Summary CleanSpark, Inc. is well positioned for a pivot to AI/HPC workloads, trading at an attractive 1.3x book value multiple. The crypto Miner has fortified its capital structure, reduced high-interest debt, and now boasts ~1 GW of contracted power, including a 285 MW Texas facility dedicated to AI. CLSK management is actively hiring AI talent and strategically repurposing existing data center capacity, with revenue from new AI-focused sites expected next year. Despite dilution risks from equity financing, CLSK's valuation remains compelling as markets await proof of AI revenue traction; I initiate CLSK with a Buy rating. Investment Thesis The crypto miner industry continues to be a fascinating space for investors, especially after the deep correction that many of these stocks saw through Q4 last year. A few winners have already emerged in the crypto mining industry as they secured deals from large clients to either provide full-stack managed GPU infrastructure solutions, turnkey data center solutions, or colocation services. Others, like CleanSpark, Inc. ( CLSK ), are still in the midst of catching up to this transformation towards quickly servicing the rapidly growing market for AI/HPC workloads as their crypto mining workloads slow. CleanSpark is one of those few crypto miners that are still cheap as compared to its peer group. There is a strong reason for that, which I explain below. However, in my view, CleanSpark looks like the next strong candidate to benefit from the industry pivot towards AI/HPC. I recommend a buy rating on CleanSpark. CleanSpark Has Set The Stage - It’s Time For The AI Show If investors are interested in reading about my foundational view on crypto miners, they can read my latest coverage on the comparison between TeraWulf ( WULF ) and Cipher Mining ( CIFR ). As explained in last month’s post, I do not expect compute demand for AI workloads to slow any time soon. Yet, the intense scrutiny on capex, cash flows, and depreciation will push many hyperscalers to diversify their supply chain of data center infrastructure away from owned to rented, giving crypto miners a huge leg up. So far, CleanSpark has been late to the "AI Pivot Party." The Nevada-based crypto miner has faced challenges in winning large customers so far because they had not secured enough resources to build out incremental capacity to serve these HPC clients. Neither were they able to fully transition many of their data center resources towards AI/HPC workloads because most of the data center infrastructure at 33 data centers that CleanSpark has online was being efficiently managed to service crypto mining workloads. Exhibit A: CleanSpark’s US data center footprint. (Company presentation) In the Q1 2025 call last year, CleanSpark’s management put forward their perspectives on why they would be late in pivoting towards AI: These challenges [infrastructure & capital] have a direct impact on both revenue generation and profitability. By contrast, Bitcoin mining remains an efficient, proven and scalable business model. We can bring a Bitcoin mining site online and start generating revenue within months, whereas a fully developed HPC site can take two to five years, not including the time and cost required to secure high-quality long-term customers. In addition to infrastructure challenges, CleanSpark also faced endogenous headwinds within their own capital structure, which inhibited the company from taking on more debt. Investors will do well to remember that building out data center infrastructure for AI/HPC clients requires immense capital. In 2025, CleanSpark’s cash fell to $43M from $122M in the previous year, while debt more than 10x-ed to $825M over the same time period. Most of the debt was sourced by CleanSpark to create a favorable capital structure that allows them to match their peers like TeraWulf or Cipher Mining, source deals, and deploy capital to rapidly build GPU capacity for clients. Also, CleanSpark generates strong EBITDA to support the current capital structure. In the last year, EBITDA has grown 2.5x to $252.4M, implying a gross debt leverage level of ~3.3x, which is very reasonable for the crypto miner. For example, Cipher Mining’s gross leverage is >10x (TTM basis), while industry leader CoreWeave ( CRWV ) sports a gross leverage of 8.6x (TTM basis). Additionally, CleanSpark has also taken 2025 to fortify its capital base, unlike many of its peers, by either eliminating entirely or reducing its debt exposure towards high-interest overhead, as seen below. Exhibit B: CleanSpark has actively reduced its exposure towards high interest overhead-bearing debt. (Company filings) The big moves CleanSpark made in its capital structure have really allowed the crypto miner to begin the fundamental pivot towards AI, which picked up speed in Q4 of last year. In the Q4 FY25 ER call , management revealed that they now have ~1 GW of contracted power in their portfolio, putting them at par with many of their peers who boast similar contracted power portfolios. This also includes the recently acquired 285 MW Houston, TX-based location , which CleanSpark plans to allocate only for AI/HPC workloads. CleanSpark has been upfront that they will start to recognize revenue from this location only next year onwards. But if CleanSpark does secure a customer for the Texas location, it would mark a significant improvement in the probability of generating revenue from this acquired location in Texas. Plus, CleanSpark is also hiring human talent to quicken the pace of its AI pivot. They recently appointed an ex-exec from Humain to lead their new AI teams. In addition to winning large clients for the Houston DC location, this new AI team and CleanSpark have already identified a 250 MW facility at its current Sandersville, GA, location, which can also be used for AI workloads along with crypto mining workloads. This gives CleanSpark a big advantage in its race to pivot to AI workloads. Valuation Levels For CleanSpark Are Very Reasonable Since CleanSpark has made active efforts to strengthen its balance sheet ahead of its widely expected AI pivot, the company looks very appealing on a book value multiple basis. Exhibit C: Cipher Mining’s 2026 revenue multiple vs TeraWulf’s 2026 revenue multiples. (yCharts) CleanSpark trades almost at par to its book, at a multiple of just 1.3x. For a company that is quickly positioning itself to benefit from the AI/HPC boom, the company is trading at very attractive multiples to its book value. Barring companies like CoreWeave and TeraWulf, investors can see how many crypto miner peers were trading in a similar book value multiple range of 1-3x book before trading at significantly higher multiples after most of these companies secured deals with hyperscalers. There is significant scope for expansion in CleanSpark’s book value multiple expansion, which is likely going to happen from a large step-up function stemming from an impending deal. CleanSpark is very cheap at current levels. Risks & Other Factors To Note One of the drawbacks of management’s approach towards fortifying its capital structure is that the company has mostly resorted to various forms of equity financing. In other words, current shareholders get impacted due to dilutive strategies employed by the company, which has seen its share base expand by ~50% in 2025 and by much more in the years preceding last year. Through multiple ER calls last year, management has reiterated their commitment towards minimizing share-dilutive tactics to source capital, but investors could still see these risks play out until the company wins large hyperscaler deals or the Bitcoin market regains its strength. At the end of the day, CleanSpark is still a crypto miner-first company attempting to pivot towards AI, so the strength of its crypto mining business is still crucial. Takeaway CleanSpark appears all set to benefit from the multi-stage pivot towards AI and HPC workloads. Markets currently are on the sidelines waiting for the company to show progress first but are unfortunately discounting the progress already made by the crypto miner. Fortunately for investors, CleanSpark does trade at attractive book value multiples, leading me to initiate a Buy rating on this company.
