have the ability to bring a paying load online faster than a traditional data center developer. That capability helped us build this portfolio. It will help us to expand it. At Sandersville, mining will continue to keep the site productive until the day of cutover. Financially, mining and our Bitcoin treasury give us a set of levers that very few companies in this sector can match. Our HODL balance is not a passive position. It is a flexible source of capital that we can deploy in whichever way creates the most value. What that means in practice is that we are never forced sellers of anything, not our Bitcoin, and critically, not our equity. Gary will walk through the capital strategy in detail, but the principle is simple.