We continue to make strides in our commitment to ESG principles, most notably by working on attracting and retaining a diverse and highly qualified workforce. We have line-of-sight on 600MW of power, driven in large part by the recent agreement we signed with Lancium at the end of the quarter. “While the whole industry faced macro headwinds, primarily driven by a lower average bitcoin price, we continued to execute on our infrastructure-first strategy. “The theme for this quarter has been operational and financial execution,” said Zach Bradford, Chief Executive Officer. Be aware that CleanSpark is showing 6 warning signs in our investment analysis, and 1 of those is concerning.A sustainable bitcoin mining and energy technology company, today reported financial results for the three and six months ended March 31, 2022. But ultimately, every company can contain risks that exist outside of the balance sheet. There's no doubt that we learn most about debt from the balance sheet. While unprofitable companies can be risky, they can also grow hard and fast in those pre-profit years. Importantly, CleanSpark's revenue growth is hot to trot. However, it has net cash of US$4.73m, so it has a bit of time before it will need more capital. Indeed, in that time it burnt through US$6.4m of cash and made a loss of US$26m. And in the last year CleanSpark had negative earnings before interest and tax (EBIT), truth be told. We have no doubt that loss making companies are, in general, riskier than profitable ones. When it comes to revenue growth, that's like nailing the game winning 3-pointer! So How Risky Is CleanSpark? In the last year CleanSpark wasn't profitable at an EBIT level, but managed to grow its revenue by 683%, to US$4.5m. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting. But it is future earnings, more than anything, that will determine CleanSpark's ability to maintain a healthy balance sheet going forward. The balance sheet is clearly the area to focus on when you are analysing debt. Simply put, the fact that CleanSpark has more cash than debt is arguably a good indication that it can manage its debt safely. Because it has plenty of assets, it is unlikely to have trouble with its lenders. This surplus suggests that CleanSpark is using debt in a way that is appears to be both safe and conservative. So it actually has US$4.12m more liquid assets than total liabilities. Offsetting this, it had US$7.84m in cash and US$834.8k in receivables that were due within 12 months. The latest balance sheet data shows that CleanSpark had liabilities of US$1.50m due within a year, and liabilities of US$3.05m falling due after that. NasdaqCM:CLSK Historical Debt, January 26th 2020 A Look At CleanSpark's Liabilities But on the other hand it also has US$7.84m in cash, leading to a US$4.73m net cash position. View our latest analysis for CleanSpark What Is CleanSpark's Debt?Īs you can see below, at the end of September 2019, CleanSpark had US$3.11m of debt, up from US$1.1 a year ago. The first thing to do when considering how much debt a business uses is to look at its cash and debt together. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. However, a more frequent (but still costly) occurrence is where a company must issue shares at bargain-basement prices, permanently diluting shareholders, just to shore up its balance sheet. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. But the real question is whether this debt is making the company risky. As with many other companies CleanSpark, Inc. So it seems the smart money knows that debt - which is usually involved in bankruptcies - is a very important factor, when you assess how risky a company is. and every practical investor I know worries about. Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of permanent loss is the risk I worry about.
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